| Page Range | 79655-80206 | |
| FR Document |
| Page and Subject | |
|---|---|
| 80 FR 80195 - Adjustments of Certain Rates of Pay | |
| 80 FR 79803 - Pesticides; Certification of Pesticide Applicators; Second Extension of the Comment Period | |
| 80 FR 79956 - Notice of Availability of Draft Guidance Documents for Subsequent License Renewal | |
| 80 FR 79881 - Sam Rayburn Dam Project Power Rate | |
| 80 FR 79883 - Robert D. Willis Hydropower Project Power Rate | |
| 80 FR 79817 - Privacy Act of 1974; New System of Records | |
| 80 FR 79926 - Indian Gaming; Three Tribal-State Class III Gaming Compacts Taking Effect in the State of California | |
| 80 FR 79872 - Invitation for Public Comment To Inform the Design of a Consent-Based Siting Process for Nuclear Waste Storage and Disposal Facilities | |
| 80 FR 79889 - Riverside Chrome Plating Superfund Site; Notice of Proposed CERCLA Administrative Cost Recovery Settlement | |
| 80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-ODPI, Inc. | |
| 80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Open Platform for NFV Project, Inc. | |
| 80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-3D PDF Consortium, Inc. | |
| 80 FR 79931 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-PXI Systems Alliance, Inc. | |
| 80 FR 79931 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-National Armaments Consortium | |
| 80 FR 79927 - Renewal of Approved Information Collection; OMB Control No. 1004-0185 | |
| 80 FR 79991 - Culturally Significant Objects Imported for Exhibition Determinations: “Pierre Bonnard: Painting Arcadia” Exhibition | |
| 80 FR 79820 - Authorization of Production Activity; Foreign-Trade Zone 84, Mitsubishi Caterpillar Forklift America, Inc. (Forklift Trucks), Houston, Texas | |
| 80 FR 79820 - Application for Additional Production Authority; The Coleman Company, Inc., Subzone 119I (Textile-Based Personal Flotation Devices); Notice of Public Hearing and Extension of Comment Period | |
| 80 FR 79820 - Light-Walled Rectangular Pipe and Tube From Mexico: Rescission of Antidumping Duty Administrative Review; 2014-2015 | |
| 80 FR 79918 - Announcement of Requirements and Registration for the “My Preparedness Story: Staying Healthy and Resilient” Video Challenge | |
| 80 FR 79992 - Culturally Significant Objects Imported for Exhibition Determinations: “Shakespeare, Life of an Icon” Exhibition | |
| 80 FR 79711 - Propiconazole; Pesticide Tolerances | |
| 80 FR 79888 - Pesticide Registration Review; Draft Human Health and Ecological Risk Assessments for Certain Organophosphates; Extension of Comment Period | |
| 80 FR 79991 - Advisory Committee on International Postal and Delivery Services | |
| 80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Cooperative Research Group on ROS-Industrial Consortium-Americas | |
| 80 FR 79936 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Evaluation of the Linking to Employment Activities Pre-Release (LEAP) Program Grants Program | |
| 80 FR 79907 - Draft Guidance for Industry on Advancement of Emerging Technology Applications To Modernize the Pharmaceutical Manufacturing Base; Draft Guidance for Industry; Availability | |
| 80 FR 79956 - Advisory Committee for International Science and Engineering; Notice of Meeting | |
| 80 FR 79993 - National Express LLC-Acquisition of Control-White Plains Bus Company, Inc. | |
| 80 FR 79724 - Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 | |
| 80 FR 79869 - Privacy Act of 1974; System of Records | |
| 80 FR 79687 - Partitions of Eligible Multiemployer Plans | |
| 80 FR 79995 - Quarterly Rail Cost Adjustment Factor | |
| 80 FR 79865 - Agency Information Collection Activities Under OMB Review | |
| 80 FR 79934 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Employee Retirement Income Security Act Summary Annual Report Requirement | |
| 80 FR 79951 - Records Schedules; Availability and Request for Comments | |
| 80 FR 79953 - Meeting of the Advisory Committee on the Presidential Library-Foundation Partnerships | |
| 80 FR 79950 - Agency Information Collection Activities: Submission for OMB Review; Comment Request | |
| 80 FR 79819 - Submission for OMB Review; Comment Request | |
| 80 FR 79931 - Notice of Lodging of Proposed Joint Stipulation To Modify Consent Decree Under the Clean Air Act | |
| 80 FR 79863 - New England Fishery Management Council; Public Meeting | |
| 80 FR 79864 - North Pacific Fishery Management Council; Public Meeting | |
| 80 FR 79862 - North Pacific Fishery Management Council; Public Meeting | |
| 80 FR 79671 - Extensions of Credit by Federal Reserve Banks | |
| 80 FR 79674 - Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold | |
| 80 FR 79947 - Privacy Act of 1974; Privacy Act System of Records | |
| 80 FR 79949 - Privacy Act of 1974; Privacy Act System of Records | |
| 80 FR 79937 - Privacy Act of 1974; Privacy Act System of Records | |
| 80 FR 79867 - Privacy Act of 1974; System of Records | |
| 80 FR 79673 - Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size Exemption Threshold | |
| 80 FR 79925 - Renewal of Agency Information Collection for Class III Gaming; Tribal Revenue Allocation Plans; Gaming on Trust Lands | |
| 80 FR 79929 - Notice of Intent To Prepare an Environmental Impact Statement for a Wilderness Stewardship Plan, Mount Rainier National Park, Pierce and Lewis Counties, Washington | |
| 80 FR 79821 - National Oceanic and Atmospheric Administration (NOAA) Ocean Exploration Advisory Board (OEAB); Public Meeting | |
| 80 FR 79928 - Environmental Impact Statement for the Modification/Removal of the Canal Diversion Dam in Cuyahoga Valley National Park, Ohio | |
| 80 FR 79933 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Required Elements for Submission of the Unified or Combined State Plan and Plan Modifications Under the Workforce Innovation and Opportunity Act | |
| 80 FR 79876 - Energy Resources USA, Inc.; Notice of Competing Preliminary Permit Application Accepted for Filing and Soliciting Comments and Motions To Intervene | |
| 80 FR 79877 - Town of Walnut, Mississippi; Notice of Application | |
| 80 FR 79877 - Combined Notice of Filings | |
| 80 FR 79878 - Notice of Application Ready for Environmental Analysis and Soliciting Comments, Recommendations, Terms and Conditions, and Prescriptions | |
| 80 FR 79875 - Brookfield White Pine Hydro LLC; Notice of Application Tendered for Filing With the Commission and Establishing Procedural Schedule for Licensing and Deadline for Submission of Final Amendments | |
| 80 FR 79874 - City of Banning, California; Notice of Filing | |
| 80 FR 79880 - Williams Field Services-Gulf Coast Company LP; Notice of Petition for Declaratory Order | |
| 80 FR 79876 - Combined Notice of Filings #1 | |
| 80 FR 79803 - Solicitation of New Safe Harbors and Special Fraud Alerts | |
| 80 FR 79871 - Submission of Data by State Educational Agencies; Submission Dates for State Revenue and Expenditure Reports for Fiscal Year (FY) 2015, Revisions to Those Reports, and Revisions to Prior Fiscal Year Reports | |
| 80 FR 79681 - Boundary Expansion of Thunder Bay National Marine Sanctuary; Correction and Expansion of Fagatele Bay National Marine Sanctuary, Regulatory Changes, and Sanctuary Name Change; Correction | |
| 80 FR 79817 - Proposed North-South Project, San Bernardino National Forest, California EIR/EIS | |
| 80 FR 79819 - National Advisory Committee | |
| 80 FR 79897 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company | |
| 80 FR 79718 - Allowing Importers To Provide Information to U.S. Customs and Border Protection in Electronic Format | |
| 80 FR 79926 - Notice of Public Meeting for the Southeast Oregon Resource Advisory Council | |
| 80 FR 79695 - Drawbridge Operation Regulation; Mill Neck Creek, Oyster Bay, NY | |
| 80 FR 79905 - Agency Information Collection Activities; Proposed Collection; Comment Request; Guidance: Emergency Use Authorization of Medical Products | |
| 80 FR 79912 - Agency Information Collection Activities: Proposed Collection; Comment Request; Bar Code Label Requirement for Human Drug and Biological Products; Correction | |
| 80 FR 79909 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Hearing, Aging, and Direct-to-Consumer Television Advertisements | |
| 80 FR 79913 - Revised Recommendations for Reducing the Risk of Human Immunodeficiency Virus Transmission by Blood and Blood Products; Guidance for Industry; Availability | |
| 80 FR 79935 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Benefit Accuracy Measurement Program | |
| 80 FR 79932 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Data Sharing Agreement Program | |
| 80 FR 79903 - Determination of Regulatory Review Period for Purposes of Patent Extension; JETREA | |
| 80 FR 79776 - Fixed-Combination and Co-Packaged Drugs: Applications for Approval and Combinations of Active Ingredients Under Consideration for Inclusion in an Over-the-Counter Monograph | |
| 80 FR 79821 - National Institute of Standards and Technology (NIST) Smart Grid Advisory Committee Meeting | |
| 80 FR 79901 - Proposed Information Collection Activity; Comment Request | |
| 80 FR 79903 - Proposed Information Collection Activity; Comment Request | |
| 80 FR 79961 - New Postal Product | |
| 80 FR 79960 - Postal Rate Changes | |
| 80 FR 79962 - New Postal Product | |
| 80 FR 79958 - New Postal Product | |
| 80 FR 79959 - New Postal Product | |
| 80 FR 79922 - Agency Information Collection Activities: Petition for Alien Relative, Form I-130, and Form I-130A; Revision of a Currently Approved Collection | |
| 80 FR 79894 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated Authority | |
| 80 FR 79924 - Proposed Renewal of Information Collection; Annual Certification of Hunting and Sport Fishing Licenses Issued | |
| 80 FR 79956 - Notice of Permits Issued Under the Antarctic Conservation Act of 1978 | |
| 80 FR 79923 - Agency Information Collection Activities: Genealogy Index Search Request and Genealogy Records Request. Forms G-1041 and G-1041A; Revision of a Currently Approved Collection | |
| 80 FR 79865 - 36(b)(1) Arms Sales Notification | |
| 80 FR 79891 - Proposed Information Collection Request; Comment Request; Distribution of Offsite Consequence Analysis Information Under Section 112(r)(7)(H) of the Clean Air Act (CAA) | |
| 80 FR 79655 - General Administrative Regulations | |
| 80 FR 79655 - Foreign Quarantine Notices | |
| 80 FR 79695 - Air Plan Approval; SD; Update to Materials Incorporated by Reference | |
| 80 FR 79655 - Domestic Quarantine Notices | |
| 80 FR 79898 - Safety and Occupational Health Study Section (SOHSS), National Institute for Occupational Safety and Health (NIOSH or Institute) | |
| 80 FR 79900 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial Review | |
| 80 FR 79901 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial Review | |
| 80 FR 79899 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial Review | |
| 80 FR 79898 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial Review | |
| 80 FR 79899 - Board of Scientific Counselors, National Center for Health Statistics | |
| 80 FR 79922 - Clinical Center; Notice of Meeting | |
| 80 FR 79921 - National Center for Advancing Translational Sciences; Notice of Closed Meeting | |
| 80 FR 79897 - Information Collection; Public Buildings Service; Art-in-Architecture Program National Artist Registry, GSA Form 7437 | |
| 80 FR 79655 - Participation of Retail Food Stores, Wholesale Food Concerns and Insured Financial Institutions | |
| 80 FR 79655 - Performance Reporting System | |
| 80 FR 79889 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; EPA Strategic Plan Information on Source Water Protection | |
| 80 FR 79892 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Metal Furniture Surface Coating (Renewal) | |
| 80 FR 79890 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Chromium Emissions From Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (Renewal) | |
| 80 FR 79893 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Beverage Can Surface Coating (Renewal) | |
| 80 FR 79891 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Surface Coating of Large Appliances (Renewal) | |
| 80 FR 79989 - Altegris KKR Commitments Master Fund, et al.; Notice of Application | |
| 80 FR 79983 - Order Granting Chicago Mercantile Exchange Inc.'s Request To Withdraw From Registration as a Clearing Agency | |
| 80 FR 79966 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Provide FINRA with Authority To Grant Exemptions from TRACE Reporting Requirements for Certain ATS Transactions | |
| 80 FR 79963 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To List and Trade Options That Overlie a Reduced Value of the FTSE China 50 Index | |
| 80 FR 79969 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt the Capital Acquisition Broker Rules | |
| 80 FR 79986 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule | |
| 80 FR 79963 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change To Adopt a New Policy Relating to Trade Reports for Exchange Traded Products | |
| 80 FR 79984 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Technical Disconnect Mechanism | |
| 80 FR 79995 - Petition for Exemption From the Federal Motor Vehicle Theft Prevention Standard; Maserati North America, Inc. | |
| 80 FR 79992 - Public Hearings on Planned Upgrades to the New Car Assessment Program | |
| 80 FR 79675 - Suspended Counterparty Program | |
| 80 FR 79719 - Implementation of the Program Fraud Civil Remedies Act of 1986 | |
| 80 FR 79894 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Metal Furniture Coating (Renewal) | |
| 80 FR 79885 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Mercury (Renewal) | |
| 80 FR 79921 - Submission for OMB Review; 30-Day Comment Request: Hazardous Waste Worker Training | |
| 80 FR 79708 - 2-Propenoic Acid, Homopolymer, Ester With α-[2,4,6-Tris(1-Phenylethyl)Phenyl]-ω-Hydroxypoly(Oxy-1,2-Ethanediyl), Compd. With 2,2′,2″-Nitrilotris[Ethanol]; Tolerance Exemption | |
| 80 FR 79886 - Chlorinated Paraffins; Request for Available Information on PMN Risk Assessments | |
| 80 FR 79918 - National Advisory Council on Nurse Education and Practice; Notice of Meeting | |
| 80 FR 79915 - Agency Information Collection Activities: Proposed Collection; Public Comment Request | |
| 80 FR 79705 - Ammonium Acetate; Exemption From the Requirement of a Tolerance | |
| 80 FR 79953 - Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 | |
| 80 FR 79862 - Proposed Information Collection; Comment Request; Antarctic Marine Living Resources Conservation and Management Measures | |
| 80 FR 79822 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to a Dock Replacement Project | |
| 80 FR 79843 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to the U.S. Air Force Conducting Maritime Weapon Systems Evaluation Program Operational Testing Within the Eglin Gulf Test and Training Range | |
| 80 FR 79997 - Proposed Collection; Comment Request for Schedule C (Form 1040) | |
| 80 FR 79917 - Agency Information Collection Activities: Proposed Collection: Public Comment Request | |
| 80 FR 79918 - National Advisory Council on Migrant Health; Notice of Meeting | |
| 80 FR 79684 - Payout Requirements for Type III Supporting Organizations That Are Not Functionally Integrated | |
| 80 FR 79795 - Country-by-Country Reporting | |
| 80 FR 80114 - System Safeguards Testing Requirements for Derivatives Clearing Organizations | |
| 80 FR 80140 - System Safeguards Testing Requirements | |
| 80 FR 79874 - ETRACOM LLC; Michael Rosenberg; Notice of Designation of Commission Staff as Non-Decisional | |
| 80 FR 79868 - Intent To Prepare a Draft Supplemental Environmental Impact Statement To Evaluate Improvements to the Mobile Harbor Federal Navigation Channel, Mobile, Alabama | |
| 80 FR 79863 - Proposed Information Collection; Comment Request; Evaluations of Coastal Zone Management Act Programs-State Coastal Management Programs and National Estuarine Research Reserves | |
| 80 FR 79902 - Submission for OMB Review; Comment Request | |
| 80 FR 79745 - Airworthiness Directives; Airbus Airplanes | |
| 80 FR 79742 - Airworthiness Directives; Airbus Airplanes | |
| 80 FR 79754 - Airworthiness Directives; The Boeing Company Airplanes | |
| 80 FR 79805 - Endangered and Threatened Wildlife and Plants; Withdrawal of Proposed Rule To Reclassify the Arroyo Toad as Threatened | |
| 80 FR 79735 - Airworthiness Directives; The Boeing Company Airplanes | |
| 80 FR 79895 - Proposed Changes to the FCC Form 499-A, FCC Form 499-Q, and Accompanying Instructions | |
| 80 FR 79680 - Removal of Jet Route J-477; Northwestern United States | |
| 80 FR 80000 - Endangered and Threatened Wildlife and Plants; Listing Two Lion Subspecies | |
| 80 FR 79655 - Energy Conservation Program: Test Procedures for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment | |
| 80 FR 79757 - Establishing the Form and Manner with which Security-Based Swap Data Repositories Must Make Security-Based Swap Data Available to the Commission | |
| 80 FR 80058 - Disclosure of Payments by Resource Extraction Issuers | |
| 80 FR 79738 - Airworthiness Directives; Airbus Airplanes | |
| 80 FR 79750 - Airworthiness Directives; Airbus Airplanes |
Animal and Plant Health Inspection Service
Food and Nutrition Service
Forest Service
Census Bureau
Foreign-Trade Zones Board
International Trade Administration
National Institute of Standards and Technology
National Oceanic and Atmospheric Administration
Engineers Corps
Navy Department
Federal Energy Regulatory Commission
Southwestern Power Administration
Centers for Disease Control and Prevention
Children and Families Administration
Food and Drug Administration
Health Resources and Services Administration
Inspector General Office, Health and Human Services Department
National Institutes of Health
Coast Guard
U.S. Citizenship and Immigration Services
Fish and Wildlife Service
Indian Affairs Bureau
Land Management Bureau
National Park Service
Antitrust Division
Federal Aviation Administration
National Highway Traffic Safety Administration
Surface Transportation Board
Comptroller of the Currency
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.
In Title 7 of the Code of Federal Regulations, Parts 300 to 399, revised as of January 1, 2015, make the following corrections:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Final rule.
In this final rule, the U.S. Department of Energy (DOE) reaffirms that the currently prescribed test procedure, with certain amendments adopted in this rulemaking, must be used when measuring the energy efficiency of certain categories of small, large, and very large air-cooled commercial package air conditioners and heating equipment. The final rule, in addition to satisfying the agency's obligation to periodically review its test procedures for covered equipment, also clarifies specific certification, compliance, and enforcement provisions related to this equipment. The final rule limits the incorporation by reference of the industry test procedure ANSI/AHRI Standard 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” to certain sections and addenda; clarifies indoor airflow tolerance and adjustment specifications when meeting other rating conditions; clarifies requirements for condenser head pressure controls; clarifies units of measurement for airflow; establishes a tolerance on part-load rating points and specifies the ambient temperatures used for the part-load rating points; and defines the term, “integrated energy efficiency ratio.”
The effective date of this rule is January 22, 2016. The final rule changes will be mandatory for testing starting December 19, 2016. The incorporation by reference of certain material listed in this rule is approved by the Director of the
The docket, which includes
A link to the docket Web page can be found at:
For further information on how to review the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email:
Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-9590, or email
For legal issues, please contact Mr. Michael Kido, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-8145. Email:
DOE intends to incorporate by reference the following industry standard into part 429 and appendix A to subpart F of part 431: ANSI/AHRI Standard 340/360-2007, (“AHRI 340/360-2007”), “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” with Addenda 1 and 2, approved by ANSI on October 27, 2011. This industry standard provides guidance regarding a variety of different elements related to the testing of commercial and industrial unitary air-conditioning and heat pump equipment, including definitions, classifications, as well as testing, rating, data, and operating requirements. ANSI/AHRI Standard 340/360-2007 is readily available from the Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or go to:
DOE intends to incorporate by reference the following industry standard into appendix A to subpart F of part 431: ANSI/ASHRAE Standard 37-2009, (“ANSI/ASHRAE 37”), “Methods of Testing for Rating Electrically Driven Unitary Air-Conditioning and Heat Pump Equipment,” approved by ASHRAE on June 20, 2009. This testing standard details test methods for the equipment addressed by this rulemaking. Copies of this testing standard are readily available from the American Society of Heating, Refrigerating, and Air-Conditioning Engineers, 1791 Tullie Circle NE., Atlanta, GA 30329, (800) 527-4723, or through its Web site at
These standards are described further in section IV.M.
Title III of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6291,
Under EPCA, the energy conservation program consists essentially of four parts: (1) testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. The testing requirements consist of test procedures that manufacturers of covered equipment must use as the basis for (1) certifying to DOE that their equipment complies with the applicable energy conservation standards adopted under EPCA, and (2) making representations about the efficiency of that equipment. Similarly, DOE must use these test procedures to determine whether the equipment complies with any relevant standards promulgated under EPCA.
DOE's test procedure for CUACs and CUHPs is codified at Title 10 of the Code of Federal Regulations (CFR), § 431.96. The current regulations require that manufacturers use ANSI/AHRI 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment” (ANSI/AHRI 340/360-2007), when measuring the efficiency of a given CUAC or CUHP and certifying that equipment as compliant with the applicable
On February 1, 2013, DOE published a request for information and notice of document availability regarding the potential amendment of the energy conservation standards for CUACs and CUHPs. 78 FR 7296. DOE solicited information from the public to help determine whether national standards more stringent than the current ones would result in a significant amount of additional energy savings and whether those national standards would be technologically feasible and economically justified. DOE also sought information from the public on the merits of adopting the integrated energy efficiency ratio (IEER) as the energy efficiency descriptor for small, large, and very large air-cooled commercial air conditioners and heat pumps, and which includes provisions to measure equipment performance under partial-load operating conditions. Currently, manufacturers must measure the energy efficiency of their equipment using the energy efficiency ratio (EER), which measures the full-load efficiency of a given unit. The procedure to follow when measuring and calculating that value, like the proposed IEER metric, is found in ANSI/ASHRAE 340/360-2007. See ANSI/ASHRAE 340/360-2007, sec. 6. Comments received on the topic of IEER are discussed in a related notice of proposed rulemaking (NOPR) published September 30, 2014, which sought to amend the CUAC and CUHP energy conservation standards. 79 FR 58948.
Subsequently, on April 1, 2015, DOE issued a notice of intent to establish the Commercial Package Air Conditioners and Heat Pumps and Commercial Warm Air Furnaces Working Group to negotiate potential amendments to the energy conservation standards for this equipment. 80 FR 17363. This Working Group was established under the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) in accordance with the Federal Advisory Committee Act and the Negotiated Rulemaking Act. See 5 U.S.C. Appendix—Federal Advisory Committee Act and 5 U.S.C. 561-570a. The Working Group, which consisted of 17 members, including one member from ASRAC and one DOE representative, met six times (five times in person and once by teleconference). The meetings were held on April 28, May 11-12, May 20-21, June 1-2, June 9-10, and June 15, 2015. The Working Group successfully reached consensus on energy conservation standards for CUACs, CUHPs, and commercial warm air furnaces, which the Working Group provided as recommendations as part of a Term Sheet for submission to ASRAC. The group also chose to provide test procedure and metric-related recommendations to the ASRAC. ASRAC voted unanimously to approve the Working Group's recommendations on June 17, 2015. Participants in the Working Group consisted of the following entities aside from DOE:
DOE initiated a rulemaking to amend the test procedure and associated certification requirements for CUACs and CUHPs to implement certain of the Working Group's recommendations regarding the metric and test procedure. On August 6, 2015, DOE published a NOPR (August 2015 NOPR)
EPCA sets forth the general criteria and procedures DOE must follow when prescribing or amending test procedures for covered equipment. See generally 42 U.S.C. 6314. EPCA provides in relevant part that any test procedures prescribed or amended under this section must be reasonably designed to produce test results that measure the energy efficiency, energy use or estimated annual operating cost of a covered
EPCA also requires DOE to evaluate its test procedures at least once every 7 years for each class of covered equipment (including CUACs and CUHPs) to determine if an amended test procedure would more accurately or fully comply with the requirement to be reasonably designed to produce test results that reflect the energy efficiency, energy use, and operating costs during a representative average use cycle. DOE must either prescribe amended test procedures or publish a notice in the
DOE considers the activity associated with this rulemaking sufficient to satisfy this review requirement.
This final rule clarifies aspects of DOE's test procedure for CUACs and CUHPs to improve the consistency and accuracy of the results generated when using that procedure. The rule clarifies how to test for compliance with the current energy conservation standards along with those standards that DOE anticipates adopting consistent with the Working Group's Term Sheet. The rule also amends certain certification, compliance, and enforcement provisions. DOE has determined that this final rule will not change the measured energy efficiency of CUACs and CUHPs when compared to the current test procedure.
This final rule amends the test procedure for CUACs and CUHPs in appendix A to subpart F of part 431 and adds new equipment-specific certification and enforcement provisions in 10 CFR 429.43 and 429.134. With respect to the latter of these changes, a new § 429.134(g) would be added to the pre-existing provisions already contained in § 429.134(a)-(f). The rule also amends certain definitions found in 10 CFR 431.92 and updates certain materials incorporated by reference in 10 CFR 431.95.
In response to the August 2015 NOPR, six interested parties submitted written comments: Air-Conditioning, Heating and Refrigeration Institute (AHRI); United Technologies Corporation (Carrier), Ingersoll Rand, the California Investor-Owned Utilities (Cal. IOUs), Goodman Manufacturing Company (Goodman), and Lennox International Inc. (Lennox). Interested parties commented on a range of issues, including those DOE identified in the August 2015 NOPR, as well as several other pertinent issues related to DOE's proposal. Commenters also offered thoughts on further opportunities to improve the clarity of the test procedure. These issues, as well as DOE's responses to them and the resulting changes to DOE's proposal, are discussed in the subsequent sections.
In response to the August 2015 NOPR, DOE received input on a variety of test procedure issues, including: (1) sections of ANSI/AHRI 340/360-2007 incorporated by reference; (2) indoor airflow adjustment and reporting; (3) condenser head pressure controls; (4) the unit of measurement for airflow; (5) the tolerance on percent load for IEER part-load tests; (6) the definition of IEER; and (7) additional provisions in the current test procedure. DOE's treatment of these issues is addressed below.
As noted previously, DOE intends to incorporate by reference ANSI/AHRI Standard 340/360-2007, (“AHRI 340/360-2007”), “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” which was approved by ANSI on October 27, 2011, and updated by addendum 1 in December 2010 and addendum 2 in June 2011. This industry standard provides guidance regarding a variety of different elements related to the testing of commercial and industrial unitary air-conditioning and heat pump equipment, including definitions, classifications, as well as testing, rating, data, and operating requirements. (ANSI/AHRI Standard 340/360-2007 is readily available from the Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or go to:
In its August 2015 NOPR, DOE proposed to specify that when testing CUACs and CUHPs for the EER, coefficient of performance (COP), and IEER metrics, only certain sections of ANSI/AHRI 340/360-2007 would be required—specifically, sections 3, 4, and 6 (omitting section 6.3)—rather than applying the entirety of ANSI/AHRI 340/360-2007. DOE also proposed not to incorporate section 5 of that testing standard, and to incorporate by reference ANSI/ASHRAE 37-2009, which was previously incorporated by reference through section 5 of ANSI/AHRI 340/360-2007. 80 FR at 46873.
Responding to this aspect of DOE's proposal, AHRI, Carrier, Ingersoll Rand, Goodman, and Lennox commented that DOE should reference ANSI/AHRI Standard 340/360-2015 after its final version is released. (AHRI, No. 8 at p. 1; Carrier, No. 11 at p. 2; Ingersoll Rand, No. 9 at p. 13; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 2, 6) They commented that this revised testing standard addresses the issues that DOE raised in the NOPR and additional items identified by industry to improve the test procedure. In addition, Lennox noted that EPCA requires DOE to use those test procedures that are generally accepted by industry. (Lennox No. 13 at pp. 2, 6) See also 42 U.S.C. 6314(a)(4)(A) (indicating that the test procedures for commercial package air conditioning and heating equipment shall be those “generally accepted industry testing procedures or rating procedures” developed or recognized by AHRI or ASHRAE “as referenced in ASHRAE/IES Standard 90.1 and in effect on June 30, 1992”). Additionally, AHRI commented that sections 6.5 and 6.6 of the soon-to-be-released version of AHRI 340/360-2015, which address verification testing uncertainty and uncertainty allowances, respectively, should be referenced as well. AHRI commented that doing so will help the user of the standard more fully understand the causes of why measured capacity and efficiency may vary, which, in its view, will be helpful to laboratories performing tests to complete the uncertainty analyses required by ISO 17025.
AHRI agreed with DOE's proposal to incorporate by reference ANSI/ASHRAE 37-2009. (AHRI, No. 8 at p. 2) AHRI noted that ANSI/AHRI 340/360-2015 has updated the reference to ANSI/ASHRAE 37-2009, and that section 5 of ANSI/AHRI 340/360-2015 addresses items related to unit setup and operating conditions that are not currently covered by ANSI/ASHRAE 37-2009.
Carrier commented that ANSI/AHRI 340/360-2015 requires that corrections be made for the impact of atmospheric pressure changes and resulting air density changes. Carrier requested that DOE adopt Appendix D of ANSI/AHRI
AHRI and Carrier commented that DOE uses a confidence level of 95 percent in the sampling requirements given in 10 CFR 429.43, whereas section 6.4 of ANSI/AHRI 340/360-2015 uses a confidence level of 90 percent. (AHRI, No. 8 at p. 2; Carrier No. 11 at p. 2) AHRI and Carrier noted that commercial equipment has as much, if not more, uncertainty and variability in testing than residential equipment, and that 90 percent is an appropriate confidence level.
After reviewing the comments from the August 2015 NOPR, DOE agrees that many of the raised issues are addressed in the draft version of ANSI/AHRI 340/360-2015. However, DOE is still investigating whether certain provisions in the draft ANSI/AHRI 340/360-2015 will change measured efficiency. Furthermore, a final version of the new standard was not available during the preparation of this final rule. For these reasons, DOE declines to adopt ANSI/AHRI 340/360-2015 in whole or in part at this time. In this final rule, DOE amends its test procedure to reference sections 3, 4, and 6 (omitting section 6.3) of ANSI/AHRI 340/360-2007. DOE may, however, consider incorporating the final version of ANSI/AHRI 340/360-2015, or additional provisions within it, in a future test procedure rulemaking, as discussed in section III.C. With respect to ANSI/ASHRAE 37-2009, DOE already incorporates by reference this testing standard in part 431.
In the NOPR, DOE did not make any proposals regarding the confidence level in its certification and enforcement provisions. Accordingly, DOE declines to adopt provisions on this issue without holding further public comment. While DOE is open to considering changes to its confidence level in the future, manufacturers or other parties with access to relevant data should provide data regarding the variability of units in production and testing to enable DOE to facilitate its efforts to make any necessary adjustments in an appropriate future rulemaking proceeding.
In the August 2015 NOPR, DOE proposed that equipment must be tested using the motor and drive assembly and settings specified in the certification report (supplemental testing instruction PDF), and that the external static pressure (ESP) during testing remain within the tolerances set forth in Section 6.1.3.2 of ANSI/AHRI 340/360-2007 with the indoor airflow rate staying within +/−5 percent of the manufacturer-rated full-load indoor airflow rate. DOE proposed that the unit and/or test facility be adjusted to set up the unit such that both the airflow and ESP are within the required tolerances. See 80 FR at 46873 (noting situations in which a test facility's equipment may need adjusting to maintain the proposed tolerances).
ANSI/AHRI 340/360-2007, section 6.1.3.2.e, specifies that the full-load cooling airflow rate (in SCFM) must be employed, irrespective of resulting ESP, for all situations other than full-load cooling in which full-load airflow is used (
In addition, DOE proposed that in cases where a unit is designed to operate with a different indoor airflow rate for cooling and heating modes, manufacturers would report the individual indoor airflow rates in cooling and heating modes. DOE also proposed that a manufacturer must include in its certification report the adjusted indoor airflow at each part-load condition. 80 FR at 46873.
Responding to the NOPR, AHRI and Carrier agreed that the tester must use the same motor and drive kit that was used to determine the certified rating, as specified in the manufacturer's certification information. (AHRI, No. 8 at p. 5; Carrier No. 11 at p. 4) AHRI, Carrier, Goodman, and Lennox agreed that a tolerance for indoor airflow is needed to ensure that it closely approximates the manufacturer's rated full-load indoor airflow rate. (AHRI, No. 8 at p. 5; Carrier No. 11 at p. 4; Goodman, No. 14 at p. 1; Lennox, No. 13 at p. 4) However, these commenters indicated that a 5 percent tolerance would result in too much variation in EER and cooling capacity. The commenters recommended that the airflow should be allowed to vary by +/−3 percent of the rated full-load indoor airflow rate to reduce test uncertainty and to ensure the variations in EER and cooling capacity are at acceptable levels. (AHRI, No. 8 at p. 5; Carrier No. 11 at p. 4; Goodman, No. 14 at p. 1; Lennox, No. 13 at p. 4)
In contrast, AHRI commented that no adjustments should be made to the airflow or the ESP during the heating test after it is set during the cooling test. (AHRI, No. 8 at p. 5). Goodman generally agreed with this view. (Goodman, No. 14 at p. 2) DOE's proposal would require adjustments to the test facility's equipment (but not the tested unit's fan settings) to maintain the full-load airflow rate when switching from the cooling test to the heating test, without regard to the resulting ESP. The method AHRI described is inconsistent with DOE's proposed method, because it would prohibit making adjustments to the ESP when switching from the cooling test to the heating test, whereas the proposal would allow the ESP to change between the cooling and heating tests as long as the full-load airflow rate is maintained. Lennox agreed with DOE's proposed approach to maintain the full-load airflow rate when switching from the cooling test to the heating test by making adjustments to the test facility's equipment—and not to the tested unit's fan settings—without regard to the resulting ESP. Lennox suggested that a +/−3 percent tolerance should apply to the full-load indoor airflow rate during the heating test. (Lennox, No. 13 at p. 5) Carrier also supported making adjustments to the test facility's equipment, but not to the unit's fan settings, to maintain proper airflow. Carrier also commented that the proposed ANSI/AHRI 340/360-2015 includes a requirement to manually adjust fan speed during the heating cycle if the unit is equipped with automatic controls that control the fan speed in heating mode. (Carrier No. 11 at pp. 4-5)
AHRI, Carrier, Goodman, and Lennox agreed with DOE that indoor airflow should be reported in both cooling and heating mode if they are different. (AHRI, No. 8 at p. 6; Carrier, No. 11 at p. 5; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 5) AHRI and Carrier are not aware of any equipment that has a different airflow for heating and cooling but believe that it could be an option in the future.
After reviewing the comments on the NOPR, DOE agrees that a 5-percent tolerance on the rated full-load indoor airflow rate would allow more variation than desired in the EER and cooling capacity. Test results provided by manufacturers regarding the range of potential variation are greater than the estimates DOE initially made, which supported the 5 percent proposal. Based on the additional information provided
In the August 2015 NOPR, DOE proposed to specify that condenser head pressure controls, if included with the unit, must be active during testing. DOE proposed that if a unit with condenser head pressure controls cannot achieve steady-state operation with the controls active, and thus cannot be tested, the manufacturer would have to request a waiver. DOE also requested comment on whether there are any units on the market with condenser head pressure controls that would prevent the unit from achieving steady-state under the test conditions, and if so, how should DOE address these kinds of units for testing purposes. 80 FR at 46873-46874.
In response, AHRI, Carrier, Ingersoll Rand, Goodman, and Lennox agreed with DOE's proposal to keep the head pressure controls active in automatic mode if present. (AHRI, No. 8 at p. 6; Carrier, No. 11 at p. 5; Ingersoll Rand, No. 9 at p. 31; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 5) AHRI, Carrier, Goodman, and Lennox also commented that the current draft of ANSI/AHRI 340/360-2015 clarifies the requirements for running the head pressure control in automatic mode and also provides a new test procedure to determine the rating performance when head pressure control results in unstable operation.
After reviewing the comments, DOE is clarifying the current test procedure to specify that condenser head pressure controls, if included with the unit, must be active during testing, as proposed in the NOPR. As noted previously, AHRI 340/360-2015 is still a draft document, and DOE is not incorporating it by reference in this rule. In addition, DOE declines at this time to adopt a test method like that in AHRI 340/360-2015 regarding rating performance when head pressure control results in unstable operation. DOE will continue to review this industry testing standard and may consider adopting a method to address this issue in the future after a full public comment process.
DOE also proposed that all instances of CFM as a unit of airflow must be interpreted to mean SCFM where they appear in the sections of ANSI/AHRI 340/360-2007, incorporated by reference in 10 CFR part 431, subpart F. 80 FR at 46874.
In response, AHRI, Carrier and Ingersoll Rand agreed with this approach. (AHRI, No. 8 at p. 4; Carrier No. 11 at p. 3; Ingersoll Rand No. 9 at p. 14) Each of these commenters recommended adopting ANSI/AHRI 340/360-2015, which would provide clear instructions to ensure that airflow is measured in SCFM for testing. AHRI noted that this issue is already addressed in ANSI/AHRI 340/360-2007 through the reference to ASHRAE 37-2009, which defines the unit of airflow as standard CFM.
As noted in section III.A.1, DOE declines to reference ANSI/AHRI 340/360-2015 at this time. Further, although section 7.7.2.3 of ASHRAE 37-2009 may be interpreted as an indication that airflow rate is to be expressed in terms of standard air in all test standards that incorporate it by reference, this interpretation may not be sufficiently clear from the relevant text of the current test procedure, which refers to both CFM and SCFM in various locations. Hence, DOE is clarifying the test procedure to indicate that all instances of CFM as a unit of airflow must be interpreted to mean SCFM where they appear in the sections of ANSI/AHRI 340/360-2007 incorporated by reference in 10 CFR part 431, subpart F.
DOE proposed applying a +/−3-percent tolerance to each part-load test point in the IEER calculation, and formally requested comment on the appropriateness of establishing such a tolerance level. See 80 FR at 46878-46879 (request for comment) and 80 FR at 46874 (discussing DOE's +/−3-percent tolerance proposal). Specifically, if the measured load fraction is within 3 percent of the target load fraction, the measured EER would not have to be adjusted using interpolation or application of the degradation factor for cyclic operation.
Responding to this aspect of the proposal, AHRI, Goodman, and Lennox agreed in principle with setting a tolerance on the part-load percent load when the unit cannot run at precisely 75-percent, 50-percent, and 25-percent part-load capacities. The commenters also agreed with DOE's tolerance level of 3 percent. (AHRI, No. 8 at p. 6; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 6)
However, AHRI and Carrier commented that implementing the 3-percent tolerance without also adopting some other provisions of ANSI/AHRI 340/360-2015 would vary IEER results by as much as 5 percent, a magnitude they considered inappropriate. (AHRI, No. 8 at p. 6; Carrier No. 11 at p. 3) AHRI stated that this variation could be reduced significantly by changing the condenser air inlet temperature used for each given part-load point. Specifically, AHRI 340/360-2007 relies on condenser air inlet temperatures as a function of percent load, while AHRI 340/360-2015 specifies condenser air inlet temperatures that are fixed for each rating point percent load. (AHRI, No. 9 at p. 6) The relationship between condenser air inlet temperature and percent load is provided in section 6.2.2 of AHRI 340/360-2007. AHRI stated that adopting the proposed 3-percent tolerance for part-load tests with the current approach would result in an IEER variation of −4.6 percent to +4.8 percent. However, if the condenser air entering temperature is fixed to the target percent load, then IEER variations would be reduced to 1.5 or 1.6 percent. (AHRI, Public Meeting Transcript, No. 15 at p. 33-36) AHRI and Carrier, as well as Goodman and Lennox, proposed that DOE reference ANSI/AHRI 340/360-2015 (section 6.2) which includes the +/− 3-percent load fraction tolerance along with the other revisions to the IEER testing procedures. (AHRI, No. 8 at pp. 6-7; Carrier, No. 11 at p. 3; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 6)
After reviewing the comments on the appropriateness of establishing a 3-percent tolerance on each part-load test point, as proposed in the NOPR, DOE is adopting the 3-percent part-load test point tolerance, and is also adopting the suggestion from several commenters for setting the condenser inlet air temperature for the test, which commenters viewed as being linked to the revised 3-percent tolerance level. DOE is adopting this suggestion in response to stakeholders' comments that a 3-percent tolerance on part-load testing would not be appropriate unless the condenser air entering temperature is fixed at the temperature for the target
DOE has elected to implement the additional change regarding condenser air inlet temperature by noting this difference with respect to AHRI 340/360-2007 within the regulatory language in the CFR rather than incorporating by reference the 2015 version of the standard—DOE's decision not to incorporation AHRI 340/360-2015 by reference is discussed in section III.A.1.
DOE proposed to define IEER (
In response to this proposed definition, AHRI and Carrier agreed that the definition of IEER must be improved and clarified. (AHRI, No. 8 at p. 4; Carrier, No. 11 at pp. 3-4) However, AHRI and Carrier commented that DOE's definition does not account for the operating conditions and rating conditions required to accurately rate IEER. They commented that this is a significant aspect of the IEER metric and it should be mentioned in the definition to avoid any misrepresentation. AHRI and Carrier further commented that the DOE definition also proposes to reference the new DOE appendix A, which does not directly address the requirements for IEER and refers back to AHRI 340/360. AHRI and Carrier suggested as an alternative that DOE use the IEER definition in ANSI/AHRI 340/360-2015. (AHRI, No. 8 at p. 4; Carrier, No. 11 at pp. 3-4)
The draft version of ANSI/AHRI 340/360-2015 section 3.11 defines IEER as “a weighted calculation of mechanical cooling EERs at full-load and part-load Standard Rating Conditions, defined in Section 6.2, expressed in Btu/Wh.”
Ingersoll Rand suggested a different definition for IEER: “Integrated energy efficiency ratio, or IEER, means the cooling energy efficiency descriptor for packaged air-conditioning and heating equipment (air-cooled with a rated cooling capacity ≥65,000 Btu/h), determined as a single number part-load efficiency based on weighting of EER at various load capacities, as measured in appendix A to subpart F of part 431, expressed in Btu/watt-hour.” (Ingersoll Rand, No. 9 at p. 2) Ingersoll Rand made this suggestion to clarify that: (1) IEER is the only cooling efficiency descriptor for CUAC and CUHP and (2) IEER is specific to CUAC and CUHP and does not apply to other commercial package air-conditioning and heating equipment. (
DOE agrees that the rating conditions for IEER could be acknowledged in the definition. However, DOE declines to reference AHRI 340/360 directly, as all representations of IEER must be made based on DOE's test procedure, which contains additional provisions beyond those in the referenced industry standard. Therefore, DOE is adopting a modified definition for IEER that references rating conditions rather than load capacities, but still specifies that measurements be made in accordance with appendix A. DOE also declines to include equipment references at this time. In the future, DOE may adopt energy conservation standards based on IEER for equipment other than CUAC and CUHP. Hence, DOE declines to specify or otherwise limit what equipment uses this metric. DOE addresses Ingersoll Rand's concern regarding the efficiency descriptor in section III.D.
DOE does agree that the IEER is intended to measure cooling provided by the refrigeration system,
For these reasons, DOE is adopting the following definition for IEER:
Integrated energy efficiency ratio, or IEER, means a weighted average calculation of mechanical cooling EERs determined for four load levels and corresponding rating conditions, as measured in appendix A to subpart F of part 431, expressed in Btu/watt-hour.
Current DOE regulations include provisions for refrigerant charging and airflow rate relevant to multiple equipment categories, including CUACs and CUHPs. (10 CFR 431.96(e)) DOE proposed adding these provisions to the proposed appendix A, section (5) for CUACs and CUHPs, while maintaining the original provision in 431.96(e) for the other relevant equipment categories. 80 FR at 46881. These provisions require that if a manufacturer specifies a range (rather than a specific rating value) of superheat, sub-cooling, and/or refrigerant charge pressure in its installation and operation manual, any value within that range may be used to determine refrigerant charge or mass of refrigerant.
In response to the NOPR, Goodman stated that manufacturers typically specify a broader range of superheat or subcooling for field charging than would be accepted in the laboratory (because field measurement equipment is not as accurate as laboratory measurement equipment). Goodman further added that the AHRI certification program has a policy of adjusting charge to the middle of the range, which makes the test more accurate. (Goodman, No. 14 at p. 3)
DOE notes that the refrigerant charge, superheat, and subcooling values are interrelated such that DOE does not believe Goodman's suggestion of hitting the midpoint of all of the ranges can be achieved in all cases. Consequently, DOE is not requiring that the test be performed at the midpoint of each of the ranges. Instead, DOE is clarifying that test labs should only be adjusting charge
In regards to airflow, DOE currently requires that the airflow rate used for testing must be in the installation and operations manual shipped with the basic model and clearly identified as the value used to generate DOE performance ratings; otherwise, a value of 400 SCFM per ton is used. See 10 CFR 431.96(e). Responding to DOE's proposal to include this set of requirements as part of appendix A, Goodman noted that manufacturers who certify through AHRI have the full-load cooling capacity shown in the AHRI Directory of Certified Product Performance, and that the value in that directory should be used as opposed to using 400 SCFM per ton. (Goodman, No. 14 at p. 3)
DOE notes that for commercial package air conditioning and heating equipment, manufacturers are currently required to certify rated airflow in SCFM for each fan coil. See 10 CFR 429.43(b)(4)(i)-(ii) (specifying certification report contents for commercial package air conditioning and heating equipment). As noted earlier, DOE is clarifying this requirement as described in section III.A.2. DOE expects the certified airflow values to be consistent with those in the installation manual and reported to AHRI, because the airflow used in tests (whether for certifying performance to DOE or as used by AHRI) should be the same airflow that installers would use when setting up the unit based on the installation instructions. However, in the event a manufacturer fails to report airflow to DOE, the specified value of 400 SCFM per ton prescribed by 10 CFR 431.96(e) will continue to apply.
In addition to addressing various aspects related to the testing of CUACs and CUHPs, DOE also proposed various certification and enforcement-related provisions with respect to this equipment. Additionally, DOE proposed including provisions related to the reporting of IEER values for certification and compliance purposes once the compliance dates for the standards recommended by the Working Group are reached. These issues are addressed in the following sections.
DOE proposed that the cooling capacity represented and subsequently certified to DOE for a given basic model must be the average of the capacities measured for the sample of units tested to certify that basic model, rounded according to the multiples in Table 4 in ANSI/AHRI 340/360-2007. DOE also proposed that when conducting assessment and enforcement testing, it would measure the total cooling capacity pursuant to the test requirements of 10 CFR 431.96 for each unit tested, and the results of the measurement(s) would be compared to the value of cooling capacity certified by the manufacturer. The manufacturer-certified cooling capacity will be considered valid if the cooling capacity determined through DOE testing is within 5 percent of the certified cooling capacity. (80 FR at 46874)
With respect to the certification requirements, Lennox disagreed with DOE's proposal to require that the certified cooling capacity be the average of the capacities measured for the sample of units tested. (Lennox, No. 13 at p. 3) Lennox stated that conservative capacity ratings subject equipment to more stringent efficiency standards. Lennox further commented that if forced to reclassify equipment into higher-capacity classes, manufacturers could face unduly burdensome administrative and procedural obligations without any benefit to energy efficiency. Lennox also stated that if conservatively-rated equipment is categorized into a larger equipment class, it can change the test conditions (
Ingersoll Rand commented that, while DOE's certification regulations typically require manufacturers to report capacity, DOE does not specify that manufacturers determine capacity through testing specified by DOE, and that DOE has not found that capacity is a measure of energy consumption as defined by EPCA at 42 U.S.C. 6291(8). (Ingersoll Rand, No. 9 at p. 13) Ingersoll Rand also noted that DOE had not demonstrated why such a proposal is necessary. (
With respect to the enforcement testing provisions, AHRI, Ingersoll Rand, and Goodman commented that a tolerance of 5 percent should not be applied to capacity because there are many factors that can affect measured capacity and performance, including variance in airflow, refrigerant charge levels, ambient conditions, test labs, and test setup. (AHRI, No. 8 at p. 3; Ingersoll Rand, No. 9 at p. 14; Goodman, No. 14 at p. 3) Goodman commented that a 5-percent tolerance is too low because, due to a number of variables, the true uncertainty of the test is probably at least 8 percent. (Goodman, No. 14 at p. 3)
AHRI commented that in the event that a verification test for its certification program shows that the cooling capacity is less than 95 percent of its rated value, the manufacturer fails the test and is then subject to stiff penalties, which are, in its view, strong incentives to discourage manufacturers from over-rating cooling capacity and energy efficiency. AHRI recommended that DOE base the equipment classification on the rated capacity only. However, in the event that DOE feels compelled to move forward with its proposal, AHRI requested that the proposed requirement apply only when the tested cooling capacity is less than 95 percent of the certified value, and not when the tested cooling capacity is greater than 105 percent of the certified value. (AHRI, No. 7 at p. 3) Carrier agreed that any tolerance should be a one-sided tolerance, allowing manufacturers to choose to rate products conservatively. (Carrier, No. 11 at p.3)
Trane commented that, in common practice, a tolerance on capacity becomes an issue at 240,000 Btu/h, which is a break between equipment classes as well as a nominal equipment tonnage. However, manufacturers do not always hit this design point, which puts them on one side or the other of the equipment class dividing line. For this reason, they tend to rate conservatively to avoid risk. (Trane, NOPR public meeting transcript, No. 15 at pp. 54-55) Carrier added that the need to conservatively rate will increase with the change in refrigerants, and that the current AHRI statistics show that they exceed 105 percent on many tests. (Carrier, NOPR public meeting transcript, No. 15 at pp. 55-56)
DOE notes that the August 2015 NOPR proposed to add a provision that the represented value of cooling capacity must be the average of the
While DOE acknowledges that multiple factors may affect the measurement of cooling capacity, DOE maintains that capacity-related provisions are necessary to ensure the reliability and consistency of the reported ratings because, as commenters pointed out, DOE expects there to be variation in the capacity measurement from different units being tested at different laboratories. Consequently, DOE is modifying its proposal for determining represented cooling capacity based on the comments received to allow for conservative rating declared according to the multiples in Table 4 in ANSI/AHRI 340/360-2007 but is not less than 95% of the mean values of the two or more units in the sample for certification testing or the output from the AEDM. DOE believes this is consistent with that currently used in the industry, including the certified ratings program approach developed by AHRI. In the industry program, this tolerance serves as the basis for penalizing manufacturers if the tested cooling capacity is lower than 95% of the rated cooling capacity of that equipment. This tolerance will help to ensure that equipment is capable of performing at the cooling capacity for which it is represented to consumers. At this time, DOE is declining to adopt specific capacity-related enforcement provisions and will evaluate compliance with standards based on the testing results from the enforcement sample. DOE believes it is important that products comply with the applicable standards based on actual tested performance rather than based on a manufacturer self-declaration.
In the August 2015 NOPR, DOE indicated that its proposal would be unlikely to alter the measured efficiency of CUACs and CUHPs. DOE proposed to require the reporting of IEER and indoor part-load airflow rates used in the IEER calculation when certifying compliance with the 2018 or 2023 standards. DOE also proposed to apply a +/−3-percent tolerance to each part-load test point for manufacturers to use when developing the IEER ratings for a given basic model. This clarification would be required when testing to determine EER for part-load rating points. See 80 FR at 46879-82.
DOE stated that its proposed amendments that were not specifically related to IEER would clarify how to test a given unit. The proposals, if adopted, would result in no procedural changes related to how testing would be performed. The proposed amendments, if adopted, would become effective 30 days after publication of the final rule in the
Ingersoll Rand disagreed with DOE's assertion that the proposed clarifications and amendments would not result in any changes to the energy efficiency of current equipment. While Ingersoll Rand agreed that the proposed changes would likely not affect the measure of EER for air-cooled commercial package air conditioning equipment, the proposed changes would add the IEER metric, which, in Ingersoll Rand's view, is a significant change to the measure of energy efficiency of current equipment. Ingersoll Rand commented that the proposed amendments to the test procedures will change the measure of energy itself, and, as DOE's proposal would require re-rating units within 360 days of publication of the final rule, that this would be a “change in the representations of the energy efficiency of current equipment.” (Ingersoll Rand, No. 9 at p. 12)
Ingersoll Rand also noted that while many manufacturers, including itself, already include an IEER rating in the AHRI
For these reasons, Ingersoll Rand recommended that the effective date of compliance with the test procedure amendments with respect to testing, representations, and reporting of IEER be made to coincide with the effective date of the amended standard setting the initial IEER standard. (Ingersoll Rand, No. 9 at p. 12)
DOE has carefully considered Ingersoll Rand's comments. DOE is adopting its proposal that reporting of IEER and indoor part-load airflow rates used in the IEER calculation will be required when certifying compliance with any amended standards and finds that this approach is consistent with Ingersoll Rand's comments. However, DOE also maintains that, consistent with 42 U.S.C. 6314(d), any representations of energy consumption or efficiency of CUACs and CUHPs must be based on any final amended test procedures 360 days after the publication of the test procedure final rule. See 80 FR at 46874-46875.
Furthermore, with respect to Ingersoll Rand's claim that significant additional testing will be required to meet the sampling requirements, based on manufacturer compliance certifications, most CUAC and CUHP manufacturers use alternative efficiency determination methods (“AEDMs”) to rate the majority of their equipment for EER. Ingersoll Rand states that manufacturers have been testing for IEER and have single tests of a wide variety of basic models, so manufacturers already have sufficient test data to develop and support an AEDM, even if they have not yet developed AEDMs to simulate IEER. Therefore, even if a manufacturer is not currently making representations in accordance with the DOE test procedure (as it is already required to do), DOE believes a 360-day compliance period provides sufficient time for such a manufacturer to do so, particularly if the manufacturer already has a collection of existing test data for its equipment.
Finally, DOE disagrees that the information collection approved by the Office of Management and Budget requires modification as a result of this rule. This rule does not change the test burden or record retention requirements that are reflected in the existing approval. Furthermore, although the metric reported to DOE will change from EER to IEER, there will be no increase in burden. DOE will revise its certification information collection to reflect the metric change prior to the reporting change in 2018.
The California IOUs encouraged DOE to initiate a more expansive test procedure rulemaking before January 1, 2016, as recommended by the ASRAC Working Group. (California IOUs, No. 10 at p. 1) The California IOUs commented that a new, more representative, metric is needed.
The California IOUs also suggested that DOE research the impact of fan energy on equipment ratings, specifically the external static pressure settings for equipment and whether it reflects field conditions. (California IOUs, No. 10 at p. 2) The IOUs further noted that the IEER test procedure proposed for inclusion by DOE in its regulations specified ESP ratings that are unrealistically low in the four test points, which results in measured fan energy consumption during testing conditions being lower than that found in actual operating conditions, which artificially inflates the IEER ratings. The California IOUs also encouraged DOE to create a test procedure that accounts for economizer energy consumption, as this aspect is omitted in the current proposed test procedure. See id.
The California IOUs suggested further that DOE should investigate the impact of requiring an additional higher temperature test point rating, such as 105 °F or 115 °F, to better reflect operating conditions experienced in hotter climates. (California IOUs, No. 10 at p. 2) The California IOUs noted that the current efficiency rating measures equipment at a maximum outside dry bulb air temperature of 95 °F. In their collective view, while this value is appropriate for much of the United States, it does not reflect peak values often experienced in parts of the desert southwest.
DOE notes that the Working Group recommended that a rulemaking to amend the test procedure shall be initiated no later than January 1, 2016, with the final rule issued no later than January 1, 2019. That rulemaking, based on the Working Group's recommendation, would be to focus on better representing the total fan energy use by considering (a) alternative external static pressures and (b) operation for other than mechanical cooling and heating. EERE-2013-BT-STD-0007-0093, ASRAC Working Group Term Sheet (recommending a series of actions for DOE to take with respect to CUAC and CUHP standards and testing). DOE plans to initiate an additional test procedure rulemaking focused on revising the IEER metric consistent with this recommendation. DOE may consider additional test procedure revisions at that time.
Ingersoll Rand asserted that the proposed IEER definition and the test procedure table (Table 1 to 10 CFR 431.96) are inconsistent with the terms of the ASRAC Working Group Term Sheet because they add IEER as a cooling metric but keep EER. Ingersoll Rand stated that the Working Group agreed that, subsequent to the effective date of the January 2018 energy conservation standard, IEER would be the sole DOE measure of cooling efficiency required to be reported to DOE. (Ingersoll Rand, No. 9 at pp. 1-2)
Ingersoll Rand added that it believed that DOE proposed amending 10 CFR 431.96 in order to make it easier for the user to follow, but without consideration of the Working Group recommendation to initiate a rulemaking to amend the test procedure for small, large, and very large air-cooled commercial package air conditioning and heating equipment. In its view, Table 1 to 10 CFR 431.96 could be confusing to the user if it included a distinction between the different measures of energy consumption and the two different test procedures before and after the expected effective date of the IEER standards. Ingersoll Rand commented that it would be clearer and simpler for DOE to return to the earlier format of section 431.96 and add the test procedure and energy descriptor updates in separate tables with their effective dates. It offered alternative tables for DOE to consider. (Ingersoll Rand, No. 9 at pp. 3-8)
DOE notes that that the primary purpose of the test procedure tables in 10 CFR 431.96 is to describe the test procedure relevant to each equipment category. The metrics required to be reported to DOE can be found in 10 CFR 429.43. As proposed (and amended by this rule), 10 CFR 429.43 will not require EER to be reported to DOE when certifying compliance with any IEER standards. However, consistent with DOE's incorporation of AHRI 340/360-2007, the test procedure itself will still include EER, which manufacturers are required to use when making EER-based representations when they choose to do so, independent of their representations required under DOE's compliance requirements.
Ingersoll Rand also criticized DOE's proposed reference to the “January 1, 2018 and January 1, 2023 standards” that would be added to 10 CFR 429.43(b)(2)(i)(B), as being vague, particularly in light of the changes made to the standards table in 10 CFR 431.97(b) by the July 17, 2015 final rule regarding energy conservation standards for small three-phase commercial air-cooled air conditioners. 80 FR 42614. Ingersoll Rand suggested that DOE consider the format of 10 CFR 429.43(b)(2)(i) and 10 CFR 431.97 that will result from both the test procedure and energy conservation standards rulemakings in completing this test procedure rulemaking, rather than waiting for the standards rulemaking. Ingersoll Rand suggested wording for 10 CFR 429.43(b)(2)(i) and recommended that DOE insert two new tables (as Tables 4 and 5) that would accommodate the 2018 and 2023 standards and would be reserved until DOE completes the energy conservation standards rulemakings. (Ingersoll Rand, No. 9 at pp. 9-10)
Ingersoll Rand also disagreed with the proposed language in § 429.43(b)(4) that lists certification report requirements (including the rated airflow for part-load operation which is needed for testing to measure IEER), and which refers to the “January 1, 2018 or the January 1, 2023 energy conservation standards.” Ingersoll Rand indicated that such references are vague and could lead to misinterpretations regarding DOE's regulations, recommending instead that DOE refer in these sections specifically to the appropriate standards listed in specific tables of § 431.97. (Ingersoll Rand, No. 9 at p. 12)
DOE acknowledges the potential for misinterpretation. Therefore, DOE has revised the language in § 429.43 to refer to compliance with EER standards or IEER standards rather than making a reference to future 2018 or 2023 standards that have not been finalized.
The Office of Management and Budget (OMB) has determined that test procedure rulemakings do not constitute “significant regulatory actions” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993). Accordingly, this action was not subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB).
The Regulatory Flexibility Act (5 U.S.C. 601
DOE reviewed this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. This final rule prescribes clarifications to DOE's already-existing test procedures that will be used to test compliance with energy conservation standards for the equipment that are the subject of this rulemaking. DOE has concluded that the final rule would not have a significant impact on a substantial number of small entities.
For manufacturers of small, large, and very large air-cooled CUAC and CUHP, the Small Business Administration (SBA) has set a size threshold, which defines those entities classified as “small businesses” for the purposes of the statute. DOE used the SBA's small business size standards to determine whether any small entities would be subject to the requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The size standards are listed by North American Industry Classification System (NAICS) code and industry description and are available at
The first small company specialized in manufacturing double-duct CUAC/CUHP products, which would not subject to the amended IEER standards recommended by the Working Group formed to negotiate the CUAC/CUHP standards.
DOE expects the impact of the final rule on manufacturers, including small businesses, to be minimal. The final rule amends DOE's certification requirements to specify additional reporting requirements and add enforcement provisions for verifying cooling capacity. The final rule also clarifies or amends DOE's test procedures to amend ANSI/AHRI 340/
The amended energy conservation standards for CUAC/CUHP recommended by the Working Group would be based on IEER rather than EER. DOE expects the impact on test burden to be modest. AHRI ratings already include IEER, indicating that many manufacturers, representing a large portion of the market, already determine IEER for their units. ANSI/ASHRAE/IES Standard 90.1-2013, “Energy Standard for Buildings Except Low-Rise Residential Buildings” (ASHRAE 90.1-2013), has adopted an IEER requirement, which makes reporting of IEER necessary for shipment to those states and localities that will adopt that standard in building codes. Current procedures relating to alternative efficiency determination methods (AEDMs), including procedures for certifying IEER, require a limited amount of testing to be conducted when validating an AEDM for CUACs and CUHPs. 10 CFR 429.70(c)(2)(iv) (detailing the minimum number of distinct basic models required to be test for purposes of AEDM validation for different equipment types and classes). DOE expects that most CUAC and CUHP ratings will be based on results obtained from AEDMs. Although DOE recognizes that some ratings will be based on testing, DOE expects these ratings to comprise a small minority of products.
For these reasons, DOE certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE will transmit the certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the SBA for review under 5 U.S.C. 605(b).
Manufacturers of CUACs and CUHPs must certify to DOE that their equipment comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their equipment according to the DOE test procedures for CUACs and CUHPs, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including CUACs and CUHPs. 10 CFR part 429, subpart B. The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA).
In the Certification of Commercial Equipment Final Rule published in May 2014, DOE amended existing regulations governing compliance certification for a variety of commercial equipment covered by EPCA, which affected CUAC and CUHP manufacturers. 79 FR 25486, 25502 (May 5, 2014). DOE amends its certification requirements to specify additional reporting requirements. DOE does not believe that these additions to the certification requirements constitute a significant additional burden upon respondents, as they require minimal additional information over what manufacturers must already report in their certification reports. DOE believes that the Certification of Commercial Equipment Final Rule provides an accurate estimate of the existing burden on respondents and would continue to apply to the relevant aspects of the proposed amendments. 79 FR 25496-25498 (detailing burden estimates and indicating an average burden of approximately 30 hours per company on an annual basis). OMB has approved the revised information collection for DOE's certification and recordkeeping requirements. 80 FR 5099 (January 30, 2015).
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.
In this final rule, DOE amends its test procedure for CUACs and CUHPs. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE examined this final rule and determined that it 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. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the equipment that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further action is required by Executive Order 13132.
Regarding the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. 2 U.S.C. 1531 For a regulatory action resulting in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820; also available at
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule will not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), that this regulation will not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.
Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use if the regulation is implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.
This regulatory action is not a significant regulatory action under Executive Order 12866. Moreover, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.
Under section 301 of the Department of Energy Organization Act, 42 U.S.C. 7101, DOE must comply with section 32 of the Federal Energy Administration Act of 1974, as amended by the Federal Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) Section 32 essentially provides in relevant part that, where a proposed rule authorizes or requires use of commercial standards, the notice of proposed rulemaking must inform the public of the use and background of such standards. In addition, section 32(c) requires DOE to consult with the Attorney General and the Chairman of the Federal Trade Commission (FTC) concerning the impact of the commercial or industry standards on competition.
While this final rule does not require use of any commercial standards not already incorporated by reference for the relevant section of the code of federal regulations, DOE consulted with both DOJ and FTC and received no comments.
In this final rule, DOE is incorporating by reference ANSI/AHRI Standard 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment” (including Addenda 1 and 2) into part 429 and appendix A to subpart F of part 431. This testing standard details various provisions regarding the testing and calculation of results for the equipment addressed by this rulemaking. The adoption of these provisions are necessary to ensure consistent and repeatable test results. Copies of this testing standard are readily available from the Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or through its Web site at
DOE is also incorporating by reference ANSI/ASHRAE Standard 37-2009, “Methods of Testing for Rating Electrically Driven Unitary Air-Conditioning and Heat Pump Equipment” into appendix A to subpart F of part 431. This testing standard details test methods for the equipment addressed by this rulemaking. The adoption of these provisions are necessary to ensure consistent and repeatable test results. Copies of this testing standard are readily available from the American Society of Heating, Refrigerating, and Air-Conditioning Engineers, 1791 Tullie Circle NE., Atlanta, GA 30329, (800) 527-4723, or through its Web site at
As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule before its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).
The Secretary of Energy has approved publication of this final rule.
Commercial equipment, Confidential business information, Energy conservation, Imports, Incorporation by reference, Reporting and recordkeeping requirements.
Administrative practice and procedure, Commercial equipment, Confidential business information, Energy conservation, Imports, Incorporation by reference, Intergovernmental relations, Small businesses.
For the reasons stated in the preamble, DOE amends parts 429 and 431 of chapter II, subchapter D, of title 10 the Code of Federal Regulations as set forth below:
42 U.S.C. 6291-6317.
(c)
(1) ANSI/AHRI Standard 340/360-2007, (“AHRI-340/360-2007”), 2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment, with Addenda 1 and 2, ANSI approved October 27, 2011, IBR approved for § 429.43.
(2) [Reserved]
(a) * * *
(1) * * *
(iv) For air-cooled commercial package air-conditioning and heating equipment, the represented value of cooling capacity must be a self-declared value corresponding to the nearest appropriate Btu/h multiple according to Table 4 of ANSI/AHRI 340/360-2007 (incorporated by reference; see § 429.4) that is no less than 95 percent of the mean of the capacities measured for the units in the sample selected as described in paragraph (a)(1)(ii) of this section.
(2)
(A) Any represented value of energy consumption or other measure of energy use of a basic model for which consumers would favor lower values shall be greater than or equal to the output of the AEDM and less than or equal to the Federal standard for that basic model; and
(B) Any represented value of energy efficiency or other measure of energy consumption of a basic model for which consumers would favor higher values shall be less than or equal to the output of the AEDM and greater than or equal to the Federal standard for that basic model.
(ii) For air-cooled commercial package air-conditioning and heating equipment, the represented value of cooling capacity must be the cooling capacity output simulated by the AEDM as described in paragraph (a)(2) of this section.
(b) * * *
(2) * * *
(i) Commercial package air-conditioning equipment (except commercial package air conditioning equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h):
(A) When certifying compliance with an EER standard: the energy efficiency ratio (EER in British thermal units per Watt-hour (Btu/Wh)), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (
(B) When certifying compliance with an IEER standard: the integrated energy efficiency ratio (IEER in British thermal units per Watt-hour (Btu/Wh)), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (
(ii) Commercial package heating equipment (except commercial package heating equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h):
(A) When certifying compliance with an EER standard: the energy efficiency ratio (EER in British thermal units per Watt-hour (Btu/Wh)), the coefficient of performance (COP), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (
(B) When certifying compliance an IEER standard: the integrated energy efficiency ratio (IEER in British thermal units per Watt-hour (Btu/Wh)), the coefficient of performance (COP), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (
(4) * * *
(i) Commercial package air-conditioning equipment (except commercial package air conditioning equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h): rated indoor airflow in standard cubic feet per minute (SCFM) for each fan coil; water flow rate in gallons per minute (gpm) for water-cooled units only; rated external static pressure in inches of water; frequency or control set
(ii) Commercial package heating equipment (except commercial package heating equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h): The rated heating capacity in British thermal units per hour (Btu/h); rated indoor airflow in standard cubic feet per minute (SCFM) for each fan coil (in cooling mode); rated airflow in SCFM for each fan coil in heating mode if the unit is designed to operate with different airflow rates for cooling and heating mode; water flow rate in gallons per minute (gpm) for water cooled units only; rated external static pressure in inches of water; frequency or control set points for variable speed components (
(g)
42 U.S.C. 6291-6317.
(b) * * *
(1) Determine the energy efficiency of each type of covered equipment by conducting the test procedure(s) listed in Table 1 of this section along with any additional testing provisions set forth in paragraphs (c) through (g) of this section and appendix A to this subpart, that apply to the energy efficiency descriptor for that equipment, category, and cooling capacity. The omitted sections of the test procedures listed in Table 1 of this section must not be used.
(c)
Note: Prior to December 19, 2016, representations with respect to the energy use or efficiency of air-cooled small, large, and very large commercial package air conditioning and heating equipment, including compliance certifications, must be based on testing conducted in accordance with either Table 1 to § 431.96 as it now appears or Table 1 to § 431.96 as it appeared in subpart F of this part, in the 10 CFR parts 200 through 499 edition revised as of January 1, 2015. After December 19, 2016, representations with respect to energy use or efficiency of air-cooled small, large, and very large commercial package air conditioning and heating equipment, including compliance certifications, must be based on testing conducted in accordance with Table 1 to § 431.96 as it now appears.
(1)
(2)
(3)
(4)
(5)
(i) If a manufacturer specifies a range of superheat, sub-cooling, and/or refrigerant pressure in its installation and operation manual for a given basic model, any value(s) within that range may be used to determine refrigerant charge or mass of refrigerant, unless the manufacturer clearly specifies a rating value in its installation and operation manual, in which case the specified rating value shall be used.
(ii) The airflow rate used for testing must be that set forth in the installation and operation manuals being shipped to the customer with the basic model and clearly identified as that used to generate the DOE performance ratings. If a certified airflow value for testing is not clearly identified, a value of 400 standard cubic feet per minute (scfm) per ton shall be used.
(6)
(ii) When testing other than full-capacity cooling operation using the full-load indoor airflow rate (
(7)
(8)
(9)
(10)
Board of Governors of the Federal Reserve System.
Final rule.
The Board of Governors of the Federal Reserve System (“Board”) has adopted final amendments to its Regulation A to reflect the Board's approval of an increase in the rate for primary credit at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased by formula as a result of the Board's primary credit rate action.
The amendments to part 201 (Regulation A) are effective December 23, 2015. The rate changes for primary and secondary credit were applicable on December 17, 2015, as specified in 12 CFR 201.51, as amended.
Stephanie Martin, Associate General Counsel (202/452-3198), or Clinton N. Chen, Attorney (202-452-3952), Legal Division, or Lyle Kumasaka, Senior Financial Analyst (202-452-2382); for users of Telecommunications Device for the Deaf (TDD) only, contact 202-263-4869; Board of Governors of the Federal Reserve System, 20th and C Streets NW., Washington, DC 20551.
The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to the review and determination of the Board.
The Board approved requests by the Reserve Banks to increase by
The
Information received since the Federal Open Market Committee met in October suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. A range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; some survey-based measures of longer-term inflation expectations have edged down.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen. Overall, taking into account domestic and international developments, the Committee sees the risks to the outlook for both economic activity and the labor market as balanced. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.
The notice, public comment, and delayed effective date requirements of 5 U.S.C. 553 is inapplicable “to the extent that there is involved . . . a matter relating to agency management or personnel or to public property,
Furthermore, the Board has determined that delaying implementation of the changes in the primary and secondary credit rates in order to allow notice and public comment would be unnecessary and contrary to the public interest. Therefore, the Board has found good cause to not follow the provisions of 5 U.S.C. 553(b) relating to notice and public participation. The Board's revisions to these rates were taken with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country. Notice and public participation would prevent the Board's action from being effective as promptly as necessary in the public interest. Seeking notice and comment on the rate changes would not aid the persons affected and would otherwise serve no useful purpose. For these same reasons, the Board also has found good cause not to provide 30 days prior notice of the effective date of the rule under 5 U.S.C. 553(d).
The Regulatory Flexibility Act (“RFA”) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.
In accordance with the Paperwork Reduction Act (“PRA”) of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA.
Banks, Banking, Federal Reserve System, Reporting and recordkeeping.
For the reasons set forth in the preamble, the Board is amending 12 CFR Chapter II as follows:
12 U.S.C. 248(i)-(j), 343
(a)
(b)
Bureau of Consumer Financial Protection.
Final rule; official commentary.
The Bureau of Consumer Financial Protection (Bureau) is issuing a final rule amending the official commentary that interprets the requirements of the Bureau's Regulation C (Home Mortgage Disclosure) to reflect the asset-size exemption threshold for banks, savings associations, and credit unions based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The exemption threshold will remain at $44 million. This amendment is based on the 0.4 percent decrease in the average of the CPI-W for the 12-month period ending in November 2015. Therefore, banks, savings associations, and credit unions with assets of $44 million or less as of December 31, 2015, are exempt from collecting data in 2016.
This final rule is effective January 1, 2016.
James Wylie or Jaclyn Maier, Counsels, Office of Regulations, at (202) 435-7700.
The Home Mortgage Disclosure Act of 1975 (HMDA) (12 U.S.C. 2801-2810) requires most mortgage lenders located in metropolitan areas to collect data about their housing-related lending activity. Annually, lenders must report that data to the appropriate Federal agencies and make the data available to the public. The Bureau's Regulation C (12 CFR part 1003) implements HMDA.
Prior to 1997, HMDA exempted certain depository institutions as defined in HMDA (
The definition of “financial institution” in Regulation C provides that the Bureau will adjust the asset threshold based on the year-to-year change in the average of the CPI-W, not seasonally adjusted, for each 12-month period ending in November, rounded to the nearest million. 12 CFR 1003.2. For 2015, the threshold was $44 million. During the 12-month period ending in November 2015, the average of the CPI-W decreased by 0.4 percent. This results in a change of zero when rounded to the nearest million. Thus, the exemption threshold will remain at $44 million. Therefore, banks, savings associations, and credit unions with assets of $44 million or less as of December 31, 2015, are exempt from collecting data in 2016. An institution's exemption from collecting data in 2016 does not affect its responsibility to report data it was required to collect in 2015.
Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, comment 1003.2 (Financial institution)-2 in Regulation C, supplement I is amended to update the exemption threshold. The amendment in this final rule is technical and non-discretionary, and it merely applies the formula established by Regulation C for determining any adjustments to the exemption threshold. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form.
Section 553(d) of the APA generally requires publication of a final rule not less than 30 days before its effective date, except for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the amendments fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 1, 2016. The amendment in this final rule is technical and non-discretionary, and it applies the method previously established in the agency's regulations for determining adjustments to the threshold.
Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.
Banking, Banks, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations.
For the reasons set forth in the preamble, the Bureau amends Regulation C, 12 CFR part 1003, as set forth below:
12 U.S.C. 2803, 2804, 2805, 5512, 5581.
2.
Bureau of Consumer Financial Protection.
Final rule; official interpretation.
The Bureau is amending the official commentary that interprets the requirements of the Bureau's Regulation Z (Truth in Lending) to reflect a change in the asset size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November. The exemption threshold is adjusted to decrease to $2.052 billion from $2.060 billion. The adjustment is based on the 0.4 percent decrease in the average of the CPI-W for the 12-month period ending in November 2015. Therefore, creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of December 31, 2015, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2016. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1 of 2017. The adjustment to the escrows exemption asset-size threshold will also decrease a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified mortgages that satisfy all applicable criteria, including being made by creditors that have (together with certain affiliates) total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages.
This final rule is effective January 1, 2016.
James Wylie or Jaclyn Maier, Counsels, Office of Regulations, at (202) 435-7700.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA section 129D(a) to contain a general requirement that an escrow account be established by a creditor to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. TILA section 129(D) also generally permits an exemption from the higher-priced mortgage loan escrow requirement for a creditor that meets certain requirements, including any asset-size threshold the Bureau may establish.
In the 2013 Escrows Final Rule,
During the 12-month period ending in November 2015, the average of theCPI-W decreased by 0.4 percent. As a result, the exemption threshold is decreased to $2.052 billion for 2016. Thus, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 are less than $2.052 billion on December 31, 2015, and it meets the other requirements of § 1026.35(b)(2)(iii) it will be exempt in 2016 from the escrow-accounts requirement for higher-priced mortgage loans and will also be exempt from the escrow-accounts requirement for higher-priced mortgage loans for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. The
Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, comment 35(b)(2)(iii)-1 in Regulation Z is amended to update the exemption threshold. The amendment in this final rule is technical, and merely applies the formula previously established in Regulation Z for determining any adjustments to the exemption threshold. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form.
Section 553(d) of the APA generally requires publication of a final rule not less than 30 days before its effective date, except for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the amendments fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 1, 2016. The amendment in this rule is technical, and applies the method previously established in the agency's regulations for automatic adjustments to the threshold.
Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.
Advertising, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.
For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below:
12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601
1. * * *
iii. * * *
E. Under § 1026.35(b)(2)(iii)(C), the $2,000,000,000 asset threshold adjusts automatically each year based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million dollars. The Bureau will publish notice of the asset threshold each year by amending this comment. For calendar year 2016, the asset threshold is $2,052,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 has total assets of less than $2,052,000,000 on December 31, 2015, satisfies this criterion for purposes of any loan consummated in 2016 and for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. For historical purposes:
Federal Housing Finance Agency.
Final rule.
This final rule establishes requirements and procedures for the Federal Housing Finance Agency's (FHFA) Suspended Counterparty Program. Under the Suspended Counterparty Program, FHFA may issue suspension orders directing the regulated entities (Fannie Mae, Freddie Mac, and the eleven Federal Home Loan Banks (Banks)) to cease doing business with an individual or institution, and any affiliate thereof, for a specified period of time where such party has committed fraud or other financial misconduct involving a mortgage transaction.
The final rule revises the interim final rule published on October 23, 2013. The final rule excludes from the types of covered transactions that would be subject to a final suspension order any transaction involving a residential mortgage loan if the loan is secured by the respondent's own personal or
The final rule is effective January 22, 2016.
Kevin Sheehan, Associate General Counsel, at (202) 649-3086 (not a toll-free number), Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20219. The telephone number for the Hearing Impaired is (800) 877-8339 (TDD only).
The Suspended Counterparty Program requires a regulated entity to submit a report to FHFA if it becomes aware that an individual or institution with which it does business has been found within the past three years to have committed fraud or other financial misconduct involving a mortgage transaction. FHFA may issue proposed and final suspension orders based on the reports it has received from the regulated entities or based on other information. FHFA offers the affected individual or institution and the regulated entities an opportunity to respond to any proposed suspension order. FHFA may issue a final suspension order if FHFA determines that the underlying misconduct is of a type that would be likely to cause significant financial or reputational harm to a regulated entity or otherwise threaten the safe and sound operation of a regulated entity. Final suspension orders direct the regulated entities to cease or refrain from doing business with the suspended individuals or institutions for a specified period of time, which may be permanent in appropriate cases.
FHFA established the Suspended Counterparty Program in June 2012 by letter to the regulated entities. The requirements and procedures for the Suspended Counterparty Program were generally codified by the interim final rule published on October 23, 2013. 78 FR 63007. FHFA received two comment letters on the interim final rule: one from Fannie Mae; and one from eleven of the then twelve Banks
The Banks asked FHFA to state that the regulated entities would not be required to conduct any docket searches for convictions or to monitor federal agency notices of debarment. The Banks also recommended that the reporting requirements not apply where a regulated entity becomes aware of covered misconduct through national news reporting or by an announcement or action taken by a federal agency, stating that such information would be accessible to FHFA as well as the regulated entities and all regulated entities should not have to report on the same, widely known conduct. The Banks further recommended that the reporting requirements not apply to any information about covered misconduct that a regulated entity discovers in reviewing a member's examination report. The Banks stated that their review of such reports is subject to confidentiality agreements with federal financial regulators that limit their ability to disclose any information in the reports without the express written consent of the regulator.
With respect to the comment regarding confidential examination information, the Suspended Counterparty Program is limited to convictions or administrative sanctions for fraud or other financial misconduct related to mortgage transactions. Records regarding any such actions would be publicly available, so it is not necessary to revise this rule to address confidential examination information.
Fannie Mae commented that screening individual purchasers of Fannie Mae-owned real estate (REO) against the FHFA suspended counterparty list would present operational challenges. Fannie Mae requested FHFA to state that such screening is not required.
FHFA recognizes that it may be difficult for a regulated entity to determine the exact date it ceased doing business with a particular individual or institution. In addition, documenting the exact timing of the most recent covered transaction is not necessary to accomplish the purposes of the Suspended Counterparty Program. Suspension orders reflect a determination by FHFA that doing business with an individual or institution presents a safety and soundness risk to the regulated entities. This determination is forward-looking and does not depend on whether a regulated entity has recently engaged in a covered transaction. For those reasons, the final rule eliminates the requirements in §§ 1227.5(b)(1) and 1227.6(a)(1) that FHFA demonstrate that a regulated entity has done business with the individual or institution within the past three years.
Although the final rule revises the standard for whether FHFA may issue a proposed or final suspension order, the final rule maintains the requirement in § 1227.4(a) that the regulated entities submit reports in appropriate cases, even if they have already ceased doing business with the individual or institution. In many cases, a regulated entity may take action to terminate its relationship with a party before there has been any conviction or administrative sanction that would trigger the reporting requirement under the Suspended Counterparty Program. In some cases, a regulated entity may have stopped doing business with a counterparty that is currently doing business with another regulated entity that is not yet aware of the covered misconduct. Therefore, excluding those cases from the coverage of the rule would undermine the effectiveness of the program.
To the extent records are available, the regulated entities are encouraged to submit reports on any individual or institution that has engaged in covered misconduct regardless of when the most recent covered transaction took place. However, recognizing the practical and operational difficulty of determining when the most recent transaction may have occurred, the final rule only requires a regulated entity to submit reports regarding any parties with which it has done business within the past three years.
Fannie Mae commented that the regulated entities should not be required to directly ensure that a suspended party does not do business indirectly with a regulated entity. Fannie Mae indicated that it would be operationally difficult for Fannie Mae to attempt to monitor such relationships between third parties. Fannie Mae commented that it could notify its counterparties of any limitations imposed by FHFA on such transactions, but it would not be able to directly ensure compliance.
Fannie Mae also recommended that the definition of “covered transaction” be limited to “contract or agreement” and not include other “financial or business relationships.” Fannie Mae stated that “financial or business relationships” is redundant with “contract or agreement,” and that if it was intended to capture something beyond a contract or agreement, it is too broad and ambiguous. Fannie Mae expressed concern that “financial or business relationships” could be interpreted to include relationships with service providers such as delivery services for which Fannie Mae may have an account but not necessarily a contract or agreement, which it stated would not advance the purposes of the Suspended Counterparty Program.
FHFA expects the regulated entities to take all appropriate measures to address the risks presented by mortgage fraud. The scope of those measures may depend in part on the nature of the financial or business relationship between the party and the regulated entity. Limiting the definition of “covered transaction” to only a “contract or agreement,” as recommended by Fannie Mae, would be too restrictive and, thus, contrary to the intent of the Suspended Counterparty Program. FHFA intends the definition to be flexible enough to encompass any parties who present a particular risk to the regulated entities, while still excluding generic third party service providers that are only incidentally involved in mortgage-related transactions, such as mail and package delivery vendors.
While the final rule does not limit the general definition of “covered transaction” in response to the comments received, the final rule limits the scope of a final suspension order to exclude one category of what otherwise might be considered lower tier covered transactions. FHFA does not intend final suspension orders to prevent respondents or their households from obtaining mortgage financing for the respondent's own personal or household residence. The final rule adds a new paragraph (d) to § 1227.3 making clear that final suspension orders do not have any effect on any transaction involving a residential mortgage loan if the loan is secured by the respondent's own personal or household residence.
While the final rule does not change the substance of this provision, the final rule clarifies the method of sending a notice of proposed suspension. Under the final rule, a notice of proposed suspension will be sent to an affiliate of a respondent only if the affiliate would be subject to the proposed suspension. The final rule also makes technical drafting changes to the language on the method of sending notices for greater clarity.
Section 1313(f) of the Federal Housing Enterprises Financial Safety and Soundness Act requires FHFA, when promulgating regulations relating to the Banks, to consider the differences between Fannie Mae and Freddie Mac (collectively, the Enterprises) and the Banks with respect to the Banks': cooperative ownership structure; mission of providing liquidity to members; affordable housing and community development mission; capital structure; joint and several liability; and any other differences FHFA considers appropriate.
The final rule does not contain any information collection requirement that requires the approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501
The Regulatory Flexibility Act (5 U.S.C. 601
Administrative practice and procedure, Federal home loan banks, Government-sponsored enterprises, Reporting and recordkeeping requirements.
Accordingly, for the reasons stated in the
12 U.S.C. 4513, 4513b, 4514, 4526.
(d)
(e)
(1) The person, the person's counsel, or an agent for service of process; and
(2) Any affiliates of the person, the counsel for those affiliates, or an agent for service of process, if suspension is also being proposed for such affiliates.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action removes jet route J-477 in the northwest United States. The FAA is taking this action to reflect and accommodate the decommissioning of the Medicine Hat VHF omnidirectional range (VOR) in Alberta, Canada.
Effective date 0901 UTC, March 31, 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.
Jason Stahl, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783.
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
In 1990, the FAA published in the
On September 30, 2015, the FAA was notified that Canada was decommissioning the Medicine Hat VOR and removing the portion of J-477 within Canada. Since the basis for which J-477 was originally established no longer exists, the FAA is removing the route.
Jet routes are published in paragraph 2004 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 jet route listed in this document will be subsequently removed 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
The FAA is amending Title 14 of the Code of Federal Regulations (14 CFR) part 71 by removing jet route J-477. This action reflects and accommodates the route changes made in Canadian airspace due to the decommissioning of the Medicine Hat VOR. Therefore, notice and public procedures 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 Department of Transportation (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 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exists 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.
Office of National Marine Sanctuaries (ONMS), National Ocean Service (NOS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Final rule; correcting amendment.
NOAA originally published final rules expanding the boundaries of Thunder Bay National Marine Sanctuary (TBNMS) and National Marine Sanctuary of American Samoa (NMSAS), and specifying new boundary coordinates for those sanctuaries, on September 5, 2014, and July 26, 2012, respectively. Upon adding the new boundaries for both sanctuaries to NOAA nautical charts, NOAA noticed that some of the coordinates did not match the description of the boundaries in the respective final rules. This action corrects those errors in the coordinates, and updates the format of the tables of coordinates for NMSAS. This action also makes corrections to the boundary description for the Swains Island unit of NMSAS and makes a correction to the use of the term “mean high high water”. This correcting amendment will ensure proper mapping and enforcement of TBNMS and NMSAS. This action makes
Effective December 23, 2015.
Helene Scalliet, phone: (301) 713-3125 x281, or email:
On September 5, 2014, NOAA issued final regulations expanding the boundary of Thunder Bay National Marine Sanctuary (TBNMS) (79 FR 52960). At that time, NOAA published incorrect coordinates for Point 7 in the description of the new boundary for TBNMS, which inadvertently placed the point a few hundred feet into Canadian waters. NOAA does not have the authority to include any foreign waters into a national marine sanctuary, and did not intend to do so. This error was discovered when NOAA began to revise the nautical charts corresponding to that area. The new coordinates for Point 7 now correspond with the textual description of the boundary in the preamble and the regulations for TBNMS at 15 CFR 922.190. This change corrects the coordinates for Point 7 in appendix A to subpart R of 15 CFR part 922. This is a technical change and makes no substantive change to the regulations.
On July 26, 2012, NOAA issued final regulations expanding the boundary of National Marine Sanctuary of American Samoa (NMSAS) (77 FR 43942), with three technical errors in the boundary descriptions. This correcting amendment addresses the three technical errors, and also updates the format of the tables of coordinates for NMSAS, as follows:
1. In the NMSAS regulations describing the boundary of the sanctuary (15 CFR 922.101), the description of the boundaries of the various units that comprise NMSAS used the term “mean high high water.” However, the correct term should have been “mean higher high water line”. This term is defined by NOAA as “the average of the higher high water height of each tidal day observed over the National Tidal Datum Epoch. For stations with shorter series, comparison of simultaneous observations with a control tide station is made in order to derive the equivalent datum of the National Tidal Datum Epoch,” as described online at
2. For two of the five units that comprise NMSAS, an error was made in the tables of coordinates in the appendix to subpart J. The textual descriptions of the boundary for Zone B of the Aunu'u Unit (§ 922.101(c)(2)) and for the Muliāva Unit (§ 922.101(e)) state that the last point is identical to the first point. However, in the tables of coordinates the longitude for the last points referenced in the textual descriptions—Point 6 in Table 2 and Point 9 in Table 4—are incorrect. As a result, the points in the tables of coordinates in the appendix do not match the textual descriptions in § 922.101(c)(2) and (e). To correct these errors in the tables, NOAA is inserting the correct coordinates. Specifically, NOAA is replacing the figure “170.551 W” with “-170.496” for Point 6 in Table 2, and replacing the figure “169.12” with “-169.012” for Point 9 in Table 4. These are technical corrections and do not make substantive changes to the regulations.
3. NOAA found that the textual description of the boundary for the Swains Island Unit (15 CFR 922.101(d)) was unclear in describing the two discrete excluded areas in the Swains Island Unit. Therefore, NOAA is correcting that description to ensure that the sanctuary boundary is clearly described. In doing so, NOAA is using a different method of laying out the coordinates, which resulted in a larger number of boundary coordinates in Table 3 in the appendix for subpart J, and a need for a new textual description of the boundaries. The new textual description and new coordinates do not change the location or size of the unit or of the two discrete excluded areas. This is a technical correction, as the area included in the sanctuary remains the same as the one promulgated in the 2012 final rule.
4. Lastly, NOAA is also revising the format of all of the tables of coordinates in the appendix to subpart J in order to update and conform them to the latest standards for presenting boundary coordinates for national marine sanctuaries. Previously, latitude coordinates were listed followed by “S” for “south”, and longitude coordinates were listed followed by “W” for “west”. Under the new standard, latitude coordinates are preceded by “-” for “south”, and longitude coordinates are preceded by “-” for “west”. These revisions to the format of the tables are consistent with NOAA's current efforts to standardize the format for coordinates across the National Marine Sanctuary System. The revisions would lessen confusion arising from the current use of different standards across the various sites and make the geographic coordinates easier for navigators to write, plot, and read. This is a technical correction, as the shape, size, and location of each of the units of NMSAS described in the tables are not changed by these revisions and remain the same as when they were promulgated in the 2012 final rule.
Accordingly, NOAA is publishing this correcting amendment without notice and comment. This rule amends: Appendix A to subpart R for TBNMS; Tables 1, 2, 3, 4 and 5 in the appendix to subpart J for NMSAS; and 15 CFR 922.101.
This final rule has been determined to be not significant for purposes of the meaning of Executive Order 12866.
The Assistant Administrator of NOS finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive the notice and comment requirements of the Administrative Procedure Act because this amendment is technical in nature, having no substantive impact. This rule corrects errors in the description of sanctuary boundaries for two national marine sanctuaries in rules previously submitted to notice and comment review. The substance of the underlying regulations remains unchanged. Therefore, providing notice and opportunity for public comment under the Administrative Procedure Act would serve no useful purpose. The clarification provided by this correction will also enable NOAA to fully implement its statutory responsibilities under the NMSA to protect resources of a national marine sanctuary. It would be contrary to the public interest to delay implementation of the technical corrections because they will reduce any confusion that may exist regarding the exact coordinates. For the reasons above, the Assistant Administrator also finds good cause under 5 U.S.C. 553(d)
This correcting amendment contains only non-substantive, technical corrections to national marine sanctuary regulations. NOAA previously conducted environmental analyses under NEPA as part of the rulemaking process leading to the regulations being corrected by this action. Since this correcting amendment is technical in nature, and will not have a significant effect on the human environment, NOAA has determined that the requirements for an environmental analysis under NEPA do not apply to this action.
Administrative practice and procedure, Coastal zone, Education, Environmental protection, Fishing gear, Marine resources, Natural resources, Penalties, Recreation and recreation areas, Reporting and recordkeeping requirements, Research, Wildlife.
Accordingly, for the reasons set out in the preamble, 15 CFR part 922 is corrected by making the following correcting amendments:
16 U.S.C. 1431
The revision reads as follows:
(d)
[Coordinates listed in this appendix are unprojected (Geographic) and based on the North American Datum of 1983.]
No coordinates are needed in addition to those described in § 922.101(a).
No coordinates are needed in addition to those described in § 922.101(b).
The Aunu'u Unit is comprised of two adjacent zones, described in § 922.101(c), for which the point coordinates are provided in following tables 1 and 2.
The Swains Island Unit boundary is defined by the coordinates provided in Table 3 and the textual description in § 922.101(d).
The Muliāva Unit boundary is defined by the coordinates provided in Table 4 and the textual description in § 922.101(e).
(f) Ta'u Unit
The Ta'u Unit boundary is defined by the coordinates provided in Table 5 and the textual description in § 922.101(f).
Internal Revenue Service (IRS), Treasury.
Final regulations and removal of temporary regulations.
This document contains final regulations regarding the distribution requirement for non-functionally integrated Type III supporting organizations. The regulations reflect changes to the law made by the Pension Protection Act of 2006. The regulations will affect non-functionally integrated Type III supporting organizations and their supported organizations.
Jonathan Carter at (202) 317-4394 or Mike Repass at (202) 317-6176 (not toll-free numbers).
This document contains amendments to the Income Tax Regulations (26 CFR part 1) regarding organizations described in section 509(a)(3) of the Internal Revenue Code (Code). An organization described in section 501(c)(3) is classified as either a private foundation or a public charity. To be classified as a public charity, an organization must be described in section 509(a)(1), (2), or (3). Organizations described in section 509(a)(3) are known as “supporting organizations.” Supporting organizations achieve their public charity status by supporting one or more organizations described in section 509(a)(1) or (2), which in this context are referred to as “supported organizations.”
To be described in section 509(a)(3), an organization must satisfy (1) an organizational test, (2) an operational test, (3) a relationship test, and (4) a disqualified person control test. The organizational and operational tests require that a supporting organization be organized and at all times thereafter operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more supported organizations. The relationship test requires a supporting organization to establish one of three types of relationships with one or more supported organizations. Finally, the disqualified person control test requires that a supporting organization not be controlled directly or indirectly by certain disqualified persons.
Each of the described tests is a necessary requirement for an organization to establish that it qualifies as a supporting organization. These final regulations, however, focus primarily on the relationship test for supporting organizations that are “operated in connection with” their supporting organization(s), otherwise known as “Type III” supporting organizations. Specifically, the final regulations reflect statutory changes enacted by the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780 (2006) (PPA)). Section 1241(d)(1) of the PPA directed the Secretary of the Treasury to promulgate regulations under section 509 that establish a new distribution requirement for Type III supporting organizations that are not “functionally integrated” to ensure that a “significant amount” is paid to supported organizations. For this purpose, the term “functionally integrated” means a Type III supporting organization that is not required under Treasury regulations to make payments to supported organizations because the supporting organization engages in activities that relate to performing the functions of, or carrying out the purposes of, its supported organization(s). These final regulations address the amount that a Type III supporting organization that is not functionally integrated (a non-functionally integrated (NFI) Type III supporting organization) must annually distribute to its supported organization(s).
On August 2, 2007, the Treasury Department and the IRS published in the
On September 24, 2009, the Treasury Department and the IRS published in the
On December 28, 2012, the Treasury Department and the IRS published in the
Under the 2012 TD, an NFI Type III supporting organization must annually distribute to or for the use of one or more supported organizations an amount equaling or exceeding the supporting organization's “distributable amount” for the taxable year. See § 1.509(a)-4(i)(5)(ii). The temporary regulations contained in the 2012 TD defined an NFI Type III supporting organization's “distributable amount” as equal to the greater of (1) 85 percent of the supporting organization's adjusted net income or (2) its “minimum asset amount,” in each case for the immediately preceding taxable year. The temporary regulations defined “minimum asset amount” as 3.5 percent of the excess of the aggregate fair market value of the supporting organization's non-exempt-use assets over the acquisition indebtedness with respect to such nonexempt use assets. Additionally, the temporary regulations provided that the determination of the aggregate fair market value of an NFI Type III supporting organization's non-exempt-use assets would be made using the valuation methods generally applicable to private foundations under § 53.4942(a)-2(c). The temporary regulations also provided that, consistent with the private foundation rules, the “non-exempt use” assets of a supporting organization do not include certain investment assets described in § 53.4942(a)-2(c)(2) or assets used (or held for use) to carry out the exempt purposes of the supported organization(s) (as determined by applying the principles described in § 53.4942(a)-2(c)(3)).
After consideration of all the comments received in response to the 2012 NPRM, this Treasury decision adopts the 2012 NPRM without change, except to (1) conform the provision regarding the valuation of non-exempt-use assets to the section 4942 regulation provision that it cross-references (§ 53.4942(a)-2(c)(2)), and (2) replace references in § 1.509(a)-4 to the temporary regulations with references to these final regulations. Thus, other than the change conforming the provision in the final regulations regarding the valuation of non-exempt-use assets to the provision in the section 4942 regulations, these final regulations are the same as the temporary regulations that have been applicable to Type III supporting organizations since December 28, 2012. Additionally, this Treasury decision removes the temporary regulations.
The Treasury Department and the IRS intend to publish a notice of proposed rulemaking for Type III supporting organizations in the near future. Among other proposals, the new proposed regulations would make one change to these final regulations. Specifically, the new proposed regulations will propose removal of the provision in these final regulations that reduces the distributable amount by the amount of taxes subtitle A of the Code imposes on a supporting organization during the immediately preceding taxable year. In addition, the new proposed regulations will propose specific rules regarding the requirements for Type III supporting organizations that support governmental supported organizations to be treated as functionally integrated Type III supporting organizations. In addition, the new proposed regulations would provide transition relief beyond the period provided in Notice 2014-4, 2014-2 IRB 274. Supporting organizations may continue to rely on the transitional rule described in Section 3.01 of Notice 2014-4 until the date that the notice of proposed rulemaking prescribing the new proposed regulations under § 1.509(a)-4(i)(4)(iv) is published in the
This section discusses the comments received in response to the 2012 NPRM.
The PPA directed the promulgation of Treasury regulations requiring NFI Type III supporting organizations to make distributions of a percentage of either income or assets to their supported organizations to ensure that a significant amount is paid to those supported organizations. Under the Treasury regulations in effect when PPA was enacted, certain Type III supporting organizations were required to distribute “substantially all” of their income to one or more publicly supported organizations. For this purpose, “substantially all” had the same meaning of 85 percent or more that it had in § 53.4942(b)-1(c) (defining “substantially all” for purposes of the income test for private operating foundations).
The 2009 NPRM had proposed to replace the income-based distribution requirement with an asset-based distribution requirement of 5 percent of the fair market value of an organization's non-exempt-use assets. In response to comments, the 2012 NPRM instead proposed to keep the historic income-based distribution requirement, and proposed to combine it with a reduced percentage-of-assets distribution requirement. Therefore, the temporary and proposed distributable amount for NFI Type III supporting organizations was the greater of 85 percent of adjusted net income or 3.5 percent of the net fair market value of non-exempt-use assets, in each case as determined for the immediately preceding taxable year.
One commenter stated that a distribution requirement based on 3.5 percent of assets is sufficient to achieve the goals of Congress and that the distribution requirement based on 85 percent of income should be removed. The commenter stated that a distribution requirement based on income would prevent a supporting organization from smoothing its returns in high-earning years with low-earning years, and could result in organizations shifting investments away from income-producing assets toward appreciating assets to avoid erosion of an endowment even if that investment strategy results in forgoing higher returns. The commenter also said that having two tests increases administrative costs for a supporting organization by requiring it to make two calculations rather than one to determine its distributable amount, thus reducing the amount distributed for true charitable purposes. Another commenter suggested that organizations that were not previously identified as avoiding the prior substantially-all-of-income distribution requirement should be exempted from the asset-based distribution requirement because it potentially harms entities that are invested primarily in non-liquid assets.
The Treasury Department and the IRS believe that a distribution requirement equal to the greater of 85 percent of adjusted net income or 3.5 percent of the net fair market value of an organization's non-exempt-use assets strikes an appropriate balance. It ensures that NFI Type III supporting organizations distribute significant amounts to their supported organizations, as Congress directed in the PPA. Further, the 85 percent of income test will make it more likely that
Therefore, the final regulations adopt the annual distributable amount rule of the 2012 NPRM without changes.
The 2012 NPRM provided that, for purposes of the calculation of the annual distributable amount, a supporting organization's adjusted net income would be determined using the principles of section 4942(f) and § 53.4942(a)-2(d). These provisions apply the principles of subtitle A of the Code.
One commenter requested that the definition of adjusted net income exclude dividend income resulting from a distribution of long-term capital gain property to a supporting organization by a corporate subsidiary. The commenter noted that without this exclusion, the receipt of distributed property could result in a much higher distribution requirement for that one year, but without producing any liquid assets to satisfy the higher distribution requirement.
The 2012 NPRM provided that adjusted net income be determined by applying the principles that apply in calculating the adjusted net income of private operating foundations under sections 4942(d) and 4942(j)(3) and are generally based on long-standing principles under subtitle A of the Code. The Treasury Department and the IRS believe that the rules for calculating adjusted net income should be applied consistently for all taxpayers and do not believe that there is a justification for the rules to be altered solely for supporting organizations. Therefore, the final regulations do not adopt this comment.
The 2012 NPRM provided that for purposes of determining the distributable amount for a taxable year, non-exempt-use assets would be valued using the principles generally applicable to private foundations under § 53.4942(a)-2(c). One commenter suggested allowing the use of state property tax valuations for purposes of valuing real property under § 53.4942(a)-2(c).
Section 53.4942(a)-2(c) applies the principles of regulations under section 2031, which generally apply for estate tax purposes, to the valuation of real property. Section 20.2031-1(b) provides that the value at which property is assessed for local tax purposes may be considered only if that value represents the fair market value as of the valuation date. Section 20.2031-3 further provides that if real property is leased or otherwise used in a business, special valuation rules may apply. The Treasury Department and the IRS continue to believe that the same valuation principles that apply to private foundations should apply to NFI Type III supporting organizations. Therefore, the final regulations do not adopt this comment.
These regulations are effective on December 21, 2015.
The IRS Notice 2014-4 cited in this preamble is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402, or by visiting the IRS Web site at
Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because these regulations do not impose a collection of information on small entities, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the temporary and proposed regulations preceding these final regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business, and no comments were received.
The principal authors of these regulations are Mike Repass and Jonathan Carter, Office of Associate Chief Counsel (Tax-Exempt and Government Entities). However, other personnel from the Treasury Department and the IRS participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 7805 * * *
The revisions and additions read as follows:
(i) * * *
(5) * * *
(ii) * * *
(B)
(C)
(
(
(
(8)
(i) Assets described in § 53.4942(a)-2(c)(2)(i) through (iv) of this chapter (with the term “supporting organization” being substituted for “foundation” or “private foundation” and the date “August 17, 2006” being substituted for “December 31, 1969”); and
(ii) Exempt-use assets, which are assets that are used (or held for use) directly in carrying out the exempt purposes of the supporting organization's supported organization(s) (determined by applying the principles described in § 53.4942(a)-2(c)(3) of this chapter) by either—
(A) The supporting organization; or
(B) One or more supported organizations, but only if the supporting organization makes the asset available to the supported organization(s) at no cost (or nominal rent) to the supported organization(s).
(l)
Pension Benefit Guaranty Corporation.
Final rule.
On June 19, 2015, PBGC published an interim final rule to implement the application process and notice requirements for partitions of eligible multiemployer plans under title IV of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Reform Act of 2014 (MPRA). PBGC is making minor changes to the interim final regulation in response to public comments received on the interim final rule.
Effective January 22, 2016. See Applicability in
Joseph J. Shelton (
This final rule makes minor changes to part 4233 of PBGC's regulations, which was added by PBGC's interim
PBGC's legal authority for this action comes from section 4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA, and section 4233 of ERISA, as amended by MPRA, which requires that the partition process be conducted in accordance with regulations prescribed by PBGC.
Part 4233 prescribes the statutory conditions and the information and notice requirements that must be met before PBGC may partition an eligible multiemployer plan under section 4233 of ERISA. This final rule makes minor revisions to part 4233 with respect to information requirements, the time period for PBGC's initial review of an application for partition, and the coordinated application process for partition and benefit suspension.
In December 2014, Congress enacted and the President signed the Consolidated and Further Continuing Appropriations Act, 2015, Public Law 113-235 (128 Stat. 2130 (2014)), of which MPRA is a part. MPRA contains a number of statutory reforms intended to help financially troubled multiemployer plans and to improve the financial condition of PBGC's multiemployer insurance program. In addition to increasing PBGC premiums, sections 121 and 122 of MPRA provide PBGC with new statutory authority to assist financially troubled multiemployer plans under certain conditions if doing so would reduce potential future costs to PBGC and PBGC can certify that its ability to meet existing financial assistance to other plans will not be impaired.
Section 122 of MPRA replaced the existing partition rules with a new framework of rules. As amended by MPRA, section 4233(a)(1) of ERISA provides that, upon application by the plan sponsor of an eligible multiemployer plan, PBGC may order a partition of the plan in accordance with that section. As under prior law, PBGC's decision to order a partition is discretionary.
In addition, section 4233(a)(2) states that not later than 30 days after submitting an application for partition, the plan sponsor shall notify the participants and beneficiaries of such application in the form and manner prescribed by regulations issued by PBGC.
Section 4233(b) of ERISA contains five statutory conditions that must be satisfied before PBGC may order a partition:
• Partition will reduce PBGC's expected long-term loss with respect to the plan; and
• Partition is necessary for the plan to remain solvent.
Upon PBGC's approval of an application for partition, section 4233(c) of ERISA provides that PBGC's partition order shall provide for a transfer to the plan created by the partition order (the successor plan) the minimum amount of the original plan's liabilities necessary for the original plan to remain solvent.
Sections 4233(d)(1) and (2) of ERISA describe the nature of the successor plan, and assign responsibility for its management. Specifically, section 4233(d)(1) provides that the plan created by the partition order is a successor plan to which section 4022A applies. Section 4233(d)(2) provides that the plan sponsor of the original plan and the administrator of such plan shall be the plan sponsor and administrator, respectively, of the successor plan.
Section 4233(d)(3) of ERISA prescribes a new withdrawal liability rule that applies for 10 years following the date of the partition order. Under the new rule, if an employer withdraws from the original plan within 10 years following the date of the partition, withdrawal liability is computed under section 4201 with respect to the original plan and the successor plan. If, however, the withdrawal occurs more than 10 years after the date of the partition order, withdrawal liability is computed under section 4201 only with respect to the original plan (and not with respect to the successor plan). In either case, withdrawal liability is payable to the original plan (and not the successor plan).
Section 4233(e)(1) imposes an ongoing benefit payment obligation on the original plan with respect to each participant or beneficiary of the original plan whose guarantee amount was transferred to the successor plan pursuant to a partition order. With respect to these individuals, the original plan must pay a monthly benefit for each month in which such benefit is in pay status following the effective date of the partition in an amount equal to the excess of—
• The monthly benefit that would be paid to such participant or beneficiary
• The monthly benefit for such participant or beneficiary that is guaranteed under section 4022A.
Section 4233(e)(2) of ERISA provides that in any case in which a plan provides a benefit improvement, as defined in section 305(e)(9)(E)(vi), that takes effect after the effective date of the partition, the original plan shall pay to PBGC for each year during the 10-year period following the partition effective date, an annual amount equal to the lesser of—
• The total value of the increase in benefit payments for such [plan] year that is attributable to the benefit improvement, or
• The total benefit payments from the successor plan for such [plan] year.
Section 4233(e)(3) of ERISA imposes a special premium rule on the original plan, which requires it to pay the premiums for participants whose guarantee amounts were transferred to the successor plan for each year during the 10-year period following the partition effective date.
In addition to the initial notice requirement under section 4233(a)(2) of ERISA, which applies to the plan sponsor, section 4233(f) imposes a notice requirement on PBGC. It states that not later than 14 days after the issuance of a partition order, PBGC must provide notice of the order to the Committee on Education and the Workforce of the House of Representatives; the Committee on Ways and Means of the House of Representatives; the Committee on Finance of the Senate; the Committee on Health, Education, Labor, and Pensions of the Senate; and any affected participants or beneficiaries.
As noted above, on June 19, 2015, PBGC published an interim final rule on Partitions of Eligible Multiemployer Plans. PBGC had earlier published a Request for Information (RFI) to solicit information on issues PBGC should consider in the rulemaking; PBGC received 20 comments in response to the RFI.
The regulatory provisions in the interim final rule were effective upon publication. PBGC provided a 60-day comment period and received nine comments, four from organizations (Pension Rights Center, U.S. Chamber of Commerce, National Coordinating Committee for Multiemployer Plans, and AARP), and five from individuals. The comments, PBGC's responses to the comments, and a summary of changes made to the interim final rule are discussed below. For a summary of the rules that remain unchanged, see the preamble to the interim final rule.
Section 4233.4 of the interim final rule provides guidance on the information needed to determine whether an application for partition is complete, and states that an application will not be considered complete unless the application includes the information specified in §§ 4233.5 (plan information), 4233.6 (partition information), 4233.7 (actuarial and financial information), 4233.8 (participant census data), 4233.9 (financial assistance information).
One commenter stated that the rule on completeness in § 4233.4 is “inappropriately strict,” and that “[t]here may be instances where not every document listed is required for PBGC to make a determination.” The commenter noted, as an example, the requirement under § 4233.5(g) for the most recent IRS determination letter for the plan. The commenter expressed the view that determination letters may become increasingly difficult to obtain due to recently announced changes to the IRS determination letter program for qualified plans,
PBGC believes that the regulation's information requirements are reasonable, necessary, and, in most instances, based on information that plans are already required to prepare and retain under ERISA and the Internal Revenue Code (“Code”). Turning to the commenter's concern about IRS determination letters, PBGC notes that to be covered under title IV of ERISA, a plan must either have received a favorable determination letter from the IRS, or have otherwise met the tax-qualification requirements under the Code. Because the requirement in § 4233.5(g) is limited to the plan's
In the case of a multiemployer plan that had never in its history obtained a determination letter (which is rare in PBGC's experience) but, in practice, operated in accordance with the qualification rules under the Code, the failure to submit a determination letter under § 4233.5(g) would not, as the commenter suggested, “undo the entire partition application.” Under that scenario, the inability to submit the plan's most recent determination letter is not due to an oversight or a refusal to provide the information. Rather, the document simply does not exist. In that case, nothing in the regulation would constrain PBGC from exercising its discretion to determine that the application was nevertheless complete.
PBGC is amending § 4233.4(a) to clarify this point by substituting the word “may” in place of “will.” Therefore, as revised, § 4233.4(a) will provide that if any of the information required under part 4233 is not included with an application for partition, “the application may not be considered complete.”
Section 4233.5 of the regulation identifies plan-related information items that must be submitted for an application to be complete, including a requirement under § 4233.5(i) to provide a current listing of contributing
One commenter suggested that in addition to the information required under § 4233.5(i), plan sponsors should be required to submit information on the specific dollar amount contributed by each employer, whether the employer is current or delinquent in making its contributions to the plan, and if delinquent, the specific dollar amount of the delinquency. Finally, the commenter suggested that PBGC should “look back at least ten years, especially given that the economic crisis from 2008 through 2013 may not be an accurate measure, and sufficient pre- and post-crisis data is needed to fairly evaluate a plan and its funding capabilities.”
For a number of reasons, PBGC did not adopt the commenter's suggestions. First, based on its partition experience under prior law, PBGC decided that § 4233.5(i) already provides PBGC with all of the employer contribution information it needs to make a determination on an application for partition.
Second, if, based on the facts of a particular case, PBGC determines that additional information relating to a plan's contribution base is needed to make a determination on partition, PBGC retains the discretion to request such information under § 4233.4(b).
Third, in addition to the employer contribution information already required under the interim final rule, § 4233.5(h) requires a copy of the most recent Form 5500 and schedules for the plan. Schedule R of the Form 5500 requires, among other things, information on any employer that contributed more than five percent of the plan's total contributions for the plan year. In addition, § 4233.7(a)(1) requires a plan sponsor to submit the most recent actuarial report for the plan and those for the two preceding plan years. These actuarial reports generally include information on actual contributions received for the plan year, and expected contributions for the following plan year.
In sum, PBGC has determined that the existing information requirements under the regulation provide PBGC with the information it needs relating to employer contributions to make a determination on an application for partition. Furthermore, as previously stated, if additional information relating to employer contributions is needed to make a determination in a particular case, PBGC retains the discretion to request that information under § 4233.4(b). Accordingly, for the reasons stated above, PBGC did not make any changes to § 4233.5(i).
Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable.
Consistent with this requirement, § 4233.6(e) requires a detailed description of all measures the plan sponsor has taken (or is taking) to avoid insolvency, as well as those measures the plan sponsor considered but did not take. The regulation also requires the plan sponsor to identify the factor(s) it considered in making those determinations, and to submit all relevant documentation relating to the determinations.
One commenter expressed concern that the interim final rule did not require “objective factual evidence” and predicted that PBGC (and plan participants) would be “treated to self-serving platitudes.” The commenter suggested that plan sponsors should be required to “document the efforts they have taken, and should likewise document why they have not taken other steps . . . to remedy the plan's financial situation.”
As a preliminary matter, PBGC agrees that unsupported assertions concerning the measures a plan sponsor has taken (or is taking) to avoid insolvency would not provide a sufficient basis for PBGC, in consultation with the Advocate, to make a determination under section 4233(b)(2) of ERISA. PBGC disagrees, however, that unsupported assertions would satisfy the requirements of § 4233.6(e).
In addition to requiring a detailed description of the measures taken to avoid insolvency, including the measures the plan sponsor considered but did not take, § 4233.6(e) requires the plan sponsor to submit “all relevant documentation” relating to those determinations. Furthermore, to the extent the information and documentation provided under § 4233.6(e) is not sufficient to reach a determination, PBGC has the authority under § 4233.4(b) to require a plan sponsor to submit any additional information necessary to make a determination under section 4233 of ERISA.
Finally, it is also important to note that § 4233.3(b) requires that an application for partition must be signed and dated by an authorized trustee and must include a statement under penalties of perjury that the “application contains all the relevant facts relating to the application, and such facts are true, correct, and complete.”
Based on the foregoing, PBGC believes that the existing information and certification requirements under the regulation address the concerns raised by the commenter relating to unsupported assertions, and that no additional changes are required.
Section 4233.7 of the interim final rule identifies the actuarial and financial information requirements for an application for partition. Although there were no comments from the public on § 4233.7, PBGC is amending the regulation to clarify that the benefit payment information required under §§ 4233.7(a)(3)(iii), (a)(5)(iii), and (a)(8) must be organized by participant status (
Section 4233.8 of the interim final rule identifies the types of participant census data to include with an application for partition. PBGC has determined that information about gender is needed to accurately determine the present value of plan liabilities and is, therefore, amending the regulation to clarify that gender must be included in the census data elements under § 4233.8.
Section 4233.10 of the interim final rule prescribes an initial review process for the purpose of determining whether an application is complete under
PBGC notes that although the partition rule under section 4233 of ERISA and the suspension of benefits rule under section 305(e)(9) work in tandem, there are important differences. One difference relates to the commencement of the review period. Unlike the suspension of benefit rule, which requires Treasury, in consultation with PBGC and the Department of Labor, to approve or deny an application for suspension of benefits within
Another important difference is that under section 305(e)(9), notice of the proposed suspension must be given concurrently with the submission of an application for suspension of benefits.
Given these differences, PBGC is not adopting the two-business-day review period under Treas. Temp. Reg. § 1.432(e)(9)-1T(g)(1)(ii). However, having considered the concerns raised by commenters relating to the lack of a specified time limit on PBGC's initial review process, PBGC believes that a 14 calendar day review period provides sufficient time to complete the initial review of an application under § 4233.10. Importantly, this addition will provide plan sponsors, participants, and beneficiaries with more certainty on when the 270-day statutory review period under section 4233(a)(1) of ERISA, and the 30-day notice period under section 4233(a)(2) will begin.
Section 4233.11 of the interim final rule describes the notice requirements for an application for partition, and provides optional model notices. Section 4233.11(d) of the regulation states that the purpose of the model notices is to assist plan sponsors in discharging their notice obligations under section 4233(a)(2) of ERISA. The regulation does not require use of the model notices, but states that a properly completed model notice will be deemed to satisfy the notice requirements under the regulation.
One commenter expressed concern that plan sponsors would be free to alter, amend, or even discard the text in the model notices in favor of their own, which, in the commenter's view, would provide “too much latitude to plan trustees and professionals who may well have steered the plan into `critical and declining' status in the first place.” The commenter suggested that PBGC require a plan sponsor to “highlight” and explain any deviations from the model notice text. The same commenter also suggested that deviations from the model notices should require advance approval from PBGC and the Advocate.
PBGC considered the commenter's suggestions but did not incorporate them into the final regulation. In PBGC's view, requiring plan sponsors to highlight and explain any deviations from the model notice (which is not required under section 4233(a)(2))
Section 4233.13 of the interim final rule describes a conditional approval process for plan sponsors who file applications for partition and suspension of benefits. Under the special rule, PBGC may, in its discretion, approve an application for partition conditioned on Treasury's final authorization to suspend benefits under section 305(e)(9) of ERISA. As noted in § 4233.12(c), however, a partition will only become effective upon satisfaction of the required conditions and the issuance of a partition order.
PBGC received one comment on the conditional approval process. The commenter stated that it was not clear if a conditional approval under § 4233.12(c) would satisfy the requirement in Temp. Treas. Reg. § 1.432(e)(9)-1T(d)(7), which states that in order to satisfy the requirement that a suspension of benefits not take effect prior to the effective date of a partition,
Having consulted with Treasury on this comment, PBGC agrees that additional clarification relating to the effect of a conditional approval of partition under the agencies' regulations is needed. First, with respect to part 4233, PBGC is amending §§ 4233.6 and 4233.13 to clarify that in any case in
PBGC received one comment on § 4233.15, which describes the nature and operation of the successor plan created by the partition order. The commenter asked whether certain legal requirements under title I and the Code would apply to a successor plan in a partition.
While a discussion of the legal requirements under title I and the Code is not within PBGC's jurisdiction and, therefore, beyond the scope of this rulemaking, all title I and Code requirements that would otherwise apply to a terminated, insolvent multiemployer plan apply to a successor plan in a partition absent a statutory, regulatory, or administrative exemption.
Section 4233.17 of the interim final rule describes PBGC's continuing jurisdiction over the original plan and the successor plan. In the preamble to the interim final rule, PBGC explained that although commenters on the RFI expressed differing views on the need for additional post-partition oversight, PBGC determined that additional oversight is necessary to ensure compliance with the post-partition requirements under MPRA and proper stewardship of PBGC financial assistance.
PBGC received one comment that did not specifically refer to § 4233.17 but did relate to post-partition oversight. The commenter suggested that when a plan is insolvent, regulating and assessing administrative costs (including salaries and professional fees) should be the first priority, and that in some cases it may be appropriate to appoint an independent legal representative and trustee to administer the plan. Finally, the commenter suggested that the trustees, employees, and service providers of an insolvent plan should be required to disclose sources of income and conflicts of interest.
The commenter did not suggest any changes to § 4233.17, and PBGC determined that none are necessary. Nevertheless, in response to the comment, PBGC notes that it will retain continuing jurisdiction over the original plan and successor plan in a partition to ensure compliance with the post-partition requirements under MPRA and proper stewardship of PBGC financial assistance.
In addition, although section 4233(d)(2) of ERISA assigns responsibility for the management of the successor plan to the plan sponsor and administrator of the original plan, PBGC continues to have authority under sections 4041A and 4281 to prescribe such rules and standards for the administration of terminated multiemployer plans (and authority under section 4042 to institute proceedings for the appointment of a new trustee to administer the plan) that PBGC considers appropriate to protect the interests of plan participants and beneficiaries, or to prevent unreasonable loss to PBGC.
Finally, as noted above, absent a statutory, regulatory, or administrative exemption, all of the title I requirements that would otherwise apply to a terminated, insolvent multiemployer plan (
In addition to comments on specific sections of the interim final rule, PBGC received two comments objecting to PBGC's interpretation of the term “maximum benefit suspensions” in section 4233(b)(2) of ERISA.
One commenter stated that it “does not believe plans should have to apply for maximum benefit suspensions to be eligible for partition” and that “[i]f PBGC believes it has no flexibility on the level of retiree cuts, it should ask Congress to modify this element of MPRA.” Expressing a similar view, the other commenter stated that PBGC's interpretation is “not consistent with the full text of section 4233” and that “the statute does not require trustees to impose
As a preliminary matter, PBGC disagrees that a partition would only be available in situations in which maximum benefit suspensions were sufficient to meet the plan's long-term solvency. In fact, if maximum benefit suspensions were sufficient to meet a plan's long-term solvency, partition would not be available because it would not be necessary for the plan to remain solvent, which is a statutory requirement under section 4233(b)(3)(B). In other words, partition is only an option when maximum benefit suspensions are
In those situations where partition would be needed, PBGC's interpretation of maximum benefit suspension reflects the statutory and regulatory limitations on suspensions under section 305(e)(9)(D). For example, as explained in the preamble to the interim final rule, the maximum benefit suspension
The commenter's hypothetical questions regarding a plan with a
PBGC's interpretation of section 4233(b)(2) of ERISA is also consistent with the other conditions for partition under section 4233, which show Congress's intent to balance the need to protect multiemployer plans from insolvency with the need to improve the financial health of the title IV multiemployer insurance program. Section 4233(b)(3)(A) of ERISA, for example, provides that PBGC must reasonably expect that a partition of the plan will reduce PBGC's expected long-term loss with respect to the plan, and under section 4233(b)(4), PBGC must certify to Congress that its ability to meet existing financial assistance obligations to other plans (including any liabilities associated with multiemployer plans that are insolvent or that are projected to become insolvent within 10 years) will not be impaired by a partition. Finally, because a partition results in the creation of a newly insolvent successor plan that will require financial assistance under section 4261 of ERISA, the amount of liabilities that can be transferred to the successor plan is limited under section 4233(c) to the
As previously discussed, under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable. In the preamble to the interim final rule, PBGC stated that it would not define by regulation the Advocate's consultative role under section 4233(b)(2); rather, the Advocate's role under the new law would be allowed to develop on a case-by-case basis.
PBGC received one comment on the Advocate's role under section 4233(b)(2). The commenter asserted that plan sponsors and PBGC suffer from conflicts of interest—plan sponsors due to the composition of boards of trustees, and PBGC because it will only approve a partition if, among other things, it reduces PBGC's expected long-term loss—and that the Advocate “is the only party who reaps no financial advantage from imposing benefit cuts on retirees.” Based on this view, the commenter stated that the final rule should clarify that the Advocate is “responsible solely for representing the plan's retirees and deferred vested participants,” and that the Advocate should be “offered the opportunity to participate in all meetings between the plan sponsor and PBGC.” The commenter also suggested that the rule should require PBGC to provide the Advocate with adequate accounting, actuarial, and legal resources, and that the Advocate should have unfettered access to all plan records, actuarial worksheets, and databases.
PBGC disagrees with the commenter's assertion relating to conflicts of interest. With respect to multiemployer plan sponsors, the Taft-Hartley Act, 29 U.S.C. 141
Although PBGC carefully considered the commenter's suggestions about defining the Advocate's consultative role, it decided not to make any changes in response. Given that the Advocate's consultative role in a partition is new, PBGC continues to believe that the better approach is to allow that role to evolve on a case-by-case basis. Finally, it is important to note that the role of the Advocate is defined by statute in section 4004(b) of ERISA, and while MPRA created additional duties, it did not change or modify the Advocate's existing duties under the statute.
The amendments in this final rule will apply to applications for partition submitted to PBGC on or after January 22, 2016.
Having determined that this rulemaking is a “significant regulatory action” under Executive Order 12866, the Office of Management and Budget has reviewed this final rule under Executive Order 12866.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Orders 12866 and 13563 require a comprehensive regulatory impact analysis be performed for any economically significant regulatory action, defined as an action that would result in an annual effect of $100 million or more on the national economy or which would have other substantial impacts.
Pursuant to section 1(b)(1) of Executive Order 12866 (as amended by Executive Order 13422), PBGC has determined that regulatory action is required in this area. Principally, this regulatory action is necessary to implement the application and notice requirements under section 4233 of ERISA as amended and restated by MPRA. In accordance with OMB Circular A-4, PBGC also has examined the economic and policy implications of this final rule and has concluded that the action's benefits justify its costs.
Under Section 3(f)(1) of Executive Order 12866, a regulatory action is economically significant if “it is likely to result in a rule that may * * * [h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.” OMB has determined that this final rule does not cross the $100 million threshold for economic significance and is not otherwise economically significant. Most of the economic effect relating to partitions will be attributable to benefit suspensions.
Based on a review of financial resources available for partition, PBGC expects that fewer than 20 plans would be approved for partition over the next three years (about six plans per year), and that the total financial assistance PBGC will provide to those plans will be less than $60 million per year.
Because PBGC did not publish a general notice of proposed rulemaking under 5 U.S.C. 553, the regulatory flexibility analysis requirements of the Regulatory Flexibility Act do not apply.
The information requirements under this final regulation—information to be reported to PBGC and information to be disclosed to participants—are being submitted to OMB under the Paperwork Reduction Act (OMB control number 1212-0068, expires December 31, 2015). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
PBGC estimates that over the next three years about six plans per year will apply for partition and that the total annual burden of this information collection will be about 78 hours and $58,800.
Employee benefit plans, Pension insurance, Reporting and recordkeeping requirements.
For the reasons given above, the interim rule amending 29 CFR part 4233 published at 80 FR 35220 on June 19, 2015, is adopted as a final rule with the following changes:
29 U.S.C. 1302(b)(3), 1413.
(a) * * * With respect to coordinated applications for partition and suspension of benefits, proposed effective dates for both transactions must satisfy the requirements of section 305(e)(9)(D)(v) of ERISA.
(a) * * *
(3) * * *
(iii) Benefit payments organized by participant status (
(5) * * *
(iii) Benefit payments organized by participant status (
(8) A long-term projection reflecting benefit disbursements from the successor plan (organized by participant status (
(9) A long-term projection of pre-partition benefit disbursements from the original plan reflecting reduced benefit disbursements at the PBGC-guarantee level beginning on the proposed effective date of the partition (using a closed group valuation and no accruals after the proposed effective date of partition, and organized separately by participant status groupings (
(10) A long-term projection of pre-partition benefit disbursements from the original plan reflecting the maximum benefit suspensions permissible under section 305(e)(9) of ERISA beginning on the proposed effective date of the partition (using an open group valuation and organized separately by participant status groupings (
An application for partition must include a copy of the census data used for the projections described in § 4233.7(a)(3) and (5), including:
(a) Participant type (retiree, beneficiary, disabled, terminated vested, active, alternate payee).
(b) Date of birth.
(c) Gender.
(d) Credited service for guarantee calculation (
(e) Vested accrued monthly benefit before benefit suspension under section 305(e)(9) of ERISA.
(f) Vested accrued monthly benefit after benefit suspension under section 305(e)(9) of ERISA.
(g) Monthly benefit guaranteed by PBGC (determined under the terms of the original plan without respect to benefit suspensions).
(h) Benefit commencement date (for participants in pay status and others for which the reported benefit is not payable at Normal Retirement Date).
(i) For each participant in pay status—
(1) Form of payment, and
(2) Data relevant to the form of payment, including:
(i) For a joint and survivor benefit, the beneficiary's benefit amount (before and after suspension) and the beneficiary's date of birth;
(ii) For a Social Security level income benefit, the date of any change in the benefit amount, and the benefit amount after such change;
(iii) For a 5-year certain or 10-year certain benefit (or similar benefit), the relevant defined period.
(iv) For a form of payment not otherwise described in this section, the data necessary for the valuation of the form of payment, including the benefit amount before and after suspension.
(j) If an actuarial increase for postponed retirement applies or if the form of annuity is a Social Security level income option, the monthly vested benefit payable at normal retirement age in normal form of annuity.
(b)
(c)
(c)
(a) * * *
(3) If Treasury does not issue the final authorization to suspend, PBGC's conditional approval under § 4233.12(c) will be null and void.
(4) If Treasury issues a final authorization to suspend, PBGC will issue a final partition order under § 4233.14 and section 4233(c) of ERISA. The effective date of a final partition order must satisfy the requirements of section 305(e)(9)(D)(v) of ERISA.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Bayville Bridge across the Mill Neck Creek, mile 0.1, at Oyster Bay, New York. The deviation is necessary to perform electrical and mechanical upgrades. This deviation allows the bridge to remain in the closed position for approximately 5 days.
This deviation is effective from 7:00 a.m. on January 11, 2016 to 3:30 p.m. on January 15, 2016.
The docket for this deviation, [USCG-2015-1102] is available at
If you have questions on this temporary deviation, call or email Ms. Judy K. Leung-Yee, Project Officer, First Coast Guard District, telephone (212) 514-4330, email
Nassau County Department of Public Works requested this temporary deviation from the normal operating schedule to perform electrical and mechanical upgrades.
The Bayville Bridge, mile 0.1, across the Mill Neck Creek has a vertical clearance in the closed position of 9 feet at mean high water and 16 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.800.
The waterway is transited by one commercial user and recreation vessel traffic.
Under this temporary deviation, the Bayville Bridge may remain in the closed position from 7:00 a.m. on January 11, 2016 to 3:30 p.m. on January 15, 2016.
Vessels able to pass through the bridge in the closed position may do so at any time. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass.
The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Environmental Protection Agency (EPA).
Final rule; administrative change.
The Environmental Protection Agency (EPA) is updating the materials that are incorporated by reference (IBR) into the South Dakota State Implementation Plan (SIP). The Regulations affected by this update have been previously submitted by the South Dakota Department of Environment and Natural Resources (SD DENR) and approved by the EPA. In this action, the EPA is also notifying the public of corrections to typographical errors and minor formatting changes to the IBR tables. This update affects the SIP materials that are available for public inspection at the EPA Regional Office.
This action is effective December 23, 2015.
The EPA has established a docket for this action under Docket Identification Number EPA-R08-OAR-2015-0429. All documents in the docket are listed on the
Kathy Ayala, Air Program, U.S. Environmental Protection Agency (EPA), Region 8, Mailcode 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129, (303) 312-6142,
The SIP is a living document which a state revises as necessary to address its unique air pollution problems. Therefore, the EPA, from time to time, must take action on SIP revisions containing new and/or revised regulations as being part of the SIP. On May 22, 1997 (62 FR 27968), the EPA revised the procedures for incorporating by reference Federally-approved SIPs, as a result of consultation between the EPA and the Office of the Federal Register (OFR). The description of the revised SIP document, IBR procedures and “Identification of Plan” format are discussed in further detail in the May 22, 1997,
In this action, the EPA is announcing the update to the IBR material as of October 1, 2015. The EPA is also correcting typographical errors, including omission and other minor errors in subsection 52.2170, paragraphs (c), (d), and (e).
In this action, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the South Dakota regulations described in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available electronically through
EPA has determined that today's action falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedure Act (APA) which, upon a finding of “good cause” authorizes agencies to dispense with public participation, and section 553(d)(3), which allows an agency to make a rule effective immediately (thereby avoiding the 30-day delayed effective date otherwise provided for in the APA). Today's action simply updates the codification of provisions which are already in effect as a matter of law.
Under section 553 of the APA, an agency may find good cause where procedures are “impractical, unnecessary, or contrary to the public interest.” Public comment is “unnecessary” and “contrary to the public interest” since the codification only reflects existing law. Likewise, there is no purpose served by delaying the effective date of this action.
Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget. This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866. Because the agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the Administrative Procedure Act or any other statute as indicated in the
The Congressional Review Act (5 U.S.C. 801
In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the South Dakota regulations described in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available electronically through
EPA has also determined that the provisions of section 307(b)(1) of the Clean Air Act pertaining to petitions for judicial review are not applicable to this action. Prior EPA rulemaking actions for each individual component of the South Dakota SIP compilation had previously afforded interested parties the opportunity to file a petition for judicial review in the United States Court of Appeals for the appropriate circuit within 60 days of such rulemaking action. Thus, EPA sees no need in this action to reopen the 60-day period for filing such petitions for judicial review for this “Identification of plan” update action for South Dakota.
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(b)
(2) EPA Region 8 certifies that the rules/regulations provided by EPA in the SIP compilation at the addresses in paragraph (b)(3) of this section are an exact duplicate of the officially promulgated state rules/regulations which have been approved as part of the SIP as of October 1, 2015.
(3) Copies of the materials incorporated by reference may be inspected at the EPA Region 8 Office, Office of Partnerships and Regulatory Assistance (OPRA), Air Program, 1595 Wynkoop Street, Denver, Colorado 80202-1129.
(c)
(d)
(e)
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of ammonium acetate (CAS No. 631-61-8) when used as an inert ingredient (buffering agent) limited to 15% in pesticide formulations applied to pre-harvested crops. Exponent Inc., 1150 Connecticut Ave., Suite 1100, Washington, DC 20036 on behalf of the Gowan Company LLC., 370 South Main Street, Yuma, AZ 85364 submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting establishment of an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of ammonium acetate.
This regulation is effective December 23, 2015. Objections and requests for hearings must be received on or before February 22, 2016, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2013-0700, is available at
Susan Lewis, Registration Division (7505P), Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2013-0700 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 22, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2013-0700, by one of the following methods:
•
•
•
In the
Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.
Consistent with FFDCA section 408(c)(2)(A), and the factors specified in FFDCA section 408(c)(2)(B), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for ammonium acetate including exposure resulting from the exemption established by this action. EPA's assessment of exposures and risks associated with ammonium acetate follows.
EPA has evaluated the available toxicity data and considered their validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by ammonium acetate as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies.
Ammonium acetate is an ammonium salt of acetic acid. In aqueous solutions acetic acid and its salt ammonium acetate dissociate into the acetate anion (CH3COO-) and the respective cations (H+ and NH4+). The cations and ammonia (also a human metabolite) are physiological components of the human body. The chemical structures, physical-chemical properties, environmental fate behavior, and aquatic and mammalian toxicity of ammonium acetate and acetic acid are similar. Since limited data are available on ammonium acetate, toxicity data on acetic acid were used to represent toxicity due to exposure to ammonium acetate.
Acetic acid is of low acute dermal and inhalation toxicity in rats. It causes dermal irritation in mice and is corrosive in rabbits. It was also irritating in the eyes of rabbits. Although reduced body weight was observed at 390 mg/kg/day in a 90-day oral toxicity study in the rat, the reduction in weight gain was likely attributed to reduced appetite and food consumption observed in the study. Therefore, this is not considered an adverse effect. Although increased spleen weight was observed at 23-31 ppm (equivalent to 15-19 mg/kg/day) of acetic acid in a toxicity study in rats via the inhalation route of exposure, there is no concern for potential immunotoxicity. The Agency considers that this effect is due to red blood cell destruction rather than an immunotoxic response. Fetal susceptibility was not observed in several developmental studies in rats, mice and rabbits. Neither maternal nor developmental toxicity was not observed up to 1,600 mg/kg/day. It is not mutagenic in an Ames test nor is it clastogenic in a cytogenetic assay with Chinese hamster ovary K1 cells. It is not carcinogenic. In an eight month cancer study, tumors were not observed in rats at 60 mg/kg/day. While evidence of potential neurotoxicity was observed in a literature study in rats conducted by Sapute et al.
As noted above, acetic acid undergoes dissociation to the acetate anion and the H+ cations in aqueous media at pHs commonly found in the environment. Also, it is a naturally-occurring substance in plants and animals. In aerobic metabolism, acetic acid (as acetate) is a metabolite that combines with Co-enzyme A to form acetyl Co-A which subsequently enters into the Citric Acid Cycle, a common metabolic pathway in which food molecules are broken down to form energy. A major function of the Citric Acid Cycle is the oxidation of acetate. In animals, acetate is obtained from the breakdown of glucose molecules.
Specific information on the studies received and the nature of the adverse effects caused by acetic acid as well as the no observed adverse effect level (NOAEL) and the lowest observed adverse effect level (LOAEL) from the toxicity studies can be found at
In an aqueous environment, ammonium acetate dissociates to acetic acid and its salt. Therefore, it is appropriate to expect toxicity due to exposure to ammonium acetate to be similar to that of acetic acid. Therefore, based on the absence of a toxicological endpoint of concern via dietary route of exposure for acetic acid, its regulatory history, and no new toxicological data to indicate concern regarding previous decisions, a qualitative assessment was appropriate for ammonium acetate for all pathways of human exposure (food, drinking water, and residential). A potential endpoint of concern for the inhalation route of exposure was identified in a toxicity study. Increased spleen weight due to red blood cell destruction was observed at 23-31 ppm (equivalent to 15-19 mg/kg/day) of acetic acid in rats. However, according to the American Conference of Governmental Industrial Hygenists, Inc. (ACGIH), the threshold limit value (TLV) for occupational exposure to acetic acid is 10 ppm via inhalation. Residential exposure to the proposed use of ammonium acetate via inhalation is not expected to exceed the TLV limit of 10 ppm because the residential use pattern would result in drastically lower opportunities for inhalation exposure than allowed occupational use patterns, which are limited to 10 ppm. In addition, residential exposure will be much lower because exposure is expected to occur for shorter periods to diluted acetic acid as compared to workers who are exposed for 8 hours continuously, to more concentrated acetic acid. Therefore, a qualitative assessment was conducted with regard to inhalation exposure.
1.
Under this exemption from the requirement of a tolerance, residues of this ammonium acetate may be found on foods from crops that were treated with pesticide formulations containing ammonium acetate. However, a quantitative dietary exposure assessment was not conducted since an endpoint for risk assessment was not identified.
2.
3.
Ammonium acetate may be used in pesticide products and non-pesticide products that may be used around the home. Based on the discussion in Unit IV.B., a quantitative residential exposure assessment for ammonium acetate was not conducted.
4.
EPA has not found ammonium acetate to share a common mechanism of toxicity with any other substances, and ammonium acetate does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that ammonium acetate does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at
1.
As part of its qualitative assessment, the Agency did not use safety factors for assessing risk, and no additional safety factor is needed for assessing risk to infants and children. Based on an assessment of ammonium acetate and its chemical properties, EPA has concluded that there are no toxicological endpoints of concern for the U.S. population, including infants and children.
Because no toxicological endpoints of concern were identified, EPA concludes that aggregate exposure to residues of ammonium acetate will not pose a risk to the U.S. population, including infants and children, and that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to ammonium acetate residues.
An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance. EPA is establishing a limitation on the amount of ammonium acetate that may be used in pesticide formulations. The limitation will be enforced through the pesticide registration process under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136
Therefore, an exemption from the requirement of a tolerance is established under 40 CFR 180.920 for ammonium acetate (CAS No. 631-61-8) when used as an inert ingredient (buffering agent) in pesticide formulations applied to crops pre-harvest and limited to 15% in the end use formulation.
This action establishes a tolerance exemption under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes an exemption from the requirement of a tolerance for residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] (CAS Reg. No. 1477613-46-9) when used as an inert ingredient in a pesticide chemical formulation. Spring Trading Company on behalf of Lamberti USA, Incorporated submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] on food or feed commodities.
This regulation is effective December 23, 2015. Objections and requests for hearings must be received on or before February 22, 2016, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2015-0630, is available at
Susan Lewis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of 40 CFR part 180 through the Government Publishing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2015-0630 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 22, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2015-0630, by one of the following methods.
•
•
•
In the
Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and use in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing an exemption from the requirement of a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue . . .” and specifies factors EPA is to consider in establishing an exemption.
EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be shown that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.
Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. In the case of certain chemical substances that are defined as polymers, the Agency has established a set of criteria to identify categories of polymers expected to present minimal or no risk. The definition of a polymer is given in 40 CFR 723.250(b) and the exclusion criteria for identifying these low-risk polymers are described in 40 CFR 723.250(d). 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl),
1. The polymer is not a cationic polymer nor is it reasonably anticipated to become a cationic polymer in a natural aquatic environment.
2. The polymer does contain as an integral part of its composition the atomic elements carbon, hydrogen, and oxygen.
3. The polymer does not contain as an integral part of its composition, except as impurities, any element other than those listed in 40 CFR 723.250(d)(2)(ii).
4. The polymer is neither designed nor can it be reasonably anticipated to substantially degrade, decompose, or depolymerize.
5. The polymer is manufactured or imported from monomers and/or reactants that are already included on the TSCA Chemical Substance Inventory or manufactured under an applicable TSCA section 5 exemption.
6. The polymer is not a water absorbing polymer with a number average molecular weight (MW) greater than or equal to 10,000 daltons.
7. The polymer does not contain certain perfluoroalkyl moieties consisting of a CF3- or longer chain length as specified in 40 CFR 723.250(d)(6).
Additionally, the polymer also meets as required the following exemption criteria specified in 40 CFR 723.250(e).
8. The polymer's minimum number average MW is greater than or equal to 10,000 daltons. The polymer contains less than 2% oligomeric material below MW 500 and less than 5% oligomeric material below MW 1,000.
Thus, 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] meets the criteria for a polymer to be considered low risk under 40 CFR 723.250. Based on its conformance to the criteria in this unit, no mammalian toxicity is anticipated from dietary, inhalation, or dermal exposure to 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol].
For the purposes of assessing potential exposure under this exemption, EPA considered that 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] could be present in all raw and processed agricultural commodities and drinking water, and that non-occupational non-dietary exposure was possible. The number average MW of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] is 10,000 daltons. Generally, a polymer of this size would be poorly absorbed through the intact gastrointestinal tract or through intact human skin. Since 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] conform to the criteria that identify a low-risk polymer, there are no concerns for risks associated with any potential exposure scenarios that are reasonably foreseeable. The Agency has determined that a tolerance is not necessary to protect the public health.
Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”
EPA has not found 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] to share a common mechanism of toxicity with any other substances, and 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at
Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA concludes that a different margin of safety will be safe for infants and children. Due to the expected low toxicity of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol], EPA has not used a safety factor analysis to assess the risk. For the same reasons the additional tenfold safety factor is unnecessary.
Based on the conformance to the criteria used to identify a low-risk polymer, EPA concludes that there is a reasonable certainty of no harm to the U.S. population, including infants and children, from aggregate exposure to residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol].
There are no existing tolerance exemptions 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol]).
An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international
The Codex has not established a MRL for 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol].
Accordingly, EPA finds that exempting residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] from the requirement of a tolerance will be safe.
This action establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of propiconazole in or on multiple commodities which are identified and discussed later in this document. Interregional Research Project Number 4 (IR-4) requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective December 23, 2015. Objections and requests for hearings must be received on or before February 22, 2016, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2014-0788, is available at
Susan Lewis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2014-0788 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 22, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2014-0788, by one of the following methods:
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In the
Based upon review of the data supporting the petition, EPA has modified some of the commodity vocabulary and rounded the significant figures of some of the tolerances. The reason for these changes are explained in Unit IV.D.
Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for propiconazole including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with propiconazole follows.
EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as
The primary target organ for propiconazole toxicity in animals is the liver. Increased liver weights were seen in mice after subchronic or chronic oral exposures to propiconazole. Liver lesions such as vacuolation of hepatocytes, ballooned liver cells, foci of enlarged hepatocytes, hypertrophy, and necrosis are characteristic of propiconazole toxicity in rats and mice. Decreased body weight gain was also seen in subchronic, chronic, developmental and reproductive studies in animal studies. Dogs appeared to be more sensitive to the localized toxicity of propiconazole as manifested by stomach irritations at 6 milligram/kilogram/day (mg/kg/day) and above.
In rabbits, developmental toxicity occurred at a higher dose than the maternally toxic dose, while in rats, developmental toxicity occurred at lower doses than maternal toxic doses. Increased incidences of rudimentary ribs occurred in rat and rabbit fetuses. Increased cleft palate malformations were noted in two studies in rats. In one published study in rats, developmental effects (malformations of the lung and kidneys, incomplete ossification of the skull, caudal vertebrae and digits, extra rib (14th rib) and missing sternbrae) were reported at doses that were not maternally toxic. In the two generation reproduction study in rats, offspring toxicity occurred at a higher dose than the parental toxic dose suggesting lower susceptibility of the offspring to the toxic doses of propiconazole.
The acute neurotoxicity study produced severe clinical signs of toxicity (decreased activity, cold, pale, decreased motor activity, etc.) in rats at the high dose of 300 milligram/kilogram (mg/kg). Limited clinical signs (piloerection, diarrhea, tip toe gait) were observed in the mid-dose animals (100 mg/kg), while no treatment related signs were observed at 30 mg/kg. The current acute dietary assessment for the general population is based on the NOAEL of 30 mg/kg from the acute neurotoxicity study. A subchronic neurotoxicity study in rats did not produce neurotoxic signs at the highest dose tested that was associated with decreased body weight.
Propiconazole was negative for mutagenicity in the
Propiconazole was carcinogenic to male mice but was not carcinogenic to rats or to female mice. The Agency classified propiconazole as a possible human carcinogen and recommended that, for the purpose of risk characterization, the reference dose (RfD) approach be used for quantification of human risk. Propiconazole is not genotoxic and this fact, together with special mechanistic studies, indicates that propiconazole is a threshold carcinogen. Propiconazole produced liver tumors in male mice only at a high dose that was toxic to the liver. At doses below the RfD, liver toxicity is not expected; therefore, tumors are also not expected.
Specific information on the studies received and the nature of the adverse effects caused by propiconazole as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which the NOAEL and the LOAEL are identified. Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a RfD—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see
A summary of the toxicological endpoints for propiconazole used for human risk assessment is shown in Table 1 of this unit.
1.
i.
Such effects were identified for propiconazole. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA). This dietary survey was conducted from 2003 to 2008. As to residue levels in food, EPA conducted an acute dietary analysis for propiconazole residues of concern using tolerance levels and 100 percent crop treated (PCT) for all existing and proposed uses.
ii.
iii.
iv.
2.
Based on the Surface Water Concentration Calculator (SWCC) and Pesticide Root Zone Model—Ground Water (PRZM-GW) models, the estimated drinking water concentrations (EDWCs) of propiconazole for acute exposures are estimated to be 35.2 parts per billion (ppb) for surface water and 37.9 ppb for ground water, and for chronic exposures are estimated to be 18.6 ppb for surface water and 35.1 ppb for ground water.
Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 37.9 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 35.1 ppb was used to assess the contribution to drinking water.
3.
Propiconazole is currently registered for the following uses that could result in residential exposures: Turf, ornamentals, and in paint. The highest incidental oral and dermal exposure scenarios are expected from residential use on turf. EPA assessed short-term risk to toddlers from incidental oral and dermal exposure and short-term risk to adults from dermal and inhalation residential handler exposure as well as from post-application dermal exposure. The highest post-application exposure from residential use on turf was used to assess risk to short-term aggregate exposures.
The only residential use scenario that will result in potential intermediate term exposure to propiconazole is wood treatment, which the Agency assumes may result in dermal and incidental oral post-application exposures to children. No chronic exposures are expected. Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at
4.
Propiconazole is a member of the triazole-containing class of pesticides. Although conazoles act similarly in plants (fungi) by inhibiting ergosterol biosynthesis, there is not necessarily a relationship between their pesticidal activity and their mechanism of toxicity in mammals. Structural similarities do not constitute a common mechanism of toxicity. Evidence is needed to establish that the chemicals operate by the same, or essentially the same, sequence of major biochemical events (EPA, 2002). In conazoles, however, a variable pattern of toxicological responses is found; some are hepatotoxic and hepatocarcinogenic in mice. Some induce thyroid tumors in rats. Some induce developmental, reproductive, and neurological effects in rodents. Furthermore, the conazoles produce a diverse range of biochemical events including altered cholesterol levels, stress responses, and altered DNA methylation. It is not clearly understood whether these biochemical events are directly connected to their toxicological outcomes. Thus, there is currently no evidence to indicate that conazoles share common mechanisms of toxicity and EPA is not following a cumulative risk approach based on a common mechanism of toxicity for the conazoles. For information regarding EPA's procedures for cumulating effects from substances found to have a common mechanism of toxicity, see EPA's Web site at
Propiconazole is a triazole-derived pesticide. This class of compounds can form the common metabolite 1,2,4-triazole and two triazole conjugates (triazolylalanine and triazolylacetic acid). To support existing tolerances and to establish new tolerances for triazole-derivative pesticides, including propiconazole, EPA conducted a human health risk assessment for exposure to 1,2,4-triazole, triazolylalanine, and triazolylacetic acid resulting from the use of all current and pending uses of any triazole-derived fungicide. The risk assessment is a highly conservative, screening-level evaluation in terms of hazards associated with common metabolites (
An updated dietary exposure and risk analysis for the common triazole metabolites 1,2,4-triazole (T), triazolylalanine (TA), triazolylacetic acid (TAA), and triazolylpyruvic acid (TP) was completed on April 9, 2015, in association with registration requests for several triazole fungicides, propiconazole, difenoconazole, and flutriafol. That analysis concluded that risk estimates were below the Agency's level of concern for all population groups. This assessment may be found on
1.
2.
Although there was quantitative evidence of increased susceptibility of the young following exposure to propiconazole in the developmental rat study, the Agency determined there is a low degree of concern for this finding and no residual uncertainties because the increased susceptibility was based on minimal toxicity at high doses of administration, clear NOAELs and LOAELs have been identified for all effects of concern, and a clear dose-response has been well defined.
3.
i. The toxicity database for propiconazole is complete.
ii. Other than the mild effects seen at 300 mg/kg in the acute neurotoxicity study, neurotoxicity and neurobehavioral effects were not seen in the propiconazole toxicity database. The liver, not the nervous system, is the primary target organ of propiconazole toxicity.
iii. Although an apparent increased quantitative susceptibility was observed in fetuses and offspring, for the reasons noted in this Unit residual uncertainties or concerns for prenatal and/or postnatal toxicity are minimal.
iv. There are no residual uncertainties identified in the exposure databases. The acute dietary food exposure assessments were performed based on 100 PCT and tolerance-level residues, while the chronic used a combination of tolerance-level residues and reliable data on average field trial residues and 100 PCT. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to propiconazole in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. A turf transferable residue study is unavailable but being requested from the registrant for registration review of propiconazole. In all probability this study will reduce exposure estimates for both the incidental oral and post-application exposure to children. These assessments will not underestimate the exposure and risks posed by propiconazole.
EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
1.
2.
3.
Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs from post-application activities (the highest exposure scenario) of 200 for adults and 96 for children 1-2 years old. Although the MOE for children 1-2 years old is slightly below the target MOE of 100, the Agency does not believe that propiconazole poses short-term risks of concern because the difference is small and more than offset by the use of conservative endpoints and conservative exposure assumptions. This assessment is considered conservative since the short-term endpoints are based on a conservative LOAEL that is 3x higher than the NOAEL. Therefore, the true NOAEL is likely higher and would result in MOEs greater than 100. Further, the assessment combines conservative assumptions by using tolerance-level residues and reliable data on average field-trial residues and 100 PCT, conservative assumptions in the ground and surface water modeling, and conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. Refining any one of these conservatisms would result in MOEs for this age group that are not of concern. Although dietary (food and water) is not the aggregate exposure driver, incorporating PCT would likely increase the aggregate MOE further above 100. For example, using the Agency's highest average PCT
4.
Propiconazole is currently registered for use as a wood treatment that could result in intermediate-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with intermediate-term residential exposures to propiconazole.
Using the exposure assumptions described in this unit for intermediate-term exposures, EPA has concluded that the combined intermediate-term food, water, and residential exposures result in an aggregate MOE of 110 for children 1-2 years old. Because EPA's level of concern for propiconazole is a MOE of 100 or below, this MOE is not of concern.
5.
6.
Adequate enforcement methodology, a high performance liquid chromatography with ultraviolet detection method (HPLC/UV Method AG-671A) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address:
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.
There are no Codex MRLs for dillweed (fresh or dried), dill seed, the brassica leafy greens subgroup 5B, ti palm, watercress, quinoa or radish.
Codex does have MRLs in place for peach and plums (part of the U.S. stone fruit group), and pecans (part of the U.S. tree nut group) that are different than the U.S. tolerances. The U.S. tolerance expression is not harmonized with the Codex expression, which is expressed in terms of propiconazole per se, and therefore, the U.S. tolerance level for stone fruit and tree nuts cannot be harmonized with the Codex MRLs that are currently established.
Two comments were received in response to the October 21, 2015 notice of filing. The first comment asserted that no residues should be allowed and that the pesticide should not be approved for sale or use. The Agency understands the commenter's concerns and recognizes that some individuals believe that pesticides should be banned on agricultural crops. However, the existing legal framework provided by section 408 of the FFDCA states that tolerances may be set when persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by that statute. The comment appears to be directed at the underlying statute and not EPA's implementation of it; the citizen has made no contention that EPA has acted in violation of the statutory framework.
The second comment was from the Center for Biological Diversity and concerned endangered species; specifically stating that EPA cannot approve this new use prior to completion of consultations with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (“the Services”). This comment is not relevant to the Agency's evaluation of safety of the propiconazole tolerances; section 408 of the FFDCA focuses on potential harms to human health and does not permit consideration of effects on the environment.
The Agency is revising the petitioned-for tolerance requests for “dill, fresh” and “dill, dried” to “dillweed, fresh leaves” and “dillweed, dried leaves”, respectively, for consistency with the Agency's commodity vocabulary for those commodities. For the same reason, the Agency is revising the petitioned-for tolerance request for “leafy
Therefore, tolerances are established for residues of propiconazole, 1-[[2-(2,4-dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl] methyl]-1
This action establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
The revisions and additions read as follows:
(a) * * *
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Final rule.
On September 2, 2015, the National Highway Traffic Safety Administration (NHTSA) published an interim final rule and request for comment entitled “Allowing Importers to Provide Information to U.S. Customs and Border Protection in Electronic Format.” No comments were received in response to the interim final rule. Accordingly, this final rule confirms that the September 2, 2015 interim final rule will not be changed and its effective date is September 2, 2015.
Effective December 23, 2015.
Arija Flowers, Trial Attorney, Office of the Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590 (telephone: 202-366-5263).
As NHTSA received no comments on its interim final rule published on September 2, 2015 (80 FR 53011), the agency is making no changes to the rule and its effective date is September 2, 2015. For regulatory analyses and notices associated with this action, please see the interim final rule published at 80 FR 53011.
Accordingly, the interim rule amending 49 CFR parts 591 and 592, published at 80 FR 53011 on September 2, 2015, is adopted as final without change.
Federal Housing Finance Agency.
Proposed rule; request for comment.
The Federal Housing Finance Agency (FHFA) proposes this rule to implement the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801
Comments must be received on or before February 22, 2016.
You may submit your comments, identified by regulatory information number (RIN) 2590-AA76, by any of the following methods:
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Follow the instructions for submitting comments. If you submit your comments to the Federal eRulemaking Portal, please also send it by email to FHFA at
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Laura Ayoud, Assistant General Counsel, Office of the General Counsel, (202) 649-3069,
FHFA invites comments on all aspects of the proposed rule and will revise the language of the proposed rule as appropriate after taking all comments into consideration. Copies of all comments will be posted without change, including any personal information you provide, such as your name, address, or phone number, on the FHFA Internet Web site at
The Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801
PFCRA establishes a process of (a) investigation by the “investigating official,” who, by statute, is the Inspector General (IG) of the agency or a designee of the IG; (b) review by the agency's “reviewing official,” designated by the agency head,
A civil penalty may be imposed for making a false claim or statement to an agency even if the agency did not provide any money, property, services or benefits to any person as a result.
Following PFCRA's enactment in 1986, an interagency task force was established under the leadership of the Department of Health and Human Services to develop model implementing regulations by all affected agencies and departments. This action was consistent with the expectation that “regulations would be substantively uniform throughout the government, except as necessary to meet the specific needs of a particular agency or program.”
FHFA has determined this approach is appropriate for several reasons. Through the Safety and Soundness Act, FHFA has other available administrative remedies and independent litigating authority that it could use in the event a regulated entity, any affiliate of an Enterprise, the OF, or any other entity-affiliated party made a false claim on or provided false information to FHFA in its supervisory, regulatory, enforcement, conservatorship, or receivership activities.
Finally, FHFA also notes that its PFCRA rule would not apply to false claims or statements made by any person to any regulated entity, an affiliate of an Enterprise, or the OF. PFCRA generally does not apply to false claims or statements made to private companies conducting private business activities, but instead creates an administrative remedy for false claims or statements for money, property, services, or benefits provided by the United States government through an agency. Thus, PFCRA would apply to a private company only where that company is acting on behalf of an agency and allocating money, property, services, or benefits for which the actual provider is the United States government. The regulated entities, including any affiliate of an Enterprise, and the OF do not provide United States government money, property, services, or benefits on FHFA's behalf to any person. Therefore, FHFA's proposed rule does not apply to any false claim or statement by any person to any regulated entity, including any affiliate of an Enterprise, or the OF.
If the Attorney General approves the use of PFCRA, FHFA's reviewing official may refer the case to an ALJ as presiding officer. To initiate the action, the reviewing official must provide notice to any person who is subject to the allegation of liability. That person may then request a formal hearing on the record and is entitled to all exculpatory information in the possession of the investigating official or the reviewing official. If a hearing is requested, the ALJ would determine liability based on the preponderance of the evidence and the amount of any penalty (and, if appropriate, any assessment) to be imposed. The proposed rule implements statutory provisions for an appeal of the ALJ's decision to the Director of FHFA as the “authority head” and then to the appropriate U.S. District Court.
The proposed rule provides for hearing and appeal rights of persons subject to allegations of liability for any penalty or assessment under PFCRA. FHFA currently has Rules of Practice and Procedure in place at title 12 of the Code of Federal Regulations, Part 1209, which establish evidentiary, hearing, and appeals procedures and processes for hearings on the record at FHFA. Similar to the HUD rule, FHFA's proposed rule cross-references its existing administrative enforcement procedures for purposes of PFCRA actions. FHFA's existing rules of procedure were issued subject to a notice and comment rulemaking process and, by proposing to use them for purposes of any PFCRA action, FHFA seeks to ensure due process and procedural consistency.
The proposed rule does not contain any collections of information pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Regulatory Flexibility Act (5 U.S.C. 601
Civil remedies, Program fraud.
Accordingly, for the reasons stated in the preamble, and under the authority of 12 U.S.C. 4511, 4513, 4514, 4526, 4585 and 4636 and 31 U.S.C. 3803, FHFA proposes to amend subchapter A of Chapter XII of Title 12 of the Code of Federal Regulations by adding a new Part 1217 to read as follows:
12 U.S.C. 4501; 12 U.S.C. 4526, 28 U.S.C. 2461 note; 31 U.S.C. 3801-3812.
(a)
(1) Establishes administrative procedures for imposing civil penalties and assessments against persons who make, submit, or present, or cause to be made, submitted, or presented, false, fictitious, or fraudulent claims or written statements to FHFA or to its agents; and
(2) Specifies the hearing and appeal rights of persons subject to allegations of liability for such penalties and assessments. Hearings under this part shall be conducted in accordance with the Administrative Procedure Act pursuant to part 1209, subpart C, of this chapter.
(b)
(1) Made to FHFA for property, services, or money (including money representing benefits);
(2) Made to a recipient of property, services, or money from FHFA or to a party to a contract with FHFA:
(i) For property or services, if FHFA:
(A) Provided such property or services;
(B) Provided any portion of the funds for the purchase of such property or services; or
(C) Will reimburse such recipient or party for the purchase of such property or services; or
(ii) For the payment of money (including money representing benefits) if the United States:
(A) Provided any portion of the money requested or demanded; or
(B) Will reimburse such recipient or party for any portion of the money paid on such request or demand; or
(3) Made to FHFA, which has the effect of decreasing an obligation to pay or account for property, services, or money.
(i) Has actual knowledge that the claim or statement is false, fictitious, or fraudulent;
(ii) Acts in deliberate ignorance of the truth or falsity of the claim or statement; or
(iii) Acts in reckless disregard of the truth or falsity of the claim or statement.
(2) No proof of specific intent to defraud is required for purposes of establishing liability under 31 U.S.C. 3802 or this part.
(1) With respect to a claim or to obtain the approval or payment of a claim (including relating to eligibility to make a claim); or
(2) With respect to (including relating to eligibility for) a contract with, or a bid or proposal for a contract with, or benefit from, FHFA or any State, political subdivision of a State, or other party, if FHFA provides any portion of the money or property under such contract or benefit, or if FHFA will reimburse such State, political subdivision, or party for any portion of the money or property under such contract or for such benefit.
(a)
(i) Is false, fictitious, or fraudulent;
(ii) Includes or is supported by a written statement that:
(A) Asserts a material fact which is false, fictitious, or fraudulent; or
(B) Omits a material fact and, as a result of the omission, is false, fictitious, or fraudulent, where the person making, presenting, or submitting such statement has a duty to include such material fact; or
(iii) Is for payment for the provision of property or services to FHFA which the person has not provided as claimed.
(2) Each voucher, invoice, claim form, or other individual request or demand for property, services, or money constitutes a separate claim for purposes of this part.
(3) A claim shall be considered made to FHFA, a recipient, or party when the claim is actually made to an agent, fiscal intermediary, or other entity, acting for or on behalf of FHFA, the recipient, or the party.
(4) Each claim for property, services, or money is subject to a civil penalty, without regard to whether the property, services, or money actually is delivered or paid.
(5) There is no liability under this part if the amount of money or value of property or services claimed exceeds $150,000 as to each claim that a person submits. For purposes of this paragraph (a), a group of claims submitted simultaneously as part of a single transaction shall be considered a single claim.
(6) If the FHFA has made any payment, transferred property, or provided services for a claim, then FHFA may make an assessment against a person found liable in an amount of up to twice the amount of the claim or portion of the claim that is determined to be in violation of paragraph (a)(1) of this section. This assessment is in addition to the amount of any civil penalty imposed.
(b)
(i) The person knows or has reason to know:
(A) Asserts a material fact which is false, fictitious, or fraudulent; or
(B) Omits a material fact and is false, fictitious, or fraudulent as a result of such omission, where the person making, presenting, or submitting such statement has a duty to include such material fact; and
(ii) Contains or is accompanied by an express certification or affirmation of the truthfulness and accuracy of the contents of the statement.
(2) Each written representation, certification, or affirmation constitutes a separate statement.
(3) A statement shall be considered made to FHFA when the statement is actually made to an agent, fiscal intermediary, or other entity acting for or on behalf of FHFA.
(c)
(a)
(b)
(c)
(1) A description of the claim or statement at issue;
(2) The evidence supporting the allegations;
(3) An estimate of the amount of money or the value of property, services, or other benefits requested or demanded in violation of § 1217.3; and
(4) Any exculpatory or mitigating circumstances that may relate to the claim or statement.
(d)
(a)
(b)
(1) A description of the claim or statement at issue;
(2) The evidence supporting the allegations;
(3) An estimate of the amount of money or the value of property, services, or other benefits requested or demanded in violation of § 1217.3;
(4) Any exculpatory or mitigating circumstances that may relate to the claim or statement; and
(5) A statement that there is a reasonable prospect of collecting an appropriate amount of penalties and assessments. Determining there is a reasonable prospect of collecting an appropriate amount of penalties and assessments is separate from determining ability to pay, and may not be considered in determining the amount of any penalty or assessment in any particular case.
(a)
(b)
(1) The allegations of liability against the respondent, including the statutory basis for liability, the claim or statement at issue, and the reasons why liability arises from that claim or statement;
(2) A statement that the required approval to issue the notice was received from the Department of Justice;
(3) The amount of the penalty and, if applicable, any assessment for which the respondent may be held liable;
(4) A statement that the respondent may request a hearing by submitting a written response to the notice;
(5) The addresses to which a response must be sent in accordance with § 1209.15 of this chapter;
(6) A statement that failure to submit an answer within 30 days of receipt of the notice may result in the imposition of the maximum amount of penalties and assessments sought, without right of appeal;
(7) A statement that the respondent must preserve and maintain all documents and data, including electronically stored data, within the possession or control of the respondent that may relate to the allegations; and
(8) A copy of this part 1217 and part 1209, subpart C of this chapter.
(c)
(a)
(i) In accordance with § 1209.24 of this chapter; and
(ii) Not later than 30 days after the date of service of the notice.
(2) A timely filed response to a notice under § 1217.6 shall be deemed to be a request for a hearing.
(3) A response to a notice under § 1217.6 must include:
(i) The admission or denial of each allegation of liability made in the notice;
(ii) Any defense on which the respondent intends to rely;
(iii) Any reasons why the penalty and, if appropriate, any assessment should be less than the amount set forth in the notice; and
(iv) The name, address, and telephone number of the person who will act as the respondent's representative, if any.
(b)
The statute of limitations for commencing a hearing under this part shall be tolled:
(a) If the hearing is commenced in accordance with 31 U.S.C. 3803(d)(2)(B) within 6 years after the date on which the claim or statement is made; or
(b) If the parties agree to such tolling.
(a)
(b)
(1) The number of false, fictitious, or fraudulent claims or statements;
(2) The time period over which such claims or statements were made;
(3) The degree of the respondent's culpability with respect to the misconduct;
(4) The amount of money or the value of the property, services, or benefit falsely claimed;
(5) The value of the actual loss to FHFA as a result of the misconduct, including foreseeable consequential damages and the cost of investigation;
(6) The relationship of the civil penalties to the amount of the loss to FHFA;
(7) The potential or actual impact of the misconduct upon public health or safety or public confidence in the management of FHFA programs and operations, including particularly the impact on the intended beneficiaries of such programs;
(8) Whether the respondent has engaged in a pattern of the same or similar misconduct;
(9) Whether the respondent attempted to conceal the misconduct;
(10) The degree to which the respondent has involved others in the misconduct or in concealing it;
(11) If the misconduct of employees or agents is imputed to the respondent, the extent to which the respondent's practices fostered or attempted to preclude the misconduct;
(12) Whether the respondent cooperated in or obstructed an investigation of the misconduct;
(13) Whether the respondent assisted in identifying and prosecuting other wrongdoers;
(14) The complexity of the program or transaction, and the degree of the respondent's sophistication with respect to it, including the extent of the respondent's prior participation in the program or in similar transactions;
(15) Whether the respondent has been found, in any criminal, civil, or administrative proceeding, to have engaged in similar misconduct or to have dealt dishonestly with the Government of the United States or of a State, directly or indirectly;
(16) The need to deter the respondent and others from engaging in the same or similar misconduct;
(17) The respondent's ability to pay; and
(18) Any other factors that in any given case may mitigate or aggravate the seriousness of the false claim or statement.
(c)
(a)
(b)
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 regulatory review; request for comments.
The OCC, Board, and FDIC (each an “Agency”; together “we” or “Agencies”) are conducting a review of the regulations we have issued in order to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions, as required by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). EGRPRA requires the Agencies to organize the regulations into categories and publish groups of categories for comment. In this notice, the Agencies are seeking public comment on regulations in the following categories: Rules of Procedure; Safety and Soundness; and Securities. We have listed these rules on a chart included with this notice.
In addition, as we previously announced, the Agencies have expanded the scope of the EGRPRA review to include the Agencies' recently issued final rules. Accordingly, in this notice, the Agencies invite the public to comment on any Agency final rule not included in a previous EGRPRA
Finally, in order to be as inclusive as possible, the Agencies also invite comment during the comment period for this notice on any Agency rule that is issued in final form on or before December 31, 2015. We will list these
Written comments must be received by no later than March 22, 2016.
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:
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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 present valid government-issued photo identification and submit to a security screening.
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:
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The FDIC will post all comments received to
OCC: Karen McSweeney, Counsel (202) 649-6295; Heidi M. Thomas, Special Counsel (202) 649-5490; Rima Kundnani, Attorney (202) 649-5545; for persons who are deaf or hard of hearing, TTY (202) 649-5597.
Section 2222 of EGRPRA
In addition to providing an opportunity to consider burden reduction generally, the EGRPRA review also provides the Agencies and the public with an opportunity to consider burden reduction on community banks and other small, insured depository institutions or holding companies. We are keenly aware of the role that these institutions play in providing consumers and businesses across the nation with essential financial services and access to credit, and we are concerned about the impact of regulatory burden on these smaller institutions. We understand that when an Agency issues a new regulation or amends a current regulation, smaller institutions may have to devote considerable resources to determine if and how the regulation will affect them. Through the public comment process, the EGRPRA review can help the Agencies identify and target regulatory changes to reduce unnecessary burden on these smaller institutions.
Burden reduction must, however, be consistent with the Agencies' statutory mandates, many of which require the issuance of regulations. These mandates include ensuring the safety and soundness of insured depository institutions, their affiliates, and the financial system as a whole. EGRPRA recognizes that effective burden reduction may require legislative change. Accordingly, as part of this review, we specifically ask the public to comment on the relationships among burden reduction, regulatory requirements, and statutory mandates.
In addition, we note that the Agencies consider potential regulatory burden each time we propose, adopt, or amend a rule. For example, under the Paperwork Reduction Act of 1995 and the Regulatory Flexibility Act, the Agencies assess each rulemaking with respect to the burdens the rule might impose. Furthermore, we invite the public to comment on every rule we propose, as required by the Administrative Procedure Act (APA).
Taken together for purposes of EGRPRA, the Agencies' regulations covering insured depository institutions encompass more than 100 subjects.
To carry out the EGRPRA review, the Agencies have published three
In the Third Notice, the Agencies also announced their decision to expand the scope of the EGRPRA review to include recently issued rules, such as those issued pursuant to the Dodd-Frank Act and the recently promulgated domestic capital and liquidity rules. The Agencies identified these rules, referred to as “Newly Listed Rules,” on a chart included with the Third Notice. The Third Notice stated that the public could comment on the Newly Listed Rules during the comment period for the final EGRPRA notice.
Today, we are publishing the fourth and final EGRPRA notice, addressing the categories of Rules of Procedure; Safety and Soundness; and Securities. We invite the public to identify outdated, unduly burdensome, or otherwise unnecessary regulatory requirements imposed on insured depository institutions and their holding companies in these three categories. Chart A in Section IV contains the Agencies' rules in these three categories, including the Newly Listed Rules in these three categories. In addition, consistent with the expanded scope of the EGRPRA review, we invite the public to identify outdated, unduly burdensome, or otherwise unnecessary regulatory requirements imposed on insured depository institutions and their holding companies by the Newly Listed Rules in the nine categories covered by the Prior Notices. Chart B in Section IV contains the Newly Listed Rules in
Finally, in order to be as inclusive as possible, the Agencies invite comment on any other rule issued in final form on or before December 31, 2015, which will be listed on the EGRPRA Web site,
As part of the EGRPRA review, the Agencies have held a series of outreach meetings around the country to provide an opportunity for bankers, consumer and community groups, and other interested persons to present their views directly to Agency senior management and staff on any of the regulations in the EGRPRA review. The Agencies held a final outreach meeting on December 2, 2015, in the Washington, DC area. Transcripts from and other information about the outreach meetings can be found on the Agencies' EGRPRA Web site,
Following the close of the comment period for this final notice, the Agencies will review all of the comments we have received and decide whether further action is appropriate with respect to the regulations. The Agencies will make this decision jointly in the case of rules that we have issued on an interagency basis. For rules issued by one Agency, the issuing Agency will review the comments received and independently determine whether amendments to or repeal of its rules are appropriate. If so, that Agency will initiate a rulemaking to effect such change.
Finally, EGRPRA also requires the FFIEC or the Agencies to publish in the
As stated previously in this notice, the Agencies are asking the public to comment on regulations in the Rules of Procedure; Safety and Soundness; and Securities categories. Chart A in Section IV contains the Agencies' rules that are in these three categories. The Agencies are also asking the public to comment on the Newly Listed Rules in the nine categories covered by the Prior Notices. Chart B in Section IV contains the Newly Listed Rules. Both charts include any rules issued on or before December 23, 2015. The Agencies will also accept comment during the open comment period of this notice on any other Agency rule issued in final form by December 31, 2015. In addition, we will accept comments on any of the Agencies' rules, including those rules in categories covered in the Prior Notices.
Where possible, we ask commenters to cite specific regulatory language or provisions. We also welcome suggested alternative provisions or language in support of a comment, where appropriate. Where implementation of a suggestion would require modification of a statute, we ask the commenter to identify the statute and the needed change, where possible.
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By order of the Board of Directors.
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 747-400, 747-400D, and 747-400F series airplanes; Model 757 airplanes; and Model 767 airplanes. This proposed AD was prompted by reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. This proposed AD would require, depending on the model/configuration for Model 747 airplanes, installing an on-ground stabilizer autotrim inhibit system, doing routine functional testing of the automatic stabilizer trim inhibit system and corrective actions if necessary; for Model 757 airplanes and Model 767 airplanes, installing relays and related wiring to open and close the flight control computer (FCC) analog output that controls the stabilizer trim adjustment, doing routine functional testing of the automatic stabilizer trim inhibit system, and corrective actions if necessary; and for Model 767-300, and -300F series airplanes, installing new operational program software (OPS) into the FCCs. We are proposing this AD to prevent stabilizer mistrim, which could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.
We must receive comments on this proposed AD by February 8, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For service information identified in this proposed AD, contact 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
Fnu Winarto, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6659; 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 have received reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. The current configuration of affected airplanes allows engagement of the autopilot while on the ground. This engagement can result in the stabilizer trim being positioned to a trim setting outside of the acceptable takeoff setting range. The root cause is unknown, but the erroneous autopilot engage request is believed to have come from the mode control panel (MCP) and to have been caused by contamination within the MCP. Incorrect stabilizer trim adjustment during takeoff, if not corrected, could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.
We reviewed the following service information.
• Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015. This service information describes procedures for installing an on-ground stabilizer autotrim inhibit system, and doing functional testing.
• Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.
• Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.
• Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015. This service information describes procedures for installing new OPS into the FCCs.
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 these same type designs.
This proposed AD would require accomplishing the actions specified in the service information described previously. For information on the procedures and compliance times, see this service information at
For Model 747 airplanes, this proposed AD would require doing post-modification routine functional testing of the automatic stabilizer trim inhibit system, and corrective actions if necessary, at intervals not to exceed 1,500 flight hours. The service information does not require these actions.
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 1,220 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
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 available costs in our cost estimate.
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 February 8, 2016.
None.
This AD applies to certain The Boeing Company airplanes, certificated in any category, identified in paragraphs (c)(1) through (c)(4) of this AD.
(1) Model 747-400, 747-400D, and 747-400F series airplanes, as identified in Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015.
(2) Model 757-200, -200PF, -200CB, and -300 series airplanes, as identified in Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015.
(3) Model 767-200, -300, -300F, and -400ER series airplanes, as identified in Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015.
(4) Model 767-300, and -300F series airplanes, as identified in Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015.
Air Transport Association (ATA) of America Code 22, Auto flight.
This AD was prompted by reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. We are issuing this AD to prevent stabilizer mistrim, which could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.
Comply with this AD within the compliance times specified, unless already done.
For airplanes identified in paragraph (c)(1) of this AD: Within 24 months after the effective date of this AD, install new wiring and relays to reroute the four autotrim arm signals through new or existing air/ground determination source select switches, and do functional testing, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015. If the functional test fails, before further flight, do corrective actions, repeat the test, and do all applicable corrective actions until the functional test is passed, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015. Repeat the functional test of the automatic stabilizer trim system specified in step 250. of paragraph 3.B. of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015, thereafter at intervals not to exceed 1,500 flight hours. If any functional test fails, before further flight, do corrective actions, repeat the test, and do all applicable corrective actions until the functional test is passed, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015.
For airplanes identified in paragraph (c)(2) of this AD: Within 24 months after the effective date of this AD, install wiring to inhibit the automatic stabilizer trim arm discrete when the airplane is on ground, install a two-position momentary contact test switch in the main equipment center, and do the functional test and all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015. Repeat the functional test of the automatic stabilizer trim system and all applicable corrective actions specified in step 11. of paragraph 3.B. of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015, thereafter at intervals not to exceed 1,500 flight hours.
For airplanes identified in paragraph (c)(3) of this AD: Within 24 months after the effective date of this AD, install relays and wiring to open and close the flight control computer (FCC) analog output that controls the stabilizer trim adjustment, install a momentary action ground test switch, and do the functional testing and all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015. Repeat the functional test of the automatic stabilizer trim system and all applicable corrective actions specified in steps 5.a. through 5.g. of Paragraph 3.B. of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015, thereafter at intervals not to exceed 1,500 flight hours.
For airplanes identified in paragraph (c)(4) of this AD: Within 16 months after the effective date of this AD, install new operational program software into the FCCs, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015.
(1) This paragraph provides credit for actions required by paragraph (i) of this AD, if those actions were performed before the effective date of this AD using Boeing Special Attention Service Bulletin 767-22-0143, dated March 6, 2015.
(2) This paragraph provides credit for actions required by paragraph (j) of this AD, if those actions were performed before the effective date of this AD using Boeing Special Attention Service Bulletin 767-22-0146, dated March 24, 2015.
(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, modification, or alteration 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. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(4) For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (l)(4)(i) and (l)(4)(ii) 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 Fnu Winarto, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6659; 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.
Supplemental notice of proposed rulemaking (NPRM); reopening of comment period.
We are revising an earlier proposed airworthiness directive (AD) for all Airbus Model A330-200, A330-200 Freighter, A330-300, A340-200, and A340-300 series airplanes. The NPRM proposed to require inspecting certain trimmable horizontal stabilizer actuators (THSAs) to determine the number of total flight cycles the THSA has accumulated, and replacing the THSA if necessary. The NPRM was prompted by the results of endurance qualification tests on the THSA, which revealed a partial loss of the no-back brake (NBB) efficiency in specific load conditions. This action revises the NPRM by adding airplanes to the proposed applicability, reducing the proposed compliance times for replacing affected THSAs, and revising the definition of a serviceable THSA. We are proposing this supplemental NPRM (SNPRM) to detect and correct premature wear of the carbon friction disks on the NBB of the THSA, which could lead to reduced braking efficiency in certain load conditions, and, in conjunction with the inability of the power gear train to keep the ball screw in its last commanded position, could result in uncommanded movements of the trimmable horizontal stabilizer and loss of control of the airplane. Since these actions impose an additional burden over those proposed in the NPRM, we are reopening the comment period to allow the public the chance to comment on these proposed changes.
We must receive comments on this SNPRM by February 8, 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 Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email
You may examine the AD docket on the Internet at
Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1138; 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
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A330-200, A330-200 Freighter, A330-300, A340-200, and A340-300 series airplanes. The NPRM published in the
Since we issued the NPRM (79 FR 6104, February 3, 2014), we have determined that additional airplanes are affected by the unsafe condition, the proposed compliance times for replacing affected THSAs should be reduced, and the definition of a serviceable THSA should be revised. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0257R1, dated May 29, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition on all Airbus Model A330-200, A330-200 Freighter, A330-300, A340-200, and A340-300 series airplanes; and Model A340-500 and A340-600 series airplanes. The MCAI states:
During endurance qualification tests on Trimmable Horizontal Stabilizer Actuator (THSA) of another Airbus aeroplane type, a partial loss of the no-back brake (NBB) efficiency was experienced. Due to THSA design similarity on the A330/A340 fleet, a similar partial loss of the NBB efficiency was identified on THSA Part Number (P/N) 47147 as installed on A330-300 and A340-200/-300 aeroplanes, on THSA P/N 47172 as installed on A330-200/-300 and A340-200/-300 aeroplanes, and on THSA P/N 47175 as installed on A340-500/600 aeroplanes.
Investigation results concluded that this partial loss of braking efficiency in some specific aerodynamic load conditions was due to polishing and auto-contamination of the NBB carbon friction disks.
This condition, if not detected and corrected and in conjunction with the power gear train not able to keep the ball screw in its last commanded position, could lead to uncommanded movements of the THS, possibly resulting in loss of control of the aeroplane.
To address this potential unsafe condition, EASA issued AD 2013-0144 [http://ad.easa.europa.eu/blob/easa_ad_2013_0144.zip/AD_2013-0144R1_2] to require replacement of each THSA that has exceeded 16,000 flight cycles (FC) in service, to be sent in shop for NBB carbon disk replacement.
Since that AD was issued, a need for clarification has been demonstrated, regarding the identification of the THSA `affected' by this requirement.
For this reason, EASA AD 2013-0144 [
Since EASA AD 2013-0144R1 [
Consequently, EASA issued AD 2014-0257 [
Since that [EASA] AD was issued, it was determined that it is necessary to consider that the THSA removal for NBB disks replacement could also be calculated since last NBB disk replacement which was done in-shop.
This proposed AD also adds Model A340-541 and A340-642 airplanes to the applicability. You may examine the MCAI in the AD docket on the Internet at
Airbus has issued the following service information, dated July 15, 2014.
• Service Bulletin A330-27-3199 (for Model A330 series airplanes);
• Service Bulletin A340-27-4190 (for Model A340-200 and -300 series airplanes); and
• Service Bulletin A340-27-5062 (for Model A340-500 and -600 series airplanes).
The service information describes procedures for inspecting the THSA to determine the part number and replacing THSAs having certain part numbers with a new or serviceable part. 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 gave the public the opportunity to participate in developing this AD. We have considered the comments received. The following presents the comments received on the NPRM (79 FR 6104, February 3, 2014) and the FAA's response to each comment.
One commenter, Chris Vargas, supported the intent of the NPRM (79 FR 6104, February 3, 2014). Another commenter, Cameron Lane, restated the proposed costs and unsafe condition. We infer that this commenter supported the intent of the NPRM.
US Airways stated that there is a conflict between the THSA life limits included in the NPRM (79 FR 6104, February 3, 2014) and the life limits included in the A330 Airworthiness Limitations. The commenter conveyed that it is concerned that operators would be unsure which life limits to follow. We infer that the commenter is requesting that the THSA life limits specified in the NPRM match those specified in the A330 Airworthiness Limitations.
The THSA life limits specified in this SNPRM are more restrictive than the life limits specified in the A330 Airworthiness Limitations for the parts identified in paragraphs (g)(1) and (g)(2) of this proposed AD. This SNPRM proposes to require a one-time
US Airways requested that a life limit be assigned only to the NBB disks (part number FE194-031) and not the entire THSA. The commenter stated that the NBB disks are replaceable in the shop and the AD should not limit the life of the entire THSA.
We partially agree with the commenter's request. EASA has revised MCAI 2014-0257, dated November 27, 2014, to include life limit computations for an affected THSA from the most recent NBB inspection, in addition to the accumulated total flight cycles since the THSA's first installation on an airplane. The revised MCAI is 2014-0257R1, dated May 29, 2015. We have revised paragraphs (g), (h)(1), (h)(2), and (h)(3) of this proposed AD accordingly.
Jennifer Paramski stated that the proposed compliance time in the NPRM (79 FR 6104, February 3, 2014) should be reduced because failure of the THSA is a substantial safety concern. The commenter stated that once the THSA has accumulated 16,000 total flight cycles, the airline has 30 months or 4,000 flight cycles to replace the part, and a lot can happen during that time because the part is sensitive to load conditions. The commenter interpreted the compliance time to replace the THSA as tiered and suggested that some airlines might try to extend the timeframe for THSA replacement because after 4,000 flight cycles from the initial 16,000 flights reached, an airline could argue that it should get an additional 1,500 flight cycles or 12 months to replace the part because of the second tier. The commenter explained that airlines would try to maximize the current part on all airplanes to try to maximize profit. The commenter emphasized that maximizing profits could jeopardize the safety of others, which, if there was an accident, would cause more monetary losses in the long run from lawsuits.
We do not agree that the compliance time should be reduced. The thresholds for THSA replacement are not tiered, as stated by the commenter. The replacement threshold is based on the accumulation of total flight cycles as of the effective date of the final rule. An airline cannot exceed the thresholds mandated in a final rule unless it requests an alternative method of compliance, issued by the FAA, using the procedures specified in paragraph (n)(1) of this proposed AD. However, we have clarified the compliance times in this SNPRM by revising paragraph (h) of this proposed AD and including a new paragraph (i). The subsequent paragraphs were redesignated accordingly.
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.
Certain changes described above expand the scope of the proposed AD (79 FR 6104, February 3, 2014). As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.
The MCAI requires operators to replace certain THSAs by certain dates. The replacements are done for THSAs exceeding a certain flight cycle limit corresponding to each date. EASA determined that accomplishing the replacements by these dates is necessary in order to address the identified unsafe condition. Therefore, we are also specifying compliance dates in this proposed AD.
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 RC (required for compliance) 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 a serviceable 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 94 airplanes of U.S. registry.
We also estimate that it would take about 3 work-hours per product to comply with the new basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $0 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $23,970, or $255 per product.
In addition, we estimate that any necessary follow-on actions would take about 23 work-hours and would require parts costing up to $722,556, for a cost of up to $724,511 per product. We have no way of determining the number of aircraft that might need this action.
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,
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 February 8, 2016.
None.
This AD applies to the Airbus airplanes identified in paragraphs (c)(1) through (c)(7) of this AD, certificated in any category, all manufacturer serial numbers.
(1) Model A330-201, -202, -203, -223, and -243 airplanes.
(2) Model A330-223F and -243F airplanes.
(3) Model A330-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes.
(4) Model A340-211, -212, and -213 airplanes.
(5) Model A340-311, -312, and -313 airplanes.
(6) Model A340-541 airplanes.
(7) Model A340-642 airplanes.
Air Transport Association (ATA) of America Code 27, Flight Controls.
This AD was prompted by the results of endurance qualification tests on the trimmable horizontal stabilizer actuator (THSA), which revealed a partial loss of the no-back brake (NBB) efficiency in specific load conditions. We are issuing this AD to detect and correct premature wear of the carbon friction disks on the NBB of the THSA, which could lead to reduced braking efficiency in certain load conditions, and, in conjunction with the inability of the power gear train unable to keep the ball screw in its last commanded position, could result in uncommanded movements of the trimmable horizontal stabilizer and loss of control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Within 90 days after the effective date of this AD: Inspect the THSA to determine if it has a part number that is specified in paragraph (g)(1) or (g)(2) of this AD, and to determine the total number of flight cycles accumulated since the THSA's first installation on an airplane, or since the most recent NBB replacement. A review of airplane delivery or maintenance records is acceptable in lieu of this inspection if the part number of the THSA can be conclusively determined from that review.
(1) For Model A330-200 Freighter, A330-200, A330-300, A340-200 and A340-300 series airplanes: Part number (P/N) 47147-500, 47147-700, 47172-300, 47172-500, 47172-510, or 47172-520.
(2) For Model A340-500 and -600 series airplanes: P/N 47175-200, 47175-300, 47175-500, or 47175-520.
For Airbus Model A330-200 Freighter, A330-200, A330-300, A340-200, and A340-300 series airplanes having a THSA with a part number specified in paragraph (g)(1) of this AD: At the applicable time specified in paragraph (h)(1), (h)(2), or (h)(3) of this AD, replace each affected THSA with a serviceable THSA, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-27-3199, dated July 15, 2014; or Airbus Service Bulletin A340-27-4190, dated July 15, 2014; as applicable.
The THSA life limits specified in Part 4—Aging System Maintenance of the Airbus A330 and A340 Airworthiness Limitations Sections are still relevant, as applicable to airplane model and THSA part number.
(1) For a THSA that has accumulated or exceeded 20,000 total flight cycles since the THSA's first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD: Within 6 months after the effective date of this AD.
(2) For a THSA that has accumulated or exceeded 16,000 total flight cycles, but less than 20,000 total flight cycles since the THSA's first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD: At the applicable time specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD.
(i) For Model A330-200 Freighter, A330-200, and A330-300 series airplanes: Within 12 months after the effective date of this AD but without exceeding 20,000 total flight cycles.
(ii) For Model A340-200, and A340-300 series airplanes: Within 12 months after the effective date of this AD but without exceeding 20,000 total flight cycles.
(3) For a THSA that has accumulated less than 16,000 total flight cycles since first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD: At the applicable time specified in paragraph (i) of this AD.
The requirements of this paragraph apply to Airbus Model A330-200 Freighter, A330-200, A330-300, A340-200, and A340-300 series airplanes having a THSA with a part number specified in paragraph (g)(1) of this AD that has accumulated less than 16,000 total flight cycles since first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD. Not later than the date specified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD, as applicable: For any THSA having reached or exceeded on that date the corresponding number of total flight cycles as specified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD, as applicable, replace the THSA with a serviceable unit in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-27-3199, dated July 15, 2014; or Airbus Service Bulletin A340-27-4190, dated July 15, 2014; as applicable.
(1) As of 12 months after the effective date of this AD: The THSA flight-cycle limit
(2) As of July 31, 2017: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 14,000 total flight cycles.
(3) As of July 31, 2018: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 12,000 total flight cycles.
For Airbus Model A340-500 and A340-600 series airplanes having a THSA with a part number specified in paragraph (g)(2) of this AD: Not later than the date specified in paragraphs (j)(1), (j)(2), (j)(3), and (j)(4) of this AD, as applicable: For any THSA having reached or exceeded on that date the corresponding number of total flight cycles as specified in paragraphs (j)(1), (j)(2), (j)(3), and (j)(4) of this AD, as applicable, replace each affected THSA with a serviceable THSA, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A340-27-5062, dated July 15, 2014.
(1) As of the effective date of this AD: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 6,000 total flight cycles.
(2) As of April 30, 2017: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 5,200 total flight cycles.
(3) As of April 30, 2018: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 4,400 total flight cycles.
(4) As of April 30, 2019: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 3,500 total flight cycles.
For any part installed as required by this AD having a part number identified in paragraph (g)(1) or (g)(2) of this AD: From the dates specified in paragraphs (i) and (j) of this AD, as applicable, and prior to exceeding the accumulated number of total flight cycles corresponding to each time, replace each affected THSA with a serviceable part, in accordance with the Accomplishment Instructions of the applicable service information identified in paragraphs (k)(1), (k)(2), and (k)(3) of this AD.
(1) Airbus Service Bulletin A330-27-3199, dated July 15, 2014.
(2) Airbus Service Bulletin A340-27-4190, dated July 15, 2014.
(3) Airbus Service Bulletin A340-27-5062, dated July 15, 2014.
For the purposes of this AD a serviceable THSA is a THSA:
(1) Having a part number identified in paragraph (g)(1) or (g)(2) of this AD that has not exceeded any of the total accumulated flight cycles identified in paragraphs (i)(1) through (i)(3) of this AD, or paragraphs (j)(1) through (j)(4) of this AD, as applicable; or
(2) Having a part number that is not identified in paragraph (g)(1) or (g)(2) of this AD.
From each date specified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD, and paragraphs (j)(1) through (j)(4) of this AD, as applicable, a THSA having a part number identified in paragraph (g)(1) or (g)(2) of this AD may be installed on any airplane, provided the THSA has not exceeded the corresponding number of accumulated total flight cycles.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0257R1, dated May 29, 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 SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all Airbus Model A318, A319, A320, and A321 series airplanes. This proposed AD was prompted by the discovery of corroded circlips in fuel vent protectors (FVP) having a certain part number. This proposed AD would require an inspection to determine the part number and serial number of the FVP, and replacement if necessary. We are proposing this AD to detect and correct corroded circlips. Corroded circlips could lead to failure of the circlips and consequent movement of the FVP, resulting in a reduction of the flame protector capability of the FVP cartridge, which could result in damage to the airplane in case of lightning impact or fire on the ground.
We must receive comments on this proposed AD by February 8, 2016.
You may send comments, using the procedures found in 14 CFR
•
•
•
•
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
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0234R1, dated December 11, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A318, A319, A320, and A321 series airplanes. The MCAI states:
On each aeroplane wing, a NACA [National Advisory committee for Aeronautics] duct assembly is installed, including a Fuel Vent Protector (FVP) which is used as flame arrestor. This FVP is maintained in its NACA duct assembly by a circlip (also known as C-clip). Following a wing water pressure test, the FVP is removed and dried with heat. During an inspection after this test, several circlips were reported to be discoloured. Investigation revealed that a batch of circlips fitted on some FVP Part Number (P/N) 786073-1-0 have an increased risk of corrosion due to a manufacturing quality issue.
This condition, if not detected and corrected, could lead to circlip failure and consequent FVP movement, reducing the flame protector capability of the FVP cartridge, possibly resulting in damage to the aeroplane in case of lightning impact or fire on ground.
For the reason described above, EASA issued AD 2014-0234 to require identification by serial number (s/n) of the affected FVP P/N 786073-1-0 and removal from service [and replacement with a serviceable part].
This [EASA] AD is revised to clarify that only maintenance records since August 2012 should be consulted to demonstrate, as required by paragraph (2), that not replacement FVP has been installed.
You may examine the MCAI in the AD docket on the Internet at
Airbus has issued Service Bulletin A320-28-1221, dated July 21, 2014. The service information describes procedures for inspecting the FVP to determine the part number, and replacing the FVP 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 these same type designs.
We estimate that this proposed AD affects 7 airplanes of U.S. registry.
We also estimate that it would take about 5 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Parts would cost $25,640. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be up to $182,455, or $26,065 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
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 February 8, 2016.
None.
This AD applies to the airplanes specified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD, certificated in any category, all manufacturer serial numbers.
(1) Airbus Model A318-111, -112, -121, and -122 airplanes.
(2) Airbus Model A319-111, -112, -113, -114, -115,-131, -132, and -133 airplanes.
(3) Airbus Model A320-211, -212, -214, -231, -232, and -233 airplanes.
(4) Airbus Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes.
Air Transport Association (ATA) of America Code 28, Fuel.
This AD was prompted by the discovery of corroded circlips in fuel vent protectors (FVP) having a certain part number. We are issuing this AD to detect and correct corroded circlips. Corroded circlips could lead to failure of the circlips and consequent movement of the FVP, resulting in a reduction of the flame protector capability of the FVP cartridge, which could result in damage to the airplane in case of lightning impact or fire on the ground.
Comply with this AD within the compliance times specified, unless already done.
For airplanes having a manufacturer serial number specified in figure 1 to paragraphs (g) and (i) of this AD: At the earliest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD, do an inspection to determine the part number and serial number of the FVP. If the FVP has part number (P/N) 786073-1-0 with a serial number that is specified in figure 2 to paragraphs (g) and (i) of this AD, and the FVP is not marked “Amdt B,” replace the FVP with a serviceable part, at the earliest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-28-1221, dated July 21, 2014. A review of airplane maintenance records is acceptable in lieu of this inspection if the part number and serial number of the FVP can be conclusively determined from that review.
Do the actions required by paragraph (g) of this AD at the earliest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD.
(1) Before the accumulation of 5,000 total flight cycles after the date of manufacture of the airplane.
(2) Before the accumulation of 7,500 total flight hours after the date of manufacture of the airplane.
(3) Within 30 months after the date of manufacture of the airplane.
An airplane that does not have a manufacturer serial number specified in figure 1 to paragraphs (g) and (i) of this AD is excluded from the requirements of paragraph (g) of this AD, provided that, a FVP having P/N 786073-1-0 with a serial number specified in figure 2 to paragraphs (g) and (i) of this AD has not been installed on that airplane after July 2012. If a FVP having P/N 786073-1-0 with a serial number specified in figure 2 to paragraphs (g) and (i) of this AD is installed, or the serial number cannot be identified: Within 12 months after the effective date of this AD, replace the FVP with a serviceable part, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-28-1221, dated July 21, 2014. A review of airplane maintenance records is acceptable if it can be conclusively determined from that review that a FVP having a serial number specified in figure 2 to paragraphs (g) and (i) of this AD has not been installed on that airplane after July 2012.
As of the effective date of this AD, a FVP having P/N 786073-1-0 and a serial number listed in figure 2 to paragraphs (g) and (i) of this AD may be installed on any airplane, provided the FVP is marked with “Amdt B.”
The following provisions also apply to this AD:
(1)
(2)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0234R1, dated December 11, 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—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 Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Model A310 series airplanes. This proposed AD was prompted by reports of premature aging of certain passenger chemical oxygen generators that resulted in the generators failing to activate. This proposed AD would require an inspection to determine if certain passenger chemical oxygen generators are installed and replacement of affected passenger chemical oxygen generators. We are proposing this AD to prevent failure of the passenger chemical oxygen generator to activate and consequently not deliver oxygen during an emergency, possibly resulting in injury to airplane occupants.
We must receive comments on this proposed AD by February 8, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For Airbus service information identified in this proposed AD, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email:
For B/E Aerospace service information identified in this proposed AD, contact B/E Aerospace Inc., 10800 Pflumm Road, Lenexa, KS 66215; telephone: 913-338-9800; fax: 913-469-8419; Internet
You may view this referenced 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.
You may examine the AD docket on the Internet at
Dan Rodina, Aerospace Engineer, International Branch, ANM-116 Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-2125; 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 AD 2015-0118, dated June 24, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Model A310 series airplanes. The MCAI states:
Reports have been received indicating premature ageing of certain chemical oxygen generators, Part Number (P/N) 117042-XX (XX representing any numerical value), manufactured by B/E Aerospace. Some operators reported that when they tried to activate generators, some older units failed to activate. Given the number of failed units reported, all generators manufactured in 1999, 2000 and 2001 were considered unreliable.
This condition, if not corrected, could lead to failure of the generator to activate and consequently not deliver oxygen during an emergency, possibly resulting in injury to aeroplane occupants.
To address this potential unsafe condition, Airbus issued Alert Operators Transmission (AOT) A35W008-14, making reference to B/E Aerospace Service Information Letter (SIL) D1019-01 (currently at Revision 1) and B/E Aerospace Service Bulletin (SB) 117042-35-001. Consequently, EASA issued AD 2014-0280 [
Since EASA AD 2014-0280 was issued, and following new investigation results, EASA [has] decided to introduce a life limitation concerning all P/N 117042-XX chemical oxygen generators, manufactured by B/E Aerospace.
For the reason described above, this [EASA] AD retains the requirements of EASA AD 2014-0280, which is superseded, expands the scope of the [EASA] AD to include chemical oxygen generators manufactured after 2001, and requires their removal from service before exceeding 10 years since date of manufacture.
You may examine the MCAI in the AD docket on the Internet at
Airbus has issued Alert Operators Transmission (AOT) A35W008-14, dated December 18, 2014.
B/E Aerospace has issued Service Bulletin 117042-35-001, dated December 10, 2014.
This service information describes procedures to replace certain passenger chemical oxygen generators. 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 these same type designs.
We estimate that this proposed AD affects 166 airplanes of U.S. registry.
We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $390 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $92,960, or $560 per product.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this proposed AD is 2120-0056. The paperwork cost associated with this proposed AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this proposed AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
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
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 February 8, 2016.
None.
This AD applies to the airplanes identified in paragraphs (c)(1), (c)(2), (c)(3), (c)(4), and (c)(5) of this AD, certificated in any category, all manufacturer serial numbers.
(1) Airbus Model A300 B4-601, B4-603, B4-620, and B4-622 airplanes.
(2) Airbus Model A300 B4-605R and B4-622R airplanes.
(3) Airbus Model A300 F4-605R and F4-622R airplanes.
(4) Airbus Model A300 C4-605R Variant F airplanes.
(5) Airbus Model A310-203, -204, -221, -222, -304, -322, -324, and -325 airplanes.
Air Transport Association (ATA) of America Code 35, Oxygen.
This AD was prompted by reports of premature aging of certain passenger chemical oxygen generators that resulted in the generators failing to activate. We are issuing this AD to prevent failure of the passenger chemical oxygen generator to activate and consequently not deliver oxygen during an emergency, possibly resulting in injury to airplane occupants.
Comply with this AD within the compliance times specified, unless already done.
Within 30 days after the effective date of this AD, do a one-time inspection of passenger chemical oxygen generators, part numbers (P/N) 117042-02 (15 minutes (min)—2 masks), 117042-03 (15 min—3 masks), 117042-04 (15 min—4 masks), 117042-22 (22 min—2 masks), 117042-23 (22 min—3 masks), or 117042-24 (22 min—4 masks), to determine the date of manufacture as specified in Airbus Alert Operators Transmission (AOT) A35W008-14, dated December 18, 2014. Refer to Figure 1 to paragraph (g) of this AD and Figure 2 to paragraph (g) of this AD for the location of the date. A review of airplane maintenance records is acceptable for the inspection required by this paragraph, provided the date of manufacture can be conclusively determined by that review.
If, during any inspection required by paragraph (g) of this AD, any passenger chemical oxygen generator having a date of manufacture in 1999, 2000, or 2001 is found: At the applicable time specified in paragraph (h)(1), (h)(2), or (h)(3) of this AD, remove and replace the affected passenger chemical oxygen generator with a serviceable unit, in accordance with the Accomplishment Instructions of B/E Aerospace Service Bulletin 117042-35-001, dated December 10, 2014 (for 15 minute passenger chemical oxygen generators); or Airbus AOT A35W008-14, dated December 18, 2014 (for 22 minute passenger chemical oxygen generators); as applicable.
(1) For passenger chemical oxygen generators that have a date of manufacture in 1999: Remove and replace within 30 days after the effective date of this AD.
(2) For passenger chemical oxygen generators that have a date of manufacture in 2000: Remove and replace within 6 months after the effective date of this AD.
(3) For passenger chemical oxygen generators that have a date of manufacture in 2001: Remove and replace within 12 months after the effective date of this AD.
If, during any inspection required by paragraph (g) of this AD, any passenger chemical oxygen generator having a date specified in Table 1 to paragraph (i) of this AD is found: At the applicable time specified in Table 1 to paragraph (i) of this AD, remove and replace the affected passenger chemical oxygen generator with a serviceable unit, in accordance with the Accomplishment Instructions of B/E Aerospace Service Bulletin 117042-35-001, dated December 10, 2014 (for 15 minute passenger chemical oxygen generators); or Airbus AOT A35N006-14, dated December 10, 2014, including Appendix 01 (for 22 minute passenger chemical oxygen generators); as applicable.
For the purpose of this AD, a serviceable unit is a passenger chemical oxygen generator having P/N 117042-XX (XX represents any numerical value) with a manufacturing date not older than 10 years, or any other approved part number, provided that the generator has not exceeded the life limit established for that generator by the manufacturer.
At the applicable time specified in paragraph (k)(1) or (k)(2) of this AD, submit a report of the findings (both positive and negative) of the inspection required by paragraph (g) of this AD, in accordance with paragraph 7, “Reporting,” of Airbus AOT A35W008-14, dated December 18, 2014. The report must include the information specified in Appendix 1 of Airbus AOT A35W008-14, dated December 18, 2014.
(1) If the inspection was done on or after the effective date of this AD: Submit the report within 30 days after the inspection.
(2) If the inspection was done before the effective date of this AD: Submit the report within 30 days after the effective date of this AD.
As of the effective date of this AD, no person may install a passenger chemical oxygen generator, unless it is determined, prior to installation, that the oxygen generator is a serviceable unit (as defined in paragraph (j) 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 2015-0118, dated June 24, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For Airbus service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAW, 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.
Supplemental notice of proposed rulemaking (NPRM); reopening of comment period.
We are revising an earlier proposed airworthiness directive (AD) for all Airbus Model A318, A319, A320, and A321 series airplanes. The NPRM proposed to require replacing certain pitot probes on the captain, first officer, and standby sides with certain new pitot probes. The NPRM was prompted by reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. This action revises the NPRM by reducing the proposed compliance time for replacing certain pitot probes based on a risk assessment due to additional reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. We are proposing this supplemental NPRM (SNPRM) to prevent airspeed indication discrepancies during inclement weather, which, depending on the prevailing altitude, could lead to unknown accumulation of ice crystals and consequent reduced controllability of the airplane. Since these actions impose an additional burden over those proposed in the NPRM, we are reopening the comment period to allow the public the chance to comment on these proposed changes.
We must receive comments on this SNPRM by January 22, 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 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
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A318, A319, A320, and A321 series airplanes. The NPRM published in the
Since we issued the NPRM (80 FR 12094, March 6, 2015), we have determined it is necessary to reduce the compliance time for replacing certain pitot probes based on a risk assessment due to additional reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, issued EASA Airworthiness Directive 2015-0205, dated October 9, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition on all Airbus Model A318, A319, A320, and A321 series airplanes. The MCAI states:
Occurrences have been reported on A320 family aeroplanes of airspeed indication discrepancies while flying at high altitudes in inclement weather conditions. Investigation results indicated that A320 aeroplanes equipped with Thales Avionics Part Number (P/N) 50620-10 or P/N C16195AA pitot probes appear to have a greater susceptibility to adverse environmental conditions that aeroplanes equipped with certain other pitot probes.
Prompted by earlier occurrences, DGAC [Direction Générale de l'Aviation Civile] France issued [DGAC] AD 2001-362 [
Since that [DGAC] AD was issued, Thales pitot probe P/N C15195BA was designed, which improved airspeed indication behavior in heavy rain conditions, but did not demonstrate the same level of robustness to withstand high-altitude ice crystals. Based on these findings, EASA have decided to implement replacement of the affected Thales [pitot] probes as a precautionary measure to improve the safety level of the affected aeroplanes.
Consequently, EASA issued AD 2014-0237 (later revised) [
Since EASA issued AD 2014-0237R1 [
For the reasons described above, this [EASA] AD retains the requirements of EASA AD 2014-0237R1, which is superseded, but reduces the compliance time.
You may examine the MCAI in the AD docket on the Internet at
On February 4, 2004, we issued AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004), applicable to certain Airbus Model A300 B2 and B4 series airplanes; Model A300 B4-600, A300 B4-600R, and A300 F4-600R series airplanes; Model A310 series Airplanes; Model A319, A320, and A321 series airplanes; Model A330-301, -321, -322, -341, and -342 airplanes; and Model A340 series airplanes. That AD requires, among other actions, replacement of certain pitot probes with certain new pitot probes. That AD was issued to prevent loss or fluctuation of indicated airspeed, which could result in misleading information being provided to the flightcrew. Accomplishing the replacement specified in paragraph (g) of this SNPRM would terminate the requirements of paragraph (f) of AD 2004-03-33, for that airplane only.
Airbus has issued the following service information:
• Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015.
• Service Bulletin A320-34-1456, Revision 01, dated May 15, 2012.
• Service Bulletin A320-34-1463, Revision 01, dated May 15, 2012.
The service information describes procedures for replacing certain Thales Avionics pitot probes on the captain, first officer, and standby sides. 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 gave the public the opportunity to participate in developing this SNPRM. We considered the comments received.
American Airlines supports the proposed compliance time of 48 months for retrofit.
United Airlines (UAL) and Virgin America asked that the NPRM be revised to refer to Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015. (The NPRM (80 FR 12094, March 6, 2015) referred to Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, as the appropriate source of service information for replacing the pitot probes.) UAL stated that Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015, includes UAL effectivity, as well as all A320 family airplanes fitted with Thales Pitot Probes. Virgin America stated that Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, is available only to select operators who previously purchased the change; Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015, is available to all operators with airplanes having Thales pitot probes installed. American Airlines (AAL) asked that we refer to Airbus Service Bulletin A320-34-1170, Revision 30, which is scheduled for release in the near future. AAL added that the effectivity in Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, is incomplete.
We agree to refer to Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015, for the pitot probe replacement. Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015, was issued to update the operator list and related information in the effectivity, and does not include additional work. We have changed paragraph (g) of this SNPRM to refer to Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015. In addition, to give credit for using Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, and Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015, we added new paragraphs (i)(1)(xxv) and (i)(1)(xxvi) to this SNPRM.
The Airline Pilots Association International (ALPA) asked that the compliance time for replacement of the pitot probes, as specified in paragraph (g) of the proposed AD (80 FR 12094, March 6, 2015), be reduced to 24 months or less. ALPA stated that it recognizes the potential flight safety risk of operating an airplane with reduced controllability characteristics, which justifies reducing the compliance time.
We agree with the request to reduce the compliance time for replacement of the pitot probes. As specified under “Actions Since Previous NPRM was Issued,” we have reduced the proposed compliance time for replacing certain pitot probes based on a risk assessment due to additional reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. EASA has issued Airworthiness Directive 2015-0205, dated October 9, 2015, to reduce the compliance time for replacement of the pitot probes to 24 months. We have changed the compliance time in paragraph (g) of this SNPRM accordingly.
AAL stated the use of a pitot probe which meets the current icing specification, as specified in the NPRM (80 FR 12094, March 6, 2015), should note that a new icing specification is forthcoming. In addition, the UTAS (formerly Goodrich) pitot probe having part number 0851HL is built to the current specification. AAL noted that the data available today shows that pitot probes on which the new icing requirement is met should be available for retrofit in 2016.
We acknowledge the commenter's statement about the NPRM proposing the use of a pitot probe that meets the current icing airworthiness requirements and not the new icing airworthiness requirements of Amendment 25-140 (79 FR 65508, November 4, 2014) to 14 CFR part 25. Since we are currently not aware of any pitot probes certified to the new icing airworthiness requirements, this SNPRM would mandate Goodrich pitot probes having part number 0851HL, which meet the icing airworthiness requirements in effect at the time of establishing the certification basis for Airbus Model A318, A319, A320, and A321 series airplanes. AAL may request approval for an alternative method of compliance for the installation of pitot probes that meet the new certification standards once the pitot probes are available for installation, under the provisions of paragraph (k)(1) of this proposed AD.
AAL also asked the following related questions and we have provided a response to each comment:
• What FAA activities are scheduled with suppliers to meet the expectations of the new icing requirement? FAA activities associated with the new icing requirements are related to new design modifications. At this time we are not mandating installation of pitot probes which meet the new icing certification standards.
• Does the FAA anticipate issuing a new AD mandating a retrofit/forward fit to the new icing requirement? We do not plan to issue further rulemaking mandating a retrofit/forward fit to the new icing requirement at this time.
• Would the FAA extend the compliance time if another pitot probe supplier demonstrates compliance to the new icing requirement? We would not extend the compliance time because this SNPRM does not require installing pitot probes that meet the new icing requirement; therefore, the compliance time for the installation is considered adequate to address the unsafe condition.
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.
Certain changes described above expand the scope of the proposed AD (80 FR 12094, March 6, 2015). As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.
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
As specified in a NOTE under the Accomplishment Instructions of Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015, 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 953 airplanes of U.S. registry.
We also estimate that it would take about 4 work-hours per product to comply with the new basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $21,930 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $21,223,310, or $22,270 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 22, 2016.
This AD affects AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004).
This AD applies to the airplanes identified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD, certificated in any category, all manufacturer serial numbers.
(1) Airbus Model A318-111, -112, -121, and -122 airplanes.
(2) Airbus Model A319-111, -112, -113, -114, -115, -131, -132, and -133 airplanes.
(3) Airbus Model A320-211, -212, -214, -231, -232, and -233 airplanes.
(4) Airbus Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes.
Air Transport Association (ATA) of America Code 34, Navigation.
This AD was prompted by reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. We are issuing this AD to prevent airspeed indication discrepancies during inclement weather, which, depending on the prevailing altitude, could lead to unknown accumulation of ice crystals and consequent reduced controllability of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Within 24 months after the effective date of this AD: Replace any Thales pitot probe having part number (P/N) C16195AA or P/N C16195BA, with a Goodrich pitot probe having P/N 0851HL, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015. Accomplishing the replacement in this paragraph terminates the requirements of paragraph (f) of AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004), for that airplane only.
(1) Replacement of the pitot probes in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-34-1456, Revision 01, dated May 15, 2012 (pitot probes on the captain and standby sides); and Airbus Service Bulletin A320-34-1463, Revision 01, dated May 15, 2012 (pitot probes on the first officer side); is an acceptable method of compliance with the requirements of paragraph (g) of this AD.
(2) Airplanes on which Airbus Modification 25578 was embodied in production, except for post-modification 25578 airplanes on which Airbus Modification 155737 (installation of Thales pitot probes) was also embodied in production, are compliant with the requirements of paragraph (g) of this AD, provided it can be conclusively determined that no Thales pitot probe having P/N C16195AA, P/N C16195BA, or P/N 50620-10 has been installed since the date of issuance of the original certificate of airworthiness or the date of issuance of the original export certificate of airworthiness. Post-modification 25578 airplanes on which Airbus Modification 155737 (installation of Thales pitot probes) was also embodied in production must be in compliance with the requirements of paragraph (g) of this AD.
(1) This paragraph provides credit for the actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using the service
(i) Airbus Service Bulletin A320-34-1170, Revision 04, dated May 24, 2000.
(ii) Airbus Service Bulletin A320-34-1170, Revision 05, dated September 11, 2000.
(iii) Airbus Service Bulletin A320-34-1170, Revision 06, dated October 18, 2001.
(iv) Airbus Service Bulletin A320-34-1170, Revision 07, dated December 4, 2001.
(v) Airbus Service Bulletin A320-34-1170, Revision 08, dated January 15, 2003.
(vi) Airbus Service Bulletin A320-34-1170, Revision 09, dated February 17, 2003.
(vii) Airbus Service Bulletin A320-34-1170, Revision 10, dated November 21, 2003.
(viii) Airbus Service Bulletin A320-34-1170, Revision 11, dated August 18, 2004.
(ix) Airbus Service Bulletin A320-34-1170, Revision 12, dated December 2, 2004.
(x) Airbus Service Bulletin A320-34-1170, Revision 13, dated January 18, 2005.
(xi) Airbus Service Bulletin A320-34-1170, Revision 14, dated April 21, 2005.
(xii) Airbus Service Bulletin A320-34-1170, Revision 15, dated July 19, 2005.
(xiii) Airbus Service Bulletin A320-34-1170, Revision 16, dated November 23, 2006.
(xiv) Airbus Service Bulletin A320-34-1170, Revision 17, dated February 14, 2007.
(xv) Airbus Service Bulletin A320-34-1170, Revision 18, dated October 9, 2009.
(xvi) Airbus Service Bulletin A320-34-1170, Revision 19, dated November 9, 2009.
(xvii) Airbus Service Bulletin A320-34-1170, Revision 20, dated December 1, 2010.
(xviii) Airbus Service Bulletin A320-34-1170, Revision 21, dated March 24, 2011.
(xix) Airbus Service Bulletin A320-34-1170, Revision 22, dated July 19, 2011.
(xx) Airbus Service Bulletin A320-34-1170, Revision 23, dated February 3, 2012.
(xxi) Airbus Service Bulletin A320-34-1170, Revision 24, dated April 12, 2012.
(xxii) Airbus Service Bulletin A320-34-1170, Revision 25, dated September 4, 2012.
(xxiii) Airbus Service Bulletin A320-34-1170, Revision 26, dated September 16, 2013.
(xxiv) Airbus Service Bulletin A320-34-1170, Revision 27, dated March 18, 2014.
(xxv) Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014.
(xxvi) Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015.
(2) This paragraph provides credit for the replacement of pitot probes on the captain and standby sides specified in paragraph (h)(1) of this AD, if the replacement was performed before the effective date of this AD using Airbus Service Bulletin A320-34-1456, dated December 2, 2009, which is not incorporated by reference in this AD.
(3) This paragraph provides credit for the replacement of pitot probes on the first officer side as specified in paragraph (h)(1) of this AD, if those actions were performed before the effective date of this AD using Airbus Service Bulletin A320-34-1463, dated March 9, 2010, which is not incorporated by reference in this AD.
(1) At the applicable time specified in paragraph (j)(1)(i) or (j)(1)(ii) of this AD: No person may install on any airplane a Thales pitot probe having P/N C16195AA or P/N C16195BA.
(i) For airplanes with a Thales pitot probe having P/N C16195AA or P/N C16195BA installed: After accomplishing the replacement required by paragraph (g) of this AD.
(ii) For airplanes without a Thales pitot probe having P/N C16195AA or P/N C16195BA installed: As of the effective date of this AD.
(2) As of the effective date of this AD, no person may install on any airplane a Thales pitot probe having part number P/N 50620-10.
The following provisions also apply to this AD:
(1) Refer to EASA Airworthiness Directive 2015-0205, dated October 9, 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 certain The Boeing Company Model 777-200, -200LR, -300, and -300ER series airplanes. This proposed AD was prompted by a report indicating that the manufacturer discovered locations where the control components and wiring of the left and right engine fuel spar valves do not have adequate physical separation to meet the redundant system separation requirements. This proposed AD would require modifying the wiring, and installing a new relay bracket and new location for the relay on the left and right engine fuel spar valves. This proposed AD would also require an inspection to identify the part number of the motor operated valve (MOV) actuators for the left and right engine fuel spar valves; replacement of specified MOV actuators with new MOV actuators; certain bonding resistance measurements; and applicable corrective actions. We are proposing this AD to prevent loss of control of both the left and right engine fuel spar valves during a single event, such as
We must receive comments on this proposed AD by February 8, 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
Georgios Roussos, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-917-6482; 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 have received a report indicating that the manufacturer discovered locations where the control components and wiring of the left and right engine fuel spar valve do not have adequate physical separation to meet the redundant system separation requirements. The control relays for both the left and right engine fuel spar valves are located in the same panel, and the left and right fuel spar valve control wiring is routed in common wire bundles and share the same electrical connectors. This condition, if not corrected, could result in loss of control of both the left and right engine fuel spar valves during a single event, such as local wire bundle damage or a wire bundle fire, which could cause both engines to shut down or result in the inability to control an engine fire.
We reviewed Boeing Special Attention Service Bulletin 777-28-0061, Revision 2, dated May 4, 2015. The service information describes procedures for modifying the wiring, and installing a new relay bracket and new location for the relay on the left and right engine fuel spar valves.
We have also reviewed Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015. The service information describes procedures for an inspection of the MOV actuators of the left and right engine fuel spar valves for part number (P/N) MA20A1001-1, replacement of MOV actuators, measurement of the electrical resistance of the bond from the adapter plate to the airplane structure, and applicable 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
AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013), was issued for certain Model 777-200, -200LR, -300, and -300ER series airplanes. AD 2013-05-03 requires an inspection to identify the part number of the MOV actuators of the main and center fuel tanks; replacing certain MOV actuators with new MOV actuators; and measuring the electrical resistance of the bond from the adaptor plate to the airplane structure, and doing corrective actions if necessary. AD 2013-05-03 refers to Boeing Service Bulletin 777-28A0034, Revision 2, dated September 20, 2010, as the appropriate source of service information for accomplishing the required actions.
In addition, AD 2015-19-01, Amendment 39-18264 (80 FR 55521, September 16, 2015), requires revising the maintenance or inspection program to add a new airworthiness limitation for a repetitive inspection of the fuel spar valve.
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.
We estimate that this proposed AD affects 133 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 replacements 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 replacements:
We have received no definitive data on the costs of the corrective actions for the bonding resistance measurement 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 February 8, 2016.
None.
The Boeing Company Model 777-200, -200LR, -300, and -300ER series airplanes, certificated in any category, as identified in Boeing Special Attention Service Bulletin 777-28-0061, Revision 2, dated May 4, 2015.
Air Transport Association (ATA) of America Code 2822, Fuel Boost Pump.
This AD was prompted by a report indicating that the manufacturer discovered locations where the control components and wiring of the left and right engine fuel spar valves do not have adequate physical separation to meet the redundant system separation requirements. We are issuing this AD to prevent loss of control of both the left and right engine fuel spar valves during a single event, such as local wire bundle damage or a wire bundle fire, which could cause both engines to shut down or result in the inability to control an engine fire.
Comply with this AD within the compliance times specified, unless already done.
Within 60 months after the effective date of this AD, modify the wiring and install a new relay bracket and new location for the relay on the left and right engine fuel spar valves, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 777-28-0061, Revision 2, dated May 4, 2015.
(1) Prior to or concurrently with accomplishing the requirements of paragraph (g) of this AD: Do an inspection of the motor operated valve (MOV) actuators of the left and right engine fuel spar valves for part number (P/N) MA20A1001-1, in accordance with the Accomplishment Instructions of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015. A
(2) If any MOV actuator having P/N MA20A1001-1 is found during the inspection required by paragraph (h)(1) of this AD, prior to or concurrently with accomplishing the requirements of paragraph (g) of this AD, replace the MOV actuator with either a new or serviceable MOV actuator having P/N MA30A1001, MA30A1017, MA20A2027, or with an MOV actuator that meets the criteria specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD; and, as applicable, measure the electrical resistance of the bond from the adapter plate to the airplane structure and, before further flight, do all applicable corrective actions. All actions specified in this paragraph for the left and right engine fuel spar valves must be done in accordance with the Accomplishment Instructions of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015.
(i) The replacement MOV actuator must be a Boeing part that is approved after the issuance of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, by the Manager, Seattle Aircraft Certification Office (ACO), FAA; or the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to approve the part.
(ii) The replacement MOV actuator must be fully interchangeable with the part specified in Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015.
(1) This paragraph provides credit for the requirements of paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Boeing Special Attention Service Bulletin 777-28-0061, dated October 25, 2010; or Boeing Special Attention Service Bulletin 777-28-0061, Revision 1, dated January 26, 2012; as applicable; which are not incorporated by reference in this AD.
(2) This paragraph provides credit for the requirements of paragraph (h) of this AD, if those actions were performed before April 25, 2013 (the effective date of AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013), using Boeing Alert Service Bulletin 777-28A0034, dated August 2, 2007; or Boeing Alert Service Bulletin 777-28A0034, Revision 1, dated May 20, 2010; except that the replacement of MOV actuators of the left and right engine fuel spar valves must also include cap sealing the bonding jumper, as described in Boeing Service Bulletin 777-28A0034, Revision 2, dated September 20, 2010; and provided that the replacement is an MOV actuator identified in paragraph (i)(2)(i) or (i)(2)(ii) of this AD. Boeing Alert Service Bulletin 777-28A0034, dated August 2, 2007; and Boeing Alert Service Bulletin 777-28A0034, Revision 1, dated May 20, 2010; are not incorporated by reference in this AD.
(i) An MOV actuator that has P/N MA30A1001, MA30A1017, or MA20A2027.
(ii) An MOV actuator that has a part number other than P/N MA20A1001-1 and meets the criteria specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD.
(3) This paragraph provides credit for the requirements of paragraph (h) of this AD, if those actions were performed before the effective date of this AD using Boeing Service Bulletin 777-28A0034, Revision 2, dated September 20, 2010, which was incorporated by reference in AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013).
(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)(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, modification, or alteration 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. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane and the approval must specifically refer to this AD.
(1) For more information about this AD, contact Georgios Roussos, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-917-6482; 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
Securities and Exchange Commission.
Proposed rule.
The Securities and Exchange Commission (“SEC” or “Commission”) is publishing for comment a proposed amendment to specify the form and manner with which security-based swap data repositories (“SDRs”) will be required to make security-based swap (“SBS”) data available to the Commission under Exchange Act Rule 13n-4(b)(5). The Commission is proposing to require SDRs to make these data available according to schemas that will be published on the Commission's Web site and that will reference the international industry standards Financial products Markup Language (“FpML”) and Financial Information eXchange Markup Language (“FIXML”).
Comments should be received on or before February 22, 2016.
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Use the Federal eRulemaking Portal (
• Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the SEC's Web site. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Narahari Phatak, Branch Chief, at (202) 551-6693; Walter Hamscher, IT Project Manager, at (202) 551-5397; Yee Cheng Loon, Financial Economist, at (202) 551-3077; Hermine Wong, Attorney-Adviser, at (202) 551-4038; Christian Sabella, Associate Director, at (202) 551-5997; Michael Gaw, Assistant Director, at (202) 551-5602.
The Commission is proposing to amend Rule 13n-4(a)(5) under the Exchange Act (defining “Direct electronic access” to data stored by an SDR).
On February 11, 2015, the Commission adopted Rules 13n-1 to 13n-11 under the Exchange Act (collectively, the “SDR Rules”),
Today, the Commission is proposing to amend the SDR Rules to specify the form and manner with which SDRs would be required to make SBS data available to the Commission. This rulemaking constitutes an important next step in the development of the SBS transaction reporting regime mandated by the Dodd-Frank Act.
Rule 13n-4(b)(5) under the Exchange Act
As the Commission noted in the SDR Adopting Release, a significant portion of the benefits of an SDR will not be realized if the Commission obtains direct electronic access to the data stored at an SDR in a form or manner that cannot be easily utilized by the Commission.
In the SDR Adopting Release, the Commission also stated that, until such time as the Commission adopts specific formats and taxonomies, SDRs “may provide direct electronic access to the Commission to data in the form in which the SDRs maintain such data.”
The Commission proposes to amend Rule 13n-4(a) to specify the form and manner with which SDRs must provide direct electronic access to the Commission by requiring SDRs to comply with an appropriate schema as will be published on the Commission's Web site.
In the SDR Adopting Release, the Commission stated that it believed it was in the best position to aggregate data across multiple SDRs.
The Commission is currently aware of only two industry standards for representing SBS data: FpML
As discussed below in more detail, the Commission preliminarily believes that both industry standards already cover many of the data elements that must be reported to registered SDRs under Regulation SBSR. In the appendix, the Commission has highlighted clear cases where the schemas require additional elements that do not yet exist in FpML or FIXML to represent all data elements that must be reported under Regulation SBSR and that registered SDRs must accept and store.
This release solicits comment on the Commission's proposal concerning the form and manner with which SDRs provide the Commission with direct electronic access, including whether the Commission should accept both the FpML and FIXML standards, whether the Commission should accept only one or the other, whether the Commission should accept other protocols or standards, and whether the Commission's incorporation of validations into the schemas supports completeness of the SBS data.
Industry standards have evolved to enable participants in the SBS market to capture and communicate certain trade information. As discussed in more detail below, these standards have evolved for use in different contexts but inherently share features that are relevant for SBS data standardization and aggregation.
The Commission is aware of two existing industry standards which are used by market participants to capture trade-related information: FpML and FIXML. FpML and FIXML are both international open industry standards, meaning that they are technological standards that are widely available to the public, royalty-free, and at no cost. In addition, they are both independent of the software and hardware used by participants, thus facilitating interoperability. Both FpML and FIXML have evolved for use in different contexts and they share features that are relevant for rendering SBS data compatible for the purposes of normalization, aggregation, and comparison.
FpML was developed under the auspices of the International Swaps and Derivatives Association (ISDA),
In contrast to FpML's focus on post-trade communication of standardized derivatives contracts, Financial Information eXchange (FIX) is a messaging protocol developed for pre-trade communication and trade execution of standardized and bespoke contracts for multiple asset classes and markets. The FIX protocol enables electronic communication between broker-dealers and their institutional clients to deliver quotes, submit orders, and execute trades. Since its inception in 1992 as a standard used to trade equities, the use of FIX was further developed to include fixed income, derivatives, and foreign exchange, and the scope of FIX has been extended to include pre-trade, trade, and post-trade business processes
Both FpML and FIXML were derived from the XML standard. Each standard uses an XML-based schema to impose structure on the order and content of, and relationships among, data elements, including the particular data types that correspond to each data element. FpML and FIXML mark up or “structure” data using standard but distinct definitions.
The Commission notes that the bodies responsible for the maintenance of both FpML and FIXML have experience engaging with the regulatory community and have made enhancements specifically to support regulatory requirements. FpML currently supports several regulatory reporting requirements other than those imposed by the Commission as part of Regulation SBSR,
The Commission preliminarily believes that both standards have been implemented by market participants and are widespread in use, and that the taxonomies for both standards for SBS reporting have developed sufficient coverage such that the Commission does not need to develop its own standard for the required data elements.
Interoperability is the ability of two or more systems to exchange data and for the data to be automatically interpreted. While FpML and FIXML both rely on XML to exchange data, they are not interoperable unless a common data model is built that allows a translation between the two standards. As a result, the Commission has developed a common data model that uses as a basis the existing overlap of the standards' current coverages of SBS data. The Commission's common data model is a representation of the SBS data elements required to be made available to the Commission. The Commission preliminarily believes that requiring SDRs to use either the FpML or FIXML schema will help achieve one of the key objectives of Regulation SBSR, which is to have a complete and intelligible record of all SBS transactions for oversight purposes. The common data model is represented by two separate schemas, one each for the FIXML and FPML standards. Accordingly, under the proposed amendment, SDRs can make SBS data available to the Commission using either the FIXML or FpML schema. The Commission describes both the common data model and the two schemas in greater detail below.
The Commission notes that ISDA and the FIX Community formed the FpML Collaboration Working Group in 2004 to support certain aspects of interoperability between FpML and FIXML.
The Commission is proposing to amend Rule 13n-4(a)(5) to specify the form and manner with which SDRs must provide direct electronic access to the Commission. In particular, under the proposal, SDRs must provide direct electronic access using either the FpML schema or the FIXML schema as published on the Commission's Web site. The Commission is also proposing to require that the SDRs use the most recent schema as published on the Web site as the Commission anticipates that the schemas will be updated periodically to reflect changes in the FpML and FIXML standards, or to reflect changes in industry practice or financial products covered by Regulation SBSR. As with the Commission's updates to other taxonomies and schemas,
As mentioned above, the Commission has developed a common data model, which is the logical arrangement of the data elements that comprise a transaction report as described under Regulation SBSR and how those data elements relate to each other. The purpose of the common data model is to improve the consistency and reliability of the data made available to the Commission for analysis and aggregation along various dimensions, such as across SDRs, within an SDR, by counterparty, or by product. The Commission's common data model reflects the reporting requirements under Regulation SBSR. The Commission's schemas for SBS data are formal representations of the Commission's common data model.
For example, a schema representing the common data model would require that a transaction record made available to the Commission include the terms of any standardized fixed or floating rate payments that correspond exactly to Rule 901(c)(1)(iv). However, consistent with Regulation SBSR, such a schema would allow flexibility in how information may be reported to a registered SDR. For example, consistent with Rule 901(c)(1), a schema that represents the common data model
To implement the common data model into an electronic format according to which SDRs could provide direct electronic access to the Commission, the Commission has developed two distinct schemas (computer code representations of the common data model), one based on the FpML standard, and the other based on the FIXML standard. Under the proposed amendment, an SDR could provide the Commission with direct electronic access by using either schema or both schemas. SBS transaction records structured according to one of the schemas could be immediately aggregated, compared, and analyzed by the Commission.
At this time, the Commission is aware of only the FpML and FIXML standards for representing SBS data. In its evaluation of the potential applicability of these two standards for the purpose of regulatory reporting of SBS transactions, Commission staff undertook a mapping exercise, the results of which are reported in the appendix, to determine how much of the Commission's common data model could be represented using the existing reporting elements within the two standards. Commission staff found that there exists significant overlap between the FpML and FIXML standards in their descriptions of SBS data, and that almost all concepts of the common data model can be represented with existing FpML and FIXML reporting elements.
Both FpML and FIXML employ data models to logically arrange and organize their respective data elements in specific ways. These data models reflect each's' decisions regarding how to represent their data elements for reporting and communication purposes. The Commission's schemas would not require alteration of the standards' data models, but rather would incorporate each standard's data models as they are used to represent one of their data elements. As a result, the mapping of FpML and FIXML to the common data model does not necessarily reflect a one-to-one mapping between named data elements. In some instances, a single concept in the Commission's common data model maps to a group of data elements within FpML or FIXML. For example, FIXML models the terms of any standardized fixed rate payments by arranging multiple FIXML data elements that each represent a different attribute of a payment stream, including settlement currency, day count convention, and fixed rate. This FIXML data model composed of multiple data elements maps to a single concept in the common data model that corresponds to Rule 901(c)(1)(iv).
Below, we describe how Regulation SBSR provides the basis for the requirements of the common data model by examining how the schemas representing the common data model would treat broad categories of transaction information and how they would define relationships between specific data elements within those broad categories by placing restrictions on SBS data. The Commission notes that the concepts within the common data model are limited to those required to be reported to registered SDRs under Rules 901, 905, and 906 and required to be assigned by registered SDRs under Rule 907. The common data model also relies on definitions provided by Rule 900.
Rule 901(c) sets forth the data elements of a security-based swap that must be reported to a registered SDR and will then be publicly disseminated by the registered SDR pursuant to Rule 902(a) (unless an exception applies). These data elements generally encompass the means of identifying the contract and the basic economic terms of the contract and include any standardized payment streams associated with a contract, the notional value of the contract, the transaction price, and other information necessary for interpreting transaction prices such as a variable that would indicate the intent to clear a transaction.
In order for the Commission to aggregate and analyze SBS data, Regulation SBSR requires reporting participants to report certain information about each security-based swap transaction. To provide a standardized means for identifying security-based swaps that share certain material economic terms, the Commission requires reporting participants to utilize a product ID of a security-based swap when one is available.
Rule 901(c) also requires reporting of certain details about an SBS transaction, including the execution time, price, and notional amount. The precise formats in which these elements can be provided have been determined by each industry standard. For example, the various FIXML data elements that express execution time are all expressed in coordinated universal time (UTC). Similarly, currencies that denominate price and notional amount are expressed using ISO 4217 currency codes.
Finally, the common data model would include concepts that correspond to requirements in Rules 901(c)(5) and 901(c)(6) for flags that indicate inter-dealer transactions and transactions that counterparties intend to clear. In addition to these required flags, Rule 901(c)(7) requires that the person with a duty to report include any additional transaction flags as specified in the policies and procedures of the registered SDR to which they report.
Rule 901(a) assigns reporting duties for the security-based swaps described in Rule 908(a), including new security-based swaps and those that result from the allocation, termination, novation, or assignment of other security-based swaps. Rule 901(e) requires reporting of life cycle events. Rule 901(i) requires reporting, to the extent the information is available, of security-based swaps entered into before the date of enactment of the Dodd-Frank Act and security-based swaps entered into after the date of enactment but before Rule 901 becomes fully operative. Finally, Rule 905 sets out procedures for correcting errors to previously submitted transaction information. The schemas would include requirements for all of these event types. Both FIXML and FpML currently support the reporting of both new transactions as well as most of the other types of events required to be reported under Regulation SBSR, and so the schemas would include explicit mappings between existing FIXML and FpML events and those included in the common data model as a result of reporting requirements under Regulation SBSR.
Under Rule 901(g), a registered SDR must assign a transaction ID to each new security-based swap that is reported to it or establish a methodology for doing so. Further, Rule 901(d)(10) requires reports of allocations, termination, novation, or assignment of one or more existing security-based swaps to include the transaction ID of the security-based swap that is allocated, terminated, novated, or assigned, while Rule 901(e)(2) requires reports of life cycle events to include the transaction ID of the original transaction. As the Commission discussed in the Regulation SBSR Adopting Release, requiring the use of a transaction ID in these instances would enable the Commission to update a transaction record to incorporate the life cycle event and map a new security-based swap to a corresponding prior transaction, even if the prior transaction was reported to a different registered SDR.
Rules 901(d)(1), 901(d)(2), 901(d)(9), 906(a), and 906(b) require reporting of the identity of each counterparty to a security-based swap as well as certain other persons who are affiliated with the counterparties or are otherwise involved in the transaction but who are not counterparties of that specific transaction. Because the Commission has recognized the Global Legal Entity Identifier System (GLEIS) as an Internationally Recognized Standard Setting System (IRSS) that assigns unique identification codes (“UICs”) to persons, these types of persons are required to obtain an LEI and registered SDRs are required to use these LEIs to identify these persons. Because the requirement to obtain an LEI does not apply to all persons enumerated in Rules 901(d)(1), 901(d)(2), 901(d)(9), 906(a), and 906(b), the schemas would accommodate identifiers that are not LEIs.
Similarly, the schemas would accommodate LEI and non-LEI identifiers for execution agent IDs and broker IDs, since such persons might not have an LEI. Further, because no IRSS meeting the requirements of 903(a) has assigned or developed a methodology for assigning branch IDs, trader IDs, and trading desk IDs, the schemas would accommodate the identifiers or methodologies developed by the registered SDRs.
Rule 901(d)(3) requires reporting of details regarding the payment terms, frequencies, and contingencies for non-standard, or bespoke, contracts. The schemas would accommodate these as separate data elements by including restrictions so that these data elements would be permitted only if the custom swap flag discussed in Section II.B.1.a is set by the registered SDR based on the transaction data that it receives from the reporting participant.
Rule 901(d)(4) requires, for transactions that are not clearing transactions, the title and date of any master agreement, collateral agreement, margin agreement, or any other agreement incorporated by reference into the SBS contract. For example, to reflect these reporting requirements the schemas would include a flag to identify clearing transactions. For purposes of validation, if the clearing transaction flag is not set by the registered SDR, the registered SDR would be required to provide the agreement information provided by a reporting side under Rule 901(d)(4), if applicable, as separate data elements as well as provide the settlement details provided by reporting participants under Rule 901(d)(8). If instead the clearing transaction flag identifies a security-based swap as a clearing transaction, the associated transaction record would be valid even in the absence of the title and date of any master agreement, collateral agreement, margin agreement, or any other agreement incorporated by reference into the SBS contract because the Commission believes it could obtain this information from the registered clearing agency as necessary.
Under Rule 901(c)(6), the person with the duty to report must indicate with a flag whether there is an intent to clear a transaction. The schemas would include such a flag. Rule 901(d)(6) also requires reporting of the name of the
As mentioned earlier, some concepts within the common data model do not currently have existing equivalents within FpML or FIXML. These include:
• Custom swap flag;
• the currencies of any upfront payment,
• a description of the settlement terms;
• inter-dealer swap flag;
• the title of any margin agreement;
• the date of any margin agreement.
In these cases, the schemas would require specific extensions of existing FpML and FIXML reporting elements. For flags required by Rule 901(c)(7), the Commission's schemas would require registered SDRs to populate the section with the flags identified within their own policies and then to select from those. As we discuss in Section III.C.2, both FpML and FIXML undergo regular updates. To the extent that the FpML and FIXML standards address the common data model as part of their periodic updates, the Commission expects that the standards will create defined elements to replace the initial use of extensions. When the Commission periodically updates its schemas, each schema will reflect the most recent version of each standard.
As mentioned above, the schemas would incorporate validations. These validations are restrictions placed on the form and manner of the reported SBS data that help ensure that the data SDRs make available to the Commission adhere to the appropriate schema. In particular, the validations test for completeness of the data and for appropriate format. As a result, the validations will enhance the Commission's ability to normalize and aggregate the data. These validations are effective at testing for whether the SBS data conforms to the technical specifications of the schema. However, these validations will not test for whether the SBS data accurately reflects the transaction that took place. By using the incorporated validations, SDRs will help ensure that their stored data adheres to the appropriate schema, thereby providing the Commission with direct electronic access pursuant to Rule 13n-4(b)(5).
In developing these proposed rules, we have consulted and coordinated with the CFTC and the prudential regulators
• The Commission has developed two interoperable schemas so that SDRs can make SBS transaction data available to the Commission using already existing standards in a form and manner that can be easily utilized by the Commission for analysis and aggregation. Are there other ways to provide for the representation of SBS transactions that could be easily utilized by the Commission? If so, what are they? What are their strengths and weaknesses?
• Should the Commission require direct electronic access be provided by SDRs using only an FpML schema? Should the Commission require direct electronic access be provided by SDRs using only an FIXML schema? Is there another standard that the Commission should consider as acceptable? If so, which characteristics about that standard should make it acceptable to the Commission and how does that standard affect the Commission's ability to normalize, aggregate, and analyze the SBS data?
• Does the Commission's approach to providing for direct electronic access using either the FpML or FIXML schemas allow for the accurate representation of SBS transactions as described in Regulation SBSR? If not, why not?
• Are the FpML and FIXML standards sufficiently developed to require either one of them to be used by SDRs to provide access to the required SBS data? What factors or indicators should the Commission use to determine when an SBS-related standard has become sufficiently developed to require its use for providing the Commission with direct electronic access to SBS data?
• Should the Commission allow SDRs to develop their own standards or leverage other standards to provide access to the Commission? How would the Commission's ability to normalize, aggregate, and analyze the data be affected if SDRs used different standards and developed different schemas for representing the SBS data?
• Instead of leveraging industry standards, such as FIXML and FpML, should the Commission create a new standard or contract with a third-party to create a new standard? Why or why not?
• Are there other approaches to developing or using a standard that the Commission should consider? Please explain in detail.
• What would be the costs to an SDR to provide data in either FpML or FIXML standard? Are there other ways that SBS data should be provided to the Commission? Are there other standards that would cost less but still allow the Commission to similarly normalize, aggregate, and analyze the data?
• Should the Commission institute a test phase for providing this information in either an FpML or FIXML standard? If so, how long should this test phase last?
• Other than using schemas, is there another effective mechanism for SDRs to provide direct electronic access to the Commission that still achieves similar or better aggregation and consistency results?
• The Commission intends to incorporate validations into its schemas to help ensure the quality and completeness of the SBS data that SDRs
• How should the common data model support reporting requirements that do not yet have equivalents in FpML or FIXML, while preserving the ability to normalize, aggregate, and analyze the data? As discussed in Section II.B.2, the Commission's schemas would require specific extensions of existing FpML and FIXML reporting elements. Is there a better alternative? Specifically, how would the alternative affect SDRs, the Commission, and market participants?
On February 11, 2015, the Commission adopted the SDR Rules,
The Commission is sensitive to the economic effects of the rules that it proposes, including implications for efficiency, competition, and capital formation. The Commission preliminarily believes that the proposed rule would provide a number of benefits and result in certain costs. Section 23(a)(2) of the Exchange Act
In many instances the potential benefits and costs of the proposed amendment are difficult to quantify. In particular, the Commission does not have precise estimates of the monetary benefits arising from the anticipated improvement in the Commission's ability to accurately analyze data made available by a single SDR, and the anticipated improvement in the Commission's ability to aggregate and analyze data made available by multiple SDRs. Benefits may arise from these improvements indirectly to the extent that facilitating the Commission's oversight of SBS market activity reduces the likelihood of abuse in the SBS market and risks to financial stability emanating from the SBS market, however the Commission does not have data that would enable it to estimate the magnitude of either of these effects.
Similarly, the Commission also does not have the data to estimate the potential costs that might be associated with reduced competition in the SDR industry that could result from the proposed approach. As we discuss in more detail below, a potential result of reduced competition among SDRs is that SDRs increase prices for their services or decrease the quantity or quality of their services. While the Commission acknowledges these potential costs, it does not have information about SDR services that would be necessary to estimate changes in prices, quality of service, or quantity of service that might result from reduced competition. One reason for this lack of information is that, to date, no SDRs have registered with the Commission. Where possible, we provide quantitative estimates of the potential costs of the proposed amendments. We provide discussions of a qualitative nature when quantification is not possible.
To examine the potential economic effects of the proposed amendments, our analysis considers as a baseline the rules adopted by the Commission that affect regulatory reporting and public dissemination, particularly those rules adopted as part of Regulation SBSR and the SDR Rules. The baseline includes our current understanding of international industry standards and market practices, including how those standards and practices have been influenced by the actions of other regulators. This section begins by summarizing the economic implications of regulatory reporting and public dissemination under the Commission's current regulatory framework for the SBS market and describing the data currently made available to the Commission on a voluntary basis. Following this discussion, the section describes the number of SDRs likely to be affected by the proposed amendments before examining the current state of the FIXML and FpML standards.
As mentioned above, the Commission recently adopted the SDR Rules and Regulation SBSR. Together, the rules seek to provide improved transparency to regulators and the markets through comprehensive regulations for SBS transaction data and SDRs.
Additionally, as a result of the SDR Rules and Regulation SBSR, increased quality and quantity of pricing and volume information and other information available to the Commission about the SBS market may enhance the Commission's ability to respond to market developments. To help inform its understanding of the SBS market, the Commission currently relies upon data on individual CDS transactions voluntarily provided by the Depository Trust and Clearing Corporation (“DTCC”) Trade Information Warehouse (“TIW”). This information is made available to the Commission in accordance with an agreement between the DTCC-TIW and the OTC Derivatives Regulators' Forum (“ODRF”), of which the Commission is a member.
The DTCC-TIW data provides sufficient information to identify the types of market participants active in the SBS market and the general pattern of dealing within that market. However, as the Commission noted in the SDR Adopting Release, the DTCC-TIW data does not encompass CDS transactions that both: (i) do not involve any U.S. counterparty, and (ii) are not based on a U.S. reference entity.
In the SDR Adopting Release, the Commission estimated that 10 persons may register with the Commission as SDRs.
As previously discussed in Section II.A, there are two international industry standards for representing SBS data: FpML and FIXML.
Based on the fact that there is substantial industry involvement in the development of both standards, the Commission preliminarily believes that the majority of transactions reportable under Regulation SBSR would include at least one counterparty that is familiar with communicating transaction details using FpML or FIXML or currently supports such communication. Further, most market participants will have familiarity with using FpML and/or FIXML for transaction reporting, including reporting to meet reporting obligations under the rules of other jurisdictions. For example, the FpML Regulatory Reporting Working Group has developed a draft mapping document that relates data elements required by seven regulators other than the Commission, in various jurisdictions, to corresponding FpML fields.
As noted in Section II.B.1, the schemas would include data elements that correspond to concepts defined in Rule 900 and required to be reported to registered SDRs by Rule 901. It would also include certain data elements derived from obligations of registered SDRs under Rule 907. Based on a mapping exercise conducted by Commission staff, the Commission preliminarily believes that both the FpML and FIMXL reporting standards already include defined data elements that can be used to cover many of the concepts in the common data model. However, the Commission staff has identified several instances of concepts within the proposed common data model that do not yet have equivalently defined data elements in FpML or FIXML. In those cases, the schemas published on the Commission's Web site would provide extensions of existing FpML and FIXML reporting elements. To the extent that the FpML and FIXML standards address the common data model as part of their periodic updates, the Commission expects that the standards will create defined elements to replace the initial use of extensions. If the Commission were to adopt a rule that required SDRs to make SBS data available to the Commission using the FpML or FIXML standards, the Commission anticipates that its staff would keep apprised of
The Commission preliminarily believes that the proposed amendment, by specifying the form and manner with which SDRs would be required to make SBS data available to the Commission, provide for the accurate analysis of data made available by a single SDR, and the aggregation and analysis of data made available by multiple SDRs. In particular, the proposed amendment would enable the aggregation of SBS data by the Commission.
In the SDR Adopting Release, the Commission recognized that the benefits associated with SDR duties, data collection and maintenance, and direct electronic access may be reduced to the extent that SBS market data are fragmented across multiple SDRs.
By limiting SDRs' flexibility to a choice between FpML and FIXML, the Commission seeks to facilitate data aggregation and analysis by specifying the form and manner with which SDRs would be required to make SBS data available to the Commission. Adherence by SDRs to the schemas when providing direct electronic access should enhance the Commission's ability to analyze the data maintained by a single SDR, and allow the Commission to more effectively aggregate and analyze data received from multiple SDRs. Furthermore, the proposed amendment also simplifies the aggregation task because the Commission would determine the permitted formatting standards and schemas, not the SDRs. As a result, the process of data aggregation will not be complicated or disrupted by SDRs' decisions to update their formatting standards for reasons unrelated to regulatory requirements. The proposed amendment affords a simpler data aggregation process compared to an alternative in which SDRs exercise full discretion over the choice of formatting standard for providing direct electronic access and the timing for using the chosen standard.
As discussed above, the schemas would incorporate validations.
The proposed amendment may also indirectly improve the quality of regulatory reporting in a number of ways. First, by specifying the form and manner with which SDRs must make SBS data available to the Commission, the proposed amendment might provide SDRs an incentive to limit the range of ways that their participants can report SBS transaction data to them. If the proposed amendment results in clearer policies and procedures of registered SDRs, then the result could be more efficient reporting. Second, by leveraging existing industry standards, the proposed amendment may indirectly improve SBS data quality by eliminating the need for SDRs to reformat data already structured in FpML or FIXML in some different Commission specific format, thus reducing the likelihood that SDRs introduce errors in the process of reformatting data.
The Commission has preliminarily identified three potential sources of costs associated with the proposed amendment. The first potential source is SDRs' implementation of the proposed amendment, the second potential source is the extension of existing standards to meet the Commission's reporting requirements and the updating of those standards if necessary, and the third potential source arises from limiting the flexibility of SDRs in making SBS data available to the Commission.
As the Commission noted in the SDR Adopting Release, the cost imposed on SDRs to provide direct electronic access to the Commission should be minimal as SDRs likely have or will establish comparable electronic access mechanisms to enable market participants to provide data to SDRs and review transactions to which such participants are parties.
Nevertheless, the Commission acknowledges that, as a result of the proposed amendment, SDRs may decide to implement policies, procedures, and information systems to ensure that SBS data made available to the Commission is in a form and manner that satisfies the requirements laid out in the schemas. The Commission preliminarily believes that the costs of implementing such policies, procedures, and information systems are likely to be related to conforming their data models to one of the Commission's schemas and are likely to be smaller for those SDRs that already employ FIXML or FpML. The Commission preliminarily believes that these costs, which are in addition to the internal costs related to information technology systems, policies, and procedures the Commission estimated in the SDR Adopting Release,
To the extent that SDRs decide to modify their policies, procedures, and information technology systems, the Commission preliminarily believes that modifications that would be needed to support compliance with the proposed amendment are unlikely to change the marginal burden of providing direct electronic access to transaction records to the Commission. This is because the only additional costs would be costs incurred by SDRs to use policies, procedures, and information systems they would have already established to ensure that each additional transaction record that is made available to the Commission is in a form and manner that meets the requirements of the schemas.
The Commission also preliminarily believes that certain of these costs may be mitigated to the extent that the proposed amendment promotes enhancements to FpML and FIXML in support of regulatory reporting to registered SDRs. If the schemas, by identifying and closing gaps between reporting requirements and existing standards, encourage the use of FpML and FIXML by reporting persons instead of other formatting standards, then SDRs could incur a lower burden of conforming SBS data to one of the Commission's schemas because SDRs will be limited to FpML or FIXML when making the data available to the Commission.
The Commission recognizes that while SDRs may directly bear the implementation costs discussed above, these costs may be shared among market participants other than SDRs in several ways and will likely be passed through to SBS market participants, potentially in the form of higher costs for participants of registered SDRs, which in turn could result in higher transactions costs for counterparties, potentially impairing, albeit indirectly, efficiency in the SBS market and capital formation by SBS market participants. For example, the implementation costs incurred by registered SDRs could be passed on to reporting participants in the form of higher fees for reporting transactions. Consider the situation in which a registered SDR takes on reporting participants as clients before it implements the policies, procedures, and information systems needed to ensure that SBS data made available to the Commission is in a form and manner that satisfies the requirements laid out in the schemas. This registered SDR could offset this implementation cost by levying higher service charges on its participant base.
The ability of SDRs to pass through costs to their participants depends in part on the market power of SDRs. As discussed in the economic baseline, the Commission preliminarily believes that a limited number of persons would register with the Commission as SDRs. If there is only one registered SDR serving all reporting participants, then this SDR would have a greater ability to shift implementation costs that could arise as a consequence of the proposed amendment to its users. By contrast, a competitive SDR industry would likely mean that registered SDRs had less market power, rendering them less able to pass through such costs to reporting participants.
As an alternative to imposing higher fees on participants, registered SDRs could pass through a portion of the implementation costs to their participants by requiring reporting parties to report SBS data using FpML or FIXML in the same manner that the Commission is proposing to require that SDRs utilize for making data accessible to the Commission under the Commission's schemas. Under Rule 907(a)(2), a registered SDR is required to establish and maintain written policies and procedures that specify one or more acceptable data formats (each of which must be an open-source structured data format that is widely used by participants), connectivity requirements, and other protocols for submitting information. In response to the proposed amendment, registered SDRs might elect to establish policies and procedures that would facilitate conforming transaction data submitted by reporting participants to the schemas, pursuant to which the registered SDRs would be required to make the data accessible to the Commission. In particular, a registered SDR might elect to establish policies and procedures that mandate reporting of data elements under Rules 901(c) and 901(d) in the same form and manner that the Commission is proposing to require of registered SDRs, or levy fees for reformatting SBS transaction data reported in other formats to conform to one of the schemas. In this scenario, the registered SDR's participants could incur costs associated with: (i) modifying their reporting systems to transmit data to the registered SDR in a FIXML or FpML format that conforms to one of the schemas; or (ii) the registered SDR's reformatting of data to conform to one of the schemas. The registered SDR could subsequently make the data available to the Commission with minimal resources in ensuring that the data conforms to one of the schemas.
Efficiency in the SBS market and capital formation by SBS market participants may be impaired, albeit indirectly, by registered SDRs' decisions to require reporting parties to report SBS data using FpML or FIXML under the Commission's schemas. If the technologies required to implement the proposed amendment have scale economies, then an outcome in which reporting participants independently modify their reporting systems potentially represents an inefficient use of resources for the SBS market as a whole, even if it results in lower costs to SDRs, and particularly if reporting participants that do not otherwise have a frequent duty to report also modify their reporting systems. While acknowledging the potential for these inefficiencies, the Commission preliminarily believes they are unlikely to manifest for a number of reasons. First, because FpML and FIXML are currently international industry standards,
We use the FIX Trading Community Membership listing to identify dealers that use FIXML.
Taken together, scale economies for implementation and competition among SDRs might compel all SDRs to permit reporting participants to submit SBS data to SDRs using a variety of formats, thereby eliminating the inefficiencies associated with modification of systems by reporting parties.
Finally, participants that report infrequently or do not use FpML or FIXML could reduce their burden by engaging with third-party entities to carry out reporting duties incurred under Regulation SBSR as well as satisfy data formatting requirements specified by registered SDRs.
At present, FpML and FIXML do not have a complete set of defined reporting elements that address all Regulation SBSR reporting requirements. Market participants may choose to extend these standards to fully reflect Regulation SBSR reporting requirements through the industry bodies that maintain FpML and FIXML (working groups).
FpML is updated by actions of its Standards Committee via a formal process in which working groups produce documents that define extensions or other technical matters which must proceed through stages as working drafts, last call working drafts, trial recommendations and recommendations. Extensions to FpML that reach trial recommendation status are assigned an incremented version number, so that the latest recommendation may be FpML 5.7 while the trial recommendation is FpML 5.8. All public specifications are published on the FpML Web site.
While the Commission acknowledges the costs of extending and updating these standards, these are indirect costs, in that they are not costs required to be incurred by the proposed amendment, but costs that may be incurred voluntarily by industry bodies. Further, the Commission preliminarily believes that extension costs would be modest. An analysis undertaken by Commission staff suggests that each standard currently has the defined reporting elements required to capture almost all of the data elements contemplated by Regulation SBSR.
In the SDR Adopting Release, the Commission required SDRs to provide direct electronic access, but did not specify the form and manner of the direct electronic access. As the Commission noted in the SDR Adopting Release, until such time as the Commission adopts specific formats and taxonomies, “SDRs may provide direct electronic access to the Commission to data in the form in which the SDRs maintain such data.”
Additionally, the proposed amendment could entail costs if FpML and FIXML no longer reflect SBS market conventions. As the SBS market evolves, FpML and FIXML may cease to reflect SBS market practices or products. If more efficient standards other than FpML or FIXML emerge, the proposed amendment would not permit SDRs to take advantage of those standards in providing direct electronic access to the Commission, though the proposed amendment would not preclude SDRs from using those standards for other purposes. The magnitude of this economic effect is difficult to estimate as we would require information about future SBS market practices and products, as well as efficiency improvements in currently existing and new formatting standards. Moreover, the Commission preliminarily believes that potential reductions in future flexibility will be limited for a number of reasons. First, as previously discussed in Section II.A, representatives from the financial industry, including those in the SBS market, are involved in maintaining, developing, and updating FpML and FIXML to support, among other things, market practices and regulatory reporting requirements. Periodic updating reduces the likelihood that FpML and FIXML will fail to reflect changes to SBS market practices or products. Further, the Commission preliminarily believes that industry involvement and periodic updating make it less likely that a more efficient alternative to FpML or FIXML will emerge. Second, by specifying schemas based on both FpML and FIXML, the proposed amendment provides redundancy in case one standard falls into disuse and no longer reflects SBS market practices or products.
The Commission is also sensitive to the effects on competition among SDRs that might arise as a result of the proposed amendment. The Commission preliminarily believes that the impact of the proposed amendment is likely to be limited. The Commission views the effect of the proposed amendment as further specifying the form and manner of data already required to be made available to the Commission under Rule 13n-4(b)(5). The Commission understands that the implementation costs associated with meeting minimum requirements for form and manner under the proposed amendment could represent a barrier to entry for entrants into the SDR industry that, in the absence of the proposed amendment, would choose to make data available to the Commission in a lower cost form and manner.
To the extent that the proposed amendment deters new firms from entering the SDR industry, competition between SDRs could be reduced. A less competitive SDR industry could see incumbent registered SDRs increasing fees charged to reporting participants, reducing the quantity and quality of services provided to reporting participants, or both. Further, a less competitive SDR industry could make it easier for incumbent registered SDRs to shift a bigger portion of their implementation cost to reporting participants. As noted above, such a shift could represent an inefficient allocation of implementation costs if it results in duplicative investment in software and systems by a large number of reporting parties to conform data to the schemas.
The Commission preliminarily believes that any deleterious effect on competition that results from the proposed amendment might be limited for a number of reasons. First, because the Commission is selecting the FpML and FIXML standards which are widely available to the public at no cost, new entrants would not incur any cost associated with the creation of new standards. Second, should extension and updating costs be necessary, such costs are expected to be modest and would likely be shared among various market participants, including SDRs. Thus, the actual portion of these costs incurred by a new entrant would be limited.
The Commission has considered two alternatives to the approach contemplated in the proposed amendment. In this section, we discuss each alternative in turn and the reasons why each alternative approach was not proposed.
The first alternative would involve development of a new information formatting standard specifically designed to support regulatory reporting of SBS data. The Commission could implement this alternative in one of two ways. First, the Commission could develop a new standard on its own and require SDRs to use this standard. The key advantage of such an approach is that it would give the Commission the ability to tailor definitions of data elements to precisely match those in Regulation SBSR. However, this approach suffers from a number of drawbacks. The Commission would likely expend significant resources to (i) develop an information formatting standard for SBS data, (ii) stay informed of the various practices of the SDRs, (iii) provide guidance on the standard's use, and (iv) update the standard on a regular basis to incorporate innovations in the SBS market and additional reporting requirements as determined by future Commission action. Further, under this approach market participants could incur costs associated with supporting an additional information formatting standard that is not useful except for purposes of satisfying Title VII requirements.
In the absence of an existing standard for SBS data, it would be appropriate for the Commission to develop a new
A second alternative would be to use either FpML or FIXML as the sole schema standard. The Commission preliminarily believes that using only a single standard would impose an additional burden on an SDR that currently uses a standard other than the selected standard. Because FpML and FIXML are both widely used and accepted in the financial industry, it is possible that some SDRs use FpML while others use FIXML. As noted in the economic baseline, among the persons that could potentially register as SDRs for security-based swaps, BSDR LLC, DTCC Data Repository, and ICE are FpML users, while Chicago Mercantile Exchange, Inc. is a FIXML user. By selecting either FpML or FIXML as the sole standard, the Commission would be requiring an SDR that did not use the proposed standard to incur costs to change its policies, procedures, and information systems to accommodate the proposed standard. In addition, selecting a sole standard could increase the likelihood of introducing errors to SBS data caused by an SDR that uses the non-permissible standard when reformatting its data to conform to the selected standard. A greater likelihood of errors could potentially reduce the quality of SBS data made available to the Commission. Further, allowing both FpML and FIXML instead of allowing just one of these standards would afford some measure of redundancy in case one standard falls into disuse (due, for example, to the cessation of industry support) and no longer reflects current market practices.
The Commission seeks commenters' views and suggestions on all aspects of its economic analysis of the proposed amendment. In particular, the Commission asks commenters to consider the following questions:
• What additional information sources can the Commission use to calibrate the cost of setting up and implementing policies, procedures, and information systems to format and submit SBS transaction data in accordance with the Commission's schemas?
• What fraction of reporting participants already use FpML or FIXML to format SBS data?
• What fraction of reporting participants use proprietary XML representations of SBS?
• What additional information sources can the Commission use to calibrate (a) the cost of extending FpML and FIXML and (b) the cost of periodically updating these standards?
• Are there costs associated with the proposed amendment that the Commission has not identified? If so, please identify them and if possible, offer ways of estimating these costs.
The Commission is required to take into account those provisions of any proposed amendments that contain “collection of information requirements” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
As is discussed in greater detail below, the Commission preliminarily believes that the proposed amendments to Rule 13n-4(a)(5) would result in a collection of information burden. To the extent that this collection of information burden has not already been accounted for in the adoption of the SDR Adopting Release and Regulation SBSR,
The Commission's SDR Rules (OMB Control Number 3235-0719) consist of Rules 13n-1 to 13n-12 under the Exchange Act governing SDRs, and a new form, Form SDR, for registration as a security-based swap data repository. Among other things, Rule 13n-4(b) sets forth requirements for collecting and maintaining transaction data that each SDR will be required to follow. The SDR Adopting Release described the relevant burdens and costs that complying with Rule 13n-4(b), as well as the other companion rules, will entail. The Commission estimated that the one-time start-up burden relating to establishing the systems necessary to comply to the SDR Rules (including Rule 13n-4(b)) would be 42,000 hours and $10 million in information technology costs for each SDR, for a total one-time start-up burden of 420,000 hours and $100 million.
Regulation SBSR (OMB Control No. 3235-0718), among other things, sets forth the primary and secondary SBS trade information that must be reported to a registered SDR and, with some exceptions, disseminated by a registered SDR to the public. The burdens associated with the reporting and dissemination of SBS trade information are discussed in Regulation SBSR. These burdens include those related to a registered SDR to time-stamping information that it receives, assigning a unique transaction ID to each security-based swap it receives (or establishing or endorsing a methodology for transaction IDs to be assigned by third parties), disseminating transaction reports related to SBSs, issuing notifications regarding closing hours and system availability, establishing protocols for correcting errors in SBS information, obtaining UICs as necessary, establishing and maintaining compliance with certain policies and procedures, and registering as a securities information processor. In this release, the Commission has not proposed changes to the information that must be reported to a registered SDR or the information that must be disseminated by a registered SDR to the public. The Commission therefore preliminarily believes that there would be no additional burden beyond those already discussed in connection with Regulation SBSR.
The Commission believes, as is discussed in greater detail above in Section II.A., that the participants in the SBS market generally already employ two industry standard formats: FpML and FIXML. The Commission expects, but Regulation SBSR does not require, that registered SDRs will accept SBS trade information in one or both of these industry standard formats. In preparation for compliance with Regulation SBSR and the SDR Adopting Release, the Commission expects that registered SDRs will have established systems capable of collecting—and indeed likely have already collected SBS trade information—in one of these two industry standards formats. However, the Commission does acknowledge that, as a result of the proposed amendment, SDRs may incur burdens associated with implementing policies, procedures, and information systems to ensure that SBS data made available to the Commission is in the form and manner that satisfies the requirements laid out in the schema.
Rule 13n-4(b)(5) requires SDRs to provide direct electronic access to the Commission or its designees. Rule 13n-4(a)(5), as proposed to be amended, requires “direct electronic access” to be made using “the most recent version of either the FpML schema or the FIXML schema for security-based swap data repositories as published on the Commission's Web site.” The proposed amendments do not alter or amend the information that must be collected and maintained by a registered SDR, but do impact the manner in which such information is made available to the Commission.
Rules 13n-4(b)(5) requires that an SDR provide the Commission, or any designee of the Commission, with direct electronic access. The information made available to the Commission, or its designee, will help ensure an orderly and transparent SBS market as well as provide the Commission with tools to help oversee this market.
The direct electronic access requirements of Rule 13n-4(b)(5) apply to all SDRs, absent an exemption. Thus, for these provisions, the Commission continues to estimate that there will be 10 respondents.
As discussed above, Rule 13n-5(b)(5) requires SDRs to provide direct electronic access to the Commission or its designees. Rule 13n-4(a)(5), as proposed to be amended, would require “direct electronic access” to be made available to the Commission using “the most recent version of either the FpML schema or the FIXML schema for security-based swap data repositories as published on the Commission's Web site.”
The Commission preliminarily believes that registered SDRs are likely to already accept transaction data from reporting persons who submit trade information using FpML and FIXML reporting standards. However, the Commission preliminarily believes that, as a result of the proposed amendment, registered SDRs may incur certain burdens associated with implementing policies, procedures, and information systems to ensure that SBS data made available to the Commission is in a form and manner that satisfies the requirements laid out in the schemas. The Commission preliminarily believes that these incremental burdens are likely to be related to ensuring that the data elements that constitute the common data model are represented using the appropriate FIXML or FpML reporting elements and are likely to be smaller for those SDRs that already employ FIXML or FpML. The Commission preliminarily estimates that each registered SDR will incur an initial, one-time burden of 472.5 hours,
Once the policies, procedures, and information systems required to comply with the proposed amendment are in place, the Commission preliminarily does not believe that there will be any additional paperwork burden placed upon SDRs to make transaction records accessible in a form and manner that satisfies the requirements of the schemas. The Commission preliminarily believes that the burdens related to SDRs using their policies, procedures, and information systems they would have already established have been accounted for in the previously adopted SDR Rules. Furthermore, the Commission preliminarily believes that the annual burdens associated with maintaining the SDRs policies and procedures, as well as the annual burdens associated with modifications of information technology systems have already been accounted for in the previously approved SDR Rules.
The collection of information relating to direct electronic access is mandatory for all SDRs, absent an exemption.
Because these proposed amendments do not impact the scope or nature of the information required to be made available to the Commission, the Commission does not expect to receive confidential information as a result of these proposed amendments. However, to the extent that the Commission does receive confidential information pursuant to this collection of information, such information will be kept confidential, subject to the provisions of applicable law.
Rule 13n-7(b) under the Exchange Act requires an SDR to keep and preserve at least one copy of all documents, including all documents and policies and procedures required by the Exchange Act and the rules or regulations thereunder, correspondence, memoranda, papers, books, notices, accounts, and other such records as shall be made or received by it in the course of its business as such, for a period of not less than five years, the first two years in a place that is immediately available to representatives of the Commission for inspection and examination. This requirement encompasses any documents and policies and procedures established as a result of the proposed amendments.
Pursuant to 44 U.S.C. 3505(c)(2)(B), the Commission solicits comment to:
• Evaluate whether the proposed collection of information is necessary for the proper performance of our functions, including whether the information will have practical utility;
• Evaluate the accuracy of our estimate of the burden of the proposed collection of information;
• Determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and
• Evaluate whether there are ways to minimize the burden of collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.
Section 3(a) of the Regulatory Flexibility Act of 1980 (“RFA”)
The Commission believes, based on input from SBS market participants and its own information, that persons that are likely to register as SDRs would not be small entities. Based on input from SBS market participants and its own information, the Commission believes that most if not all registered SDRs would be part of large business entities, and that all registered SDRs would have assets exceeding $5 million and total capital exceeding $500,000.
The Commission encourages written comments regarding this certification. The Commission solicits comment as to whether the proposed amendment to Rule 13n-4(a)(5) could have an effect on small entities that has not been considered. The Commission requests that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of such impact.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA)
The Commission requests comment on the potential impact of the proposed amendment on the economy on an annual basis. Commenters are requested to provide empirical data and other factual support for their views to the extent possible.
Pursuant to the Exchange Act, and particularly Sections 13(n) and 23(a) thereof, 15 U.S.C. 78m(n) and 78w(a), the Commission is proposing to amend rule 13n-4(a)(5), under the Exchange Act.
Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the SEC is proposing to amend Title 17, Chapter II of the Code of the Federal Regulations as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201
(a) * * *
(5) * * * Direct electronic access must be made available to the Commission using the most recent version of either the FpML schema or the FIXML schema for security-based swap data repositories as published on the Commission's Web site.
By the Commission.
The following will not appear in the CFR.
The common data model is informed by the current versions of the FpML and FIXML standards. Commission staff has mapped concepts in the common data model to existing data elements in both FpML and FIXML. Table 1 depicts the result of this mapping exercise for FpML version 5.9, which is considered current for the purposes of this proposal. Table 2 repeats this exercise for FIX version 5.0, Service Pack 2, which shall be considered current for the purposes of this proposal.
Food and Drug Administration, HHS.
Proposed rule.
The Food and Drug Administration (FDA or the Agency) is proposing to revise its regulations on prescription fixed-combination drugs to apply the regulations to both prescription and nonprescription fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an over-the-counter (OTC) monograph. These products must meet specific evidentiary requirements for approval. The proposed revisions would harmonize the requirements for prescription and nonprescription products and make them consistent with long-standing Agency policy.
Submit either electronic or written comments on this proposed rule by March 22, 2016. Submit comments on information collection issues under the Paperwork Reduction Act of 1995 (the PRA) by January 22, 2016 (see the “Paperwork Reduction Act of 1995” section of this document). See section IX of this document for the proposed effective date of a final rule based on this document.
You may submit comments by any of the following methods, except that comments on information collection issues under the PRA must be submitted to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB) (see the “Paperwork Reduction act of 1995” section of this document):
Submit electronic comments in the following way:
•
Submit written submissions in the following ways:
•
Diana Pomeranz, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, rm. 6208, Silver Spring, MD 20993,
We are proposing to revise our existing regulations in subpart B of part 300 (21 CFR part 300) on prescription fixed-combination drugs and establish new provisions applicable to prescription and nonprescription fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an OTC monograph. Although current regulations exist for prescription fixed-combination drugs (current § 300.50 (21 CFR 300.50)) and combinations of active ingredients under consideration for inclusion in an OTC monograph (current § 330.10(a)(4)(iv) (21 CFR 330.10(a)(4)(iv)), they use slightly different language to state the same requirements. In addition, current § 300.50 does not mention co-packaged drugs even though the Agency's long-standing policy has been to apply the requirements to co-packaged drugs. The proposed revisions would harmonize the requirements for prescription and OTC products and make them consistent with long-standing Agency policy.
Fixed-combination or co-packaged drugs are intended to provide greater effectiveness (either by having a greater effect for a single indication or by treating more than one indication) than either ingredient alone, or by having one active ingredient enhance the safety or effectiveness of another active ingredient. Under the Federal Food, Drug, and Cosmetic Act (the FD&C Act) and related regulations, FDA has the authority to require specific types of evidence demonstrating that prescription fixed-combination or co-packaged drugs and OTC ingredients used in combination provide enhanced safety or effectiveness and can be labeled as such. This proposed rule describes the requirements applicants must meet to demonstrate that their fixed-combination or co-packaged drugs are safe and effective.
Under section 502(a) of the FD&C Act (21 U.S.C. 352(a)), prescription and OTC drugs are deemed “misbranded” if their labeling is false or misleading “in any particular.” Section 201(n) of the FD&C Act (21 U.S.C. 321(n)) states that labeling is misleading if it fails to reveal facts that are material with respect to the consequences which may result not only from the use of the product as labeled but from the use of the product under such conditions of use as are customary or usual. Information on how each ingredient in a combination contributes to the effect of the combination is a fact “material” to the consequences that may result from customary use of that product. Thus, it is within FDA's authority to require such testing as is necessary to establish the safety and effectiveness of ingredients used in combination.
The proposed rule would apply to both prescription and OTC fixed-combination and co-packaged drugs that are subject to approval under a new drug application (NDA) under section 505 of the FD&C Act (21 U.S.C. 355), or a biologics license application (BLA) under section 351 of the Public Health Service Act (PHS Act) (42 U.S.C. 262), and to combinations of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330. It does not apply to individual natural-source drugs, which are drugs derived from natural raw materials, even though those drugs may contain multiple ingredients derived from the same source.
Proposed § 300.53 sets forth the requirements for combinations of active ingredients under consideration for inclusion in an OTC monograph and prescription and OTC fixed-combination and co-packaged drugs. Under proposed § 300.53, two or more active ingredients may be combined in a fixed-combination or co-packaged drug or included as a combination in an OTC monograph when two requirements are met.
First, under proposed § 300.53(a)(1), each active ingredient must make a contribution to the effect(s) of the combination, enhance the safety or effectiveness of an active ingredient, or minimize the potential for abuse of an active ingredient. Second, under proposed § 300.53(a)(2), the dosage of each active ingredient (amount, frequency of administration, and duration of use) must be such that the combination is safe and effective and provides rational concurrent therapy.
Under proposed § 300.53(b)(1), applicants and “interested persons” (persons seeking a change in an OTC monograph) who seek approval of a combination must state the intended use of each active ingredient in the combination. This requirement ensures that the therapeutic purpose of all active ingredients, even those that might not be considered active ingredients in other contexts, is claimed.
Under proposed § 300.53(b)(2), applicants and interested persons must provide sufficient evidence to demonstrate that their products meet the requirements of § 300.53(a), including evidence demonstrating the contribution of each active ingredient to the effect(s) of the combination. The amount and type of data and information needed may vary depending on a number of factors, including the therapeutic intent of the combination.
Because there are some products for which it would be infeasible or medically unreasonable or unethical to meet the requirements of this proposed rule, proposed § 300.60 would give FDA the authority to grant a waiver of some or all of the requirements of the proposed rule at the request of an applicant or interested person or on its own initiative. In addition, FDA may grant a waiver for products that contain a subset of the components contained in a natural-source drug or a product that has already received a waiver under the proposed rule. FDA may grant a waiver of any of the requirements of proposed § 300.53 depending on the evidence submitted.
The Agency has determined that this proposed rule is not a significant regulatory action as defined by Executive Order 12866.
We are proposing to revise our existing regulations in subpart B of part 300 on prescription fixed-combination drugs and establish new provisions applicable to prescription and nonprescription fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an OTC monograph.
The proposed rule would apply to fixed-combinations (two or more active ingredients are combined at a fixed dosage in a single dosage form) of drugs (Refs. 1 to 5),
Current FDA regulations contain requirements applicable to fixed-combination drugs. The provisions on “fixed-combination prescription drugs for humans” are set forth in § 300.50. The requirements for fixed-combination drugs that are marketed without a prescription and that are included in the OTC Drug Review are described in § 330.10(a)(4)(iv).
In the
Current § 300.50 explains how the requirements for demonstrating the safety and effectiveness of a drug submitted under section 505(b)(1) or (2) of the FD&C Act and subject to FDA's implementing regulations in part 314 (21 CFR part 314) apply to prescription fixed-combination drugs. Under current § 300.50(a), two or more drugs may be combined in a single dosage form when each component makes a contribution to the claimed effects and the dosage of each component (amount, frequency, duration) is such that the combination is safe and effective for a significant patient population requiring such concurrent therapy as defined in the labeling for the drug. “Special cases” of this general rule are when a component is added to enhance the safety or effectiveness of the principal active ingredient or to minimize the potential for abuse of the principal active ingredient.
Paragraphs (b) and (c) of current § 300.50 relate to Agency determinations about the effectiveness of drugs under the Drug Efficacy Study Implementation (DESI) review, which FDA initiated in response to the Kefauver-Harris Drug Amendments to the FD&C Act (Pub. L. 87-781). The Kefauver-Harris Drug Amendments required FDA to assess the effectiveness of drugs that the Agency had previously approved for safety under the FD&C Act between 1938 and 1962. When the fixed-combination drug regulations in § 300.50 were established in 1971 (36 FR 20037), the DESI review was ongoing for many DESI drugs. A significant number of the drugs undergoing DESI review were fixed-combination drugs. According to current § 300.50(b), if a fixed-combination drug that is the subject of an NDA approved before 1962
Because most of the few, still-pending DESI proceedings are in advanced stages, we do not believe that it is necessary to maintain provisions in the fixed-combination drug regulations that address the DESI review. Therefore, current § 300.50(b) and (c) are omitted from this proposed regulation. Under this proposed rule, the manufacturer of a DESI drug could still propose a change in formulation, labeling, or dosage to meet the requirements of this proposed rule, and any DESI proceeding that is still pending when the final rule publishes will be subject to the requirements of the final rule.
In FDA's consideration of OTC combinations under the OTC Drug Review, the Agency has applied a standard similar to § 300.50(a) under § 330.10(a)(4)(iv) in the development of OTC monographs. An OTC drug that combines two or more safe and effective active ingredients may be generally recognized as safe and effective (GRASE) when the following criteria are met: (1) Each active ingredient makes a contribution to the claimed effect(s); (2) combining the active ingredients does not decrease the safety or effectiveness of any of the individual active ingredients; and (3) the fixed-combination, when used in accordance with labeling that provides adequate directions for use and warnings against unsafe use, provides rational concurrent therapy for a significant proportion of the target population. Combinations of active ingredients described in an OTC drug monograph may be marketed without prior Agency approval. Those combinations that are not described in a proposed tentative final monograph (TFM) or OTC monograph must either be added to the applicable OTC monograph or be approved under the NDA or abbreviated new drug application (ANDA) provisions in section 505 of the FD&C Act before they may be marketed in the United States.
Current §§ 300.50 and 330.10(a)(4)(iv) are not identical. Section 330.10(a)(4)(iv) refers to combinations of “active ingredients” rather than “components,” the term used in the prescription fixed-combination drug regulations; however, we do not believe this is a substantive difference because we have interpreted “component” in § 300.50 to mean active ingredient. Section 330.10(a)(4)(iv) specifically states that the combining of active ingredients must not decrease the safety or effectiveness of any individual active ingredient, whereas, § 300.50 does not specifically address this point. A prescription fixed-combination drug must be “safe and effective for a significant patient population requiring such concurrent therapy,” (§ 300.50(a)), while an OTC combination of active ingredients must provide “rational concurrent therapy for a significant proportion of the target population” (§ 330.10(a)(4)(iv)).
In addition, unlike the prescription fixed-combination drug regulations, the OTC combination standard does not specifically refer to the addition of a component to enhance the safety or effectiveness, or minimize the potential for abuse, of the principal active ingredient. However, FDA's guidance document entitled “General Guidelines for OTC Drug Combination Products” (OTC combination guidance), issued in 1978 (available at
This proposed rule aims to create uniform requirements for prescription and nonprescription fixed-combination and co-packaged drugs and combinations under consideration for inclusion in an OTC monograph by incorporating the concepts described in the OTC combination guidance, as well as those set forth in current § 330.10(a)(4)(iv) with those described in current § 300.50.
Most approved drugs contain a single active ingredient
Although fixed-combination drugs can provide convenience, therapeutic benefit, and even economic benefit to patients, they also have potential disadvantages. These include the lack of flexibility in adjusting the dosage of each active ingredient to an individual patient's needs, the related possibility of overexposure, or unnecessary exposure to a particular active ingredient.
Co-packaged drugs raise similar concerns to those associated with fixed-combination drugs, including whether each product contributes to the effect of the combination, whether there is a particular patient population that requires or can benefit from such a combination, and whether the co-packaged drugs can be used together safely and effectively (
Co-packaged drugs might also pose certain concerns that differ from those of fixed-combination drugs. These include potential confusion regarding labeling and misuse, abuse, or diversion of one of the products. An example of possible misuse is the development of drug-resistant organisms when a patient fails to properly take co-packaged anti-tuberculosis drugs. Labeling confusion could also occur where information on individual product labels is inconsistent with labeling for use of the co-packaged drugs together. Furthermore, there is concern that abuse or diversion of an active ingredient may be easier with a co-packaged drug than with a fixed-combination drug because the desired active ingredient does not need to be chemically separated from the combination. We believe that the requirements in proposed § 300.53 are sufficiently broad to encompass evaluation of these and similar concerns, and it is appropriate to apply the same requirements to co-packaged and fixed-combination drugs.
We are proposing to revise our existing regulations on prescription fixed-combination drugs and establish new provisions applicable to prescription and nonprescription fixed-combination and co-packaged drugs approved under a new drug application and to combinations of active ingredients under consideration for inclusion in an OTC monograph, in subpart B of part 300, as discussed in this document. The following is a description of the proposed regulation.
In revised § 300.50, we propose to define the following terms used in subpart B (entitled “Combination Drugs”) of part 300:
We propose to define “active ingredient” as having the meaning consistent with that used in § 210.3(b)(7), namely: Any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body of man or other animals. The term includes those components that may undergo chemical change in the manufacture of the drug product and be present in the drug product in a modified form intended to furnish the specified activity or effect (see § 210.3(b)(7)). Whether an ingredient is active or not may depend on its function in the product (
FDA also has long interpreted the term “other direct effect” in the definition of “active ingredient” to include nutritional effects of dietary supplements. When used as part of a fixed-combination or co-packaged drug, dietary supplements are considered to be an active ingredient in that product and subject to the requirements of this proposed rule. See footnote 1 for additional discussion of the treatment of dietary supplements as drugs when used in combination with a drug.
We proposed to define “applicant” as any person who, to obtain approval of a fixed-combination or co-packaged drug, submits an NDA under section 505 of the FD&C Act or a BLA under section 351 of the PHS Act.
We propose to define “botanical raw material” as a fresh or physically processed material derived from a single part of a single species of plant,
We encourage the study and development of botanical substances as botanical drug products. In 2004, we issued guidance for industry, “Botanical Drug Products,” on conducting clinical studies of and submitting marketing applications for such products (69 FR 32359, June 9, 2004). The guidance is available on the Internet at
We propose to define “co-packaged drug” as a product that contains two or more separate drugs in their final dosage forms that are intended to be used together for a common or related therapeutic purpose and that are contained in a single package or unit.
Co-packaging two or more drugs might involve, for example, putting these products into the same blister pack, carton, or box, or in separate boxes that are shrink-wrapped together. Some co-packaged drugs have separate labeling for each of the individual products; whereas, other co-packaged drugs have joint labeling. For example, co-packaged Sodium Nitrite Injection and Sodium Thiosulfate Injection (Nithiodote) are marketed for the sequential treatment of acute cyanide poisoning that is judged to be life-threatening. When sodium thiosulfate is sold as a single entity, it is labeled for sequential use with sodium nitrite for treatment of acute cyanide poisoning that is judged to be life-threatening. When sodium thiosulfate is co-packaged with sodium thiosulfate, it is singly labeled for treatment of acute cyanide poisoning that is judged to be life-threatening. The Monistat 3 Combination Pack for treatment of vaginal yeast infection is an example of a co-packaged OTC product the individual components of which are also sold individually (cool wipes, miconazole nitrate vaginal inserts, and miconazole nitrate cream). Miconazole nitrate vaginal inserts are sold separately as Monistat outside of a combination pack and are labeled for treatment of vaginal yeast infections. Similarly, miconazole nitrate cream is sold individually for treatment of vaginal itching. However, when these products are packaged together in the Monistat 3 Combination Pack, the co-packaged drug has one label for both products.
In recent years, we have reviewed and approved several applications to market co-packaged drugs. Examples include Pravigard PAC (co-packaged pravastatin sodium tablets and buffered aspirin tablets) for reducing the occurrence of serious cardiovascular and cerebrovascular events; co-packaged peginterferon alfa-2a and ribavirin for the treatment of hepatitis C; and co-packaged bismuth subsalicylate (gastrointestinal agent), metronidazole (antiprotozoal and antibacterial agent), and tetracycline hydrochloride (antibiotic) for the treatment of patients with active duodenal ulcer associated with
The Agency interprets the act of shrink-wrapping or otherwise packaging two products together, in the absence of any alternative explanation for the packaging such as “convenience” or “value” pack, to be an implied claim that the products are intended to be used together for a common or related therapeutic purpose. In the case of a dietary supplement co-packaged with a drug, the co-packaging implies that the dietary supplement is intended to be used for a therapeutic purpose, and the dietary supplement will be considered a drug under the FD&C Act (see footnote 1 for additional discussion of the treatment of dietary supplements as drugs when used in combination with a drug).
In the absence of another explanation (such as the “convenience kit” discussed later in this section), packaging two products together makes an implied claim that they are safe and effective when used together. Without proper approval, these products are considered unapproved drugs under section 505(a) of the FD&C Act. Without approved labeling, such products would also be considered misbranded under section 502 of the FD&C Act, including under section 502(n).
In some cases, however, OTC drugs are packaged together for convenience, such as a “travel kit” or “convenience kit” that includes an antiperspirant, an internal analgesic, toothpaste, sunscreen, and/or a sleep aid. In other cases, OTC drugs might be packaged together as two or more shrink-wrapped cartons to be sold as one unit identified as a “special value” or “value pack.” These individual drugs are not intended to be used together for a common or related therapeutic purpose. Therefore, these types of kits do not meet the proposed definition of co-packaged drug and would not be subject to the requirements of this proposed rule.
We propose to define “drug” as having the same meaning given this term in section 201(g) of the FD&C Act and including biological products as defined in section 351 of the PHS Act that also meet the definition of “drug” in section 201(g) of the FD&C Act, but not including any product that meets the definition of “device” under the FD&C Act (21 U.S.C. 301,
We propose to define “fixed-combination drug” to mean a drug in which two or more active ingredients are combined at a fixed dosage in a single dosage form.
We are not proposing to include individual natural-source drugs under the definition of “fixed-combination drug,” even when they may contain more than one active component. We do not believe that the current fixed-combination drug regulations were intended to or should apply to a drug that is derived from a single, naturally occurring raw material. Fixed-combination drugs involve deliberate combinations of distinct, single active ingredients, either produced synthetically or isolated and purified from a natural source.
Examples of prescription fixed-combination drugs include the following: ARTHROTEC (diclofenac sodium and misoprostol tablets) for the treatment of osteoarthritis or rheumatoid arthritis in patients at high risk of developing nonsteroidal anti-inflammatory drug (NSAID)-induced gastric or duodenal ulcers; COMBIVIR (lamivudine and zidovudine tablets) for the treatment of HIV infection; and LOTREL (amlodipine besylate and benazepril capsules) for the treatment of hypertension (one of a large number of antihypertensive fixed-combination drugs). Examples of fixed-combination OTC drug products marketed in accordance with OTC drug monographs include, a wide variety of “cough/cold” fixed-combination drugs (containing analgesics-antipyretics, cough suppressants, decongestants, and antihistamines). Fixed-combination OTC drug products marketed under an NDA include Imodium Multi-Symptom Relief (loperamide hydrochloride and simethicone tablets), to relieve diarrhea and gas, and Pepcid Complete (famotidine, calcium carbonate, and magnesium hydroxide chewable tablets), to relieve heartburn.
There are also certain products that, although they are composed of or derived from a single animal, botanical, prokaryotic, fungal, or viral raw material, combine two or more separated and purified active ingredients and therefore
Our current and long-standing policy is to apply the requirements of current § 300.50 to fixed-combination drugs that are created by combining two or more macromolecules that are separate active ingredients. It should be noted, however, that products such as whole blood, individual or pooled transfusible blood components (
We also have a current and long-standing policy of applying the requirements of current § 300.50 to products formed by inducing and then purifying two or more macromolecules (proteins or other macromolecules) derived from the same raw material where each induced and purified protein or other macromolecule is necessary to achieve the claimed effect(s) of the product. Inducing macromolecules usually involves treating a source material to elicit the production of two or more macromolecules from a single raw material source. For example, a single animal (raw material source) might be immunized with multiple antigens to induce antibodies of multiple specificities. Another example is combining two treatments that enhance production of different proteins in one cell line, with both sets of proteins contributing to the claimed effect of the product. Even for a product created using a process in which the raw material is not manipulated, if an applicant makes claims about different specific macromolecules contained in the product, it would be considered a fixed-combination drug and the applicant would be required to demonstrate the contribution of each active ingredient to the claimed effect.
Similarly, a product derived from the purification of an
Copurifying macromolecules involves selective purification and extraction of multiple macromolecules away from the rest of the raw material, such as that which occurs during the development of the fibrinogen component of a fibrin/thrombin sealant product. The fibrinogen component can be isolated from plasma in such a way that it contains both fibrinogen and Factor XIII. If the copurified fibrinogen and Factor XIII are isolated and measured to determine whether each improves the performance of the other, and it is determined that they both make a contribution to the fibrin sealant (
We propose to define “fungal raw material” as a physically processed culture of a single-cell or multicellular organism, including yeasts, molds, and smut.
We propose to define “interested person” to mean, with regard to a combination of two or more active ingredients under consideration for inclusion in an OTC monograph, any person who makes a submission under part 330 regarding safety or effectiveness.
We propose to define “natural-source drug” as a drug composed of one single animal, botanical, prokaryotic, fungal, or viral raw material, or derived from one such material using a manufacturing process that involves only physical steps (
The composition of a natural-source drug may be adjusted for assuring quality (
Examples of natural-source drugs include the following:
• Menotropins derived from the urine of postmenopausal women for the induction of ovulation in anovulatory infertile patients.
• Extract from porcine thyroid glands for treating hypothyroidism.
• Extract from porcine pancreas glands for treating pancreatic enzyme deficiency.
• Heparin sodium derived from porcine intestinal mucosa for anticoagulant therapy in prophylaxis and treatment of venous thrombosis.
• Psyllium husk fiber for treatment of constipation.
• Bermuda grass pollen allergenic extract.
• Catechins in green tea extract for treatment of genital warts.
• Polyclonal immunoglobulin to provide protection against infectious diseases.
• Prothrombin complex concentrate products used for urgent reversal of acquired coagulation factor deficiency induced by vitamin K antagonist therapy.
Natural-source drugs differ from the drugs for which current § 300.50 was established in that they do not involve an intentional “combining” of active ingredients. There is no discussion of this type of drug in the regulatory history of § 300.50 or § 330.10(a)(4)(iv), and historically we have not applied the fixed-combination drug requirements to products that contain active ingredients derived from a single, naturally-occurring source. Therefore, we believe that it is appropriate to make clear in the regulations that individual natural-source drugs are not fixed-combination drugs and are not subject to this proposed rule.
In addition, we contemplate that the raw materials contained in natural-source drugs exist in nature or result from a traditional breeding practice or a conventional laboratory gene modification technique such as ultraviolet radiation or non-targeted chemical mutagenesis. Plants or animals that are genetically modified in these ways result from a process that can produce multiple, unpredictable variants of the genome of an organism, similar to the process that occurs in nature. In contrast, genetic modification by a process involving recombinant DNA technology or any other gene modification technology produces a deliberate change to the genome of an organism. Thus, plants, animals, or microorganisms whose genetic structure has been modified by recombinant DNA technology would not be appropriate sources for natural-source drugs because the intent is to produce a particular gene product with well-defined active ingredients. Included among such products are transgenic plants, transgenic animals, and recombinant DNA-derived microorganisms and other cells.
Similarly, we assume that the components of natural-source drugs have not been altered or deliberately mixed in a way that would change the
In addition, drugs made from multiple raw materials (such as a product made from parts of different plants) would not be considered natural-source drugs because they involve an intentional combining of multiple different raw materials, each of which might contain a separate active ingredient, for the purpose of treating a particular disease, condition, or set of symptoms. One example of such a drug is botulinum antitoxin, which is made by immunizing several horses with one of seven distinct botulinum toxins and blending the plasma from the animals to make a single product that is active against seven toxins. Mixed (multiple source) allergenic products are another example of a drug made by intentionally combining more than one raw material. Stallergenes' ORALAIR, a sublingual allergen extract, contains a mixture of freeze-dried extracts from the pollens of five grasses, including Kentucky bluegrass, orchard, perennial rye, sweet vernal, and timothy. These types of products would be subject to this proposed rule, but may be eligible for a waiver under proposed § 300.60 on the grounds that clinical trials to show that each component contributes to the effect of the combination would be scientifically infeasible.
Finally, it is important to note that, although the requirements of proposed § 300.53 would not be applied to natural-source drugs, to obtain marketing approval of these products, an applicant would still need to provide evidence demonstrating that the natural-source drug meets the requirements for approval under section 505 of the FD&C Act or section 351 of the PHS Act, or is appropriate for inclusion in an OTC monograph.
We propose to define “prokaryotic raw material” as a physically processed culture of bacteria or other cellular organism lacking a true nucleus and nuclear membrane. Prokaryotes are composed of bacteria and blue-green bacteria (formerly referred to as blue-green algae).
We propose to define “rational concurrent therapy” as medically appropriate treatment for a patient population defined in the drug's labeling. That is, the defined patient population can benefit from all of the active ingredients at the specific doses present, given for a similar duration of treatment, and not be adversely affected by receiving them in combination.
When we refer to a “defined patient population” in this definition, we mean that there is an easily identifiable patient population for the combination in question that will be specifically described in the drug's labeling. When we say that the defined patient population will not be adversely affected, we mean, for example, not adversely affected by being exposed to drugs that interact harmfully, being restricted to particular doses of a drug when a wider range of doses is needed for proper administration, and having to take two or more active ingredients as extended treatment when one or more of these ingredients may be needed only for a short period of time. Rational concurrent therapy does allow for the treatment of more than one indication, as long as there is a defined patient population for which the combination provides medically appropriate treatment.
The requirement that the patient population be identified in the label is currently required under § 300.50, but is not currently in § 330.10. However, identifying the patient population has been the practice in circumstances when an OTC drug is only appropriate for certain patient populations, so we do not believe this proposed requirement will require a change in existing labeling for OTC monograph drugs.
We propose to define “single animal raw material” as a single organ, human cell, tissue, cellular- and tissue-based product, or bodily fluid collected from any human or nonhuman animal species that has not been genetically modified using recombinant DNA technology or any other process that deliberately changes the genome. In certain cases, multiple parts of an animal may be used in a single animal raw material. For example, a drug that is derived from an invertebrate animal species (including multiple parts or all of an invertebrate animal) may be considered a single animal raw material. The organs and tissues of invertebrate species (
We propose to define “viral raw material” as a minimally processed culture of a virus. The virus in culture may exist in nature or may have been attenuated or inactivated through selection or by physical and/or chemical means.
We propose to define “waived product” to mean: (1) An approved fixed-combination or co-packaged product for which a waiver has been granted under § 300.60 or (2) a combination of active ingredients included in an OTC monograph that has been GRASE for which a waiver has been granted under § 300.60.
Proposed § 300.51 states that subpart B of part 300 (currently containing the provisions on prescription fixed-combination drugs for humans) applies to both prescription and OTC fixed-combination and co-packaged drugs that are subject to approval under an NDA under section 505 of the FD&C Act, or a BLA under section 351 of the PHS Act, and to combinations of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330. It does not apply to individual natural-source drugs.
This proposed rule applies to prescription or OTC fixed-combination or co-packaged drugs that require an NDA or a BLA for marketing approval. In addition, OTC combinations cannot be GRASE under § 330.10 unless they meet the requirements in proposed § 300.53. This means that, consistent with our current regulations, compliance with proposed § 300.53 would be necessary to add a new combination of active ingredients to an OTC monograph in accordance with § 330.10(a)(12). Or, to obtain approval of a combination of two active ingredients that are each contained in a different final monograph, an applicant may
The proposed rule would not apply to combination products
Proposed § 300.53 sets forth the requirements for combinations of active ingredients under consideration for inclusion in an OTC monograph and prescription and OTC fixed-combination and co-packaged drugs. Under proposed § 300.53, two or more active ingredients may be combined in a fixed-combination or co-packaged drug or included as a combination in an OTC monograph when the proposed requirements are met.
First, under proposed § 300.53(a)(1), each active ingredient must make a contribution to the effect(s) of the combination, enhance the safety or effectiveness of an active ingredient, or minimize the potential for abuse of an active ingredient. Most often, two or more active ingredients are combined in a single dosage form or are co-packaged so that patients or consumers who are taking both active ingredients can more conveniently obtain the therapeutic benefits of each active ingredient. In this case, an applicant or interested person would be required to show that each active ingredient contributes to the effect(s) of the combination. In other cases, active ingredients are combined to enhance the safety or effectiveness of one or more of the active ingredients or to minimize the potential for abuse of one of the active ingredients. In these cases, an applicant or interested person would be required to demonstrate that the active ingredients perform as claimed.
Second, under proposed § 300.53(a)(2), the dosage of each active ingredient (amount, frequency of administration, and duration of use) must be such that the combination is safe and effective and provides rational concurrent therapy. We note that, in the context of the OTC monograph, some monographs indicate that dosing for combinations should not “exceed any maximum dosage limits established for the individual ingredients in the applicable OTC drug monograph,” but remain silent on minimum dosage limits. For a combination under a monograph or proposed to be included in a monograph, to satisfy the requirements of either this proposed rule or current § 330.10(a)(4)(iv), the dosing for the individual active ingredients in the combination must not exceed the maximum dosage limits for the single entities (if these are marketed separately) and must meet the minimum effective dosage established in the monograph. For example, if the monograph specifies that an individual active ingredient is to be dosed every 4 hours, that active ingredient could not be combined with another active ingredient that is to be dosed every 6 to 8 hours because there is no way to write directions for use with a dosing interval that would achieve the minimum effective dose for both ingredients without exceeding the maximum dose for one of them.
We note that, under section 351(d)(1) of the PHS Act, a BLA must demonstrate that the product is “safe, pure, and potent” to be approvable; whereas, section 505(d) of the FD&C Act requires proof of safety and substantial evidence of effectiveness for approval of an NDA. Nevertheless, we believe that referring to effectiveness in proposed § 300.53(a) is appropriate and consistent with statutory and regulatory provisions regarding biological products. This is because the Agency has long interpreted “potency” to include effectiveness.
Under proposed § 300.53(b)(1), we explain that applicants or interested persons must state the intended use of each active ingredient in the combination. This requirement ensures that the therapeutic purpose of all active ingredients, even those that might not be considered active ingredients in other contexts, is claimed. As noted in footnote 1 and under the definition of “active ingredient” in section III.A.l., FDA considers a dietary supplement to be a drug and considers it to be intended to furnish a therapeutic effect when it is combined with a drug in a prescription or OTC fixed-combination or co-packaged drug or is part of a combination under consideration for inclusion in an OTC monograph.
Under proposed § 300.53(b)(2), we explain that applicants and interested persons must provide sufficient evidence to demonstrate that their products meet the requirements of proposed § 300.53(a), including evidence demonstrating the contribution of each active ingredient to the effect(s) of the combination. The amount and type of data and information needed to demonstrate such a contribution may vary depending on a range of factors, including the types and number of active ingredients, the nature of the therapeutic intent of the product (
The most common scenario for development of fixed-combination or co-packaged drugs involves combining two or more drugs that are already approved for use as single agents. In these types of fixed-combination or co-packaged drugs, the drugs to be combined may be directed at the same sign or symptom of the same disease or condition, at different signs or symptoms of the same disease or condition, or at different diseases or conditions. Less often, a fixed-combination or co-packaged drug will include one approved drug and an additional active ingredient that is intended to enhance its safety or effectiveness but that has no independent therapeutic effect. For fixed-combination or co-packaged drugs that are made up of already-approved drugs, the individual drugs in the combination are generally well-characterized and development is
FDA is also aware of a growing interest in the development of two or more new investigational drugs (
Proposed § 300.53(c) states that the statement and evidence specified in proposed § 300.53(b) must be provided in an NDA or a BLA or, if an interested person seeks to include the combination in an OTC monograph, in a submission under part 330. The information showing that a fixed-combination or co-packaged drug meets the requirements of § 300.53 would be included in the data on effectiveness that is needed for the approval of an NDA under § 314.50(d)(5) (21 CFR 314.50(d)(5)), for the approval of a BLA under § 601.2(a) (21 CFR 601.2(a)), or for inclusion of the combination in an OTC monograph under part 330. Regarding NDAs, this would include an NDA requesting approval of an OTC combination that deviates in some respect from a final monograph in accordance with § 330.11. During the development of a fixed-combination or co-packaged drug, we may generally discuss with the sponsor what clinical trial data or other information might be needed to demonstrate that the product meets these requirements.
In the following subsections of this document, we discuss the data and information that might be needed to demonstrate the contribution of each active ingredient to the effect of a combination. As this discussion illustrates, there is considerable flexibility in the amount and types of new or existing data that would be needed, and applicants and interested persons should provide scientific justification for the testing and data that might be needed to discuss the matter with FDA. We also understand that, in some cases, it may be medically unreasonable or unethical or scientifically infeasible to conduct new clinical studies, and existing data may not be adequate to fulfill the requirements of proposed § 300.53. In these cases, a waiver from the requirement to demonstrate the contribution of each active ingredient to the claimed effect may be an option (see proposed § 300.60).
Finally, it is important to note that it is not always a requirement that a fixed-combination formulation be used in a factorial study. The data from a factorial study in which the individual active ingredients are administered separately can be relied upon to support an application for a fixed-combination drug if the study data is linked to a fixed-combination formulation by a bioavailability study.
Active ingredients that have different mechanisms of action may be combined to treat the same sign, symptom, or condition if the active ingredients, when used together, can be proven to provide a benefit greater than each of the active ingredients used alone at its therapeutic dose. For such combinations, in which the effect of each active ingredient is directed at the same sign or symptom of a disease or condition, a factorial study is typically used to demonstrate that the combination has a larger treatment effect than one or more of the active ingredients alone. A factorial study for a combination of
If a factorial study is needed to demonstrate the contribution of each active ingredient in a combination, and the individual active ingredients are all previously approved and the magnitude and duration of effect of each active ingredient is well characterized, it may be possible to conduct a study of shorter duration than was required for initial approval. It also may be possible to study the effect of the combination on a subset of the endpoints used for approval of the active ingredients, or even a different endpoint such as a pharmacological endpoint, if the active ingredient is well understood.
In certain cases, a new factorial study may not be needed. For example, FDA guidance for industry on the development of combinations of antiretrovirals for the treatment of HIV describes situations in which existing data can be used to demonstrate the contribution of the individual active ingredients, including clinical data on use of the individual ingredients in a combination, in clinical pharmacologic data, and in nonclinical data (Ref. 6). As discussed in that guidance, for a fixed combination of two previously approved drugs in this class, new clinical data would ordinarily be needed only to demonstrate that the bioavailability of the fixed-combination drug is comparable to that of the active ingredients administered individually. The same would be true for a co-packaged drug developed for the treatment of HIV.
The guidance also points out that, in some cases, it may be possible to use data from a previously approved fixed-combination drug to partially support an application for a new fixed-combination drug if the previously approved product is similar to the new product. Similarly, FDA guidance on demonstrating efficacy of fibrin sealant products recommends that overall efficacy of a fixed-combination fibrin sealant drug be demonstrated in clinical trials, but provides that the contribution of each active ingredient may be demonstrated using nonclinical methods (Ref. 7).
In some cases, it may not be possible to conduct a factorial study because the study would be unethical. For example, it would be unethical to conduct a
In the case of combinations for which a factorial design is not possible, different approaches could be used to satisfy the requirement to demonstrate the contribution of each active ingredient to the effect of the combination by identifying an existing population in which the added effect of one of the active ingredients could be established. For example, for a fixed-combination drug containing an older antiplatelet active ingredient and a newer lipid-lowering active ingredient, existing studies of the lipid-lowering active ingredient may have included substantial subsets of subjects who were all receiving the antiplatelet active ingredient and who were randomized to the lipid-lowering active ingredient or placebo. These subsets could potentially be used to demonstrate the added contribution of the lipid-lowering active ingredient. Or, if there were a newer antiplatelet drug (approved after the lipid-lowering active ingredient), there may be studies in which its effect when added to the lipid-lowering active ingredient had been established. In theory, the data from these studies may be adequate to support a general conclusion that a lipid-lowering active ingredient and an antiplatelet active ingredient can be expected to have independent and additive effects when used in combination.
There are also practical constraints on the use of a factorial design as the number of active ingredients in a combination increases. The greater number of active ingredients in a combination, the greater number of comparisons must be performed to demonstrate that each active ingredient contributes to the effect of the combination. At some point, a factorial study design becomes infeasible. The approximate overall power of a factorial study equals the power of the individual comparisons raised to the
Active ingredients that have the same mechanism of action and are directed at the same sign or symptom of a disease or condition should not ordinarily be combined unless there is some advantage over the individual active ingredients in terms of enhanced effectiveness, safety, patient acceptance, or quality of formulation. Thus, simply using half-doses of two pharmacologically similar drugs would not overcome the disadvantages of putting them in a fixed-combination unless the lower doses of the drugs had some advantages, such as fewer or different adverse events or greater effectiveness.
For combinations in which one active ingredient is intended to: (1) Provide a direct effect that either potentiates or makes another active ingredient more tolerable (
A factorial study is unlikely to be needed to demonstrate the contribution of each active ingredient in a combination where the active ingredients are directed at different signs or symptoms of a disease or condition. Instead, evidence that demonstrates that the active ingredients are effective individually and do not interfere with one another (
Many OTC drug monographs, such as the cold cough, allergy, bronchodilator, and anti-asthmatic drug products monograph (part 341), describe acceptable combinations of active ingredients directed at different
For combinations in which the active ingredients are directed at different diseases or conditions (
Proposed § 300.55(a) states that, when a natural-source drug is combined with any other type of active ingredient, the natural-source drug will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53. This section is intended to make clear that, for a combination of a natural-source drug and any other active ingredient, proposed § 300.53 would not be interpreted to apply to the components of the natural-source drug.
Proposed § 300.55(b) states that, when a natural-source drug is combined with one or more additional natural-source drugs, each natural-source drug in the combination will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53. This is intended to clarify that, when a natural-source drug is combined with another such product, proposed § 300.53 would not be interpreted to apply to the components in the natural-source drugs.
Proposed § 300.55(c) states that, when a waived product is combined with any other type of active ingredient, the waived product will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53. This is intended to clarify that, when a waived product is combined with any other active ingredient, proposed § 300.53 would not be interpreted to apply to the components of the waived product. Waived products are discussed in section III.E.
It is likely that many of these types of combinations would be eligible for a waiver under § 300.60, as discussed in section III.E.
Proposed § 300.60(a) states that “FDA may, at the request of an applicant or interested person or on its own initiative, grant a waiver of any of the requirements under § 300.53 with regard to a fixed-combination or co-packaged drug that is the subject of a pending application under section 505 of the FD&C Act or section 351 of the PHS Act, or a combination of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330, if it finds one of the following: (1) There is a reasonable rationale for the combination of the individual active ingredients, and compliance with any of the requirements of § 300.53 would be infeasible or medically unreasonable or unethical; or (2) the product contains all or a subset of the known or probable components in the same ratio as a natural-source drug or a waived product, provided the product is intended for the same conditions of use as the natural-source drug or the waived product; there is a reasonable basis to conclude that the product would provide a comparable clinical effect to the natural-source drug or the waived product; and, for products containing large molecules (macromolecules), the ingredients have the same principal molecular structural features and overall mechanism of action.”
Applicants or interested persons may be granted a waiver from some or all of the requirements of proposed § 300.53, depending on the evidence submitted.
Proposed § 300.60(a) requires that there be a reasonable rationale for the combination of the individual active ingredients in the proposed combination. This requirement ensures that all of the active ingredients in combinations that receive a waiver are appropriate and not extraneously added to the combination in the hope of receiving a waiver. Applicants might fulfill this requirement by referring to existing knowledge or providing data from in vitro or in vivo studies in animals or humans.
Compliance with the requirements of § 300.53 might be infeasible if a proposed combination has so many active ingredients that a factorial study would become absurd (see discussion of statistical issues with large factorial studies in section III.C), and there is no other alternative method to demonstrate the contribution of each active ingredient to the effect of the combination.
Among the types of products for which we would expect to grant a waiver are products used in traditional medicine that are composed of or derived from multiple raw materials from a single source or from raw materials from multiple sources. These products include the following:
• Traditional botanical products composed of multiple botanical raw materials in fixed ratios. These botanical products may be composed of or derived from multiple parts of the same species of plant or from parts of different plant species;
• traditional medicinal products composed of multiple parts of animals; and
• traditional medicinal products composed of substances derived from more than one type of natural source (
• Cellular and gene therapies.
In most cases, these products have so many active ingredients that studies to demonstrate the contribution of each to the effect of the combination would be infeasible. For example, to show the clinical contribution of each active ingredient of a five-active ingredient mixture of raw materials, the study might require a minimum of six or seven arms: One arm for the five-active ingredient product, an arm for each of the five different four-active ingredient treatments (each omitting one component), and possibly a placebo (see section III.C for a full discussion of clinical trial design to fulfill the requirements of this proposed rule).
Therefore, we generally expect to grant a waiver for these traditional products that have a long history of use as a single medicinal product (
We also expect that we would waive the requirements of this proposed rule for certain allergenic products. Allergen patch tests are diagnostic tests applied to the surface of the skin to determine the specific causes of contact dermatitis. An allergenic patch test kit may contain individual patches in which several chemicals that may elicit allergic contact dermatitis are mixed (
A single synthetic process that can produce a large mixture of random polymers (glatiramer acetate) may also be infeasible to study. These large mixtures of random polymers are analogous to the products discussed previously in that determining the contribution of each active ingredient would be similarly difficult.
Compliance with the requirements of proposed § 300.53 might be considered medically unreasonable if, for example, each of the active ingredients of a planned fixed-combination drug where the combination is intended to affect survival is known to have an independent effect on survival (
Similarly, a combination of active ingredients could be effective for a fatal disease for which there is no available therapy
We do not believe it necessary, from the standpoint of safety or effectiveness, to impose the requirements of this proposed rule on combinations that have similar active ingredients to approved products for which the fixed-combination drug requirements have not been applied or have been waived. To receive a waiver as a subset under this proposed subsection, an applicant or interested person must demonstrate that the active ingredients contained in the product produce a comparable clinical effect to those contained in the original product. Merely encompassing a subset of the active ingredients contained in an approved product is not sufficient to gain a waiver under this provision. The subset of active ingredients must be sufficiently chemically similar to those contained in the approved product to achieve a comparable clinical effect. The concept of a subset contemplates that the active ingredients will remain in the same ratio, but will be a smaller amount. In other words, no product containing a greater percentage of a particular active ingredient than is present in the approved product would be eligible for a waiver.
We propose to apply this concept to fixed-combination and co-packaged drugs containing proteins or other large molecules (macromolecules). However, unlike for small molecules, proteins and macromolecules can differ in ways that do not change their clinical effect. Therefore, we believe it is more appropriate to require that, for fixed-combination and co-packaged drugs involving a subset of proteins or macromolecules, the active ingredients have the same principal molecular structural features and the same overall mechanism of action as the approved product. This requirement helps ensure that any structural difference would be minor and that the likelihood would be very low that any minor structural difference in an active ingredient would affect its contribution to the product's claimed effect.
For example, an applicant might seek a waiver for a protein drug product with an active ingredient that differs in a post-translational modification from the active ingredient of the approved product. If there was sufficient evidence that the structural difference would be unlikely to alter the contribution of that active ingredient, a waiver might be appropriate. However, if it were known that the structural difference resulted in reduced effectiveness in related products, this might suggest a difference in the mechanism of action of the active ingredient in the proposed product, which would render the product ineligible for a waiver.
Proposed § 300.60(b) states that, if an applicant wishes to request a waiver, it must submit that request with supporting documentation in an application under section 505 of the FD&C Act or section 351 of the PHS Act. If an interested person wishes to request a waiver, that person must do so as part of a submission under part 330. The request for a waiver should explain why the applicant or interested person believes its product fulfills one or more of the waiver requirements of proposed § 300.60(a). Submissions should include evidence demonstrating the safety and effectiveness of the product (including, where appropriate, dose-response studies) and, if appropriate, assurance that the active ingredients or active moieties in the proposed product have a comparable clinical effect as those in the approved product. For infeasibility waivers, applicants and interested persons should explain why they believe it would be infeasible to comply with the requirements of proposed § 300.53. For example, they should explain why it is impossible to conduct any of the studies that would satisfy the requirements of the proposed rule, or, if conducting a study would be medically unreasonable or unethical, they should discuss why they believe that is the case.
Proposed § 300.60(c) states that “FDA will provide appropriate written notice when the Agency grants a waiver on its own initiative, or grants or denies a request for a waiver. Fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an OTC monograph for which a waiver is granted must still meet all other applicable requirements under section 505 of the FD&C Act, section 351 of the PHS Act, or § 330.10(a)(4) of this chapter, as appropriate.” The decision to grant a waiver under proposed § 300.60(a) of the regulations is solely at the discretion of FDA. FDA may choose to grant a full or partial waiver. For products subject to an NDA or a BLA, we will notify the applicant in writing when we grant a waiver, or grant or deny a request for a waiver. For combinations seeking inclusion in an OTC monograph, because the citizen petition process described in 21 CFR 10.25 governs the addition of combinations to a monograph, we will place our decision to grant a waiver, or grant or deny a request for a waiver, in the docket related to the citizen petition. Products for which a waiver is granted must still be shown to meet the requirements for approval under section 505 of the FD&C Act or section 351 of the PHS Act, as appropriate, including requirements for safety and effectiveness, or the requirements for classification of OTC drugs as GRASE under a monograph.
As described in section III.B, proposed § 300.51 states that the requirements of § 300.53 would apply to prescription drugs as well as nonprescription drugs that are subject to approval under an NDA. Proposed § 300.51 further states a combination of active ingredients cannot be GRASE under § 330.10(a)(4)(iv) unless it meets the requirements in § 300.53 (unless it is being marketed in accordance with an existing monograph that includes that particular combination).
Under the proposed rule, § 330.10(a)(4)(iv) would no longer contain separate provisions for OTC fixed-combination or co-packaged drugs. Instead, to make it easier to understand the regulations that apply to OTC combinations, we are proposing to revise § 330.10(a)(4)(iv) to state that a combination of two or more active ingredients that are individually determined to be safe and effective in accordance with the preceding requirements of part 330 must meet the requirements of subpart B of part 300 of the regulations to be GRASE and included in an OTC monograph. If such combination is granted a waiver under § 300.60 of the regulations, it must still meet all other applicable requirements of this subsection to be GRASE and included in an OTC monograph. Unless otherwise specified in the applicable OTC monograph(s), combinations of active ingredients that are included in an OTC monograph may be used in either fixed-combination or co-packaged drugs.
Section 610.17 of the biological product regulations contains provisions on permissible combinations of biological products. Section 610.17 states that a separate license is required when a licensed product is combined with another licensed product or with a nonlicensable therapeutic, prophylactic, or diagnostic substance.
Under the proposed rule, biological products would be subject to the regulations in subpart B of part 300. To help make this clear to companies that have drug products subject to approval under section 351 of the PHS Act regulations, we propose to revise § 610.17 to state that a drug product subject to approval under section 351 of the PHS Act may not be combined with another drug except in accordance with subpart B of part 300.
This rule, if finalized, would amend subpart B of part 300 in a manner consistent with the Agency's current understanding and application of that provision. FDA's legal authority to modify subpart B of part 300 arises from the same authority under which FDA initially issued the regulation (21 U.S.C. 331, 351, 352, 355, 361, 371) and section 330.1 (21 U.S.C. 321, 351, 352, 353, 355, 371) and also, with respect to biological products, section 351 of the PHS Act. Biological products are subject both to section 351 of the PHS Act and to the provisions of the FD&C Act and implementing regulations applicable to drugs, except that manufacturers of biological products covered by approved BLAs are not required to submit NDAs under section 505 of the FD&C Act. References to “drugs” in this section include biological products that are also drugs.
Fixed-combination or co-packaged drugs generally purport to provide greater effectiveness (either in cumulative effect, by treating more than one indication, or by facilitating compliance) than either ingredient alone, or to enhance the safety or effectiveness of one of the active ingredients. Under the FD&C Act and related regulations, FDA has the authority to require specific types of evidence demonstrating that fixed-combination or co-packaged drugs and OTC monograph ingredients used in combination provide enhanced safety or effectiveness and can be labeled as such. This is because the use of any added active ingredient involves some risk, and that risk can only be justified by an added benefit in either safety or effectiveness. This proposed rule describes the requirements applicants must meet to demonstrate that their fixed-combination or co-packaged drugs are safe and effective.
Section 701(a) of the FD&C Act (21 U.S.C. 371(a)) authorizes FDA to issue regulations for the efficient enforcement of the FD&C Act. FDA's rulemaking authority under section 701(a) has been broadly interpreted.
Under section 502(a) of the FD&C Act, prescription and OTC drugs are deemed “misbranded” if their labeling is false or misleading “in any particular.” Section 201(n) of the FD&C Act states that labeling is misleading if it fails to reveal facts that are material with respect to the consequences that may result not only from the use of the product as labeled but from the use of the product under such conditions of use as are customary or usual. With regard to OTC drugs under a monograph, § 330.1 explains that OTC drugs are GRASE and not misbranded if they meet “each of the conditions contained in this part and each of the conditions contained in any applicable monograph.” The standards for safety, effectiveness, and labeling are explained in § 330.10(a)(4). Proof of safety may consist of “adequate tests by methods reasonably applicable to show the drug is safe under the prescribed, recommended, or suggested conditions of use.” Proof of effectiveness must consist of “controlled clinical investigations” demonstrating that the drug “will provide clinically significant relief of the type claimed.” Information on how each ingredient in a combination contributes to the effect of the combination is a fact “material” to the consequences that may result from customary use of that product. Thus, it is within FDA's authority to require such testing as is necessary to establish the safety and effectiveness of ingredients used in combinations.
With regard to prescription drugs or nonprescription drugs requiring approval under an NDA, section 505(c) and (d) of the FD&C Act directs FDA to refuse approval if there is a lack of substantial evidence that the drug will
Under §§ 314.90 and 314.126(c), FDA has the authority to grant a waiver of any of the requirements for submitting an NDA or any criteria of an adequate and well-controlled study if it finds the applicant's compliance with a requirement is unnecessary or cannot be achieved, the applicant makes an alternative submission that satisfies the requirement, or the applicant otherwise justifies a waiver. Similarly, FDA may waive some or all of the requirements of this proposed rule if an applicant meets certain criteria. Waiver provisions are intended to give applicants flexibility to seek alternative ways of complying with the statutory standards for drug approval. Any drugs that receive a waiver under these provisions are still required to demonstrate safety and effectiveness to meet the statutory requirements for approval.
Section 351 of the PHS Act provides legal authority for the Agency to regulate the labeling and shipment of biological products. Licenses for biological products are to be issued only upon a showing that the products meet standards “designed to insure the continued safety, purity, and potency of such products” prescribed in regulations (section 351(d) of the PHS Act). The “potency” of a biological product includes its effectiveness (21 CFR 600.3(s)). Section 351(b) of the PHS Act prohibits false labeling of a biological product. FDA's regulations in part 201 apply to all prescription drug products, including biological products.
FDA has examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct Agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The Agency believes that this proposed rule is not a significant regulatory action as defined by Executive Order 12866.
The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the proposed requirements will have minimal economic impact on small entities (the unit cost of a request for a waiver as a percentage of the average of value of sales for a typical firm would be small—less than 0.15 percent of average sales for firms with 10 to 49 workers and even smaller for other small-size firms), the Agency anticipates that the proposed rule will not have a significant economic impact on a substantial number of small entities and seeks comments on its Initial Regulatory Flexibility Analysis.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that Agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $144 million, using the most current (2014) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this proposed rule to result in any 1-year expenditure that would meet or exceed this amount.
The proposed rule would harmonize the requirements for prescription and OTC fixed-combination and co-packaged drugs and clarify the types of studies needed for approval of these products. Although we are unable to quantify or monetize all of the benefits, harmonizing and clarifying current policy would result in benefits to industry because there would be less uncertainty surrounding the requirements for approval of the affected products. This may in turn incentivize the development of new products. We estimated benefits associated with reduction in preparation and review time of information that would not be necessary if the proposed rule were in effect. Estimated annual benefits range between $651,891 and $977,836.
Because the proposed requirements would codify current policy regarding the review of the affected products, there are no costs associated with these proposed requirements. However, the proposed rule would also create a provision under which sponsors can apply for a waiver when certain conditions are met. This proposed provision is a new requirement and would result in costs. Estimated annual costs of preparation and review of the proposed waiver range between $101,858 and $152,787.
The estimated annual benefits and costs are summarized in table 1.
The full discussion of economic impacts is available (Ref. 8) in docket FDA-2011-N-0830 and at
This proposed rule contains information collection provisions that are subject to review by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA). The title, description, and respondent description of the information collection are given under this section with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
We invite comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Under proposed § 300.53(a), combinations of active ingredients under consideration for inclusion in an OTC monograph and fixed-combination and co-packaged drugs must meet the following requirements: (1) Each active ingredient makes a contribution to the effect(s) of the combination, enhances the safety or effectiveness of an active ingredient, or minimizes the potential for abuse of an active ingredient and (2) the dosage of each active ingredient (amount, frequency of administration, and duration of use) is such that the combination is safe and effective and provides rational concurrent therapy.
Under proposed § 300.53(b), applicants and interested persons must: (1) State the intended use of each active ingredient in the combination and (2) submit sufficient evidence to meet the requirements in § 300.53(a), including evidence demonstrating the contribution of each active ingredient to the effect(s) of the combination. The amount and types of data and information needed may vary and may include some or all of the following: Data from adequate and well-controlled clinical trials, clinical pharmacology data, in vitro and animal model data, a basis for concluding there is a plausible pharmacologic rationale for the combination, and other relevant information.
Under proposed § 300.53(c), the statement and evidence specified in § 300.53(b) must be included in an NDA (§ 314.50), a BLA (§ 601.2), or a submission under part 330 (§ 330.10) to support inclusion of a combination in an OTC monograph.
FDA already has OMB approval for the submission of data or information under §§ 314.50 and 601.2 (OMB control numbers 0910-0001 and 0910-0338). The proposed regulations clarify current requirements and FDA policy and, therefore, the proposed changes would not result in the submission of additional data or information.
In addition, the submission of data or information relating to § 330.10(a)(4)(iv) for OTC monographs that have not yet been finalized would be submissions in response to a proposed rule, in the form of comments, which are excluded from the definition of “information” under 5 CFR 1320.3(h)(4) of OMB regulations on the PRA (
Under proposed § 300.60(a), FDA may, at the request of an applicant or interested person or on its own initiative, grant a waiver of any of the requirements under proposed § 300.53 with regard to a fixed-combination or co-packaged drug that is the subject of a pending NDA or BLA, or a combination of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330. To grant a waiver, one of the following must exist: (1) There is a reasonable rationale for the combination of the individual active ingredients in the product, and compliance with any of the requirements of § 300.53 would be infeasible or medically unreasonable or unethical; or (2) the product contains all or a subset of the known or probable components in the same ratio as a natural-source drug or a waived product, provided the product is intended for the same conditions of use as the natural-source drug or the waived product; there is a reasonable basis to conclude that the product would provide a comparable clinical effect to the natural-source drug or the waived product; and, for products containing large molecules (macromolecules), the active ingredients have the same principal molecular structural features and overall mechanism of action as the active ingredients in the natural-source drug or the waived product.
Under proposed § 300.60(b), an applicant must submit a waiver request with supporting documentation in an NDA or BLA, and an interested person must submit a waiver request as part of a submission under part 330.
Existing regulations permit applicants to request waivers of any of the requirements under §§ 314.50 through 314.81for NDAs, and for BLAs, and the information collections associated with such waiver requests generally are approved under existing control numbers. (See § 314.90(a), waiver requests for drugs subject to NDAs and ANDAs (approved under OMB control number 0910-0001); and § 600.90(a), waiver requests for products subject to BLAs (approved under OMB control number 0910-0308)).
Concerning waiver requests submitted for a combination of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330, interested persons would submit such requests as a citizen petition in accordance with § 10.30. FDA currently has OMB approval for the collection of information entitled “General Administrative Procedures: Citizen Petitions; Petition for Reconsideration or Stay of Action; Advisory Opinions” (OMB control number 0910-0183).
Based on information provided in Section V of this preamble and in the Preliminary Regulatory Impact Analysis referenced in Section V, we estimate that FDA will receive approximately 15 waiver requests annually, and that each request will take approximately 50 hours to prepare and submit. The industry burden under the PRA for submitting waiver requests is calculated in Table 2:
In compliance with the PRA (44 U.S.C. 3507(d)), we have submitted the information collection requirements of this proposed rule to OMB for review. Interested persons are requested to send comments on this information collection by (see DATES) to the Office of Information and Regulatory Affairs, OMB. To ensure that comments on
We have determined that under 21 CFR 25.30(h), this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
FDA has analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the proposed rule, if finalized, would not contain policies that would have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the Agency tentatively concludes that the proposed rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.
We propose that any final rule that may issue based on this proposal become effective 30 days after the date of its publication in the
Interested persons may submit either electronic comments regarding this document to
The following references have been placed on display in the Division of Dockets Management (see
Drugs, Prescription drugs.
Over-the-counter drugs.
Biologics, Labeling, Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and Public Health Service Act and under authority delegated to the Commissioner of Food and Drugs, FDA proposes to amend 21 CFR parts 300, 330, and 610 as follows:
21 U.S.C. 331, 351, 352, 355, 360b, 361, 371; 42 U.S.C. 262.
As used in this part:
This subpart applies to both prescription and OTC fixed-combination and co-packaged drugs that are subject to approval under a new drug application under section 505 of the Federal Food, Drug, and Cosmetic Act, or a biologics license application under section 351 of the Public Health Service Act, and to combinations of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330 of this chapter. It does not apply to natural-source drugs unless those drugs are used as ingredients in combination with other ingredients in a single dosage form.
(a) Combinations of active ingredients under consideration for inclusion in an OTC monograph and fixed-combination and co-packaged drugs (collectively referred to in this section as “the combination”) must meet the following requirements:
(1) Each active ingredient makes a contribution to the effect(s) of the combination, enhances the safety or effectiveness of an active ingredient, or minimizes the potential for abuse of an active ingredient; and
(2) The dosage of each active ingredient (amount, frequency of administration, and duration of use) is such that the combination is safe and effective and provides rational concurrent therapy.
(b) Applicants and interested persons must:
(1) State the intended use of each active ingredient in the combination; and
(2) Submit sufficient evidence to demonstrate that the combination meets the requirements in paragraph (a) of this section, including evidence demonstrating the contribution of each active ingredient to the effect(s) of the combination. The amount and types of data and information needed to demonstrate such a contribution may vary and may include some or all of the following: Data from adequate and well-controlled clinical trials, clinical pharmacology data, in vitro and animal model data, a basis for concluding there is a plausible pharmacologic rationale for the combination, and other relevant information.
(c) The statement and evidence specified in paragraph (b) of this section must be included in a new drug application under section 505 of the Federal Food, Drug, and Cosmetic Act, a biologics license application under section 351 of the Public Health Service Act, or a submission under part 330 of this chapter to support inclusion of a combination in an OTC monograph.
For combinations not already described in an OTC monograph or for proposed fixed-combination and co-packaged drugs:
(a) When a natural-source drug is combined with any other active ingredient, the natural-source drug will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53.
(b) When a natural-source drug is combined with one or more additional natural-source drugs, each natural-source drug in the combination will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53.
(c) When a waived product is combined with any other active ingredient, the waived product will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53.
(a) FDA may, at the request of an applicant or interested person or on its own initiative, grant a waiver of any of the requirements under § 300.53 with regard to a fixed-combination or co-packaged drug that is the subject of a pending application under section 505 of the Federal Food, Drug, and Cosmetic Act or section 351 of the Public Health Service Act, or a combination of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330 of this chapter, if it finds one of the following:
(1)(i) There is a reasonable rationale for the combination of the individual active ingredients; and
(ii) Compliance with any of the requirements of § 300.53 would be infeasible or medically unreasonable or unethical; or
(2) The product contains all or a subset of the known components in the same ratio as a natural-source drug or a waived product provided the product is intended for the same conditions of use as the natural-source drug or the waived product; there is a reasonable basis to conclude that the product would provide a comparable clinical effect to the natural-source drug or the waived product; and, for products containing large molecules (macromolecules), the macromolecules have the same principal molecular structural features and overall mechanism of action as those in the natural-source drug or the waived product.
(b) If an applicant wishes to request a waiver, it must submit the waiver request with supporting documentation in an application under section 505 of the Federal Food, Drug, and Cosmetic Act or section 351 of the Public Health Service Act. If an interested person wishes to request a waiver, the waiver request must be submitted as part of a submission under part 330 of this chapter.
(c) FDA will provide appropriate written notice when the Agency grants a waiver on its own initiative, or grants or denies a request for a waiver. Fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an OTC monograph for which a waiver is granted must still meet all other applicable requirements under section 505 of the Federal Food, Drug, and Cosmetic Act, section 351 of the Public Health Service Act, or § 330.10(a)(4) of this chapter, as appropriate.
21 U.S.C. 321, 351, 352, 353, 355, 360, 371.
(a) * * *
(4) * * *
(iv) A combination of two or more active ingredients that are individually classified as drugs generally recognized as safe and effective in accordance with the requirements of § 300.53 of this chapter must meet the requirements of subpart B of part 300 of this chapter to be generally recognized as safe and effective and included in an OTC monograph. If such combination is granted a waiver under § 300.60 of this chapter, it must still meet all other applicable requirements of this subparagraph to be generally recognized as safe and effective and included in an OTC monograph. Unless otherwise specified in the applicable OTC monograph(s), combinations of active ingredients that are included in an OTC monograph may be used in either fixed-combination or co-packaged drugs.
21 U.S.C. 321, 331, 351, 352, 353, 355, 360, 360c, 360d, 360h, 360i, 371, 372, 374, 381; 42 U.S.C. 216, 262, 263, 263a, 264.
(a) * * *
(b) A drug product subject to approval under section 351 of the Public Health Service Act may not be combined with another drug product except in accordance with subpart B of part 300 of this chapter.
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking.
This document contains proposed regulations that would require annual country-by-country reporting by United States persons (U.S. persons) that are the ultimate parent entity of a multinational enterprise (MNE) group. These proposed regulations affect U.S. persons that are the ultimate parent entity of an MNE group that has annual revenue for the preceding annual accounting period of $850,000,000 or more. This document invites comments from the public on all aspects of the proposed rules and provides the opportunity for the public to request a public hearing.
Written or electronic comments and requests for a public hearing must be received by March 22, 2016.
Send submissions to: CC:PA:LPD:PR (REG-109822-15), room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-109822-15), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at
Concerning the proposed regulations, Melinda E. Harvey, (202) 317-6934; concerning submissions of comments or requests for a public hearing, Oluwafunmilayo (Funmi) Taylor, (202) 317-6901 (not toll-free numbers).
Pursuant to the authority granted under sections 6001, 6011, 6012, 6031, 6038, and 7805, these proposed regulations describe a new requirement for certain U.S. persons that are the ultimate parent entity of an MNE group (U.S. MNE group) earning substantial annual revenue to file an annual report (U.S. CbC report) containing information on a country-by-country basis related to the MNE group's income and taxes paid, together with certain indicators of the location of economic activity within the MNE group. Because the reporting form is currently under development by the IRS and yet to be officially numbered, it is referred to in this preamble and the proposed regulations as Form XXXX,
The G20 and OECD members, in coordination with other countries, developed a model template for the collection of country-by-country information from large MNE groups. The model template is intended to promote consistent and effective implementation of country-by-country reporting across tax jurisdictions (including countries and jurisdictions that are not countries but that have fiscal autonomy). The Treasury Department and the IRS anticipate that other tax jurisdictions will adopt information reporting requirements based on the model template that will mandate the filing of a country-by-country report (foreign CbC report) by MNE groups with an ultimate parent entity that is not a U.S. person (foreign MNE groups) that have substantial revenues. In developing these proposed regulations, the Treasury Department and the IRS determined that it is appropriate to use the model template as a guide because the model template was developed taking into account extensive consultations with stakeholders, including in particular U.S. MNE groups, in order to appropriately balance the benefits to tax administrations of collecting the information about an MNE group's global operations against the compliance costs and burdens imposed on MNE groups. These consultations significantly affected both the scope of the information included in the model template as well as the flexibility afforded to MNE groups in determining how to compile that information in light of their different system capabilities. In addition, the model template reflects an agreed international standard for reporting by MNE groups that will promote consistency of reporting obligations across tax jurisdictions and reduce the risk that other countries will depart from the agreed standard by imposing inconsistent and overlapping reporting obligations on U.S. MNE groups. In this respect, the Treasury Department and the IRS note that clear and widely adopted documentation rules for MNE groups also help to reduce compliance costs. While the proposed regulations generally are consistent with the international standard, the proposed regulations also are tailored to be consistent with the preexisting information reporting requirements applicable to U.S. persons under sections 6001, 6011, 6012, 6031, and 6038.
The Treasury Department and the IRS have determined that the information required under these proposed regulations will assist in better enforcement of the federal income tax laws by providing the IRS with greater transparency regarding the operations and tax positions taken by U.S. MNE groups. In addition to this direct benefit expected from collecting U.S. CbC reports, as discussed in Part 2 of this preamble, pursuant to income tax conventions and other conventions and bilateral agreements relating to the exchange of tax information (collectively, information exchange agreements), a U.S. CbC report filed with the IRS may be exchanged by the United States with other tax jurisdictions in which the U.S. MNE group operates that have agreed to provide the IRS with foreign CbC reports filed in their jurisdiction by foreign MNE groups that have operations in the United States. Foreign CbC reports will provide the IRS with information that will assist the IRS in performing risk assessment of foreign MNE groups operating in the United States.
In particular, it is expected that CbC reports filed by both U.S. MNE groups and foreign MNE groups (collectively CbC reports) will help the IRS perform high-level transfer pricing risk identification and assessment. The information in a CbC report will not itself constitute conclusive evidence that transfer pricing practices are or are not consistent with the arm's length standard. Accordingly, the information in a CbC report will not be used as a substitute for an appropriate transfer pricing determination based on a best method analysis (including a full comparability analysis of factors such as functions performed, resources employed, and risks assumed) as required by the arm's length standard set forth in the regulations under section 482, and transfer pricing adjustments will not be based solely on a CbC report. However, a CbC report may be used as the basis for making further inquiries into transfer pricing practices or other tax matters in the course of an examination of a member of an MNE group, and adjustments may be based on additional information developed through those inquiries in accordance with applicable law.
Information reported pursuant to these proposed regulations is return information under section 6103. Section 6103 imposes strict confidentiality rules with respect to all return information. Moreover, section 6103(k)(4) allows the IRS to exchange return information with a competent authority of a tax jurisdiction only to the extent provided in, and subject to the terms and conditions of, an information exchange agreement. It is expected that the U.S. competent authority will enter into competent authority arrangements for the automatic exchange of CbC reports under the authority of information exchange agreements to which the United States is a party.
Consistent with established international standards, all of the information exchange agreements to which the United States is a party require the information exchanged to be treated as confidential by both parties, and disclosure and use of the information must be in accordance with the terms of the relevant information exchange agreement. Information exchange agreements generally prohibit the parties from using any information received for any purpose other than for the administration of taxes (
Prior to entering into an information exchange agreement with another tax jurisdiction, the Treasury Department and the IRS closely review the tax jurisdiction's legal framework for maintaining confidentiality of taxpayer information and its track record of complying with that legal framework. In order to conclude an information exchange agreement with another tax jurisdiction, the Treasury Department and the IRS must be satisfied that the tax jurisdiction has the necessary legal safeguards in place to protect exchanged information, such protections are enforced, and adequate penalties apply to any breach of that confidentiality. Moreover, even when these conditions have been met and an information exchange agreement is in effect, the U.S. competent authority will not enter into a reciprocal automatic exchange of information relationship with a tax jurisdiction unless it has reviewed the tax jurisdiction's policies and procedures regarding confidentiality protections and has determined that such an exchange relationship is appropriate.
If the United States determines that a tax jurisdiction is not in compliance with confidentiality requirements, data safeguards, and the appropriate use standards provided for under the information exchange agreement or the competent authority arrangement, the United States will pause automatic exchange of CbC reports with that tax jurisdiction until such time as the United States is satisfied that the tax jurisdiction is meeting its obligations under the applicable information exchange or competent authority agreement or arrangement.
The proposed regulations generally require a U.S. business entity that is the ultimate parent entity of a U.S. MNE group to file Form XXXX,
Under proposed § 1.6038-4(b)(6), a business entity generally is considered resident in a tax jurisdiction if, under the laws of that tax jurisdiction, the business entity is liable to tax therein based on place of management, place of organization, or another similar criterion. However, a business entity will not be considered resident in a tax jurisdiction if it is liable to tax in such jurisdiction solely with respect to income from sources in such jurisdiction, or capital situated in such jurisdiction. The proposed regulations also provide rules for determining the tax jurisdiction of residence of a business entity that is resident in more than one tax jurisdiction or that is a permanent establishment.
Proposed § 1.6038-4(b)(4) defines a U.S. MNE group as a group of business entities, including the U.S. business entity that is the ultimate parent entity, that are required to consolidate their accounts under U.S. GAAP, or would be required to consolidate their accounts if equity interests in the ultimate parent entity were publicly traded on a U.S. securities exchange. Generally, under U.S. GAAP, if an entity owns a majority voting interest in another legal entity, the majority owner must combine the financial statements of the majority-owned entity with its own financial statements in consolidated financial statements. Financial Accounting Standards Board,
The Treasury Department and the IRS request comments on whether additional guidance is needed for determining which U.S. persons must file Form XXXX,
Generally, a constituent entity will have a tax jurisdiction of residence as determined under proposed § 1.6038-4(b)(6). However, a business entity that is treated as a partnership in the tax jurisdiction in which it is organized and that does not own or create a permanent establishment in another tax jurisdiction generally will have no tax jurisdiction of residence under the definition in proposed § 1.6038-4(b)(6) (other than for purposes of determining the ultimate parent entity of a U.S. MNE group). In these cases, it is expected that the partners will report their share of the partnership's items in the partners' respective tax jurisdictions of residence in order to determine the aggregate amounts reported on Form XXXX,
Proposed § 1.6038-4(d)(1) describes the information that Form XXXX,
The information required with respect to each constituent entity includes identification of the tax jurisdiction, if any, in which the constituent entity is resident for tax purposes, the tax jurisdiction in which the constituent entity is organized or incorporated (if different from the tax jurisdiction of residence), and the main business activity or activities of the constituent entity. The tax identification number of each constituent entity used by the tax administration in its jurisdiction of tax residence also will be reported on Form XXXX,
Proposed § 1.6038-4(d)(2) requires certain information to be reported for each tax jurisdiction in which one or more constituent entities of the MNE group is resident. The information for each tax jurisdiction must be presented on Form XXXX,
Specifically, the information required to be reported for each tax jurisdiction includes: (i) Revenues generated from transactions with other constituent entities of the U.S. MNE group; (ii) revenues not generated from transactions with other constituent entities of the U.S. MNE group; (iii) profit (or loss) before income tax; (iv) income tax paid on a cash basis to all tax jurisdictions, including any taxes withheld on payments received; (v) accrued tax expense recorded on taxable profits (or losses), reflecting only the operations in the relevant annual accounting period and excluding deferred taxes or provisions for uncertain tax positions; (vi) stated capital; (vii) accumulated earnings; (viii) number of employees on a full-time equivalent basis in the relevant tax jurisdiction; and (ix) net book value of tangible assets other than cash or cash equivalents.
The Treasury Department and the IRS have sought to minimize deviations from the model template that was developed by G20 and OECD member countries based on extensive consultations with stakeholders. Nonetheless, the Treasury Department and the IRS understand that there may be areas where further clarification or refinement is warranted to take into account the purpose of these proposed regulations to collect relevant information for high-level risk assessment while minimizing the burdens imposed. For example, the report seeks information on the taxes paid or accrued by MNE groups and their constituent entities on taxable income earned in the relevant accounting period. The Treasury Department and the IRS specifically solicit comments on the manner in which the proposed regulations request that information. The Treasury Department and the IRS also request comments on whether any of the other items should be further refined or whether additional guidance is needed with respect to how to determine any of the items in proposed § 1.6038-4(d)(2)(i)-(ix).
Proposed § 1.6038-4(d)(3)(iii) provides that the number of employees on a full-time equivalent basis may be determined as of the end of the accounting period, on the basis of average employment levels for the annual accounting period, or on any
Proposed § 1.6038-4(e)(2) provides that the financial information reported on Form XXXX,
The template on which Form XXXX,
Proposed § 1.6038-4(f) requires that Form XXXX,
While a U.S. business entity is not required to reconcile information reported on Form XXXX,
These regulations are proposed to be applicable to taxable years of ultimate parent entities of US MNE groups that begin on or after the date of publication of the Treasury decision adopting these rules as final regulations in the
Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It also has been determined that section 553(b) and (d) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations.
The IRS intends that the information collection requirements in these proposed regulations will be satisfied by submitting a new reporting form with an income tax return. The new reporting form has not yet been numbered and is referred to as Form XXXX,
It is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6). Accordingly, a regulatory flexibility analysis is not required. This certification is based on the fact that these regulations will only affect U.S. corporations, partnerships, and trusts that have foreign operations when the combined annual revenue of the business entities owned by the U.S. person meets or exceeds $850,000,000. Pursuant to section 7805(f), these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the “Addresses” heading. The Treasury Department and the IRS request comments on aspects of the proposed rules for which additional guidance is desired. All comments will be available at
The principal author of these proposed regulations is Melinda E. Harvey of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Department of the Treasury participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
26 U.S.C. 7805 * * *
Section 1.6038-4 also issued under 26 U.S.C. 6038.
(a)
(b)
(i) Owns directly or indirectly a sufficient interest in one or more other business entities, at least one of which is organized or tax resident in a tax jurisdiction other than the United States, such that the U.S. business entity is required to consolidate the accounts of the other business entities with its own accounts under U.S. generally accepted accounting principles, or would be so required if equity interests in the U.S. business entity were publicly traded on a U.S. securities exchange; and
(ii) Is not owned directly or indirectly by another business entity that consolidates the accounts of such U.S. business entity with its own accounts under generally accepted accounting principles in the other business entity's tax jurisdiction of residence, or would be so required if equity interests in the other business entity were traded on a public securities exchange in its tax jurisdiction of residence.
(2)
(3)
(4)
(5)
(6)
(7)
(c)
(d)
(i) The tax jurisdiction, if any, in which the constituent entity is resident for tax purposes;
(ii) The tax jurisdiction in which the constituent entity is organized or incorporated (if different from the tax jurisdiction of residence);
(iii) The tax identification number, if any, used for the constituent entity by the tax administration of the constituent entity's tax jurisdiction of residence; and
(iv) The main business activity or activities of the constituent entity.
(2)
(i) Revenues generated from transactions with other constituent entities;
(ii) Revenues not generated from transactions with other constituent entities;
(iii) Profit or loss before income tax;
(iv) Total income tax paid on a cash basis to all tax jurisdictions, and any taxes withheld on payments received by the constituent entities;
(v) Total accrued tax expense recorded on taxable profits or losses, reflecting only operations in the relevant annual accounting period and excluding deferred taxes or provisions for uncertain tax liabilities;
(vi) Stated capital of all the constituent entities, except that the stated capital of a permanent establishment must be reported by the legal entity of which it is a permanent establishment unless there is a defined capital requirement in the permanent establishment tax jurisdiction for regulatory purposes;
(vii) Total accumulated earnings, except that accumulated earnings of a permanent establishment must be reported by the legal entity of which it is a permanent establishment;
(viii) Total number of employees on a full-time equivalent basis in the relevant tax jurisdiction; and
(ix) Net book value of tangible assets other than cash or cash equivalents.
(3)
(ii)
(iii)
(iv)
(v)
(e)
(2)
(f)
(g)
(h)
(j)
Environmental Protection Agency (EPA).
Proposed rule; extension of comment period.
EPA issued a proposed rule in the
The comment period for the proposed rule published August 24, 2015, at 80 FR 51356, is extended. Comments, identified by docket identification (ID) number EPA-HQ-OPP-2011-0183, must be received on or before January 22, 2016.
Follow the detailed instructions provided under
Michelle Arling, Field and External Affairs Division (7506P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (703) 308-5891; email address:
This document extends the public comment period established in the
To submit comments, or access the docket, please follow the detailed instructions provided under
Environmental protection, Administrative practice and procedure, Certified applicator, Commercial applicator, Indian Country, Indian Tribes, Noncertified applicator, Pesticides and pests, Private applicator, Reporting and recordkeeping requirements, Restricted use pesticides.
Office of Inspector General (OIG), HHS.
Notice of intent to develop regulations.
In accordance with section 205 of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), this annual document solicits proposals and recommendations for developing new, and modifying existing, safe harbor provisions under the Federal anti-kickback statute (section 1128B(b) of the Social Security Act), as well as developing new OIG Special Fraud Alerts.
To ensure consideration, public comments must be delivered to the
In commenting, please refer to file code OIG-124-N. Because of staff and resource limitations, we cannot accept comments by facsimile (fax) transmission.
You may submit comments in one of three ways (no duplicates, please):
1.
2.
3.
For information on viewing public comments, please see the
Patrice Drew, Regulatory Affairs Liaison, Office of Inspector General, (202) 619-1368.
Section 1128B(b) of the Social Security Act (the Act) (42 U.S.C. 1320a-7b(b)) provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration to induce or reward business reimbursable under the Federal health care programs. The offense is classified as a felony and is punishable by fines of up to $25,000 and imprisonment for up to 5 years. OIG may also impose civil money penalties, in accordance with section 1128A(a)(7) of the Act (42 U.S.C. 1320a-7a(a)(7)), or exclusion from the Federal health care programs, in accordance with section 1128(b)(7) of the Act (42 U.S.C. 1320a-7(b)(7)).
Because the statute, on its face, is so broad, concern has been expressed for many years that some relatively innocuous commercial arrangements may be subject to criminal prosecution or administrative sanction. In response to the above concern, section 14 of the Medicare and Medicaid Patient and Program Protection Act of 1987, Public Law 100-93 section 14, the Act, section 1128B(b), 42 U.S.C. 1320a-7b(b), specifically required the development and promulgation of regulations, the so-called “safe harbor” provisions, specifying various payment and business practices that, although potentially capable of inducing referrals of business reimbursable under the Federal health care programs, would not be treated as criminal offenses under the anti-kickback statute and would not serve as a basis for administrative sanctions. OIG safe harbor provisions have been developed “to limit the reach of the statute somewhat by permitting certain non-abusive arrangements, while encouraging beneficial and innocuous arrangements” (56 FR 35952, July 29, 1991). Health care providers and others may voluntarily seek to comply with these provisions so that they have the assurance that their business practices will not be subject to liability under the anti-kickback statute or related administrative authorities. The OIG safe harbor regulations are found at 42 CFR part 1001.
OIG has also periodically issued Special Fraud Alerts to give continuing guidance to health care providers with respect to practices OIG finds potentially fraudulent or abusive. The Special Fraud Alerts encourage industry compliance by giving providers guidance that can be applied to their own practices. OIG Special Fraud Alerts are intended for extensive distribution directly to the health care provider community, as well as to those charged with administering the Federal health care programs.
In developing Special Fraud Alerts, OIG has relied on a number of sources and has consulted directly with experts in the subject field, including those within OIG, other agencies of the Department, other Federal and State agencies, and those in the health care industry.
Section 205 of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), Public Law 104-191 section 205, the Act, section 1128D, 42 U.S.C. 1320a-7d, requires the Department to develop and publish an annual document in the
In developing safe harbors for a criminal statute, OIG is required to thoroughly review the range of factual circumstances that may fall within the proposed safe harbor subject area so as to uncover potential opportunities for fraud and abuse. Only then can OIG determine, in consultation with the Department of Justice, whether it can effectively develop regulatory limitations and controls that will permit beneficial and innocuous arrangements within a subject area while, at the same time, protecting the Federal health care programs and their beneficiaries from abusive practices.
In accordance with the requirements of section 205 of HIPAA, OIG last published a
A detailed explanation of justifications for, or empirical data supporting, a suggestion for a safe harbor or Special Fraud Alert would be helpful and should, if possible, be included in any response to this solicitation.
In accordance with section 205 of HIPAA, we will consider a number of factors in reviewing proposals for new or modified safe harbor provisions, such as the extent to which the proposals would affect an increase or decrease in:
• Access to health care services,
• the quality of health care services,
• patient freedom of choice among health care providers,
• competition among health care providers,
• the cost to Federal health care programs,
• the potential overutilization of health care services, and
• the ability of health care facilities to provide services in medically underserved areas or to medically underserved populations.
In addition, we will also consider other factors, including, for example, the existence (or nonexistence) of any potential financial benefit to health care professionals or providers that may take into account their decisions whether to (1) order a health care item or service or (2) arrange for a referral of health care items or services to a particular practitioner or provider.
In determining whether to issue additional Special Fraud Alerts, we will consider whether, and to what extent, the practices that would be identified in a new Special Fraud Alert may result in any of the consequences set forth above, as well as the volume and frequency of the conduct that would be identified in the Special Fraud Alert.
Fish and Wildlife Service, Interior.
Proposed rule; withdrawal.
We, the U.S. Fish and Wildlife Service (Service), withdraw the proposed rule to reclassify the arroyo toad (
The March 27, 2014 (79 FR 17106), proposed rule to reclassify the arroyo toad as threatened is withdrawn as of December 23, 2015.
This withdrawal, comments on our March 27, 2014, proposed rule (79 FR 17106), and supplementary documents are available on the Internet at
Stephen P. Henry, Field Supervisor, Ventura Fish and Wildlife Office (see
Please refer to the proposed reclassification rule for the arroyo toad (79 FR 17106; March 27, 2014) for a detailed description of the Federal actions concerning this species that occurred prior to publication of the proposed reclassification rule. We accepted submission of new information and comments on the proposed reclassification for a 60-day comment period, ending May 27, 2014. In order to ensure that the public had an adequate opportunity to review and comment on our proposed rule, we reopened the comment period for an additional 30 days on October 17, 2014 (79 FR 62408).
A scientific analysis was completed and presented in detail within the arroyo toad species report (Service 2014, entire), which was available on
Arroyo toads are found in low gradient, medium-to-large streams and rivers with intermittent and perennial flow in coastal and desert drainages in central and southern California, and Baja California, Mexico. Arroyo toads occupy aquatic, riparian, and upland habitats in the remaining suitable drainages within its range. Arroyo toads are breeding habitat specialists that need slow-moving streams that are composed of sandy soils with sandy streamside terraces (Sweet 1992, pp. 23-28). Reproduction is dependent upon the availability of very shallow, still, or low-flow pools in which breeding, egg-laying, and tadpole development occur. Suitable habitat for arroyo toads is created and maintained by periodic flooding and scouring that modify
Arroyo toads were once relatively abundant in coastal central and southern California. Arroyo toads historically were known to occur in coastal drainages in southern California from the upper Salinas River system in Monterey and San Luis Obispo Counties; south through the Santa Maria and Santa Ynez River basins in Santa Barbara County; the Santa Clara River basin in Ventura County; the Los Angeles River basin in Los Angeles County; the coastal drainages of Orange, Riverside, and San Diego Counties; and south to the Arroyo San Simeon system in Baja California, México (Sweet 1992, p. 18; Service 1999, p. 12). Jennings and Hayes (1994, p. 57) are most commonly cited as documenting a decline of 76 percent of arroyo toad populations throughout the species' range due to loss of habitat and hydrological alterations to stream systems as a result of dam construction and flood control. This 76 percent decline was based on studies done in the early 1990s by Sam Sweet (Jennings and Hayes 1994, p. 57) that addressed the natural history and status of arroyo toad populations on a portion of the species' range on the Los Padres National Forest.
Currently, arroyo toads are limited to isolated populations found primarily in the headwaters of coastal streams along the central and southern coast of California and southward to Rio Santa Maria near San Quintin in northwestern Baja California, México (Lovich 2009, p. 62). Arroyo toads are still extant within the range they occupied historically and at the time of listing, but new data indicate that the species has continued to decline in numbers and in area occupied within its current range (Hancock 2007-2014, entire; Hollingsworth
A thorough review of the taxonomy, life history, and ecology of the arroyo toad is presented in the final species report (Service 2015) (the species report and other materials relating to this withdrawal can be found on
Based upon our review of the public comments, agency comments, peer review comments, and new relevant information that became available since the March 27, 2014, publication of the reclassification proposed rule (79 FR 17106), we reevaluated our proposed rule. Other than minor clarifications and incorporation of additional information on the species' biology and populations, this determination differs from the proposal in the following ways:
(1) As in the proposed rule, we find that the types of threats to arroyo toads remain the same as at the time of listing and are ongoing; in addition, new threats have been identified. The threats of urbanization, dams and water diversions, introduced predators, and drought have current and ongoing, high impacts to arroyo toads and their habitat. New threats include invasive, nonnative plants and effects of climate change. Some conservation efforts are ongoing in most populations to help manage and reduce impacts to arroyo toads from many ongoing threats. However, we have now determined that the best available scientific data do not currently support a determination that the species has responded to conservation actions such that a change in listing status is warranted (see numbers (2) and (3), below).
(2) Based on our evaluation of peer review and public comments and on additional population data received during the comment periods, we have determined that that the intent of the reclassification criteria in the recovery plan (Service 1999) has not been met. The downlisting recovery criteria state that for arroyo toads to be reclassified to threatened, management plans must have been approved and implemented on federally managed lands, and at least 20 self-sustaining metapopulations or populations at specified locations on Federal lands must be maintained. At the time of our proposed reclassification rule, as well as currently, there were no long-term population trend data available that demonstrate that arroyo toad populations have stabilized or are increasing. However, the Service is required by section 4(b)(1) of the Act (16 U.S.C. 1531
Since we published the proposed rule to downlist the arroyo toad, however, we have received additional information through the peer review and public comment process that refutes our finding that the intent of the recovery criteria has been met. First, we reevaluated our use of extant or presumed extant populations as a proxy for self-sustaining populations. While these kind of data do indicate that some level of reproduction and recruitment is occurring, we now agree with commenters that these data cannot be used to infer that arroyo toad populations are self-sustaining in the long term, and we conclude it is scientifically inaccurate to do so. Self-sustaining is clearly defined in the recovery plan as populations that have stabilized or are increasing. No long-term population trend data for arroyo toads demonstrate that populations have stabilized or are increasing anywhere within the species' range. Second, although arroyo toads are still persisting within the range they occupied historically and at the time of listing, new data indicate that the species has continued to decline in numbers and in area occupied within its current range (Hancock 2007-2014, entire; Hollingsworth
(3) Because no information indicates that populations have stabilized or are increasing, and new information suggests several occurrences are in decline, we have determined that downlisting the arroyo toad is not appropriate at this time. As a result, this document withdraws the proposed rule published on March 27, 2014 (79 FR 17106).
Section 4 of the Act and its implementing regulations (50 CFR 424) set forth the procedures for listing species, reclassifying species, or removing species from listed status. “Species” is defined by the Act as including any species or subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature (16 U.S.C. 1532(16)). A species may be determined to be an endangered species or threatened species because of any one or a combination of the five factors described in section 4(a)(1) of the Act: (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or human made factors affecting its continued existence. A species may be reclassified on the same basis.
Determining whether the status of a species has improved to the point that it can be downlisted or delisted requires consideration of whether the species is endangered or threatened because of the same five categories of threats specified in section 4(a)(1) of the Act. For species that are already listed as endangered species or threatened species, this analysis of threats is an evaluation of both the threats currently facing the species and the threats that are reasonably likely to affect the species in the foreseeable future following the delisting or downlisting and the removal or reduction of the Act's protections.
A species is an “endangered species” for purposes of the Act if it is in danger of extinction throughout all or a significant portion of its range and is a “threatened species” if it is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range. The word “range” in the definitions of “endangered species” and “threatened species” refers to the range in which the species currently exists. For the purposes of this analysis, we first evaluate the status of the species throughout all its range; then, if we determine that the species is neither in danger of extinction nor likely to becomes so, we next consider whether the species is in danger of extinction or likely to become so in any significant portion of its range.
A threats analysis for the arroyo toad is included in the final species report (Service 2015, entire) associated with this document (and available at
At the time of listing, the primary threats to arroyo toads were urban development, agricultural conversion, operations of dams and water flow, roads and road maintenance, recreational activities, introduced predator species, and drought (59 FR 64859; December 16, 1994). Other threats identified in 1994 included livestock grazing, mining and prospecting, and alteration of the natural fire regime (59 FR 64859).
Current and potential future threats to arroyo toads include urban development (Factors A and E), agriculture (Factors A and E), operation of dams and water diversions (Factor A), mining and prospecting (Factors A and E), livestock grazing (Factor A), roads and road maintenance (Factors A and E), recreation (Factors A and E), invasive, nonnative plants (Factor A), disease (Factor C), introduced predator species (Factor C), drought (Factor E), fire and fire suppression (Factors A and E), and climate change (Factor E).
Please see the “Threats” section of the final species report for a thorough discussion of all potential and current threats (Service 2015, pp. 29-91). In the final species report, we use threat impact categories to reflect the magnitude to which arroyo toads are affected by the threat. Impact categories are: (1) High: Likely to have a major impact on local populations or habitat that rises to a species-level effect; (2) medium: Likely to have a moderate impact on local population numbers or habitat, but populations in other locations may not be impacted such that the effect does not rise to the species level; and (3) low: Likely to have minimal impacts on local population numbers or habitat such that the effect does not rise above the individual level. Timing is used to characterize the period of the available data and determine the general timeframe over which we can make reliable predictions about how threats will affect arroyo toads. In general, we have information about effects of threats on arroyo toads since time of listing, approximately 20 years ago. Therefore, the timeframe we are comfortable predicting into the future for most threats is also 20 years. The following sections provide a summary of the current and potential future threats that are impacting or may impact arroyo toads.
At the time of listing, habitat loss from development projects in riparian wetlands caused permanent losses of riparian habitats. Urban development was the most conspicuous factor in the decline of arroyo toads at the time of listing because the loss of arroyo toad breeding habitat was permanent. By the time the arroyo toad was listed in 1994, development and urban sprawl had already resulted in conversion to urban and suburban use of nearly 40 percent of the riparian areas along the coast from Ventura County to the Mexican border (CDFG 2005). The trend toward increasing urbanization in California continues to the present day.
Existing urban development currently affects 25 out of 32 river basins (3 unknown) where arroyo toads are known to occur and has a serious effect on arroyo toads and their habitats. While this threat has been somewhat reduced at 10 occurrences, we categorize the threat of urban development as having a high level of impact to the species throughout its range. Decline in number of populations of arroyo toads has already occurred (Jennings and Hayes 1994, p. 57), and new data indicate that the species has continued to decline in numbers and in area occupied within its current range (Hancock 2007-2014, entire; Hollingsworth
At the time of listing, habitat loss from agricultural development projects in riparian wetlands also had caused permanent losses of riparian habitats. Agricultural development currently affects 20 out of 35 river basins where arroyo toads are known to occur and has a moderate effect on arroyo toads and their habitats. While this threat has been reduced at two occurrences, we categorize the threat of agriculture as having a medium level of impact to the species throughout its range. Because arroyo toads use both aquatic and terrestrial environments, they are impacted both by agricultural activities that subject their habitats to increased fragmentation and by decreased habitat quality from groundwater pumping, water diversions, and contaminated runoff. Additionally, arroyo toads are attracted to open areas of farm fields to find foraging and burrowing sites, and thus are vulnerable to being run over by farm equipment or trampled by field workers. Where chemicals are used, arroyo toads are exposed to residues that can collect in soils where they burrow or in pools where they breed. Overall, over the next 20 years, agriculture is expected to continue to have a medium level of impact to arroyo toads.
At the time of listing, short- and long-term changes in river hydrology, including construction of dams and water diversions, were responsible for the loss of 40 percent of the estimated original range of the species, and nearly half of historical extirpations prior to listing are attributed to impacts from original dam construction and operation (Sweet 1992, pp. 4-5; Ramirez 2003, p. 7). These changes are a result of dam construction and operation because the original construction of a dam: (1) Effectively fragments a watershed by slowing rivers and blocking the natural flow of water and sediments; (2) inundates large areas of arroyo toad habitat; and (3) blocks in-stream movement of arroyo toads, which effectively isolates populations upstream and downstream of dams and may preclude recolonization of areas formerly occupied by arroyo toads (Campbell
Dams and water diversions currently affect 19 out of 26 river basins (9 unknown) where arroyo toads are known to occur and have a serious effect on arroyo toads and their habitats. While this threat has been reduced at four occurrences, we categorize the threat of the operation of dams and water diversions as having a high level of impact to the species throughout its range. Dam construction results in the immediate destruction of habitat above the dam through inundation, destroying both arroyo toad breeding and upland habitats. Downstream habitat is eliminated by regulated stream flows that: Destroy sand bars used during the breeding season; reconfigure, and in some cases eliminate, suitable breeding pools; and disrupt clutch and larval development (Ramirez 2005, p. 2). The initial downstream effects of a dam will modify and degrade breeding habitat for arroyo toads, but in the long term will eventually eliminate it (Madden-Smith
At the time of listing, habitat loss through recreational suction dredge mining for gold was considered an additional threat to the species. For example, in 1991, during the Memorial Day weekend, four small dredges operating on Piru Creek in the Los Padres National Forest produced sedimentation visible more than 0.8 miles (mi) (1 kilometer (km)) downstream and adversely affected 40,000 to 60,000 arroyo toad larvae. Subsequent surveys revealed an almost total loss of the species in this stream section; fewer than 100 larvae survived, and only four juvenile toads were located (Sweet 1992, pp. 180-187). Currently, the California Department of Fish and Wildlife has prohibited suction dredge mining in Class A streams; only one occurrence is located outside Class A streams in the United States (24 total occurrences).
Mining and prospecting currently affect 8 out of 27 river basins (8 unknown) where arroyo toads are known to occur and have minimal impacts on local population numbers or habitat and their habitats. Therefore, we categorize this threat as having a low level of impact to the species throughout its range. Sand and gravel mining remain a threat at five occurrences in the United States and two occurrences in Baja California, Mexico, and gold prospecting is a threat at one occurrence in the United States. Overall, over the next 20 years, mining and prospecting are expected to continue to have a low level of impact to arroyo toads.
At the time of listing, overgrazing caused mortality to arroyo toads if horses or cattle were allowed to graze in riparian areas. The effects of livestock grazing on arroyo toads included directly crushing individuals and burrows; trampling stream banks, resulting in soil compaction, loss or reduction in vegetative bank cover, stream bank collapse, and increased in-stream water temperatures from loss of shade; and excess sedimentation entering stream segments at crossings or other stream areas used by livestock for watering or grazing on riparian vegetation.
Livestock grazing currently affects 20 out of 35 river basins where arroyo toads are known to occur and has a moderate effect on arroyo toads and their habitats. While this threat has been reduced at four occurrences, we categorize the threat of livestock grazing as having a medium level of impact to the species throughout its range. Due to their fragile nature, even occasional use of riparian corridors by cattle can cause harm to the riparian and aquatic habitats. Concentrated grazing by cattle will, over time, reduce or eliminate the under- and mid-story components of vegetation. Evidence of livestock overgrazing is seen in the lack of breeding pool habitat, sloughed and trampled stream-banks, and a stressed riparian plant community where desirable species such as sedges (
At the time of listing, the use of heavy equipment in yearly reconstruction of roads and stream crossings in the National Forests had a significant and repeated impact to arroyo toads and their habitat. Conversion of streams and stream terraces to roads eliminates foraging and burrowing habitat for arroyo toads. Toads are crushed by equipment on the roads or when vehicles use the low water crossings during normal daytime project activities. For example, as described in the listing rule (59 FR 64859; December 16, 1994), grading in Mono Creek for Ogilvy Ranch Road destroyed habitat and likely killed individual toads; maintenance of the road continues to depress populations of toads in Mono Creek.
Roads and road maintenance currently affect 30 out of 35 river basins where arroyo toads are known to occur and have a moderate effect on arroyo toads and their habitats. While this threat has been reduced at three occurrences, we categorize the threat of roads and road maintenance as having a medium level of impact to the species throughout its range. Overall, over the next 20 years, roads and road maintenance are expected to continue to have a medium level of impact to arroyo toads.
At the time of listing, recreational activities in riparian wetlands had substantial negative effects on arroyo toad habitat and individuals. Streamside campgrounds in southern California National Forests were frequently located adjacent to arroyo toad habitat (Sweet 1992). With nearly 20 million people living within driving distance of the National Forests and other public lands in southern California, recreational access and its subsequent effects are an ongoing concern (CDFG 2005). Numerous studies have documented the effects of recreation on vegetation and soils, and document results of human trampling caused by hiking, camping, fishing, and nature study. Significantly fewer studies report the consequences of horse and bicycle riding or that of off-road vehicles (OHV) and snowmobiles (Cole and Landres 1995).
Recreational activities are currently known to affect 22 out of 25 river basins (10 unknown) where arroyo toad are known to occur and have a moderate effect on arroyo toads and their habitats. While this threat has been reduced at six occurrences, we categorize this threat as having a medium level of impact to the species throughout its range. Many of the recreational activities described above may result in the loss and fragmentation of arroyo toad habitat. Roads, trails, OHV use, recreational facilities, and water impoundments can replace natural habitat, and this destruction can displace arroyo toad populations (Maxell and Hokit 1999, p. 2.15). The U.S. Forest Service (Forest Service) has been proactive in reducing or eliminating some of these threats on their lands. To help control recreational activities, the Forest Service has closed campgrounds seasonally or permanently, installed road and interpretive signs, erected barriers, re-routed trails and trailheads, and implemented seasonal road closures in six occurrences on Federal lands. However, impacts have not been reduced at the remaining recreational sites on National Forests. Overall, over the next 20 years, recreational activities are expected to continue to have a medium level of impact to arroyo toads.
At the time of listing, invasive, nonnative plants were not identified as a threat to arroyo toads. Since then, invasive, nonnative plants have had a negative effect on arroyo toads and their habitat. Nonnative plant species, particularly tamarisk and giant reed (
Invasive, nonnative plants are known to currently affect 16 out of 25 river basins (10 unknown) where arroyo toads are known to occur and have a moderate effect on arroyo toad habitats. While this threat has been reduced at six occurrences, we categorize the threat of invasive, nonnative plants as having a medium level of impact to the species throughout its range. Invasive, nonnative plants such as tamarisk and giant reed alter the natural hydrology and habitat features of watersheds occupied by arroyo toad. Large riparian corridors have historically acted as natural firebreaks in southern California because of their low-lying topography and relative absence of flammable fuels. However, the highly flammable tamarisk and giant reed have altered this situation and pose a serious problem for management because they vigorously resprout after burning. Management of invasive plants and weeds with chemical herbicides and pesticides can also have impacts to arroyo toads. Management of invasive plants that minimizes impacts to arroyo toads is currently limited to proactive control and minimizing habitat disturbances that permit some invasive species to become established. Overall, over the next 20 years, invasive, nonnative plants are expected to continue to have a medium level of impact to arroyo toads.
Disease was not considered a threat to arroyo toads at the time of listing in 1994. However, during the last several decades, significant declines in populations of amphibians have been observed worldwide (Beebee and Griffiths 2005, p. 273). Since the arroyo toad was listed, chytridiomycosis, an infectious amphibian disease caused by the fungus
At the time of listing, nonnative predators had caused substantial reductions in the sizes of extant populations of arroyo toads, and nonnative predators have caused arroyo toads to disappear from large portions of historically occupied habitat (Jennings and Hayes 1994, p. 57).
Introduced predators currently affect 26 out of 35 river basins where arroyo toads are known to occur and have a serious effect on arroyo toads and their habitats. While this threat has been somewhat reduced at five occurrences, we categorize the threat of introduced predators as having a high level of impact to the species throughout its range. Introduced fishes and bullfrogs prey on arroyo toad larvae, juveniles, and adults. These predator species pose a continuing threat to almost all arroyo toad populations and have essentially become residents of the ecosystem. In reality, bullfrogs, green sunfish (
At the time of listing, drought and the resultant deterioration of riparian habitats was considered to be the most significant natural factor adversely affecting arroyo toads. Although drought is a recurring phenomenon in southern California, there is no doubt that this natural event combined with the many manmade factors negatively affects arroyo toad survival.
Drought continues to have negative effects on arroyo toads. Drought tends to be regional in scale, and thus we expect Baja California, Mexico, to experience similar effects to southern California. Therefore, drought currently affects 35 out of 35 river basins where arroyo toads are known to occur and has a serious effect on arroyo toads and their habitats. Most arroyo toad occurrences are small and occur in ephemeral streams at high elevations. At lower elevations, impacts from drought on arroyo toad occurrences are exacerbated by alteration of hydrology from dams, water diversions, and groundwater extraction due to urbanization and agriculture. Arroyo toads' lifespan averages approximately 5 years; if drought persists longer than 6 years, entire populations could be extirpated for lack of water necessary to reproduce and complete their life cycle (Sweet 1992, p. 147; USGS
At the time of listing and at present, periodic fires are considered a threat to arroyo toads because fires can cause direct mortality of arroyo toads, destroy streamside vegetation, or eliminate vegetation that sustains the watershed. Direct mortality to arroyo toads can also result from construction of fuel breaks and safety zones in stream terraces where arroyo toads are burrowed. Bulldozing operations for construction of fuel breaks can severely degrade other essential upland habitats. In recent decades, large fires in the West have become more frequent, more widespread, and potentially more deadly to wildlife (Joint Fire Science Program 2007, entire). There has been a shift to more severe fires on the Los Padres National Forest, including the Day and Zaca Fires.
Periodic fire and fire suppression activities could potentially affect 22 out of 25 river basins (10 unknown) where arroyo toads are known to occur and have a moderate effect on arroyo toads and their habitats. This threat has been reduced at none of the occurrences, and we categorize this threat as having a medium level of impact to the species throughout its range. Overall, over the next 20 years, periodic fire and fire suppression activities are expected to continue to have a medium level of impact to arroyo toads.
Climate change is a new threat identified since listing. Climate change currently affects 35 out of 35 river basins where arroyo toads are known to occur; however, the impact of climate change on arroyo toad populations or habitat throughout the species' range remains unknown. Over the next 35 to 55 years, the key risk factor for climate change impacts to arroyo toads is likely the interaction between: (1) Reduced water levels limiting breeding and larval development or causing direct mortality; (2) reduction or loss of breeding and upland habitat; and (3) the relative inability of individuals to disperse longer distances in order to occupy more favorable habitat conditions (
Threats working in combination with one another have the ability to negatively impact species to a greater degree than individual threats operating alone (IPCC 2002, p. 22; IPCC 2014, pp. 4-15; Boone
We also examined the distribution of threats across the range of the species to assist in determining whether the status and the threats affecting the species might vary across its range.
Threats in the northern portion of the arroyo toad's range (five occurrences in Monterey, Santa Barbara, Ventura, and Los Angeles Counties) that are likely to impact some of the river basins in the Northern Recovery Unit are characterized as medium to high in impact; impacts primarily involve roads and road maintenance, recreation, urbanization, nonnative plants,
In the central/southern portion of the species' range (18 occurrences in Orange, Riverside, San Bernardino, and San Diego Counties), threat impacts are medium to high, and are expected to continue to increase as the demand for water and suitable development sites continues. Threats here primarily involve urban development, agriculture, roads, operation of dams and water diversions, recreation, nonnative plants, introduced predator species, fire and fire suppression, and drought. As the human population grows, the negative effects from increased water needs and recreational activities will put more pressure on the remaining habitats, even those sites receiving some protection. Most occurrences (12 of 18) are restricted to ephemeral or low-order streams, and of these, most (10 of 12) are unnaturally restricted to these areas because habitat downstream was destroyed by large reservoirs, urbanization, or agriculture, thereby reducing the ability of arroyo toads to act in response to dynamic habitat conditions and increased threats, especially drought, climate change effects, roads, recreation, agriculture, and introduced predators. Five habitat conservation plans (HCPs) were developed to minimize impacts to arroyo toad at eight occurrences from development and associated infrastructure. There are also large areas of Federal lands, such as the Marine Corps Base Camp Pendleton, Naval Weapons Station Seal Beach Detachment Fallbrook, and the Remote Training Site Warner Springs, where arroyo toads are managed under the military's INRMPs, and 11 of 18 occurrences within the Southern Recovery Unit are on Forest Service lands or are partly on Forest Service lands and benefit from land management plans.
In the desert portion of the species' range (two occurrences in Los Angeles and San Bernardino Counties), threats are moderate in impact, and result primarily from recreation, urban development, agriculture, overgrazing, and dam operations. Portions of both occurrences are afforded some management through Forest Service land management plans.
There are 10 occurrences in Baja California, Mexico, for which we have limited to no information concerning the scope or degree of impact from each threat. Urban development, agriculture, livestock grazing, roads, introduced predators, drought, and climate change are the threats known or suspected to impact arroyo toads within these 10 occurrences.
Although the specific threats affecting the species may be different at individual sites or in different parts of the arroyo toad's range, on the whole threats are occurring throughout the species' range, and the severity of threats and their effects on arroyo toad populations are similar. We conclude that all populations throughout the species' range and all recovery units are experiencing similar levels of threats.
Section 4(f) of the Act directs us to develop and implement recovery plans for the conservation and survival of endangered and threatened species unless we determine that such a plan will not promote the conservation of the species. Under section 4(f)(1)(B)(ii), recovery plans must, to the maximum extent practicable, include “objective, measurable criteria which, when met, would result in a determination, in accordance with the provisions of [section 4 of the Act], that the species be removed from the list.” However, revisions to the list (adding, removing, or reclassifying a species) must reflect determinations made in accordance with sections 4(a)(1) and 4(b) of the Act. Section 4(a)(1) requires that the Secretary determine whether a species is endangered or threatened (or not) because of one or more of five threat factors. Section 4(b) of the Act requires that the determination be made “solely on the basis of the best scientific and commercial data available.” Therefore, recovery criteria should indicate when a species is no longer an endangered species or threatened species because of any of the five statutory factors. Thus, while recovery plans provide important guidance to the Service, States, and other partners on methods of minimizing threats to listed species and measurable objectives against which to measure progress towards recovery, they are not regulatory documents and cannot substitute for the determinations and promulgation of regulations required under section 4(a)(1) of the Act.
The Service finalized a recovery plan for the arroyo toad in 1999 (Service 1999, pp. 1-119). The intent of the arroyo toad recovery plan was to prescribe recovery criteria that would at least demonstrate population stability and good habitat management over a period of years, which would indicate a substantially improved situation for arroyo toads. The overall objectives of the recovery plan are to prevent further loss of individuals, populations, and habitat critical for the survival of the species; and to recover existing populations to normal reproductive capacity to ensure viability in the long term, prevent extinction, maintain genetic viability, and improve conservation status (Service 1999, p. 108). The general aim in species' recovery is to establish sufficient self-sustaining healthy populations for the species to be no longer considered as an endangered or threatened species.
The recovery plan describes 22 river basins in the coastal and desert areas of nine U.S. counties along the central and southern coast of California, and the recovery plan divides the range of the arroyo toad into three large recovery units: Northern, Southern, and Desert. These recovery units were established to reflect the ecological and geographic distribution of the species and its current and historic range (Service 1999, p. 71-72) within the United States. The recovery plan did not address the species' range in Mexico. In the recovery plan, the downlisting recovery criteria state that for the arroyo toad to be reclassified to threatened, management plans must have been approved and implemented on federally managed lands, and at least 20 self-sustaining metapopulations or populations at specified locations must be maintained (Service 1999, pp. 75-77). Self-sustaining is defined in the recovery plan as populations that have successful recruitment equal to 20 percent or more of the average number of breeding adults in 7 of 10 years of average to above-average rainfall amounts with normal rainfall patterns. Such recruitment would be documented by statistically valid trend data indicating stable or increasing populations.
In our analysis of the status of the arroyo toad, we found that we lack long-term population trend data for arroyo toads demonstrating that populations have stabilized or are increasing anywhere within the species' range. Although arroyo toads are presumed to
These and other data that we have analyzed indicate that the downlisting criteria have not been met for the arroyo toad. The types of threats to arroyo toads remain the same as at the time of listing and are ongoing, and new threats have been identified. Some conservation efforts are ongoing in most populations to help manage and reduce impacts to arroyo toads from many ongoing threats; however, we have not yet documented a response to these ongoing conservation actions that would indicate a change in the species' listing status is warranted.
In the proposed rule published on March 27, 2014 (79 FR 17106), we requested that all interested parties submit written comments on the proposal by May 27, 2014. We reopened the comment period on the proposed rule on October 17, 2014, for an additional 30 days (79 FR 62408). We also contacted appropriate Federal and State agencies, scientific experts and organizations, and other interested parties and invited them to comment on the proposal. We did not receive any comments from States or Tribes. We also did not receive any requests for a public hearing. All substantive information provided during the comment periods has been incorporated directly into this final determination or is addressed below.
In accordance with our peer review policy published on July 1, 1994 (59 FR 34270), we received expert opinion from four knowledgeable individuals with scientific expertise that included familiarity with arroyo toads and their habitat, biological needs, and threats.
We reviewed all comments we received from the peer reviewers for substantive issues and new information regarding the proposed downlisting of the arroyo toad. The peer reviewers generally disagreed with our finding in the proposed rule and provided additional information, clarifications, and suggestions to improve the final rule. Peer reviewer comments are addressed in the following summary and incorporated into the final determination as appropriate.
• Identify and secure additional suitable arroyo toad habitat and populations;
• Conduct research to obtain data to guide management efforts and determine the best methods for reducing threats; and
• Develop and implement an outreach program.
Regarding evidence of plummeting recruitment, for most populations of arroyo toads, we do not have long-term trend data. However, we received information from peer reviewers that indicates that at least three occurrences in the Northern Recovery Unit (Salinas River Basin, Santa Ynez River Basin, and Santa Clara River Basin) (Hancock 2006, 2007-2014; Sweet 2015, pers. comm.) and at least eight occurrences in the Southern Recovery Unit (Lower Santa Margarita River Basin, Upper San Luis Rey River Basin, Upper and Lower Santa Ysabel Creek Basins, Upper San Diego River Basin, Upper Sweetwater River Basin, and Upper and Lower Cottonwood Creek Basins) (USGS
As required by the Act, we considered the five factors listed in section 4(a)(1) of the Act in assessing whether the arroyo toad warrants downlisting at this time. We examined the best scientific and commercial information available regarding the past, present, and foreseeable future threats faced by the species. For the purposes of this determination, we consider the foreseeable future to be 20 years. In general, we have information about effects of threats on arroyo toads since time of listing, approximately 20 years ago. Therefore, the timeframe we are comfortable predicting into the future for most threats is also 20 years (as described under the various threats analysis discussions in the final species report (Service 2015, pp. 29-91)).
Current and potential future threats to arroyo toads include urban development (Factors A and E), agriculture (Factors A and E), operation of dams and water diversions (Factor A), mining and prospecting (Factors A and E), livestock grazing (Factor A), roads and road maintenance (Factors A and E), recreation (Factors A and E), invasive, nonnative plants (Factor A), disease (Factor C), introduced predator species (Factor C), drought (Factor E), fire and fire suppression (Factors A and E), and climate change (Factor E). Some factors known to pose a threat to arroyo toads and their habitat at the time of listing are no longer of concern (for example, new dam construction or collection for scientific or commercial purposes). Conservation activities and preservation of habitat have further reduced threats from mining and prospecting, livestock overgrazing, roads and road maintenance, and recreation.
Overall, we find that four threats (introduced predator species, drought, urban development, and operation of dams and water diversions) continue to pose a significant threat to the continued existence of the arroyo toad, such that these threats are likely to have a major impact on local populations or habitat that rises to a species-level effect. In particular, introduced predators pose a threat to the continued survival of arroyo toads. Other factors, such as operation of dams and increased drought, can increase the ability of introduced predators to invade and persist in habitats where arroyo toads are found. These predators can have a significant impact on the breeding success and survival of arroyo toad populations, and if not controlled, could result in the extirpation of entire populations of the species. Urban development, drought, and operation of dams and water diversions, and potentially climate change, also pose a threat to the continued existence of arroyo toads; all of these factors have the potential to alter the natural flow regime in creeks and streams that support arroyo toads. Because arroyo toads have specialized life-history needs and habitat requirements, they are especially sensitive to such changes in habitat. Furthermore, conservation actions that would be sufficient to ameliorate the effects of factors such as climate change and drought have not been implemented.
Arroyo toads also continue to be impacted by threats from agriculture; livestock grazing; roads and road maintenance; recreation; invasive, nonnative plants; and fire and fire suppression. These threats are likely to have a moderate impact on local population numbers or habitat. However, populations in other locations may not be impacted. Therefore, the effects of these threats do not rise to the species level.
Management efforts are being implemented in approximately 18 arroyo toad occurrences on Federal lands through the LRMPs for each of the four southern California National Forests (Los Padres, Angeles, San Bernardino, and Cleveland), and through the INRMPs on Fort Hunter Liggett, Naval Weapons Station Seal Beach, Camp Pendleton, and Naval Base Coronado. As a result, very few populations of arroyo toads have been extirpated since the time of listing, and the species continues to persist throughout the range known at the time of listing. However, data indicate that the species has continued to decline in numbers and in area occupied within its current range (Hancock 2007-2014, entire; Hollingsworth
We examined the downlisting criteria provided in the recovery plan for the arroyo toad (Service 1999). Self-sustaining is defined in the recovery plan as populations which have stabilized or are increasing. We lack long-term population trend data for arroyo toads that demonstrate that populations have stabilized or are increasing anywhere within the species' range. Although arroyo toads are still extant within the range they occupied historically and at the time of listing, data indicate that the species has continued to decline (Hancock 2007-2014, entire; Hollingsworth
In conclusion, we have carefully assessed the best scientific and commercial information available regarding the past, present, and future threats faced by this species. After review of the information pertaining to the five statutory factors, we determined that the types of threats to arroyo toads remain the same as at the time of listing and are ongoing, and new threats have been identified. Some conservation efforts are ongoing in most populations to help manage and reduce impacts to arroyo toads from many ongoing threats; however, we have not yet documented a species response to conservation actions that would indicate a change in status is warranted. We conclude that the intent of the reclassification criteria in the recovery plan (Service 1999, pp. 75-77) has not been met and that ongoing threats continue to put all populations of arroyo at risk of extinction such that the species is in danger of extinction throughout all its range.
Because we have determined that the arroyo toad is in danger of extinction throughout all its range, no portion of its range can be “significant” for purposes of the Act's definitions of “endangered species” and “threatened species.” See the Service's final policy interpreting the phrase “significant portion of its range” (SPR) (79 FR 37578; July 1, 2014).
Based on the analysis above, we conclude the arroyo toad meets the Act's definition of an endangered species in that it is in danger of extinction throughout all of its range. We therefore conclude that reclassification of this species is not warranted at this time. As a result, this document withdraws the proposed rule published on March 27, 2014, at 79 FR 17106.
A complete list of all references cited in this document is available on the Internet at
The primary authors of this document are the staff members of the Pacific Southwest Regional Office and Ventura Fish and Wildlife Office (see
The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531
Forest Service, USDA.
Revised Notice of Intent to extend scoping for the joint Environmental Impact Report/Environmental Impact Statement for the North-South Project.
The San Bernardino National Forest (Forest Service), together with the California Public Utilities Commission (CPUC), published a Notice of Intent in the
All scoping comments must be received by January 18, 2016. The draft environmental impact statement is expected June 2016 and the final environmental impact statement is expected December 2016.
You may submit comments to Eric Chiang, California Public Utilities Commission, and Jody Noiron, Forest Supervisor, San Bernardino National Forest by any of the following methods:
Information can be requested by leaving a voice message at (855) 520-6799 (toll free), or by checking the project Web site at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8 a.m. and 8 p.m., Eastern Time, Monday through Friday.
Scoping for the proposed North-South project began October 2nd 2015 with the publication of the Notice of Intent (NOI), followed by the Notice of Preparation (NOP) on October 8th 2015. Both the NOI and the NOP are available on the project Web site listed above.
The Forest Service and CPUC held a series of public meetings between October 27th and October 29th 2015. During the public scoping meetings there was concern about the noticing for this project and the lack of detailed route information. In response to that concern, additional information requested at the meetings has been posted on the project Web site and additional comments will be accepted until January 18, 2016.
This notice is also to inform agencies, organizations, and the public that the meeting sign-in sheets and written comments that were submitted during the public scoping meetings held on October 27, 28, and 29 in San Bernardino, Hesperia, and Moreno Valley have been lost. All of the comments previously received via email, mail, or oral comment at the public scoping meetings have been posted to the project Web site to provide agencies, organizations, and the public an opportunity to verify that their comment was received. It is not necessary to re-submit those comments. Any written comment submitted during one of the public meetings should be resubmitted by January 18, 2016. New comments will also be accepted through January 18, 2016.
Individuals or organizations who would like to be added to the project mailing list may send an email or fax to the address/numbers listed above, or call (855) 520-6799 (toll free).
It is important that reviewers provide their comments at such times and in such a way that they are useful to the CPUC and Forest Service preparation of the EIR/EIS. Therefore, comments should be provided prior to the close of the extended comment period and should clearly articulate the reviewer's concerns and contentions. Comments received during scoping, including names and addresses of those who comment, will be part of the public record for this proposed project. Comments submitted anonymously will be accepted and considered; however, anonymous comments will not provide the Forest Service with the ability to provide the respondent with subsequent environmental documents and will not provide the respondent standing to participate in subsequent administrative or judicial review of the Forest Service decision. This project will follow the predecisional administrative review process pursuant to 36 CFR 218, Subparts A and B.
The Broadcasting Board of Governors.
Notice of a New System of Records.
BBG proposes to add a new time and attendance system to its inventory of records systems subject to the Privacy Act of 1974 (5 U.S.C. 522a), as amended. The primary purpose of this system is to track time worked and leave for pay administration, leave administration, reporting, and compliance functions. This action is necessary to meet the requirement of the Privacy Act to publish in the
This action will be effective without further notice on February 1, 2016, unless comments are received that would result in a contrary determination.
Send written comments to the Broadcasting Board of Governors, ATTN: Daniel Rosenholtz, Policy Officer, 330 Independence Avenue SW., Room 3324, Washington, DC 20237.
Greg Wyman, Payroll Manager, Office of the Chief Financial Officer or Carroll Cobb, Director, Office of Human Resources, BBG—Broadcasting Board of Governors, International Broadcasting Bureau, 330 Independence Avenue SW., Washington, DC 20237.
Employee Time and Attendance and Leave Records System.
Time and attendance reports, leave records, and service history files are located at 330 Independence Avenue SW., Washington, DC 20237, as well a FedRAMP-certified secure government cloud facility in Reston, Virginia.
None.
Past and present BBG employees in the Civil Service and the Foreign Service, excluding Foreign Service Nationals and Personal Services Contractors.
These records include time and attendance and leave records, including number and type of hours worked (
5 U.S.C. 301; 5 U.S.C. Chapter 53; 5 U.S.C. Chapter 55; 5 U.S.C. Chapter 61; 5 U.S.C. Chapter 63; 44 U.S.C. 3101.
The purpose of this system is to track time worked and leave for pay administration, leave administration, reporting, and compliance functions.
The primary uses of the records are to manage the BBG's fiscal operations for payroll, time and attendance, leave, insurance, tax, retirement, qualifications, and benefits functions. In addition to those disclosures generally permitted under 5 U.S.C. 552a(b), all or a portion of the records contained in this system of records may be disclosed outside BBG as a routine use as follows:
(1) A record from this system may be disclosed to Federal entities that provide payroll processing services to BBG. These services may include the issuance of salary payments to employees and distribution of wages and the distribution of allotments and deductions to financial and other institutions, many of which are through electronic funds transfer.
(2) A record from this system may be disclosed to other Federal entities, including the Department of Treasury and the Office of Personnel Management, for purposes of: Processing payroll payments; collecting withheld taxes; managing personnel; processing benefits; establishing and maintaining records related to payroll, retirement, and benefits; processing worker's compensation claims; conducting personnel research; and producing statistics or analytical studies and reports.
(3) To appropriate agencies, entities, and persons when: (a) It is suspected or confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the BBG has determined that, as a result of the suspected or confirmed compromise, there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the BBG or another agency or entity) that rely upon the compromised information; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the BBG's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
(4) A record from this system may be also be disclosed in accordance with the Statement of General Routine Uses Applicable to All BBG Systems of Records, originally published at 69 FR 46478, Aug. 3, 2004.
Records are maintained in electronic and paper format. Electronic records are stored in secure computerized databases. Paper records are stored in locked rooms and/or file cabinets.
These records may be retrieved by identifiers including, but not limited to, individual's name, social security number or employee number, and date of birth, or organizational code.
Access to records is limited to authorized BBG employees having an official use or need for the information. All records are stored within secure buildings with access granted only to individuals with appropriate identification. All paper records are maintained in locked offices and/or file cabinets during non-duty hours and are protected by office personnel when being used during duty hours. All users of personal information in connection with the performance of their jobs protect information from public view and from unauthorized personnel entering an unsupervised office.
Technical security measures within the electronic time and attendance system include: Restrictions on computer access to authorized individuals; required use of strong, frequently changed passwords; use of encryption for certain data types and transfers; and regular review of security procedures and best practices to enhance security. Physical measures include restrictions on building access to authorized individuals and maintenance of records in lockable offices and filing cabinets. Only specifically authorized individuals may access the electronic time and attendance computer system, and unique User IDs and passwords are required.
Agency time and attendance records are retained in accordance with the National Archives and Records Administration General Records Schedule 2.
Payroll Manager, Office of the Chief Financial Officer and Director, Office of Human Resources, BBG—Broadcasting Board of Governors, International Broadcasting Bureau, 330 Independence Avenue SW., Washington, DC 20237.
Individuals who want to know whether this system of records contains information about them, or who want access to their records, or who want to contest the contents of a record, may make a written request to: FOIA/Privacy Act Officer, BBG, Suite 3349, 330 Independence Ave. SW., Washington, DC 20237. Individuals' requests should contain the name and address of the system manager (listed above) and must contain the following information to enable their records to be located and identified:
A. Full legal name;
B. Date of Birth;
C. Social Security Number or employee identification number;
D. Last employing organization (include duty station location) and the approximate dates of employment or contact; and
E. Signature.
Individuals wishing to request access to their records should follow the Notification Procedures (listed above). Individuals requesting access will also be required to provide identification, such as a driver's license, employee identification card, or other appropriate identifying document. A notarized signature is required if the request is made by written correspondence. To request a record other than your own, you must have a signed and notarized statement from the individual to whom the record pertains granting you express permission to access their record.
The BBG's rules for access and for contesting record contents and appealing determinations appear in 22 CFR part 505. The right to contest records is limited to information that is incomplete, irrelevant, erroneous, or untimely.
The individual about whom the record is maintained, supervisors, timekeepers, and official personnel records.
None.
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35).
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Bureau of the Census, Department of Commerce.
Notice of public virtual meeting.
The Bureau of the Census (Census Bureau) is giving notice of a virtual meeting of the National Advisory Committee (NAC). The Committee will address updates on the 2020 Census Tribal Consultations. The NAC will meet virtually on Wednesday, January 13, 2016. Last minute changes to the schedule are possible, which could prevent giving advance public notice of schedule adjustments. Please visit the Census Advisory Committees Web site for the most current meeting agenda at:
January 13, 2016. The virtual meeting will begin at approximately 2:00 p.m. ET and end at approximately 4:00 p.m. ET.
The meeting will be held via teleconference. To attend, participants should call the following phone number to access the audio portion of the meeting: 1-888-455-8222. When prompted, please use the following password: 2984842. The meeting will be available via webex at:
Tara Dunlop, Advisory Committee Branch Chief, Customer Liaison and Marketing Services Office,
The NAC was established in March 2012 and operates in accordance with the Federal Advisory Committee Act (Title 5, United States Code, Appendix 2, Section 10). NAC members are appointed by the Director, U.S. Census Bureau, and consider topics such as hard to reach populations, race and ethnicity, language, aging populations, American Indian and Alaska Native tribal considerations, new immigrant populations, populations affected by natural disasters, highly mobile and migrant populations, complex households, rural populations, and population segments with limited access to technology. The Committee also advises on data privacy and confidentiality, among other issues.
All meetings are open to the public. A brief period will be set aside at the meeting for public comment on January 13. However, individuals with extensive questions or statements must submit them in writing to:
The public hearing on the application for additional production authority submitted by The Coleman Company, Inc., for activity within Subzone 119I in Sauk Rapids, Minnesota (see 80 FR 49986, August 18, 2015) that was previously postponed (see 80 FR 74754, November 30, 2015) has been rescheduled. The Commerce examiner will hold the public hearing on February 24, 2016, 9:30 a.m., at the U.S. Department of Commerce, Hoover Building, Room 3407, 1401 Constitution Avenue NW., Washington, DC 20230. Interested parties should indicate their intent to participate in the hearing and provide a summary of their remarks (submitted to
The comment period for the case referenced above will be extended through March 11, 2016. Rebuttal comments may be submitted during the subsequent 15-day period, until March 28, 2016. Submissions (signed original and one electronic copy) shall be addressed to the FTZ Board's Executive Secretary at: Foreign-Trade Zones Board, U.S. Department of Commerce, Room 21013, 1401 Constitution Avenue NW., Washington, DC 20230-0002.
For further information, contact Pierre Duy at
On August 13, 2015, Mitsubishi Caterpillar Forklift America Inc., an operator of FTZ 84, submitted a notification of proposed production activity to the Foreign-Trade Zones (FTZ) Board for its facilities in Houston, Texas.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (“the Department”) is rescinding the administrative review of the antidumping duty order on light-walled rectangular pipe and tube from Mexico for the period of review (“POR”) August 1, 2014, through July 31, 2015.
Brian Davis, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-7924.
On August 3, 2015, the Department published the notice of opportunity to request an administrative review of the order on light-walled rectangular pipe and tube from Mexico for the POR,
Pursuant to 19 CFR 351.213(d)(1), the Department will rescind an administrative review, in whole or in part, if the party or parties that requested a review withdraws the request within 90 days of the publication date of the notice of initiation of the requested review. As noted above, Perfiles withdrew its request for an administrative review within 90 days of the publication date of the notice of initiation. No other parties requested an administrative review of the order. Therefore, in accordance with 19 CFR 351.213(d)(1), we are rescinding this review in its entirety.
The Department will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on all appropriate entries of light-walled rectangular pipe and tube from Mexico. 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 41 days after the date of publication of this notice of rescission of administrative review.
This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a final reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return or destruction of proprietary information disclosed under an APO in
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).
National Institute of Standards and Technology, Department of Commerce
Notice of open meeting.
The National Institute of Standards and Technology (NIST) Smart Grid Advisory Committee (SGAC or Committee), will meet in open session on Tuesday, January 26, 2016 from 8:30 a.m. to 5:00 p.m. Eastern time and Wednesday, January 27, 2016 from 8:30 a.m. to 12:00 p.m. Eastern time. The primary purposes of this meeting are to provide updates on NIST Smart Grid and Cyber-Physical Systems Program activities and to discuss resiliency and reliability topics. The agenda may change to accommodate Committee business. The final agenda will be posted on the Smart Grid Web site at
The SGAC will meet on Tuesday, January 26, 2016 from 8:30 a.m. to 5:00 p.m. Eastern time and Wednesday, January 27, 2016 from 8:30 a.m. to 12:00 p.m. Eastern time.
The meeting will be held in the Portrait Room, Building 101 (Administration), National Institute of Standards and Technology (NIST), 100 Bureau Drive, Gaithersburg, Maryland 20899. Please note admittance instructions under the
Mr. Cuong Nguyen, Smart Grid and Cyber-Physical Systems Program Office, National Institute of Standards and Technology, 100 Bureau Drive, Mail Stop 8200, Gaithersburg, MD 20899-8200; telephone 301-975-2254, fax 301-948-5668; or via email at
The Committee was established in accordance with the Federal Advisory Committee Act, as amended, 5 U.S.C. App. The Committee is composed of nine to fifteen members, appointed by the Director of NIST, who were selected on the basis of established records of distinguished service in their professional community and their knowledge of issues affecting Smart Grid deployment and operations. The Committee advises the Director of NIST in carrying out duties authorized by section 1305 of the Energy Independence and Security Act of 2007 (Pub. L. 110-140). The Committee provides input to NIST on Smart Grid standards, priorities, and gaps, on the overall direction, status, and health of the Smart Grid implementation by the Smart Grid industry, and on Smart Grid Interoperability Panel activities, including the direction of research and standards activities. Background information on the Committee is available at
Pursuant to the Federal Advisory Committee Act, as amended, 5 U.S.C. App., notice is hereby given that the NIST Smart Grid Advisory Committee (SGAC or Committee) will meet in open session on Tuesday, January 26, 2016 from 8:30 a.m. to 5:00 p.m. Eastern time and Wednesday, January 27, 2016 from 8:30 a.m. to 12:00 p.m. Eastern time. The meeting will be open to the public and held in the Portrait Room, Building 101 (Administration) at NIST in Gaithersburg, Maryland. The primary purposes of this meeting are to provide updates on NIST Smart Grid and Cyber-Physical Systems Programs activities and to discuss resiliency and reliability topics. The agenda may change to accommodate Committee business. The final agenda will be posted on the Smart Grid Web site at
Individuals and representatives of organizations who would like to offer comments and suggestions related to the Committee's affairs are invited to request a place on the agenda by submitting their request to Cuong Nguyen at
All visitors to the NIST site are required to pre-register to be admitted. Anyone wishing to attend this meeting must register by 5:00 p.m. Eastern time, Friday, January 15, 2016, in order to attend. Please submit your full name, time of arrival, email address, and phone number to Cuong Nguyen. Non-U.S. citizens must submit additional information; please contact Mr. Nguyen. Mr. Nguyen's email address is
Office of Ocean Exploration and Research (OER) National Oceanic and Atmospheric Administration (NOAA) Department of Commerce (DOC).
Notice of public meeting.
This notice sets forth the schedule and proposed agenda of a forthcoming meeting of the Ocean Exploration Advisory Board (OEAB). OEAB members will discuss and provide advice on Federal ocean exploration programs, with a particular emphasis on National Oceanic and Atmospheric Administration (NOAA) Office of Ocean Exploration and Research (OER) activities, NOAA's response to the OEAB letter to NOAA Administrator Kathryn Sullivan on October 2, 2015, U.S. ocean exploration-related activities in the Arctic, and other matters as described in the agenda found on the OEAB Web site at
The meeting will be held at SRI International, 450 8th Avenue SE., St. Petersburg, FL 33071
The OEAB expects that public statements at its meetings will not be repetitive of previously submitted verbal or written statements. In general, each individual or group making a verbal presentation will be limited to three minutes. The Designated Federal Officer must receive written comments by January 6, 2016 to provide sufficient time for OEAB review. Written comments received after January 6, 2016 will be distributed to the OEAB but may not be reviewed prior to the meeting date. Seats will be available on a first-come, first-served basis.
Mr. David McKinnie, Designated Federal Officer, Ocean Exploration Advisory Board, National Oceanic and Atmospheric Administration, 7600 Sand Point Way NE., Seattle, WA 98115, (206) 526-6950.
NOAA established the OEAB under the Federal Advisory Committee Act (FACA) and legislation that gives the agency statutory authority to operate an ocean exploration program and to coordinate a national program of ocean exploration. The OEAB advises NOAA leadership on strategic planning, exploration priorities, competitive ocean exploration grant programs and other matters as the NOAA Administrator requests.
OEAB members represent government agencies, the private sector, academic institutions, and not-for-profit institutions involved in all facets of ocean exploration—from advanced technology to citizen exploration.
In addition to advising NOAA leadership, NOAA expects the OEAB to help to define and develop a national program of ocean exploration—a network of stakeholders and partnerships advancing national priorities for ocean exploration.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments.
NMFS has received a request from UniSea, Inc., for authorization to take marine mammals incidental to construction activities as part of a dock construction project at a commercial fish processing facility in Unalaska, AK. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to UniSea to incidentally take marine mammals, by Level B Harassment only, during the specified activity.
Comments and information must be received no later than January 22, 2016.
Comments on the application should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service. Physical comments should be sent to 1315 East-West Highway, Silver Spring, MD 20910 and electronic comments should be sent to
Jordan Carduner, Office of Protected Resources, NMFS, (301) 427-8401.
An electronic copy of UniSea's application and supporting documents, as well as a list of the references cited in this document, may be obtained by visiting the Internet at:
NMFS is preparing an Environmental Assessment (EA) for the proposed issuance of an IHA, pursuant to NEPA, to determine whether or not this proposed activity may have significant direct, indirect and cumulative effects on the human environment. This analysis will be completed prior to the issuance or denial of this proposed IHA. We will review all comments submitted in response to this notice as we complete the NEPA process, prior to a final decision on the incidental take authorization request. The EA will be posted at
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
The incidental taking of small numbers of marine mammals may be allowed only if NMFS (through authority delegated by the Secretary) finds that the total taking by the specified activity during the specified time period will (1) have a negligible impact on the species or stock(s), and (2) not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant). Further, the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such taking must be set forth.
The allowance of such incidental taking under section 101(a)(5)(A), by harassment, serious injury, death, or a combination thereof, requires that regulations be established. Subsequently, a Letter of Authorization may be issued pursuant to the prescriptions established in such regulations, providing that the level of taking will be consistent with the findings made for the total taking allowable under the specific regulations. Under section 101(a)(5)(D), NMFS may authorize such incidental taking by harassment only, for periods of not more than one year, pursuant to requirements and conditions contained within an IHA. The establishment of these prescriptions requires notice and opportunity for public comment.
NMFS has defined “negligible impact” in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival. Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as any act of pursuit, torment, or annoyance which: has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].
On June 10, 2015, we received a request from UniSea for authorization to take marine mammals incidental to pile driving and pile removal associated with construction of a commercial fishing dock in Iliuliuk Harbor, a small harbor in the Aleutian Islands. UniSea submitted revised versions of the request on September 28, 2015, and December 2, 2015. The latter of these was deemed adequate and complete. UniSea proposes to replace the existing dock with an 80 foot by 400 foot open cell sheet pile dock between March 1, 2016 and February 28, 2017.
The use of both vibratory and impact pile driving is expected to produce underwater sound at levels that have the potential to result in behavioral harassment of marine mammals. Species with the expected potential to be present during all or a portion of the in-water work window include the Steller sea lion (
UniSea's “G1” dock is located in the commercial fishing port of Iliuliuk Harbor in Unalaska, AK, and supports activities that occur in nearby fish processing facilities. The existing dock is being replaced because it is currently partially unusable, and because the company's plans for expansion necessitate a larger dock with increased capacity.
UniSea proposes to demolish the existing structure by removing the concrete deck, steel superstructure, and all attached appurtenances/structures, and extracting the existing steel support piles with a vibratory hammer. Starting at the existing “G2” sheet pile dock, the sheet pile of the new dock will then be installed. After completion of a few cells, the cells will be incrementally filled with clean material as the work progresses with bulldozers, wheel loaders, and compaction equipment. After all of the sheet piles are installed and the bulkhead is backfilled, concrete surfacing, fender piles, mooring cleats, and other appurtenances will be installed. Sound attenuation measures (
UniSea plans to conduct all in-water construction work during the period from March 1, 2016 to February 28, 2017. The total construction time, including removal of old piles and construction of the new dock, is expected to take no more than 180 days. Durations are conservative, and the actual amount of time to install and remove piles may be less than estimated. In‐water and over-water construction of Phase 1 (all sheet pile installation and some pipe pile installation) is planned to occur between approximately March 1, 2016 and October 31, 2016. Phase 2 (remaining pipe pile installation) is planned to occur between approximately November 1, 2016 and December 1, 2017. It is possible that work could be completed within one year; however, if it is not, UniSea will apply for a second IHA for any additional construction work that was not completed in the first year of the project.
In the summer months (May-August), 12 hour work days in daylight will likely be feasible given the extended daylight hours. In winter months (September-April), 8 hour to 10 hour work days in daylight will likely be achievable. The daily construction window for pile driving or removal will begin no sooner than 30 minutes after sunrise to allow for initial marine mammal monitoring to take place, and will end 30 minutes before sunset to allow for post-construction marine mammal monitoring.
Duration estimates for each of the pile installation and removal elements are described below:
• Vibratory Pile Removal: Vibratory pile removal will take 10 minutes or less per pile over a maximum duration of 30 days. Total maximum vibratory pile removal time for 75 piles is 13 hours.
• Vibratory Pile Driving (Sheet Pile): Vibratory pile driving of sheet pile will take 5 minutes or less per pile over a maximum duration of 90 days. Total maximum driving time for 890 sheet piles is 75 hours.
• Vibratory Pile Driving (Support Piles): Vibratory pile driving of support piles will take 10 minutes or less per pile over a maximum duration of 30 days (concurrent with impact pile driving). Total maximum driving time for 64 piles is 11 hours.
• Impact Pile Driving: Impact pile driving of dolphin and other support piles will take 30 minutes or less per pile over a maximum duration of 60 days. Total maximum driving time for 78 piles is 39 hours.
• Drilling: Drilling for installation of dolphin and other support piles will take 6 hours or less per pile over a maximum duration of 50 days (concurrent with impact pile driving).
The duration estimates provided above are considered generous enough to account for temporary support piles installed by the construction contractor for template structures to accommodate pile driving. Only one pile driver will be operating at any given time, and impact and vibratory driving are not anticipated to occur concurrently (
The project location is in the eastern Aleutian Islands, west of mainland Alaska. The UniSea dock is located in Iliuliuk Harbor, a small harbor on an islet called Amaknak Island that is connected by a small bridge to the larger Unalaska Island. Iliuliuk Harbor is located between Captains Bay and Iliuliuk Bay, with Unalaska Bay to the north opening into the Bering Sea. Please see Figure 1 and Section 2 of UniSea's IHA application for detailed information about the specific geographic region.
UniSea proposes to replace the “G1” dock mainly because the existing dock is partially unusable as a large portion of the dock is condemned due to corrosion and damage to existing steel piles. Additionally, the current UniSea processing plant is nearing capacity and the company plans to build new processing facilities that will ultimately be located at the shoreline and possibly encroach onto the new dock, necessitating a fill dock design rather than a pile-supported structure.
The proposed action includes the demolition and removal of the existing dock structure and the installation of a new 80 foot by 400 foot open cell sheet pile
The construction process is described below; further detail on the process can be found in Section 1 of the IHA application. The number and type of piles and related construction equipment proposed for installation as part of the construction process are as follows (and are shown in Table 1):
• Approximately fifty 24-inch diameter fiber-reinforced polymer (FRP) composite fender piles;
• Approximately nine 24-inch diameter steel support piles along the dock face and for crab brailer support;
• One 24-inch diameter steel plug/closure pile to retain fill between the existing and new sheet pile cells at the north end of the project;
• Two dolphins, each includes: five 24-inch diameter steel support piles (10 total) and two 24-inch diameter steel fender pin piles (four total);
• Four 50 foot steel catwalks with intermediate supports of two 18-inch diameter steel piles each (four piles total); and
• Seawater intake sheet pile (PS31 flat sheet piles) structure approximately 90 foot by 85 foot, access ramp, and armor rock erosion protection (3,400 cubic yards of rock fill and 400 cubic yards of armor rock).
The existing dock (consisting of steel support piles, steel superstructure, and concrete deck) will be completely removed for construction of the new G1 dock. Vibratory pile removal will generally consist of clamping the “jaws” of the vibratory hammer to the pile to be removed, extracting the pile (with vibratory hammer turned on) to the point where the pile is temporarily secured and removal can be completed with crane line rigging. The pile will then be completely removed from the water by hoisting with crane line rigging, and then placed on the ground or deck of a barge. In addition to vibratory pile removal, demolition of the existing dock and removal of existing riprap/obstructions will be performed with track excavators, loaders, cranes, barges, cutting equipment, and labor forces. The existing dock (consisting of steel support piles, steel superstructure, and concrete deck) will be completely removed for construction of the new dock. The contractor will be required to dispose of (or salvage) demolished items in accordance with all federal, state, and local regulations. Dewatering will not be required as all extraction will take place from the existing dock, from shore, and/or from a work barge.
The new sheet pile bulkhead dock and seawater intake structure will then be installed utilizing a crane and vibratory hammer. UniSea anticipates that the largest vibratory hammer that may be used for the project will have an eccentric moment of 6,600 inch-pounds (“eccentric moment” is one of two key factors in vibratory hammer performance—the other being engine power—and is responsible for creating enough amplitude to exceed the elastic range of the substrate). After all piles of several sheet pile cells have been installed, clean rock fill will be placed within the sheet pile cells from the shore. This process will continue sequentially until all of the sheet pile cells are installed and backfilled. See Figure 2 in the IHA application for a photo of sheet pile installation using a vibratory hammer.
Approximately 50 fiber-reinforced polymer (FRP) composite fender piles will then be installed along the face of the new sheet pile dock, fastened to the face at the top, and cut to elevation.
Fender support/pin piles will then be installed and cut to elevation. The fender support/pin piles will either be installed in a socket drilled into the shallow bedrock (driven with an impact hammer and possibly a vibratory hammer down into the socket), by the down-the-hole drilling technique (described below), or with a rock anchor system. Pre-assembled fender systems (energy absorbers, sleeve piles, steel framing, and fender panels) will be lifted and installed onto fender support piles via crane.
Miscellaneous support piles (including catwalk and dock face support piles) will then be installed and cut to elevation. Installation methods for the miscellaneous support piles will be similar to the fender support piles (described above). Temporary support piles for the contractor's pile driving template structures will be installed to aid with construction and removed after the permanent sheet piles or support piles have been installed. Installation methods for the temporary support piles will be similar to those used for the fender support piles (described above). Temporary support piles will likely be steel H-piles (18 inch or smaller) or steel round piles (18 inch diameter or smaller). The sheet pile structures consist of 14 cells, and there are two dolphin and two catwalk support structures. It is estimated that upwards of ten temporary support piles will be used per cell for the sheet pile structures, and upwards of eight piles per dolphin and catwalk support location (this represents a best estimate of the number of temporary piles that will be necessary based on previous projects, however the actual number will be determined by the contractor).
Down-the-hole drilling entails the use of a rotary drill bit that is impacted when hard material is encountered. The pounding action takes place where the drill bit encounters the resistant material underground, rather than at the surface as would be the case for impact or vibratory pile driving. The piling is fit over the drill with the drill head extending beneath the pile, and as the drill advances downward, so does the pile. When the proper depth is achieved, the drill is retracted and the piling is left in place. This method eliminates much of the high-energy sound associated with traditional pile driving methods. For the purposes of this proposed authorization we assume that fender support/pin piles, miscellaneous support piles (including catwalk and dock face support piles), and temporary support piles (for the contractor's pile driving template structures) would be installed using impact driving. However, if they are ultimately installed by down-the-hole drilling this would not change the total amount of effort,
Additional construction work, such as concrete dock surfacing, will take place at or near the surface of the dock and will occur above water. Because this work is not expected to result in harassment of marine mammals, we do not summarize it here. Details of all planned construction work, and photos of many of the construction techniques described above, can be found in Section 1 of UniSea's IHA application.
Marine waters near Unalaska Island support many species of marine mammals, including pinnipeds and cetaceans; however, the number of species regularly occurring near the project location is limited. There are three marine mammal species under NMFS' jurisdiction with recorded occurrence in Iliuliuk Harbor during the past 15 years, including one cetacean and two pinnipeds. Steller sea lions are the most common marine mammals in the project area and are part of the western Distinct Population Segment (DPS) that is listed as Endangered under the Endangered Species Act (ESA). Harbor seals (
We have reviewed UniSea's detailed species descriptions, including life history information, for accuracy and completeness and refer the reader to Sections 3 and 4 of UniSea's application, rather than reprinting the information here. Please also refer to NMFS' Web site (
Table 2 lists the marine mammal species with expected potential for occurrence in the vicinity of the project during the project timeframe and summarizes key information regarding stock status and abundance. Taxonomically, we follow Committee on Taxonomy (2015). Please see NMFS' Stock Assessment Reports (SAR), available at
In the species accounts provided here, we offer a brief introduction to the species and relevant stock as well as available information regarding
Steller sea lions are distributed mainly around the coasts to the outer continental shelf along the North Pacific rim from northern Hokkaido, Japan through the Kuril Islands and Okhotsk Sea, Aleutian Islands and central Bering Sea, southern coast of Alaska and south to California (Loughlin
The species as a whole was ESA-listed as threatened in 1990 (55 FR 49204) because of significant declines in the population which may have been caused by nutritional stress due to competition with commercial fisheries, environmental change, disease, killer whale predation, incidental take, and shooting (illegal and legal). In 1997, the species was divided into two separate DPSs, as described above, and the western DPS was reclassified as endangered under the ESA because of its continued decline since the initial listing in 1990 (62 FR 24345).
The most recent comprehensive estimate of the abundance of the western DPS in Alaska is 55,422 individuals (both pups and non-pups), based on aerial surveys of non-pups conducted from 2008-2011 and estimates of total pup production (Allen and Angliss 2014a). This figure represents a marked decline from abundance estimates in the 1950s (N = 140,000) and 1970s (N = 110,000). Pup counts in the Western DPS in Alaska overall increased at 1.8 percent annually between 2000 and 2014; non-up counts increased at 2.2 percent annually over the same period (Fritz et al. 2015). However, survey data collected since 2000 indicate that the population decline continues in the central and western Aleutian Islands while populations east of Samalga Pass (~170° W) have increased (Allen and Angliss 2014a). Survival rates east of Samalga Pass have rebounded to nearly the same levels estimated for the 1970s, prior to the decline in abundance. In addition, population models indicate that natality among the increasing population east of Samalga Pass in the period 2000−2012 may not be significantly different from rates estimated for the 1970s. The proposed project location in Iliuliuk Harbor is approximately 220 km east of Samalga Pass.
Steller sea lions are the most abundant marine mammals in the project area. Data from the NOAA National Marine Mammal Laboratory (NMML) surveys of haulouts on Unalaska Island suggest the Steller sea lion haulouts nearest to the project location are at Priest Rock (on the east side of the entrance to Unalaska Bay, approximately 19 km from the project site), Cape Wislow (on the northwest side of the entrance to Unalaska Bay, approximately 19 km from the project site) and Bishop Point (west of Cape Wislow on the North side of Unalaska Island, approximately 27 km from the project site). Bishop Point appears to be the most actively utilized haulout of the three, with a mean of 193 individual sea lions observed over 36 separate surveys
Based on data from NMML breeding season surveys (conducted in June and July), the population of Steller sea lions in the eastern Aleutian Islands (from Unimak Island through Umnak Island, 163-169°W) has been increasing at 2-3% per year since 2000. Local abundance in the breeding season is generally higher overall than in the non-breeding season, with counts on land approximately twice as much as those observed in winter, as sea lions spend more time at sea feeding during the winter months. Most large males leave the Aleutian Islands and head north during the winter, feeding off the ice edge, thus adult females and juveniles make up the majority of the local population during the nonbreeding season (pers. comm. L. Fritz, NMML, to J. Carduner, NMFS, Oct. 8, 2015).
Steller sea lions are not known to haul out in the project area, though individuals are observed with regularity in the water within Iliuliuk Harbor. The number of sea lions in the immediate project area varies depending on the season and the on the presence of fishing vessels unloading their catch at the seafood processing facilities in the harbor. Sea lions are likely drawn to the project location by the abundant and predictable sources of food provided by commercial fishing vessels and fish processing facilities. Based on accounts from UniSea personnel, sea lions are sighted more often when fishing boats are docked at the project site and are often observed foraging near fishing boats that are docked at the UniSea facility, suggesting sea lions in the Iliuliuk Harbor area are habituated to the presence of fishing vessels and are likely conditioned to associating fishing boats with easy access to food.
Harbor seals range from Baja California north along the west coasts of Washington, Oregon, California, British Columbia, and Southeast Alaska; west through the Gulf of Alaska, Prince William Sound, and the Aleutian Islands; and north in the Bering Sea to Cape Newenham and the Pribilof Islands. They haul out on rocks, reefs, beaches, and drifting glacial ice, and feed in marine, estuarine, and occasionally fresh waters. They generally are nonmigratory, with local movements associated with such factors as tides, weather, season, food availability, and reproduction (Scheffer and Slipp 1944, Fisher 1952, Bigg 1969, 1981, Hastings et al. 2004).
In 2010, harbor seals in Alaska were partitioned into 12 separate stocks based largely on genetic structure (Allen and Angliss 2012). Only the Aleutian Islands stock is considered in this application because other stocks occur outside the geographic area under consideration. Distribution of the Aleutian Islands stock extends from Ugamak Island (southwest of Unimak Island in the Eastern Aleutians) west to Attu Island (the westernmost Aleutian Island in the U.S.). The abundance estimate for the Aleutian Islands stock is 3,579; however, this estimate is based on survey data that is over 10 years old. The current statewide abundance estimate for Alaskan harbor seals is 152,602 based on aerial survey data collected during 1998-2007 (Allen and Angliss 2012).
Surveying harbor seals in the Aleutian Islands is notoriously difficult as the islands are often blanketed with fog or high winds that limit aerial surveys to narrow windows of time. The logistics of surveying the entire length of the Aleutian Chain are also quite difficult with limited airports and limited access to fuel. As a result, available survey data for the Aleutian Islands harbor seal stock are extremely limited. The current population trend in the Aleutian Islands is unknown. Additionally, the haul-out patterns of harbor seals in the Aleutian Islands have not been studied, and there is no stock specific estimate of a survey correction factor.
Small
Harbor seals are only occasionally seen in Iliuliuk Harbor. No pupping or haulout sites exist within the project area. The closest known harbor seal haulout to the G1 dock is located approximately 3 km away on the northern tip of Hog Island in Unalaska Bay; NMML survey data shows an average of ~11 seals observed at the site over the course of four surveys from 2008-2010. Surveys were conducted only in late July and August, thus seasonal information on abundance or distribution is not available. NMML survey data suggest there are at least six other harbor seal haulouts in and around Unalaska Bay that are further from the project site; the maximum number of seals observed at any of these haulouts has not exceeded 39 individuals at any one time.
This section includes a summary and discussion of the ways that components of the specified activity may impact marine mammals. The “Estimated Take by Incidental Harassment” section later in this document will include a quantitative analysis of the number of individuals that are expected to be taken by this activity. The “Negligible Impact Analysis” section will include the analysis of how this specific activity will impact marine mammals and will consider the content of this section, the “Estimated Take by Incidental Harassment” section, the “Proposed Mitigation” section, and the “Anticipated Effects on Marine Mammal Habitat” section to draw conclusions regarding the likely impacts of this activity on the reproductive success or survivorship of individuals and from that on the affected marine mammal populations or stocks. In the following discussion, we provide general background information on sound and marine mammal hearing before considering potential effects to marine mammals from sound produced by the construction techniques proposed for use.
Sound travels in waves, the basic components of which are frequency, wavelength, velocity, and amplitude. Frequency is the number of pressure waves that pass by a reference point per unit of time and is measured in hertz (Hz) or cycles per second. Wavelength is the distance between two peaks of a sound wave; lower frequency sounds have longer wavelengths than higher frequency sounds and attenuate
Root mean square (rms) is the quadratic mean sound pressure over the duration of an impulse, and is calculated by squaring all of the sound amplitudes, averaging the squares, and then taking the square root of the average (Urick, 1983). Rms accounts for both positive and negative values; squaring the pressures makes all values positive so that they may be accounted for in the summation of pressure levels (Hastings and Popper, 2005). This measurement is often used in the context of discussing behavioral effects, in part because behavioral effects, which often result from auditory cues, may be better expressed through averaged units than by peak pressures.
When underwater objects vibrate or activity occurs, sound-pressure waves are created. These waves alternately compress and decompress the water as the sound wave travels. Underwater sound waves radiate in all directions away from the source (similar to ripples on the surface of a pond), except in cases where the source is directional. The compressions and decompressions associated with sound waves are detected as changes in pressure by aquatic life and man-made sound receptors such as hydrophones.
Even in the absence of sound from the specified activity, the underwater environment is typically loud due to ambient sound. Ambient sound is defined as environmental background sound levels lacking a single source or point (Richardson
• Wind and waves: The complex interactions between wind and water surface, including processes such as breaking waves and wave-induced bubble oscillations and cavitation, are a main source of naturally occurring ambient noise for frequencies between 200 Hz and 50 kHz (Mitson, 1995). In general, ambient sound levels tend to increase with increasing wind speed and wave height. Surf noise becomes important near shore, with measurements collected at a distance of 8.5 km from shore showing an increase of 10 dB in the 100 to 700 Hz band during heavy surf conditions.
• Precipitation: Sound from rain and hail impacting the water surface can become an important component of total noise at frequencies above 500 Hz, and possibly down to 100 Hz during quiet times.
• Biological: Marine mammals can contribute significantly to ambient noise levels, as can some fish and shrimp. The frequency band for biological contributions is from approximately 12 Hz to over 100 kHz.
• Anthropogenic: Sources of ambient noise related to human activity include transportation (surface vessels and aircraft), dredging and construction, oil and gas drilling and production, seismic surveys, sonar, explosions, and ocean acoustic studies. Shipping noise typically dominates the total ambient noise for frequencies between 20 and 300 Hz. In general, the frequencies of anthropogenic sounds are below 1 kHz and, if higher frequency sound levels are created, they attenuate rapidly (Richardson
The sum of the various natural and anthropogenic sound sources at any given location and time—which comprise “ambient” or “background” sound—depends not only on the source levels (as determined by current weather conditions and levels of biological and shipping activity) but also on the ability of sound to propagate through the environment. In turn, sound propagation is dependent on the spatially and temporally varying properties of the water column and sea floor, and is frequency-dependent. As a result of the dependence on a large number of varying factors, ambient sound levels can be expected to vary widely over both coarse and fine spatial and temporal scales. Sound levels at a given frequency and location can vary by 10-20 dB from day to day (Richardson
Known sound levels and frequency ranges associated with anthropogenic sources similar to those that would be used for this project are summarized in Table 3. Details of the source types are described in the following text.
In-water construction activities associated with the project would include impact pile driving vibratory pile driving. The sounds produced by these activities fall into one of two general sound types: pulsed and non-pulsed (defined in the following). The distinction between these two sound types is important because they have
Pulsed sound sources (
Non-pulsed sounds can be tonal, narrowband, or broadband, brief or prolonged, and may be either continuous or non-continuous (ANSI, 1995; NIOSH, 1998). Some of these non-pulsed sounds can be transient signals of short duration but without the essential properties of pulses (
Impact hammers operate by repeatedly dropping a heavy piston onto a pile to drive the pile into the substrate. Sound generated by impact hammers is characterized by rapid rise times and high peak levels, a potentially injurious combination (Hastings and Popper, 2005). Vibratory hammers install piles by vibrating them and allowing the weight of the hammer to push them into the sediment. Vibratory hammers produce significantly less sound than impact hammers. Peak SPLs may be 180 dB or greater, but are generally 10 to 20 dB lower than SPLs generated during impact pile driving of the same-sized pile (Oestman
Hearing is the most important sensory modality for marine mammals, and exposure to sound can have deleterious effects. To appropriately assess these potential effects, it is necessary to understand the frequency ranges marine mammals are able to hear. Current data indicate that not all marine mammal species have equal hearing capabilities (
• Low-frequency cetaceans (mysticetes): functional hearing is estimated to occur between approximately 7 Hz and 25 kHz (extended from 22 kHz; Watkins, 1986; Au
• Mid-frequency cetaceans (larger toothed whales, beaked whales, and most delphinids): functional hearing is estimated to occur between approximately 150 Hz and 160 kHz;
• High-frequency cetaceans (porpoises, river dolphins, and members of the genera
• Pinnipeds in water: functional hearing is estimated to occur between approximately 75 Hz to 100 kHz for Phocidae (true seals) and between 100 Hz and 48 kHz for Otariidae (eared seals), with the greatest sensitivity between approximately 700 Hz and 20 kHz. The pinniped functional hearing group was modified from Southall
There are two marine mammal species (one otariid pinniped and one phocid pinniped) with expected potential to co-occur with UniSea construction activities. Please refer to Table 2.
In the absence of mitigation, impacts to marine species would be expected to result from physiological and behavioral responses to both the type and strength of the acoustic signature (Viada
Given the available data, the received level of a single pulse (with no frequency weighting) might need to be approximately 186 dB re 1 μPa
The above TTS information for odontocetes is derived from studies on the bottlenose dolphin (
Relationships between TTS and PTS thresholds have not been studied in marine mammals but are assumed to be similar to those in humans and other terrestrial mammals. PTS might occur at a received sound level at least several decibels above that inducing mild TTS if the animal were exposed to strong sound pulses with rapid rise time. Based on data from terrestrial mammals, a precautionary assumption is that the PTS threshold for impulse sounds (such as pile driving pulses as received close to the source) is at least 6 dB higher than the TTS threshold on a peak-pressure basis and probably greater than 6 dB (Southall
Measured source levels from impact pile driving can be as high as 214 dB rms. Although no marine mammals have been shown to experience TTS or PTS as a result of being exposed to pile driving activities, captive bottlenose dolphins and beluga whales exhibited changes in behavior when exposed to strong pulsed sounds (Finneran
Disturbance includes a variety of effects, including subtle changes in behavior, more conspicuous changes in activities, and displacement. Behavioral responses to sound are highly variable and context-specific and reactions, if any, depend on species, state of maturity, experience, current activity, reproductive state, auditory sensitivity, time of day, and many other factors (Richardson
Habituation can occur when an animal's response to a stimulus wanes with repeated exposure, usually in the absence of unpleasant associated events (Wartzok
Controlled experiments with captive marine mammals showed pronounced behavioral reactions, including avoidance of loud sound sources (Ridgway
With both types of pile driving, it is likely that the onset of pile driving could result in temporary, short term changes in an animal's typical behavior and/or avoidance of the affected area. These behavioral changes may include (Richardson
The biological significance of many of these behavioral disturbances is difficult to predict, especially if the detected disturbances appear minor. However, the consequences of behavioral modification could be expected to be biologically significant if the change affects growth, survival, or reproduction. Significant behavioral modifications that could potentially lead to effects on growth, survival, or reproduction include:
• Drastic changes in diving/surfacing patterns (such as those thought to cause beaked whale stranding due to exposure to military mid-frequency tactical sonar);
• Habitat abandonment due to loss of desirable acoustic environment; and
• Cessation of feeding or social interaction.
The onset of behavioral disturbance from anthropogenic sound depends on both external factors (characteristics of sound sources and their paths) and the specific characteristics of the receiving animals (hearing, motivation, experience, demography) and is difficult to predict (Southall
Natural and artificial sounds can disrupt behavior by masking, or interfering with, a marine mammal's ability to hear other sounds. Masking occurs when the receipt of a sound is interfered with by another coincident sound at similar frequencies and at similar or higher levels. Chronic exposure to excessive, though not high-intensity, sound could cause masking at particular frequencies for marine mammals that utilize sound for vital biological functions. Masking can interfere with detection of acoustic signals such as communication calls, echolocation sounds, and environmental sounds important to marine mammals. Therefore, under certain circumstances, marine mammals whose acoustical sensors or environment are being severely masked could also be impaired from maximizing their performance fitness in survival and reproduction. If the coincident (masking) sound were man-made, it could be potentially harassing if it disrupted hearing-related behavior. It is important to distinguish TTS and PTS, which persist after the sound exposure, from masking, which occurs during the sound exposure. Because masking (without resulting in TS) is not associated with abnormal physiological function, it is not considered a physiological effect, but rather a potential behavioral effect.
The frequency range of the potentially masking sound is important in determining any potential behavioral impacts. Because sound generated from in-water pile driving is mostly concentrated at low frequency ranges, it may affect detection of communication calls and other potentially important natural sounds such as surf and prey sound. It may also affect communication signals when they occur near the sound band and thus reduce the communication space of animals (
Masking has the potential to impact species at the population or community levels as well as at individual levels. Masking affects both senders and receivers of the signals and can potentially have long-term chronic effects on marine mammal species and populations. Recent research suggests that low frequency ambient sound levels have increased by as much as 20 dB (more than three times in terms of SPL) in the world's ocean from pre-industrial periods, and that most of these increases are from distant shipping (Hildebrand, 2009). All anthropogenic sound sources, such as those from vessel traffic, pile driving, and dredging activities, contribute to the elevated ambient sound levels, thus intensifying masking.
The most intense underwater sounds in the proposed action are those produced by impact pile driving. Given that the energy distribution of pile driving covers a broad frequency spectrum, sound from these sources would likely be within the audible range of marine mammals present in the project area. Impact pile driving activity is relatively short-term, with rapid pulses occurring for approximately fifteen minutes per pile. The probability for impact pile driving resulting from the proposed action to mask acoustic signals important to the behavior and survival of marine mammal species is likely to be negligible. Vibratory pile driving is also relatively short-term, with rapid oscillations occurring for approximately one and a half hours per pile. It is possible that vibratory pile driving resulting from the proposed action may mask acoustic signals important to the behavior and survival
Marine mammals that occur in the project area could be exposed to airborne sounds associated with pile driving that have the potential to cause harassment, depending on their distance from pile driving activities. Airborne sound could potentially affect pinnipeds that are either hauled out or are in the water but have their heads above water in the project area. Most likely, airborne sound would cause behavioral responses similar to those discussed above in relation to underwater sound. For instance, anthropogenic sound could cause hauled out pinnipeds to exhibit changes in their normal behavior, such as reduction in vocalizations, or cause them to temporarily abandon their habitat and move further from the source. Studies by Blackwell
The proposed activities at Iliuliuk Harbor would not result in permanent impacts to habitats used directly by marine mammals, such as haul-out sites, but may have potential short-term impacts to food sources such as forage fish and salmonids. There are no rookeries or haulout sites within the modeled zone of influence for impact or vibratory pile driving associated with the project, or ocean bottom structure of significant biological importance to marine mammals that may be present in the waters in the vicinity of the project area. The project location is characterized by several commercial fish processing facilities and experiences frequent vessel traffic because of these facilities, thus the area is already relatively industrialized and not a pristine habitat for sea lions or seals. As such, the main impact associated with the proposed activity would be temporarily elevated sound levels and the associated direct effects on marine mammals, as discussed previously in this document. The most likely impact to marine mammal habitat occurs from pile driving effects on likely marine mammal prey (
Construction activities would produce both pulsed (
The area likely impacted by the project is very small relative to the available habitat in Unalaska Bay. Avoidance by potential prey (
In summary, given the short daily duration of sound associated with individual pile driving events and the relatively small area that would be affected, pile driving activities associated with the proposed action are not likely to have a permanent, adverse effect on any fish habitat, or populations of fish species. Thus, any impacts to marine mammal habitat are not expected to cause significant or long-term consequences for individual marine mammals or their populations.
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to such activity, and other means of effecting the least practicable impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of such species or stock for taking for certain subsistence uses.
Measurements from similar pile driving events were coupled with practical spreading loss to estimate zones of influence and an exclusion zone (see “Estimated Take by Incidental Harassment”). These values were then used to develop mitigation measures for proposed pile driving activities. The exclusion zone effectively represents the mitigation zone that would be established around each pile to prevent Level A harassment to marine mammals, while the zones of influence (ZOI) provide estimates of the areas within which Level B harassment might occur for impact and vibratory pile driving. While the modeled ZOI and exclusion zone vary between the different types of installation methods, UniSea is proposing to establish mitigation zones for the maximum exclusion zone and ZOI for all pile driving and down-the-hole drilling conducted in support of the proposed project.
The following measures would apply to UniSea's mitigation through the exclusion zone and zone of influence:
In order to document observed incidents of harassment, monitors will record all marine mammals observed within the modeled ZOI. Modeling was performed to estimate the ZOI for impact pile driving (the areas in which SPLs are expected to equal or exceed 160 dB rms during impact driving) and for vibratory pile driving (the areas in which SPLs are expected to equal or exceed 120 dB rms during vibratory driving and removal). Results of this modeling showed the ZOI for impact driving would extend to a radius of 500 m from the pile being driven, the ZOI for vibratory pile driving and down-the-hole drilling (if it occurs) would extend to a radius of 10,000 m from the pile being driven, and the ZOI for vibratory pile removal would extend to a radius of 7,400 m from the pile being removed. However, due to the geography of the project area, landmasses surround Iliuliuk Harbor are expected to limit the propagation of sound from construction activities such that the actual distances to the ZOI extent for vibratory and impact driving will be substantially smaller than those described above. Modeling results of the ensonified areas, taking into account the attenuation provided by landmasses, suggest the actual ZOI will extend to a maximum distance of 1,250 m from the G1 dock, at its furthest point (for vibratory driving). Due to this relatively small modeled ZOI, and due to the monitoring locations chosen by UniSea (see the Monitoring Plan for details), we expect that monitors will be able to observe the entire modeled ZOI for both impact and vibratory pile driving, and thus we expect data collected on incidents of Level B harassment to be relatively accurate. The modeled areas of the ZOIs for impact and vibratory driving, taking into account the attenuation provided by landmasses in attenuating sound from the construction project, are shown in Appendix B of UniSea's application.
The following additional measures apply to visual monitoring:
(1) Monitoring will be conducted by qualified observers, who will be placed at the best vantage point(s) practicable to monitor for marine mammals and implement shutdown procedures when applicable by calling for the shutdown to the hammer operator. Qualified observers are trained biologists, with the following minimum qualifications:
• Visual acuity in both eyes (correction is permissible) sufficient for discernment of moving targets at the water's surface with ability to estimate target size and distance;
• Experience and ability to conduct field observations and collect data according to assigned protocols;
• Experience or training in the field identification of marine mammals, including the identification of behaviors, with ability to accurately identify marine mammals in Alaskan waters to species;
• Sufficient training, orientation or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations; and
• Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
(2) Prior to the start of pile driving activity, the exclusion zone will be monitored for fifteen minutes to ensure that it is clear of marine mammals. Pile driving will only commence once observers have declared the exclusion zone clear of marine mammals; animals will be allowed to remain in the exclusion zone (
(3) If a marine mammal approaches or enters the exclusion zone during the course of pile driving operations, activity will be halted and delayed until either the animal has voluntarily left and been visually confirmed beyond the exclusion zone or fifteen minutes have passed without re-detection of the animal. Monitoring will be conducted throughout the time required to drive a pile.
Sound levels can be reduced during impact pile driving using sound attenuation devices. There are several types of sound attenuation devices including bubble curtains, cofferdams, and isolation casings (also called temporary noise attenuation piles [TNAP]), and cushion blocks. UniSea plans to use bubble curtains, which create a column of air bubbles rising around a pile from the substrate to the water surface. The air bubbles absorb and scatter sound waves emanating from the pile, thereby reducing the sound energy.
Bubble curtains may be confined or unconfined. An unconfined bubble curtain may consist of a ring seated on the substrate and emitting air bubbles from the bottom. An unconfined bubble
The literature presents a wide array of observed attenuation results for bubble curtains (
Unconfined bubble curtains will be used during all impact pile driving associated with the proposed project. The bubble curtain used by UniSea may result in some noise reduction from impact pile driving; however, we are unable make any assumptions about the extent of the attenuation that may be provided by UniSea's bubble curtain, as sound source verification at pile driving projects using the proposed bubble curtain design has not occurred previously, and in situ recordings are not proposed for this particular project.
The use of a “soft-start” procedure is believed to provide additional protection to marine mammals by providing a warning and an opportunity to leave the area prior to the hammer operating at full capacity. For vibratory hammers, the soft start technique will initiate noise from the hammer for 15 seconds at a reduced energy level, followed by 1- minute waiting period and repeat the procedure two additional times. For impact hammers, the soft start technique will initiate three strikes at a reduced energy level, followed by a 30-second waiting period. This procedure would also be repeated two additional times. The actual number of strikes at reduced energy will vary because operating the hammer at less than full power results in “bouncing” of the hammer as it strikes the pile, resulting in multiple “strikes.” Soft start for impact driving will be required at the beginning of each day's pile driving work and at any time following a cessation of impact pile driving of thirty minutes or longer.
We have carefully evaluated UniSea's proposed mitigation measures and considered their likely effectiveness relative to implementation of similar mitigation measures in previously issued IHAs to preliminarily determine whether they are likely to affect the least practicable impact on the affected marine mammal species and stocks and their habitat. Our evaluation of potential measures included consideration of the following factors in relation to one another:
(1) The manner in which, and the degree to which, the successful implementation of the measure is expected to minimize adverse impacts to marine mammals;
(2) The proven or likely efficacy of the specific measure to minimize adverse impacts as planned; and
(3) The practicability of the measure for applicant implementation.
Any mitigation measure(s) we prescribe should be able to accomplish, have a reasonable likelihood of accomplishing (based on current science), or contribute to the accomplishment of one or more of the general goals listed below:
(1) Avoidance or minimization of injury or death of marine mammals wherever possible (goals 2, 3, and 4 may contribute to this goal).
(2) A reduction in the number (total number or number at biologically important time or location) of individual marine mammals exposed to stimuli expected to result in incidental take (this goal may contribute to 1, above, or to reducing takes by behavioral harassment only).
(3) A reduction in the number (total number or number at biologically important time or location) of times any individual marine mammal would be exposed to stimuli expected to result in incidental take (this goal may contribute to 1, above, or to reducing takes by behavioral harassment only).
(4) A reduction in the intensity of exposure to stimuli expected to result in incidental take (this goal may contribute to 1, above, or to reducing the severity of behavioral harassment only).
(5) Avoidance or minimization of adverse effects to marine mammal habitat, paying particular attention to the prey base, blockage or limitation of passage to or from biologically important areas, permanent destruction of habitat, or temporary disturbance of habitat during a biologically important time.
(6) For monitoring directly related to mitigation, an increase in the probability of detecting marine mammals, thus allowing for more effective implementation of the mitigation.
Based on our evaluation of UniSea's proposed measures, we have preliminarily determined that the proposed mitigation measures provide the means of affecting the least practicable impact on marine mammal species or stocks and their habitat.
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth “requirements pertaining to the monitoring and reporting of such taking.” The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for incidental take authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present in the proposed action area.
Any monitoring requirement we prescribe should accomplish one or more of the following general goals:
1. An increase in the probability of detecting marine mammals, both within defined zones of effect (thus allowing for more effective implementation of the mitigation) and in general to generate more data to contribute to the analyses mentioned below;
2. An increase in our understanding of how many marine mammals are likely to be exposed to stimuli that we associate with specific adverse effects, such as behavioral harassment or hearing threshold shifts;
3. An increase in our understanding of how marine mammals respond to stimuli expected to result in incidental take and how anticipated adverse effects on individuals may impact the population, stock, or species (specifically through effects on annual rates of recruitment or survival) through any of the following methods:
• Behavioral observations in the presence of stimuli compared to observations in the absence of stimuli (need to be able to accurately predict pertinent information,
• Physiological measurements in the presence of stimuli compared to observations in the absence of stimuli (need to be able to accurately predict
• Distribution and/or abundance comparisons in times or areas with concentrated stimuli versus times or areas without stimuli.
4. An increased knowledge of the affected species; or
5. An increase in our understanding of the effectiveness of certain mitigation and monitoring measures.
UniSea submitted a marine mammal monitoring plan as part of their IHA application (the monitoring plan can be viewed online at:
UniSea will collect sighting data and will record behavioral responses to construction activities for marine mammal species observed in the project location during the period of activity. All marine mammal observers (MMOs) will be trained in marine mammal identification and behaviors and are required to have no other construction-related tasks while conducting monitoring. UniSea will monitor the Exclusion Zone and Zone of Influence before, during, and after pile driving, with observers located at the best practicable vantage points. See Figure 2 in the Marine Mammal Monitoring Plan for the observer locations planned for use during construction. Based on our requirements, the Marine Mammal Monitoring Plan would implement the following procedures for pile driving:
• A dedicated monitoring coordinator will be on-site during all construction days. The monitoring coordinator will oversee marine mammal observers. The monitoring coordinator will serve as the liaison between the marine mammal monitoring staff and the construction contractor to assist in the distribution of information.
• MMOs would be located at the best vantage point(s) in order to properly observe the entire Exclusion Zone, and as much of the ZOI as possible. A minimum of two MMOs will be on duty during all pile driving activity, with one of these MMOs having full time responsibility for monitoring the Exclusion Zone.
• During all observation periods, observers will use binoculars and the naked eye to search continuously for marine mammals.
• If the Exclusion Zone is obscured by fog or poor lighting conditions, pile driving will not be initiated until the Exclusion Zone is clearly visible. Should such conditions arise while impact driving is underway, the activity would be halted.
• The Exclusion Zone and ZOI will be monitored for the presence of marine mammals before, during, and after any pile driving or removal activity.
Individuals implementing the monitoring protocol will assess its effectiveness using an adaptive approach. MMOs will use their best professional judgment throughout implementation and seek improvements to these methods when deemed appropriate. Any modifications to protocol will be coordinated between NMFS and UniSea.
We require that observers use approved data forms. Among other pieces of information, UniSea will record detailed information about any implementation of shutdowns, including the distance of animals to the pile being driven, a description of specific actions that ensued, and resulting behavior of the animal, if any. In addition, UniSea will attempt to distinguish between the number of individual animals taken and the number of incidents of take, when possible. We require that, at a minimum, the following information be collected on sighting forms:
• Date and time that monitored activity begins or ends;
• Construction activities occurring during each observation period;
• Weather parameters (
• Water conditions (
• Species, numbers, and (if possible) sex and age class of marine mammals;
• Description of any observable marine mammal behavior patterns, including bearing and direction of travel and distance from pile driving activity;
• Distance from pile driving activities to marine mammals and distance from marine mammal(s) to the observation point;
• Locations of all marine mammal observations; and
• Other human activity in the area.
A draft report will be submitted within 90 calendar days of the completion of the activity, or within 45 calendar days prior to the effective date of a subsequent IHA (if applicable). The report will include information on marine mammal observations pre-activity, during-activity, and post-activity during pile driving days, and will provide descriptions of any behavioral responses to construction activities by marine mammals and a complete description of any mitigation shutdowns and results of those actions, as well as an estimate of total take based on the number of marine mammals observed during the course of construction. A final report must be submitted within 30 days following resolution of comments from NMFS on the draft report.
In the unanticipated event that the specified activity clearly causes the take of a marine mammal in a manner not authorized by the IHA (if issued), such as a Level A harassment, or a take of a marine mammal species other than those proposed for authorization, UniSea would immediately cease the specified activities and immediately report the incident to the Chief of the Permits and Conservation Division, Office of Protected Resources. The report would include the following information:
• Time, date, and location (latitude/longitude) of the incident;
• Description of the incident;
• Status of all sound source use in the 24 hours preceding the incident;
• Environmental conditions (
• Description of all marine mammal observations in the 24 hours preceding the incident;
• Species identification or description of the animal(s) involved;
• Fate of the animal(s); and
• Photographs or video footage of the animal(s) (if equipment is available).
Activities would not resume until NMFS is able to review the circumstances of the prohibited take. NMFS would work with UniSea to determine what is necessary to minimize the likelihood of further prohibited take and ensure MMPA compliance. UniSea would not be able to resume their activities until notified by NMFS via letter, email, or telephone.
In the event that UniSea discovers an injured or dead marine mammal, and the lead MMO determines that the cause of the injury or death is unknown and the death is relatively recent (
The report would include the same information identified in the paragraph
In the event that UniSea discovers an injured or dead marine mammal, and the lead MMO determines that the injury or death is not associated with or related to the activities authorized in the IHA (
Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as: “. . . any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].”
All anticipated takes would be by Level B harassment, resulting from vibratory and impact pile driving and involving temporary changes in behavior. Based on the best available information, the proposed activities—vibratory and impact pile driving—would not result in serious injuries or mortalities to marine mammals even in the absence of the planned mitigation and monitoring measures. However, the proposed mitigation and monitoring measures are expected to minimize the potential for injury, such that take by Level A harassment is considered discountable.
If a marine mammal responds to a stimulus by changing its behavior (
This practice potentially overestimates the numbers of marine mammals taken, as it is often difficult to distinguish between the individual animals harassed and incidences of harassment. In particular, for stationary activities, it is more likely that some smaller number of individuals may accrue a number of incidences of harassment per individual than for each incidence to accrue to a new individual, especially if those individuals display some degree of residency or site fidelity and the impetus to use the site (
UniSea has requested authorization for the incidental taking of small numbers of Steller sea lions and harbor seals that may result from pile driving activities associated with the dock construction project described previously in this document. In order to estimate the potential incidents of take that may occur incidental to the specified activity, we must first estimate the extent of the sound field that may be produced by the activity and then incorporate information about marine mammal density or abundance in the project area. We first provide information on applicable sound thresholds for determining effects to marine mammals before describing the information used in estimating the sound fields, the available marine mammal density or abundance information, and the method of estimating potential incidences of take.
We use generic sound exposure thresholds to determine when an activity that produces sound might result in impacts to a marine mammal such that a “take” by harassment might occur. To date, no studies have been conducted that explicitly examine impacts to marine mammals from pile driving sounds or from which empirical sound thresholds have been established. These thresholds should be considered guidelines for estimating when harassment may occur (
This formula neglects loss due to scattering and absorption, which is assumed to be zero here. The degree to which underwater sound propagates away from a sound source is dependent on a variety of factors, most notably the water bathymetry and presence or absence of reflective or absorptive conditions including in-water structures and sediments. Spherical spreading occurs in a perfectly unobstructed (free-field) environment not limited by depth or water surface, resulting in a 6 dB reduction in sound level for each doubling of distance from the source (20*log[range]). Cylindrical spreading occurs in an environment in which sound propagation is bounded by the water surface and sea bottom, resulting in a reduction of 3 dB in sound level for each doubling of distance from the source (10*log[range]). A practical spreading value of fifteen is often used under conditions, such as Iliuliuk Harbor, where water depth increases as the receiver moves away from the shoreline, resulting in an expected propagation environment that would lie between spherical and cylindrical spreading loss conditions. Practical spreading loss (4.5 dB reduction in sound level for each doubling of distance) is assumed here.
Iliuliuk Harbor does not represent open water, or free field, conditions. Therefore, sounds would attenuate as they encounter land masses. As a result, and as described above, pile driving noise in the project area is not expected to propagate to the calculated distances for the 160 dB or 120 dB thresholds as shown in Table 5. See Appendix B of UniSea's IHA application for figures depicting the actual extents of areas in which each underwater sound threshold is predicted to occur at the project area due to pile driving, taking into account the attenuation provided by landmasses.
As discussed above regarding underwater sound from pile driving, the intensity of pile driving sounds is greatly influenced by factors such as the type of piles, hammers, and the physical environment in which the activity occurs. In order to determine reasonable airborne SPLs and their associated effects on marine mammals that are likely to result from pile driving at Iliuliuk Harbor, studies with similar properties to the proposed action, as described previously, were evaluated. UniSea used representative source levels of 100 dB Leq/rms at 22 m for vibratory removal and installation of a 24-inch steel pile and 100 dB Leq/rms at 26 m for impact driven 24-inch steel piles. Please see Section 5 of UniSea's application for details of the information considered. These values result in a disturbance zone (radial distance) of 3.16 m for harbor seals and 1.0 m for Steller sea lions. No data was found for the airborne sound levels expected from the installation of steel sheet piles or 18-inch steel piles, but sound levels from the installation of steel sheet piles and 18-inch steel piles are likely to be within a similar range as sound levels mentioned above.
Despite the modeled distances described above, no incidents of incidental take resulting solely from airborne sound are likely, as distances to the harassment thresholds would not reach areas where pinnipeds are known to haul out in the area of the project. Harbor seal haulout locations may change slightly depending on weather patterns, human disturbance, or prey availability, but the closest known harbor seal haulout to the project location is on the north side of Hog island, located west of Amaknak Island in Unalaska Bay, approximately 3 km from the G1 dock (pers. comm., L. Fritz, NMML, to J. Carduner, NMFS, Oct 30, 2015). Steller sea lions have greater site fidelity than harbor seals; the closest known Steller sea lion haulout is at Priest Rock, a point that juts into the Bering Sea on the northeastern corner of Unalaska Bay, approximately 20 km from the project site (pers. comm., L. Fritz, NMML, to J. Carduner, NMFS, Oct 30, 2015).
We recognize that pinnipeds in the water could be exposed to airborne
The most appropriate information available was used to estimate the number of potential incidences of take. Density estimates for Steller sea lions and harbor seals in Iliuliuk Harbor, and more broadly in the waters surrounding Unalaska Island, are not readily available. Likewise, we were not able to find any published literature or reports describing densities or estimating abundance of either species in the project area. As such, data collected from marine mammal surveys represent the best available information on the occurrence of both species in the project area.
Beginning in April 2015, UniSea personnel began conducting marine mammal surveys of Iliuliuk Harbor under the direction of an ecological consultant. Observers recorded data on all marine mammals that were observed, including Steller sea lions, whales, and harbor seals. Both stationary and roving observations occurred within a 1,000 m radius of the project site (see Figure 9 in the IHA application for a depiction of survey points and marine mammal observations). A combination of two of the stationary observation points were surveyed each day, for a total of 15 minutes at each point, and the roving route was checked once per day over a time span of 15 minutes, covering areas between the docks that were too difficult to see from the stationary points. The survey recorded the number of animals observed, the species, their primary activity, and any additional notes. From January through October 2015, a total of 323 Steller sea lions and 33 harbor seals were observed during 1,432 separate observations over the course of 358 hours of surveys. These surveys represent the most recent data on marine mammal occurrence in the harbor, and represent the only targeted marine mammal surveys of the project area that we are aware of.
Data from bird surveys of Iliuliuk Harbor conducted by the U.S. Army Corps of Engineers (USACE) from 2001-2007, which included observations of marine mammals in the harbor, were also available; however, we determined that these data were unreliable as a basis for prediction of marine mammal abundance in the project location as the goal of the USACE surveys was to develop a snapshot of waterfowl and seabird location and abundance in the harbor, thus the surveys would have been designed and carried out differently if the goal had been to document marine mammal use of the harbor (pers. comm., C. Hoffman, USACE, to J. Carduner, NMFS, October 26, 2015). Additionally, USACE surveys occurred only in winter; as Steller sea lion abundance is expected to vary significantly between the breeding and the non-breeding season in the project location, data that were collected only during the non-breeding season have limited utility in predicting year-round abundance. As such, we determined that the data from the surveys commissioned by UniSea in 2015 represents the best available information on marine mammals in the project location.
The take calculations presented here rely on the best data currently available for marine mammal populations in the project location. Density data for marine mammal species in the project location is not available. Therefore the data collected from marine mammal surveys of Iliuliuk Harbor in 2015 represent the best available information on marine mammal populations in the project location, and this data was used to estimate take. As such, the zones that have been calculated to contain the areas ensonified to the Level A and Level B thresholds for pinnipeds have been calculated for mitigation and monitoring purposes and were not used in the calculation of take. See Table 6 for total estimated incidents of take. Estimates were based on the following assumptions:
• All marine mammals estimated to be in areas ensonified by noise exceeding the Level B harassment threshold for impact and vibratory driving (as shown in Appendix B of the IHA application) are assumed to be in the water 100% of the time. This assumption is based on the fact that there are no haulouts or rookeries within the area predicted to be ensonified to the Level B harassment threshold based on modeling.
• Predicted exposures were based on total estimated total duration of pile driving/removal hours, which are estimated at 1,080 hours over the entire project. This estimate is based on a 180 day project time frame, an average work day of 12 hours (work days may be longer than 12 hours in summer and shorter than 12 hours in winter), and an estimate that approximately 50% of time during those work days will include pile driving and removal activities (with the other 50% of work days spent on non-pile driving activities which will not result in marine mammal take, such as installing templating and bracing, moving equipment, etc.).
• Vibratory or impact driving could occur at any time during the “duration” and our approach to take calculation assumes a rate of occurrence that is the same for any of the calculated zones.
• The hourly marine mammal observation rate recorded during marine mammal surveys of Iliuliuk Harbor in 2015 is reflective of the hourly rate that will be observed during the construction project.
• Takes were calculated based on estimated rates of occurrence for each species in the project area and this rate was assumed to be the same regardless of the size of the zone (for impact or vibratory driving/removal).
• Activities that may be accomplished by either impact driving or down-the-hole drilling (
Take estimates for Steller sea lions and harbor seals were calculated using the following series of steps:
1. The average hourly rate of animals observed during 2015 marine mammal surveys of Iliuliuk Harbor was calculated separately for both species (“Observation Rate”). Thus “Observation Rate” (OR) = No. of individuals observed/hours of observation;
2. The 95% confidence interval was calculated for the data set, and the upper bound of the 95% confidence interval was added to the Observation Rate to account for variability of the
3. The total estimated hours of pile driving work over the entire project was calculated, as described above (“Duration”); Thus “Duration” = total number of work days (180) * average work hours per day (12) * percentage of pile driving time during work days (0.5) = total work hours for the project (1,080); and
4. The estimated number of exposures was calculated by multiplying the “Duration” by the estimated “Exposure Rate” for each species. Thus, estimated takes = Duration * XR.
Please refer to Appendix G of the IHA application for a more thorough description of the statistical analysis of the observation data from marine mammal surveys.
Estimated take of Steller sea lions was calculated using the equations described above, as follows:
Thus we estimate that a total of 2,177 Steller sea lion takes will occur as a result of the proposed UniSea G1 dock construction project.
Estimated take of harbor seals was calculated using the equations described above, as follows:
Thus we estimate that a total of 385 harbor seal takes will occur as a result of the proposed UniSea G1 dock construction project (Table 6).
We therefore propose to authorize the take, by Level B harassment only, of a total of 2,177 Steller sea lions (western DPS) and 385 harbor seals (Aleutian Islands stock) as a result of the proposed construction project. These take estimates are considered reasonable estimates of the number of marine mammal exposures to sound above the Level B harassment threshold that are likely to occur over the course of the project, and not the number of individual animals exposed. For instance, for pinnipeds that associate fishing boats in Iliuliuk Harbor with reliable sources of food, there will almost certainly be some overlap in individuals present day-to-day depending on the number of vessels entering the harbor, however each instance of exposure for these individuals will be recorded as a separate, additional take. Moreover, because we anticipate that marine mammal observers will typically be unable to determine from field observations whether the same or different individuals are being exposed over the course of a workday, each observation of a marine mammal will be recorded as a new take, although an individual theoretically would only be considered as taken once in a given day.
NMFS has defined “negligible impact” in 50 CFR 216.103 as “. . .an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.” A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
Pile driving activities associated with the proposed dock construction project, as outlined previously, have the potential to disturb or displace marine mammals. Specifically, the specified activities may result in take, in the form of Level B harassment (behavioral disturbance) only, from underwater sounds generated from pile driving. Potential takes could occur if marine mammals are present in the ZOI when pile driving is happening, which is likely to occur because: (1) Steller sea lions have established haulouts near Iliuliuk Harbor and are frequently observed in Iliuliuk Harbor, in varying numbers depending on season and prey availability, and probably associate fishing boats entering the harbor with reliable food sources; and (2) harbor seals are observed in Iliuliuk Harbor occasionally and are known to haulout at sites outside the harbor, including one site approximately 3 km from the project location.
No serious injury or mortality of marine mammals would be anticipated as a result of vibratory and impact pile driving, regardless of mitigation and monitoring measures. Vibratory hammers do not have significant potential to cause injury to marine mammals due to the relatively low source levels produced (less than 180 dB rms) and the lack of potentially injurious source characteristics. Impact pile driving produces short, sharp pulses with higher peak levels than vibratory driving and much sharper rise time to reach those peaks. The potential for injury that may otherwise result from exposure to noise associated with impact pile driving will effectively be minimized through the implementation of the planned mitigation measures. These measures include: the implementation of a exclusion zone, which is expected to eliminate the likelihood of marine mammal exposure to noise at received levels that could result in injury; the use of “soft start” before pile driving, which is expected to provide marine mammals near or within the zone of potential injury with sufficient time to vacate the area; and the use of a sound attenuation system which is expected to dampen the sharp, potentially injurious peaks associated with impact driving and to reduce the overall source level to some extent (it is difficult to predict the extent of attenuation provided as underwater recordings have not been performed for the type of bubble curtain proposed for use). We believe the required mitigation measures, which have been successfully implemented in similar pile driving projects, will minimize the possibility of injury that may otherwise exist as a result of impact pile driving.
Effects on individuals that are taken by Level B harassment, on the basis of reports in the literature as well as monitoring from similar pile driving projects that have received incidental take authorizations from NMFS, will likely be limited to reactions such as increased swimming speeds, increased surfacing time, or decreased foraging. Most likely, individuals will simply move away from the sound source and be temporarily displaced from the area of pile driving (though even this reaction has been observed primarily in association with impact pile driving). In response to vibratory driving, harbor seals have been observed to orient towards and sometimes move towards the sound. Repeated exposures of individuals to levels of sound that may cause Level B harassment are unlikely to result in hearing impairment or to significantly disrupt foraging behavior. Thus, even repeated Level B harassment of some small subset of the overall stock is unlikely to result in any significant realized decrease in fitness to those individuals, and thus would not result in any adverse impact to the stock as a whole. Level B harassment will be reduced to the level of least practicable impact through use of mitigation measures described herein and, if sound produced by project activities is sufficiently disturbing, animals are likely to simply avoid the project area while the activity is occurring.
No pinniped rookeries or haul-outs are present within the project area, and the project area is not known to provide foraging habitat of any special importance to either Steller sea lions or harbor seals (other than is afforded by the migration of salmonids to and from Iliuliuk Stream and the occasional availability of discarded fish from commercial fishing boats and fish processing facilities in the project area). No cetaceans are expected within the project area. While we are not aware of comparable construction projects in the project location, the pile driving activities analyzed here are similar to other in-water construction activities that have received incidental harassment authorizations previously, including projects at Naval Base Kitsap Bangor in Hood Canal, Washington, and at the Port of Friday Harbor in the San Juan Islands, which have occurred with no reported injuries or mortalities to marine mammals, and no known long-term adverse consequences to marine mammals from behavioral harassment.
In summary, this negligible impact analysis is founded on the following factors: (1) The possibility of injury, serious injury, or mortality may reasonably be considered discountable; (2) the anticipated incidences of Level B harassment consist of, at worst, temporary modifications in behavior; (3) the absence of any major rookeries and only a few isolated haulout areas near the project site; (4) the absence of any other known areas or features of special significance for foraging or reproduction within the project area; and (5) the presumed efficacy of planned mitigation measures in reducing the effects of the specified activity to the level of least practicable impact. In combination, we believe that these factors, as well as the available body of evidence from other similar activities, demonstrate that the potential effects of the specified activity will have only short-term effects on individual animals. The specified activity is not expected to impact rates of recruitment or survival and will therefore not result in population-level impacts. Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the proposed monitoring and mitigation measures, we preliminarily find that the total marine mammal take from UniSea's dock construction activities in Iliuliuk Harbor will have a negligible impact on the affected marine mammal species or stocks.
The numbers of animals authorized to be taken would be considered small relative to the relevant stocks or populations (4 percent and 11 percent for Steller sea lions and harbor seals, respectively) even if each estimated taking occurred to a new individual. However, the likelihood that each take would occur to a new individual is extremely low. As described above, for those sea lions that associate fishing boats with reliable sources of food, there will almost certainly be some overlap in individuals present day-to-day depending on the number of vessels entering the harbor. It is expected that operations at a separate, nearby UniSea dock and the associated UniSea processing facilities, as well as at seafood processing facilities owned by other companies based in Iliuliuk Harbor, will continue as usual during construction on the G1 dock, so it is likely that sea lions accustomed to seeking food at these facilities will continue to be attracted to the area during portions of the construction activities.
Further, these takes are likely to occur only within some small portion of the overall regional stock. For example, of the estimated 55,422 western DPS Steller sea lions throughout Alaska, there are probably no more than 300 individuals with site fidelity to the three haulouts located nearest to the project location, based on over twenty years of NMML survey data (see “Description of Marine Mammals in the Area of the Specified Activity” above). For harbor seals, NMML survey data suggest there are likely no more than 60 individuals that use the three haulouts nearest to the project location (the only haulouts in Unalaska Bay). Thus the estimate of take is an estimate of the number of anticipated exposures, rather than an estimate of the number of individuals that will be taken, as we expect the majority of exposures would be repeat exposures that would accrue to the same individuals. As such, the authorized takes would represent a much smaller number of individuals of both Steller sea lions and harbor seals, in relation to total stock sizes.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the mitigation and monitoring measures, we preliminarily find that small numbers of marine mammals will be taken relative to the populations of the affected species or stocks.
Subsistence hunting and fishing is an important part of the history and culture of Unalaska Island. However, the number of Steller sea lions and harbor seals harvested in Unalaska decreased from 1994 through 2008; in 2008, the last year for which data is available, there were no Steller sea lions or harbor seals reported as harvested for subsistence use. Data on pinnipeds hunted for subsistence use in Unalaska has not been collected since 2008. For a summary of data on pinniped harvests in Unalaska from 1994-2008, see Section 8 of the IHA application.
Aside from the apparently decreasing rate of subsistence hunting in Unalaska, Iliuliuk Harbor is not likely to be used for subsistence hunting or fishing due to its industrial nature, with several fish processing facilities located along the shoreline of the harbor. In addition, the proposed construction project is likely to result only in short-term, temporary impacts to pinnipeds in the form of possible behavior changes, and is not expected to result in the injury or death of any marine mammal. As such, the proposed project is not likely to adversely impact the availability of any marine mammal species or stocks that may otherwise be used for subsistence purposes.
There is one marine mammal species (western DPS Steller sea lion) with confirmed occurrence in the project area that is listed as endangered under the ESA. The NMFS Permits and Conservation Division has initiated consultation with the NMFS Alaska Regional Office Protected Resources Division under section 7 of the ESA on the issuance of an IHA to UniSea under section 101(a)(5)(D) of the MMPA for this activity. Consultation will be concluded prior to a determination on the issuance of an IHA.
As a result of these preliminary determinations, we propose to issue an IHA to UniSea, Inc., to conduct the described dock construction activities in Iliuliuk Harbor, from March 1, 2016 through February 28, 2017, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. The proposed IHA language is provided next.
This section contains a draft of the IHA itself. The wording contained in this section is proposed for inclusion in the IHA (if issued).
1. This Incidental Harassment Authorization (IHA) is valid from March 1, 2016 through February 28, 2017.
2. This IHA is valid only for pile driving and removal activities associated with construction of the UniSea G1 dock in Iliuliuk Harbor, Unalaska, AK.
3. General Conditions
(a) A copy of this IHA must be in the possession of UniSea, its designees, and work crew personnel operating under the authority of this IHA.
(b) The species authorized for taking are the harbor seal (
(c) The taking, by Level B harassment only, is limited to the species listed in condition 3(b). See Table 6 in the proposed IHA authorization for numbers of take authorized.
(d) The taking by injury (Level A harassment), serious injury, or death of any of the species listed in condition 3(b) of the Authorization or any taking of any other species of marine mammal is prohibited and may result in the modification, suspension, or revocation of this IHA.
(e) UniSea shall conduct briefings between construction supervisors and crews, marine mammal monitoring team, and UniSea staff prior to the start of all pile driving activity, and when new personnel join the work, in order to explain responsibilities, communication procedures, marine mammal monitoring protocol, and operational procedures.
4. Mitigation Measures
The holder of this Authorization is required to implement the following mitigation measures:
(a) During impact and vibratory pile driving and removal, and down-the-hole drilling, UniSea shall implement a minimum shutdown zone of 10 m radius around the pile being driven or removed, to be effective for marine mammals. If a marine mammal comes within the relevant zone, such operations shall cease.
(b) UniSea shall establish monitoring locations as described in the Marine Mammal Monitoring Plan (Monitoring Plan; attached). For all pile driving and removal activities, a minimum of two observers shall be on duty, in addition to a monitoring coordinator. The primary responsibility of one of these observers shall be to monitor the shutdown zone, while the additional observer shall be positioned for optimal monitoring of the surrounding waters within Iliuliuk Harbor. These observers shall record all observations of marine mammals, regardless of distance from the pile being driven, as well as
(c) Monitoring shall take place from fifteen minutes prior to initiation of pile driving activity or down-the-hole drilling activity through thirty minutes post-completion of such activity. Pre-activity monitoring shall be conducted for fifteen minutes to ensure that the exclusion zone is clear of marine mammals, and pile driving or down-the-hole drilling may commence when observers have declared the exclusion zone clear of marine mammals. In the event of a delay or shutdown of activity resulting from marine mammals in the exclusion zone, animals shall be allowed to remain in the exclusion zone (
(d) If a marine mammal approaches or enters the exclusion zone, all pile driving or down-the-hole drilling activities shall be halted. If pile driving is halted or delayed due to the presence of a marine mammal, the activity may not commence or resume until either the animal has voluntarily left and been visually confirmed beyond the exclusion zone, or fifteen minutes have passed without re-detection of the animal.
(e) Monitoring shall be conducted by qualified observers, as described in the Monitoring Plan. Trained observers shall be placed from the best vantage point(s) practicable (
(f) UniSea shall use sound attenuation devices during impact pile driving operations.
(g) UniSea shall use soft start techniques recommended by NMFS for vibratory and impact pile driving. Soft start for vibratory drivers requires contractors to initiate sound for fifteen seconds at reduced energy followed by a thirty-second waiting period. This procedure is repeated two additional times. Soft start for impact drivers requires contractors to provide an initial set of strikes at reduced energy, followed by a one minute waiting period, then two subsequent reduced energy strike sets. Soft start shall be implemented at the start of each day's pile driving and at any time following cessation of pile driving for a period of thirty minutes or longer. UniSea may discontinue use of vibratory soft starts if unsafe working conditions believed to result from implementation of the measure are reported by the contractor, verified by an independent safety inspection, and reported to NMFS.
(h) In case of fog or reduced visibility, observers must be able to see the entire shutdown zone, or pile driving/removal will not be initiated until visibility in the zone improves to acceptable levels.
5. Monitoring
The holder of this Authorization is required to conduct marine mammal monitoring during pile driving activity. Marine mammal monitoring and reporting shall be conducted in accordance with the Monitoring Plan.
(a) UniSea shall collect sighting data and behavioral responses to pile driving/removal for marine mammal species observed in the region of activity during the period of activity. All observers shall be trained in marine mammal identification and behaviors, and shall have no other construction related tasks while conducting monitoring.
(b) For all marine mammal monitoring, the information shall be recorded as described in the Monitoring Plan.
6. Reporting
The holder of this Authorization is required to:
(a) Submit a draft report on all marine mammal monitoring conducted under the IHA within 90 calendar days of the end of the in-water work period, or within 45 calendar days of the renewal of the IHA (if applicable). A final report shall be prepared and submitted within thirty days following resolution of comments on the draft report from NMFS. This report must contain the informational elements described in the Monitoring Plan, at minimum (see attached).
(b) Reporting injured or dead marine mammals:
i. In the unanticipated event that the specified activity clearly causes the take of a marine mammal in a manner prohibited by this IHA (as determined by the lead observer), such as an injury (Level A harassment), serious injury, or mortality, UniSea shall immediately cease the specified activities and report the incident to the Office of Protected Resources, NMFS, and the Alaska Regional Stranding Coordinator, NMFS. The report must include the following information:
A. Time and date of the incident;
B. Description of the incident;
C. Environmental conditions (
D. Description of all marine mammal observations in the 24 hours preceding the incident;
E. Species identification or description of the animal(s) involved;
F. Fate of the animal(s); and
G. Photographs or video footage of the animal(s).
Activities shall not resume until NMFS is able to review the circumstances of the prohibited take. NMFS will work with UniSea to determine what measures are necessary to minimize the likelihood of further prohibited take and ensure MMPA compliance. UniSea may not resume their activities until notified by NMFS.
i. In the event that UniSea discovers an injured or dead marine mammal, and the lead observer determines that the cause of the injury or death is unknown and the death is relatively recent (
The report must include the same information identified in 6(b)(i) of this IHA. Activities may continue while NMFS reviews the circumstances of the incident and makes a final determination on the cause of the reported injury or death. NMFS will work with UniSea to determine whether additional mitigation measures or modifications to the activities are appropriate.
ii. In the event that UniSea discovers an injured or dead marine mammal, and the lead observer determines that the injury or death is not associated with or related to the activities authorized in the IHA (
7. This Authorization may be modified, suspended or withdrawn if the holder fails to abide by the conditions prescribed herein, or if NMFS determines that the authorized taking is having more than a negligible impact on the species or stock of affected marine mammals.
We request comment on our analysis, the draft authorization, and any other aspect of this Notice of Proposed IHA for UniSea's dock construction activities. Please include with your comments any supporting data or literature citations to help inform our final decision on UniSea's request for an MMPA authorization.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; proposed incidental harassment authorization; request for comments.
NMFS (hereinafter, “we” or “our”) received an application from the U.S. Department of the Air Force, Headquarters 96th Air Base Wing (Air Force), Eglin Air Force Base (Eglin AFB), requesting an Incidental Harassment Authorization (Authorization) to take marine mammals, by harassment, incidental to a Maritime Weapon Systems Evaluation Program (Maritime WSEP) within a section of the Eglin Gulf Test and Training Range in the northern Gulf of Mexico.
Eglin AFB's activities are military readiness activities per the Marine Mammal Protection Act (MMPA), as amended by the National Defense Authorization Act (NDAA) for Fiscal Year 2004. Per the MMPA, NMFS requests comments on its proposal to issue an Authorization to Eglin AFB to incidentally take, by Level B and Level A harassment, two species of marine mammals, the Atlantic bottlenose dolphin (
NMFS must receive comments and information no later than January 22, 2016.
Address comments on the application to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service, 1315 East-West Highway, Silver Spring, MD 20910. The mailbox address for providing email comments is
Instructions: All submitted comments are a part of the public record, and generally we will post them to
To obtain an electronic copy of the 2015 renewal request, the 2014 application, a list of the references used in this document, and Eglin AFB's Environmental Assessment (EA) titled, “Maritime Weapons System Evaluation Program,” write to the previously mentioned address, telephone the contact listed here (see
Jeannine Cody, Office of Protected Resources, NMFS, (301) 427-8401.
Sections 101(a)(5)(A) and (D) of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
An Authorization for incidental takings for marine mammals shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring, and reporting of such taking are set forth. NMFS has defined “negligible impact” in 50 CFR 216.103 as “an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.”
The National Defense Authorization Act of 2004 (NDAA; Public Law 108-136) removed the “small numbers” and “specified geographical region” limitations indicated earlier and amended the definition of harassment as it applies to a “military readiness activity” to read as follows (Section 3(18)(B) of the MMPA): (i) Any act that injures or has the significant potential to injure a marine mammal or marine mammal stock in the wild [Level A Harassment]; or (ii) any act that disturbs or is likely to disturb a marine mammal or marine mammal stock in the wild by causing disruption of natural behavioral patterns, including, but not limited to, migration, surfacing, nursing, breeding, feeding, or sheltering, to a point where such behavioral patterns are abandoned or significantly altered [Level B Harassment].
On February 5, 2015, we issued an Authorization to Eglin AFB to take marine mammals, by harassment, incidental to a Maritime Weapon Systems Evaluation Program (Maritime WSEP) within the Eglin Gulf Test and Training Range (EGTTR) in the Gulf of Mexico from February through April 2015 (see 80 FR 17394, April 1, 2015). Eglin AFB conducted the Maritime WSEP training activities between February 9-12, and March 16-19, 2015. However, due to unavailability of some of the live munitions, Eglin AFB released only 1.05 percent of the munitions proposed for the 2015 military readiness activities. On May 28, 2015, we received a renewal request for an Authorization from Eglin AFB to complete the missions authorized in 2015. Following the initial application submission, Eglin AFB submitted a revised version of the renewal request on December 3, 2015. We considered the revised renewal request as adequate and complete on December 10, 2015.
Eglin AFB proposes to conduct Maritime WESP missions within the EGTTR airspace over the Gulf of
Eglin AFB proposes to use multiple types of live munitions (
The following aspects of the proposed Maritime WSEP training activities have the potential to take marine mammals: Exposure to impulsive noise and pressure waves generated by live ordnance detonation at or near the surface of the water. Take, by Level B harassment of individuals of common bottlenose dolphin or Atlantic spotted dolphin could potentially result from the specified activity. Additionally, although NMFS does not expect it to occur, Eglin AFB has also requested authorization for Level A Harassment of up to 38 individuals of either common bottlenose dolphins or Atlantic spotted dolphins. Therefore, Eglin AFB has requested authorization to take individuals of two cetacean species by Level A and Level B harassment.
Eglin AFB's Maritime WSEP training activities may potentially impact marine mammals at or near the water surface in the absence of mitigation. Marine mammals could potentially be harassed, injured, or killed by exploding and non-exploding projectiles, and falling debris. However, based on analyses provided in Eglin AFB's 2015 Authorization renewal request; 2014 application; 2015 Environmental Assessment (EA); the 2015 monitoring report for the authorized activities conducted in February and March 2015; and for reasons discussed later in this document, we do not anticipate that Eglin AFB's Maritime WSEP activities would result in any serious injury or mortality to marine mammals.
For Eglin AFB, this would be the second such Authorization, if issued, following the Authorization issued effective from February through April 2015 (80 FR 17394, April 1, 2015). The monitoring report associated with the 2015 Authorization is available at
Eglin AFB proposes to conduct live ordnance testing and training in the Gulf of Mexico as part of the Maritime WSEP operational testing missions. The Maritime WSEP test objectives are to evaluate maritime deployment data, evaluate tactics, techniques and procedures, and to determine the impact of techniques and procedures on combat Air Force training. The need to conduct this type of testing has developed in response to increasing threats at sea posed by operations conducted from small boats which can carry a variety of weapons; can form in large or small numbers; and may be difficult to locate, track, and engage in the marine environment. Because of limited Air Force aircraft and munitions testing on engaging and defeating small boat threats, Eglin AFB proposes to employ live munitions against boat targets in the EGTTR in order to continue development of techniques and procedures to train Air Force strike aircraft to counter small maneuvering surface vessels. Thus, the Department of Defense considers the Maritime WSEP training activities as a high priority for national security.
Eglin AFB proposes to schedule the Maritime WSEP training missions over an approximate three-week period that would begin in early February 2016. The proposed missions would occur in the spring, on weekdays, during daytime hours only, with one or two missions occurring per day. Some minor deviation from Eglin AFB's requested dates is possible and the proposed Authorization, if issued, would be effective from February 4, 2016 through February 3, 2017.
The specific planned mission location is approximately 17 miles (mi) (27.3 kilometers [km]) offshore from Santa Rosa Island, Florida, in nearshore waters of the continental shelf in the Gulf of Mexico. All activities would take place within the EGTTR, defined as the airspace over the Gulf of Mexico controlled by Eglin AFB, beginning at a point three nautical miles (nmi) (3.5 miles [mi]; 5.5 kilometers [km]) from shore. The EGTTR consists of subdivided blocks including Warning Area 151 (W-151) where the proposed activities would occur, specifically in sub-area W-151A shown (Figure 1).
The Maritime WSEP training missions, classified as military readiness activities, include the release of multiple types of inert and live munitions from fighter and bomber aircraft, unmanned aerial vehicles, and gunships against small, static, towed, and remotely-controlled boat targets. Munition types include bombs, missiles, rockets, and gunnery rounds (Table 1).
The proposed Maritime WSEP training activities involve detonations above the water, near the water surface, and under water within the EGTTR. However, because the tests will focus on weapons/target interaction, Eglin AFB will not specify a particular aircraft for a given test as long as it meets the delivery parameters.
Eglin AFB would deploy the munitions against static, towed, and remotely-controlled boat targets within the W-151A. Eglin AFB would operate the remote-controlled boats from an
Table 2 lists the number, height, or depth of detonation, explosive material, and net explosive weight (NEW) in pounds (lbs) of each munition proposed for use during the Maritime WSEP activities.
At least two ordnance delivery aircraft will participate in each live weapons release training mission which lasts approximately four hours. Before delivering the ordnance, mission aircraft would make a dry run over the target area to ensure that it is clear of commercial and recreational boats. Jets will fly at a minimum air speed of 300 knots (approximately 345 miles per hour, depending on atmospheric conditions) and at a minimum altitude of 305 m (1,000 ft). Due to the limited flyover duration and potentially high speed and altitude, the pilots would not participate in visual surveys for protected species. Eglin AFB's 2015 renewal request, 2014 application for the same activities, and 2015 EA, which is available upon request (see
Table 3 lists marine mammal species with potential or confirmed occurrence in the proposed activity area during the project timeframe and summarizes key information regarding stock status and abundance. Please see NMFS' draft 2015 and 2014 Stock Assessment Reports (SAR), available at
An additional 19 cetacean species could occur within the northeastern Gulf of Mexico, mainly occurring at or beyond the shelf break (
Of these species, only the sperm whale is listed as endangered under the ESA and as depleted throughout its range under the MMPA. Sperm whale occurrence within W-151A is unlikely because almost all reported sightings have occurred in water depths greater than 200 m (656.2 ft).
Because these species are unlikely to occur within the W-151A area, Eglin AFB has not requested and NMFS has not proposed the issuance of take authorizations for them. Thus, NMFS does not consider these species further in this notice.
We have reviewed Eglin AFB's species descriptions, including life history information, distribution, regional distribution, diving behavior, and acoustics and hearing, for accuracy and completeness. We refer the reader to Sections 3 and 4 of Eglin AFB's 2014 Authorization application and to Chapter 3 in Eglin AFB's EA rather than reprinting the information here.
The endangered West Indian manatee (
This section includes a summary and discussion of the ways that components (
In the following discussion, we provide general background information on sound and marine mammal hearing before considering potential effects to marine mammals from sound produced by underwater detonations.
Sound travels in waves, the basic components of which are frequency, wavelength, velocity, and amplitude. Frequency is the number of pressure waves that pass by a reference point per unit of time and is measured in hertz (Hz) or cycles per second. Wavelength is the distance between two peaks of a sound wave; lower frequency sounds have longer wavelengths than higher frequency sounds and attenuate (decrease) more rapidly in shallower water. Amplitude is the height of the sound pressure wave or the “loudness” of a sound and is typically measured using the decibel (dB) scale. A dB is the ratio between a measured pressure (with sound) and a reference pressure (sound at a constant pressure, established by scientific standards). It is a logarithmic unit that accounts for large variations in amplitude; therefore, relatively small changes in dB ratings correspond to large changes in sound pressure. When referring to sound pressure levels (SPLs; the sound force per unit area), sound is referenced in the context of underwater sound pressure to 1 microPascal (μPa). One pascal is the pressure resulting from a force of one newton exerted over an area of one square meter. The source level (SL) represents the sound level at a distance of 1 m from the source (referenced to 1 μPa). The received level is the sound level at the listener's position. Note that we reference all underwater sound levels in this document to a pressure of 1 μPa.
Root mean square (rms) is the quadratic mean sound pressure over the duration of an impulse. Acousticians calculate rms by squaring all of the sound amplitudes, averaging the squares, and then taking the square root of the average (Urick, 1983). Rms accounts for both positive and negative values; squaring the pressures makes all values positive so that one can account for the values in the summation of pressure levels (Hastings and Popper, 2005). Researchers often use this measurement in the context of discussing behavioral effects, in part because behavioral effects, which often result from auditory cues, may be better expressed through averaged units than by peak pressures.
The sounds produced by the proposed WSEP activities fall into one of two general sound types: Impulsive (defined in the following) and non-pulsed. The distinction between these two sound types is important because they have differing potential to cause physical effects, particularly with regard to hearing (
Impulsive sound sources (
When considering the influence of various kinds of sound on the marine environment, it is necessary to understand that different kinds of marine life are sensitive to different frequencies of sound. Current data indicate that not all marine mammal species have equal hearing capabilities (Richardson
Southall
The functional groups and the associated frequencies are:
• Low frequency cetaceans (13 species of mysticetes): Functional hearing estimates occur between approximately 7 Hertz (Hz) and 25 kilohertz (kHz) (extended from 22 kHz based on data indicating that some mysticetes can hear above 22 kHz; Au
• Mid-frequency cetaceans (32 species of dolphins, six species of larger toothed whales, and 19 species of beaked and bottlenose whales): Functional hearing estimates occur between approximately 150 Hz and 160 kHz;
• High-frequency cetaceans (porpoises, river dolphins, and members of the genera
• Pinnipeds in water: Functional hearing is estimated to occur between approximately 75 Hz to 100 kHz for Phocidae (true seals) and between 100 Hz and 40 kHz for Otariidae (eared seals), with the greatest sensitivity between approximately 700 Hz and 20 kHz. The pinniped functional hearing group was modified from Southall
There are two marine mammal species (two cetaceans, the common bottlenose dolphin and the Atlantic spotted dolphin) with expected potential to co-occur with Eglin AFB WSEP military readiness activities. Please refer to Table 3 for information on these mid-frequency hearing specialists.
Sounds emitted by common bottlenose dolphins fall into two broad categories: Pulsed sounds (including clicks and burst-pulses) and narrow-band continuous sounds (whistles), which usually are frequency modulated. Clicks have a dominant frequency range of 110 to 130 kHz and a source level of 218 to 228 dB re: 1 μPa (peak-to-peak) (Au, 1993) and 3.4 to 14.5 kHz at 125 to 173 dB re 1 μPa (peak-to-peak) (Ketten, 1998). Whistles are primarily associated with communication and can serve to identify specific individuals (
The Maritime WSEP training exercises proposed for the incidental take of marine mammals have the potential to take marine mammals by exposing them to impulsive noise and pressure waves generated by live ordnance detonation at or near the surface of the water. Exposure to energy, pressure, or direct strike by ordnance has the potential to result in non-lethal injury (Level A harassment), disturbance (Level B harassment), serious injury, and/or mortality. In addition, NMFS also considered the potential for harassment from vessel and aircraft operations.
Underwater explosive detonations send a shock wave and sound energy through the water and can release gaseous by-products, create an oscillating bubble, or cause a plume of water to shoot up from the water surface. The shock wave and accompanying noise are of most concern to marine animals. Depending on the intensity of the shock wave and size, location, and depth of the animal, an animal can be injured, killed, suffer non-lethal physical effects, experience hearing related effects with or without behavioral responses, or exhibit temporary behavioral responses or tolerance from hearing the blast sound. Generally, exposures to higher levels of
The effects of underwater detonations on marine mammals are dependent on several factors, including the size, type, and depth of the animal; the depth, intensity, and duration of the sound; the depth of the water column; the substrate of the habitat; the standoff distance between activities and the animal; and the sound propagation properties of the environment. Thus, we expect impacts to marine mammals from WSEP activities to result primarily from acoustic pathways. As such, the degree of the effect relates to the received level and duration of the sound exposure, as influenced by the distance between the animal and the source. The further away from the source, the less intense the exposure should be.
The potential effects of underwater detonations from the proposed WSEP training activities may include one or more of the following: Temporary or permanent hearing impairment, non-auditory physical or physiological effects, behavioral disturbance, and masking (Richardson
In the absence of mitigation, impacts to marine species could result from physiological and behavioral responses to both the type and strength of the acoustic signature (Viada
Given the available data, the received level of a single pulse (with no frequency weighting) might need to be approximately 186 dB re 1 μPa2-s (
The above TTS information for odontocetes is derived from studies on the bottlenose dolphin and beluga whale (
Relationships between TTS and PTS thresholds have not been studied in marine mammals, but they are assumed to be similar to those in humans and other terrestrial mammals. PTS might occur at a received sound level at least several decibels above that inducing mild TTS if the animal were exposed to strong sound pulses with rapid rise time. There is no empirical data for onset of PTS in any marine mammal for ethical reasons and researchers must extrapolate PTS-onset based on hearing loss growth rates (
Adverse Stress Responses: An acoustic source is considered a potential stressor if, by its action on the animal, via auditory or non-auditory means, it may produce a stress response in the animal. Here, the stress response will refer to an increase in energetic expenditure that results from exposure to the stressor and which is predominantly characterized by either the stimulation of the sympathetic nervous system (SNS) or the hypothalamic-pituitary-adrenal (HPA) axis (Reeder and Kramer, 2005). The SNS response to a stressor is immediate and acute and occurs by the release of the catecholamine neurohormones norepinephrine and epinephrine (
Serious Injury/Mortality: Elgin AFB proposes to use several types of explosive sources during its training exercises. Proposed detonations could be either in air, at the water surface, or underwater, depending on the mission and type of munition. Airburst detonations have little transfer of energy underwater, but surface and underwater detonations are of most concern regarding potential effects to marine mammals. The underwater explosions from these weapons would send a shock wave and blast noise through the water, release gaseous by-products, create an oscillating bubble, and cause a plume of water to shoot up from the water surface. The shock wave and blast noise are of most concern to marine animals. In general, potential impacts from explosive detonations can range from brief effects (such as short term behavioral disturbance), tactile perception, physical discomfort, slight injury of the internal organs, and death of the animal (Yelverton
Non-lethal injury includes slight injury to internal organs and the auditory system; however, delayed lethality can be a result of individual or cumulative sublethal injuries (DoN, 2001). Immediate lethal injury would be a result of massive combined trauma to internal organs as a direct result of proximity to the point of detonation (DoN, 2001).
Disturbance includes a variety of effects, including subtle changes in behavior, more conspicuous changes in activities, and displacement. Behavioral responses to sound are highly variable and context-specific and reactions, if any, depend on species, state of maturity, experience, current activity, reproductive state, auditory sensitivity, time of day, and many other factors (Richardson
Tolerance: Studies on marine mammals' tolerance to sound in the natural environment are relatively rare. Richardson
The opposite process is sensitization, when an unpleasant experience leads to subsequent responses, often in the form of avoidance, at a lower level of exposure. Behavioral state may affect the type of response as well. For example, animals that are resting may show greater behavioral change in response to disturbing sound levels than animals that are highly motivated to remain in an area for feeding (Richardson
Numerous studies have shown that underwater sounds are often readily detectable by marine mammals in the water at distances of many kilometers. However, other studies have shown that marine mammals at distances more than a few kilometers away often show no apparent response to activities of various types (Miller
Controlled experiments with captive marine mammals showed pronounced behavioral reactions, including avoidance of loud sound sources (Ridgway
Because the few available studies show wide variation in response to underwater sound, it is difficult to quantify exactly how sound from the Maritime WSEP operational testing would affect marine mammals. It is likely that the onset of underwater detonations could result in temporary, short term changes in an animal's typical behavior and/or avoidance of the affected area. These behavioral changes may include (Richardson
The biological significance of any of these behavioral disturbances is difficult to predict, especially if the detected disturbances appear minor. However generally, one could expect the consequences of behavioral modification to be biologically significant if the change affects growth, survival, or reproduction. Significant behavioral modifications that could potentially lead to effects on growth, survival, or reproduction include:
• Drastic changes in diving/surfacing patterns (such as those thought to cause beaked whale stranding due to exposure to military mid-frequency tactical sonar);
• Habitat abandonment due to loss of desirable acoustic environment; and
• Cessation of feeding or social interaction.
The onset of behavioral disturbance from anthropogenic sound depends on both external factors (characteristics of sound sources and their paths) and the specific characteristics of the receiving animals (hearing, motivation, experience, demography) and is difficult to predict (Southall
Natural and artificial sounds can disrupt behavior by masking, or interfering with, a marine mammal's ability to hear other sounds. Masking occurs when the receipt of a sound interferes with by another coincident sound at similar frequencies and at similar or higher levels (Clark
Introduced underwater sound may, through masking, more specifically reduce the effective communication distance of a marine mammal species if the frequency of the source is close to that used as a signal by the marine mammal, and if the anthropogenic sound is present for a significant fraction of the time (Richardson
While it may occur temporarily, we do not expect auditory masking to result in detrimental impacts to an individual's or population's survival, fitness, or reproductive success. Dolphin movement is not restricted within the W-151 test area, allowing for movement out of the area to avoid masking impacts and the sound resulting from the underwater detonations is short in duration. Also, masking is typically of greater concern for those marine mammals that utilize low frequency communications, such as baleen whales and, as such, is not likely to occur for marine mammals in the W-151 test area.
The marine mammals most vulnerable to vessel strikes are slow-moving and/or spend extended periods of time at the surface in order to restore oxygen levels within their tissues after deep dives (
Dolphins within the Gulf of Mexico are continually exposed to recreational, commercial, and military vessels. Behaviorally, marine mammals may or may not respond to the operation of vessels and associated noise. Responses to vessels vary widely among marine mammals in general, but also among different species of small cetaceans. Responses may include attraction to the vessel (Richardson
Aircraft produce noise at frequencies that are well within the frequency range of cetacean hearing and also produce visual signals such as the aircraft itself and its shadow (Richardson
There are fewer reports of reactions of odontocetes to aircraft than those of pinnipeds. Responses to aircraft include diving, slapping the water with pectoral fins or tail fluke, or swimming away from the track of the aircraft (Richardson
Another potential risk to marine mammals is direct strike by ordnance, in which the ordnance physically hits an animal. While strike from an item falling through the water column is possible, the potential risk of a direct hit to an animal within the target area would be so low because objects sink slowly and most projectiles fired at targets usually hit those targets.
Detonations of live ordnance would result in temporary changes to the water environment. Munitions could hit the targets and not explode in the water. However, because the targets are located over the water, in water explosions could occur. An underwater explosion from these weapons could send a shock wave and blast noise through the water, release gaseous by-products, create an oscillating bubble, and cause a plume of water to shoot up from the water surface. However, these effects would be temporary and not expected to last more than a few seconds.
Similarly, Eglin AFB does not expect any long-term impacts with regard to hazardous constituents to occur. Eglin AFB considered the introduction of fuel, debris, ordnance, and chemical materials into the water column within its EA and determined the potential effects of each to be insignificant. We summarize Eglin AFB's analyses in the following paragraphs (for a complete discussion of potential effects, please refer to section 3.3 in Eglin AFB's EA).
Metals typically used to construct bombs, missiles, and gunnery rounds include copper, aluminum, steel, and lead, among others. Aluminum is also present in some explosive materials. These materials would settle to the seafloor after munitions detonate. Metal ions would slowly leach into the substrate and the water column, causing elevated concentrations in a small area around the munitions fragments. Some of the metals, such as aluminum, occur naturally in the ocean at varying concentrations and would not necessarily impact the substrate or water column. Other metals, such as lead, could cause toxicity in microbial communities in the substrate. However, such effects would be localized to a very small distance around munitions fragments and would not significantly affect the overall habitat quality of sediments in the northeastern Gulf of Mexico. In addition, metal fragments would corrode, degrade, and become encrusted over time.
Chemical materials include explosive byproducts and also fuel, oil, and other fluids associated with remotely controlled target boats. Explosive byproducts would be introduced into the water column through detonation of live munitions. Explosive materials would include 2,4,6-trinitrotoluene (TNT) and RDX, among others. Various byproducts are produced during and immediately after detonation of TNT and RDX. During the very brief time that a detonation is in progress, intermediate products may include carbon ions, nitrogen ions, oxygen ions, water, hydrogen cyanide, carbon monoxide, nitrogen gas, nitrous oxide, cyanic acid, and carbon dioxide (Becker, 1995). However, reactions quickly occur between the intermediates, and the final products consist mainly of water, carbon monoxide, carbon dioxide, and nitrogen gas, although small amounts of other compounds are typically produced as well.
Chemicals introduced into the water column would be quickly dispersed by waves, currents, and tidal action, and eventually become uniformly distributed. A portion of the carbon compounds such as carbon monoxide and carbon dioxide would likely become integrated into the carbonate system (alkalinity and pH buffering capacity of seawater). Some of the nitrogen and carbon compounds, including petroleum products, would be metabolized or assimilated by phytoplankton and bacteria. Most of the gas products that do not react with the water or become assimilated by organisms would be released into the atmosphere. Due to dilution, mixing, and transformation, none of these chemicals are expected to have significant impacts on the marine environment.
Explosive material that is not consumed in a detonation could sink to the substrate and bind to sediments. However, the quantity of such materials is expected to be inconsequential. Research has shown that if munitions function properly, nearly full combustion of the explosive materials will occur, and only extremely small amounts of raw material will remain. In addition, any remaining materials would be naturally degraded. TNT decomposes when exposed to sunlight (ultraviolet radiation), and is also degraded by microbial activity (Becker, 1995). Several types of microorganisms have been shown to metabolize TNT. Similarly, RDX decomposes by hydrolysis, ultraviolet radiation exposure, and biodegradation.
While we anticipate that the specified activity may result in marine mammals avoiding certain areas due to temporary ensonification, this impact to habitat and prey resources would be temporary and reversible. The main impact associated with the proposed activity would be temporarily elevated noise levels and the associated direct effects on marine mammals, previously discussed in this notice. Marine mammals are anticipated to temporarily vacate the area of live fire events. However, these events usually do not last more than 90 to 120 minutes at a time, and animals are anticipated to
In order to issue an incidental take authorization under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to such activity, and other means of effecting the least practicable adverse impact on such species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and the availability of such species or stock for taking for certain subsistence uses (where relevant).
The NDAA of 2004 amended the MMPA as it relates to military-readiness activities and the incidental take authorization process such that “least practicable adverse impact” shall include consideration of personnel safety, practicality of implementation, and impact on the effectiveness of the military readiness activity.
NMFS and Eglin AFB have worked to identify potential practicable and effective mitigation measures, which include a careful balancing of the likely benefit of any particular measure to the marine mammals with the likely effect of that measure on personnel safety, practicality of implementation, and impact on the “military-readiness activity.” We refer the reader to Section 11 of Eglin AFB's application for more detailed information on the proposed mitigation measures which include the following:
Trained protected species observers would be aboard five of these boats and will conduct protected species surveys before and after each test. The protected species survey vessels will be dedicated solely to observing for marine species during the pre-mission surveys while the remaining safety boats clear the area of non-authorized vessels. The protected species survey vessels will begin surveying the area at sunrise. The area to be surveyed will encompass the zone of influence (ZOI), which is 5 km (3.1 mi). Animals that may enter the area after Eglin AFB has completed the pre-mission surveys and prior to detonation would not reach the predicted smaller slight lung injury and/or mortality zones.
Because of human safety issues, observers will be required to leave the test area at least 30 minutes in advance of live weapon deployment and move to a position on the safety zone periphery, approximately 15.28 km (9.5 mi) from the detonation point. Observers will continue to scan for marine mammals from the periphery.
Eglin AFB has created a sample day reflecting the maximum number of munitions that could be released and resulting in the greatest impact in a single mission day. However, this scenario is only a representation and may not accurately reflect how Eglin AFB may conduct actual operations. However, NMFS and Eglin AFB are considering this conservative assumption to calculate the impact range for mitigation monitoring measures. Thus, Eglin AFB has modeled, combined, and compared the sum of all energies from these detonations against thresholds with energy metric criteria to generate the accumulated energy ranges for this scenario. Table 4 lists these ranges which form the basis of the mitigation monitoring.
Based on the ranges presented in Table 4 and factoring operational limitations associated with survey-based vessel support for the missions, Eglin AFB estimates that during pre-mission surveys, the proposed monitoring area would be approximately 5 km (3.1 miles) from the target area, which corresponds to the Level A harassment threshold range. Eglin AFB proposes to survey the same-sized area for each mission day, regardless of the planned munition expenditures. By clearing the Level A harassment threshold range of protected species, animals that may enter the area after the completed pre-mission surveys but prior to detonation would not reach the smaller slight lung injury or mortality zones (presented in Table 6 later in this document). Because of human safety issues, Eglin AFB would require observers to leave the test area at least 30 minutes in advance of live weapon deployment and move to a position on the safety zone periphery, approximately 15 km (9.5 miles) from the detonation point. Observers would continue to scan for marine mammals from the periphery, but effectiveness would be limited as the boat would remain at a designated station.
The GRATV will be located about 183 m (600 ft) from the target. The larger mortality threshold ranges correspond to the modified Goertner model adjusted for the weight of an Atlantic spotted dolphin calf, and extend from 0 to 237 m (0 to 778 ft) from the target, depending on the ordnance, and the Level A ranges for both common bottlenose and Atlantic spotted dolphins extend from 7 to 965 m (23 to 3,166 ft) from the target, depending on the ordnance and harassment criterion. Given these distances, observers could reasonably be expected to view a substantial portion of the mortality zone in front of the camera, although a small portion would be behind or to the side of the camera view. Based on previous monitoring reports for this activity, the pre-training surveys for delphinids and other protected species within the mission area are effective. Observers can view some portion of the Level A harassment zone, although the view window would be less than that of the mortality zone (a large percentage would be behind or to the side of the camera view).
If the high-definition video cameras are not operational for any reason, Eglin AFB will not conduct Maritime WSEP missions.
In addition to the two types of visual monitoring discussed earlier in this section, Eglin AFB personnel are present within the mission area (on boats and the GRATV) on each day of testing well in advance of weapon deployment, typically near sunrise. They will perform a variety of tasks including target preparation, equipment checks, etc., and will opportunistically observe for marine mammals and indicators as feasible throughout test preparation. However, we consider these observations as supplemental to the proposed mitigation monitoring and would only occur as time and schedule permits. Eglin AFB personnel would relay information on these types of sightings to the Lead Biologist, as described in the following mitigation sections.
The purposes of pre-mission monitoring are to: (1) Evaluate the mission site for environmental suitability, and (2) verify that the ZOI (in this case, 5 km [3.1 mi]) is free of visually detectable marine mammals, as well as potential indicators of these species. On the morning of the mission, the Test Director and Safety Officer will confirm that there are no issues that would preclude mission execution and that weather is adequate to support mitigation measures.
Eglin AFB range clearing vessels and protected species survey vessels will be on site at least two hours prior to the mission. The Lead Biologist on board one survey vessel will assess the overall suitability of the mission site based on environmental conditions (sea state) and presence/absence of marine mammal indicators. Eglin AFB personnel will communicate this information to Tower Control and personnel will relay the information to the Safety Officer in Central Control Facility.
Vessel-based surveys will begin approximately one and one-half hours prior to live weapons deployment. Surface vessel observers will survey the ZOI (in this case, 5 km [3.1 mi]) and relay all marine species and indicator sightings, including the time of sighting, GPS location, and direction of travel, if known, to the Lead Biologist. The lead biologist will document all sighting information on report forms which he/she will submit to Eglin Natural Resources after each mission. Surveys would continue for approximately one hour. During this time, Eglin AFB personnel in the mission area will also observe for marine species as feasible. If marine mammals or indicators are observed within the ZOI (5 km [3.1 mi]), the range will be declared “fouled,” a term that signifies to mission personnel that conditions are such that a live ordnance drop cannot occur (
At approximately 30 minutes to one hour prior to live weapon deployment, marine species observers will be instructed to leave the mission site and remain outside the safety zone, which on average will be 15.28 km (9.5 mi) from the detonation point. The actual size is determined by weapon net explosive weight and method of delivery. The survey team will continue to monitor for protected species while leaving the area. As the survey vessels leave the area, marine species monitoring of the immediate target areas will continue at the Central Control Facility through the live video feed received from the high definition cameras on the GRATV. Once the survey vessels have arrived at the perimeter of the safety zone (approximately 30 minutes after leaving the area per instructions from Eglin AFB, depending on actual travel time), Eglin AFB will declare the range as “green” and the mission will proceed, assuming all non-participating vessels have left the safety zone as well.
Immediately prior to live weapons drop, the Test Director and Safety Officer will communicate to confirm the results of marine mammal surveys and the appropriateness of proceeding with the mission. The Safety Officer will have final authority to proceed with, postpone, or cancel the mission. Eglin AFB would postpone the mission if:
• Any of the high-definition video cameras are not operational for any reason;
• Any marine mammal is visually detected within the ZOI (5 km [3.1 mi]). Postponement would continue until the animal(s) that caused the postponement is: (1) Confirmed to be outside of the ZOI (5 km [3.1 mi]) on a heading away from the targets; or (2) not seen again for 30 minutes and presumed to be outside the ZOI (5 km [3.1 mi]) due to the animal swimming out of the range;
• Any large schools of fish or large flocks of birds feeding at the surface are within the ZOI (5 km [3.1 mi]). Postponement would continue until Eglin AFB personnel confirm that these potential indicators are outside the ZOI (5 km [3.1 mi]):
• Any technical or mechanical issues related to the aircraft or target boats; or
• Any non-participating vessel enters the human safety zone prior to weapon release.
In the event of a postponement, protected species monitoring would continue from the Central Control Facility through the live video feed.
Post-mission monitoring determines the effectiveness of pre-mission mitigation by reporting sightings of any marine mammals. Post-detonation monitoring surveys will commence once the mission has ended or, if required, as soon as personnel declare the mission area safe. Vessels will move into the survey area from outside the safety zone and monitor for at least 30 minutes, concentrating on the area down-current of the test site. This area is easily identifiable because of the floating debris in the water from impacted targets. Up to 10 Eglin AFB support vessels will be cleaning debris and collecting damaged targets from this area thus spending several hours in the area once Eglin AFB completes the mission. Observers will document and report any marine mammal species, number, location, and behavior of any animals observed to Eglin Natural Resources.
Eglin AFB would delay or reschedule Maritime WSEP missions if the Beaufort sea state is greater than number 4 at the time of the testing activities. The Lead Biologist aboard one of the survey vessels will make the final determination of whether conditions are conducive for sighting protected species or not.
We have carefully evaluated Eglin AFB's proposed mitigation measures in the context of ensuring that we prescribe the means of effecting the least practicable impact on the affected marine mammal species and stocks and their habitat. Our evaluation of potential measures included consideration of the following factors in relation to one another:
• The manner in which, and the degree to which, the successful implementation of the measure is expected to minimize adverse impacts to marine mammals;
• The proven or likely efficacy of the specific measure to minimize adverse impacts as planned; and
• The practicability of the measure for applicant implementation.
Any mitigation measure(s) prescribed by NMFS should be able to accomplish, have a reasonable likelihood of accomplishing (based on current science), or contribute to the accomplishment of one or more of the general goals listed here:
1. Avoidance or minimization of injury or death of marine mammals wherever possible (goals 2, 3, and 4 may contribute to this goal).
2. A reduction in the numbers of marine mammals (total number or number at biologically important time or location) exposed to stimuli expected to result in incidental take (this goal may contribute to 1, above, or to reducing takes by behavioral harassment only).
3. A reduction in the number of times (total number or number at biologically important time or location) individuals would be exposed to stimuli that we expect to result in the take of marine mammals (this goal may contribute to 1, above, or to reducing harassment takes only).
4. A reduction in the intensity of exposures (either total number or number at biologically important time or location) to training exercises that we expect to result in the take of marine mammals (this goal may contribute to 1, above, or to reducing the severity of harassment takes only).
5. Avoidance or minimization of adverse effects to marine mammal habitat, paying special attention to the food base, activities that block or limit passage to or from biologically important areas, permanent destruction of habitat, or temporary destruction/disturbance of habitat during a biologically important time.
6. For monitoring directly related to mitigation—an increase in the probability of detecting marine mammals, thus allowing for more effective implementation of the mitigation.
Based on our evaluation of Eglin AFB's proposed measures, as well as other measures that may be relevant to the specified activity, we have preliminarily determined that the proposed mitigation measures provide the means of effecting the least practicable impact on marine mammal species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance. while also considering personnel safety, practicality of implementation, and the impact of effectiveness of the military readiness activity.
In order to issue an Authorization for an activity, section 101(a)(5)(D) of the MMPA states that we must set forth “requirements pertaining to the monitoring and reporting of such taking.” The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for an authorization must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and our expectations of the level of taking or impacts on populations of marine mammals present in the proposed action area.
Eglin AFB submitted a marine mammal monitoring plan in their Authorization application. We may modify or supplement the plan based on comments or new information received from the public during the public comment period. Any monitoring requirement we prescribe should improve our understanding of one or more of the following:
• Occurrence of marine mammal species in action area (
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) Action or environment (
• Individual responses to acute stressors, or impacts of chronic exposures (behavioral or physiological).
• How anticipated responses to stressors impact either: (1) Long-term fitness and survival of an individual; or (2) Population, species, or stock.
• Effects on marine mammal habitat and resultant impacts to marine mammals.
• Mitigation and monitoring effectiveness.
NMFS proposes to include the following measures in the Maritime WSEP Authorization (if issued). They are:
(1) Eglin AFB will track the use of the EGTTR for test firing missions and protected species observations, through the use of mission reporting forms.
(2) Eglin AFB will submit a summary report of marine mammal observations and Maritime WSEP activities to the NMFS Southeast Regional Office (SERO) and the Office of Protected Resources 90 days after expiration of the current Authorization. This report must include the following information: (i) Date and time of each Maritime WSEP exercise; (ii) a complete description of the pre-exercise and post-exercise activities related to mitigating and monitoring the effects of Maritime WSEP exercises on marine mammal populations; and (iii) results of the Maritime WSEP exercise monitoring, including number of marine mammals (by species) that may have been harassed due to presence within the activity zone.
(3) Eglin AFB will monitor for marine mammals in the proposed action area. If
(4) Eglin AFB must immediately report any unauthorized takes of marine mammals (
Eglin AFB complied with the mitigation and monitoring required under the previous Authorization for 2015 WSEP activities. Marine mammal monitoring occurred before, during, and after each Maritime WSEP mission. During the course of these activities, Eglin AFB's monitoring did not suggest that they had exceeded the take levels authorized under Authorization. In accordance with the 2015 Authorization, Eglin AFB submitted a monitoring report (available at:
Under the 2015 Authorization, Eglin AFB anticipated conducting Maritime WSEP training missions over approximately two to three weeks, but actually conducted a total of eight mission days: Four days (February 9, 10, 11, and 12, 2015) associated with inert ordnance delivery and four days (March 16, 17, 18, and 19, 2015) associated with live ordnance delivery.
During the February 2015 missions, Eglin AFB released two inert CBU-105s in air which resulted in no acoustic impacts to marine mammals. The CBU-105 is a cluster bomb unit that detonates in air (airburst), contains 10 submunition cylinders with each cylinder containing four sub-submunitions (skeets) which fire inert projectiles.
During the March 2015 live fire missions, Eglin AFB expended four AGM-65 Mavericks and six AGM-114 Hellfire missiles against remotely-controlled boats approximately 27 km (17 mi) offshore Santa Rosa Island, FL. Net explosive weights of the munitions that detonated at the water surface or up to 3 m (10 ft) below the surface are 86 lbs for the AGM-65 Maverick missiles and 13 pounds for the AGM-114 Hellfire missiles. Eglin AFB conducted the required monitoring for marine mammals or indicators of marine mammals (
For one mission day (March 17, 2015), Eglin AFB personnel extended the duration of the pre-mission surveys to continue to monitoring a pod of 10 bottlenose dolphins until the vessel captain could confirm that the pod remained outside the ZOI (5 km [3.1 mi]) and did not change travel direction. Eglin AFB delayed weapons delivery as required by the Authorization. Eglin AFB continued with their mission activities after all animals cleared the ZOI (5 km [3.1 mi]).
After each mission, Eglin AFB re-entered the ZOI (5 km [3.1 mi]) to begin post-mission surveys for marine mammals and debris-clean-up operations. Eglin AFB personnel did not observe reactions indicative of disturbance during the pre-mission surveys and did not observe any marine mammals during the post-mission surveys. In summary, Eglin AFB reports that no observable instances of take of marine mammals occurred incidental to the Maritime WSEP training activities under the 2015 Authorization.
The NDAA amended the definition of harassment as it applies to a “military readiness activity” to read as follows (Section 3(18)(B) of the MMPA): (i) Any act that injures or has the significant potential to injure a marine mammal or marine mammal stock in the wild [Level A Harassment]; or (ii) any act that disturbs or is likely to disturb a marine mammal or marine mammal stock in the wild by causing disruption of natural behavioral patterns, including, but not limited to, migration, surfacing, nursing, breeding, feeding, or sheltering, to a point where such behavioral patterns are abandoned or significantly altered [Level B Harassment].
NMFS' analysis identified the physiological responses, and behavioral responses that could potentially result from exposure to underwater explosive detonations. In this section, we will relate the potential effects to marine mammals from underwater detonation of explosives to the MMPA regulatory definitions of Level A and Level B harassment. This section will also quantify the effects that might occur from the proposed military readiness activities in W-151.
At NMFS' recommendation, Eglin AFB updated the thresholds used for onset of temporary threshold shift (TTS; Level B Harassment) and onset of permanent threshold shift (PTS; Level A Harassment) to be consistent with the thresholds outlined in the Navy's report titled, “Criteria and Thresholds for U.S. Navy Acoustic and Explosive Effects Analysis Technical Report,” which the Navy coordinated with NMFS. NMFS believes that the thresholds outlined in the Navy's report represent the best available science. The report is available on the internet at:
Of the potential effects described earlier in this document, the following are the types of effects that fall into the Level B harassment category:
Behavioral Harassment—Behavioral disturbance that rises to the level described in the above definition, when resulting from exposures to non-impulsive or impulsive sound, is Level B harassment. Some of the lower level physiological stress responses discussed earlier would also likely co-occur with the predicted harassments, although these responses are more difficult to detect and fewer data exist relating these responses to specific received levels of sound. When predicting Level B harassment based on estimated behavioral responses, those takes may have a stress-related physiological component.
Temporary Threshold Shift (TTS)—As discussed previously, TTS can affect how an animal behaves in response to the environment, including conspecifics, predators, and prey. NMFS classifies TTS (when resulting from exposure to explosives and other impulsive sources) as Level B harassment, not Level A harassment (injury).
Of the potential effects that were described earlier, the following are the types of effects that fall into the Level A Harassment category:
Permanent Threshold Shift (PTS)—PTS (resulting either from exposure to explosive detonations) is irreversible and NMFS considers this to be an injury.
Table 5 in this document outlines the acoustic thresholds used by NMFS for
Eglin AFB conservatively modeled that all explosives would detonate at a 1.2 m (3.9 ft) water depth despite the training goal of hitting the target, resulting in an above water or on land explosion. For sources detonated at shallow depths, it is frequently the case that the explosion may breech the surface with some of the acoustic energy escaping the water column. Table 6 provides the estimated maximum range or radius, from the detonation point to the various thresholds described in Table 5.
Eglin AFB uses the distance information shown in Table 6 (Table 6.3 in Eglin AFB's application) to calculate the radius of impact for a given threshold from a single detonation of each munition/detonation scenario, then combine the calculated impact radii with density estimates (adjusted for depth distribution) and the number of live munitions to provide an estimate of the number of marine mammals potentially exposed to the various impact thresholds.
The ranges presented in Table 6 represent a radius of impact for a given threshold from a single detonation of each munition/detonation scenario. They do not consider accumulated energies from multiple detonation occurring within the same 24-hour time period. For calculating take estimates, the single detonation approach is more conservative because it multiplies the exposures from a single detonation by the number of munitions and assumes a fresh population of marine mammals is being impacted each time. Eglin AFB used this approach because of the uncertainty surrounding which munitions they would release on a given day. Multiple variables, such as weather, aircraft mechanical issues, munition malfunctions, and target availability may prevent planned munitions releases. By treating each detonation as a separate event and summing those impacts accordingly, Eglin AFB would have maximum operational flexibility to conduct the missions without limitations on either the total number of munitions allowed to be dropped in a day, or on the specific combinations of munitions that could be released.
While this methodology overestimates the overall potential takes, the ranges do not accurately represent the actual area acoustically impacted for a given threshold from multiple detonations in a given mission day. The total acoustic impact area for two identical bombs detonating within a given timeframe is less than twice the impact area of a single bomb's detonation. This has to do with the accumulated energy from multiple detonations occurring sequentially. When one weapon is detonated, a certain level of transmission loss is required to be calculated to achieve each threshold level which can then be equated to a range. By releasing a second munition in the same event (same place and close in time), even though the total energy is increased, the incremental impact area from the second detonation is slightly less than that of the first; however the impact range for the two munitions is larger than the impact range for one. Since each additional detonation adds energy to the sound exposure level (SEL) metric, all the energy from all munitions released in a day is accumulated. By factoring in the transmission loss of the first detonation added with the incremental increases from the second, third, fourth, etc., the range of the cumulative energy that is below each threshold level can be determined.
Density estimates for bottlenose dolphin and spotted dolphin were derived from two sources (see Table 7). NMFS provided detailed information on Eglin AFB's derivation of density estimates for the common bottlenose and Atlantic spotted dolphins in a previous
Table 8 indicates the modeled potential for lethality, injury, and non-injurious harassment (including behavioral harassment) to marine mammals in the absence of mitigation measures. Eglin AFB and NMFS estimate that approximately 38 marine mammals could be exposed to injurious Level A harassment noise levels (187 dB SEL) and approximately 942 animals could be exposed to Level B harassment (TTS and Behavioral) noise levels in the absence of mitigation measures.
Based on the mortality exposure estimates calculated by the acoustic model, zero marine mammals are expected to be affected by pressure levels associated with mortality or serious injury. Zero marine mammals are expected to be exposed to pressure levels associated with slight lung injury or gastrointestinal tract injury.
NMFS generally considers PTS to fall under the injury category (Level A Harassment). An animal would need to stay very close to the sound source for an extended amount of time to incur a serious degree of PTS, which could increase the probability of mortality. In this case, it would be highly unlikely for this scenario to unfold given the nature of any anticipated acoustic exposures that could potentially result from a mobile marine mammal that NMFS generally expects to exhibit avoidance behavior to loud sounds within the EGTTR.
NMFS has relied on the best available scientific information to support the issuance of Eglin AFB's authorization. In the case of authorizing Level A harassment, NMFS has estimated that no more than 33 bottlenose dolphins and 5 Atlantic spotted dolphins could, although unlikely, experience minor permanent threshold shifts of hearing
NMFS has defined “negligible impact” in 50 CFR 216.103 as “. . . an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.” A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival (
To avoid repetition, the discussion below applies to all the species listed in Table 8 for which we propose to authorize incidental take for Eglin AFB's activities.
In making a negligible impact determination, we consider:
• The number of anticipated injuries, serious injuries, or mortalities;
• The number, nature, and intensity, and duration of Level B harassment;
• The context in which the takes occur (
• The status of stock or species of marine mammals (
• Impacts on habitat affecting rates of recruitment/survival; and
• The effectiveness of monitoring and mitigation measures to reduce the number or severity of incidental take.
For reasons stated previously in this document and based on the following factors, Eglin AFB's specified activities are not likely to cause long-term behavioral disturbance, serious injury, or death.
The takes from Level B harassment would be due to potential behavioral disturbance and TTS. The takes from Level A harassment would be due to some form of PTS. Activities would only occur over a timeframe of two to three weeks in beginning in February, 2016, with one or two missions occurring per day. It is possible that some individuals may be taken more than once if those individuals are located in the exercise area on two different days when exercises are occurring.
Noise-induced threshold shifts (TS, which includes PTS) are defined as increases in the threshold of audibility (
In addition, there are different degrees of PTS: Ranging from slight/mild to moderate and from severe to profound (Clark, 1981). Profound PTS or the complete loss of the ability to hear in one or both ears is commonly referred to as deafness (CDC, 2004; WHO, 2006). High-frequency PTS, presumably as a normal process of aging that occurs in humans and other terrestrial mammals, has also been demonstrated in captive cetaceans (Ridgway and Carder, 1997; Yuen
In terms of what is analyzed for the potential PTS (Level A harassment) in marine mammals as a result of Eglin AFB's Maritime WSEP operations, if it occurs, NMFS has determined that the levels would be slight/mild because research shows that most cetaceans show relatively high levels of avoidance. Further, it is uncommon to sight marine mammals within the target area, especially for prolonged durations. Results from monitoring programs associated other Eglin AFB activities and for Eglin AFB's 2015 Maritime WSEP activities have shown the absence of marine mammals within the EGTTR during and after maritime operations. Avoidance varies among individuals and depends on their activities or reasons for being in the area.
NMFS' predicted estimates for Level A harassment take are likely overestimates of the likely injury that will occur. NMFS expects that successful implementation of the required vessel-based and video-based mitigation measures would avoid Level A take in some instances. Also, NMFS expects that some individuals would avoid the source at levels expected to result in injury. Nonetheless, although NMFS expects that Level A harassment is unlikely to occur at the numbers proposed to be authorized, because it is difficult to quantify the degree to which the mitigation and avoidance will reduce the number of animals that might incur PTS, we are proposing to authorize (and analyze) the modeled number of Level A takes (38), which does not take the mitigation or avoidance into consideration. However, we anticipate that any PTS incurred because of mitigation and the likely short duration of exposures, would be in the form of only a small degree of permanent threshold shift and not total deafness.
While animals may be impacted in the immediate vicinity of the activity, because of the short duration of the actual individual explosions themselves (versus continual sound source operation) combined with the short duration of the Maritime WSEP operations, NMFS has preliminarily determined that there will not be a substantial impact on marine mammals or on the normal functioning of the nearshore or offshore Gulf of Mexico ecosystems. We do not expect that the proposed activity would impact rates of recruitment or survival of marine mammals since we do not expect mortality (which would remove individuals from the population) or serious injury to occur. In addition, the proposed activity would not occur in areas (and/or times) of significance for the marine mammal populations potentially affected by the exercises (
Moreover, the mitigation and monitoring measures proposed for the Authorization (described earlier in this document) are expected to further minimize the potential for harassment. The protected species surveys would require Eglin AFB to search the area for marine mammals, and if any are found in the live fire area, then the exercise would be suspended until the animal(s) has left the area or relocated. Moreover, marine species observers located in the Eglin control tower would monitor the high-definition video feed from cameras located on the instrument barge anchored on-site for the presence of protected species. Furthermore, Maritime WSEP missions would be delayed or rescheduled if the sea state is greater than a 4 on the Beaufort Scale at the time of the test. In addition, Maritime WSEP missions would occur no earlier than two hours after sunrise and no later than two hours prior to sunset to ensure adequate daylight for pre- and post-mission monitoring.
Based on the preliminary analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the mitigation and monitoring measures, NMFS finds that Eglin AFB's Maritime WSEP operations will result in the incidental take of marine mammals, by Level A and Level B harassment only, and that the taking from the Maritime WSEP exercises will have a negligible impact on the affected species or stocks.
There are no relevant subsistence uses of marine mammals implicated by this action. Therefore, NMFS has preliminarily determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.
Eglin AFB initiated consultation with the Southeast Region, NMFS, under section 7 of the ESA regarding the effects of this action on ESA-listed species and critical habitat under the jurisdiction of NMFS. The consultation will be completed and a biological opinion issued prior to any final determinations on an issuance of an Authorization. Due to the location of the activity, no ESA-listed marine mammal species are likely to be affected; therefore, NMFS has preliminarily determined that this proposed Authorization would have no effect on ESA-listed species. However, prior to the agency's decision on the issuance or denial of this Authorization, NMFS will make a final determination on whether additional consultation is necessary.
In 2015, Eglin AFB provided NMFS with an EA titled, Maritime Weapon Systems Evaluation Program (WSEP) Operational Testing in the Eglin Gulf Testing and Training Range (EGTTR), Florida. The EA analyzed the direct, indirect, and cumulative environmental impacts of the specified activities on marine mammals. NMFS, after review and evaluation of the Eglin AFB EA for consistency with the regulations published by the Council of Environmental Quality (CEQ) and NOAA Administrative Order 216-6, Environmental Review Procedures for Implementing the National Environmental Policy Act, adopted the EA. After considering the EA, the information in the 2014 IHA application, and the
In accordance with NOAA Administrative Order 216-6 (Environmental Review Procedures for Implementing the National Environmental Policy Act, May 20, 1999), NMFS will again review the information contained in Eglin AFB's EA and determine whether the EA accurately and completely describes the preferred action alternative and the potential impacts on marine mammals. Based on this review and analysis, NMFS may reaffirm the 2015 FONSI statement on issuance of an annual authorization under section 101(a)(5) of the MMPA or supplement the EA if necessary.
As a result of these preliminary determinations, we propose to issue an Authorization to Eglin AFB for conducting Maritime WSEP activities, for a period of one year from the date of issuance, provided the previously mentioned mitigation, monitoring, and reporting requirements are incorporated. The proposed Authorization language is provided in the next section. The wording contained in this section is proposed for inclusion in the Authorization (if issued).
1. This Authorization is valid for a period of one year from the date of issuance.
2. This Authorization is valid only for activities associated with the Maritme WSEP operations utilizing munitions identified in the Attachment.
3. The incidental taking, by Level A and Level B harassment, is limited to: Atlantic bottlenose dolphin (
The taking by serious injury or death of these species, the taking of these species in violation of the conditions of this Incidental Harassment Authorization, or the taking by harassment, serious injury or death of any other species of marine mammal is prohibited and may result in the modification, suspension or revocation of this Authorization.
4. Mitigation
When conducting this activity, the following mitigation measures must be undertaken:
• If daytime weather and/or sea conditions preclude adequate monitoring for detecting marine mammals and other marine life, maritime strike operations must be delayed until adequate sea conditions exist for monitoring to be undertaken. Daytime maritime strike exercises will be conducted only when sea surface conditions do not exceed Beaufort sea state 4 (
• On the morning of the maritime strike mission, the test director and safety officer will confirm that there are no issues that would preclude mission execution and that the weather is adequate to support monitoring and mitigation measures.
• Mission-related surface vessels will be stationed on site.
• Vessel-based observers on board at least one vessel will assess the overall suitability of the test site based on environmental conditions (
• Vessel-based surveys and video camera surveillance will commence. Vessel-based observers will survey the zone of impact (ZOI) (5 km [3.1 mi]) and relay all marine mammal and indicator sightings, including the time of sighting and direction of travel (if known) to the safety officer. Surveys will continue for approximately one hour.
• If marine mammals or marine mammal indicators are observed within the ZOI (5 km [3.1 mi]), the test range will be declared “fouled,” which will signify to mission personnel that conditions are such that a live ordnance drop cannot occur.
• If no marine mammals or marine mammal indicators are observed, the range will be declared “green,” which will signify to mission personnel that conditions are such that a live ordnance drop may occur.
• Approximately 30 minutes prior to live weapon deployment, vessel-based observers will be instructed to leave the test site and remain outside the safety zone, which will be 9.5 miles from the detonation point (actual size will be determined by weapon net explosive weight (NEW) and method of delivery) during the conduct of the mission.
• Monitoring for marine mammals will continue from the periphery of the safety zone while the mission is in progress. Other safety boat crews will be instructed to observe for marine mammals during this time.
• After survey vessels have left the test site, marine species monitoring will continue for the Eglin control tower through the video feed received from the high definition cameras on the instrument barge.
• Immediately prior to live weapons drop, the test director and safety officer will communicate to confirm the results of the marine mammal survey and the appropriateness of proceeding with the mission. The safety officer will have final authority to proceed with, postpone, move, or cancel the mission.
• The mission will be postponed or moved if: Any marine mammal is visually detected within the ZOI (5 km [3.1 mi]). Postponement will continue until the animal(s) that caused the postponement is confirmed to be outside of the ZOI (5 km [3.1 mi]) due to swimming out of the range; or large schools of fish, jellyfish, Sargassum rafts, or large flocks of birds feeding at the surface are observed within the ZOI (5 km [3.1 mi]). Postponement will continue until these potential indicators are confirmed to be outside the ZOI (5 km [3.1 mi]).
• In the event of a postponement, pre-mission monitoring will continue as long as weather and daylight hours allow.
• Post-mission surveys will commence as soon as Explosive Ordnance Disposal (EOD) personnel declare the test area safe. These surveys will be conducted by the same vessel-based observers that conducted the pre-mission surveys.
• Survey vessels will move into the ZOI (5 km [3.1 mi]) from outside the safety zone and monitor for at least 30 minutes, concentrating on the area down-current of the test site. Any marine mammals killed or injured as a result of the test will be documented and immediately reported to the NMFS Southeast Region Marine Mammal Stranding Network at 877-433-8299 and the Florida Marine Mammal Stranding Hotline at 888-404-3922. The species, number, location, and behavior of any animals observed will be documented and reported.
• If post-mission surveys determine that an injury or lethal take of a marine mammal has occurred, the next maritime strike mission will be suspended until the test procedure and the monitoring methods have been reviewed with NMFS and appropriate changes made.
The holder of this Authorization is required to cooperate with the National Marine Fisheries Service and any other Federal, state or local agency monitoring the impacts of the activity on marine mammals.
The holder of this Authorization will track their use of the EGTTR for the Maritime WSEP missions and marine mammal observations, through the use of mission reporting forms.
Maritime strike missions will coordinate with other activities conducted in the EGTTR (
Any dead or injured marine mammals observed or detected prior to testing or injured or killed during live drops, must be immediately reported to the NMFS Southeast Region Marine Mammal Stranding Network at 877-433-8299 and the Florida Marine Mammal Stranding Hotline at 888-404-3922.
Any unauthorized impacts on marine mammals must be immediately reported to Dr. Roy E. Crabtree, the National Marine Fisheries Service's Southeast Regional Administrator, at 727-842-5312, and Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources at 301-427-8401.
The monitoring team will document any marine mammals that were killed or injured as a result of the test and, if practicable, coordinate with the local stranding network and NMFS to assist with recovery and examination of any dead animals, as needed.
Activities related to the monitoring described in this Authorization, including the retention of marine mammals, do not require a separate scientific research permit issued under section 104 of the Marine Mammal Protection Act.
A draft report of marine mammal observations and Maritime WSEP mission activities must be submitted to the National Marine Fisheries Service's Southeast Regional Office, Protected Resources Division, 263 13th Ave. South, St. Petersburg, FL 33701 and NMFS's Office of Protected Resources, 1315 East West Highway, Silver Spring, MD 20910. This draft report must include the following information:
• Date and time of each maritime strike mission;
• A complete description of the pre-exercise and post-exercise activities related to mitigating and monitoring the effects of maritime strike missions on marine mammal populations;
• Results of the monitoring program, including numbers by species/stock of any marine mammals noted injured or killed as a result of the maritime strike mission and number of marine mammals (by species if possible) that may have been harassed due to presence within the ZOI (5 km [3.1 mi]); and
• A detailed assessment of the effectiveness of sensor based monitoring in detecting marine mammals in the area of Maritime WSEP operations.
The draft report will be subject to review and comment by the National Marine Fisheries Service. Any recommendations made by the National Marine Fisheries Service must be addressed in the final report prior to acceptance by the National Marine Fisheries Service. The draft report will be considered the final report for this activity under this Authorization if the National Marine Fisheries Service has not provided comments and recommendations within 90 days of receipt of the draft report.
• The maritime strike mission monitoring team will participate in the marine mammal species observation training. Designated crew members will be selected to receive training as protected species observers. Protected Species Observers will receive training in protected species survey and identification techniques through a National Marine Fisheries Service-approved training program.
• The holder of this Authorization must inform the Director, Office of Protected Resources, National Marine Fisheries Service, (301-427-8400) or designee (301-427-8401) prior to the initiation of any changes to the monitoring plan for a specified mission activity.
• A copy of this Authorization must be in the possession of the safety officer on duty each day that maritime strike missions are conducted.
• Failure to abide by the Terms and Conditions contained in this Incidental Harassment Authorization may result in a modification, suspension or revocation of the Authorization.
We request comment on our analysis, the draft authorization, and any other aspect of this
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The North Pacific Fishery Management Council (Council) Electronic Monitoring Workgroup (EMWG) will meet in Anchorage, AK.
The meeting will be held on Monday, January 11, 2016, from 12:30 p.m. to 5 p.m. and on Tuesday, January 12, 2016, from 8 a.m. to 5 p.m.
The meeting will be held in the Aspen room at the Hilton Hotel, 500 W. 3rd Ave., Anchorage, AK 99501.
Diana Evans, Council staff; telephone: (907) 271-2809.
The agenda will include a review of the 2016 pre-implementation program and other 2016 research, the EM integration analysis and progress with analytical studies, review of the budget, and other business and scheduling.
The Agenda is subject to change, and the latest version will be posted at
These meetings are 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 Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before February 22, 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 and instructions should be directed to MiAe Kim, Office of International Affairs and Seafood Inspection, 1315 East-West Hwy, Silver Spring, MD 20910, (301) 427-8365 or
The 1982 Convention on the Conservation of Antarctic Marine Living Resources (Convention) established the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR). The United States is a Contracting Party to the Convention. The Antarctic Marine Living Resources Convention Act (AMLRCA) directs and authorizes the United States to take actions necessary to meet its treaty obligations as a Contracting Party to the Convention. The regulations implementing AMLRCA are at 50 CFR part 300, subpart G. The record keeping and reporting requirements at 50 CFR part 300 form the basis for this collection of information. This collection of information concerns research in, and the harvesting and importation of, marine living resources from waters regulated by CCAMLR related to ecosystem research, U.S.
Paper applications, electronic reports, satellite-linked vessel monitoring devices, radio and telephone calls, gear and vessel markings are required from participants and methods of transmittal include internet, satellite, facsimile and mail transmission of forms, reports and information.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The New England Fishery Management Council (Council) is scheduling a public meeting of its
This meeting will be held on Thursday, January 21, 2016 at 10 a.m.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.
The Committee will review Amendment 22 scoping comments and develop recommendations for the range of issues to be addressed by the amendment. The Council will then approve the scope of the amendment at its January Council meeting. The Committee will also review and discuss PDT recommendations for five-year Council research priorities. Other business may be discussed if time permits.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465-0492, at least 5 days prior to the meeting date.
16 U.S.C. 1801
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before February 22, 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 and instructions should be directed to Carrie Hall, (240) 533-0730 or
This request is for revision and extension of a current information collection.
The Coastal Zone Management Act of 1972, as amended (CZMA; 16 U.S.C. 1451
Section 1458 of the CZMA and implementing regulations at 15 CFR 923, Subpart L, require that state coastal management programs be evaluated concerning the extent to which the state has implemented and enforced the program approved by the Secretary, addressed the coastal management needs identified in 16 U.S.C. 1452(2)(A) through (K), and adhered to the terms of any grant, loan, or cooperative agreement funded under the CZMA. Section 1461(f) of the CZMA and implementing regulations at 15 CFR 921, Subpart E, require that national estuarine research reserves be evaluated with regard to their operation and management, including education and interpretive activities, the research being conducted within the reserve, and be evaluated in accordance with section 1458 of the CZMA and procedures set forth in 15 CFR 923.
NOAA's Office of Ocean and Coastal Resource Management (OCRM) conducts periodic evaluations of the 34 coastal management programs and 28 research reserves and produces written findings for each evaluation. OCRM has access to documents submitted in cooperative agreement applications, performance reports, and certain documentation required by the CZMA and implementing regulations. However, additional information from each coastal management program and research reserve, as well as information from the program and reserve partners and stakeholders with whom each works, is necessary to evaluate against statutory and regulatory requirements. Different information collection subsets are necessary for (1) coastal management programs, (2) their partners and stakeholders, (3) research reserves, and (4) their partners and stakeholders.
Coastal program and reserve manager respondents will receive information requests/questionnaires via email, and submittals will be made via email. Partners and stakeholders of coastal management programs and of reserves will receive a link to a web-based survey tool and respond through the survey tool.
As part of this submission, a few questions will be modified to clarify the information that should be provided as part of the information requests/questionnaires sent to the coastal program and reserve managers. The overall number of survey questions for the partners and stakeholders will be reduced.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The North Pacific Fishery Management Council (Council) Crab Plan Team (CPT) will meet in Anchorage, AK.
The meeting will be held on Tuesday, January 12, 2016 through Friday, January 15, 2016, from 9 a.m. to 5 p.m.
The meeting will be held in the Birch/Willow room at the Hilton Hotel, 500 W 3rd Ave., Anchorage, AK 99501.
Diana Stram, Council staff; telephone: (907) 271-2809.
The agenda includes developing recommendations on 2016-2017 OFL (over fishing limit) and ABC (acceptable biological catch) catch for NS RKC (Norton Sound Red King Crab), review assessment models for BSAI (Bering Sea and Aleutian Island) crab stocks, develop crab specific ecosystem indices, review a discussion paper on crab bycatch, revise the crab SAFE (Stock Assessment and Fishery Evaluation) guidelines and terms of reference for the CPT. The Agenda is subject to change, and the latest version will be posted at
These meetings are 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.
Commodity Futures Trading Commission.
Notice.
In compliance with the Paperwork Reduction Act of 1995 (“PRA”), this notice announces that the Information Collection Request (“ICR”) abstracted below has been forwarded to the Office of Management and Budget (“OMB”) for review and comment. The ICR describes the nature of the information collection and its expected costs and burden.
Comments must be submitted on or before January 22, 2016.
Comments regarding the burden estimated or any other aspect of the information collection, including suggestions for reducing the burden, may be submitted directly to the Office of Information and Regulatory Affairs (“OIRA”) in OMB, within 30 days of the notice's publication, by email at
Comments may also be mailed to: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581 or by Hand Delivery/Courier at the same address.
A copy of the supporting statements for the collection of information discussed above may be obtained by visiting
Melissa Chiang, Counsel, Office of General Counsel, Commodity Futures Trading Commission, (202) 418-5578; email:
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 OMB control numbers for the Commission's regulations were published on December 30, 1981.
There are no capital costs or operating and maintenance costs associated with this collection.
44 U.S.C. 3501
Defense Security Cooperation Agency, Department of Defense,
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996.
Sarah A. Ragan or Heather N. Harwell, DSCA/LMO, (703) 604-1546/(703) 607-5339.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 15-79 with attached Policy Justification.
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
* As defined in Section 47(6) of the Arms Export Control Act.
The Government of Argentina requested a possible sale of four (4) Bell 412EP Helicopters, Bell 412EP Helicopter major components, spare
The proposed sale will contribute to the foreign policy and national security of the United States by providing Argentina with air mobility capabilities to support various missions, including humanitarian assistance and peacekeeping. This potential sale will provide additional opportunities for bilateral engagements and further strengthen the bilateral relationship between the United States and Argentina.
The Government of Argentina intends to use these aircraft for search and rescue operations, humanitarian assistance and disaster relief, peacekeeping support, scientific operations in the Antarctic, and other missions. The proposed sale will improve Argentina's standardization of operational procedures, logistics, and associated maintenance and augment its current inventory of U.S.-origin utility helicopters. Argentina will have no difficulty absorbing these helicopters into its armed forces.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The prime contractor will be Bell Helicopter Textron Inc., in Fort Worth, Texas. There are no known offset agreements proposed in connection with this potential sale.
A sole source has been requested for the original equipment manufacturer, Bell Helicopter Textron, Fort Worth, Texas.
There will be no adverse impact on United States defense readiness as a result of this proposed sale.
Office of the Secretary of Defense, DoD.
Notice to alter a System of Records.
The Office of the Secretary of Defense proposes to alter a system of records, DWHS P18, entitled “Office of the Secretary of Defense Identification Badge System” to be used by officials of the Military Personnel Division, Human Resources Directorate, Washington Headquarters Services to temporarily issue the badge at arrival and determine who is authorized permanent award after a one-year period and then prepare the certificate to recognize this event.
Comments will be accepted on or before January 22, 2016. This proposed action will be effective the day following the end of the comment period unless comments are received which result in a contrary determination.
You may submit comments, identified by docket number and title, by any of the following methods:
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*
Ms. Cindy Allard, Chief, OSD/JS Privacy Office, Freedom of Information Directorate, Washington Headquarters Service, 1155 Defense Pentagon, Washington, DC 20301-1155, or by phone at (571) 372-0461.
The Office of the Secretary of Defense notices for systems of records subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
The proposed system report, as required by 5 U.S.C. 552a(r) of the Privacy Act of 1974, as amended, was submitted on December 15, 2015, to the House Committee on Oversight and Government Reform, the Senate Committee on Governmental Affairs, and the Office of Management and Budget (OMB) pursuant to paragraph 4c of Appendix I to OMB Circular No. A-130, “Federal Agency Responsibilities for Maintaining Records About Individuals,” dated February 8, 1996 (February 20, 1996, 61 FR 6427).
Office of the Secretary of Defense Identification Badge System (December 9, 2011, 76 FR 76958).
Delete entry and replace with “Military Personnel Division, Human Resources Directorate, Washington Headquarters Services, Department of Defense, 1155 Defense Pentagon, Washington, DC 20301-1155.”
Delete entry and replace with “All permanent military personnel assigned to the Office of the Secretary of Defense (OSD).”
Delete entry and replace with “10 U.S.C. 1125, Recognition for Accomplishment: Award of Trophies; DoD Manual 1348.33, Volume 1, Manual of Military Decorations and Awards: General Information, Medal of Honor, and Defense/Joint Decorations and Awards; and E.O. 9397 (SSN), as amended.”
A record from a system of records maintained by a DoD Component may be disclosed as a routine use to a federal, state, or local agency maintaining civil, criminal, or other relevant enforcement information or other pertinent information, such as current licenses, if necessary to obtain information relevant to a DoD Component decision concerning the hiring or retention of an employee, the issuance of a security clearance, the letting of a contract, or the issuance of a license, grant, or other benefit.
A record from a system of records maintained by a DoD Component may be disclosed to a federal agency, in response to its request, in connection with the hiring or retention of an
A record from a system of records subject to the Privacy Act and maintained by a DoD Component may be disclosed to the Office of Personnel Management (OPM) concerning information on pay and leave, benefits, retirement deduction, and any other information necessary for the OPM to carry out its legally authorized government-wide personnel management functions and studies.
A record from a system of records maintained by a Component may be disclosed to appropriate agencies, entities, and persons when (1) The Component suspects or has confirmed that the security or confidentiality of the information in the system of records has been compromised; (2) the Component has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the Component 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 the Components efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
The DoD Blanket Routine Uses set forth at the beginning of the Office of the Secretary of Defense (OSD) compilation of systems of records notices may apply to this system. The complete list of DoD Blanket Routine Uses can be found online at:
Delete entry and replace with “Information is retrieved by last name of recipient, SSN, grade, and/or service.”
Delete entry and replace with “Accesses are authorized by system manager, granted by Information Technology Management Directorate to a secure computer application database and are Common Access Card enabled. Users receive annual Privacy Act and information assurance training, and only those individuals with an official “need to know” are provided access. Back-up data and/or paper copies are stored in a locked room and cabinet. Access to this room is controlled by building badge and swipe access granted by the security manager. Access to locked cabinet is controlled by system manager.”
Delete entry and replace with “Assistant Director, Military Personnel Division, Human Resources Directorate, Washington Headquarters Services, Department of Defense, 1155 Defense Pentagon, Washington, DC 20301-1155.”
Delete entry and replace with “Individuals seeking to determine whether information about themselves is contained in this system should address written inquiries to Military Personnel Division, Human Resources Directorate, Washington Headquarters Services, Department of Defense, 1155 Defense Pentagon, Washington, DC 20301-1155.
Signed, written request must include the individual's name, grade, service, and SSN.”
Delete entry and replace with “Individuals seeking access to information about themselves contained in this system should address written inquiries to Military Personnel Division, Human Resources Directorate, Washington Headquarters Services, Department of Defense, 1155 Defense Pentagon, Washington, DC 20301-1155.
Signed, written request must include the name and number of this system of records notice, along with the individual's name, grade, service, and SSN.”
Delete entry and replace with “The OSD rules for accessing records, for contesting contents and appealing initial agency determinations are published in Office of Secretary of Defense Administrative Instruction 81; 32 CFR part 311; or may be obtained from the system manager.”
Department of the Army, U.S. Army Corps of Engineers, DOD.
Notice of intent.
The Mobile District, U.S. Army Corps of Engineers (Corps) intends to prepare a Draft Supplemental Environmental Impact Statement (DSEIS) to address the potential impacts associated with improving the Mobile Harbor Federal Navigation Channel in Mobile County, AL. The DSEIS will be used as a basis for ensuring compliance with the National Environmental Policy Act (NEPA) and evaluating alternative plans including the “No Action.” The proposed alternatives identified in the Alternatives Milestone analysis will be evaluated including widening and deepening of selected areas of the navigation channel within the currently authorized dimensions.
The scoping meeting will be held on Tuesday, January 12, 2015 from 5:00 p.m. to 8:00 p.m.
The scoping meeting will be held at the Mobile Alabama Cruise Terminal, 201 S. Water Street, Mobile, AL 36602.
Questions about the DSEIS should be addressed to Mr. Larry Parson, Coastal Environment Team, Mobile District, U.S. Army Corps of Engineers, P.O. Box 2288, Mobile, AL 36628 by telephone (251) 690-3139 or email him at
1. As Authorized in the Water Resources Development Act of 1986 and per the 1981 Chief's Report for Mobile Harbor, Alabama, the major components of the project are as follows: (a) Deepen and widen entrance channel over the bar to 57 by 700 feet, a distance of about 7.4 miles, (b) deepen and widen Mobile Bay Channel from mouth of bay to south of Mobile River, 55 by 550 feet, a distance of about 27.0 miles, (c) deepen and widen an additional 4.2 miles of Mobile Bay Channel to 55 by 650 feet, (d) provide 55‐foot deep anchorage area and turning basin in vicinity of Little Sand Island, and (e) deepening the Mobile River channel to 55 feet to a point about 1 mile below the Interstate 10 and U.S. 90 highway tunnels. Also, per the Fiscal Year (FY) 2015
2. The evaluation will examine the costs and benefits as well as the environmental impacts of modifying the maintained dimensions of the existing Federal project within its authorized limits. The purpose of the study will be to determine improvements for safety and efficiency of harbor users. Vessels are experiencing delays leaving and arriving at port facilities and inefficiencies have increased as the volume of cargo has grown and larger vessels call on the port to handle the increased cargo. Construction of Mobile Harbor to 45‐foot depth was completed in FY 1994. The construction depth was limited to 45 feet because the sponsor did not have the funds to construct to the fully authorized depth. A 1300‐foot extension in the river channel was a separable element new start with the Project Partnership Agreement (PPA) signed in FY 98 and construction completed in FY 2000. A 1200‐foot and a 2100‐foot extension in the river channel were also separable element new starts with the PPA signed in FY 2004 and work completed in FY 2008. The Turning Basin was also a separable element new start with the PPA signed in FY 2009 and construction completed in August 2010. Due to traffic changes, vessel delays began being experienced into and out of the port as traffic was limited to one‐way as larger ships transited the channel. The Alabama State Port Authority (ASPA) requested that the Corps consider widening a portion of the authorized channel to allow two‐way traffic to reduce delays. Subsequently, the Corps initiated an LRR to consider widening a portion of the upper bay channel. The design agreement for the LRR was executed on August 14, 2012. After initial analysis and coordination with the ASPA and its users, the design agreement for the LRR was amended on April 14, 2014 to account for a change in location for the proposed widening to include an approximate 5-mile section of the lower bay channel up to the authorized width of 550 feet and to widen an approximate 2-mile section of the bar channel to its authorized width of 700 feet (all work within the existing project authorization). On June 12, 2014, the ASPA requested that the Corps undertake additional studies to determine the feasibility of deepening and widening the channel to its full authorized depths and widths. Per letter dated October 20, 2014, the Assistant Secretary of the Army (ASA) approved the direction of General Investigation funds to complete Preconstruction Engineering and Design for the channel widening for Mobile Harbor to initiate a General Reevaluation Report (GRR) to evaluate deepening and widening of the channel to its full authorized dimensions. This letter also directed the Corps to halt all work on the LRR being prepared for the widening project.
3. Scoping:
a. The Corps invites full public participation to promote open communication on the issues surrounding the proposal. All Federal, State, and local agencies, and other persons or organizations that have an interest are urged to participate in the NEPA scoping process. Public meetings will be held to help identify significant issues and to receive public input and comment.
b. The DSEIS will analyze the potential social, economic, and environmental impacts to the local area resulting from improvements to the Mobile Harbor Navigation Project. Specifically, the following major issues will be analyzed in depth in the DSEIS: Hydrologic and hydraulic regimes, water quality, effects on natural resources, sediment transport, threatened and endangered species, essential fish habitat and other marine habitat, air quality, cultural resources, transportation systems, alternatives, secondary and cumulative impacts, socioeconomic impacts, environmental justice (effect on minorities and low-income groups) (Executive Order 12898), and protection of children (Executive Order 13045).
c. The Corps will serve as the lead Federal agency in the preparation of the DSEIS. It is anticipated that the following agencies will be invited and will accept cooperating agency status for the preparation of the DSEIS: U.S. Environmental Protection Agency, U.S. Fish and Wildlife Service, National Marine Fisheries Service, Department of Interior, U.S. Geological Survey, Federal Emergency Management Agency, U.S. Department of Transportation, Alabama Department of Environmental Management, Alabama Department of Conservation and Natural Resources, Alabama State Port Authority, Alabama Secretary of State, and Alabama State Historic Preservation Office.
4. The scoping meeting will be held on (see
5. It is anticipated that the DSEIS will be made available for public review in July 2018.
Department of the Navy, DoD.
Notice to add a new System of Records.
The Department of the Navy proposes to add a new system of records, N05220-1, entitled “Data Warehouse Business Intelligence System (DWBIS)” to be used as a management tool for statistical analysis, tracking, reporting, and to increase program effectiveness; to direct the workforce education, training, skills, and experience needed to develop and deploy key Information Dominance systems for Naval and DoD programs assigned to this Command; and to analyze the correct staffing needed for key products supported by the Command. This system of records will rely on selected information collected from other authorized personnel and financial systems of records to manage the development of its Acquisition Workforce, Cyber Security, and Information Dominance workforce.
Comments will be accepted on or before January 22, 2016. This proposed action will be effective the day following the end of the comment period unless comments are received which result in a contrary determination.
You may submit comments, identified by docket number and title, by any of the following methods:
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Ms. Robin Patterson, Head, PA/FOIA Office (DNS-36), Department of the Navy, 2000 Navy Pentagon, Washington, DC 20350-2000, or by phone at (202) 685-6545.
The Department of the Navy notices for systems of records subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the
The proposed system report, as required by 5 U.S.C. 552a(r) of the Privacy Act of 1974, as amended, was submitted on December 15, 2015, to the House Committee on Oversight and Government Reform, the Senate Committee on Governmental Affairs, and the Office of Management and Budget (OMB) pursuant to paragraph 4c of Appendix I to OMB Circular No. A-130, “Federal Agency Responsibilities for Maintaining Records About Individuals,” dated February 8, 1996 (February 20, 1996, 61 FR 6427).
Data Warehouse Business Intelligence System (DWBIS).
Space and Naval Warfare (SPAWAR) Systems Center Atlantic, Building 3148, 1 Innovation Drive, Hanahan, SC 29410-4200.
Naval service members assigned to SPAWAR Systems Center Atlantic and government employees (to include employees outside the Contiguous United States) and government contractors directly supporting SPAWAR Systems Center Atlantic.
Name, work mailing address, DoD ID Number, employee ID number, Common Access Card (CAC) ID Number, Navy Enterprise Resource Planning (ERP) employee ID number, military rank or government grade, employee series and grade, date reported to command, work location, organizational code, organizational group, supervisor and their contact numbers, position title and pay plan, Defense Acquisition Workforce coursework planned or completed, position level and continuous learning points required, cyber security workforce membership including credentials, certifications held, and expiration date; contracting officer's representative status, certifications achieved, demonstrated proficiency levels earned under internal Competency Development Model, projects or portfolio work assigned, credentials held on entry to the Mid-Career Leadership Program, last personnel action (SF-50), nominations for award(s); education information includes college courses applied for, college degrees held and institutions attended, professional certifications held; employee promotion(s), overseas tour begin and end date, number of years at current tour end, Navy ERP transactions executed or approved by the individual.
Contractor's information includes current provisioning in Navy ERP by name and unique ID, government sponsor, and whether they are a current member of the command's cyber security workforce for reporting purposes.
10 U.S.C. 5013, Secretary of the Navy; 10 U.S.C Chapter 87, Defense Acquisition Workforce; DoD 5200.2-R, Department of Defense Personnel Security Program; DoDD 8570.1-M, Information Assurance Workforce Improvement Program; and SECNAV M-5510.30, Department of Navy Personnel Security Program.
This system is primarily be used as a management tool for statistical analysis, tracking, reporting, and to increase program effectiveness. To direct the workforce education, training, skills, and experience needed to develop and deploy key Information Dominance systems for Naval and DoD programs assigned to this Command. To analyze the correct staffing needed for key products supported by the Command. This system of records will rely on selected information collected from other authorized personnel and financial systems of records to manage the development of its Acquisition Workforce, Cyber Security, and Information Dominance workforce.
In addition to those disclosures generally permitted under 5 U.S.C. 552a(b) of the Privacy Act of 1974, as amended, the records contained therein may specifically be disclosed outside the DoD as a routine use pursuant to 5 U.S.C. 552a (b)(3) as follows:
Disclosure of information is in response to a specific inquiry from a member of Congress, or a committee, joint committee, or subcommittee of either entity to the extent of matter within its jurisdiction.
The DoD Blanket Routine Uses set forth at the beginning of the Department of the Navy's compilation of systems of records notices may apply to this system. The complete list of DoD blanket routine uses can be found online at:
Electronic storage media.
Records are retrieved primarily by name, mailing/home address, DoD ID Number, employee ID number, and/or unique ID.
Electronic records have data at rest encryption and access is restricted to authorized users holding specific electronic credentials and have a need to know. Physical access to terminals, terminal rooms, buildings, and surroundings are controlled by locked terminals and rooms, guards, personnel screening, and visitor registers.
Records are maintained for 1 year or when abstracted, or consolidated, whichever is earlier. Records are destroyed by overwriting with new data or burning, erasing, or degaussing of the hard drive.
SPAWAR Systems Center Atlantic 80, Chief Engineer, 1837 Morris Street, Suite 3109B, Norfolk, VA 23511-3498.
Individuals seeking to determine whether this system of records contains
The requester must provide their full name, mailing/home address, DoD ID Number, and/or employee ID number.
The system manager may require a DoD Public Key Infrastructure (PKI) signed email as a means of proving the identity of the individual requesting access to the records.
For separated or retired employees, the system manager may require an original signature or a notarized signature and the last organizational code worked for while in the Command as a means of proving the identity of the individual requesting access to the records.
Individuals seeking access to records about themselves contained in this system of records should address written and signed inquiries to SPAWAR Systems Center Atlantic, Code 80E, 1837 Morris Street, Suite 3109B, Norfolk, VA 23511-3498.
The requester must provide their full name, mailing/home address, DoD ID Number, and/or employee ID number.
The system manager may require a DoD Public Key Infrastructure (PKI) signed email as a means of proving the identity of the individual requesting access to the records.
For separated or retired employees, the system manager may require an original signature or a notarized signature and the last organizational code worked for while in the Command as a means of proving the identity of the individual requesting access to the records.
The Navy's rules for accessing records, and for contesting contents and appealing initial agency determinations are published in Secretary of the Navy Instruction 5211.5; 32 CFR part 701; or may be obtained from the system manager.
SPAWAR Personnel and Administrators, Navy Enterprise Resource Planning (Navy ERP), Total Workforce Management Services (TWMS), Department of the Navy Civilian Authoritative Data Source (DONCADS) and DoD Defense Civilian Personnel Data System (DCPDS).
None.
National Center for Education Statistics, Institute of Education Sciences, Department of Education.
Notice.
The Secretary announces dates for State educational agencies (SEAs) to submit expenditure and revenue data and average daily attendance statistics on ED Form 2447 (the National Public Education Financial Survey (NPEFS)) for fiscal year (FY) 2015, revisions to those reports, and revisions to prior fiscal year reports. The Secretary sets these dates to ensure that data are available to serve as the basis for timely distribution of Federal funds. The U.S. Census Bureau is the data collection agent for this request of the Department of Education's National Center for Education Statistics (NCES). The data will be published by NCES and will be used by the Secretary in the calculation of allocations for FY 2017 appropriated funds.
SEAs can begin submitting data on Tuesday, February 2, 2016. The deadline for the final submission of all data, including any revisions to previously submitted data for FY 2014 and FY 2015, is Monday, August 15, 2016. Any resubmissions of FY 2014 or FY 2015 data by SEAs in response to requests for clarification or reconciliation or other inquiries by NCES or the Census Bureau must be completed as soon as possible, but no later than Tuesday, September 6, 2016. All outstanding data issues must be reconciled or resolved by the SEAs, NCES, and the Census Bureau as soon as possible, but no later than September 6, 2016.
SEAs may mail ED Form 2447 to: U.S. Census Bureau, ATTENTION: Economic Reimbursable Surveys Division, 4600 Silver Hill Road, Suitland, MD 20746.
Alternatively, SEAs may hand-deliver submissions by 4:00 p.m. Washington, DC time on August 15, 2016, to: U.S. Census Bureau, Economic Reimbursable Surveys Division, 4600 Silver Hill Road, Suitland, MD 20746.
Mr. Stephen Q. Cornman, NPEFS Project Director, National Center for Education Statistics, Institute of Education Sciences, U.S. Department of Education. Telephone: (202) 245-7753 or by email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service, toll free, at 1-800-877-8339.
Under section 153(a)(1)(I) of the Education Sciences Reform Act of 2002, 20 U.S.C. 9543(a)(1)(I), which authorizes NCES to gather data on the financing and management of education, NCES collects data annually from SEAs through ED Form 2447. The report from SEAs includes attendance, revenue, and expenditure data from which NCES determines a State's “average per-pupil expenditure” (SPPE) for elementary and secondary education, as defined in section 9101(2) of the Elementary and Secondary Education Act of 1965, as amended (ESEA) (20 U.S.C. 7801(2)).
In addition to using the SPPE data as general information on the financing of elementary and secondary education, the Secretary uses these data directly in calculating allocations for certain formula grant programs, including, but not limited to, title I, part A of the ESEA, Impact Aid, and Indian Education programs. Other programs, such as the Education for Homeless Children and Youth program under title VII of the McKinney-Vento Homeless Assistance Act and the Teacher Quality State Grants program (title II, part A of the ESEA), make use of SPPE data indirectly because their formulas are based, in whole or in part, on State title I, part A allocations.
In January 2016, the Census Bureau, acting as the data collection agent for NCES, will email ED Form 2447 to
Submissions by SEAs to the Census Bureau will be analyzed for accuracy and returned to each SEA for verification. SEAs must submit all data, including any revisions to FY 2014 and FY 2015 data, to the Census Bureau no later than Monday, August 15, 2016. Any resubmissions of FY 2014 or FY 2015 data by SEAs in response to requests for clarification or reconciliation or other inquiries by NCES or the Census Bureau must be completed by Tuesday, September 6, 2016. Between August 15, 2016, and September 6, 2016, SEAs may also, on their own initiative, resubmit data to resolve issues not addressed in their final submission of NPEFS data by August 15, 2016. All outstanding data issues must be reconciled or resolved by the SEAs, NCES, and the Census Bureau as soon as possible, but no later than September 6, 2016.
In order to facilitate timely submission of data, the Census Bureau will send reminder notices to SEAs in May, June, and July of 2016.
Having accurate, consistent, and timely information is critical to an efficient and fair Department of Education (Department) allocation process and to the NCES statistical process. To ensure timely distribution of Federal education funds based on the best, most accurate data available, the Department establishes, for program funding allocation purposes, Monday, August 15, 2016, as the final date by which the SEAs must submit data using either the interactive survey form on the NPEFS data collection Web site at:
Any resubmissions of FY 2014 or FY 2015 data by SEAs in response to requests for clarification or reconciliation or other inquiries by NCES or the Census Bureau must be completed through the interactive survey form on the NPEFS data collection Web site or ED Form 2447 by Tuesday, September 6, 2016. If an SEA submits revised data after the final deadline that result in a lower SPPE figure, the SEA's allocations may be adjusted downward, or the Department may direct the SEA to return funds. SEAs should be aware that all of these data are subject to audit and that, if any inaccuracies are discovered in the audit process, the Department may seek recovery of overpayments for the applicable programs.
The following are important dates in the data collection process for FY 2015:
February 2, 2016—SEAs can begin to submit accurate and complete data for FY 2015 and revisions to previously submitted data for FY 2014.
March 18, 2016—Date by which SEAs are urged to submit accurate and complete data for FY 2014 and FY 2015.
August 15, 2016—Mandatory final submission date for FY 2014 and FY 2015 data to be used for program funding allocation purposes.
September 6, 2016—Mandatory final deadline for responses by SEAs to requests for clarification or reconciliation or other inquiries by NCES or the Census Bureau. All data issues must be resolved.
If an SEA's submission is received by the Census Bureau after August 15, 2016, the SEA must show one of the following as proof that the submission was mailed on or before that date:
1. A legibly dated U.S. Postal Service postmark.
2. A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
3. A dated shipping label, invoice, or receipt from a commercial carrier.
4. Any other proof of mailing acceptable to the Secretary.
If the SEA mails ED Form 2447 through the U.S. Postal Service, the Secretary does not accept either of the following as proof of mailing:
1. A private metered postmark.
2. A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, an SEA should check with its local post office.
You may also access documents of the Department published in the
20 U.S.C. 9543.
Fuel Cycle Technologies, Office of Nuclear Energy, Department of Energy.
Notice of Invitation for Public Comment (IPC).
The U.S Department of Energy (DOE) is implementing a consent-based siting process to establish an integrated waste management system to transport, store, and dispose of commercial spent nuclear fuel and high level defense radioactive waste. In a consent-based siting approach, DOE will work with communities, tribal governments and states across the country that express interest in hosting any of the facilities identified as part of an integrated waste management system. As part of this process, the Department wants public input on implementing this system. In order to solicit public feedback, DOE is submitting this Invitation for Public Comment (IPC). Through this IPC, we are requesting feedback from communities, states, Tribes, and other interested stakeholders on how to design a consent-based siting process. In addition, the Department intends to host a series of public meetings to engage communities and discuss the development of a consent-based approach to managing our nation's nuclear waste.
Written comments will be accepted beginning December 23, 2015 through June 15, 2016. Separate announcements will be made for each public meeting.
You may submit questions or comments by any of the following methods:
Requests for further information should be sent to
Electricity generated by nuclear energy has powered homes, schools, and industry in the United States since the 1950s. Nuclear material is used to power naval vessels and was used to build the U.S. nuclear weapon stockpile during the Cold War. These activities have generated spent nuclear fuel (SNF) and high-level radioactive waste (HLW).
Isolating and containing this radioactive waste is necessary to ensure the long-term safety and security of the public and environment. Though the Cold War ended a quarter century ago and commercial nuclear power has been generated for over half a century, the country still lacks a permanent disposal solution for SNF and HLW. Instead, commercial SNF is stored at operating and shutdown reactor sites around the country while HLW from defense activities resides at Department of Energy sites. Previous attempts to develop long-term solutions for storage and disposal of this waste have resulted in controversy, litigation, protracted delays, and ultimately a failure to address the problem.
Failure to dispose of nuclear waste has proven costly for energy ratepayers and taxpayers who are paying for the inability of the government to meet federal waste management commitments. States, Tribes, and others in the public carry the undue burden of hosting radioactive waste they were promised was only temporary.
The purpose of this IPC is to seek input on the elements that the Department of Energy should consider in the development of a consent-based siting process. As reflected in the Administration's
The Administration's Strategy envisioned the implementation of an integrated waste management system consisting of a range of nuclear waste facilities, each serving a specific role, to address the challenges facing the U.S. These nuclear waste facilities could include:
• A pilot interim storage facility with limited capacity capable of accepting used nuclear fuel and high-level radioactive waste and initially focused on serving shut-down reactor sites;
• A larger, consolidated interim storage facility, potentially co-located with the pilot facility and/or with a geologic repository, that provides the needed flexibility in the waste management system and allows for important near-term progress in implementing the federal commitment;
• Deep borehole disposal, which could be an option for disposal of smaller and more compact waste forms currently stored at Department of Energy sites;
• A permanent geologic repository for the disposal of defense high-level waste and, potentially, some DOE-managed spent nuclear fuel, which would be generally less radioactive, cooler, and easier to handle, enabling a simpler design and earlier availability; and
• A permanent geologic repository for the disposal of commercial spent nuclear fuel.
In early to mid-2016, the Department of Energy will host a series of public meetings to receive input for the design of a consent-based siting process. This IPC announces the Department's intention to hold meetings and to request input about what considerations are important when designing a fair and effective process for consent-based siting. Written input as well as feedback from public meetings will enable the Department to draft the initial steps on a proposal for a phased, adaptive, consent-based process for selecting sites.
Moving forward, the Department of Energy will draw upon extensive experience in storage, transportation, siting, policy, legislative, and regulatory issues both in the U.S. and elsewhere. A top priority is to build upon and improve existing relationships with states, Tribes, communities, and stakeholders to help identify important considerations, challenges, and opportunities for discussion.
Consent based siting seeks to ensure fairness in the distribution of costs, benefits, risks and responsibilities now and in future generations. How, in your view, can fairness be best assured by the process for selecting a site?
The challenges and opportunities of site selection drive us to continue to learn from previous or ongoing examples. From your perspective, what experience and models do you think are the most relevant to consider and draw from in designing the process for selecting a site?
The Department believes that there may be a wide range of communities who will want to learn more and be involved in selecting a site. Participation in the process for selecting a site carries important responsibilities. What are your views on who should be involved and the roles participants should have?
The Department of Energy is committed to ensuring that people and communities have sufficient information and access to resources for engaging fully and effectively in siting. What information and resources would be essential to enable you to learn the most about and participate in the siting process?
The questions posed in this document are a starting point for discussion on the design of the process for consent-based siting of nuclear waste facilities, the Department of Energy would like to hear about and discuss any related questions, issues, and ideas that you think are important.
Written comments from this IPC, along with input from public meetings, will be documented in a draft report scheduled to be released in summer 2016. The Department is planning to solicit comments on the draft report in order to ensure the content accurately reflects input received.
If you are unable to attend a public meeting or would like to further discuss ideas for consent-based siting, please propose an opportunity for us to speak with you. The Department will do its best to accommodate requests and help arrange additional opportunities to engage. To learn more about nuclear energy, nuclear waste, and ongoing technical work please see
State, tribal, community, organization, public or individual name;
State, tribal, community, organization, public or individual point of contact; and
Point of contact's address, phone number, and email address.
If an email or phone number is included, it will allow the DOE to contact the commenter if questions or clarifications arise. No responses will be provided to commenters in regards to the disposition of their comments. All comments will be officially recorded without change or edit, including any personal information provided. Personal information (other than name) will be protected from public disclosure upon request.
Please identify your answers by responding to a specific question or topic, if possible. Respondents may answer as many or as few questions as they wish. Any additional comments that do not address a particular question should be included at the end of your response to this IPC as “Additional Comments.”
DOE would appreciate early input in order to identify initial interest and concerns, as well as any early opportunities. Amended or revised inputs from commenters are also welcome throughout the comment period to help DOE develop this process. Comments received after the closing date will be considered as the planning process progresses; however, the DOE is only able to ensure consideration of comments received on or before the closing date as the initial phase of the consent based siting process is developed. Subsequent comments and input will also be welcome as DOE views this as a core component of a phased and adaptive consent-based siting process.
Take notice that on December 15, 2015, City of Banning, California submitted its tariff filing: Filing 2016 Transmission Revenue Balancing Account Adjustment and Existing Transmission Contracts update, to be effective 1/1/2016.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
With respect to an order issued by the Commission on December 16, 2015 in the above-captioned docket, with the exceptions noted below, the staff of the Office of Enforcement are designated as non-decisional in deliberations by the Commission in this docket.
Exceptions to this designation as non-decisional are:
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection.
a.
b. Project No.: 2335-039.
c.
d.
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h.
i.
j. This application is not ready for environmental analysis at this time.
k.
The existing project consists of: (a) A 894.7-foot-long, 45.0-foot-high dam that includes: (i) A 202-foot-long, 15-foot-high east earth embankment section with a concrete core wall; (ii) a 244-foot-long, 32-foot-high stone masonry and concrete spillway section at the west end of the east earth embankment section with six 32.5-foot-wide, 20.5-foot-high Tainter gates; (iii) a 71.3-foot-long, 19.5-foot-high stone masonry and concrete abutment section at the west end of the spillway section; (iv) a 203.3-foot-long, 26.5-foot-high stone masonry and concrete stanchion bay section at the west end of the abutment section with two 65.9-foot-wide, 17.5-foot-high and one 46.8-foot-wide, 17.5-foot-high stanchion bays; (v) a 27-foot-long bulkhead section at the west end of the stanchion bay section with a 20.5-foot-wide, 7.0-foot-high surface weir gate and a 6.0-foot-wide, 12.3-foot-high Tainter gate at the upstream end of a steel-lined sluiceway; (vi) a 95.5-foot-wide intake and powerhouse section at the west end of the bulkhead section that varies in height from 45.5 feet to 49.4 feet and includes four headgates and two double-bay trashracks with 3.5-inch clear-bar spacing; and (vii) a 51.6-foot-long, 10.5-foot-high concrete cut-off wall at the west end of the intake and powerhouse section; (b) a 400-acre impoundment with a gross storage volume of 4,575 acre-feet and a useable storage volume of 2,065 acre-feet at a normal maximum elevation of 320 feet National Geodetic Vertical Datum; (c) a 40.5-foot-wide, 105.5-foot-long concrete powerhouse that is integral with the dam and contains two turbine-generator units rated at 6 and 7 MW; (d) a 6,000-foot-long excavated tailrace that varies from 150 to 175 feet wide; (e) a 200-foot-long generator lead and a 310-foot-long generator lead that connect the turbine-generator units to the regional grid; and (f) appurtenant facilities.
The Williams Project operates in a store-and-release mode where the impoundment level is fluctuated up to six feet daily to regulate downstream flow and meet peak demands for hydroelectric generation. The existing license requires an instantaneous minimum flow of 1,360 cubic feet per second, or inflow (whichever is less), in the tailrace. White Pine Hydro proposes to install an upstream eel passage facility, improve a canoe portage, and improve angler access. White Pine Hydro also proposes to remove 375.5 acres of land and water from the existing project boundary because it does not serve a project purpose.
l.
m. You may also register online at
n.
The application will be processed according to the following preliminary Hydro Licensing Schedule. Revisions to the schedule may be made as appropriate.
o. Final amendments to the application must be filed with the Commission no later than 30 days from the issuance date of the notice of ready for environmental analysis.
On November 28, 2015, Energy Resources USA, Inc. (Energy Resources) filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of the Selden Lock and Dam Hydroelectric Project (Selden Project or project) to be located at the U.S. Army Corps of Engineers' Selden Lock and Dam on the Black Warrior River in Green County, Alabama. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
Energy Resources' permit application is filed in competition with Lock+
The proposed project would consist of the following: (1) A 200-foot-long, 140-foot-wide intake channel; (2) a 133-foot-long, 83-foot-wide powerhouse containing two generating units with a total capacity of 12.5 megawatts; (3) a 4000-foot-long, 1600-foot-wide tailrace; (4) a 4.16/69 kilo-Volt (kV) substation; (5) a 330-foot-long addition to the existing access road; and (6) a 3-mile-long, 69 kV transmission line. The proposed project would have an estimated average annual generation of 68,900 megawatt-hours, and operate as directed by the Corps.
Deadline for filing comments and motions to intervene: 60 days from the issuance of this notice.
The Commission strongly encourages electronic filing. Please file comments and motions to intervene using the Commission's eFiling system at
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of the Commission's Web site at
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
Description: Triennial Market Power Analysis Filing for Southwest Power Pool region of Lea Power Partners, LLC.
Description: Compliance filing: Compliance Filing, Formula Rate Protocols, TFR to be effective 3/1/2015.
Description: Section 205(d) Rate Filing: Revised Tariff & Req for Ancillary Services to be effective 12/18/2015.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Accession Number: 201512155229.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and § 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on December 11, 2015, the Town of Walnut, Mississippi (Walnut), PO Box 540, 621 Main Street, Walnut, Mississippi 38683, filed an application pursuant to section 7(f) of the Natural Gas Act (NGA) requesting a service area determination within which it may enlarge or expand its natural gas distribution facilities without further Commission authorization. Walnut also requests a determination that it qualifies as a local distribution company for purposes of section 311 of the Natural Gas Policy Act of 1978 (NGPA) and a waiver of all reporting, accounting, and other rules and regulations under the NGA and NGPA that are normally applicable to natural gas companies. Walnut's proposed service area is intended to encompass the segments of the two 4-mile, 2-inch diameter Gas Supply lines that are located in Tennessee and the Walnut facilities located in Tennessee that are used to serve 33 residential customers and one industrial customer, all as more fully set forth in the application which is on file with the Commission and open to public inspection. The filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site web at
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice, the Commission staff will either: complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the EA for this proposal. The filing of the EA
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit seven copies of filings made in the proceeding with the Commission and must mail a copy to the applicant and to every other party. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commentors will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commentors will not be required to serve copies of filed documents on all other parties. However, the non-party commentors will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that the following hydroelectric applications have been filed with the Commission and are available for public inspection.
a.
b.
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d.
e.
f.
g.
h.
i.
j. Deadline for filing comments, recommendations, terms and conditions, and prescriptions: 60 days from the issuance date of this notice; reply comments are due 105 days from the issuance date of this notice.
The Commission strongly encourages electronic filing. Please file comments, recommendations, terms and conditions, and prescriptions using the Commission's eFiling system at
The Commission's Rules of Practice and Procedures require all intervenors filing documents with the Commission to serve a copy of that document on each person on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
k. These applications have been accepted, and are ready for environmental analysis at this time.
l. The proposed Opekiska Lock and Dam Hydroelectric Project would be the most upstream project at river mile (RM) 115.4 on the Monongahela River and would consist of the following new facilities: (1) A 180-foot-long, 95-foot-wide intake channel directing flow to a 30-foot-long, 50-foot-high, 70-foot-wide intake structure with 3-inch bar spacing trash racks; (2) a 120-foot-long, 60-foot-high, 70-foot-wide reinforced concrete powerhouse on the west bank of the river; (3) two turbine-generator units with a combined capacity of 6.0 megawatts (MW); (4) a 280-foot-long, 64-foot-wide tailrace; (5) a 40-foot-long by 40-foot-wide substation; (6) a 3,511-foot-long, 12.5-kilovolt (kV), overhead transmission line to connect the project substation to an existing distribution line; and (7) appurtenant facilities.
The proposed Morgantown Lock and Dam Hydroelectric Project would be located at RM 102.0 on the Monongahela River and consist of the following new facilities: (1) A 100-foot-long, 64-foot-wide intake channel located downstream of the Corps' 6th spillway gate on the east side of the river; (2) a pair of spill gates totaling 60 feet wide located within the intake channel; (3) a 30-foot-long, 50-foot-high, 64-foot-wide intake structure with 3-inch bar spacing trash racks; (4) a 120-foot-long, 60-foot-high, 70-foot-wide reinforced concrete powerhouse; (5) two turbine-generator units with a combined capacity of 5.0 MW; (6) a 170-foot-long, 90-foot-wide tailrace; (7) a 40-foot-long by 40-foot-wide substation; (8) a 2,162-foot-long, 12.5-kV, overhead transmission line to connect the project substation to an existing distribution line; and (9) appurtenant facilities.
The proposed Point Marion Lock and Dam Hydroelectric Project would be located at RM 90.8 on the Monongahela River and consist of the following new facilities: (1) A 280-foot-long, 70-foot-wide intake channel directing flow to a 30-foot-long, 50-foot-high, 70-foot-wide intake structure with 3-inch bar spacing trash racks; (2) a 120-foot-long, 60-foot-high, 70-foot-wide reinforced concrete powerhouse on the east bank of the river; (3) two turbine-generator units with a combined capacity of 5.0 MW; (4) a 215-foot-long, 84-foot-wide tailrace; (5) a 40-foot-long by 40-foot-wide substation; (6) a 3,325-foot-long, 69-kV, overhead transmission line to connect the project substation to an existing substation; and (7) appurtenant facilities.
The proposed Grays Landing Lock and Dam Hydroelectric Project would be located at RM 82.0 on the Monongahela River and consist of the following new facilities: (1) A 300-foot-long, 130-foot-wide intake channel directing flow to a 100-foot-long, 84-foot-wide intake structure with 3-inch bar spacing trash racks; (2) a 576-foot-long, 2.5-foot-high adjustable crest gate on top of the existing dam crest; (3) a 150-foot-long, 75-foot-high, 90-foot-wide reinforced concrete powerhouse on the west bank of the river; (4) two turbine-generator units with a combined capacity of 12.0 MW; (5) a 250-foot-long, 84-foot-wide tailrace; (6) a 40-foot-long by 40-foot-wide substation; (7) a 9,965-foot-long, 69-kV, overhead transmission line to connect the project substation to an existing distribution line; and (8) appurtenant facilities.
The proposed Maxwell Lock and Dam Hydroelectric Project would be located at RM 61.2 on the Monongahela River and consist of the following new facilities: (1) A 130-foot-long, 85-foot-wide intake channel located immediately downstream of the Corps' 5th spillway gate on the east side of the river; (2) a pair of spill gates totaling 84 feet wide located within the proposed intake channel; (3) a 100-foot-long, 70-foot-high, 85-foot-wide intake structure with 3-inch bar spacing trash racks; (4) a 150-foot-long, 70-foot-high, 90-foot-wide reinforced concrete powerhouse; (5) two turbine-generator units with a combined capacity of 13.0 MW; (6) a 160-foot-long, 120-foot-wide tailrace; (7) a 40-foot-long by 40-foot-wide substation; (8) a 350-foot-long, 69/138-kV, overhead transmission line to connect the project substation to an existing distribution line; and (9) appurtenant facilities.
The proposed Monongahela Lock and Dam Number Four (Charleroi) Hydroelectric Project would be located at RM 41.5 on the Monongahela River
The proposed Allegheny Lock and Dam Number Two Hydroelectric Project would be located at RM 6.7 on the Allegheny River and consist of the following new facilities: (1) A 170-foot-wide, 120-foot-long, 70-foot-high intake structure with two 5-inch bar spacing trash racks; (2) two 45-foot-wide, 40-foot-high spillway bays; (3) an 1,100-foot-long, 2.5-foot-high adjustable crest gate on top of the existing dam crest; (4) a 170-foot-wide by 180-foot-long powerhouse along the east side of the river; (5) three Kaplan turbine-generator units with a combined installed capacity of 17.0 MW; (6) a 50-foot-wide by 60-foot-long substation; (7) a 1,265-foot-long, single overhead, 69-kV, overhead transmission line to connect the project substation to an existing distribution line owned by Duquesne Light Company; and (8) appurtenant facilities. The average annual generation would be 81,950 MWh annually.
The proposed Emsworth Locks and Dam Hydroelectric Project would be located at RM 6.2 on the Ohio River and would consist of the following new facilities: (1) A 205-foot-long, 180-foot-wide intake channel directing flow to a 30-foot-long, 63.5-foot-high, 180-foot-wide intake structure with 5-inch bar spacing trash racks; (2) a 180-foot-long, 77-foot-high, 180-foot-wide reinforced concrete powerhouse on the south bank of the river; (3) four turbine-generator units with a combined capacity of 24 MW; (4) a 380-foot-long, 280-foot-wide tailrace; (5) a 50-foot-long by 60-foot-wide substation; (6) a 1,893-foot-long, 69-kV, overhead transmission line to connect the project substation to an existing substation; and (7) appurtenant facilities. The average annual generation would be 101,300 MWh.
The proposed Emsworth Back Channel Dam Hydroelectric Project would be located at RM 6.8 on the Ohio River and consist of the following new facilities: (1) A 100-foot-long, 165-foot-wide intake channel directing flow to a 32-foot-long, 63.5-foot-high, 90-foot-wide intake structure with 5-inch bar spacing trash racks; (2) a 150-foot-long, 77-foot-high, 90-foot-wide reinforced concrete powerhouse on the north bank of the river; (3) two turbine-generator units with a combined capacity of 12.0 MW; (4) a 190-foot-long, 105-foot-wide tailrace; (5) a 50-foot-long by 60-foot-wide substation; (6) a 3,758-foot-long, 69-kV, overhead transmission line to connect the project substation to an existing substation; and (7) appurtenant facilities. The average annual generation would be 53,500 MWh.
The proposed Montgomery Locks and Dam Hydroelectric Project would be located at RM 31.7 on the Ohio River and consist of the following new facilities: (1) A 340-foot-long, 205-foot-wide intake channel directing flow to a 150-foot-long, 90-foot-high, 205-foot-wide intake structure with 5-inch bar spacing trash racks; (2) a 315-foot-long, 105-foot-high, 205-foot-wide reinforced concrete powerhouse on the north bank of the river; (3) three turbine-generator units with a combined capacity of 42 MW; (4) a 280-foot-long, 210-foot-wide tailrace; (5) a 50-foot-long by 60-foot-wide substation; (6) a 392-foot-long, 69-kV, overhead transmission line to connect the project substation to an existing distribution line; and (7) appurtenant facilities. The average annual generation would be 194,370 MWh.
The applicants propose to operate each of the ten projects in a “run-of-river” mode using flows made available by the Corps. The proposed projects would not change existing flow releases or water surface elevations upstream or downstream of the proposed projects.
m. A copy of each application is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
All filings must (1) bear in all capital letters the title “COMMENTS,” “REPLY COMMENTS,” “RECOMMENDATIONS,” “TERMS AND CONDITIONS,” or “PRESCRIPTIONS;” (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person submitting the filing; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, recommendations, terms and conditions or prescriptions must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). Agencies may obtain copies of the application directly from the applicant. Each filing must be accompanied by proof of service on all persons listed on the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b), and 385.2010.
You may also register online at
n. Public notice of the filing of the initial development applications, which has already been given, established the due date for filing competing applications or notices of intent. Under the Commission's regulations, any competing development application must be filed in response to and in compliance with public notice of the initial development application. No competing applications or notices of intent may be filed in response to this notice.
o. A license applicant must file no later than 60 days following the date of issuance of this notice: (1) A copy of the water quality certification; (2) a copy of the request for certification, including proof of the date on which the certifying agency received the request; or (3) evidence of waiver of water quality certification.
Take notice that on December 11, 2015, and supplemented on December 16, 2015, pursuant to section 207(a)(2) of the Federal Energy Regulatory Commission's (Commission) Rules of
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Petitioner.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Comment
Southwestern Power Administration, DOE.
Notice of Rate Order.
Pursuant to Delegation Order Nos. 00-037.00A, effective October 25, 2013, and 00-001.00F, effective November 17, 2014, the Deputy Secretary has approved and placed into effect on an interim basis Rate Order No. SWPA-69, which increases the power rate for the Sam Rayburn Dam Project (Rayburn) pursuant to the Rayburn Rate Schedule (SRD-15) to supersede the existing rate schedule.
The effective period for the rate schedule specified in Rate Order No. SWPA-69 is January 1, 2016, through September 30, 2019.
Mr. Marshall Boyken, Senior Vice President, Chief Operating Officer, Southwestern Power Administration, U.S. Department of Energy, Williams Center Tower I, One West Third Street, Tulsa, Oklahoma 74103, (918) 595-6646,
Rate Order No. SWPA-69, which has been approved and placed into effect on an interim basis, increases the power rate for Rayburn pursuant to the following rate schedule:
Rate Schedule SRD-15, Wholesale Rates for Hydro Power and Energy Sold to Sam Rayburn Dam Electric Cooperative, Inc. (Contract No. DE-PM75-92SW00215)
Rate Schedule SRD-13, Wholesale Rates for Hydro Power and Energy Sold to Sam Rayburn Dam Electric Cooperative, Inc. (Contract No. DE-PM75-92SW00215) (superseded by SRD-15)
The Administrator has followed title 10, part 903 subpart A, of the Code of Federal Regulations (10 CFR part 903), “Procedures for Public Participation in Power and Transmission Rate Adjustments and Extensions” in connection with the proposed rate schedule. On October 9, 2015, Southwestern published notice in the
Information regarding this rate proposal, including studies and other supporting material, is available for public review and comment in the offices of Southwestern Power Administration, Williams Center Tower I, One West Third Street, Tulsa, Oklahoma 74103. Following review of Southwestern's proposal within the Department of Energy, I approved Rate Order No. SWPA-69 which increases the existing Rayburn power rate to $4,563,792 per year for the period January 1, 2016 through September 30, 2019.
Pursuant to Sections 302(a) and 301(b) of the Department of Energy Organization Act, Public Law 95-91, the functions of the Secretary of the Interior and the Federal Power Commission under Section 5 of the Flood Control
The Sam Rayburn Dam (Rayburn) is located on the Angelina River in the State of Texas in the Neches River Basin. Since the beginning of its operation in 1965, its power has been marketed as an isolated project, under contract with Sam Rayburn Dam Electric Cooperative, Inc. (SRDEC) (Contract No. DE-PM75-92SW00215).
FERC confirmation and approval of the current Rayburn rate schedule was provided in FERC Docket EF14-2-000 issued on February 6, 2013, (146 FERC ¶62,105) effective for the period October 1, 2013, through September 30, 2017.
Southwestern prepared a 2015 Current Power Repayment Study which indicated that the existing power rate would not satisfy present financial criteria regarding repayment of investment within a 50-year period due to increased U.S. Army Corps of Engineers (Corps) operations and maintenance expenses as well as increased interest expense associated with investments and replacements in the hydroelectric generating facilities. The 2015 Revised Power Repayment Study indicated the need for a 7.9 percent revenue increase. These preliminary results provided the basis for the proposed revenue increase.
The 2015 Revised Power Repayment Study was finalized and indicates that an increase in annual revenues of $333,672 (7.9 percent) is necessary beginning January 1, 2016, to accomplish repayment in the required number of years. Accordingly, Southwestern has prepared a proposed rate schedule based on the additional revenue requirement to ensure repayment.
Southwestern conducted the rate adjustment proceeding in accordance with title 10, part 903, subpart A of the Code of Federal Regulations (10 CFR part 903), “Procedures for Public Participation in Power and Transmission Rate Adjustments and Extensions.” More specifically, opportunities for public review and comment during a 30-day period on the proposed Rayburn power rate were announced by a
Southwestern will continue to perform its Power Repayment Studies annually, and if the 2016 results should indicate the need for additional revenues, another rate filing will be conducted and updated revenue requirements implemented for FY 2017 and thereafter.
Following the conclusion of the comment period on November 9, 2015, Southwestern finalized the Power Repayment Studies and rate schedule for the proposed annual rate of $4,563,792 which is the lowest possible rate needed to satisfy repayment criteria. This rate represents an annual increase of 7.9 percent. The Administrator made the decision to submit the rate proposal for interim approval and implementation.
Southwestern received one comment during the public comment period. The comment on behalf of the Sam Rayburn Dam Electric Cooperative, Inc. expressed no objection to the proposed rate increase.
Information regarding this power rate increase, including studies, comments and other supporting material, is available for public review in the offices of Southwestern Power Administration, One West Third Street, Tulsa, OK 74103.
The 2015 Rayburn Revised Power Repayment Study indicates that the increased power rate of $4,563,792 will repay all costs of the project including amortization of the power investment consistent with the provisions of Department of Energy Order No. RA 6120.2. In accordance with Delegation Order No. 00-037.00A (October 25, 2013), and Section 5 of the Flood Control Act of 1944, the Administrator has determined that the proposed Rayburn power rate is consistent with applicable law and is the lowest possible rate consistent with sound business principles.
The environmental impact of the power rate increase proposal was evaluated in consideration of the Department of Energy's guidelines for implementing the procedural provisions of the National Environmental Policy Act and was determined to fall within the class of actions that are categorically excluded from the requirements of preparing either an Environmental Impact Statement or an Environmental Assessment. (10 CFR part 1021, App. B to Subpart D, § B1.1 “Changing rates & prices”).
In view of the foregoing and pursuant to the authority delegated to me by the Secretary of Energy, I hereby confirm, approve and place in effect on an interim basis, effective January 1, 2016, through September 30, 2019, the annual Rayburn rate of $4,563,792 for the sale of power and energy from Rayburn to the Sam Rayburn Dam Electric Cooperative Inc., under Contract No. DE-PM75-92SW00215. This rate shall remain in effect on an interim basis through September 30, 2019, or until the FERC confirms and approves the rate on a final basis, or until it is superseded by a subsequent rate.
During the period January 1, 2016, through September 30, 2019, in accordance with interim approval from Rate Order No.SWPA-69 issued by the
To the power and energy purchased by Sam Rayburn Dam Electric Cooperative, Inc., (SRDEC) from the Southwestern Power Administration (Southwestern) under the terms and conditions of the Power Sales Contract dated October 7, 1992, for the sale of all Hydro Power and Energy generated at the Sam Rayburn Dam.
Three-phase, alternating current, delivered at approximately 60 Hertz, at the nominal voltage, at the point of delivery, and in such quantities as are specified by contract.
1.1. These rates shall be applicable regardless of the quantity of Hydro Power and Energy available or delivered to SRDEC;
1.2. The term “Uncontrollable Force,” as used herein, shall mean any force which is not within the control of the party affected, including, but not limited to, failure of water supply, failure of facilities, flood, earthquake, storm, lightning, fire, epidemic, riot, civil disturbance, labor disturbance, sabotage, war, acts of war, terrorist acts, or restraint by court of general jurisdiction, which by exercise of due diligence and foresight such party could not reasonably have been expected to avoid.
1.3. Hydro Power Rates, Terms, and Conditions
1.3.1. Monthly Charge for the Period of January 1, 2016 through September 30, 2019
$380,316 per month ($4,563,792 per year) for Sam Rayburn Dam Hydro Power and Energy purchased by SRDEC from January 1, 2016, through September 30, 2019.
Southwestern Power Administration, DOE.
Notice of rate order.
Pursuant to Delegation Order Nos. 00-037.00A, effective October 25, 2013, and 00-001.00F, effective November 17, 2014, the Deputy Secretary has approved and placed into effect on an interim basis Rate Order No. SWPA-70, which increases the power rate for the Robert D. Willis Hydropower Project (Willis) pursuant to the Willis Rate Schedule (RDW-15) which supersedes the existing rate schedule.
The effective period for the rate schedule specified in Rate Order No. SWPA-70 is January 1, 2016, through September 30, 2019.
Mr. Marshall Boyken, Senior Vice President, Chief Operating Office, Southwestern Power Administration, U.S. Department of Energy, Williams Center Tower I, One West Third Street, Tulsa, Oklahoma 74103, (918) 595-6646,
Rate Order No. SWPA-70, which has been approved and placed into effect on an interim basis, increases the power rate for Willis pursuant to the following Rate Schedule:
Rate Schedule RDW-15, Wholesale Rates for Hydro Power and Energy Sold to Sam Rayburn Municipal Power Agency (Contract No. DE-PM75-85SW00117)
The rate schedule supersedes the existing rate schedule shown below:
Rate Schedule RDW-14, Wholesale Rates for Hydro Power and Energy Sold to Sam Rayburn Municipal Power Agency (Contract No. DE-PM75-85SW00117) (superseded by RDW-15)
Southwestern Power Administration's (Southwestern) Administrator has determined, based on the 2015 Willis Current Power Repayment Study that the existing power rate will not satisfy cost recovery criteria specified in Department of Energy Order No. RA 6120.2 and Section 5 of the Flood Control Act of 1944. The finalized 2015 Willis Power Repayment Studies indicate that an increase in annual revenue of $101,340, or 8.6 percent, beginning January 1, 2016, will satisfy cost recovery criteria for Willis. The proposed Willis rate schedule would ultimately increase annual revenues from $1,181,496 to $1,282,836, to recover increased costs associated with operations and maintenance as well as increased costs for investments and replacements in the hydroelectric generating facility and the associated increased interest expense, with one half (4.3 percent) beginning January 1, 2016, and the remaining one half (4.3 percent) beginning on January 1, 2017.
The Administrator has followed title 10, part 903 subpart A, of the Code of Federal Regulations (10 CFR part 903), “Procedures for Public Participation in Power and Transmission Rate Adjustments and Extensions” in connection with the proposed rate schedule. On October 9, 2015, Southwestern published notice in the
Information regarding this rate proposal, including studies and other supporting material, is available for public review and comment in the offices of Southwestern Power Administration, Williams Center Tower I, One West Third Street, Tulsa, Oklahoma 74103. Following review of Southwestern's proposal within the Department of Energy, I approved Rate Order No. SWPA-70, on an interim basis, which ultimately increases the existing Willis power rate to $1,282,836 per year for the period January 1, 2016 through September 30, 2019.
In the matter of: Southwestern Power Administration, Robert D. Willis Hydropower Project Power Rate
Pursuant to Sections 302(a) and 301(b) of the Department of Energy Organization Act, Public Law 95-91, the functions of the Secretary of the Interior and the Federal Power Commission under Section 5 of the Flood Control Act of 1944, 16 U.S.C. 825s, relating to the Southwestern Power Administration (Southwestern) were transferred to and vested in the Secretary of Energy. By Delegation Order No. 00-037.00A, the Secretary of Energy delegated to the Administrator of Southwestern the authority to develop power and transmission rates, delegated to the Deputy Secretary of the Department of Energy the authority to confirm, approve, and place in effect such rates on an interim basis and delegated to the Federal Energy Regulatory Commission (FERC) the authority to confirm and approve on a final basis or to disapprove rates developed by the Administrator under the delegation. Pursuant to that delegated authority, the Deputy Secretary issued this interim rate order.
The Robert Douglas Willis Hydropower Project (Willis) (aka: Dam B and later Town Bluff Dam), located on the Neches River in eastern Texas downstream from the Sam Rayburn Dam, was originally constructed in 1951 by the U.S. Army Corps of Engineers (Corps) and provides stream flow regulation of releases from the Sam Rayburn Dam. The Lower Neches Valley Authority contributed funds toward construction of both projects and makes established annual payments for the right to withdraw up to 2000 cubic feet of water per second from Willis for its own use. Power was legislatively authorized at the project, but installation of hydroelectric facilities was deferred until justified by economic conditions. A determination of feasibility was made in a 1982 Corps study. In 1983, the Sam Rayburn Municipal Power Agency (SRMPA) proposed to sponsor and finance the development of hydropower at Willis in return for the output of the project to be delivered to its member municipalities and participating member cooperatives of the Sam Rayburn Dam Electric Cooperative.
The Willis power rate excludes the costs associated with the hydropower design and construction performed by the Corps, because all funds for these costs were provided by SRMPA. Under the Southwestern/SRMPA power sales Contract No. DE-PM75-85SW00117, SRMPA will continue to pay all annual operating and maintenance costs, as well as expected capital replacement costs, through the power rate paid to Southwestern, and will receive all power and energy produced at the project for a period of 50 years.
FERC confirmation and approval of the current Willis rate schedule was provided in FERC Docket No. EF15-5-000 issued on June 3, 2015, (151 FERC ¶62,156) effective for the period January 1, 2015, through September 30, 2018.
Southwestern prepared a 2015 Current Power Repayment Study which indicated that the existing power rate would not satisfy present financial criteria regarding repayment of investment within a 50-year period due to increased costs associated with Corps operations and maintenance as well as increased costs for investments and replacements in the hydroelectric generating facilities and the associated increased interest expense. The 2015 Revised Power Repayment Study indicated the need for an 8.6 percent revenue increase. These preliminary results, which presented the basis for the proposed revenue increase, were provided to the customers for their review prior to the formal process.
The 2015 Revised Power Repayment Study has been finalized and indicates that an increase in annual revenues of $101,340 (8.6 percent) is necessary beginning January 1, 2016, to accomplish repayment in the required number of years. Accordingly, Southwestern has prepared a proposed rate schedule based on the additional revenue requirement to ensure repayment.
Southwestern conducted the rate adjustment proceeding in accordance with title 10, part 903, subpart A of the Code of Federal Regulations (10 CFR part 903), “Procedures for Public Participation in Power and Transmission Rate Adjustments and Extensions.” More specifically, opportunities for public review and comment during a 30-day period on the proposed Willis power rate were announced by a
The first step of the rate increase, beginning January 1, 2016, would incorporate one half of the required revenue increase ($50,670 or 4.3 percent). The second step of the rate increase, beginning January 1, 2017, and ending on September 30, 2019, would incorporate the remaining one half of the revenue increase requirement ($50,670 or 4.3 percent). Southwestern will continue to perform its Power Repayment Studies annually, and if the 2016 results should indicate the need for additional revenues, another rate filing will be conducted and updated revenue requirements implemented for Fiscal Year 2017 and thereafter.
Following the conclusion of the comment period on November 9, 2015, Southwestern finalized the Power Repayment Studies and rate schedule for the proposed annual rate of $1,282,836 which is the lowest possible rate needed to satisfy repayment criteria. This rate represents an annual increase of 8.6 percent. The Administrator made the decision to submit the rate proposal for interim approval and implementation.
Southwestern received one comment during the public comment period. The comment on behalf of the Vinton Public Power Authority and the Sam Rayburn Generation and Transmission Cooperative expressed no objection to the proposed rate increase.
Information regarding this power rate increase, including studies, comments and other supporting material, is available for public review in the offices of Southwestern Power Administration, One West Third Street, Tulsa, OK 74103.
The 2015 Willis Revised Power Repayment Study indicates that the increased power rate of $1,282,836 will repay all costs of the project including
The environmental impact of the power rate increase proposal was evaluated in consideration of the Department of Energy's guidelines for implementing the procedural provisions of the National Environmental Policy Act and was determined to fall within the class of actions that are categorically excluded from the requirements of preparing either an Environmental Impact Statement or an Environmental Assessment (10 CFR part 1021, App. B to subpart D, § B1.1 “Changing rates & prices”).
In view of the foregoing and pursuant to the authority delegated to me by the Secretary of Energy, I hereby confirm, approve and place in effect on an interim basis, effective January 1, 2016, through September 30, 2019, the phased-in annual Willis power rate of $1,282,836 for the sale of power and energy from Willis to the Sam Rayburn Municipal Power Agency, under Contract No. DE-PM75-85SW00117, as amended. This rate shall remain in effect on an interim basis through September 30, 2019, or until the FERC confirms and approves the rate on a final basis.
During the period January 1, 2016, through September 30, 2019, in accordance with interim approval from Rate Order No. SWPA-70 issued by the Deputy Secretary of Energy on
To the power and energy purchased by Sam Rayburn Municipal Power Agency (SRMPA) from the Southwestern Power Administration (Southwestern) under the terms and conditions of the Power Sales Contract dated June 28, 1985, as amended, for the sale of all Hydro Power and Energy generated at the Robert Douglas Willis Hydropower Project (Robert D. Willis) (formerly designated as Town Bluff).
Three-phase, alternating current, delivered at approximately 60 Hertz, at the nominal voltage, at the point of delivery, and in such quantities as are specified by contract.
1.1. These rates shall be applicable regardless of the quantity of Hydro Power and Energy available or delivered to SRMPA;
1.2. The term “Uncontrollable Force,” as used herein, shall mean any force which is not within the control of the party affected, including, but not limited to, failure of water supply, failure of facilities, flood, earthquake, storm, lightning, fire, epidemic, riot, civil disturbance, labor disturbance, sabotage, war, acts of war, terrorist acts, or restraint by court of general jurisdiction, which by exercise of due diligence and foresight such party could not reasonably have been expected to avoid.
$102,681 per month ($1,232,172 per year) for Robert D. Willis Hydro Power and Energy purchased by SRMPA from January 1, 2016, through December 31, 2016.
$106,903 per month ($1,282,836 per year) for Robert D. Willis Hydro Power and Energy purchased by SRMPA from January 1, 2017, through September 30, 2019.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency has submitted an information collection request (ICR), “NESHAP for Mercury (40 CFR part 61, subpart E) (Renewal)” (EPA ICR No. 0113.12, OMB Control No. 2060-0097), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2012-0529, to: (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI), or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Environmental Protection Agency (EPA).
Notice.
EPA is requesting new available data on certain chlorinated paraffins in different industries and for different uses, to inform the risk assessments for chlorinated paraffins submitted as Toxic Substances Control Act (TSCA) Premanufacture Notices (PMNs). The risk assessments have been placed in a public docket. Any comments on the assessments or data to inform the assessments will be placed in the docket subject to Confidential Business Information considerations.
Available data and/or comments must be received on or before February 22, 2016.
Submit your data and/or comments, identified by docket identification (ID) number EPA-HQ-OPPT-2015-0789, by one of the following methods:
•
•
•
You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Manufacturers, processors, or users of one or more subject chemical substances (NAICS codes 325 and 324110),
This action is issued under the authority in Section 5 of the Toxic Substances Control Act (TSCA), 15 U.S.C. 2604.
EPA is requesting new available data on the chlorinated paraffins, referenced in Unit II., in different industries and for different uses, to inform the risk assessments for chlorinated paraffins submitted as Toxic Substances Control Act (TSCA) Premanufacture Notices (PMNs). The risk assessments have been placed in a public docket. Any comments on the assessments or data to inform the assessments will be placed in the docket subject to Confidential Business Information considerations.
As a result of its TSCA new chemicals review, EPA preliminarily determined that the above mentioned chlorinated paraffin PMN substances may present an unreasonable risk to the environment for two independent reasons: (1) The PMN substances are expected to be persistent, bioaccumulative and toxic (PBT) chemicals; and (2) releases of the PMN substances may exceed concentrations of concern (COCs) to aquatic and sediment-dwelling
1. The PMN substances are expected to be PBT chemicals based on the following lines of evidence:
(a) The available data on medium-chain chlorinated paraffins (MCCPs), sediment core studies, environmental fate studies, and associated calculations, indicate transformation half-lives of months to years, depending on the environmental media. Even though there are limited data on the long-chain chlorinated paraffins (LCCPs), biodegradation data indicate increasing stability with increasing chain length. LCCPs are also expected to have transformation half-lives comparable to, or greater than, MCCPs. Therefore, the PMN substances are expected to be very persistent.
(b) The available data on MCCPs and LCCPs indicate that these substances have bioconcentration factors (BCFs) and bioaccumulation factors (BAFs) that exceed 1,000 or 5,000 liters per kilogram wet weight of tissue (L/kg ww). Therefore, the PMN substances are expected to be very bioaccumulative.
(c) The available data on MCCPs and LCCPs indicate acute and chronic toxicity to aquatic organisms with effect levels below 10 milligrams per liter (mg/L) or 0.1 mg/L, depending on the species and MCCP or LCCP congener evaluated. Therefore, the PMN substances are expected to be toxic to aquatic organisms.
(d) EPA is concerned about PBT chemicals because even small releases may persist in environmental media, build up in the environment and concentrate/accumulate in organisms over time. These properties increase the potential for continual exposure, and thus risk.
(e) EPA expects there to be releases of the PMN substances to the environment resulting from distribution in commerce and during processing and all of the substances' intended uses.
2. Releases of the PMN substances may exceed concentrations of concern to aquatic and sediment-dwelling organisms, even without taking into consideration the expected persistence and bioaccumulation of the PMN substances, based on the following evidence:
(a) Using estimated environmental concentrations, the PMN substances may present unreasonable acute and chronic risks to aquatic organisms because releases result in exceedances of COCs for aquatic organisms. Also, using the available measured concentrations of MCCPs in the environment as supporting information, the PMN substances are expected to partition to sediment and may partition to soil through land application of biosolids; and may be released to the environment resulting in levels at or above concentrations that are likely to exceed the COC. These concentrations may present acute and chronic risks to aquatic organisms.
(b) EPA expects releases of the PMN substances to water during processing and all of the substances' intended uses to result in surface water concentrations that may present an unreasonable risk of adverse effects to aquatic and sediment-dwelling organisms. As described in EPA's risk assessment documents entitled “Standard Review Risk Assessment on Medium-Chain Chlorinated Paraffins (PMN P-12-0282, P-12-0283) and Long-Chain Chlorinated Paraffins (PMN P-12-0284)”, “Standard Review Risk Assessment on Medium-Chain Chlorinated Paraffins (PMN P-12-0453) and Long-Chain Chlorinated Paraffins (PMN P-12-0433)”, and ” Standard Review Risk Assessment: Medium Chain Chlorinated Paraffins (PMNs P-14-0683/P-14-0684)”, EPA reviewed a variety of sources to inform its assessment on the PMN substances, including: Information provided in the PMNs, information on the environmental fate of MCCPs and LCCPs in different environmental compartments, the properties that control transport, and assessments performed by Canada and the European Union.
Given EPA's preliminary risk determinations, under section 5(e) of TSCA, EPA has informed the PMN submitters that it does not believe that manufacture of these PMN substances should commence (Qualice, LLC,) or continue (Dover Chemical and INOVYN Americas, Inc.) absent the development of sufficient information to permit a reasoned evaluation of the environmental effects of the substances, as described in a testing strategy shared with the PMN submitters. This testing strategy and the risk assessments for these three groups of PMNs are available in the public docket (EPA-HQ-OPPT-2015-0789).
While EPA used information provided by the submitters of the PMNs, EPA realizes that its assessment of some uses may be improved by more specific information on the chlorinated paraffins identified above. With this notice, EPA is requesting new, available information on chlorinated paraffins in different industries and for different uses to reduce the uncertainties in the risk assessments for the three groups of PMNs, submitted under TSCA by three companies. Such information may include whether there are uses for the PMN chlorinated paraffin substances that do not present the potential for direct or indirect release to water. In developing the risk assessments for these PMN substances, EPA used the information provided by the submitters of the PMNs and standard PMN models and scenarios. Processors and users of the PMN substances may have specific available data on such issues as treatment methods, environmental releases and other waste management practices, particularly for non-water based applications. EPA has received some information from the Independent Lubricant Manufacturers Association and would like to augment this information with specific data from other user sectors, particularly those sectors that formulate and use chlorinated paraffins as plasticizers and flame retardants in adhesives, sealants and coatings.
This notice covers seven medium- and long-chain chlorinated paraffins (MCCPs and LCCPs). EPA is reviewing five PMNs as a result of settlements resolving violations of the TSCA premanufacture notice obligations for production and import of various chlorinated paraffins. As part of consent decrees between the Department of Justice (DOJ) and EPA and Dover Chemical (February 7, 2012) and separately between DOJ and EPA and INEOS Chlor Americas (now INOVYN Americas, Inc) (August 21, 2012) these companies were required to submit premanufacture notices under TSCA section 5 for all chlorinated paraffins domestically produced or imported. Also as part of the settlement, the companies were required to cease domestic manufacture and import of the closely-related short-chain chlorinated paraffins, which have persistent, bioaccumulative and toxic (PBT) characteristics.
On March 30, 2012, EPA received three PMNs: P-12-282 for the new chemical substance identified as Alkanes C14-16, chloro (no Chemical Abstract Service Registry Number (CASRN) assigned yet), P-12-283 for Tetradecane, chloro derivs. (no CASRN assigned yet), and Octadecane, chloro derivs. (no CASRN assigned yet). On October 28, 2015, the submitter, Dover Chemical Corporation, removed all prior assertions of CBI claims covering any or
On June 27, 2012, EPA received PMN P-12-0433 for the new chemical substance identified as Alkanes, C18-20, chloro (CASRN 106232-85-3). On July 9, 2012, EPA received PMN P-12-0453 for the new chemical substance identified as Alkanes, C14-17, chloro (CASRN 85535-85-9). On August 13, 2012, EPA received PMN P-12-0453 for the new chemical substance identified as Alkanes, C22-30, chloro (CASRN 288260-42-4). The submitter, INEOS Chlor Americas (now INOVYN Americas Inc.), claimed only production volume as CBI in these three PMN submissions.
On July 10, 2014, EPA received PMN P-14-0683 for the new chemical substance identified as Tetradecane, chloro derivs. (CASRN 198840-65-2) and P-14-0684 for the new chemical substance identified as Alkanes, C14-C16, chloro (CASRN 1372804-76-6). The submitter, Qualice, LLC, made no CBI claims in their PMN submissions.
As with all PMN submissions, EPA has followed the processes, procedures and statutory provisions of TSCA section 5 for the chlorinated paraffin PMNs, including EPA's Policy Statement on PBT New Chemical Substances in the
15 U.S.C. 2601
Environmental Protection Agency (EPA).
Notice; extension of comment period.
EPA issued a notice in the
Comments, identified by docket identification (ID) numbers identified in Table 1 must be received on or before February 23, 2016.
Follow the detailed instructions provided under
Persons listed with individual chemicals in Table 1.
This document extends the public comment period for certain chemicals established in the
To submit comments, or access the docket, please follow the detailed instructions provided under
7 U.S.C. 136
Environmental Protection Agency (EPA).
Notice.
The U.S. Environmental Protection Agency (EPA) has submitted an information collection request (ICR), “EPA Strategic Plan Information on Source Water Protection” (EPA ICR No. 1816.06, OMB Control No. 2040-0197) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ-OW-2004-0013, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Beth Hall, Drinking Water Protection Division—Prevention Branch, Office of Ground Water and Drinking Water (MC 4606M), Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: 202-564-3883; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Environmental Protection Agency (EPA).
Notice; request for public comment.
The United States Environmental Protection Agency (EPA) is hereby providing notice of a proposed administrative settlement with two parties for recovery of response costs concerning the Riverside Chrome Plating Superfund Site in Riverside County, California (the Site). The proposed settlement requires Settling Parties Cleon Benson and SP Group, who own the Site property, to pay $86,388.99 to reimburse EPA for funds expended in performing and overseeing response actions at the Site. For thirty (30) days following the date of publication of this Notice in the
EPA will receive written comments relating to the settlement until January 22, 2016.
The proposed settlement is available for public inspection at EPA Region IX, 75 Hawthorne Street, San Francisco, California. A copy of the proposed settlement may be obtained from Craig Whitenack, EPA Region IX, 600 Wilshire Blvd., Suite 1460 (SFD-7-5), Los Angeles, California 90017, telephone number (213) 244-1820. Comments should reference the Riverside Chrome Plating Superfund Site, Riverside, California, and should be addressed to Craig Whitenack at the above address.
Craig Whitenack, EPA Region IX, 600 Wilshire Blvd., Suite 1460 (SFD-7-5), Los Angeles, California 90017, telephone number (213) 244-1820; email
EPA enters into this proposed settlement pursuant to Section 122(i) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (CERCLA), 42 U.S.C. 9622(i). The proposed settlement includes a covenant by EPA not to sue the settling parties pursuant to Sections 106 or 107(a) of CERCLA, 42 U.S.C. 9606 or 9607(a), conditioned upon Settling Parties' compliance with the terms of the proposed settlement agreement.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency has submitted an information collection request (ICR), “NESHAP for Chromium Emissions from Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (40 CFR part 63, subpart N) (Renewal)” (EPA ICR No. 1611.11, OMB Control No. 2060-0327) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2009-0422, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
The increase in the respondent labor hours is primarily due to the correction of a data entry error, which was that the number of area sources using wetting agents monitoring on a regular schedule was switched with the number monitoring on a reduced schedule, and vice versa.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency has submitted an information collection request (ICR), “NSPS for Surface Coating of Large Appliances (40 CFR part 60, subpart SS)” (EPA ICR No. 0659.13, OMB Control No. 2060-0108), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2012-0531, to: (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI), or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) is planning to submit an information collection request (ICR), “Distribution of Offsite Consequence Analysis Information under Section 112(r)(7)(H) of the Clean Air Act (CAA),” (EPA ICR No. 1981.06, OMB Control No. 2050-0172) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Comments must be submitted on or before February 22, 2016.
Submit your comments, referencing Docket ID No. EPA-HQ-OAR-2003-0073, online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Sicy Jacob, Office of Emergency Management, Mail Code 5104A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-8019; fax number: (202) 564-2620; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Pursuant to section 3506(c)(2)(A) of the PRA, EPA is soliciting comments and information to enable it to: (i) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the Agency, including whether the information will have practical utility; (ii) evaluate the accuracy of the Agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (iii) enhance the quality, utility, and clarity of the information to be collected; and (iv) minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology,
On August 5, 1999, the President signed the Chemical Safety Information, Site Security, and Fuels Regulatory Relief Act (CSISSFRRA). The Act required the President to promulgate regulations on the distribution of OCA information (CAA section 112(r)(7)(H)(ii)). The President delegated to EPA and the Department of Justice (DOJ) the responsibility to promulgate regulations to govern the dissemination of OCA information to the public. The final rule was published on August 4, 2000 (65 FR 48108). The regulations imposed minimal requirements on the public, state and local agencies that request OCA data from EPA. The state and local agencies who decide to obtain OCA information must send a written request on their official letterhead to EPA certifying that they are covered persons under Public Law 106-40, and that they will use the information for official use only. EPA will then provide OCA data to those agencies as requested. The rule authorizes and encourages state and local agencies to set up reading rooms. The local reading rooms would provide read-only access to OCA information for all the sources in the LEPC's jurisdiction and for any source where the vulnerable zone extends into the LEPC's jurisdiction.
Members of the public requesting to view OCA information at federal reading rooms would be required to sign in and self-certify. If asking for OCA information from federal reading rooms for the facilities in the area where they live or work, they would be required to provide proof that they live or work in that area. Members of the public are required to give their names, telephone number, and the names of the facilities for which OCA information is being requested, when they contact the central office to schedule an appointment to view OCA information.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency has submitted an information collection request (ICR), “NESHAP for Metal Furniture Surface Coating (40 CFR part 63, subpart RRRR) (Renewal)” (EPA ICR No. 1952.06, OMB Control No. 2060-0518), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2012-0518, to: (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change, including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
There is a decrease in the total estimated labor costs due to a correction. The previous ICR incorrectly referenced managerial labor rates when calculating technical labor cost, and vice versa, thereby overestimating total labor costs.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency has submitted an information collection request (ICR), “NSPS for Beverage Can Surface Coating (40 CFR part 60, subpart WW) (Renewal)” (EPA ICR No. 0663.12, OMB Control No. 2060-0001), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ- OECA-2012-0532, to: (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI), or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency has submitted an information collection request (ICR), “NSPS for Metal Furniture Coating (40 CFR part 60, subpart EE) (Renewal)” (EPA ICR No. 0649.12, OMB Control No. 2060-0106) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (44 U.S.C. 3501
Additional comments may be submitted on or before January 22, 2016.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2012-0530, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents which explain in detail the information that the EPA will be collecting are available in the public docket for this ICR. The docket can be viewed online at
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the
Written PRA comments should be submitted on or before February 22, 2016. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Nicole Ongele, FCC, via email to
For additional information about the information collection, contact Nicole Ongele at (202) 418-2991.
Federal Communications Commission.
Notice; Solicitation of comments.
In this document, the Federal Communications Commission's Wireline Competition Bureau (Bureau) seeks comment on proposed revisions to the annual Telecommunications Reporting Worksheet, FCC Form 499-A (FCC Form 499-A) and accompanying instructions (FCC Form 499-A Instructions) to be used in 2016 to report 2015 revenues, and (2) quarterly Telecommunications Reporting Worksheet, FCC Form 499-Q (FCC Form 499-Q) and accompanying instructions (FCC Form 499-Q Instructions) to be used in 2016 to report projected collected revenues on a quarterly basis.
Comments are due on or before December 24, 2015.
Interested parties may file comments on or before December 24, 2015. All pleadings are to reference WC Docket No. 06-122. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS) or by filing paper copies, by any of the following methods:
•
•
•
Regina Brown, Wireline Competition Bureau at (202) 418-7400 or TTY (202) 418-0484.
For detailed instructions for submitting comments and additional information on the rulemaking process, see the
This is a synopsis of the Bureau's Public Notice in WC Docket No. 06-122; DA 15-1361, released November 24, 2015. The complete text of this document is available for inspection and copying during normal business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554.
1. In order to promote clarity, transparency and predictability, the Bureau seeks comment on proposed revisions to (1) the 2016 annual Telecommunications Reporting Worksheet, FCC Form 499-A, and the FCC Form 499-A Instructions to be used in 2016 to report 2015 revenues, and (2) the 2016 quarterly Telecommunications Reporting Worksheet, FCC Form 499-Q, and the FCC Form 499-Q Instructions to
The proposed revisions include the following modifications:
A.
B.
C.
D.
E.
F.
A.
B.
C.
D.
5.
6. Pursuant to §§ 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments on or before the dates indicated on the first page of this document. All pleadings are to reference WC Docket No. 06-122. Comments may be filed using: (1) The Commission's Electronic Comment Filing System (ECFS), or (2) by filing paper copies. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
7.
8.
• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th Street SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes must be disposed of
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington DC 20554.
9.
• Regina Brown, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th Street SW., Room 5-A333, Washington, DC 20554; email:
• Charles Tyler, Telecommunications Access Policy Division, Wireline Competition Bureau, 445 12th Street SW., Room 5-A452, Washington, DC 20554; email:
10. People with Disabilities: To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to
11. Filings and comments are also available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554.
12. The proceeding this Notice initiates shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's
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 January 7, 2016.
A. Federal Reserve Bank of Cleveland (Nadine Wallman, Vice President) 1455 East Sixth Street, Cleveland, Ohio 44101-2566:
1.
B. Federal Reserve Bank of Chicago (Colette A. Fried, Assistant Vice President) 230 South LaSalle Street, Chicago, Illinois 60690-1414:
1.
Public Buildings Service, General Services Administration (GSA).
Notice of request for comments regarding an extension to an existing OMB clearance.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division will be submitting to the Office of Management and Budget (OMB) a request to review and approve an extension of a previously approved information collection requirement regarding Art-in Architecture Program National Artist Registry, GSA Form 7437.
The Art-in-Architecture Program is the result of a policy decision made in January 1963 by GSA Administrator Bernard L. Boudin, who served on the Ad Hoc Committee on Federal Office Space in 1961-1962.
The program has been modified over the years, most recently in 2009, when a requirement was instituted that all artists who want to be considered for any potential GSA commission must be included on the National Artists Registry, which serves as the qualified list of eligible artists. The program continues to commission works of art from living American artists. One-half of one percent of the estimated construction cost of new or substantially renovated Federal buildings and U.S. courthouses is allocated for commissioning works of art.
Submit comments on or before February 22, 2016.
Ms. Jennifer Gibson, Office of the Chief Architect, Art-in-Architecture & Fine Arts Division (PCAC), 1800 F Street, NW., Room 5400 PCAC, Washington, DC 20405, at telephone 202-501-0930 or via email at
Submit comments identified by Information Collection 3090-0274, Art-in-Architecture Program National Artist Registry, GSA Form 7437, by any of the following methods:
•
•
The Art-in-Architecture Program actively seeks to commission works from the full spectrum of American artists and strives to promote new media and inventive solutions for public art. The GSA Form 7437, Art-in-Architecture Program National Artist Registry, will be used to collect information from artists across the country to participate and to be considered for commissions.
Public comments are particularly invited on: Whether this collection of information is necessary and whether it will have practical utility; whether our estimate of the public burden of this collection of information is accurate and based on valid assumptions and methodology; and ways to enhance the quality, utility, and clarity of the information to be collected.
Please cite OMB Control No. 3090-0274, Art-in-Architecture Program National Artist Registry, GSA Form 7437, in all correspondence.
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces the following committee meeting.
It is the intent of NIOSH to support broad-based research endeavors in keeping with the Institute's program goals. This will lead to improved understanding and appreciation for the magnitude of the aggregate health burden associated with occupational injuries and illnesses, as well as to support more focused research projects, which will lead to improvements in the delivery of occupational safety and health services, and the prevention of work-related injury and illness. It is anticipated that research funded will promote these program goals.
These portions of the meeting will be closed to the public in accordance with provisions set forth in Section 552b(c)(4) and (6), Title 5 U.S.C., and the Determination of the Director, Management Analysis and Services Office, Centers for Disease Control and Prevention, pursuant to Section 10(d) Public Law 92-463.
Agenda items are subject to change as priorities dictate.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to Funding Opportunity Announcement (FOA) DP 16-001, Pregnancy Risk Assessment Monitoring System (PRAMS).
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to Funding Opportunity Announcement (FOA) DP 16-001, Pregnancy Risk Assessment Monitoring System (PRAMS).
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to Funding Opportunity Announcement (FOA) DP 16-001, Pregnancy Risk Assessment Monitoring System (PRAMS).
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC), National Center for Health Statistics (NCHS) announces the following meeting of the aforementioned committee.
8:30 a.m.-1:00 p.m., EST, January 22, 2016.
Requests to make oral presentations should be submitted in writing to the contact person listed below. All requests must contain the name, address, telephone number, and organizational affiliation of the presenter.
Written comments should not exceed five single-spaced typed pages in length and must be received by December 31, 2015.
The agenda items are subject to change as priorities dictate.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to PAR 15-361, NIOSH Centers of Excellence for Total Worker Health.
8:00 a.m.-5:00 p.m., EST, March 17, 2016 (Closed).
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to Funding Opportunity Announcements (FOA) IP16-001, Research on the Epidemiology, Vaccine Effectiveness and Treatment of Influenza and Other Respiratory Viruses in Southeast Asia and the Western Pacific and (FOA) IP16-002, Annual Estimates of Influenza Vaccine Effectiveness for Preventing Medically Attended Laboratory-Confirmed Influenza in the United States.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to Funding Opportunity Announcement (FOA) CK16-001, Emerging Infections Sentinel Networks (EISN) Research.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
In accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), the Centers for Disease Control and Prevention (CDC) announces a meeting for the initial review of applications in response to PAR 13-129, Occupational Safety and Health Research, NIOSH Member Conflict Review.
The Director, Management Analysis and Services Office, has been delegated the authority to sign
The purpose of this request is to provide data that will allow OCS to identify LIHEAP recipients that responded to the 2015 Residential Energy Consumption Survey (RECS). The U.S. Energy Information Administration (EIA) conducts this survey to provide periodic national and regional data on residential energy use in the United States. OCS uses RECS data to furnish Congress and the Administration with important national and regional descriptive data on the energy needs of low-income households.
State LIHEAP grantees have provided household-level recipient data in 2001, 2005, and 2010 for similar efforts to identify LIHEAP recipients that participated in the RECS for those years. Administrative household data already is collected by State grantees and used to complete the annual LIHEAP Household Report (OMB Control No. 0970-0060) and the annual LIHEAP Performance Data Form (OMB Control No. 0970-0449).
The LIHEAP data collected for this effort will be used by OCS to study the impact of LIHEAP on income eligible and recipient households in accordance with section 2610(b)(2) of the LIHEAP statute. The information is being collected for use in development of the Department's annual
State LIHEAP grantees will be asked to furnish data for LIHEAP recipient households that reside in areas included in the RECS sample.
The following are the specific data items grantees will report for each household:
The following are optional data items that grantees can provide if the data are available in your database:
State LIHEAP grantees can provide the data elements in the selected format of their choosing.
The confidentiality of client data will be strictly protected as part of the Project. LIHEAP application client waivers allow grantees to share information with OCS and its contractors.
As LIHEAP is a block grant, there is varying capacity to collect and report data among grantees. The estimated burden hours displayed above are for the average LIHEAP grantee. All LIHEAP grantees have existing data systems to collect, maintain, and analyze this data to complete annual reporting requirements.
In compliance with the requirements of Section 506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to the Administration for Children and Families, Office Planning, Research and Evaluation, 330 C Street SW., Washington, DC 20201. Attn: ACF Reports Clearance Officer. Email address:
The Department specifically requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted within 60 days of this publication.
The proposed F.A.S.T. form will be used in a pilot capacity in just one Administration for Native Americans' discretionary program areas: Native American Language Preservation and Maintenance. All applicants applying for funding in that program area will be required to use the F.A.S.T. form during the pilot competition proposed for FY16 unless they request and receive approval to submit a paper application. By using the F.A.S.T. form no applicant will be required to provide any information beyond what is already required by the FOA. Additionally, free training and technical assistance will be available to all applicants on use of the F.A.S.T. form.
ANA intends to use the project proposals submitted via the F.A.S.T. form to make funding decisions for Native American Language Preservation and Maintenance grant awards made in the FY 2016 pilot year. In addition, ANA will solicit feedback from applicants and panel reviewers to obtain feedback on the results, outcomes, and their recommendations regarding the F.A.S.T. form as a user friendly method of applying for funding opportunities. If the pilot is successful in making it easier for applicants to apply, ANA will consider potentially expanding use of the F.A.S.T. form to all Administration for Native Americans' discretionary funding areas in subsequent years.
Estimated Total Annual Burden Hours: 560.
Copies of the proposed collection may be obtained by writing to the Administration for Children and Families, Office of Planning, Research and Evaluation, 370 L'Enfant Promenade SW., Washington, DC 20447, Attn: ACF Reports Clearance Officer. All requests should be identified by the title of the information collection. Email address:
OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this document in the
Estimated Total Annual Burden Hours: 66,000.
In compliance with the requirements of Section 506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to the Administration for Children and Families, Office of Planning, Research and Evaluation, 370 L'Enfant Promenade SW., Washington, DC 20447, Attn: ACF Reports Clearance Officer. Email address:
The Department specifically requests comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden information to be collected; and (e) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted within 60 days of this publication.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) has determined the regulatory review period for JETREA and is publishing this notice of that determination as required by law. FDA has made the determination because of the submission of an application to the Director of the U.S. Patent and Trademark Office (USPTO), Department of Commerce, for the extension of a patent which claims that human biological product.
Anyone with knowledge that any of the dates as published (see the
You may submit comments as follows:
Submit electronic comments in the following way:
• Federal eRulemaking Portal:
• 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:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• 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.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Beverly Friedman, Office of Regulatory Policy, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6250, Silver Spring, MD 20993, 301-796-3600.
The Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. 98-417) and the Generic Animal Drug and Patent Term Restoration Act (Pub. L. 100-670) generally provide that a patent may be extended for a period of up to 5 years so long as the patented item (human drug product, animal drug product, medical device, food additive, or color additive) was subject to regulatory review by FDA before the item was marketed. Under these acts, a product's regulatory review period forms the basis for determining the amount of extension an applicant may receive.
A regulatory review period consists of two periods of time: A testing phase and an approval phase. For human biological products, the testing phase begins when the exemption to permit the clinical investigations of the biological becomes effective and runs until the approval phase begins. The approval phase starts with the initial submission of an application to market the human biological product and continues until FDA grants permission to market the biological product. Although only a portion of a regulatory review period may count toward the actual amount of extension that the Director of USPTO may award (for example, half the testing phase must be subtracted as well as any time that may have occurred before the patent was issued), FDA's determination of the length of a regulatory review period for a human biological product will include all of the testing phase and approval phase as specified in 35 U.S.C. 156(g)(1)(B).
FDA has approved for marketing the human biologic product JETREA (ocriplasmin). JETREA is indicated for the treatment of symptomatic vitreomacular adhesion. Subsequent to this approval, USPTO received patent term restoration applications for JETREA (U.S. Patent Nos. 7,445,775; 7,547,435; and 7,914,783) from ThromboGenics NV, and the USPTO requested FDA's assistance in determining these patents' eligibility for patent term restoration. In a letter dated January 31, 2014, FDA advised the USPTO that this human biological product had undergone a regulatory review period and that the approval of JETREA represented the first permitted commercial marketing or use of the product. Thereafter, the USPTO requested that FDA determine the product's regulatory review period.
FDA has determined that the applicable regulatory review period for JETREA is 2,171 days. Of this time, 1,987 days occurred during the testing phase of the regulatory review period, while 184 days occurred during the approval phase. These periods of time were derived from the following dates:
1.
2.
3.
This determination of the regulatory review period establishes the maximum potential length of a patent extension. However, the USPTO applies several statutory limitations in its calculations of the actual period for patent extension. In its applications for patent extension, this applicant seeks 2,169 days; 761 days; or 435 days of patent term extension.
Anyone with knowledge that any of the dates as published are incorrect may submit either electronic or written comments and ask for a redetermination (see
Submit petitions electronically to
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by February 22, 2016.
You may submit comments as follows:
Submit electronic comments in the following way:
• Federal eRulemaking Portal:
• 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:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• 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.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION”. The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
FDA PRA Staff, Office of Operations, Food and Drug Administration, 8455 Colesville Rd., COLE-14526, Silver Spring, MD 20993-0002,
Under the PRA (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
The guidance describes the Agency's general recommendations and procedures for issuance of emergency use authorizations (EUA) under section 564 of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360bbb-3), which was amended by the Project BioShield Act of 2004 (Pub. L. 108-276). The FD&C Act permits the Commissioner to authorize the use of unapproved medical products or unapproved uses of approved medical products during an emergency declared under section 564 of the FD&C Act. The data to support issuance of an EUA must demonstrate that, based on the totality of the scientific evidence available to the Commissioner, including data from adequate and well-controlled clinical trials (if available), it is reasonable to believe that the product may be effective in diagnosing, treating, or preventing a serious or life-threatening disease or condition (21 U.S.C. 360bbb-3(c)). Although the exact type and amount of data needed to support an EUA may vary depending on the nature of the declared emergency and the nature of the candidate product, FDA recommends that a request for consideration for an EUA include scientific evidence evaluating the product's safety and effectiveness, including the adverse event profile for diagnosis, treatment, or prevention of the serious or life-threatening disease or condition, as well as data and other information on safety, effectiveness, risks and benefits, and (to the extent available) alternatives.
Under section 564 of the FD&C Act, the FDA Commissioner may establish conditions on the authorization. Section 564(e) requires the FDA Commissioner (to the extent practicable given the circumstances of the emergency) to establish certain conditions on an authorization that the Commissioner finds necessary or appropriate to protect the public health and permits the FDA Commissioner to establish other conditions that she finds necessary or appropriate to protect the public health. Conditions authorized by section 564(e) of the FD&C Act include, for example: Requirements for information dissemination to health care providers or authorized dispensers and product recipients; adverse event monitoring and reporting; data collection and analysis; recordkeeping and records access; restrictions on product advertising, distribution, and administration; and limitations on good manufacturing practices requirements. Some conditions, the statute specifies, are mandatory to the extent practicable for authorizations of unapproved products and discretionary for authorizations of unapproved uses of approved products. Moreover, some conditions may apply to manufacturers of an EUA product, while other conditions may apply to any person who carries out any activity for which the authorization is issued. Section 564 of the FD&C Act also gives the FDA Commissioner authority to establish other conditions on an authorization that she finds to be necessary or appropriate to protect the public health.
For purposes of estimating the annual burden of reporting (table 1), FDA has established four categories of respondents: (1) Those who file a request for FDA to issue an EUA or a substantive amendment to an EUA that has previously been issued, assuming that a requisite declaration under section 564 of the FD&C Act has been made and criteria for issuance have been met; (2) those who submit a request for FDA to review information/data (
In some cases, manufacturers directly submit EUA requests. Often a Federal Government entity (
For purposes of estimating the annual burden of recordkeeping, FDA has also calculated the anticipated burden on manufacturers and public health officials associated with administration of unapproved products authorized for emergency use, recognizing that the Federal Government will perform much of the recordkeeping related to administration of such products (table 2).
No burden was attributed to reporting or recordkeeping for unapproved uses of approved products, since those products are already subject to approved collections of information (
FDA estimates the burden of this collection of information as follows:
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a draft guidance for industry entitled “Advancement of Emerging Technology Applications to Modernize the Pharmaceutical Manufacturing Base.” This guidance provides recommendations to pharmaceutical companies interested in participating in a program involving the submission of chemistry, manufacturing, and controls (CMC) information containing emerging manufacturing technology. The program is open to companies that intend the technology to be submitted as part of an investigational new drug application (IND), or an original or supplemental new drug application (NDA), abbreviated new drug application (ANDA), or biologics license application (BLA) reviewed by the Center for Drug Evaluation and Research (CDER), where that technology meets certain criteria described in the guidance.
Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by February 22, 2016.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• 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:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• 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,
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Submit written requests for single copies of the draft guidance to the Division of Drug Information, Center for Drug Evaluation and Research, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Building, 4th Floor, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Sau L. Lee, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 4144, Silver Spring, MD 20993-0002, 301-796-2905; or for further information or to submit requests to participate in the program, please use
FDA is announcing the availability of a draft guidance for industry entitled “Advancement of Emerging Technology Applications to Modernize the Pharmaceutical Manufacturing Base.” The Office of Pharmaceutical Quality and Office of Compliance, CDER, are committed to supporting and enabling the modernization of pharmaceutical manufacturing as part of the Agency's mission to protect and promote the public health. While the implementation of emerging technology is critical to modernizing pharmaceutical manufacturing and improving quality, FDA also recognizes that innovative approaches to manufacturing may represent challenges to industry and regulators. By the very nature of an approach being innovative, a limited knowledge and experiential base about the technology may exist. Pharmaceutical companies may have concerns that using such technologies could result in delays while FDA reviewers familiarize themselves with the new technologies and determine how they fit within existing regulatory approaches. Through CDER's Emerging Technology Team, FDA intends to encourage the adoption of innovative approaches to pharmaceutical manufacturing by leveraging existing resources within the Agency to facilitate the regulatory review of submissions to the Agency involving manufacturing technologies likely to improve product safety, identity, strength, quality, and purity.
The draft guidance provides recommendations to pharmaceutical companies interested in participating in a program involving the submission of CMC information containing emerging manufacturing technology to FDA. Acceptance of a request to participate in this CDER program will depend on the applicant's proposed plan for submission of an IND or original or supplemental ANDA, BLA, or NDA, based on certain criteria described in the guidance. To be considered for inclusion in the program, the proposal should be for an innovative or novel product, manufacturing process, and/or testing technology that is subject to CMC review, and for which the Agency has limited review or inspection experience.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on Advancement of Emerging Technology Applications to Modernize the Pharmaceutical Manufacturing Base. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This draft guidance refers to previously approved collections of information that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The information to be included in a meeting request for a product submitted in an IND, BLA, or NDA is approved under OMB control number 0910-0429 (Guidance for Industry on Formal Meetings Between the FDA and Sponsors or Applicants). Information to be included in a meeting request for a product submitted in an ANDA is approved under OMB control number 0910-0797 (Guidance on Controlled Correspondence Related to Generic Drug Development). The submission of INDs under 21 CFR 312.23 is approved under OMB control number 0910-0014; the submission of BLAs under 21 CFR 601.2 and 601.12 is approved under OMB control number 0910-0338; and the submission of NDAs and ANDAs under 21 CFR 314.50, 314.70, 314.71, 314.94, and 314.97 are approved under OMB control number 0910-0001.
Persons with access to the Internet may obtain the draft guidance at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing that a proposed collection of information has been submitted to the Office of Management and Budget (OMB) for review and clearance under the Paperwork Reduction Act of 1995.
Submit either electronic or written comments on the collection of information by January 22, 2016.
To ensure that comments on the information collection are received, OMB recommends that written comments be faxed to the Office of Information and Regulatory Affairs, OMB, Attn: FDA Desk Officer, FAX: 202-395-7285, or emailed to
FDA PRA Staff, Office of Operations, Food and Drug Administration, 8455 Colesville Rd., COLE-14526, Silver Spring, MD 20993-0002,
In compliance with 44 U.S.C. 3507, FDA has submitted the following proposed collection of information to OMB for review and clearance.
Section 1701(a)(4) of the Public Health Service Act (42 U.S.C. 300u(a)(4)) authorizes the FDA to conduct research relating to health information. Section 1003(d)(2)(C) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 393(b)(2)(c)) authorizes FDA to conduct research relating to drugs and other FDA regulated products in carrying out the provisions of the FD&C Act.
Older adults use a disproportionate number of prescription drugs (Ref. 1) and watch more television than other age groups (Ref. 2). Age-related changes in hearing are common (Refs. 3-5) and, depending on their severity, influence the understanding of speech. Direct-To-Consumer (DTC) television advertisements (ads) contain large amounts of complex information about prescription drug treatments that may be particularly relevant to a population that is experiencing some level of hearing loss. Moreover, much of the information in these ads is conveyed by voiceover, meaning that the audio channel is the only way to receive the information. Although people with serious hearing loss may compensate by using closed captioning (which may or may not be available for ads) or hearing aids, some individuals experience the effects of hearing loss without realizing that it is the cause and others choose not to use external compensatory aids (Ref. 6). For these reasons, FDA is proposing research to investigate how people at various ages and levels of hearing ability comprehend DTC ads.
Sponsors of DTC ads cannot control the hearing abilities of their audiences. Nonetheless, researchers have identified several aspects of DTC ads within their control that influence the understanding of speech in individuals who experience aging-related hearing loss. First, frequency thresholds differ as people age—that is, older adults are not able to hear higher frequencies as well (Refs. 7, 8). Second, DTC television ads contain a risk statement of the most serious and most common side effects, called “the major statement.” FDA regulations require that the major statement must be included in at least the audio portion of the ad (Ref. 9). The risks of a medical product often include highly technical medical terms that should be transformed into consumer-friendly language to convey the risks appropriately. This is easier in some cases than in others. In addition, there are techniques to help reduce the complexity of the major statement, such as maintaining active voice, reducing instances where words need clarification from other later words in the broadcast, and using shorter sentences. Third, television ad spots are typically bought in increments of 15 seconds, leading to a preponderance of 30- and 60-second ads, and some 75-second ads when risk information is especially dense. In order to fit the required information into this time frame, the audio presentation speed may be adjusted to be faster or slower. Research has shown that fast speech is more difficult to understand than slower speech, even for healthy young adults (Ref. 10).
Thus, we propose to examine the effects of three aspects of DTC ads (voice frequency, complexity of major statement, and speed of major statement) on the comprehension of the ads among four different age groups of individuals. Because hearing losses begin to occur as people age, we will examine a group of middle-aged adults (40-50 years), young-old adults (60-74 years), and old-old adults (75+ years), and a group of young adults (18-25 years) as a control. The use of young adults as a control group is common in studies of age changes in memory, cognition, and hearing (Refs. 11-14). We expect a progression of hearing loss across the lifespan, but that is not the focus of this study. Our primary outcomes will be verbatim and gist memory, and confidence in memory judgments, but we will also seek to apply findings from previous studies showing age changes in hearing ability (Refs. 15, 16) to the particular situation of DTC ad viewing.
It is important to note that despite hearing and cognitive losses, older adults generally use linguistic context well. That is, they are as good as or even better than younger adults at using context to determine what they are hearing. They are also skilled at using the intonation of words, which words are stressed, where pauses occur, and how words are lengthened before pauses, all components of something called the prosody of language (Ref. 17). Thus, even though older adults generally perform worse than younger adults with rapid speech, older adult recall of sentences is still relatively high, at 80 percent, presumably because older adults use linguistic context. Moreover, to approximate real DTC ads, participants will view an ad that has a typical amount of superimposed text, some of which may repeat the information in the audio. Our task thus involves viewing realistic DTC ads, which provide more context than lists of unrelated words or sentences, as often found in laboratory experiments. Thus, it is an open question whether hearing loss will impede the comprehension of DTC ads or whether the ability to make use of context will counteract these decrements across the lifespan.
1. How do hearing and cognitive declines in older adults affect comprehension of DTC television ads, and the major statement in particular?
2. How do the frequency, speed, and complexity of the major statement influence the comprehension of the major statement and DTC ads as a whole?
3. How do hearing and cognitive declines interact with the frequency, speed, and complexity of the major statement to affect the comprehension of DTC ads?
To test these research questions, we will examine four groups of adults and manipulate three variables as shown in table 1.
Pretesting will take place before the main study to evaluate the hearing assessment procedures and questionnaire measures used in the main study. We will recruit adults who fall into one of four age brackets shown in table 1. We will exclude individuals who work in healthcare or marketing settings because their knowledge and experiences may not reflect those of the average consumer. A priori power analyses revealed that we need 640 participants for the pretest to obtain 80 percent power to detect a small effect size, and 1,056 participants for the main study to obtain 90 percent power to detect a small effect size. Data collection will take place in person.
For the pretest and main study, within each age group, participants will be randomly assigned to one of eight experimental conditions in a 2 (speed) × 2 (frequency) × 2 (complexity) design, as depicted in table 1. The study will include audiometric measurement of individual hearing ability to help determine if hearing declines account for any age group differences in reported comprehension or retention of ad information. During the scheduled appointment time, participants will receive a complete audiometric test performed by audiologists from the University of North Carolina Hearing and Communication Center, watch a fictitious DTC television ad twice, and answer questions in a survey. Participation is estimated to take approximately 45 minutes.
Questionnaire measures are designed to assess, for both risk and benefit information, verbatim memory, comprehension, gist memory, and confidence in memory and comprehension judgments. The draft questionnaire is available upon request.
To examine differences between experimental conditions, we will conduct inferential statistical tests such as analysis of variance (ANOVA).
In accordance with 5 CFR 1320.8(d), FDA published a 60-day notice for public comment in the
(Comment 1) The Agency should place research results in the context that older adults are diverse and increasingly involved in new technologies.
(Response 1) We agree that older adults are not homogenous. Regarding our focus on television ads, the fact that older people are increasingly able to look at advertisements online does not eliminate the fact that many continue to be exposed to television advertising and that advertising is not always presented with closed-captioning. We will ensure that we frame our research results in the proper context.
(Comment 2) A bias may exist in asking survey participants to self-declare “a hearing loss” as hearing loss can be viewed as a negative consequence/indicator of aging. Thus, those in older age groups may underestimate their true hearing loss as well as the need for some type of hearing aid or assistance.
(Response 2) We will not rely solely on self-reported hearing loss. We have arranged for trained audiologists to conduct in-person audiological assessments with validated approaches as well.
(Comment 3) As the Agency plans to test multiple variables and age groups, it is important to test these variables independently; testing only in combination with other variables or aggregating across age groups or variables may mask true drivers. Individual cells with a sample size of 33 are too small to compare to other individual cells. A minimum of 50 is necessary to understand individual variables within and across age groups.
(Response 3) We are aware of no statistical or research standard that specifies that groups must contain 50 individuals. We conducted power analyses to determine that 33 individuals per cell is adequate and statistically defensible for our study goals.
(Comment 4) The Introduction and Debriefing state that the study “involves information about a drug that is not yet available for sale.” However, survey questions 8, 10, 18, and 30 refer to respondents having access to the drug with verbiage such as “even if you have never taken the drug,” “ask the doctor to prescribe Drug X,” and “have you seen any advertising for Drug X before today.” Yet none of these could happen if Drug X is not yet available for sale.
(Response 4) We acknowledge that we are posing hypothetical possibilities in some questions that respondents should
(Comment 5) Question 13 refers to “claims”. We suspect “claim” is not as readily understood by consumers as is the more general term “information” used in Question 17. Also, there are only minor differences in the wording of two recognition choices for Questions 13a vs. 13b; was this intended?
(Response 5) Thank you for your close review of the questionnaire. The two ad versions (simple and complex) are designed to include the same information but stated differently. Thus, these two questions (then 13a and 13b; now 14a and 14b) should be similar in nature and only two of the sub-items are stated differently (#2 and #4). Participants will see either question 14a or 14b depending on their experimental condition.
The next responses address issues raised by Eli Lilly and Company.
(Comment 6) What are the objectives of the pretest? The proposed sample size for the pretest (n = 640) appears excessive to test the procedural flow and survey procedures.
(Response 6) The pretest will be used to assess whether the instrument as a whole as well as individual sections work equally well across respondent groups (
(Comment 7) The age groups selected are logical, but why are people aged 51-59 excluded and why are 18-25 year olds selected as the control? “Although 18-25 year olds as a control group might be common in studies of age changes in memory and hearing, this age group does not seem as relevant for pharmaceutical advertisements about cholesterol lowering drugs.” Also, the age group of 60-75 should be capped at 74 to make sure the groups are mutually exclusive.
(Response 7) We agree that there is a likely slow progression of age-related hearing loss across the lifespan and if our focus was on this progression, we would want to include 50-59 year olds. The approach we are taking will ensure that we can see contrasts between younger and older people. We also have a middle-aged group to see whether any contrast between the youngest and oldest groups appears to be relatively linear or is curvilinear. Including the 50-59 year age group would not add substantial information to this design, although we do acknowledge that we will not be able to address when decline occurs if it appears to drop dramatically from our middle-aged group to our young-older age group.
We are including participants between 18-25 years as a baseline for our measurement of hearing ability, as that is an integral part of this research. The entire sample will be drawn from the general population, and although there may be distinct differences in potential interest in the advertised drug, we feel the addition of this younger group is worth measurement. We have included a question to assess whether participants have been diagnosed with high cholesterol and can use that as a proxy for interest, regardless of age. Thank you for pointing out the need to cap the young-old age group at 74 rather than 75 to ensure the groups are mutually exclusive.
(Comment 8) We advise caution in reporting results for individual cells (
(Response 8) We are aware of no statistical or research standard that specifies that groups must contain 50 individuals. We conducted power analyses to determine that 33 individuals per cell is adequate and statistically defensible for our study goals.
(Comment 9) Because the Summary Brief of the project does not adequately provide details regarding the individual ads to be tested, we seek clarification on whether multiple ads will be tested and the variability of ad content. With greater variability of the ads tested, there is potential for a new source of bias to be introduced into the study.
(Response 9) We agree that extraneous variability should be kept to a minimum. For this study, the same base ad will be manipulated such that all else remains constant except for the gender of the voiceover announcer, the complexity of the risk information, and the speed at which it is stated. The visuals will be as similar as possible except for minimal differences in length of time on screen to account for the different lengths of the voiceover. The same male and female voice actors will record all variations of the ad.
In addition to public comment, Office of Prescription Drug Promotion solicited peer-review comments from academic researchers in fields relevant to the communication of DTC prescription drug information. We received responses and incorporated the thoughts of the following individuals:
To examine differences between experimental conditions, we will conduct inferential statistical tests such as analysis of variance (ANOVA). With the sample size described in table 2, we will have sufficient power to detect small-to-medium sized effects in the main study.
FDA estimates the burden of this collection of information as follows:
The following references are on display in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at
Food and Drug Administration, HHS.
Notice; correction.
The Food and Drug Administration (FDA) is correcting a notice entitled “Agency Information Collection Activities: Proposed Collection; Comment Request; Bar Code Label Requirement for Human Drug and Biological Products” that appeared in the
Lisa Granger, Office of Policy and Planning, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 32, rm. 3330, Silver Spring, MD 20993-0002, 301-796-9115.
In the
1. On page 77637, in the second column, the docket number is corrected to read FDA-2012-N-0873.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a document entitled “Revised Recommendations for Reducing the Risk of Human Immunodeficiency Virus Transmission by Blood and Blood Products; Guidance for Industry.” The guidance document provides blood establishments that collect blood or blood components, including Source Plasma, with revised donor deferral recommendations for individuals at increased risk for transmitting human immunodeficiency virus (HIV) infection. The guidance document recommends corresponding revisions to donor educational materials, donor history questionnaires and accompanying materials, along with revisions to donor requalification, product management, and testing procedures. The guidance announced in this notice finalizes the draft guidance of the same title dated May 2015 and supersedes the memorandum to blood establishments entitled “Revised Recommendations for the Prevention of Human Immunodeficiency Virus (HIV) Transmission by Blood and Blood Products” dated April 23, 1992 (1992 blood memo). While this guidance represents FDA's current thinking on the subject, our recommendations may evolve over time as new scientific evidence becomes available.
Submit either electronic or written comments on Agency guidances at any time.
You may submit comments as follows:
Submit electronic comments in the following way:
• Federal eRulemaking Portal:
• 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:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• 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.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION”. The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Submit written requests for single copies of the guidance to the Office of Communication, Outreach, and Development, Center for Biologics Evaluation and Research (CBER), Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 3128, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist the office in processing your requests. The guidance may also be obtained by mail by calling CBER at 1-800-835-4709 or 240-402-8010. See the
Valerie A. Butler, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911.
FDA is announcing the availability of a document entitled, “Revised Recommendations for Reducing the Risk of Human Immunodeficiency Virus Transmission by Blood and Blood Products; Guidance for Industry.” The emergence of Acquired Immune Deficiency Syndrome (AIDS) in the early 1980s and the recognition that it could be transmitted by blood and blood products had profound effects on the
Since September 1985, FDA has recommended that blood establishments indefinitely defer male donors who have had sex with another male, even one time, since 1977. On April 23, 1992, FDA issued the 1992 blood memo, which consolidated its recommendations regarding the deferral of donors at risk of HIV, including the deferral for MSM, as well as deferral recommendations for other persons with behaviors associated with high rates of HIV exposure, namely commercial sex workers, those who inject non-prescription drugs, and certain other individuals with HIV risk factors.
The use of donor educational material, specific deferral questions, and advances in HIV donor testing have reduced the risk of HIV transmission from blood transfusion from about 1 in 2500 transfusions prior to HIV testing to a current estimated residual risk of about 1 in 1.47 million transfusions. Since the implementation in 1985 of donor testing for antibodies to HIV, FDA and the U.S. Department of Health and Human Services (HHS) have held a number of public meetings, including public scientific workshops and meetings of the Blood Products Advisory Committee and the HHS Advisory Committee on Blood Safety and Availability (ACBSA) to further review evidence and discuss FDA's blood donor deferral policies to reduce the risk of transmission of HIV by blood and blood products. Consistent with recommendations of the ACBSA in June 2010, studies that might support a policy change were carried out by the Public Health Service in 2011 to 2014. A recommendation for a policy change to the blood donor deferral period for MSM from indefinite deferral to 1 year since the last sexual contact was announced by the Commissioner of Food and Drugs in December 2014. This guidance implements that recommended policy change.
In addition, the guidance provides donor deferral recommendations for other individuals at increased risk for transmitting HIV infection, including commercial sex workers, non-prescription injection drug users, women who have sex with MSM, and certain other individuals with other risk factors. The guidance provides revised recommendations for donor educational materials, donor history questionnaires and accompanying materials, as well as for donor requalification and product management procedures.
In the
Approximately one-half of the comments opposed FDA's time-based deferral policy for MSM and considered the proposed policy to be discriminatory and lacking a scientific rationale. Many of these comments recommended that FDA adopt an individual risk assessment based approach, regardless of an individual's sexual orientation or gender identity. Other comments supported a time-based deferral policy shorter than 1year, or no deferral period at all, because of advances in blood donor testing technologies that permit earlier detection of new HIV infections. Comments requested that FDA commit to reexamining its deferral policies as new technologies, such as pathogen reduction technology are implemented and data regarding compliance with the revised policies become available.
Most of the remaining comments advocated for the continuation of the indefinite deferral policy for MSM and expressed concern regarding the safety of the blood should the revised policy for MSM donors be adopted. Opponents of the proposed change commented on the HIV incidence and prevalence rates among MSM; the potential failure of HIV tests to capture window-period infections; the risk of emerging pathogens for which testing does not exist; and, the potential for decreased compliance rates with the new deferral policy. Other comments argued that FDA should not compromise public health and the safety of the blood supply to satisfy special interest groups.
A smaller number of comments, including those from certain patient advocacy organizations, supported the proposed 1-year deferral policy for MSM predicated on the establishment of a transfusion-transmitted infectious disease monitoring system to enhance safety monitoring and allow rapid responses to emerging threats to the blood supply. Further, similar comments advocated for an evaluation of the effectiveness of the donor educational materials and donor history questionnaires prior to the implementation of new donor deferral policies.
Finally, comments received from the blood industry were generally supportive of the revised MSM donor deferral policy. However, some comments noted that manufacturers of plasma for further manufacturing use (
Finally numerous commenters requested FDA to clarify the recommendation for deferral of women who have had sex with MSM.
FDA carefully considered all of the comments received in response to the draft guidance and the available scientific data, including the results of
In response to comments, FDA made the following changes when finalizing the guidance: (1) Amended the recommendations regarding the inclusion of signs and symptoms associated with HIV in the donor educational materials; (2) revised the recommendation for the deferral of female donors who have had sex with MSM; (3) stated that FDA no longer recommends deferral for individuals who have had sex with an individual with hemophilia or related clotting deficiencies requiring treatment with clotting factor concentrates; and (4) revised the recommendations regarding product retrieval and consignee notification of distributed blood products collected from a donor who should have been deferred for HIV risk factors. In addition, FDA made the following changes to clarify certain recommendations in the guidance, which are consistent with current policy: (1) Clarified that donors who have been determined to have a false-positive HIV test may be reentered according to a requalification method found acceptable to FDA; (2) noted that recipients of allogeneic blood transfusions (
FDA remains committed to exploring options and engaging in public discussions regarding enhancements to donor and public education regarding safe blood donors and evaluating the effectiveness of the donor history questionnaire. Further, with the implementation of a transfusion transmitted infectious disease monitoring system, FDA will be able to monitor donor risk factors and the safety of the blood supply, as well as investigate and refine blood safety measures in the future. FDA's recommendations may evolve over time as new scientific data become available on strategies to maintain or improve blood safety.
The guidance announced in this notice finalizes the draft guidance dated May 2015 and supersedes the 1992 blood memo.
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on recommendations for reducing the risk of HIV transmission by blood and blood products. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
The guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR 601.12 have been approved under OMB control number 0910-0338; the collections of information in 21 CFR 606.171 have been approved under OMB control number 0910-0458; and the collections of information in 21 CFR 610.46, 630.6, 640.3 and 640.63 have been approved under OMB control number 0910-0116.
Persons with access to the Internet may obtain the guidance at either
Health Resources and Services Administration, HHS.
Notice.
In compliance with the requirement for opportunity for public comment on proposed data collection projects (Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995), the Health Resources and Services Administration (HRSA) announces plans to submit an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this ICR should be received no later than February 22, 2016.
Submit your comments to
To request more information on the proposed project or to obtain a copy of
When submitting comments or requesting information, please include the information request collection title for reference.
Information Collection Request Title: 340B Drug Pricing Program Reporting Requirements.
OMB No. 0915-0176—[Revision].
Abstract: Section 602 of Public Law 102-585, the Veterans Health Care Act of 1992, enacted section 340B of the Public Health Service Act (PHS Act) “Limitation on Prices of Drugs Purchased by Covered Entities.” Section 340B provides that a manufacturer who participates in Medicaid must sign a Pharmaceutical Pricing Agreement with the Secretary of Health and Human Services in which the manufacturer agrees to charge enrolled covered entities a price for covered outpatient drugs that will not exceed an amount determined under a statutory formula. Covered entities who choose to participate in the section 340B Drug Pricing Program must comply with the requirements of 340B(a)(5) of the PHS Act. Section 340B(a)(5)(A) prohibits a covered entity from requesting Medicaid reimbursement from a drug that has been discounted under the 340B Program. Further, section 340B(a)(5)(B) prohibits a covered entity from reselling or otherwise transferring a discounted drug to a person who is not a patient of the entity.
Section 340B(a)(5)(C) of the PHS Act permits the Secretary and manufacturers of a covered outpatient drug to conduct audits of covered entities in accordance with procedures established by the Secretary related to the number, duration and scope of the audits.
Manufacturers are permitted to conduct an audit only when there is reasonable cause to believe a violation of section 340B(a)(5)(A) or (B) has occurred. The manufacturer notifies the covered entity in writing when it believes the covered entity has violated these provisions of the 340B Program. If the problem cannot be resolved, the manufacturer will then submit an audit work plan describing the audit and evidence in support of the reasonable cause standard to the HRSA Office of Pharmacy Affairs (OPA) for review. OPA will review the documentation to determine if reasonable cause exists. Once the audit is completed, the manufacturer will submit copies of the audit report to OPA for review and resolution of the findings, as appropriate. The manufacturer will also submit an informational copy of the audit report to the HHS Office of Inspector General (OIG).
In response to the statutory mandate of section 340B(a)(5)(C) to permit the Secretary or manufacturers to conduct audits of covered entities and because of the potential for disputes involving covered entities and participating drug manufacturers, OPA developed an informal voluntary dispute resolution process for manufacturers and covered entities, who prior to filing a request for resolution of a dispute with OPA, should attempt in good faith to resolve the dispute. All parties involved in the dispute must maintain written documentation as evidence of a good faith attempt to resolve the dispute. If the dispute is not resolved and dispute resolution is desired, a party must submit a written request for a review of the dispute to OPA. A committee appointed to review the documentation will send a letter to the party alleged to have committed a violation. The party will be asked to provide a response to or a rebuttal of the allegations.
HRSA published a Notice in 1996 and a policy release in 2011 on manufacturer audit guidelines and the informal dispute resolution process. (61 FR 65406 (December 12, 1996) and “Clarification of Manufacturer Audits of 340B Covered Entities,” Release No. 2011-3).
The expected revision to this package includes additional background information on the dispute resolution process and clarifies the need and proposed use of information regarding the manufacturer audit guidelines and the informal dispute resolution process.
Need and Proposed Use of the Information: HRSA is proposing the collection of information related to the manufacturer audit guidelines. These guidelines contain the following reporting/notification elements:
1. Manufacturers should notify the entity in writing when it believes a violation has occurred;
2. Manufacturers should submit documentation to OPA as evidence of good faith of attempts to resolve a dispute.
3. Manufacturers must submit an audit work plan to OPA;
4. Manufacturers should submit the audit report to the OPA and informational copies to the HHS OIG; and
5. The covered entity should provide a written response to the audit report.
This information is necessary to ensure the orderly conduct of manufacturer audits. In addition, the informal dispute resolution process requires the participating manufacturer or covered entity requesting dispute resolution to provide OPA with a written request. The party alleged to have committed a section 340B violation, may provide a response or rebuttal to OPA. This information is necessary in order to ensure that the dispute will be resolved in a fair and equitable manner.
Likely Respondents: Drug manufacturers and 340B covered entities.
Burden Statement: Burden in this context means the time expended by persons to generate, maintain, retain, disclose or provide the information requested during an audit. This includes the time needed to review instructions; to develop, acquire, install, and utilize technology and systems for the purpose of collecting, validating and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information; to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information for both covered entities and manufacturers. The total annual burden hours estimated for this Information Collection Request are summarized in the table below.
HRSA specifically requests comments on: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Health Resources and Services Administration, HHS.
Notice.
In compliance with the requirement for opportunity for public comment on proposed data collection projects (Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995), the Health Resources and Services Administration (HRSA) announces plans to submit an Information Collection Request (ICR), described below, to the Office of Management and Budget (OMB). Prior to submitting the ICR to OMB, HRSA seeks comments from the public regarding the burden estimate, below, or any other aspect of the ICR.
Comments on this Information Collection Request must be received no later than February 22, 2016.
Submit your comments to
To request more information on the proposed project or to obtain a copy of the data collection plans and draft instruments, email
When submitting comments or requesting information, please include the information request collection title for reference.
HRSA specifically requests comments on (1) the necessity and utility of the proposed information collection for the proper performance of the agency's functions, (2) the accuracy of the estimated burden, (3) ways to enhance the quality, utility, and clarity of the information to be collected, and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), notice is hereby given of the following meeting:
In addition, the Council will be holding a public hearing at which migratory and seasonal agricultural workers will have the opportunity to testify before the Council regarding matters that affect the health of migratory and seasonal agricultural workers. The hearing is scheduled for Thursday, January 14, 2016, from 9:45 a.m. to 12:00 p.m., at the Biltmore Hotel & Suites. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the contact person listed above at least 10 days prior to the meeting.
Agenda items are subject to change as priorities indicate.
In accordance with section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463), notice is hereby given of the following meeting:
Please be advised that committee members are given copies of all written statements submitted by the public prior to the meeting. Any further public participation will be at the discretion of the Chair, with approval of the DFO in attendance. Registration through the designated contact for the public comment session is required. Any member of the public who wishes to have printed materials distributed to NACNEP should submit materials to the point of contact no later than 12:00 noon EST on January 4, 2016.
For additional information regarding NACNEP, please contact Jeanne Brown, Staff Assistant, National Advisory Council on Nurse Education and Practice, 5600 Fishers Lane, Rockville, Maryland 20857. The telephone number is: (301) 443-5688. The email is
Office of the Assistant Secretary for Preparedness and Response, Department of Health and Human Services.
Notice.
The Office of the Assistant Secretary for Preparedness and Response (ASPR), located within the U.S. Department of Health and Human Services, announces the launch of the “My Preparedness Story: Staying Healthy and Resilient” Video Challenge. Natural disasters and other emergencies can happen anywhere and at any time. Taking action ahead of an emergency can help individuals, families, and communities fully prepare to prevent or minimize potential health impacts. Young people can help their family, friends, and community become stronger by protecting their health during disasters and every day. For example, some can do it by volunteering in a health center or with a local Medical Reserve Corps Unit, learning first aid skills, developing an emergency plan, preparing an emergency kit, or educating their family and friends about actions they can take to be healthy.
This contest invites young people between the ages of 14 and 23 to create a short video, 60 seconds or less, that answers the question, “How are you helping family, friends, and community to protect their health during disasters and every day?”
Challenge begins on January 4, 2016, and ends on March 28, 2016, 11 p.m. EST. ASPR staff will judge eligible submissions and select semifinalists April 4-8, 2016. The general public will rate the semifinalists' videos April 11-22, 2016. The winners will be notified and announced no later than May 9, 2016. ASPR will announce timeline changes by amending this
See Supplemental Information section for complete Video Challenge details.
The challenge is authorized by Public Law 111-358, the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education and Science Reauthorization Act of 2010 (COMPETES Act).
• Contestants must submit their video by March 28, 2016, at 11 p.m. EST;
• All videos must be submitted through the Video Challenge Web site at
• A video must be 60 seconds or less, showing how you help family, friends, and community to protect their health during disasters and every day;
• Contestants may submit their entry as an individual or part of a group;
Only one video may be submitted per contestant;
Submissions by groups should be submitted only once by one member of the group (one prize will be awarded for each winning entry); and
• Contestants must upload their video to YouTube (
Helpful Links and Information:
• YouTube: How to upload
• YouTube: How to add closed captions
• Contestants must be between the ages of 14 and 23 on March 28, 2016. If under 18, a contestant must have their adult parent or legal guardian complete the Parental/Guardian Consent Form at
• Contestants must have the necessary documented permissions for individuals heard and/or seen on the submitted video. The documented permission of the adult parent or guardian of each person under the age of 18 seen or heard in the video is also required.
• Any individual contestant or group entry with a member on the Excluded Parties List (
• The video must be an original creation. Contestants must not infringe upon any copyright or any other rights of any third party.
• By submitting a video to this contest, contestants grant a royalty-free license to ASPR to copy, distribute, modify, display and perform publicly and otherwise use, and authorize others to use, your video for any educational purpose throughout the world and in any media.
• By submitting a video to this contest, contestants agree that ASPR may make your video available to the public from its Web site (
• Contestants must agree to follow applicable local, state, and federal laws, regulations, and policies.
• ASPR reserves the right, in its sole discretion, to cancel, suspend, or otherwise modify the challenge, or not award prizes if no entries are deemed worthy.
• Contestants must comply with these terms and conditions of these rules.
• Clear and consistent message/Overall impact (40 percent): Does the video show how the contestant is helping family, friends, and community to protect their health during disasters and every day? Is the story clear, educational, inspiring, and persuasive? Does it motivate peers to be more prepared?
• Creativity and originality (30 percent): How creatively does the video answer the challenge question? How original is the idea?
• Production quality (20 percent): Does the video effectively use lighting, sound, and editing to tell the story? Is the dialogue clear and easy to understand? Do visual effects (if any) contribute to the message or detract from it?
• Public rating (10 percent): How does the public rate the video?
To receive an award, contestant/submitter will not be required to transfer their intellectual property rights to the ASPR. Each contestant/submitter retains title to their entry, and expressly reserves all intellectual property rights (
Contestants/submitters are free to discuss their entry and the ideas or technologies that it contains with other parties, encouraged to share ideas/technologies publicly, and free to contract with any third parties, as long as they do not sign any agreement or undertake any obligation that conflicts with the challenge rules set forth herein.
• Is your original work, or is submitted by permission with full and proper credit given within your entry;
• Does not contain confidential information or trade secrets (yours or anyone else's);
• Does not knowingly violate or infringe upon the patent rights, industrial design rights, copyrights, trademarks, rights in technical data, rights of privacy, publicity or other intellectual property or other rights of any person or entity; and
• Does not contain malicious code, such as viruses, malware, timebombs, cancelbots, worms, Trojan horses, or other potentially harmful programs or other material or information.
Only complete entries that follow application instructions will be reviewed and eligible to win. ASPR reserves the right to disqualify any challenge participants in instances where misconduct is identified or other contest guidelines are not met.
Under the provisions of Section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the NIEHS, the National Institutes of Health, has submitted to the Office of Management and Budget (OMB) a request for review and approval of the information collection listed below. This proposed information collection was previously published in the
To obtain a copy of the data collection plans and instruments, or request more information on the proposed project, contact: Joseph T. Hughes, Jr., Director, Worker Training Program, Division of Extramural Research and Training, NIEHS, P.O. Box 12233, Research Triangle Park, NC 27709 or call non-toll-free number (919) 541-0217 or Email your request, including your address to:
Proposed Collection Hazardous Waste Worker Training—42 CFR part 65, (NIEHS), 0925-0348, Expiration Date 12/31/2015—EXTENSION, National Institute of Environmental Health Sciences (NIEHS), National Institutes of Health (NIH).
OMB approval is requested for 3 years. There are no costs to respondents other than their time. The total estimated annualized burden hours are 560.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the NIH Advisory Board for Clinical Research.
The meeting will be open to the public as indicated below, with attendance limited to space available. Individuals who plan to attend and need special assistance, such as sign language interpretation or other reasonable accommodations, should notify the Contact Person listed below in advance of the meeting.
The meeting will be closed to the public in accordance with the provisions set forth in section 552b(c)(9)(B), Title 5 U.S.C., as amended because the premature disclosure of to discuss personnel matters and the discussions would likely to significantly frustrate implementation of recommendations.
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.
In the interest of security, NIH has instituted stringent procedures for entrance onto the NIH campus. All visitor vehicles, including taxicabs, hotel, and airport shuttles will be inspected before being allowed on campus. Visitors will be asked to show one form of identification (for example, a government-issued photo ID, driver's license, or passport) and to state the purpose of their visit.
U.S. Citizenship and Immigration Services, Department of Homeland Security.
30-Day Notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The information collection notice was previously published in the
The purpose of this notice is to allow an additional 30 days for public comments. Comments are encouraged and will be accepted until January 22, 2016. This process is conducted in accordance with 5 CFR 1320.10.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, must be directed to the OMB USCIS Desk Officer via email at
You may wish to consider limiting the amount of personal information that you provide in any voluntary submission you make. For additional information please read the Privacy Act notice that is available via the link in the footer of
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Laura Dawkins, Chief, 20 Massachusetts Avenue NW., Washington, DC 20529-2140, Telephone number (202) 272-8377 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS Web site at
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
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(5)
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U.S. Citizenship and Immigration Services, Department of Homeland Security.
30-Day notice.
The Department of Homeland Security (DHS), U.S. Citizenship and Immigration Services (USCIS) will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995. The information collection notice was previously published in the
The purpose of this notice is to allow an additional 30 days for public comments. Comments are encouraged and will be accepted until January 22, 2016. This process is conducted in accordance with 5 CFR 1320.10.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, must be directed to the OMB USCIS Desk Officer via email at
You may wish to consider limiting the amount of personal information that you provide in any voluntary submission you make. For additional information please read the Privacy Act notice that is available via the link in the footer of
USCIS, Office of Policy and Strategy, Regulatory Coordination Division, Laura Dawkins, Chief, 20 Massachusetts Avenue NW., Washington, DC 20529-2140, Telephone number (202) 272-8377 (This is not a toll-free number. Comments are not accepted via telephone message). Please note contact information provided here is solely for questions regarding this notice. It is not for individual case status inquiries. Applicants seeking information about the status of their individual cases can check Case Status Online, available at the USCIS Web site at
You may access the information collection instrument with instructions, or additional information by visiting the Federal eRulemaking Portal site at:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(1)
(2)
(3)
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Fish and Wildlife Service, Interior.
Notice; request for comments.
We (U.S. Fish and Wildlife Service) will ask the Office of Management and Budget (OMB) to approve the information collection (IC) described below. As required by the Paperwork Reduction Act of 1995 and as part of our continuing efforts to reduce paperwork and respondent burden, we invite the general public and other Federal agencies to take this opportunity to comment on this IC. This IC is scheduled to expire on March 31, 2016. We 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.
To ensure that we are able to consider your comments on this IC, we must receive them by February 22, 2016.
Send your comments on the IC to the Information Collection Clearance Officer, U.S. Fish and Wildlife Service, MS BPHC, 5275 Leesburg Pike, Falls Church, VA 22041-3803 (mail); or
To request additional information about this IC, contact Hope Grey at
The Pittman-Robertson Wildlife Restoration Act (16 U.S.C. 669
We invite comments concerning this information collection on:
• Whether or not the collection of information is necessary, including whether or not the information will have practical utility;
• The accuracy of our estimate of the burden for this collection of information;
• Ways to enhance the quality, utility, and clarity of the information to be collected; and
• Ways to minimize the burden of the collection of information on respondents.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this IC. 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
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 Class III Gaming Procedures authorized by OMB Control Number 1076-0149, Tribal Revenue Allocation Plans authorized by OMB Control Number 1076-0152, and Gaming on Trust Lands Acquired After October 17, 1988 authorized by OMB Control Number 1076-0158. These information collections expire January 31, 2016.
Interested persons are invited to submit comments on or before January 22, 2016.
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. Paula Hart, U.S. Department of the Interior, Office of Indian Gaming, telephone: 202-219-4066. You may review the information collection request online at
The Assistant Secretary—Indian Affairs is seeking renewal of the approval for information collection Class III Gaming Procedures, Tribal Revenue Allocation Plans, and Gaming on Trust Lands Acquired After October 17, 1988, as required by the Paperwork Reduction Act of 1995. This information is necessary for the Office of Indian Gaming, to ensure that the applicable requirements for IGRA, 25 U.S.C. 2701
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 Indian Affairs, Interior.
Notice.
The State of California entered into Tribal-State compacts governing Class III gaming with: (1) The Santa Ynez Band of Chumash Mission Indians of the Santa Ynez Reservation, California; (2) the Sycuan Band of the Kumeyaay Nation; and (3) the United Auburn Indian Community of the Auburn Rancheria of California. This notice announces that the compacts are taking effect.
The effective date of the compacts are December 23, 2015.
Ms. Paula L. Hart, Director, Office of Indian Gaming, Office of the Assistant Secretary—Indian Affairs, Washington, DC 20240, (202) 219-4066.
Section 11 of the Indian Gaming Regulatory Act (IGRA) requires the Secretary of the Interior to publish in the
Bureau of Land Management, Interior.
Notice of Public Meeting.
In accordance with the Federal Land Policy and Management Act and the Federal Advisory Committee Act of 1972, and the U.S. Department of the Interior, Bureau of Land Management (BLM), the Southeast Oregon Resource Advisory Council (RAC) will meet as indicated below:
The Southeast Oregon RAC will hold a public meeting Monday and Tuesday, January 25 and 26, 2016. The January 25th meeting begins at noon and ends at 5:00 p.m. The January 26th meeting beings at 8:00 a.m. and ends at 1:00 p.m. The agenda will be released online at
A public comment period will be available each day of the session. Unless otherwise approved by the Southeast Oregon RAC Chair, the public comment period will last no longer than 30 minutes, and each speaker may address the Southeast Oregon RAC for a maximum of 5 minutes. Meeting times and the duration scheduled for public comment periods may be extended or altered when the authorized representative considers it necessary to accommodate necessary business and all who seek to be heard regarding matters before the Southeast Oregon RAC.
The meeting will be held at the Clarion Inn, 1249 Tapadera Ave., Ontario, OR 97914.
Larry Moore, Public Affairs Specialist, BLM Vale District Office, 100 Oregon Street, Vale, Oregon 97918, (541) 473-6218 or
The Southeast Oregon RAC consists of 15 members chartered and appointed by the Secretary of the Interior. Their diverse perspectives are represented in commodity, conservation, and general interests. They provide advice to BLM and Forest Service resource managers regarding management plans and proposed resource actions on public land in southeast Oregon. This meeting is open to the public in its entirety. Information to be distributed to the Southeast Oregon RAC is requested prior to the start of each meeting.
Before including your address, phone number, email address, or other personal identifying information in your comments, please be aware that your entire comment—including your
Bureau of Land Management, Interior.
30-day notice and request for comments.
The Bureau of Land Management (BLM) has submitted an information collection request to the Office of Management and Budget (OMB) to continue the collection of information pertaining to Onshore Oil and Gas Leasing, and Drainage Protection (43 CFR parts 3100, 3120, and 3150, and Subpart 3162). The Office of Management and Budget (OMB) previously approved this information collection activity, and assigned it control number 1004-0185.
The OMB is required to respond to this information collection request within 60 days but may respond after 30 days. For maximum consideration, written comments should be received on or before January 22, 2016.
Please submit comments directly to the Desk Officer for the Department of the Interior (OMB #1004-0185), Office of Management and Budget, Office of Information and Regulatory Affairs, fax 202-395-5806, or by electronic mail at
Please indicate “Attn: 1004-0185” regardless of the form of your comments.
Jennifer Spencer, at 202-912-7146. Persons who use a telecommunication device for the deaf may call the Federal Information Relay Service at 1-800-877-8339, to leave a message for Ms. Spencer. You may also review the information collection request online at
The Paperwork Reduction Act (44 U.S.C. 3501-3521) and OMB regulations at 5 CFR part 1320 provide that an agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. Until OMB approves a collection of information, you are not obligated to respond. In order to obtain and renew an OMB control number, Federal agencies are required to seek public comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d) and 1320.12(a)).
As required at 5 CFR 1320.8(d), the BLM published a 60-day notice in the
1. Whether the collection of information is necessary for the proper functioning of the BLM, including whether the information will have practical utility;
2. The accuracy of the BLM's estimate of the burden of collecting the information, including the validity of the methodology and assumptions used;
3. The quality, utility and clarity of the information to be collected; and
4. How to minimize the information collection burden on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other forms of information technology.
Please send comments as directed under the
The following information pertains to this request:
1. Statutory acreage limitations;
2. Waiver, suspension, or reduction of rental or royalty payments;
3. Various types of agreements, contracts, consolidation and combinations;
4. Subsurface storage of oil and gas;
5. Transfers, name changes, and corporate mergers;
6. Lease renewal, relinquishment, termination, and cancellation;
7. Leasing under railroads and certain other types of rights-of-way;
8. Lands available for competitive leasing; and
9. Drainage protection.
The following table details the individual components and respective hour burdens of this information collection request:
National Park Service, Interior.
Notice of termination of environmental impact statement.
The National Park Service (NPS) is terminating preparation of an environmental impact statement (EIS) for the modification/removal of the Canal Diversion Dam (Dam) in Cuyahoga Valley National Park, Ohio (CUVA). Instead, the NPS will be preparing an environmental assessment (EA) to assist the NPS in determining how best to bring the Cuyahoga River within the boundaries of CUVA into attainment with the Clean Water Act and to allow for its recreational use by the public.
Information will be available at Cuyahoga Valley National Park headquarters located at 15610 Vaughn Road, Brecksville, Ohio 44141; telephone (330) 657-2752. Information will also be available at the NPS Planning, Environment and Public Comment (PEPC) Web site at
Superintendent Craig Kenkel at the address above; or by telephone at the number above. Information will be available at the NPS Planning, Environment and Public Comment (PEPC) Web site at
The Dam is owned by the Ohio Department of Natural Resources and supplies water to a portion of the Ohio and Erie Canal National Historic Landmark. The Cuyahoga River upstream of the Dam does not meet aquatic community goals set forth in Ohio's Water Quality Standards. The Lower Cuyahoga River Total Maximum Daily Load (TMDL) report, as well as previous water quality surveys, has indicated that a cause of nonattainment of the standards is the Dam. The TMDL report recommends that the Dam be modified or removed to restore water quality in the Cuyahoga River upstream of the structure. Public and stakeholder scoping regarding modification or removal of the Dam was initiated by the Ohio Environmental Protection Agency in August 2002. It was unclear at that time whether the proposed modification or removal of the Dam would involve NPS lands or adversely affect NPS resources. The NPS determined in 2009 that the State of Ohio alternatives for the proposal to modify or remove the Canal Diversion Dam would impact NPS resources, require access to NPS lands, or require NPS funds. Accordingly, the NPS decided to prepare the EIS, and the Ohio Department of Natural Resources and the Ohio Environmental Protection Agency agreed to be cooperating agencies. A Notice of Intent to Prepare the EIS was published in the
Following extensive internal review and interagency consultation over the last six years, preliminary analysis of the alternatives indicates there is no potential for significant impacts to NPS resources and values and no concerns or issues were expressed during the public scoping process that would have the potential for highly controversial impacts. Therefore, NPS intends to terminate the EIS and prepare an environmental assessment to develop and analyze alternatives that satisfy the project purpose and need. The Ohio Department of Natural Resources and
National Park Service, Interior.
Notice of intent.
Mount Rainier National Park is initiating process to prepare a Wilderness Stewardship Plan (WSP) for the Mount Rainier Wilderness, a 228,480-acre area surrounding and including Mount Rainier, as designated by the Washington Parks Wilderness Act of 1988. Through this process, an Environmental Impact Statement (EIS) will be prepared to analyze a range of alternatives for achieving wilderness stewardship objectives, which include providing appropriate types and levels of access for visitors and authorized users, protecting cultural and natural resources, and adhering to legally-mandated management and preservation requirements. Ninety-seven percent of Mount Rainier National Park is designated as wilderness. The Wilderness Act of 1964 (Wilderness Act) directs federal land management agencies to protect and manage wilderness so that it “generally appears to have been affected primarily by the forces of nature, with the imprint of man's work substantially unnoticeable,” and so that it “has outstanding opportunities for solitude, or a primitive and unconfined type of recreation.”
All written comments must be postmarked or transmitted not later than February 22, 2016.
Requests to be added to the project mailing list may be sent to: Randy King, Superintendent, Attn: Wilderness Stewardship Plan, Mount Rainier National Park, 55210 238th Ave., East Ashford, WA 98304-9751.
Information will be available for public review and comment at the above address, as well as online at
In January 2002, the National Park Service (NPS) issued a Record of Decision for the Mount Rainier National Park General Management Plan (GMP) which provided broad, programmatic direction for wilderness management, including the assignment of management zones that attempt to identify levels of visitor use and management guidance for areas that are heavily impacted. The GMP also stated that indicators and standards in the wilderness management plan may be revised, and day use limits may be proposed. The new WSP is intended to not only update to the park's 1992 Wilderness Management Plan, it will reflect changes that have occurred in the uses and management of the Mount Rainier Wilderness since 2002.
As an implementation level plan, the WSP/EIS will provide detailed guidance on a variety of issues including, but not limited to: day and overnight use; trail maintenance standards; wildlife and proper food storage; party size; camping and campsites; human waste management; meadow management; research activities; permitted uses; historic structures and cultural resources in wilderness; infrastructure and administrative activities within or adjacent to wilderness; and the “minimum requirement” for administration of the area as Wilderness. An “extent necessary” determination prepared in response to the Mount Rainier National Park's Commercial Services Plan (2005) will also be reviewed. This determination will identify the extent to which commercial services are necessary to fulfill the various wilderness purposes of the designated wilderness within Mount Rainier National Park, pursuant to Section 4(d)(5) of the Wilderness Act.
The WSP/EIS will reevaluate existing wilderness-related plans and guidance, such as the 1992 Wilderness Management Plan, the 2005 Fire Management Plan, and the 2010 Hazard Tree Management Plan. The WSP/EIS will also provide for more detailed management direction on provisions of the Washington Parks Wilderness Act of 1989, the NPS Management Policies (2006), and current interagency policies regarding the preservation of wilderness character as they relate to wilderness within Mount Rainier National Park.
To learn more about the issues and concerns to be addressed in the WSP/EIS, Mount Rainier National Park staff will also host four public scoping meetings at the following Washington locations: Seattle, Tacoma, Enumclaw/Buckley, and Ashford. In addition, park staff will prepare a scoping newsletter to provide additional information about Mount Rainier wilderness, the wilderness planning process, and the goals of public scoping. This newsletter will be sent to the park's general mailing list, and posted on the park planning Web site (
In order to ensure that your comments are considered, please submit your comments online by visiting
The responsible official approval of the Wilderness Stewardship Plan is the Regional Director, Pacific West Region. Subsequently the official responsible of implementation of the approved plan is the Superintendent, Mount Rainier National Park.
Notice is hereby given that, on November 23, 2015, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and 3D PDF intends to file additional written notifications disclosing all changes in membership.
On March 27, 2012, 3D PDF filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on February 23, 2015. A notice was published in the
Notice is hereby given that, on November 16, 2015, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open and RIC-Americas intends to file additional written notifications disclosing all changes in membership or planned activities.
On April 30, 2014, RIC-Americas filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on October 16, 2015. A notice was published in the
Notice is hereby given that, on November 27, 2015, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Also, Alcatel-Lucent, Murray Hill, NJ; Citrix, Santa Clara, CA; Contextream, Inc., Mountain View, CA; Coriant Gmbh, Munich, GERMANY; Cyan, Inc., Petaluma, CA; Metaswitch Networks, Ltd., Enfield, UNITED KINGDOM; Ooredoo Group, Doha, QATAR; and Overture Networks, Inc., Morrisville, NC, have withdrawn as parties to this venture.
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and Open Platform for NFV Project intends to file additional written notifications disclosing all changes in membership.
On October 17, 2014, Open Platform for NFV Project filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on September 10, 2015. A notice was published in the
Notice is hereby given that, on November 23, 2015, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Pursuant to Section 6(b) of the Act, the identities of the parties to the venture are: Hortonworks, Inc., Santa Clara, CA; International Business Machines Corporation, Armonk, NY; Infosys Limited, Bengaluru, INDIA;
The general area of ODPi's planned activities is: (a) To accelerate the development and delivery of big data solutions by providing well-defined open source and open data technologies that run across distributed devices (the “Platform”); (b) to promote the Platform worldwide; (c) to develop and implement certification programs to create high customer awareness of, demand for, and compliant implementations of the Platform; and (d) to undertake such other activities as may from time to time be appropriate to further the purposes and achieve the goals set forth above.
Notice is hereby given that, on November 10, 2015, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Also, 21 CT, Inc., Austin, TX; Cipher3LV, LLC, Stafford, VA; K2, Southern Pines, NC; Michigan Research Institute, Ann Arbor, MI; Omnis, Inc., McLean, VA; and Vistacom Inc., Allentown, PA, have withdrawn as parties to this venture.
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and NAC intends to file additional written notifications disclosing all changes in membership.
On May 2, 2000, NAC filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on August 26, 2015. A notice was published in the
Notice is hereby given that, on November 25, 2015, pursuant to Section 6(a) of the National Cooperative Research and Production Act of 1993, 15 U.S.C. 4301
Also, SELEX ES S.p.A., Rome, ITALY; Contec Co. Ltd., Nishiyodogawa-ku, Osaka, JAPAN; and Brilliant Instruments, Inc., Campbell, CA, have withdrawn as parties to this venture.
No other changes have been made in either the membership or planned activity of the group research project. Membership in this group research project remains open, and PXI Systems Alliance, Inc. intends to file additional written notifications disclosing all changes in membership.
On November 22, 2000, PXI Systems Alliance, Inc. filed its original notification pursuant to Section 6(a) of the Act. The Department of Justice published a notice in the
The last notification was filed with the Department on September 8, 2015. A notice was published in the
On December 16, 2015, the Department of Justice lodged a proposed Joint Stipulation to Modify Consent Decree (Joint Stipulation) with the United States District Court for the Southern District of Indiana in the lawsuit entitled
The proposed Joint Stipulation will modify a Consent Decree entered on August 13, 2003, which resolved Clean Air Act (CAA) claims of Plaintiff, the United States of America, against Defendant, Southern Indiana Gas & Electric Company (SIGECO), at its F.B. Culley Generating Station (Culley Station) in Newburgh, Indiana. Under the proposed Joint Stipulation, SIGECO has agreed, among other things, to construct and permanently operate sorbent injection systems at both Culley Station and its nearby A.B. Brown Generating Station to mitigate sulfuric acid emissions and meet specified
The publication of this notice opens a period for public comment on the Joint Stipulation. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
During the public comment period, the Joint Stipulation may be examined and downloaded at this Justice Department Web site:
We will provide a paper copy of the Joint Stipulation upon written request and payment of reproduction costs. Please mail your request and payment to: Consent Decree Library, U.S. DOJ—ENRD, P.O. Box 7611, Washington, DC 20044-7611.
Please enclose a check or money order for $3.50 (25 cents per page reproduction cost) payable to the United States Treasury.
Notice.
The Department of Labor (DOL) is submitting the Bureau of Labor Statistics (BLS) sponsored information collection request (ICR) titled, “Data Sharing Agreement Program,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before January 22, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-BLS, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Seleda Perryman by telephone at 202-693-4131, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Data Sharing Agreement Program information collection. Disseminating the maximum amount of information possible to the public is an important aspect of the BLS mission; however, not all data are publicly available, because of the importance of maintaining BLS data confidential. The BLS has opportunities available, on a limited basis, for eligible researchers to access confidential data for purposes of conducting valid statistical analyses that further the mission of the BLS, as permitted by the Confidential Information Protection and Statistical Efficiency Act of 2002 (CIPSEA).
In order to provide access to confidential data, the BLS must determine that the researcher's project will be exclusively statistical in nature and that the researcher is eligible based on guidelines set out in the CIPSEA, OMB implementation guidance on the CIPSEA, and BLS policy. This information collection provides the vehicle through which the BLS will obtain the necessary details to ensure all researchers and projects comply with appropriate laws and policies.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on December 31, 2015. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Notice.
The Department of Labor (DOL) is submitting the Employment and Training Administration (ETA) sponsored information collection request (ICR) proposal titled, “Required Elements for Submission of the Unified or Combined State Plan and Plan Modifications under the Workforce Innovation and Opportunity Act,” to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before January 22, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Seleda Perryman by telephone at 202-693-4131 (this is not a toll-free number) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks PRA authority for the Required Elements for Submission of the Unified or Combined State Plan and Plan Modifications under the Workforce Innovation and Opportunity Act information collection. This information collection would implement WIOA sections 102 and 103 that require each State to submit a Unified State Plan or, in the alternative, a Combined State Plan.
This information collection is being cleared under a procedure that will allow other agencies to use the ICR. In order to ensure total burdens are correctly captured after all partner agencies have submitted requests to join in on this ICR, the burdens reflected in this specific request are only for the DOL share. Subsequent requests for agencies to join the information collection will not be subject to public comment, as those actions are considered to be non-material changes. WIOA sections 102 and 103 authorize this information collection.
This proposed information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information if the collection of information does not display a valid Control Number.
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information,
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Notice.
The Department of Labor (DOL) is submitting the Employee Benefits Security Administration (EBSA) sponsored information collection request (ICR) titled, “Employee Retirement Income Security Act Summary Annual Report Requirement,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before January 22, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-EBSA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Seleda Perryman by telephone at 202-693-4131, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Employee Retirement Income Security Act (ERISA) Summary Annual Report Requirement information collection. ERISA section 104(b)(3), 29 U.S.C. 1024(b)(3), and regulations codified at 29 CFR 2520.104b-10 require an employee benefit plan to furnish a summary of the plan's annual report to participants and specified beneficiaries for purposes of disclosure of basic financial information.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on December 31, 2015. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Notice.
The Department of Labor (DOL) is submitting the Employment and Training Administration (ETA) sponsored information collection request (ICR) titled, “Benefit Accuracy Measurement Program,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before January 22, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Seleda Perryman by telephone at 202-693-4131, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Benefit Accuracy Measurement (BAM) Program information collection, which is one of the tools the DOL uses to measure and reduce waste, fraud, and abuse for the Unemployment Insurance (UI) program. The BAM program provides reliable estimates of the accuracy of benefit payments and denied claims in the UI program, and identifies the sources of improper payments and denials so their causes can be eliminated. The BAM program consists of two comprehensive reviews: Paid Claims Accuracy (PCA) and Denied Claims Accuracy (DCA). States conduct intensive audits of statewide random samples of UI payments and denials to determine their accuracy. The DOL provides State Workforce Agencies with software to edit the sampling frame files and to select the weekly PCA and DCA samples. The Improper Payments Elimination and Recovery Act of 2010 authorizes this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on December 31, 2015. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Office of the Assistant Secretary for Policy, Chief Evaluation Office, Department of Labor.
Notice.
The Department of Labor (DOL), as part of its continuing effort to reduce paperwork and respondent burden, conducts a preclearance consultation program to provide the general public and federal agencies with an opportunity to comment on proposed and/or continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA95) [44 U.S.C. 3506(c)(2)(A)]. This program helps to ensure that requested data can be provided in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the impact of collection requirements on respondents is properly assessed. Currently, DOL is soliciting comments concerning the collection of data about the Evaluation of the Linking to Employment Activities Pre-release (LEAP) Program grants program [FOA-ETA-15-13]. A copy of the proposed Information Collection Request (ICR) can be obtained by contacting the office listed in the addressee section of this notice.
Written comments must be submitted to the office listed in the addressee section below on or before February 22, 2016.
You may submit comments by either one of the following methods:
Megan Lizik by email at
This information collection covers the implementation study which will address four main research questions: (1) What are the key program elements of each of the 20 grantee sites, and what practices appear promising in addressing the unique challenges of individuals reentering the community? (2) What factors influence LEAP program implementation, and what steps are taken to ensure sustainability? (3) How and why is there variation in the structure, partnerships, and implementation of the grants across grantees, and how does this appear to affect programs' ability to increase employment and reduce recidivism among participants? and (4) What are the perceptions of facility- and community-based staff, stakeholders, partners, and participants regarding LEAP programs and services?
This
*
*
*
At this time, clearance is requested for the three data collection activities mentioned above. Should an impact evaluation be deemed feasible for the LEAP Grant Program, a separate package will be submitted containing and requesting clearance of the impact evaluation materials.
* evaluate whether the proposed collection of information is necessary for the proper performance functions of the agency, including whether the information will have practical utility;
* evaluate the accuracy of the agency's burden estimate of the proposed information collection, including the validity of the methodology and assumptions;
* enhance the quality, utility, and clarity of the information to be collected; and
* minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology—for example, permitting electronic submissions of responses.
Comments submitted in response to this request will be summarized and/or included in the request for Office of Management and Budget approval of the information collection request; they will also become a matter of public record.
National Aeronautics and Space Administration (NASA).
Notice of proposed revisions to existing Privacy Act systems of records.
Pursuant to the provisions of the Privacy Act of 1974 (5 U.S.C. 552a), the National Aeronautics and Space Administration is issuing public notice of its proposal to modify its previously noticed system of records. This notice publishes updates to systems of records as set forth below under the caption
Submit comments within 30 calendar days from the date of this publication. The changes will take effect at the end of that period, if no adverse comments are received.
Patti F. Stockman, Privacy Act Officer, Office of the Chief Information Officer, National Aeronautics and Space Administration Headquarters, Washington, DC 20546-0001, (202) 358-4787,
NASA Privacy Act Officer, Patti F. Stockman, (202) 358-4787,
Pursuant to the provisions of the Privacy Act of 1974, 5 U.S.C. 552a, and as part of its biennial System of Records review, NASA is making minor modifications of its systems of records including: Elimination of redundancies in locations of records; revised categories of records to reflect reduced information collected; updates of system and subsystem managers; clarification of routine uses; and correction of previous typographical errors. Changes for specific NASA systems of records are set forth below:
Aircraft Crewmembers' Qualifications and Performance Records/NASA 10ACMQ: Adding a Purpose section and elaborating the Safeguards section to be more precise.
Astronaut Candidate Selection Records/NASA 10ACSR: Adding a Purpose section and elaborating the Safeguards section to be more complete.
Core Financial Management Records/NASA 10CFMR: Adding a Purpose section and elaborating the Safeguards section to be more complete.
NASA Freedom of Information Act System/NASA 10FOIA: Adding a Purpose statement and revising Source of Records Categories to include
NASA Guest Operations System/NASA 10GOS: Updating to reflect change in location of the records, add a statement of the purposes of collecting the records, and clarifying the Storage section.
History Archives Biographical Collection/NASA 10HABC: Adding a Purpose section and a new Routine Use.
Inspector General Investigations Case Files/NASA 10IGIC: Revising Location and System Manager(s) sections to delete a location where records are no longer maintained; updating Retention and Disposal for clarity.
Parking and Transit System (PATS)/NASA 10PATS: Adding a Purpose statement and elaborating the Safeguards section to be more complete.
Security Records System/NASA 10SECR: Adding a new Routine Use, elaborating Safeguards section to be more complete, and updating Retention and Disposal to reflect approved retention schedules.
Submitted by:
Aircraft Crewmembers' Qualifications and Performance Records.
None.
Locations 1 through 11 inclusive as set forth in Appendix A.
This system maintains information on Crewmembers of NASA aircraft.
This System contains: (1) Records of experience, and currency (
51 U.S.C. 20113(a) and 44 U.S.C. 3101.
Records in this system are used to document flight crew experience and currency as well as itineraries and passenger manifests in case of accidents or requests.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. Records from this system may be disclosed: (1) To this system of records may be granted to Federal, State, or local agencies or to foreign governments in cases of accident investigations, including mishap and collateral investigations; (2) to Federal, State, or local agencies, companies, or governments requesting qualifications of crewmembers prior to authorization to participate in their flight programs, or to Federal, State, or local agencies, companies, or governments whose crewmembers may participate in NASA's flight programs; (3) to the public or in press releases either by prior approval of the individual, or in the case of public release of information from mishap or collateral investigation reports, pursuant to NASA regulations at 14 CFR part 1213; and (4) in accordance with NASA standard routine uses as set forth in Appendix B.
Records in this system are maintained as hard-copy documents and on electronic media.
Records are retrieved from the system by aircrew identifier.
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only from workstations within the NASA Intranet or via a secure Virtual Private Network (VPN) connection that requires two-factor hardware token authentication or via employee PIV badge authentication from NASA-issued computers. Non-electronic records are secured in locked rooms or locked file cabinets.
Records for other than astronauts are maintained in Agency files and destroyed 5 years after crewmember separates from NASA in accordance with NASA Records Retention Schedules (NRRS), Schedule 8 Item 32. Records of crewmembers who are astronauts are permanent and will be transferred to the National Archives in accordance with NRRS, Schedule 8 Item 34.
Director, Aircraft Management Office, Location 1.
Subsystem Managers: Deputy Chief, Flight Control and Cockpit Integration Branch, Location 2; Chief, Dryden Research Aircraft Operations Division, Location 3; Head, Aeronautical Programs Branch, Location 4; Chief, Aircraft Operations Division, Location 5; Chief, Aircraft Operations Office, Location 6; Chief, Flight Operations and Engineering Branch, Location 7; Chief, Aircraft Operations Office, Location 8; Chief, Aircraft Operations, Location 9; Chief, Contract Management, Location 10; Aircraft Management Officer, Location 11 (Locations are set forth in Appendix A).
Information may be obtained from the cognizant system or subsystem manager listed above.
Requests from individuals should be addressed to the same address as stated in the Notification section above.
The NASA regulations for requesting amendments to records and contesting record contents appear at 14 CFR part 1212.
Individuals, training schools or instructors, medical units or doctors.
None.
Astronaut Candidate Selection Records.
None.
Location 5, as set forth in Appendix A.
This system maintains information on persons who have applied to the agency for consideration as candidates for and recipients of training associated with NASA Astronaut and Human Space Flight Programs.
Records in this system include identifying information for the individuals in employment applications and resumes and records of specialized training, honors and awards. The system also contains relevant human resource correspondence, records an individual's qualifications for participation in a specialized program, evaluations of candidates, and final NASA determinations of candidates' qualification for the program.
51 U.S.C. 20113(a); 44 U.S.C. 3101; 5 U.S.C. 3301
Records in this system are used by NASA to facilitate processes and procedures associated with the recruitment, evaluation, and selection of United States astronaut candidates, as defined in 14 CFR 1214, Subpart 1214.11 (NASA Astronaut Candidate Recruitment and Selection Program).
NASA standard routine uses, as set forth in Appendix B.
Stored on a secure server as electronic records.
Records are retrieved from the system by any one or a combination of name, Discipline Area, or unique identification number.
Records are maintained within a secure, electronic database and protected in accordance with the requirements and procedures of FISMA, the NASA regulations at 14 CFR 1212.605, NASA Procedural Requirements (NPR) 2810.1A, NASA ITS-HBK-2810.02-05, and, utilizing database servers with self-encrypting “data-at-rest” technologies, located in secured, monitored, restricted access rooms. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. An approved security plan for this system has been established in accordance with OMB Circular A-130, Management of Federal Information Resources. Only key authorized employees with appropriately configured system roles can access the system through approved authentication methods, and only from workstations within the NASA Intranet or via a secure VPN connection that requires two-factor authentication.
Records are maintained and transferred to the National Archives in accordance with NASA Records Retention Schedules, Schedule 8, Item 35.
Astronaut Candidate Program Manager, Location 5, as set forth in Appendix A.
Individuals interested in inquiring about their records should notify the System Manager at the address given above.
Individuals who wish to gain access to their records should submit their request in writing to the system manager.
The NASA regulations pertaining to access to records and for contesting contents and appealing initial determinations by individual concerned are set forth in 14 CFR 1212.4.
Civil servant application information is received by the NASA Astronaut Candidate Selection System from applicants themselves via an electronic interface with the NASA Enterprise Application Competency Center (NEACC) that receives a portion of all records from the USAJobs.gov Web site, operated by the United States Office of Personnel Management (OPM), and into which applicants enter their own application data. Candidate Qualification input is received directly from individuals used as references who have direct knowledge of applicant capabilities. In certain circumstances, updates to this information may be submitted by the individual on whom the record is maintained and/or the NASA Personnel Office(s).
None.
Core Financial Management Records.
This system is categorized in accordance with OMB Circular A-11 as a Special Management Attention Major Information System. A security plan for this system has been established in accordance with OMB Circular A-130, Management of Federal Information Resources.
George C. Marshall Space Flight Center, National Aeronautics and Space Administration, Marshall Space Flight Center, AL 35812.
Individuals covered by this system of records include former and current NASA employees and non-NASA individuals requiring any type of payment.
Records in this system are comprised of budget formulation, financial management, and employee timekeeping records and may include information about the individuals including Social Security Number (Tax Identification Number), home address, telephone number, email address, and bank account information.
National Aeronautics and Space Act, as amended. 51 U.S.C. 20113(a); Federal Records Act, 44 U.S.C. 3101; Chief Financial Officers Act of 1990, 31 U.S.C. 901; Financial Management Improvement Act of 1996, 31 U.S.C. 3512.
Records in this system are used to process reimbursement payments to employees for travel, purchase of books or other miscellaneous items; and to process payments and collections in which an individual is reimbursing the Agency.
Any disclosures of information will be compatible with the purpose for
Records in this system are maintained on electronic media.
Records are retrieved from the system by name or SSN (Tax ID).
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only from workstations within the NASA Intranet or via a secure Virtual Private Network (VPN) connection that requires two-factor hardware token authentication or via employee PIV badge authentication from NASA-issued computers. Non-electronic records are secured in locked rooms or locked file cabinets.
Records are stored in the NASA Enterprise Application Competency Center (NEACC) database and managed, retained and dispositioned in accordance with NASA Records Retention Schedules, Schedule 9, Items 11, 13 and 16.
IS01/Manager of the NEACC, George C. Marshall Space Flight Center, National Aeronautics and Space Administration, Marshall Space Flight Center, AL 35812.
Individuals interested in inquiring about their records should notify the System Manager at the address given above.
Individuals who wish to gain access to their records should submit their request in writing to the System Manager at the address given above.
The NASA regulations governing access to records, procedures for contesting the contents and for contesting the contents and for appealing initial determinations are set forth in 14 CFR part 1212.
The information is received by the NEACC Financial Systems through an electronic interface from the Federal Personnel Payroll System (FPPS). In certain circumstances, updates to this information may be submitted by NASA employees and recorded directly into the NEACC Financial Systems.
None.
NASA Freedom of Information Act System.
None.
Locations 1-11 and 18, as set forth in Appendix A.
Individuals or their representatives who have submitted Freedom of Information Act (FOIA)/Privacy Act (PA) requests for records and/or FOIA administrative appeals with NASA; individuals whose requests for records have been referred to the Agency by other agencies; individuals who are the subject of such requests, appeals; and/or the NASA personnel assigned to handle such requests and appeals.
This system consists of records created or compiled in response to FOIA, FOIA/PA or PA requests for records or subsequent administrative appeals and may include: The requester's name, address, telephone number, email address; the original requests and administrative appeals; responses to such requests and appeals; all related memoranda, correspondence, notes and other related or supporting documentation, and in some instances copies of requested records and records under administrative appeal.
51 U.S.C. 20113(a); 44 U.S.C. 3101; 5 U.S.C. 552; 14 CFR part 1206.
Records in this system are maintained for the purpose of processing and tracking access requests and administrative appeals under the FOIA and Privacy Act; for the purpose of maintaining a FOIA or Privacy Act administrative record regarding Agency action on such requests and appeals; and for the Agency in carrying out any other responsibilities under the FOIA and Privacy Act.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. The records and information in these records may be disclosed in accordance with a NASA standard routine uses as set forth in Appendix B.
Records in this system are maintained in paper files; copies may also be maintained in electronic format.
Information is retrieved by FOIA case file numbers.
Records are maintained on a secure NASA server and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, the server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and
Records are retained and disposed of in accordance with guidelines defined in the NASA Procedural Requirements (NPR) 1441.1D, NASA Records Retention Schedules (NRRS), Schedule 1, Item 49.
System Manager: Principal Agency FOIA Officer, Office of Communications, Location 1, as set forth in Appendix A. Subsystem Managers: Center FOIA Officers, located within locations 2-11 and 18, as set forth in Appendix A.
Individuals interested in inquiring about their records should notify the system manager or subsystem manager at the appropriate NASA Center, as set forth in Appendix A.
Individuals seeking to access their FOIA case file should submit their request in writing to the system manager or subsystem manager at the appropriate NASA Center, as set forth in Appendix A. The request envelope should be clearly marked, “PRIVACY ACT REQUEST FOR ACCESS.” The request should include a general description of the records sought, FOIA case file number, and must include your full name, current address, and the date. The request must be signed and either notarized or submitted under penalty of perjury. The system manager may require a notarized signature. Some information may be exempt from access in accordance with FOIA regulations.
The NASA regulations governing access to records, procedures for contesting the content and for appealing initial determinations are set forth in Title 14, Code of Federal Regulations, Part 1212.
Information is collected directly from individuals, or their representatives, making Freedom of Information Act or Privacy Act requests.
None.
NASA Guest Operations System.
None.
Location 5, as set forth in Appendix A.
This system maintains information on individuals who have been invited to attend NASA events. These individuals can be members of the NASA community such as principal and prominent management and staff officials, program and project managers, scientists, engineers, speakers, other selected employees involved in newsworthy activities, and other participants in Agency programs, as well members of the general public who are invited to attend NASA events.
Records in this system may include personal information about the individuals invited or attending events, such as their names, home addresses, nationality and passport information.
51 U.S.C. 20113(a); 44 U.S.C. 3101.
Records in this system are used by the Agency for the purpose of communicating with guests to NASA events.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. Records from this system may be disclosed in accordance with NASA standard routine uses as set forth in Appendix B.
Records are maintained electronically in a central secure database.
Records are searched and retrieved by name, business, or address.
An approved security plan for this system has been established in accordance with OMB Circular A-130, Management of Federal Information Resources. Individuals will have access to the system only in accordance with approved authentication methods. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Only key authorized employees with appropriately configured system roles can access the system and only from workstations within the NASA Intranet.
Records are retained in a computer database and managed, retained and dispositioned in accordance with the guidelines defined in the NASA Records Retention Schedules (NRRS), Schedule 1, Item 37A.
System Manager: Guest Operations Manager, Office of Communications, Location 1, as set forth in Appendix A.
Individuals interested in inquiring about their records should notify the system manager.
Individuals who wish to gain access to their records should submit their request in writing to the system manager.
The NASA regulations governing access to records, procedures for contesting the contents and for appealing initial determinations are set forth in 14 CFR part 1212.
The information contained in the GOS is obtained directly from the individuals, who provide the information on a voluntary basis.
None.
History Archives Biographical Collection.
None.
Location 1 and 11 as set forth in Appendix A.
This system maintains information on individuals who are of historical significance in aeronautics, astronautics, space science, and other concerns of NASA.
Biographical data; speeches and articles by an individual; correspondence, interviews, and various other tapes and transcripts of program activities.
51 U.S.C. 20112(a)(3) and 44 U.S.C. 3101.
Records in this system are used by History Office staff to answer reference queries from the media and are made available to visiting historians and other researchers to support their research and writing projects.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. Records may be disclosed: (1) To scholars (historians and other disciplines) or any other interested individuals for research in writing dissertations, articles, and books, for government, commercial, and nonprofit publication or developing material for other media use; (2) by History Office staff to members of the media or NASA staff in response to reference requests, and to visiting historians and other researchers to support their research and writing projects; and (3) in accordance with NASA standard routine uses as set forth in Appendix B.
Records in this system are maintained as hard-copy documents and on electronic media.
The records are retrieved from the system by the individual's name.
Because these records are archive material and, therefore, a matter of public information, there are no special safeguard procedures required.
Records are retained indefinitely in Agency reference collections in history offices, but may be destroyed when no longer needed in accordance with NASA Records Retention Schedules, Schedule 1 Item 10.
Chief Archivist, Location 1.
Subsystem Manager: Public Affairs Officer, Location 11 as set forth in Appendix A.
Information may be obtained from the system manager listed above.
Requests from individuals should be addressed to same address as stated in the Notification section above.
The NASA regulations for access to records and for contesting contents and appealing initial determinations by the individual concerned appear at 14 CFR part 1212.
Press releases, newspapers, journals, copies of internal Agency records, and the individuals themselves.
None.
Inspector General Investigations Case Files.
Some of the material contained in the system has been classified in the interests of national security pursuant to Executive Order 11652.
Locations 1, 2, 4 through 11, 16 and 17 as set forth in Appendix A.
This system maintains information on current and former employees of NASA, contractors, and subcontractors, and others whose actions have affected NASA.
Case files pertaining to matters including, but not limited to, the following classifications of cases: (1) Fraud against the Government, (2) theft of Government property, (3) bribery, (4) lost or stolen lunar samples, (5) misuse of Government property, (6) conflict of interest, (7) waiver of claim for overpayment of pay, (8) leaks of Source Evaluation Board information, (9) improper personal conduct, (10) irregularities in awarding contracts, (11) computer crimes, (12) research misconduct, and (13) whistleblower protection investigations under various statutes and regulations.
51 U.S.C. 20113; 51 U.S.C. 20114; 44 U.S.C. 3101; Inspector General Act of 1978, as amended, 5 U.S.C. Appendix 3.
Information in this system of records is collected in the course of investigating alleged crimes and other violations of law or regulations that affect NASA. The information is used by prosecutors, Agency managers, law enforcement agencies, Congress, NASA contractors, and others to address the crimes and other misconduct discovered during investigations.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. The following are routine uses: (1) Responding to the White House, the Office of Management and Budget, and other organizations in the Executive Office of the President regarding matters inquired of; (2) disclosure to a congressional office from the record of an individual in response to a written inquiry from the congressional office made at the request of that individual; (3) providing data to Federal intelligence elements; (4) providing data to any source from which information is requested in the course of an investigation, and to identify the type of information requested; (5) providing personal identifying data to Federal, State, local, or foreign law enforcement representatives seeking confirmation of identity of persons under investigations; (6) disclosing, as necessary, to a contractor, subcontractor, or grantee firm or institution, to the extent that the disclosure is in NASA's interest and is relevant and necessary in order that the contractor, subcontractor, or grantee is able to take administrative or corrective
Records in this system are maintained as hard-copy documents and on electronic media.
Each OIG investigation is assigned a case number and all records relating to a particular investigation are filed and retrieved by that case number. Records may also be retrieved from the system by the name of an individual.
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only from workstations within the NASA Intranet or via a secure Virtual Private Network (VPN) connection that requires two-factor hardware token authentication or via employee PIV badge authentication from NASA-issued computers. Non-electronic records are secured in locked rooms or files.
Records are maintained in Agency files and destroyed in accordance with NASA Procedural Requirements (NPR) 1441.1, NASA Records Management Program Requirements, and NASA Records Retention Schedules (NRRS) 1441.1, Schedule 9.
Assistant Inspector General for Investigations, Location 1.
Subsystem Managers Special and Resident Agents in Charge, Location 2, 4 through 11 inclusive, 16, and 17 as set forth in Appendix A.
None. System is exempt (see below).
None. System is exempt (see below).
None. System is exempt (see below).
Exempt.
(1) The Inspector General Investigations Case Files system of records is exempt from any part of the Privacy Act (5 U.S.C. 552a), EXCEPT the following subsections: (b) Relating to conditions of disclosure; (c)(1) and (2) relating to keeping and maintaining a disclosure accounting; (e)(4)(A)-(F) relating to publishing a system notice setting forth name, location, categories of individuals and records, routine uses, and policies regarding storage, retrievability, access controls, retention and disposal of the records; (e)(6), (7), (9), (10), and (11) relating to the dissemination and maintenance of records; (i) relating to criminal penalties. This exemption applies to those records and information contained in the system of records pertaining to the enforcement of criminal laws.
(2) To the extent that there may exist noncriminal investigative files within this system of records, the Inspector General Investigations Case Files system of records is exempt from the following subsections of the Privacy Act (5 U.S.C. 552a): (c)(3) Relating to access to disclosure accounting, (d) relating to access to reports, (e)(1) relating to the type of information maintained in the records; (e)(4)(G), (H), and (I) relating to publishing the system notice information as to agency procedures for access and amendment and information as to the categories of sources of records, and (f) relating to developing agency rules for gaining access and making corrections.
The determination to exempt this system of records has been made by the Administrator of NASA in accordance with 5 U.S.C. 552a(j) and (k) and subpart 5 of the NASA regulations appearing in 14 CFR part 1212, for the reason that a component of the Office of Inspector General, NASA, performs as its principal function activities pertaining to the enforcement of criminal laws, within the meaning of 5 U.S.C. 552a(j)(2).
Parking and Transit System (PATS).
None.
Locations 1 and 4, as set forth in Appendix A.
This system maintains information on NASA civil servants and contractors who are holders of parking permits; applicants or members of carpools, vanpools and other ridesharing programs; applicants and recipients of fare subsidies issued by NASA; and applicants for other NASA transit benefit programs.
Records in this system may include information about individuals, including name, home address, badge number, monthly commuting cost, email address, years of government service, grade, personal vehicle make and model, and person vehicle license number. These records may be captured as parking, rideshare, or other transit program applications, status or participation reports of individuals' participation in the programs.
51 U.S.C. 20113(a); 44 U.S.C. 3101; 40 U.S.C. 471; and, 40 U.S.C. 486;
Records in this system are used to facilitate administration of employee and contractor participation in parking, rideshare, and transit programs.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information, which is the issuance of NASA Parking Permits and NASA Fare Subsidies.
Records in this system may be disclosed: (1) To other Federal agencies to confirm that an individual is not receiving transit benefits from multiple agencies concurrently; and (2) in accordance with the NASA Standard Routine Uses as listed in Appendix B.
Records are stored in hard copy and electronically in systems on secure NASA servers.
Records are retrieved by name or by zip code of residence.
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency that convey sensitive data are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only from workstations within the NASA Intranet or via a secure Virtual Private Network (VPN) connection that requires two-factor hardware token authentication or via employee PIV badge authentication from NASA-issued computers. Non-electronic records are secured in locked rooms or locked file cabinets.
Records are maintained and disposed of in accordance with NASA Records Retention Schedule 6, Item 11 and General Records Schedule 9, Item 7.
Transportation Officer, Headquarters Facilities and Administrative Services Division, Location 1, as set forth in Appendix A.
Subsystem Manager: Transportation Subsidy Program Lead, Logistics Management Division, Location 4, as set forth in Appendix A.
Individuals interested in inquiring about their records should notify the System Manager or Subsystem Manager at the addresses given above.
Individuals who wish to gain access to their records should submit their request in writing to the System Manager or Subsystem Manager at the address given above.
The NASA regulations governing access to records and procedures for contesting the contents and for appealing initial determinations are set forth in 14 CFR part 1212.
Information is provided by individuals in applications submitted for parking permits, carpool and vanpool membership, ridesharing information, and fare subsidies.
None.
Security Records System.
None.
The centralized data system is located at Location 9. Records are also located at Locations 1 through 9 and Locations 11, 12, and 14. The locations are set forth in Appendix A.
This system maintains information on Civil Servant Employees, applicants, NASA committee members, NASA consultants, NASA experts, NASA Resident Research Associates, guest workers, contractor employees, detailees, visitors, correspondents (written and telephonic), Faculty Fellows, Intergovernmental Personnel Mobility Act (IPA) Employees, Grantees, Cooperative Employees, and Remote Users of NASA Non-Public Information Technology Resources. This system also maintains information on all non-U.S. citizens, to include Lawful Permanent Residents seeking access to NASA facilities, resources, laboratories, contractor sites, Federally Funded Research and Development Centers or NASA sponsored events for unclassified purposes to include employees of NASA or NASA contractors; prospective NASA or NASA contractor employees; employees of other U.S. Government agencies or their contractors; foreign students at U.S. institutions; officials or other persons employed by foreign governments or other foreign institutions who may or may not be involved in cooperation with NASA under international agreements; foreign media representatives; and representatives or agents of foreign national governments seeking access to NASA facilities, to include high-level protocol visits; or international relations.
Personnel Security Records, Personal Identity Records including NASA visitor files, Emergency Data Records, Criminal Matters, Traffic Management
18 U.S.C. 793-799, Espionage and Information Control Statutes;
18 U.S.C. 2151-2157, Sabotage Statutes;
18 U.S.C. 202-208, Bribery, Graft, and Conflicts of Interest;
18 U.S.C. 3056, Powers, authorities, and duties of United States Secret Service;
18 U.S.C. 371, Conspiracy Statute;
40 U.S.C. 1441, Responsibilities regarding efficiency, security, and privacy of Federal computer systems;
44 U.S.C. 3101, Records management by agency heads; general duties;
50 U.S.C., Internal Security Act of 1950;
51 U.S.C. 20101 National and Commercial Space Programs;
42 U.S.C. 2011
Executive Order 9397, as amended, Numbering System for Federal Accounts Relating to Individual Persons;
Executive Order 13526, as amended, Classified National Security Information;
Executive Order 12968, as amended, Access to Classified Information;
Executive Order 10865, Safeguarding Classified Information Within Industry;
Executive Order 10450, Security Requirements for Government Employees;
Pub. L. 81-733, Summary suspension of employment of civilian officers and employees;
Pub. L. 107-347, Federal Information Security Management Act 2002;
HSPD 12, Policy for a Common Identification Standard for Federal Employees and Contractors;
14 CFR parts 1203 through 1203b, NASA Information Security Program;
14 CFR 1213; NASA Release of Information to News and Information Media;
15 CFR 744; EAR Control Policy: End-user and End-use Based;
22 CFR 62, Exchange Visitor Program;
22 CFR 120-130; Foreign Relations Export Control;
41 CFR Chapter 101 Federal Property Management Regulation.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. The records and information in these records may be disclosed:
1. To the Department of Justice (DOJ) when: (a) The agency or any component thereof; (b) any employee of the agency in his or her official capacity; (c) any employee of the agency in his or her individual capacity where agency or the DOJ has agreed to represent the employee; or (d) the United States Government, is a party to litigation or has an interest in such litigation, and by careful review, the agency determines that the records are both relevant and necessary to the litigation and the use of such records by DOJ is therefore deemed by the agency to be for a purpose compatible with the purpose for which the agency collected the records.
2. To a court or adjudicative body in a proceeding when: (a) The agency or any component thereof; (b) any employee of the agency in his or her official capacity; (c) any employee of the agency in his or her individual capacity where agency or the Department of Justice has agreed to represent the employee; or (d) the United States Government, is a party to litigation or has an interest in such litigation, and by careful review, the agency determines that the records are both relevant and necessary to the litigation and the use of such records is therefore deemed by the agency to be for a purpose that is compatible with the purpose for which the agency collected the records.
3. To an Agency in order to provide a basis for determining preliminary visa eligibility.
4. To a staff member of the Executive Office of the President in response to an inquiry from the White House.
5. To the National Archives and Records Administration or to the General Services Administration for records management inspections conducted under 44 U.S.C. 2904 and 2906.
6. To agency contractors, grantees, or volunteers who have been engaged to assist the agency in the performance of a contract service, grant, cooperative agreement, or other activity related to this system of records and who need to have access to the records in order to perform their activity. Recipients shall be required to comply with the requirements of the Privacy Act of 1974, as amended, 5 U.S.C. 552a.
7. To other Federal agencies and relevant contractor facilities to determine eligibility of individuals to access classified National Security information.
8. To any official investigative or judicial source from which information is requested in the course of an investigation, to the extent necessary to identify the individual, inform the source of the nature and purpose of the investigation, and to identify the type of information requested.
9. To the news media or the general public, factual information the disclosure of which would be in the public interest and which would not constitute an unwarranted invasion of personal privacy, consistent with Freedom of Information Act standards.
10. To a Federal, State, or local agency, or other appropriate entities or individuals, or through established liaison channels to selected foreign governments, in order to enable an intelligence agency to carry out its responsibilities under the National Security Act of 1947 as amended, the CIA Act of 1949 as amended, Executive Order 12333 or any successor order, applicable national security directives, or classified implementing procedures approved by the Attorney General and promulgated pursuant to such statutes, orders or directives.
11. In order to notify an employee's next-of-kin or contractor in the event of a mishap involving that employee or contractor.
12. To notify another Federal agency when, or verify whether, a PIV card is valid.
13. To provide relevant information to an internal or external organization or element thereof conducting audit activities of a NASA contractor or subcontractor.
14. To a NASA contractor, subcontractor, grantee, or other Government organization information developed in an investigation or administrative inquiry concerning a violation of a Federal or state statute or regulation on the part of an officer or employee of the contractor, subcontractor, grantee, or other Government organization.
15. To foreign governments or international organizations if required by treaties, international conventions, or executive agreements.
16. To members of a NASA Advisory Committee or Committees and interagency boards charged with responsibilities pertaining to international visits and assignments and/or national security when authorized by the individual or to the extent the committee(s) is so authorized and such disclosure is required by law.
17. To the following individuals for the purpose of providing information on traffic accidents, personal injuries, or the loss or damage of property: (a) Individuals involved in such incidents; (b) persons injured in such incidents; (c)
18. To the Transportation Security Administration, with consent of the individual on whom the records are maintained, to establish eligibility for the TSA Pre✓ program.
19. In accordance with NASA standard routine uses as set forth in Appendix B.
Records in this system are maintained electronically and in hard-copy documents.
Records are retrieved from the system by individual's name, file number, badge number, decal number, payroll number, Agency-specific unique personal identification code, and/or Social Security Number.
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources (OA-9999-M-MSF-2712, OA-9999-M-MSF-2707, IE-999-M-MSF-1654). Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only by utilizing NASA agency managed authentication mechanisms. Non-electronic records are secured in access-controlled rooms with electronic security countermeasures and agency managed, PIV enabled, physical authentication mechanisms.
The Personnel Security Records are maintained in Agency files and destroyed upon notification of the death or within 5 years after separation or transfer of employee or within 5 years after contract relationship expires, whichever is applicable in accordance with NASA Records Retention Schedules (NRRS), Schedule 1 Item 103. The foreign national files are maintained in Agency files and destroyed in accordance with NRRS, Schedule 1 Item 35.
The Personal Identity Records are maintained in Agency files and destroyed upon notification of the death or within 5 years after separation or transfer of employee or within 5 years after contract relationship expires, whichever is applicable in accordance with NRRS, Schedule 1 Item 103. Visitor files are maintained and destroyed in accordance with NRRS, Schedule 1 Item 114. The Emergency Data Records are maintained in Agency files and destroyed when superseded or obsolete in accordance with NRRS 1, Item 100B.
The Criminal Matter Records are maintained in Agency files and destroyed in accordance with NRRS 1, Schedule 97.5, Items A and B.
The Traffic Management Records are maintained in Agency files and destroyed in accordance with NRRS 1, Schedule 97.5, Item C.
System Manager: Deputy Assistant Administrator of the Office of Protective Services, Location 1. Subsystem Managers: The Chief of Security/Protective Services at each subsystem location at locations 1 through 9 and locations 11, 12, and 14. Locations are as set forth in Appendix A.
Information may be obtained from the cognizant system or subsystem manager listed above. Requests must contain the following identifying data concerning the requestor: First, middle, and last name; date of birth; Social Security Number; period and place of employment with NASA, if applicable.
Personnel Security Records compiled solely for the purpose of determining suitability, eligibility, or qualifications for Federal civilian employment, Federal contracts, or access to classified information have been exempted by the Administrator under 5 U.S.C. 552a(k)(5) from the access provisions of the Act.
Personal Identity Records: Requests from individuals should be addressed to the same address as stated in the Notification section above.
Emergency Data Records: Requests from individuals should be addressed to the same address as stated in the Notification section above.
Criminal Matter Records compiled for civil or criminal law enforcement purposes have been exempted by the Administrator under 5 U.S.C. 552a(k)(2) from the access provision of the Act.
Traffic Management Records: Requests from individuals should be addressed to the same address as stated in the Notification section above.
For Personnel Security Records and Criminal Matters Records, see Record Access Procedures, above. For Personal Identity Records, Emergency Data Records, and Traffic Management Records, the NASA rules for access to records and for contesting contents and appealing initial determinations by the individual concerned appear at 14 CFR part 1212.
Information is obtained from a variety of sources including the employee, contractor, or applicant via use of the Standard Form (SF) SF-85, SF-85P, or SF-86 and personal interviews; employers' and former employers' records; FBI criminal history records and other databases; financial institutions and credit reports; medical records and health care providers; educational institutions; interviews of witnesses such as neighbors, friends, coworkers, business associates, teachers, landlords, or family members; tax records; and other public records. Security violation information is obtained from a variety of sources, such as guard reports, security inspections, witnesses, supervisor's reports, audit reports.
Personnel Security Records compiled solely for the purpose of determining suitability, eligibility, or qualifications for Federal civilian employment, Federal contracts, or access to classified information, but only to the extent that the disclosure of such material would
Criminal Matter Records to the extent they constitute investigatory material compiled for law enforcement purposes are exempt from the following sections of the Privacy Act of 1974, 5 U.S.C. 552a(c)(3) relating to access to the disclosure accounting; (d) relating to access to the records; (e)(1) relating to the type of information maintained in the records; (e)(4)(G), (H) and (I) relating to publishing in the annual system notice information as to agency procedures for access and correction and information as to the categories of sources of records; and (f) relating to developing agency rules for gaining access and making corrections. The determination to exempt the Criminal Matter Records portion of the Security Records System has been made by the Administrator of NASA in accordance with 5 U.S.C. 552a(k)(2) and subpart 5 of the NASA regulations appearing in 14 CFR part 1212.
Records subject to the provisions of 5 U.S.C. 552(b)(1) required by Executive Order to be kept secret in the interest of national defense or foreign policy are exempt from the following sections of the Privacy Act of 1974, 5 U.S.C. 552a: (c)(3) Relating to access to the disclosure accounting; (d) relating to the access to the records; (e)(1) relating to the type of information maintained in the records; (e)(4)(G), (H) and (I) relating to publishing in the annual system notice information as to agency procedures for access and correction and information as to the categories of sources of records; and (f) relating to developing agency rules for gaining access and making corrections. The determination to exempt this portion of the Security Records System has been made by the Administrator of NASA in accordance with 5 U.S.C. 552a(k)(1) and subpart 5 of the NASA regulations appearing in 14 CFR part 1212.
National Aeronautics and Space Administration (NASA).
Notice of proposed revisions to an existing Privacy Act system of records and establishment of a new system of records.
Pursuant to the provisions of the Privacy Act of 1974 (5 U.S.C. 552a), the National Aeronautics and Space Administration is issuing public notice of its proposal to modify a previously noticed system of records and to establish a new system of records. This notice publishes the modified and new systems of records as set forth below under the caption
Submit comments within 30 calendar days from the date of this publication. The changes will take effect at the end of that period, if no adverse comments are received.
Patti F. Stockman, Privacy Act Officer, Office of the Chief Information Officer, National Aeronautics and Space Administration Headquarters, Washington, DC 20546-0001, (202) 358-4787,
NASA Privacy Act Officer, Patti F. Stockman, (202) 358-4787,
Pursuant to the provisions of the Privacy Act of 1974, 5 U.S.C. 552a, and as part of its biennial System of Records review, NASA proposes to modify its existing Equal Opportunity system of records and establish a new system. Specifically, the existing system of records, Equal Opportunity (EO) Records/NASA 10EEOR, is being modified to add a Purpose section, update an Authority, eliminate a redundant Routine Use, and reflect removal of reasonable accommodations records which will constitute the new system of records in this notice, Reasonable Accommodation Records/NASA 10RAR, covering records of all current NASA employees and applicants requesting reasonable accommodation.
Submitted by:
Equal Opportunity (EO) Records.
None.
Locations 1-9, 11, 18 and 19, as set forth in Appendix A.
This system maintains information on current and former employees and applicants for employment who have entered the informal counseling process or who have filed formal complaints.
Equal Employment Opportunity (EEO) informal counseling and formal complaint records.
29 U.S.C. 791
These records are maintained for the purpose of counseling, investigating and adjudicating complaints of employment discrimination brought by applicants and current and former federal employees against NASA.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. Records and information in this system may be disclosed: (1) To the Equal Employment Opportunity Commission (EEOC) and the Merit Systems Protection Board (MSPB) to facilitate their processing of discrimination complaints, including investigations, hearings, and reviews on appeals; (2) to employees of contractors engaged by the Agency to carry out the Agency's responsibilities under 29 CFR part 1614; (3) to complainants, aggrieved persons, potential witnesses, and other individuals as deemed appropriate and necessary to perform the agency's functions under 29 CFR part 1614; (4) to other Federal agencies and other organizations having legal and administrative responsibilities related to the NASA Office of Diversity and Equal
Records in this system are maintained as hard-copy and electronic documents, and as data within Agency-wide web-based tracking systems.
Hard copy records are retrieved by the complainant's name. Electronic records are accessed by name, case number, nature of the complaint, NASA Center from which complaint originated, or stage of the complaint in the process.
Hard copy records are locked in file cabinets or in secured rooms with access limited to those whose official duties require access. Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only from workstations within the NASA Intranet or via a secure Virtual Private Network (VPN) connection that requires two-factor hardware token authentication or via employee PIV badge authentication from NASA-issued computers or via employee PIV badge authentication from NASA-issued computers.
Records are maintained in Agency files and destroyed in accordance with NPR 1441.1 NASA Records Retention Schedules, Schedule 3 Item 2.5/E.
Associate Administrator for Diversity and Equal Opportunity, Location 1. Subsystem Managers: Center Equal Opportunity (EO) Directors/Officers, at locations 1-9, 11, 18 and 19, as set forth in Appendix A.
Information may be obtained from the cognizant system or subsystem managers listed above.
Requests from individuals should be addressed to the same address as stated in the Notification section above.
The NASA regulations for access to records and for contesting contents and appealing initial determinations by the individual concerned appear at 14 CFR part 1212.
Individuals themselves; Associate Administrator for Diversity and Equal Opportunity, and all designees, including NASA Center EO Directors; Center complaints managers/coordinators; EEO counselors, specialists, and investigators; EEOC officials and MSPB officials.
Reasonable Accommodation (RA) Records.
None.
Locations 1-9, 11, 18 and 19, as set forth in Appendix A.
This system maintains records of requests by NASA employees or applicants for employment who are seeking reasonable accommodation under the Rehabilitation Act of 1973 and also contains the disposition of such requests.
Records may include, but are not limited to: requests for reasonable accommodation; medical records; notes or records made during such requests, requests for reconsideration or internal Agency appeals and the disposition of such requests.
29 U.S.C. 791
This system is maintained for the purpose of considering, deciding and implementing requests for reasonable accommodation made by NASA employees and applicants for employment.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. Records from this system may be disclosed: (1) To another Federal agency, to a court, or a party in litigation before a court or in an administrative proceeding being conducted by a Federal agency when the Government is a party to the judicial or administrative proceeding; (2) to an authorized appeal grievance examiner, formal complaints examiner, administrative judge, equal employment opportunity investigator, arbitrator or other duly authorized official engaged in investigation or settlement of a grievance, complaint or appeal filed by an employee; (3) to employees of contractors engaged by an agency to carry out the agency's responsibilities under 29 CFR part 1614; (4) to first aid and safety personnel, when appropriate, if the disability might require emergency treatment; (5) to Federal Government officials or any of their assignees charged with the responsibility of investigating NASA's compliance with The Rehabilitation Act of 1973, as amended, or the Genetic Information Nondiscrimination Act of 2008 (GINA); (6) to those outside the Agency who have expertise on the provision of reasonable accommodations to individuals with disabilities; and (5) in accordance with NASA standard routine uses as set forth in Appendix B.
Records in this system are maintained in hard-copy and electronically, and within Agency-wide Intranet database and tracking system.
Records in the system are retrieved by name of the employee or applicant requesting accommodation, case identification number, or NASA Center from which request originated.
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Additionally, server and data management environments employ infrastructure encryption technologies both in data transmission and at rest on servers. Electronic messages sent within and outside of the Agency are encrypted and transmitted by staff via pre-approved electronic encryption systems as required by NASA policy. Approved security plans are in place for information systems containing the records in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. Only authorized personnel requiring information in the official discharge of their duties are authorized access to records through approved access or authentication methods. Access to electronic records is achieved only from workstations within the NASA Intranet or via a secure Virtual Private Network (VPN) connection that requires two-factor hardware token authentication. Non-electronic records are secured in locked rooms or locked file cabinets.
Records are maintained and destroyed in accordance with NPR 1441.1 NASA Records Retention Schedules, Schedule 3 Item 2.6.
Associate Administrator for Diversity and Equal Opportunity, Location 1.
Subsystem Managers: Director, Complaints Management Division; Center Equal Employment Opportunity (EEO) Directors/Officers, Center Disability Program Managers, at locations 1-9, 11, 18 and 19, as set forth in Appendix A.
Information may be obtained from the cognizant system or subsystem managers listed above.
Requests from individuals should be addressed to the same address as stated in the Notification section above.
The NASA regulations for access to records and for contesting contents and appealing initial determinations by the individual concerned appear at 14 CFR part 1212.
Individuals themselves; Associate Administrator for Diversity and Equal Opportunity, and all designees, including NASA Center EO Directors and Center Disability Program Managers; EEOC officials.
National Aeronautics and Space Administration (NASA).
Notice of proposed revisions to existing Privacy Act systems of records.
Pursuant to the provisions of the Privacy Act of 1974 (5 U.S.C. 552a), the National Aeronautics and Space Administration is issuing public notice of its proposal to modify its previously noticed system of records. This notice publishes updates a Goddard Space Flight Center system of records as set forth below under the caption
Submit comments within 30 calendar days from the date of this publication. The changes will take effect at the end of that period, if no adverse comments are received.
Patti F. Stockman, Privacy Act Officer, Office of the Chief Information Officer, National Aeronautics and Space Administration Headquarters, Washington, DC 20546-0001, (202) 358-4787,
NASA Privacy Act Officer, Patti F. Stockman, (202) 358-4787,
Pursuant to the provisions of the Privacy Act of 1974, 5 U.S.C. 552a, and as part of its biennial System of Records review, NASA is making the following minor modifications of its Earth Observing System Data and Information System (EOSDIS) User Information/GSFC 51EUI: Correct a typo in the System Number, changing it from 51EUID to 51EUI; eliminate redundancies in System Location; update Categories of Records to reflect reduced information collected on individuals; insert a Purpose statement; clarify Routine Uses, Records Storage, Safeguards, and the listing of System Managers.
Earth Observing System Data and Information System (EOSDIS) User Information.
None.
Electronic records are maintained on secure NASA and NASA partner servers at NASA Locations 1, 4, 7, and 9-10, as set forth in Appendix A, and at the following contractor and other Federal agency Distributed Active Archive Centers (DAACs):
• Alaska Satellite Facility SAR Data Center DAAC, University of Alaska, Fairbanks, AK 99775-7320.
• Land Processes Distributed Active Archive Center (LP DAAC), Department of Interior: Earth Resources Observation and Science (EROS), 47914 252nd Street, Sioux Falls, SD 57918-0001.
• National Snow and Ice Data Center, University of Colorado, Boulder, CO 80309.
• Oak Ridge National Laboratory DAAC, Department of Energy, Oak Ridge, TN 37381-6407.
• Socioeconomic Data and Applications Center, Center for International Earth Science Information Network (CIESIN) at Columbia University, Palisades, NY 10964.
Individuals from the NASA, university, and research communities, as well as the general public, who request satellite data or other data products from any of the EOSDIS DAACs indicated above, or individuals who register to save their data search parameters for reuse in the future.
Records in this system consist of information obtained from individual users to establish user accounts that enable user notification of improved or altered data and services, as well as actual science data from EOSDIS, most often via on-line mechanisms. Records include an individual's name, email address, organizational affiliation, and country of residence.
51 U.S.C. 20113(a).
These records are used to establish user accounts that enable user notification of improved or altered data and services, as well as actual science data from EOSDIS, most often via on-line mechanisms.
Any disclosures of information will be compatible with the purpose for which the Agency collected the information. The records and information in these records may be disclosed: (1) To government contractors conducting OMB-approved annual user satisfaction surveys collecting user feedback for aggregating reports to OMB and enabling NASA to improve its systems, processes, and services to the user community; (2) To the European Space Agency (ESA) through public posting on a NASA Web site of ESA scientific data users' names, email addresses, and organizational affiliation to achieve ESA member nation awareness of the breadth of their scientific data use (including ESA scientific data hosted by NASA); and (3) In accordance with NASA standard routine uses set forth in Appendix B.
Records are stored electronically on secure servers.
User account records are typically indexed and retrieved by user's name.
Electronic records are maintained on secure NASA servers and protected in accordance with all Federal standards and those established in NASA regulations at 14 CFR 1212.605. Approved security plans for each of the DAACs at NASA and contractor facilities have been established in accordance with the Federal Information Security Management Act of 2002 (FISMA) and OMB Circular A-130, Management of Federal Information Resources. The aggregation of these plans constitutes the security plan for EOSDIS. Authorized individuals will have access to the system only in accordance with approved authentication methods. With the exception of the records of ESA scientific data users' information posted in accordance with Routine Use (2) above, all user information is protected according to NASA guidelines for managing sensitive information.
The Earth Science Data and Information System (ESDIS) Project has a plan under configuration control according to which the original data are deleted in accordance with NASA Records Retention Schedule (NRRS) 2, Item 15A.3. The DAACs reauthorize specific users' information on an approved basis and user information is deleted when no longer needed in accordance with NRRS 2, Item 19A. Mailing lists containing user information are maintained in order to permit distribution of newsletters to users and are disposed of according to the NRRS 1, Item 88.
System Manager: 423/Deputy Project Manager for Operations, ESDIS Project, Location 4 as set forth in Appendix A.
Subsystem Managers: DAAC Managers at each of the locations listed under System Location above; ECHO Manager, EMS Manager, and LANCE Manager, all in Code 423 at Location 4 as set forth in Appendix A.
Individuals inquiring about their records should contact the System Manager at the address given above and provide their name and email address. The System Manager can be reached by phone at (301) 614-5048.
Individuals who wish to gain access to their records should submit their request in writing to the System Manager at the address provided or by phone at (301) 614-5048.
The NASA regulations governing access to records and procedures for contesting the contents, and for appealing initial determinations are set forth in 14 CFR part 1212.
The information is received electronically or via telephone directly from users needing to obtain or access NASA's Earth science data products.
None.
National Archives and Records Administration (NARA).
Notice of Information Collection Activity.
NARA gives public notice that it has submitted to OMB for approval the information collections described in this notice. We invite you to comment on the proposed information collections pursuant to the Paperwork Reduction Act of 1995.
OMB must receive written comments at the address below on or before January 22, 2016.
Send comments to Mr. Nicholas A. Fraser, Desk Officer for NARA by mail to Office of Management and Budget; New Executive Office Building; Washington, DC 20503; by fax to 202-395-5167; or by email to
Direct requests for additional information or copies of the proposed information collection and supporting statement to Tamee Fechhelm by phone at 301-837-1694 or by fax at 301-713-7409.
Pursuant to the Paperwork Reduction Act of 1995 (Pub. L. 104-13), NARA invites the public and other Federal agencies to comment on proposed information collections. We published a notice of proposed collection for this information collection on June 9, 2015 (80 FR 32615 and 32616); we received no comments. NARA has therefore submitted the described information collection to OMB for approval.
In response to this notice, comments and suggestions should address one or more of the following points: (a) Whether the proposed information collection is necessary for NARA to properly perform its functions; (b) NARA's estimate of the burden of the proposed information collection and its accuracy; (c) ways NARA could enhance the quality, utility, and clarity of the information it collects; (d) ways NARA could minimize the burden on respondents of collecting the information, including through information technology; and (e) whether the collection affects small businesses. In this notice, NARA solicits comments concerning the following information collections:
1. Title: Forms Relating to Civilian Service Records.
OMB number: 3095-0037.
Agency form numbers: NA Forms 13022, 13064, and 13068.
Type of review: Regular.
Affected public: Former Federal civilian employees, their authorized representatives, state and local governments, and businesses.
Estimated number of respondents: 20,800.
Estimated time per response: 5 minutes.
Frequency of response: On occasion, when individuals desire to acquire information from Federal civilian employee personnel or medical records.
Estimated total annual burden hours: 1,733 hours.
Abstract: In accordance with rules issued by the Office of Personnel Management, the National Personnel Records Center (NPRC) of the National Archives and Records Administration (NARA) administers former Federal civilian employee Official Personnel Folders (OPF) and Employee Medical Folders (EMF). When former Federal civilian employees and other authorized individuals request information from or copies of documents in OPF or EMF, they must provide, in forms or in letters, certain information about the employee and the nature of the request. We use the NA Form 13022, Returned Request Form, to request additional information about a former Federal employee. We use the NA Form 13064, Reply to Request Involving Relief Agencies, to request additional information about a former relief agency employee. Members of the public use the NA Form 13068, Walk-In Request for OPM Records or Information, with proper authorization, to request a copy of a personnel or medical record.
2. Title: Volunteer Service Application.
OMB number: 3095-0060.
Agency form numbers: NA Forms 6045, 6045a, 6045b, and 6045c.
Type of review: Regular.
Affected public: Individuals or households.
Estimated number of respondents: 500.
Estimated time per response: 25 minutes.
Frequency of response: On occasion.
Estimated total annual burden hours: 208 hours.
Abstract: NARA uses volunteer resources to enhance its services to the public and to further its mission of providing ready access to essential evidence. Volunteers assist in outreach and public programs and provide technical and research support for administrative, archival, library, and curatorial staff. We use a standard way to recruit volunteers and assess the qualifications of potential volunteers. Applicants use NA Form 6045, Volunteer Service Application, to signal their interest in being a NARA volunteer and to identify their qualifications for this work. Once the applicant has been selected, the volunteer fills out the NA Form 6045a, Standards of Conduct for Volunteers, NA Form 6045b, Volunteer or Intern Emergency and Medical Consent, and NA Form 6045c, Volunteer or Intern Confidentiality Statement.
National Archives and Records Administration (NARA).
Notice of availability of proposed records schedules; request for comments.
The National Archives and Records Administration (NARA) publishes notice at least once monthly of certain Federal agency requests for records disposition authority (records schedules). Once approved by NARA, records schedules provide agencies with mandatory instructions for what to do with records when agencies no longer need them for current Government business. The instructions authorize agencies to preserve records of continuing value in the National Archives of the United States and to destroy, after a specified period, records lacking administrative, legal, research, or other value. NARA publishes notice in the
NARA must receive requests for copies in writing by January 22, 2016. Once NARA appraises the records, we will send you a copy of the schedule you requested. We usually prepare appraisal memoranda that contain additional information concerning the records covered by a proposed schedule. You may also request these. If you do, we will also provide them once we have completed the appraisal. You have 30 days after we send you these requested documents in which to submit comments.
You may request a copy of any records schedule identified in this notice by contacting Records Management Services (ACNR) using one of the following means:
You must cite the control number, which appears in parentheses after the name of the agency that submitted the schedule, and a mailing address. If you would like an appraisal report, please include that in your request.
Margaret Hawkins, Director, by mail at Records Management Services (ACNR); National Archives and Records Administration; 8601 Adelphi Road; College Park, MD 20740-6001, by phone at 301-837-1799, or by email at
Each year, Federal agencies create billions of records on paper, film, magnetic tape, and other media. To control this accumulation, agency records managers prepare schedules proposing retention periods for records and submit these schedules for NARA's approval. These schedules provide for timely transfer into the National Archives of historically valuable records and authorize disposal of all other records after the agency no longer needs them to conduct its business. Some schedules are comprehensive and cover all the records of an agency or one of its major subdivisions. Most schedules, however, cover records of only one office or program or a few series of records. Many of these update previously approved schedules, and some include records proposed as permanent.
The schedules listed in this notice are media-neutral unless otherwise specified. An item in a schedule is media-neutral when an agency may apply the disposition instructions to records regardless of the medium in which it has created or maintains the records. Items included in schedules submitted to NARA on or after December 17, 2007, are media-neutral unless the item is specifically limited to a specific medium. (See 36 CFR 1225.12(e).)
Agencies may not destroy Federal records without the approval of the Archivist of the United States. The
In addition to identifying the Federal agencies and any subdivisions requesting disposition authority, lists the organizational unit(s) accumulating the records or lists that the schedule has agency-wide applicability (in the case of schedules that cover records that may be accumulated throughout an agency); provides the control number assigned to each schedule, the total number of schedule items, and the number of temporary items (the records proposed for destruction); and includes a brief description of the temporary records. The records schedule itself contains a full description of the records at the file unit level as well as their disposition. If NARA staff has prepared an appraisal memorandum for the schedule, it also includes information about the records. You may request additional information about the disposition process at the addresses above.
1. Department of Agriculture, Farm Service Agency (DAA-0145-2014-0007, 2 items, 2 temporary items). Case files and summaries of appeals and litigation, including correspondence and background materials.
2. Department of Agriculture, Farm Service Agency (DAA-0145-2014-0008, 2 items, 2 temporary items). Transition payment records and assessments of a loan program. Included are correspondence, contract folders, applications, registers, compliance documents, and program assessments.
3. Department of Agriculture, Farm Service Agency (DAA-0145-2015-0013, 3 items, 3 temporary items). Outreach, bankruptcy, and accounting records. Included are correspondence, public notifications, and reports.
4. Department of Agriculture, Farm Service Agency (DAA-0145-2015-0014, 6 items, 6 temporary items). Farm loan program files, property inventories, compliance reviews, and program documentation records.
5. Department of Agriculture, Farm Service Agency (DAA-0145-2015-0015, 2 items, 2 temporary items). Legal advice and opinion records of the Office of the General Counsel.
6. Department of Agriculture, Farm Service Agency (DAA-0161-2015-0001, 1 item, 1 temporary item). Tobacco loss assistance program files of the Commodity Credit Corporation. Included are eligibility requirements, payments records, producer folders, and reports.
7. Department of Agriculture, Food Safety Inspection Service (DAA-0584-2015-0001, 4 items, 4 temporary items). Records related to regulatory waivers, procedural changes, suitability determination, and product safety for meat, poultry, and egg product plants.
8. Department of Commerce, National Oceanic and Atmospheric Administration (DAA-0370-2015-0006, 6 items, 6 temporary items). Inspector General complaint case files, audit case files, and files containing information or allegations which are of an investigative nature but do not relate to a specific investigation.
9. Department of Defense, Office of the Secretary of Defense (DAA-0330-2015-0007, 1 item, 1 temporary item). Research files related to programs that support the military community.
10. Department of Energy, Office of Energy Efficiency and Renewable Energy (DAA-0434-2015-0011, 7 items, 6 temporary items). Records related to the development of energy efficient vehicles. Proposed for permanent retention are reports to Congress on alternative fuel.
11. Department of Health and Human Services, Indian Health Service (DAA-0513-2015-0010, 12 items, 12 temporary items). Records of the Division of Health Professions Support, including scholarship program records, successful and unsuccessful program completion files, unsuccessful applications, and monitoring files.
12. Department of Homeland Security, Immigration and Customs Enforcement (DAA-0567-2016-0001, 1 item, 1 temporary item). Records related to energy efficiency at agency facilities.
13. Department of the Navy, United States Marine Corps (DAA-0127-2014-0004, 2 items, 2 temporary items). Master files and outputs of an electronic information system used to manage and analyze collected electronic signals and communications and outputs for commands in the field.
14. Department of the Navy, United States Marine Corps (DAA-0127-2015-0004, 2 items, 2 temporary items). Master files and outputs of an electronic information system used to track and manage maintenance of Marine Corps vehicles.
15. Department of State, Bureau of Conflict and Stabilization Operations (DAA-0059-2015-0001, 2 items, 2 temporary items). Records of the Office of the Executive Director including administrative memorandums, background materials, and copies of budget materials.
16. Department of State, Bureau of Conflict and Stabilization Operations (DAA-0059-2015-0004, 4 items, 4 temporary items). Records of the Office of Overseas Operations including routine memorandums, reports, working files, and administrative records.
17. Department of Transportation, Federal Railroad Administration (DAA-0399-2015-0002, 1 item, 1 temporary item). Content records of agency social networking Web sites.
18. Department of Transportation, Surface Transportation Board (DAA-0134-2013-0020, 1 item, 1 temporary item). Studies of the effect of proposed rail line construction.
19. Department of Transportation, Surface Transportation Board (DAA-0134-2013-0021, 1 item, 1 temporary item). Studies of the effect of proposed rail line mergers, acquisitions, and other actions.
20. Environmental Protection Agency, Agency-wide (DAA-0412-2013-0010, 4 items, 3 temporary items). Routine rulemaking records, working papers, and other background records related to the development and approval process of regulations and state standards. Proposed for permanent retention are significant rulemaking records and records related to the approval, amendment, repeal, or implementation of final regulations and directives.
21. Executive Office of the President, Office of Science and Technology Policy (DAA-0359-2016-0001, 1 item, 1 temporary items). Non-substantive working papers.
22. Federal Communications Commission, Wireline Competition Bureau (DAA-0173-2016-0007, 1 item, 1 temporary item). Records include copies of infrastructure sharing agreements and transmittal cover letters.
23. National Archives and Records Administration, Agency-wide (DAA-0064-2015-0003, 1 item, 1 temporary item). Routine administrative records common to all offices.
24. National Archives and Records Administration, Research Services (N2-64-15-1, 6 items, 6 temporary items). Records of the National Archives and Records Administration related to a cluster of holdings associated with foreign affairs records including receipts, working files and background materials, and samples to support disposal requests. These records were accessioned to the National Archives but lack sufficient historical value to warrant continued preservation.
25. Securities and Exchange Commission, Agency-wide (DAA-0266-2016-0004, 2 items, 1 temporary item). Supporting documentation for studies and reports. Proposed for permanent
National Archives and Records Administration (NARA)
Notice of Advisory Committee Meeting.
In accordance with the Federal Advisory Committee Act, as amended (5 U.S.C. appendix 2), NARA announces the following meeting of the Advisory Committee on Presidential Library-Foundation Partnerships.
The meeting will be on Wednesday, February 24, 2016, from 9:00 a.m. to 12:00 noon CDT.
Lyndon Baines Johnson Presidential Library and Museum; 2313 Red River Street; Austin, TX 78705.
Denise LeBeck by telephone at 301-837-3250 or by email at
The purpose of this meeting is to discuss the Presidential library program and topics related to public-private partnership between Presidential libraries and Presidential foundations. The meeting will be open to the public. Meeting attendees may enter from the Lyndon Baines Johnson Presidential Library and Museum's main entrance. You may have to show photo identification. Free parking is available in the Library's designated parking lot number 38.
National Credit Union Administration.
Notice of regulatory review; request for comments.
The NCUA Board (Board) is continuing its comprehensive review of its regulations to identify outdated, unnecessary, or burdensome regulatory requirements imposed on federally insured credit unions, as contemplated by section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). This second decennial review of regulations began when the Board issued its first EGRPRA notice on May 22, 2014, covering the two categories of “Applications and Reporting” and “Powers and Activities.”
Comment must be received on or before March 22, 2016.
You may submit comments by any of the following methods (Please send comments by one method only):
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Ross P. Kendall, Special Counsel to the General Counsel, at the above address, or telephone: (703) 518-6562.
Congress enacted EGRPRA
NCUA is not technically required to participate in the EGRPRA review process, since NCUA is not an “appropriate Federal banking agency” as specified in EGRPRA. In keeping with the spirit of the law, however, the Board has once again elected to participate in the review process. Thus, NCUA has participated along with the Agencies in the planning process, but has developed its own regulatory categories that are comparable with
In accordance with the objectives of EGRPRA, the Board asks the public to identify areas of its regulations that are outdated, unnecessary, or unduly burdensome. The EGRPRA review supplements and complements the reviews of regulations that NCUA conducts under other laws and its internal policies.
As the Board noted in its initial EGRPRA notice, the creation of the Consumer Financial Protection Bureau (CFPB) resulted in the transfer to it of responsibility for certain consumer protection rules that had previously been the responsibility of the Agencies and/or NCUA, such as Regulation Z and rules governing consumer privacy. Because the CFPB is not covered by EGRPRA or required to participate in this regulatory review process, the Agencies and NCUA excluded certain consumer protection regulations from the scope of the current review.
EGRPRA contemplates a two-part regulatory response. First, NCUA will publish in the
EGRPRA further requires the FFIEC to submit a report to the Congress within 30 days after NCUA and the Agencies publish the comment summary and analysis in the
The regulatory review contemplated by EGRPRA provides a significant opportunity for the public and the Board to consider groups of related regulations and identify possibilities for streamlining. The EGRPRA review's overall focus on the totality of regulations will offer a new perspective in identifying opportunities to reduce regulatory burden. For example, the EGRPRA review may facilitate the identification of regulatory requirements that are no longer consistent with the way business is conducted and that therefore might be eliminated. Of course, reducing regulatory burden must be consistent with ensuring the continued safety and soundness of federally insured credit unions and appropriate consumer protections.
EGRPRA also recognizes that burden reduction must be consistent with NCUA's statutory mandates, many of which currently require certain regulations. One of the significant aspects of the EGRPRA review program is the recognition that effective burden reduction in certain areas may require legislative change. The Board will be soliciting comment on, and reviewing the comments and regulations carefully for, the relationship among burden reduction, regulatory requirements, and statutory mandates. This will be a key aspect of the report to Congress.
The Board views the approach of considering the relationship of regulatory and statutory change on regulatory burden, in concert with EGRPRA's provisions calling for grouping regulations by type, to provide the potential for particularly effective burden reduction. The Board believes the EGRPRA review can also significantly contribute to its on-going efforts to reduce regulatory burden. Since 1987, a formally adopted NCUA policy has required the Board to review each of its regulations at least once every three years with a view toward eliminating, simplifying, or otherwise easing the burden of each regulation.
The Board is particularly sensitive to the impact of agency rules on small institutions. At its September, 2015 meeting, the Board formally increased the threshold for meeting the “small” classification to having assets of less than $100 million.
EGRPRA contemplates the categorization of regulations by “type.” During the initial decennial review, the Board developed and published for comment ten categories for NCUA's rules, including some that had been issued jointly with the Agencies. The Board believes these initial categories worked well for the purpose of presenting a framework for the review and so has retained them for this second review.
As the Board noted during the initial decennial review, although there are other possible ways of categorizing its rules, these ten categories “are logical groupings that are not so broad such that the number of regulations presented in any one category would overwhelm potential commenters. The categories also reflect recognized areas of industry interest and specialization or are particularly critical to the health of the credit union system.” As was also noted during the initial review, some regulations, such as lending, pertain to more than one category and are included in all applicable categories.
The Board remains convinced that publishing its rules for public comment separately from the Agencies is the most effective method for achieving EGRPRA's burden reduction goals for federally insured credit unions. Owing to differences in the credit union system as compared to the banking system, there is not a direct, category by category, correlation between NCUA's rules and those of the Agencies. For example, credit unions deal with issues such as membership, credit union service organizations, and corporate credit unions, all of which are unique to credit union operations. Similarly, certain categories identified by the Agencies have limited or no applicability in the credit union sector, such as community reinvestment, international operations, and securities. The categories developed by the Board and the Agencies reflect these differences. The Board intends to maintain comparability with the Agencies' notices to the extent there is overlap or similarity in the issues and the categories.
After the conclusion of the comment period for each EGRPRA notice published in the
The Board has prepared a chart to assist public understanding of the organization of its review. The chart, set forth at Section V below, presents the two categories of regulations on which NCUA is requesting burden reduction recommendations in this final notice. The two categories are shown in the left column. In the middle column are the subject matters that fall within the categories and in the far right column are the regulatory citations.
The Board seeks public comment on regulations within the following two categories—“Rules of Procedure” and “Safety and Soundness”—that may impose outdated, unnecessary, or unduly burdensome regulatory requirements on federally insured credit unions. Comments that cite particular provisions or language, and provide reasons why such provisions should be changed, would be most helpful to NCUA's review efforts. Suggested alternative provisions or language, where appropriate, would also be helpful. If the implementation of a comment would require modifying a statute that underlies the regulation, the comment should, if possible, identify the needed statutory change.
Specific issues for commenters to consider. While all comments related to any aspect of the EGRPRA review are welcome, the Board specifically invites comment on the following issues:
• Need and purpose of the regulations. Do the regulations in these categories fulfill current needs? Has industry or other circumstances changed since a regulation was written such that the regulation is no longer necessary? Have there been shifts within the industry or consumer actions that suggest a re-focus of the underlying regulations? Do any of the regulations in these categories impose burdens not required by their authorizing statutes?
• Need for statutory change. Do the statutes impose unnecessary requirements? Are any of the statutory requirements underlying these categories redundant, conflicting or otherwise unduly burdensome? If so, how should the statutes be amended?
• Overarching approaches/flexibility of the regulatory standards. Generally, is there a different approach to regulating that the Board could use that would achieve statutory goals while imposing less burden? Do any of the regulations in these categories or the statutes underlying them impose unnecessarily inflexible requirements?
• Effect of the regulations on competition. Do any of the regulations in these categories or the statutes underlying them create competitive disadvantages for credit unions compared to another part of the financial services industry? If so, how should these regulations be amended?
• Reporting, recordkeeping and disclosure requirements. Do any of the regulations in these categories or the statutes underlying them impose particularly burdensome reporting, recordkeeping or disclosure requirements? Are any of these requirements similar enough in purpose and use so that they could be consolidated? What, if any, of these requirements could be fulfilled electronically to reduce their burden? Please provide specific recommendations.
• Consistency and redundancy. Do any of the regulations in these categories impose inconsistent or redundant regulatory requirements that are not warranted by the circumstances?
• Clarity. Are the regulations in these categories and the underlying statutes drafted in clear and easily understood language? Are there specific regulations or underlying statutes that need clarification?
• Scope of rules. Is the scope of each rule in these categories consistent with the intent of the underlying statute(s)? Could we amend the scope of a rule to clarify its applicability or to reduce the burden, while remaining faithful to statutory intent? If so, specify which regulation(s) should be clarified.
• Burden on small insured institutions. The Board has a particular interest in minimizing burden on small insured credit unions (those with less than $100 million in assets). NCUA solicits comment on whether any regulations within these categories should be continued without change, amended or rescinded in order to minimize any significant economic impact the regulations may have on a substantial number of small federally insured credit unions.
National Science Foundation.
Notice of permits issued under the Antarctic Conservation of 1978, Public Law 95-541.
The National Science Foundation (NSF) is required to publish notice of permits issued under the Antarctic Conservation Act of 1978. This is the required notice.
Nature McGinn, ACA Permit Officer, Division of Polar Programs, Rm. 755, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230. Or by email:
On November 13, 2015 the National Science Foundation published a notice in the
Diana H. Wall Permit No. 2016-019
In accordance with the Federal Advisory Committee Act (Pub. L. 92-463, as amended), the National Science Foundation announces the following meeting:
Name: Advisory Committee for International Science and Engineering (#25104).
Date & Time: January 21, 2016, 8:00 a.m. to 5:15 p.m.; January 22, 2016, 9:00 a.m. to 12:30 p.m.
Place: National Science Foundation, 4201 Wilson Boulevard, Stafford II, Suite 1155, Arlington, Virginia 22230.
To facilitate entry into the building, contact Diane Drew (
Type of Meeting: OPEN.
Contact Person: Rebecca Keiser, Head, Office of International Science and Engineering, National Science Foundation, 4201 Wilson Boulevard, Stafford II, Suite 1155, Arlington, Virginia 22230; 703-292-7727.
Purpose of Meeting: To provide advice and recommendations concerning support for research, education and related activities involving the U.S. science and engineering community working in a global context as well as strategic efforts to promote a more effective NSF role in international science and engineering.
Nuclear Regulatory Commission.
Draft NUREG; public meeting and request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is issuing for public comment a draft NUREG, NUREG-2191, “Generic Aging Lessons Learned for Subsequent License Renewal (GALL-SLR) Report, Volume 1 and Volume 2,” and draft NUREG-2192, “Standard Review Plan for Review of Subsequent License Renewal Applications for Nuclear Power Plants” (SRP-SLR). These draft documents describe methods acceptable to the NRC staff for granting a subsequent license renewal in accordance with license renewal regulations, as well as techniques used by the NRC staff in evaluating applications for subsequent license renewal. Public meetings related to the issuance of these NUREGs are planned to be held on January 27 and 28, 2016, and February 23, 2016, at NRC's
Submit comments by February 29, 2016. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received on or before this date.
You may submit comments by any of the following methods:
• Federal Rulemaking Web site: Go to
• Mail comments to: Cindy Bladey, Office of Administration, Mail Stop: OWFN-12-H08, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.
For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Bennett Brady, Office of Nuclear Reactor Regulation, telephone: 301-415-2981, email:
Please refer to Docket ID NRC-2015-0251 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
• Federal rulemaking Web site: Go to
• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection at
• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Please include Docket ID NRC-2015-0251 in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC will post all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment into ADAMS.
The Atomic Energy Act (AEA) of 1954, as amended, authorizes the NRC to issue 40-year initial licenses and upon application and approval, subsequently renew licenses for nuclear power reactors. The NRC regulations permit these licenses to be renewed beyond the initial 40-year term for an additional period of time, limited to 20-year increments per renewal, based on the outcome of an assessment to determine if the nuclear facility can continue to operate safely during the proposed period of extended operation. There are no limitations in the AEA or the NRC's regulations restricting the number of times a license may be renewed.
Based on interactions with the nuclear power industry, the NRC staff believes the first applications for subsequent license renewal, a term referring to all license renewals allowing a plant to operate beyond the 60-year period (40-year of an original operating license and a 20-year period of the first license renewal), may be submitted in 2018 or 2019.
The NRC has developed draft guidance for utilities wishing to apply for subsequent license renewal. The guidance documents for first license renewal (
The NRC is also announcing public meetings during the public comment period. Scheduled for January 27 and 28, 2016, and February 23, 2016, these meetings will be held at the NRC headquarters in Rockville, MD. The formal meeting notices are available at
Submitted comments should include detailed, supporting justification for the NRC staff to evaluate the need for changes in guidance, as well as references to the operating experience, industry standards, or other relevant reference materials that provide a sound technical basis for such changes. The NRC is also interested in comments that will improve the clarity of the documents so that the final guidance will provide a stable and acceptable evaluation standard for future subsequent license renewal applications. These guidance documents describe an acceptable, but not required, means for nuclear power plants to meet the license renewal regulations for operation during the subsequent period of extended operation. Editorial and style comments are not necessary and will not be considered, because the final versions will reflect any necessary editorial and style changes.
For the Nuclear Regulatory Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 168 negotiated service agreement 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. MC2016-42 and CP2016-51 to consider the Request pertaining to the proposed Priority Mail Contract 168 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 January 7, 2016. The public portions of these filings can be accessed via the Commission's Web site (
The Commission appoints Kenneth R. Moeller to serve as Public Representative in these dockets.
1. The Commission establishes Docket Nos. MC2016-42 and CP2016-51 to consider the matters raised in each docket.
2. Pursuant to 39 U.S.C. 505, Kenneth R. Moeller 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 January 7, 2016.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning an additional Global Expedited Package Services 3 negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
On December 16, 2015, the Postal Service filed notice that it has entered into an additional Global Expedited Package Services 3 (GEPS 3) negotiated service agreement (Agreement).
To support its Notice, the Postal Service filed a copy of the Agreement, a copy of the Governors' Decision authorizing the product, 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 No. CP2016-54 for consideration of matters raised by the Notice.
The Commission invites comments on whether the Postal Service's filing is consistent with 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 24, 2015. The public portions of the filing can be accessed via the Commission's Web site (
The Commission appoints Curtis E. Kidd to serve as Public Representative in this docket.
1. The Commission establishes Docket No. CP2016-54 for consideration of the matters raised by the Postal Service's Notice.
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 this proceeding (Public Representative).
3. Comments are due no later than December 24, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 169 negotiated service agreement 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. MC2016-43 and CP2016-52 to consider the Request pertaining to the proposed Priority Mail Contract 169 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 January 7, 2016. The public portions of these filings can be accessed via the Commission's Web site (
The Commission appoints James F. Callow to serve as Public Representative in these dockets.
1. The Commission establishes Docket Nos. MC2016-43 and CP2016-52 to consider the matters raised in each docket.
2. Pursuant to 39 U.S.C. 505, James F. Callow is appointed to serve as an officer of the Commission to represent the interests of the general public in these proceedings (Public Representative).
3. Comments are due no later than January 7, 2016.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 165 negotiated service agreement 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. MC2016-39 and CP2016-48 to consider the Request pertaining to the proposed Priority Mail Contract 165 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 January 7, 2016. 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. MC2016-39 and CP2016-48 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 January 7, 2016.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing announcing its intention to change rates not of general applicability for Inbound Parcel Post (at Universal Postal Union (UPU) Rates). 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.
To accompany its Notice, the Postal Service filed the following materials:
• Attachment 1—an application for non-public treatment of materials filed under seal;
• Attachment 2—a redacted copy of Governors' Decision No. 14-04;
• Attachment 3—a redacted copy of UPU International Bureau (IB) Circular 163, which contains the new rates;
• Attachment 4—a copy of the certification required under 39 CFR 3015.5(c)(2); and
• Attachment 5—documentation in support of inflation-linked adjustment for inward land rates.
The Postal Service also filed supporting financial workpapers, an unredacted copy of Governors' Decision 14-04, an unredacted copy of the new rates, and related financial information under seal.
The Commission establishes Docket No. CP2016-56 for consideration of matters raised by the Notice.
The Commission invites comments on whether the Postal Service's filing is consistent with 39 U.S.C. 3632, or 3633, and 39 CFR part 3015. Comments are due no later than December 24, 2015. The public portions of the filing can be accessed via the Commission's Web site (
The Commission appoints James F. Callow to serve as Public Representative in this docket.
1. The Commission establishes Docket No. CP2016-56 for consideration of the matters raised by the Postal Service's Notice.
2. Pursuant to 39 U.S.C. 505, James F. Callow is appointed to serve as an officer of the Commission to represent the interests of the general public in this proceeding (Public Representative).
3. Comments are due no later than December 24, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filed a notice it has entered into an Inbound Competitive Multi-Service Agreement with Foreign Postal Operators 1 Canada Post Corporation. 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 December 16, 2015, the Postal Service filed notice that it has entered into an Inbound Competitive Multi-Service Agreement with a Foreign Postal Operator (Agreement)
The Agreement replaces an agreement with Canada Post, expiring December 31, 2015, that was the subject of Docket No. CP2014-13. Notice at 3. The Postal Service asserts the negotiated service agreement is functionally equivalent to the baseline agreement filed in Docket No. MC2010-34.
To support its Notice, the Postal Service filed a copy of the Agreement, a copy of the Governors' Decision authorizing the product, 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 No. CP2016-57 for consideration of matters raised by the Notice.
The Commission invites comments on whether the Postal Service's filing is consistent with 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 24, 2015. The public portions of the filing can be accessed via the Commission's Web site (
The Commission appoints Katalin K. Clendenin to serve as Public Representative in this docket.
1. The Commission establishes Docket No. CP2016-57 for consideration of the matters raised by the Postal Service's Notice.
2. Pursuant to 39 U.S.C. 505, Katalin K. Clendenin is appointed to serve as an officer of the Commission to represent the interests of the general public in this proceeding (Public Representative).
3. Comments are due no later than December 24, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 166 negotiated service agreement 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. MC2016-40 and CP2016-49 to consider the Request pertaining to the proposed Priority Mail Contract 166 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
The Commission appoints James F. Callow to serve as Public Representative in these dockets.
1. The Commission establishes Docket Nos. MC2016-40 and CP2016-49 to consider the matters raised in each docket.
2. Pursuant to 39 U.S.C. 505, James F. Callow is appointed to serve as an officer of the Commission to represent the interests of the general public in these proceedings (Public Representative).
3. Comments are due no later than January 7, 2016.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning an additional Global Expedited Package Services 3 negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
On December 16, 2015, the Postal Service filed notice that it has entered into an additional Global Expedited Package Services 3 (GEPS 3) negotiated service agreement (Agreement).
To support its Notice, the Postal Service filed a copy of the Agreement, a copy of the Governors' Decision authorizing the product, 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 No. CP2016-55 for consideration of matters raised by the Notice.
The Commission invites comments on whether the Postal Service's filing is consistent with 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 24, 2015. The public portions of the filing can be accessed via the Commission's Web site (
The Commission appoints Curtis E. Kidd to serve as Public Representative in this docket.
1. The Commission establishes Docket No. CP2016-55 for consideration of the matters raised by the Postal Service's Notice.
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 this proceeding (Public Representative).
3. Comments are due no later than December 24, 2015.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing concerning the addition of Priority Mail Contract 167 negotiated service agreement 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. MC2016-41 and CP2016-50 to consider the Request pertaining to the proposed Priority Mail Contract 167 product and the related contract, respectively.
The Commission invites comments on whether the Postal Service's filings in
The Commission appoints Curtis E. Kidd to serve as Public Representative in these dockets.
1. The Commission establishes Docket Nos. MC2016-41 and CP2016-50 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 January 7, 2016.
4. The Secretary shall arrange for publication of this order in the
By the Commission.
On October 28, 2015, NYSE Arca, Inc. (“Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
Section 19(b)(2) of the Act
The Commission finds it appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider this proposed rule change and the comments received. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On October 30, 2015, the Chicago Board Options Exchange, Incorporated (“Exchange” or “CBOE”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange proposes to list and trade A.M. cash-settled, European-style options on the FTSE China 50 Index.
According to the Exchange, the FTSE China 50 Index is calculated in Hong Kong dollars on a real-time basis during Hong Kong trading hours. The methodology used to calculate the FTSE China 50 Index is similar to the methodology used to calculate the value of other benchmark market-capitalization weighted indexes.
The Exchange proposes that trading hours for FTSE China 50 Index options would be from 8:30 a.m. (Chicago time) to 3:15 p.m. (Chicago time).
The Exchange proposes that FTSE China 50 Index options would expire on the third Friday of the expiration month.
The Exchange proposes to create specific initial and maintenance listing criteria for options on the reduced value of the FTSE China 50 Index. Specifically, the Exchange proposes to add new Interpretation and Policy .03(a) to Rule 24.2 to provide that the Exchange may trade FTSE China 50 Index options if each of the following conditions is satisfied: (1) the index is broad-based, as defined in Rule 24.1(i)(1); (2) options on the index are designated as A.M.-settled index options; (3) the index is capitalization-weighted, price-weighted, modified capitalization-weighted or equal dollar-weighted; (4) the index consists of 45 or more component securities; (5) each of the component securities of the index will have a market capitalization of greater than $100 million; (6) no single component security accounts for more than fifteen percent (15%) of the weight of the index, and the five highest weighted component securities in the index do not, in the aggregate, account for more than fifty percent (50%) of the weight of the index; (7) non-U.S. component securities (stocks or ADRs) that are not subject to comprehensive surveillance agreements do not, in the aggregate, represent more than twenty percent (20%) of the weight of the index; (8) the Exchange may continue to trade FTSE China 50 Index options after trading in all component securities has closed for the day and the index level is no longer widely disseminated at least once every fifteen (15) seconds by one or more major market data vendors, provided that FTSE China 50 futures contracts are trading and prices for those contracts may be used as a proxy for the current index value; (9) the Exchange reasonably believes it has adequate system capacity to support the trading of options on the index, based on a calculation of the Exchange's current Independent System Capacity Advisor allocation and the number of new messages per second expected to be generated by options on such index; and (10) the Exchange has written surveillance procedures in place with respect to surveillance of trading of options on the index.
Additionally, the Exchange proposes to add new Interpretation and Policy .03(b) to Rule 24.2 to set forth the following maintenance listing standards for options on the FTSE China 50 Index: (1) the conditions set forth in subparagraphs .03(a) (1), (2), (3), (4), (7), (8), (9) and (10) must continue to be satisfied, the conditions set forth in subparagraphs .03(a)(5) and (6) must be satisfied only as of the first day of January and July in each year; and (2) the total number of component securities in the index may not increase or decrease by more than ten percent (10%) from the number of component securities in the index at the time of its initial listing. In the event a class of index options listed on the Exchange pursuant to Interpretation and Policy .03(b) fails to satisfy these maintenance listing standards, the Exchange shall not open for trading any additional series of options of that class unless the continued listing of that class of index options has been approved by the Commission under Section 19(b)(2) of the Act.
The contract multiplier for the FTSE China 50 Index options would be $100. The FTSE China 50 Index options would be quoted in index points and one point would equal $100. The Exchange proposes that the minimum tick size for series trading below $3 would be 0.05 ($5.00), and at or above $3 would be 0.10 ($10.00). The Exchange also proposes that the strike price interval for FTSE China 50 Index options would be no less than $5, except that the strike price interval would be no less than $2.50 if the strike price is less than $200.
The Exchange proposes to apply the default position limits for broad-based index options of 25,000 contracts on the same side of the market (and 15,000 contracts near-term limit) to FTSE China 50 Index options. All position limit hedge exemptions would apply. The exercise limits for FTSE China 50 Index options would be equivalent to the position limits for those options. In
The Exchange states that, except as modified by the proposal, Exchange Rules in Chapters I through XIX, XXIV, XXIVA, and XXIVB would equally apply to FTSE China 50 Index options. The Exchange also states that FTSE China 50 Index options would be subject to the same rules that currently govern other CBOE index options, including sales practice rules, margin requirements,
The Exchange represents that it has an adequate surveillance program in place for FTSE China 50 Index options and intends to use the same surveillance procedures currently utilized for each of the Exchange's other index options to monitor trading in the proposed options. The Exchange also states that it is a member of the Intermarket Surveillance Group, is an affiliate member of the International Organization of Securities Commissions, and has entered into various comprehensive surveillance agreements and/or Memoranda of Understanding with various stock exchanges, including SEHK. Finally, the Exchange represents that it believes it and the Options Price Reporting Authority (“OPRA”) have the necessary systems capacity to handle the additional traffic associated with the listing of new series that would result from the introduction of FTSE China 50 Index options.
The Commission finds that the proposed rule change, as modified by Amendment Nos. 1 and 2, is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Commission believes that the listing and trading of FTSE China 50 Index options will broaden trading and hedging opportunities for investors by providing an options instrument based on an index designed to measure the performance of 50 of the largest and most liquid Chinese stocks listed and trading on SEHK. Moreover, the Exchange states that FTSE China 50 ETFs, such as the iShares China Large-Cap exchange traded fund (“FXI”), are actively-traded products. The Exchange also lists actively-traded options overlying those ETFs and states that those options are actively traded as well.
Because the FTSE China 50 Index is a broad-based index composed of actively-traded, well-capitalized stocks, the trading of options on the index does not raise unique regulatory concerns. The Commission believes that the listing standards, which are created specifically and exclusively for the index, are consistent with the Act, for the reasons discussed below.
The Commission notes that proposed Interpretation and Policy .03 to Exchange Rule 24.2 would require that the FTSE China 50 Index consist of 45 or more component securities. Further, for options on the FTSE China 50 Index to trade, each of the minimum of 45 component securities would need to have a market capitalization of greater than $100 million.
The Commission notes that the proposed listing standards for options on the FTSE China 50 Index would not permit any single component security to account for more than 15% of the weight of the index, and would not permit the five highest weighted component securities to account for more than 50% of the weight of the index in the aggregate. The Commission believes that, in view of the requirement on the number of securities in the index and on each security's market capitalization, this concentration standard is consistent with the Act. As noted above, the Exchange represents that it has an adequate surveillance program in place for FTSE China 50 Index options and intends to use the same surveillance procedures currently utilized for each of the Exchange's other index options to monitor trading in the proposed options.
The Commission notes that, consistent with the Exchange's generic listing standards for broad-based index options, non-U.S. component securities of the FTSE China 50 Index that are not subject to comprehensive surveillance agreements will not, in the aggregate, represent more than 20% of the weight of the index.
The Exchange states that, because trading in the components of the FTSE China 50 Index starts at approximately 8:30 p.m. (Chicago time) (prior day) and ends at approximately 3:00 a.m. (Chicago time) (next day), there will not be a current FTSE China 50 Index level calculated and disseminated while FTSE China 50 Index options would be traded (from approximately 8:30 a.m. (Chicago time) to 3:15 p.m. (Chicago time)). However, the listing standards state that the Exchange may continue to trade FTSE China 50 Index options after trading in all component securities has closed for the day and the index level is no longer widely disseminated at least once every 15 seconds by one or more major market data vendors, provided that FTSE China 50 futures contracts are trading and prices for those contracts may be used as a proxy for the current index value. The Exchange states that during time that the options would be trading on the exchange, E-Mini FTSE China 50 Index futures contracts will be trading and that the futures prices would be a proxy for the current FTSE China 50 Index level during this time period.
In addition, the proposed listing standards require the Exchange to reasonably believe that it has adequate system capacity to support the trading of options on the FTSE China 50 Index. As noted above, the Exchange represents that it believes it and the OPRA have the necessary systems capacity to handle the additional traffic associated with the listing of new series that would result from the introduction of FTSE China 50 Index options.
As a national securities exchange, the Exchange is required, under Section 6(b)(1) of the Act,
The Commission further believes that the Exchange's proposed position and exercise limits, trading hours, margin, strike price intervals, minimum tick size, series openings, and other aspects of the proposed rule change, as modified by Amendment Nos. 1 and 2, are appropriate and consistent with the Act.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
FINRA is proposing to adopt new FINRA Rule 6732 to provide FINRA with authority to exempt certain transactions by a member alternative trading system (“ATS”) that meet specified criteria from the transaction reporting obligations under FINRA Rule 6730. In addition, FINRA is proposing a conforming change to FINRA Rule 9610 to specify that FINRA has exemptive authority under proposed Rule 6732.
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Rule 6730 (Transaction Reporting) generally requires that each FINRA member that is a party to a transaction in a TRACE-Eligible Security
On February 28, 2012, FINRA adopted Rule 6731 (Exemption from Trade Reporting Obligation for Certain Alternative Trading Systems) to provide FINRA with authority to exempt ATSs from TRACE trade reporting obligations under certain circumstances; specifically, where the ATS demonstrates that: member subscribers are fully disclosed to one another at all times on the ATS; the system does not permit automatic execution (and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber); the trade does not pass through any ATS account (and the ATS does not in any way hold itself out to be a party to the trade); and the ATS does not exchange TRACE-Eligible Securities or funds on behalf of the member subscribers or take either side of the trade for clearing or settlement purposes (including, but not limited to, at DTC or otherwise), or in any other way insert itself into the trade.
FINRA believes it is appropriate to propose a rule change to provide FINRA with authority to exempt trades on ATSs not otherwise falling within the exemption in Rule 6731 from the Rule 6730 trade reporting obligations. Pursuant to the proposed exemption, an ATS would not be required to report exempted transactions occurring on the ATS to TRACE, but rather, would be permitted to provide to FINRA on a monthly basis, or such other basis as prescribed by FINRA, data relating to each exempted trade occurring on the ATS. Each side of a trade for which an ATS is exempted from TRACE reporting pursuant to the proposal must be reported by a member (other than the ATS) that meets the definition of a “Party to a Transaction” identifying a contra-party (other than the ATS).
The proposal would permit FINRA to exempt a member ATS from reporting trades where: (a) The trade is between FINRA members, (b) the trade does not pass through any ATS account; (c) the ATS does not exchange TRACE-Eligible Securities or funds on behalf of the subscribers or take either side of the trade for clearing or settlement purposes (including, but not limited to, at DTC or otherwise), or in any other way insert itself into the trade; and (d) the ATS has entered into a written agreement with each member that is a “Party to a Transaction” with respect to any trade for which the ATS is exempted under this Rule, specifying that trades must be reported by such party pursuant to Rule 6730(c)(13) identifying the trade as having occurred on the ATS (using the ATS's separate MPID obtained in compliance with Rule 6720(c)).
Unlike the exemption provided for under Rule 6731 (where, if granted, all transactions occurring on the ATS are exempted from TRACE reporting), proposed Rule 6732 would provide FINRA authority to grant exemptions only for transactions that meet the enumerated criteria, which provides a greater degree of flexibility to member ATSs seeking an exemption. In addition, the proposed exemption omits two of the conditions required for relief under Rule 6731—specifically, that member subscribers must be fully disclosed to one another at all times on the ATS, and that the system does not permit automatic execution and a member subscriber must take affirmative steps beyond the submission of an order to agree to a trade with another member subscriber. Thus, proposed Rule 6732 contemplates that an ATS may have a greater degree of involvement in exempted trades than contemplated by existing Rule 6731.
In lieu of reporting through TRACE, proposed Rule 6732 would include a similar requirement to that contained in Rule 6731 in that it would require the periodic reporting of transaction information by any member ATS granted relief. Specifically, under the proposed exemption, an ATS would be required to provide FINRA with data relating to each exempted trade that occurred on its system (on a monthly basis or such other basis as prescribed by FINRA). FINRA will publish the required items of trade data information, the frequency of the reporting requirement, if different than monthly, and mode of transmission in a separate
FINRA believes that the proposed rule change will simplify compliance for member ATSs and other members. Specifically, where an ATS does not exchange TRACE-Eligible Securities or funds on behalf of the subscribers, take either side of the trade for clearing or settlement purposes (including, but not limited to, at DTC or otherwise), or in any other way insert itself into the trade, and where the trade does not pass through any ATS account, the proposal provides FINRA with authority to allow ATSs (and member subscribers) to streamline their trade reporting practices.
In some cases, member subscribers trading on an ATS may prefer to program their back-end systems automatically to clear against the contra-party identified on TRACE trade reports. Thus, reporting against the contra-party member subscriber, rather than the ATS, would simplify clearance and settlement for such members. However, because, under FINRA rules, an ATS generally is deemed a party to each trade occurring through its system, Rule 6730 currently precludes member subscribers from reflecting a party other than the ATS on TRACE trade reports, even where the ATS has not inserted itself into the trade.
For example, today, where a member (BD 1) sells a TRACE-Eligible Security to another member (BD 2) through an ATS, Rule 6730 generally requires BD 1 to report a sale to the ATS and the ATS to report a buy from BD 1. The ATS also must report the corresponding sale to BD 2, and BD 2 must report its buy from the ATS.
Therefore, FINRA believes that the proposed rule change will simplify compliance for these member ATSs and their member subscribers without compromising public transparency in exempted trades, because the exempted transaction will continue to be trade reported by members and disseminated in accordance with existing rules.
FINRA has filed the proposed rule change for immediate effectiveness. The implementation date of the proposed rule change will be July 18, 2016.
FINRA believes that the proposed rule change is consistent with the provisions
FINRA believes that the proposed rule change will simplify compliance for certain ATSs and their member subscribers by permitting subscribers to trade report with the party against which it will clear the trade. The proposal also accommodates a broader range of ATS models. FINRA also notes that public transparency with respect to exempted trades will not be compromised because such transactions will continue to be trade reported by members and disseminated in accordance with existing rules.
FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Any ATS that meets the criteria set forth in the proposed rule may apply for the exemption with respect to eligible transactions occurring on its platform. In addition, irrespective of an ATS's model or whether the ATS is granted an exemption pursuant to this proposal, all ATSs that are a “party to a transaction” must continue to pay transaction reporting fees with respect to Rule 6732 exempted transactions. As stated above, any ATS granted a Rule 6732 exemption would continue to be deemed a “party” to the transactions covered by the exemption, and would be required to remit to FINRA a transaction reporting fee based on the fee schedule set forth in Rule 7730(b)(1) for each exempted sell transaction occurring through the ATS.
As discussed above, an ATS is a party to a transaction in TRACE-eligible securities occurring on that ATS. As such, an ATS is responsible to report the transaction to FINRA as provided in Rule 6730, unless an exception or exemption applies.
FINRA recognizes that there are different business models for the way an ATS may facilitate trading on its platform, and the functional role of the ATS may differ in each of these models. For instance FINRA is aware that some ATS's do not pass TRACE-eligible securities or funds through their own accounts as part of an execution. In instances where the functional activities of the ATS are more limited with respect to a transaction, FINRA believes that the ATS, while still party to the transaction, may benefit from a streamlined reporting regime without reducing public transparency.
By FINRA rule today, all ATSs are parties to transactions in TRACE-eligible securities occurring on the ATS and are subject to TRACE reporting. Rule 6731 provides FINRA authority to exempt an ATS from Rule 6730 TRACE transaction reporting requirements where an ATS meets the conditions in Rule 6731 described above. Thus, an ATS that does not meet the conditions of Rule 6731 is required to report transactions occurring on the ATS to TRACE in accordance with FINRA rules.
FINRA estimates that only a small number of ATSs would be eligible to seek the exemption based on staff understanding of their current business models, although the proposed exemption would be available to any current or future ATS that would meet the requirements. Member subscribers who execute trades on an ATS that seeks and is granted the proposed exemption also may be impacted. FINRA does not have a reliable estimate for the number of transactions that might be eligible for the exemption.
Any ATS that meets the qualifications proposed in this rule may request exemption from FINRA. Where granted, the ATS would presumably reduce its compliance costs by shifting from contemporaneous reporting of transactions to TRACE in TRACE-eligible securities to periodic reporting.
An ATS that seeks and is granted an exemption under this proposed rule may incur costs to modify its systems, and must update its policies and procedures to reflect reporting consistent with the periodic regime. Each ATS may determine independently whether or not it seeks to obtain the exemption, and thus, it is likely that an ATS would only seek this exemption where it was less costly than meeting its current reporting requirements.
FINRA understands that a commenter to a related filing indicated that transactions in TRACE-eligible securities occurring on some ATSs are “given up” to the broker-dealer counterparties for TRACE reporting.
Where an ATS seeks and is granted the exemption, member subscribers who transact through the ATS also may incur costs associated with reporting the additional information to FINRA that identifies the ATS where the trade occurred. These costs may include additional programming and testing along with updating policies and procedures. FINRA notes, however, that member subscribers may determine where to seek executions and would not have to incur the related costs if they choose to send orders elsewhere for execution.
Both member subscribers and ATSs may incur additional costs associated with creating and maintaining a written agreement with respect to the reporting of any trades for which the ATS is exempted under the proposed rule.
FINRA also considered the potential impacts of the proposed rule on investors and other parties that might rely on TRACE reporting. As proposed, the rule would not negatively impact FINRA's ability to monitor securities markets. The proposed rule would not substantively reduce the information collected by FINRA on TRACE-eligible securities transactions occurring on an ATS. Member subscribers maintain their obligation to report transactions on the ATS to TRACE within the time prescribed by FINRA rules. The additional information collected pursuant to the exemption under the rule would enhance FINRA's ability to identify all exempted trades occurring on an individual ATS. Further, the exemption would not impact the quality and completeness of the information made generally available through TRACE, since TRACE reporting obligations continue to apply to the member subscribers transacting on the ATS.
The primary alternative considered was to continue to have ATS [
Written comments were neither solicited nor received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is 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 (“Act,” “Exchange Act” or “SEA”)
FINRA is proposing to create a separate rule set that would apply to firms that meet the definition of “capital acquisition broker” and elect to be governed under this rule set.
The text of the proposed rule change is available on FINRA's Web site at
In its filing with the Commission, FINRA included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. FINRA has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
There are FINRA firms that are solely corporate financing firms that advise companies on mergers and acquisitions,
Nevertheless, these firms do not engage in many of the types of activities typically associated with traditional broker-dealers. For example, these firms typically do not carry or act as an introducing broker with respect to customer accounts, handle customer funds or securities, accept orders to purchase or sell securities either as principal or agent for the customer, exercise investment discretion on behalf of any customer, or engage in proprietary trading of securities or market-making activities.
FINRA is proposing to establish a separate rule set that would apply exclusively to firms that meet the definition of “capital acquisition broker” (“CAB”) and that elect to be governed under this rule set. CABs would be subject to the FINRA By-Laws, as well as core FINRA rules that FINRA believes should apply to all firms. The rule set would include other FINRA rules that are tailored to address CABs' business activities.
Proposed CAB Rule 014 provides that all persons that have been approved for membership in FINRA as a CAB and persons associated with CABs shall be subject to the Capital Acquisition Broker rules and the FINRA By-Laws (including the schedules thereto), unless the context requires otherwise. Proposed CAB Rule 015 provides that FINRA Rule 0150(b) shall apply to the CAB rules. FINRA Rule 0150(b) currently provides that the FINRA rules do not apply to transactions in, and business activities relating to, municipal securities as that term is defined in the Exchange Act.
CAB Rule 016 sets forth basic definitions modified as appropriate to apply to CABs. The proposed definitions of “capital acquisition broker” and “institutional investor” are particularly important to the application of the rule set.
The term “capital acquisition broker” would mean any broker that solely engages in any one or more of the following activities:
• Advising an issuer, including a private fund, concerning its securities offerings or other capital raising activities;
• advising a company regarding its purchase or sale of a business or assets or regarding its corporate restructuring, including a going-private transaction, divestiture or merger;
• advising a company regarding its selection of an investment banker;
• assisting in the preparation of offering materials on behalf of an issuer;
• providing fairness opinions, valuation services, expert testimony, litigation support, and negotiation and structuring services;
• qualifying, identifying, soliciting, or acting as a placement agent or finder with respect to institutional investors in connection with purchases or sales of unregistered securities; and
• effecting securities transactions solely in connection with the transfer of ownership and control of a privately-held company through the purchase, sale, exchange, issuance, repurchase, or redemption of, or a business combination involving, securities or assets of the company, to a buyer that will actively operate the company or the business conducted with the assets of the company, in accordance with the terms and conditions of an SEC rule, release, interpretation or “no-action” letter that permits a person to engage in such activities without having to register as a broker or dealer pursuant to Section 15(b) of the Exchange Act.
A firm would be permitted to register as, or change its status to, a CAB
The term “capital acquisition broker” would not include any broker or dealer that:
• Carries or acts as an introducing broker with respect to customer accounts;
• holds or handles customers' funds or securities;
• accepts orders from customers to purchase or sell securities either as principal or as agent for the customer (except as permitted by paragraphs (c)(1)(F) and (G) of CAB Rule 016);
• has investment discretion on behalf of any customer;
• engages in proprietary trading of securities or market-making activities; or
• participates in or maintains an online platform in connection with offerings of unregistered securities pursuant to Regulation Crowdfunding or Regulation A under the Securities Act of 1933.
The term “institutional investor” would have the same meaning as that term has under FINRA Rule 2210 (Communications with the Public), with one exception. The term would include any:
• Bank, savings and loan association, insurance company or registered investment company;
• governmental entity or subdivision thereof;
• employee benefit plan, or multiple employee benefit plans offered to employees of the same employer, that meet the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and in the aggregate have at least 100 participants, but does not include any participant of such plans;
• qualified plan, as defined in Section 3(a)(12)(C) of the Exchange Act, or multiple qualified plans offered to employees of the same employer, that in the aggregate have at least 100 participants, but does not include any participant of such plans;
• other person (whether a natural person, corporation, partnership, trust, family office or otherwise) with total assets of at least $50 million; and
• person acting solely on behalf of any such institutional investor.
The definition also would include any person meeting the definition of “qualified purchaser” as that term is defined in Section 2(a)(51) of the Investment Company Act of 1940 (“1940 Act”).
The proposed CAB Rule 100 Series sets forth the requirements for firms that wish to register as a CAB. The proposed CAB Rule 100 Series generally incorporates by reference FINRA Rules 1010 (Electronic Filing Requirements for Uniform Forms), and 1122 (Filing of Misleading Information as to Membership or Registration), and NASD Rules 1011 (Definitions), 1012 (General Provisions), 1013 (New Member Application and Interview), 1014 (Department Decision), 1015 (Review by National Adjudicatory Council), 1016 (Discretionary Review by FINRA Board), 1017 (Application for Approval of Change in Ownership, Control, or Business Operations), 1019 (Application to Commission for Review), 1090 (Foreign Members), 1100 (Foreign Associates) and IM-1011-1 (Safe Harbor for Business Expansions). Accordingly, a CAB applicant would follow the same procedures for membership as any other FINRA applicant, with four modifications.
• First, an applicant for membership that seeks to qualify as a CAB would have to state in its application that it intends to operate solely as such.
• Second, in reviewing an application for membership as a CAB, the FINRA Member Regulation Department would consider, in addition to the standards for admission set forth in NASD Rule 1014, whether the applicant's proposed activities are consistent with the limitations imposed on CABs under CAB Rule 016(c).
• Third, proposed CAB Rule 116(b) sets forth the procedures for an existing FINRA firm to change its status to a CAB. If an existing firm is already approved to engage in the activities of a CAB, and the firm does not intend to change its existing ownership, control or business operations, it would not be required to file either a New Member Application (“NMA”) or a Change in Membership Application (“CMA”). Instead, such a firm would be required to file a request to amend its membership agreement or obtain a membership agreement (if none exists currently) to provide that: (i) The firm's activities will be limited to those permitted for CABs under CAB Rule 016(c), and (ii) the firm agrees to comply with the CAB rules.
• Fourth, proposed CAB Rules 116(c) and (d) set forth the procedures for an existing CAB to terminate its status as such and continue as a FINRA firm. Under Rule 116(c), such a firm would be required to file a CMA with the FINRA Member Regulation Department, and to amend its membership agreement to provide that the firm agrees to comply with all FINRA rules.
Under Rule 116(d), however, if during the first year following an existing FINRA member firm's amendment to its membership agreement to convert a full-service broker-dealer to a CAB pursuant to Rule 116(b) a CAB seeks to terminate its status as such and continue as a FINRA member firm, the CAB may notify the FINRA Membership Application Program group of this change without having to file an application for approval of a material change in business operations pursuant to NASD Rule 1017. The CAB would instead file a request to amend its membership agreement to provide that the member firm agrees to comply with all FINRA rules, and execute an amended membership agreement that imposes the same limitations on the member firm's activities that existed prior to the member firm's change of status to a CAB.
The proposed CAB Rule 100 Series also would govern the registration and qualification examinations of principals and representatives that are associated with CABs. These Rules incorporate by reference NASD Rules 1021 (Registration Requirements—Principals), 1022 (Categories of Principal Registration), 1031 (Registration Requirements—Representatives), 1032 (Categories of Representative Registration), 1060 (Persons Exempt from Registration), 1070 (Qualification Examinations and Waiver of Requirements), 1080 (Confidentiality of Examinations), IM-1000-2 (Status of Persons Serving in the Armed Forces of the United States), IM-1000-3 (Failure to Register Personnel) and FINRA Rule 1250 (Continuing Education Requirements). Accordingly, CAB firm principals and representatives would be subject to the same registration, qualification examination, and continuing education requirements as principals and representatives of other FINRA firms. CABs also would be subject to FINRA Rule 1230(b)(6) regarding Operations Professional registration.
The proposed CAB Rule 200 Series would establish a streamlined set of conduct rules. CABs would be subject to FINRA Rules 2010 (Standards of Commercial Honor and Principles of Trade), 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices), 2040 (Payments to Unregistered Persons),
CAB Rules 209 and 211 would impose know-your-customer and suitability obligations similar to those imposed under FINRA Rules 2090 and 2111. CAB Rule 211(b) includes an exception to the customer-specific suitability obligations for institutional investors similar to the exception found in FINRA Rule 2111(b).
Proposed CAB Rule 221 is an abbreviated version of FINRA Rule 2210 (Communications with the Public), essentially prohibiting false and misleading statements.
Under proposed CAB Rule 240, if a CAB or associated person of a CAB had engaged in activities that would require the CAB to register as a broker or dealer under the Exchange Act, and that are inconsistent with the limitations imposed on CABs under CAB Rule 016(c), FINRA could examine for and enforce all FINRA rules against such a broker or associated person, including any rule that applies to a FINRA broker-dealer that is not a CAB or to an associated person who is not a person associated with a CAB.
FINRA has determined not to subject CABs to FINRA Rules 2121 (Fair Prices and Commissions), 2122 (Charges for Services Performed), and 2124 (Net Transactions with Customers), since CABs' business model does not raise the same concerns that Rules 2121, 2122 and 2124 are intended to address.
Rule 2121 provides that, for securities in both listed and unlisted securities, a member that buys for its own account from its customer, or sells for its own account to its customer, shall buy or sell at a price which is fair, taking into consideration all relevant circumstances, including market conditions with respect to the security at the time of the transaction, the expense involved, and the fact that the member is entitled to a profit. Further, if the member acts as agent for its customer in any such transaction, the member shall not charge its customer more than a fair commission or service charge, taking into consideration all relevant circumstances, including market conditions with respect to the security at the time of the transaction, the expense of executing the order and the value of any service the member may have rendered by reason of its experience in and knowledge of such security and the market therefor.
CABs would not be permitted to act as a principal in a securities transaction. Accordingly, the provisions of Rule 2121 that govern principal transactions would not apply to a CAB's permitted activities.
CABs would be permitted act as agent in a securities transaction only in very narrow circumstances. CABs would be allowed to act as an agent with respect to institutional investors in connection with purchases or sales of unregistered securities. CABs also would be
In both instances, FINRA believes that these circumstances either involve institutional parties that negotiate the terms of permitted securities transactions without the need for the conditions set forth in Rule 2121, or involve the sale of a business as a going concern, which differs in nature from the types of transactions that typically raise issues under Rule 2121.
Rule 2122 provides that charges, if any, for services performed, including, but not limited to, miscellaneous services such as collections due for principal, dividends, or interest; exchange or transfer of securities; appraisals, safekeeping or custody of securities, and other services shall be reasonable and not unfairly discriminatory among customers. As discussed above, CABs typically provide services to institutional customers that generally do not need the protections that Rule 2122 offers, since these customers are capable of negotiating fair prices for the services that CABs provide. Moreover, CABs are not permitted to provide many of the services listed in Rule 2122, such as collecting principal, dividends or interest, or providing safekeeping or custody services.
Rule 2124 sets forth specific requirements for executing transactions with customers on a “net” basis. “Net” transactions are defined as a type of principal transaction, and CABs may not trade securities on a principal basis. For these reasons, FINRA does not believe it is necessary to include FINRA Rules 2121, 2122 and 2124 as part of the CAB rule set.
CAB Rule 201 would subject CABs to FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade), which requires a member, in the conduct of its business, to observe high standards of commercial honor and just and equitable principles of trade. Depending on the facts, other rules, such as Rule 2010, may apply in situations in which a CAB charged a commission or fee that clearly is unreasonable under the circumstances.
The proposed CAB Rule 300 Series would establish a limited set of supervisory rules for CABs. CABs would be subject to FINRA Rules 3220 (Influencing or Rewarding Employees of Others), 3240 (Borrowing from or Lending to Customers), and 3270 (Outside Business Activities of Registered Persons).
Proposed CAB Rule 311 would subject CABs to some, but not all, of the requirements of FINRA Rule 3110 (Supervision) and, consistent with Rule 3110, is designed to provide CABs with the flexibility to tailor their supervisory systems to their business models. CABs would be subject to many of the provisions of Rule 3110 concerning the supervision of offices, personnel, customer complaints, correspondence and internal communications. However, CABs would not be subject to the provisions of Rule 3110 that require annual compliance meetings (paragraph (a)(7)), review and investigation of transactions (paragraphs (b)(2) and (d)), specific documentation and supervisory procedures for supervisory personnel (paragraph (b)(6)), and internal inspections (paragraph (c)).
FINRA does not believe that the annual compliance meeting requirement in FINRA Rule 3110(a)(7) should apply to CABs given the nature of CABs' business model and structure. FINRA has observed that most current FINRA member firms that would qualify as CABs tend to be small and often operate out of a single office. In addition, the range of rules that CABs would be subject to is narrower than the rules that apply to other broker-dealers. Moreover, as noted above, CABs would be subject to both the Regulatory and Firm Element continuing education requirements. Accordingly, FINRA does not believe that CABs need to conduct an annual compliance meeting as required under FINRA Rule 3110(a)(7).
FINRA does not believe that FINRA Rule 3110(b)(2), which requires members to adopt and implement procedures for the review by a registered principal of all transactions relating to the member's investment banking or securities business, or FINRA Rule 3110(d), which imposes requirements related to the investigation of securities transactions and heightened reporting requirements for members engaged in investment banking services, should apply to CABs. CABs would not be permitted to carry or act as an introducing broker with respect to customer accounts, hold or handle customers' funds or securities, accept orders from customers to purchase or sell securities except under the narrow circumstances discussed above, have investment discretion on behalf of any customer, engage in proprietary trading or market-making activities, or participate in Crowdfunding or Regulation A securities offerings. Accordingly, due to these restrictions, FINRA does not believe a CAB's business model necessitates the application of these provisions, which primarily address trading and investment banking functions that are beyond the permissible scope of a CAB's activities.
FINRA does not believe that the requirements of FINRA Rule 3110(b)(6) should apply to CABs. Paragraph (b)(6) generally requires a member to have procedures to prohibit its supervisory personnel from (1) supervising their own activities; and (2) reporting to, or having their compensation or continued employment determined by, a person the supervisor is supervising.
FINRA believes that a CAB's business model, which is geared toward acting as a consultant in capital acquisition transactions, or acting as an agent solely in connection with purchases or sales of unregistered securities to institutional investors, or with the transfer of ownership and control of a privately-held company, does not give rise to the same conflicts of interest and
Proposed CAB Rule 313 would require CABs to designate and identify one or more principals to serve as a firm's chief compliance officer, similar to the requirements of FINRA Rule 3130(a). CAB Rule 313 would not require a CAB to have its chief executive officer (“CEO”) certify that the member has in place processes to establish, maintain, review, test and modify written compliance policies and written supervisory procedures reasonably designed to achieve compliance with applicable federal securities laws and regulations, and FINRA and MSRB rules, which are required under FINRA Rules 3130(b) and (c). FINRA does not believe the CEO certification is necessary given a CAB's narrow business model and smaller rule set.
Proposed Rule 328 would prohibit any person associated with a CAB from participating in any manner in a private securities transaction as defined in FINRA Rule 3280(e).
Proposed CAB Rule 331 would require each CAB to implement a written anti-money laundering (“AML”) program. This is consistent with the SEC's requirements and Chapter X of Title 31 of the Code of Federal Regulations. Accordingly, the proposed rule is similar to FINRA Rule 3310 (Anti-Money Laundering Compliance Program); however, the proposed rule contemplates that all CABs would be eligible to conduct the required independent testing for compliance every two years.
The proposed CAB Rule 400 Series would establish a streamlined set of rules concerning firms' financial and operational obligations. CABs would be subject to FINRA Rules 4140 (Audit), 4150 (Guarantees by, or Flow through Benefits for, Members), 4160 (Verification of Assets), 4511 (Books and Records—General Requirements), 4513 (Records of Written Customer Complaints), 4517 (Member Filing and Contact Information Requirements), 4524 (Supplemental FOCUS Information), 4530 (Reporting Requirements), and 4570 (Custodian of Books and Records).
Proposed CAB Rule 411 includes some, but not all, of the capital compliance requirements of FINRA Rule 4110. CABs would be required to suspend business operations during any period a firm is not in compliance with the applicable net capital requirements set forth in SEA Rule 15c3-1, and the rule also would authorize FINRA to direct a CAB to suspend its operation under those circumstances. Proposed CAB Rule 411 also sets forth requirements concerning withdrawal of capital, subordinated loans, notes collateralized by securities, and capital borrowings.
CABs would not be subject to FINRA Rules 4370 (Business Continuity Plans and Emergency Contact Information) or 4380 (Mandatory Participation in FINRA BC/DR Testing Under Regulation SCI). FINRA does not believe it would be necessary for a CAB to maintain a business continuity plan (BCP), given a CAB's limited activities, particularly since a CAB would not engage in retail customer account transactions or clearance, settlement, trading, underwriting or similar investment banking activities. Moreover, FINRA Rule 4380 relates to Rule SCI under the Exchange Act, which is not applicable to a member that limits its activities to those permitted under the CAB rule set.
Because CABs would not carry or act as an introducing broker with respect to customer accounts, they would have more limited customer information requirements than is imposed under FINRA Rule 4512.
CAB Rule 452(a) establishes a limited set of requirements for the supervision and review of a firm's general ledger accounts.
The proposed CAB Rule 500 Series would subject CABs to certain rules concerning securities offerings. CABs would be subject to FINRA Rules 5122 (Private Placements of Securities Issued by Members) and 5150 (Fairness Opinions).
CABs would be subject to the FINRA Rule 8000 Series governing investigations and sanctions of firms, other than FINRA Rules 8110 (Availability of Manual to Customers), 8211 (Automated Submission of Trading Data Requested by FINRA), and 8213 (Automated Submission of Trading Data for Non-Exchange-Listed Securities Requested by FINRA).
CABs would not be subject to FINRA Rule 8110 (Availability of Manual to Customers), which requires members to make available a current copy of the FINRA manual for examination by customers upon request. If the Commission approves this proposed rule change, the CAB rule set would be available through the FINRA Web site. Accordingly, FINRA does not believe this rule is necessary for CABs.
CABs also would not be subject to FINRA Rules 8211 (Automated Submission of Trading Data Requested by FINRA) or 8213 (Automated Submission of Trading Data for Non-Exchange-Listed Securities Requested by FINRA). Given that these rules are intended to assist FINRA in requesting trade data from firms engaged in securities trading, and that CABs would not engage in securities trading, FINRA
CABs would be subject to the FINRA Rule 9000 Series governing disciplinary and other proceedings involving firms, other than the FINRA Rule 9700 Series (Procedures on Grievances Concerning the Automated Systems). Proposed CAB Rule 900(c) would provide that any CAB may be subject to a fine under FINRA Rule 9216(b) with respect to an enumerated list of FINRA By-Laws, CAB rules and SEC rules under the Exchange Act. Proposed CAB Rule 900(d) would authorize FINRA staff to require a CAB to file communications with the FINRA Advertising Regulation Department at least ten days prior to use if the staff determined that the CAB had departed from CAB Rule 221's standards.
CABs would be subject to the FINRA Rule 12000 Series (Code of Arbitration Procedure for Customer Disputes), 13000 Series (Code of Arbitration Procedure for Industry Disputes) and 14000 Series (Code of Mediation Procedure).
If the Commission approves the proposed rule change, FINRA will announce the implementation date of the proposed rule change in a
FINRA believes that the proposed rule change is consistent with the provisions of Section 15A(b)(6) of the Act,
FINRA does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. FINRA has undertaken an economic impact assessment, as set forth below, to analyze the regulatory need for the proposed rulemaking, its potential economic impacts, including anticipated costs and benefits, and the alternatives FINRA considered in assessing how to best meet its regulatory objectives.
As discussed above, many firms solely engage in corporate financing activities, including advising companies on mergers and acquisitions, advising issuers on raising debt and equity capital in private placements with institutional investors, or providing advisory services on a consulting basis. These firms often register as broker-dealers because of their activities and because they may receive transaction-based compensation as part of their services, but unlike traditional broker-dealers, they do not handle customer funds or securities, carry or act as an introducing broker with respect to customer accounts, or provide products and services to retail customers. As a result, many FINRA rules are not applicable to the business activities of these firms. The proposed rule change establishes a separate set of streamlined rules that would apply exclusively to these firms and is tailored to address their business activities, while maintaining necessary investor protections.
The proposed rule change would impact member firms that engage in CAB-related business activities, discussed above. As a baseline and based on staff experience, FINRA preliminarily estimates that the number of member firms that meet this definition would range from 650 to 750 firms.
FINRA anticipates that some firms provide similar services but are not currently registered as broker-dealers with the SEC or FINRA. For example, some firms may currently limit activities, such as not accepting transaction-based compensation for their services, to avoid broker-dealer registration requirements and attendant costs. Others may accept transaction-based compensation, but may be relying on SEC no-action relief to avoid broker-dealer registration.
The proposed rule change would reduce the regulatory burden for CABs by decreasing the range and scope of current FINRA rules that would be applicable to them given their limited activities and institutional business model. For example, as discussed above, the proposed rule change would establish a streamlined set of conduct rules. Similarly, the proposed CAB rules would establish a limited set of supervisory rules that are better designed to provide CABs with the flexibility to tailor their supervisory systems to their business models. As discussed above, CABs also would be subject to more limited customer information requirements than those applicable to other broker-dealers.
The reduction in these regulatory requirements is anticipated to reduce compliance costs for member firms that would register as CABs without diminishing investor protections. These cost savings would include reduction in costs associated with maintaining FINRA membership, including ongoing compliance activities such as maintaining policies and procedures. These firms also would likely benefit from more focused examinations that are tailored to their business activities. To avail themselves of these benefits, firms would, however, be required to maintain their CAB status and as a result limit their activities to those permitted under the CAB rules.
As discussed above, CAB rules also may encourage non-member firms that engage in similar kinds of services as CABs to register with FINRA. FINRA membership would benefit these non-member firms by allowing them to expand their securities business and
A member firm that seeks to register as a CAB would incur initial legal and other compliance costs associated with effectively completing the application to amend its membership agreement to elect CAB status. Such a firm also would incur administrative costs associated with updating its policies and procedures. FINRA, however, anticipates that these costs would likely be minimal relative to the cost savings from the streamlined CAB rules. As firms would have discretion to determine whether to apply for the amended status, FINRA anticipates that only those firms that anticipate net benefits to them would do so.
Non-member firms that choose to register as a CAB would incur implementation and ongoing costs associated with joining and maintaining their broker-dealer registrations with FINRA. The initial implementation costs would include FINRA application fees, costs associated with adapting technology infrastructure for regulatory data reporting requirements, as well as other legal or consulting costs associated with developing policies and procedures to ensure continued compliance with SEC and CAB rules. The ongoing costs would include annual fees associated with FINRA membership, costs of maintaining data reporting, costs of legal work relating to FINRA membership, and other costs associated with additional compliance activities. FINRA notes, however, that the proposed rule change would not impose these costs on non-member firms because registering as a broker-dealer and electing CAB status is optional. Non-member firms would likely only choose to register as a CAB broker-dealer and incur these costs if the anticipated benefits of registering exceed the costs of doing so.
In considering how to best meet its regulatory objectives, FINRA considered several alternatives to particular features of this proposal. For example, the initial proposal would have allowed CABs to solicit only institutional investors as that term is defined in FINRA Rule 2210. As discussed in more detail below, several commenters suggested that the proposed rule change also allow CABs to provide products and services to accredited investors or qualified purchasers. FINRA's regulatory programs have uncovered significant concerns associated with the ways in which firms sell private placements to accredited investors. Accordingly, FINRA does not believe it is appropriate to lower the institutional investor threshold for the CAB rules to the accredited investor standard.
Nonetheless, FINRA agrees that the definition of institutional investor under the CAB rules should include qualified purchasers as that term is defined under the 1940 Act, since qualified purchasers are required to own significantly more investments than those required for accredited investors, and as a result qualified purchasers are more likely to have the resources necessary to protect themselves from potential sales practice problems. Accordingly, FINRA has revised the institutional investor definition to include qualified purchasers, which would allow CABs to offer interests in private funds that are excluded from the definition of “investment company” and thus exempt from registration under the 1940 Act, such as hedge funds or private equity funds.
In developing this proposal, FINRA also considered expanding the scope of permissible activities for CABs. For example, as discussed below, commenters suggested that FINRA allow CABs to engage in activities related to the transfer of ownership or control of a privately-held company consistent with the SEC's M&A Brokers no-action letter. FINRA agrees that CABs should be permitted to engage in merger and acquisition transactions to the same extent as an unregistered broker-dealer pursuant to the M&A Brokers no-action letter and has revised the definition of CAB to allow such activities.
In February 2014, FINRA published
As discussed below, most of the comments opposed the
LCFB Rule 015 would have stated that the LCFB rules do not apply to transactions in, and business activities relating to, municipal securities as defined in Section 3(a)(29) of the Exchange Act. One commenter noted that some FINRA member firms provide financial advisory services only to municipalities or municipal agencies, including recommending the timing and type of offering and to assist in the selection of an underwriter. The commenter stated that if this type of firm does not engage in the sale of municipal securities and would otherwise qualify, it should be eligible to be an LCFB.
LCFB Rule 015 would not prevent an LCFB from engaging in municipal securities activities. Rather, as revised, it simply would clarify that FINRA Rule 0150(b) applies to the CAB rules. FINRA Rule 0150(b) currently provides that the FINRA rules do not apply to transactions in, and business activities relating to, municipal securities as defined in the Exchange Act.
LCFB Rule 016(d) would have defined the term “customer” as “any natural person and any entity receiving corporate financing services from an LCFB.” It also would have specified that
One commenter stated that this definition is unclear and should be replaced with other terms, such as “issuer,” “investor,” “qualified investor,” and “intermediary,” since these terms better describe the counterparties involved in an LCFB's business.
FINRA does not believe it would be appropriate to replace the term “customer” with other terms such as issuer, investor, or intermediary. The meaning of the term “customer” depends on the context in which it is used, such as the requirements to know your customer or to recommend a suitable investment to a customer. Terms such as “issuer” or “investor” would not be appropriate in these contexts. However, FINRA does believe that the term customer should be interpreted in a manner consistent with the way it is interpreted under the FINRA rules. Accordingly, FINRA has revised this term to have the same definition as it has under the FINRA rules.
LCFB Rule 016(h) would have allowed an LCFB to solicit only institutional investors. LCFB Rule 016(g) would have defined the term “institutional investor” to include banks, savings and loan associations, insurance companies, registered investment companies, governmental entities and their subdivisions, employee benefit plans and qualified plans with at least 100 participants (but not including the participants themselves), any other person with at least $50 million in assets, and persons acting on an institutional investor's behalf.
Seven commenters recommended that the LCFB rules allow LCFBs to offer interests in privately placed companies to accredited investors, as that term is defined in SEC Regulation D.
As discussed in the
Nevertheless, FINRA agrees that the definition of “institutional investor” should include persons that meet the definition of “qualified purchaser” under the 1940 Act.
Moreover, as discussed below, FINRA has proposed to expand the permissible activities of CABs to include effecting securities transactions solely in connection with the transfer of ownership and control of a privately-held company in accordance with the terms and conditions of an SEC rule, release, interpretation or no-action letter.
The proposed definition of LCFB would have allowed firms meeting this definition to engage in:
• Advising an issuer, including a private fund concerning its securities offerings or other capital raising activities;
• advising a company regarding its purchase or sale of a business or assets or regarding its corporate restructuring, including a going-private transaction, divestiture or merger;
• advising a company regarding its selection of an investment banker;
• assisting in the preparation of offering materials on behalf of an issuer;
• providing fairness opinions; and
• qualifying, identifying, or soliciting potential institutional investors.
The proposed definition of LCFB would have excluded any broker or dealer that carries or maintains customer accounts, holds or handles customers' funds or securities, accepts orders from customers to purchase or sell securities either as principal or agent for the customer, possesses investment discretion on behalf of any customer, or engages in proprietary trading of securities or market making activities.
Although one commenter felt that the definition of LCFB was appropriate,
Commenters also suggested that FINRA allow LCFBs to advise controlling or minority shareholders in a private business in connection with the sale of stock,
FINRA intended to allow CABs to provide valuation, expert testimony, litigation support, negotiation and structuring services, and to act as a placement agent for, or finder of, institutional investors. Accordingly, FINRA has revised the definition of CAB to make this clearer. FINRA does not agree, however, that CABs should be allowed to produce research for the investing public. If a CAB produced research reports, FINRA would need to consider whether to add FINRA Rule 2241 and potentially other rules to the list of CAB rules, which currently do not include these rules.
FINRA agrees that CABs should be permitted to engage in M&A transactions to the same extent as an unregistered broker pursuant to the M&A Brokers no-action letter. Accordingly, FINRA has revised the definition of CAB to allow such firms to effect securities transactions solely in connection with the transfer of ownership and control of a privately-held company to a buyer that will actively operate the company in accordance with the terms and conditions of an SEC rule, release, interpretation or no-action letter that permits a person to engage in such activities without registering as a broker under Section 15(b) of the Exchange Act.
One commenter argued that the term “limited corporate financing broker” itself is problematic because it may confuse clients into thinking that a firm has reduced its servicing offerings when in fact they remain unchanged.
LCFB Rule 112 would have subjected LCFBs to NASD Rule 1013, which governs new FINRA membership applications. LCFB Rule 112 also would have required applicants for FINRA membership that seek to qualify as LCFBs to state in their applications that they intend to operate as an LCFB.
LCFB Rule 116 would have subjected LCFBs to NASD Rule 1017, which governs applications for approval of change in ownership, control, or business operations. Rule 116 also would have allowed an existing FINRA member firm that seeks to change its status to an LCFB, and that is already approved to engage in the activities of an LCFB, but which does not intend to change its existing ownership, control, or business operations, to file a request to amend its membership agreement or obtain a membership agreement (if none exists), to provide that: (i) The member firm's activities will be limited to those permitted for LCFBs under LCFB Rule 016(h); and (ii) the member firm agrees to comply with the LCFB rules. Rule 116 further specified that an LCFB that seeks to terminate its status as such and continue as a FINRA member firm would have to file an application for approval of a material change in business operations pursuant to NASD Rule 1017 (a “CMA”), and would have to amend its membership agreement to provide that it agrees to comply with all FINRA rules.
One commenter also recommended that FINRA streamline the new member and change in membership process for LCFBs, reduce the time period for decisions, and lower the application fees.
FINRA does not agree that it should create a different new member process for applicants that are not already registered broker-dealers and that seek to become CABs. Although CABs would be subject to fewer FINRA requirements than other broker-dealers, FINRA still believes that it is important for investor protection and industry confidence reasons that FINRA have an opportunity to vet new CAB firms in the same manner that FINRA vets other new firm applicants. Similarly, if a firm wishes to change its ownership, control or business operations, FINRA believes that it is important that these changes receive the same review as any other registered firm. FINRA has modified CAB Rule 112, however, to clarify that a CAB applicant must state in its application that it intends to operate solely as a CAB.
CAB Rule 116 already permits an existing FINRA member firm to elect CAB status by requesting a change in its membership agreement, and without filing a CMA or paying a filing fee. However, FINRA agrees that Rule 116 should provide some more flexibility to a CAB that seeks to revert to its full broker status within the first year after electing CAB status. Accordingly, FINRA has amended Rule 116 to provide that, if during the first year following an existing FINRA member firm's amendment to its membership agreement to elect CAB status, the firm seeks to terminate its CAB status and
Proposed LCFB Rule 123 would have allowed persons registered with LCFBs to hold only a limited set of registrations that relate to an LCFB's business.
Commenters objected to limiting the types of registrations that an associated person of an LCFB may retain.
However, one commenter supported the restrictions. It recommended that LCFB representatives be required to obtain the Series 79 registration, and that LCFB representatives not be permitted to obtain other registration categories or retain other existing registrations during the time they are associated with an LCFB.
FINRA is persuaded that not allowing registered principals and representatives to obtain and hold the full range of registration categories could potentially penalize individuals who have already obtained those registration categories, and that the limitations of proposed LCFB Rule 123 also could potentially conflict with state law requirements. Accordingly, FINRA is amending CAB Rule 123 to eliminate the prior restrictions on the types of registrations persons associated with CABs may hold. Associated persons still would only be permitted to retain registrations that are appropriate to their functions under the registration rules.
FINRA continues to believe that CABs should be subject to FINRA Rule 1230(b)(6) regarding Operations Professional (Series 99) registration. FINRA believes the Operations Professional registration category enhances the regulatory structure surrounding the specified (or “covered” functions), including contributing to the process of preparing and filing financial regulatory reports, and has noted that for some firms the Operations Professional often may be the firm's Financial and Operations Principal.
Proposed LCFB Rule 125 would have required any person registered with an LCFB who has direct contact with customers in the conduct of the broker's corporate financing activities, and the immediate supervisors of such persons, to be subject to many of the same requirements contained in the Firm Element provisions of FINRA Rule 1250. Proposed LCFB Rule 125 would not have subjected persons registered with an LCFB to the Regulatory Element provisions of FINRA Rule 1250, however.
One commenter stated that it was not opposed to requiring registered persons to undergo additional training and continuing education testing to keep an associated person's registration active, but proposed that these requirements be imposed only once every two years.
Given that FINRA has revised the proposed registration rules to allow persons registered with a CAB to hold and retain any principal and representative registrations that are appropriate to their functions under the registration rules, FINRA believes it is appropriate to subject associated persons to all of the continuing education requirements of FINRA Rule 1250, including the Regulatory Element provisions. FINRA has amended CAB Rule 125 accordingly.
Proposed LCFB Rule 208 (Obtaining an Order of Expungement of Customer Dispute Information from the Central Registration Depository (CRD) System) would have subjected LCFBs to FINRA Rule 2080, which sets forth requirements for members or associated persons seeking to expunge information from the CRD system arising from disputes with customers. FINRA did not receive any comments on this proposed rule.
Since the
Proposed LCFB Rules 209 (Know Your Customer) and 211 (Suitability) would have included slightly modified versions of the know your customer (“KYC”) and suitability requirements of FINRA Rules 2090 and 2111. Proposed LCFB Rule 211(b) specified that an LCFB or its associated person fulfills the customer-specific suitability obligations for an institutional account, as defined by FINRA Rule 4512(c), if (1) the broker or associated person has a reasonable basis to believe that the institutional customer is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies involving a security or securities and (2) the institutional customer affirmatively indicates that it is exercising independent judgment in evaluating the broker's or associated person's recommendations. Where an institutional customer has delegated decision-making authority to an agent, such as an investment adviser or bank trust department, the rule would have applied these factors to the agent.
One commenter recommended that proposed LCFB Rule 209 be redrafted to remove any reference to “customer,” instead suggesting that LCFBs should be required to perform due diligence of issuers, as well as reviews of investors and intermediaries considering whether to invest in an issuer to ensure qualified status.
Commenters also were largely critical of proposed LCFB Rule 211. One commenter stated that it was inappropriate to require a suitability analysis before any recommendation, and that the rule was written as if an LCFB services retail customers. This commenter suggested that any suitability analysis should only be required before a subscription or purchase agreement is signed, and only where an investor is not represented by a qualified intermediary.
On the other hand, one commenter stated that LCFBs advise issuers, and that the KYC and suitability requirements should apply to these types of firms.
FINRA believes that the KYC and suitability rules should apply to CABs. The KYC rule requires CABs to use reasonable diligence to know and retain the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer. Facts essential to knowing a firm's customer are those required to (a) effectively service the customer, (b) understand the authority of each person acting on behalf of the customer, and (c) comply with applicable laws, regulations and rules.
The rule is flexible in that it recognizes that the determination of what is required to service a particular client will always be based on the facts and circumstances of a firm's relationship with its client. Likewise, the fact that a firm's client is a party to an M&A or other private equity transaction does not alter the need to understand the authority of each person acting on behalf of the customer, or facts necessary to comply with applicable laws, regulations and rules. Again, these facts will depend on each transaction's facts and circumstances, and the rule recognizes this flexibility.
Likewise, FINRA also believes that CABs should be subject to suitability requirements. If a CAB does not recommend a securities transaction, as some commenters assert, then the suitability requirements would not apply. Likewise, the proposed rule specifies that a CAB or associated person fulfills the customer specific suitability requirements for institutional investors if (1) the broker or associated persons has a reasonable basis to believe that the institutional investor is capable of evaluating investment risks independently and (2) the institutional investor affirmatively indicates that it is exercising independent judgment in evaluating the broker's or associated person's recommendations. If the institutional investor has delegated decision-making authority to an agent, these factors apply to the agent. FINRA believes that this provision largely addresses concerns expressed by commenters that the proposed rule applies retail investor requirements to transactions involving institutional investors. It also recognizes that a CAB or its associated person may look to an institutional investor's agent if the investor is represented by an agent.
FINRA has added supplementary material to proposed Rule 211 to clarify that a CAB still must have a reasonable basis to believe, based on reasonable diligence, that a recommendation is suitable for at least some investors. FINRA also has added supplemental material providing guidance with regard to the institutional investor exemption from the customer specific suitability requirements. The text of both of these supplementary materials is taken from similar supplementary materials that follow FINRA Rule 2111. FINRA believes that these additions will help clarify the scope of a CAB's suitability responsibilities under proposed Rule 211.
FINRA also has revised the definition of “customer” to reflect the definition of this term under FINRA Rule 0160(b)(4). As revised, customer is defined as not including a broker or dealer. FINRA is making this change to make clear that the definition of customer under the CAB rules has the same meaning as under the FINRA rules.
Proposed LCFB Rule 221 would have required LCFB communications to meet the general principles-based content standards of FINRA Rule 2210, although it also would have prohibited LCFB communications from projecting or predicting performance. Proposed LCFB Rule 221 would not have required LCFBs to approve communications prior to use, nor would it have imposed any filing requirements for LCFB communications.
One commenter recommended that the proposed rule's content standards include a “realistic approach” to setting fair and balanced content standards to meet the realities of representing issuers of securities.
FINRA believes that proposed CAB Rule 221 is already sufficiently general to take into account the institutional nature of CABs' business models. However, FINRA recognizes that firms may need to include projections of an issuer's performance in communications that are sent to prospective investors,
FINRA does not believe it is necessary to include either principal pre-use approval or filing requirements for CABs given the institutional nature of their business. CABs will be required to supervise communications, but FINRA intends to allow CABs the flexibility to determine the best means of such supervision given each firm's business model. LCFBs will be subject to the SEC's record-keeping requirements for emails under Exchange Act Rules 17a-3 and 17a-4, which FINRA has no authority to alter.
Proposed LCFB Rule 240 provided that, upon finding that an LCFB or associated person of an LCFB has engaged in activities that require the firm to register as a broker or dealer under the Exchange Act, and that are inconsistent with the limitations imposed on LCFBs under LCFB Rule 016(h), FINRA may examine for and enforce all FINRA rules against such a broker or associated person, including any rule that applies to a FINRA member broker-dealer that is not an LCFB or to an associated person who is not a person associated with an LCFB. One commenter argued that an LCFB that engages in impermissible activities should be given a defined remedial period and process for any unintentional activities of an LCFB until the rules have been in place for a while, given the potential for rule ambiguity.
FINRA does not believe it is necessary to include within the rule a specific remedial period for engaging in impermissible activities. FINRA believes that unintentional violations during a transition period are best handled through the examination and enforcement process on a case-by-case basis. Accordingly, FINRA is not proposing to amend the rule.
Proposed LCFB Rule 327 would have required LCFBs to be subject to FINRA Rule 3270 (Outside Business Activities). One commenter urged FINRA to clarify an LCFB's supervisory responsibilities when an associated person engages in private securities transactions away from the firm under NASD Rule 3040, and an LCFB's supervisory obligations when an associated person either is also registered with an affiliated or unaffiliated full-service broker-dealer or refers a customer to a full-service firm in return for a referral fee.
An associated person of a CAB would not be permitted to engage in private securities transactions away from the firm, since such activities would be beyond the scope of permissible activities for a CAB under proposed CAB Rule 016(c).
For the same reasons, an associated person of a CAB also would not be allowed to register with an affiliated or unaffiliated full-service broker-dealer. An associated person could receive a fee for referring business to another broker-dealer, provided that the proposed transaction would be permissible for the CAB to conduct itself.
Proposed LCFB Rule 331 would require an LCFB to develop and implement a written AML program reasonably designed to achieve and monitor its compliance with the requirements of the Bank Secrecy Act and the Department of Treasury regulations thereunder. The AML program would have to meet many of the same standards that full-service broker-dealers must meet under FINRA Rule 3310, except that the program would provide for independent testing for compliance no less frequently than every two years, rather than every year.
Five commenters stated that AML audits should not be required for LCFBs, since such firms receive no customer deposits and have no customer accounts.
Because the Bank Secrecy Act imposes AML obligations on all broker-dealers, FINRA does not believe it has the authority to exempt CABs from the requirement to adopt and implement an AML program. However, due to the limited nature of CABs' securities transactions, FINRA believes it is appropriate to allow CABs to conduct independent compliance testing of their AML programs every two years rather than every year.
Proposed LCFB Rule 411 would impose on LCFBs certain requirements imposed on full-service broker-dealers under FINRA Rule 4110 (Capital Compliance). Unless otherwise permitted by FINRA, an LCFB would have to suspend all business operations during any period in which it is not in compliance with the applicable net capital requirements set forth in Exchange Act Rule 15c3-1. The proposed rule also would authorize FINRA to issue a notice pursuant to FINRA Rule 9557 directing a non-compliant LCFB to suspend all or a portion of its business. The proposed rule would impose requirements related to withdrawal of equity capital, subordinated loans, and notes collateralized by securities and capital borrowings similar to provisions in FINRA Rule 4110.
Numerous commenters recommended that FINRA either eliminate or substantially reduce net capital requirements for LCFBs,
The SEC, however, sets these standards under its net capital rules and FINRA believes that the SEC would have to adjust its net capital requirements before FINRA could alter the net capital requirements that it imposes under its rules. In this regard, FINRA has clarified the CAB rules to note that CABs would be required to file supplemental FOCUS reports pursuant to FINRA Rule 4524 as FINRA may deem necessary or appropriate for the protection of investors or in the public interest.
Numerous commenters urged FINRA to work with the SEC and the Public Company Accounting Oversight Board (“PCAOB”) to carve out LCFBs from the
FINRA believes that it does not have the authority to reduce or eliminate the requirement to obtain audited financial statements.
The proposal would subject LCFBs to FINRA Rule 4360, which requires each member firm required to join the Securities Investor Protection Corporation (“SIPC”) to maintain blanket fidelity bond coverage that provides against loss and have insuring agreements covering at least six enumerated areas. The minimum required fidelity bond amount varies depending on a firm's net capital requirements, but in any case it must be at least $100,000.
Some commenters argued this requirement should not apply to LCFBs, since fidelity bonds protect against theft of a customer's funds. Because LCFBs may not accept or hold customer funds, these commenters argue that the bond requirement makes no sense.
In response to these comments, FINRA has determined not to subject CABs to FINRA Rule 4360 because of CABs' unique business model. CABs' clients would be limited to issuers of unregistered securities, institutional investors, and parties to a transaction involving the change of control of a privately held company. CABs would act as agent only in transactions in which funds flow directly from a purchaser of securities to the issuer or shareholder of such securities, and would not carry or act as an introducing broker in connection with customer accounts. In addition, CABs would belong to a separate FINRA membership category that would make them unique among all other FINRA member firms. For these reasons, FINRA believes it would be appropriate not to require CABs to maintain a fidelity bond under Rule 4360.
Thirteen commenters argued that an LCFB should not have to pay dues to SIPC on the ground that an LCFB would not carry or act as an introducing broker with respect to customer accounts or hold or handle customer funds.
Almost all persons registered as brokers or dealers under Section 15(b) of the Exchange Act must be members of SIPC.
Commenters had a number of other observations and recommendations regarding the proposed rule set, which FINRA addresses below.
One commenter recommended that FINRA relieve LCFBs from the requirement to review and file hard copies of employees' stock trading records.
The CAB rules would not apply NASD Rule 3050 to CABs. FINRA believes that, due to the limited institutional activities of CABs and their associated persons, it is not necessary to impose this rule's obligations on CABs.
Three commenters urged FINRA to eliminate or reduce its assessments on LCFBs due to the limited level of FINRA oversight of these firms.
One commenter expressed concern that the proposed rule set will lead to differing interpretations of rules, and will create an uneven playing field with full-service broker-dealers. This commenter believes that the proposed rule set is contrary to FINRA's mission of market integrity and investor protection, and that FINRA and the industry would be better served by expanding existing rules rather than creating a new rule set.
FINRA staff strives to interpret all of its rules in a consistent manner, and it will make similar efforts to interpret rules consistently if the proposal is approved. To the extent a CAB rule requires compliance with an existing FINRA rule that applies to full-service broker-dealers, the staff anticipates that it will interpret the CAB rule in the same manner as the corresponding FINRA rule. If the CAB rule differs from its FINRA rule counterpart, the staff intends to interpret the rule consistently with respect to all CABs. FINRA does not agree that the proposed rule set would be contrary to FINRA's mission of market integrity and investor protection. FINRA has carefully crafted the rule set to include rules that should apply to all broker-dealers, or to broker-dealers that engage in M&A and other private equity activities with institutional investors, while excluding from the proposal rules that have no applicability to CABs' business model, or that would impose unnecessary burdens given the kinds of activities in which CABs engage.
One commenter suggested that the Federal Trade Commission Red Flag Rules should apply to LCFBs. This
One commenter noted that the proposed rule set omits FINRA Rule 5150 (Fairness Opinions) and a reference to information barriers, such as the guidance provided in NASD
FINRA agrees that FINRA Rule 5150 should apply to a CAB that provides a fairness opinion that is subject to that rule. Although this rule generally applies to fairness opinions that are provided or described to public shareholders, it is possible that a CAB could serve as an advisor in connection with a public offering of securities and provide a fairness opinion in connection with the offering. In such a case, it would make sense to require the same disclosures regarding potential conflicts of interest in connection with the fairness opinion. Accordingly, FINRA is adding new CAB Rule 515 (Fairness Opinions), which would subject CABs to FINRA Rule 5150.
NASD
FINRA disagrees that a CAB may not be affiliated with a broker-dealer that engages in activities that are not permitted for CABs. As discussed previously, the CAB rules would prohibit both a CAB firm and its associated persons from engaging in activities that are not permitted under the definition of CAB. However, FINRA does not believe that it would be inconsistent for an affiliate of a CAB to engage in a wider array of activities; in those cases, the affiliate would be subject to all FINRA rules, and not the CAB rules.
One commenter urged FINRA to collaborate with the North American Securities Administrators Association (“NASAA”) to further reduce regulatory burdens on LCFBs.
Another commenter requested that FINRA confirm that LCFBs may serve as “chaperones” for non-U.S. broker-dealers under Exchange Act Rule 15a-6 by performing activities that are described in Rule 15a-6(a)(3) and related no-action letters. The same commenter recommended that FINRA confirm with the states that an LCFB would be eligible for an exemption from state business broker licensing laws, to the extent that they exempt other registered broker-dealers.
FINRA is not prepared at this time to confirm that all activities listed in Rule 15a-6(a)(3) and related no-action letters would be permissible for a CAB. For example, these activities include effecting securities transactions and issuing all required confirmations and statements, which appear to be activities beyond what would be permitted under the CAB definition. Likewise, the question of whether a CAB would be subject to a particular state's business broker licensing laws would be better directed to that state.
Another commenter recommended that FINRA work with the SEC, NASAA, the Commodity Futures Trading Commission, the National Futures Association, and the industry to develop a unified simple regulatory approach to regulating broker-dealer activities on the basis of risk rather than on transaction-based compensation.
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.
On August 3, 2015, Chicago Mercantile Exchange Inc. (“CME”) filed with the Securities and Exchange Commission (“Commission”) a written request (the “Written Request”)
CME is registered as a derivatives clearing organization (“DCO”) with the Commodity Futures Trading Commission (“CFTC”) and offers clearing services for futures and swap products. Pursuant to Section 17A(l) of the Exchange Act,
As a registered clearing agency, CME is required to comply with the requirements of the Exchange Act and the rules and regulations thereunder applicable to registered clearing agencies. These requirements include the obligation to file proposed rule changes pursuant to Section 19(b) of the Exchange Act.
Based upon the representations made by CME to the Commission, the Commission has determined that granting CME's request to withdraw from registration is appropriate. CME represents it is not performing actions that require registration as a clearing agency under Section 17A of the Exchange Act and has provided specific assurances regarding record-keeping, record-production and the lack of potential for future claims against it resulting from its registration as a clearing agency.
Additionally, CME states that because CME never conducted any clearing activity for SBS, it has no known or anticipated claims associated with its clearing agency registration.
(1) Effective December 17, 2015, CME's registration as a clearing agency under Section 17A of the Exchange Act is withdrawn and
(2) For a period of 5 years from the effective date of withdrawal of registration as a clearing agency, CME will maintain all the records required to be maintained pursuant to Rule 17A-1(a) and (b) which are in CME's possession and will produce such records upon the request of any representative of the Commission.
By the Commission.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend Rule 6.23C related to the Exchange's Technical Disconnect Mechanism. The text of the proposed rule change is provided below.
(a) When a CBOE Application Server (“CAS”) loses communication with a Client Application such that a CAS does not receive an appropriate response to a Heartbeat Request within “x” period of time, the Technical Disconnect Mechanism will automatically logoff the Trading Permit Holder's affected Client Application and automatically cancel all the Trading Permit Holder's Market-Maker quotes, if applicable, and open orders with a time-in-force of “day”
(i)-(ii) No change.
(b)-(c) No change.
. . .
.01 No change.
The text of the proposed rule change is also available on the Exchange's Web site (
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
Rule 6.23C(a) provides that when a CBOE Application Server (“CAS”)
Recently, the Exchange amended Rule 6.23C related to the Technical Disconnect Mechanism to provide TPHs with an optional service that, if enabled by a TPH, will cause the Technical Disconnect Mechanism to also automatically cancel all the TPH's open orders with a time-in-force of “day” (“day orders”) posted through the affected Client Application if the CAS loses communication with the Client Application.
The proposed rule change provides that this optional service will automatically cancel open orders with a time-in-force of day that are resting on the book, but not resting on a PAR workstation or order management terminal (“OMT”).
The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the “Act”) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.
In particular, the proposed rule change helps maintain a fair and orderly market, promotes efficiency and protects investors. While the optional service to have the Technical Disconnect Mechanism cancel a TPH's day orders mitigates the risks of potential erroneous or unintended executions of those orders associated with a loss in communication with a Client Application, those risks have already been mitigated for day orders resting on a PAR workstation or OMT that are subject to manual handling. Thus, the Exchange believes it is reasonable to not have the Technical Disconnect Mechanism cancel those orders and instead allow the broker, agent or PAR Official, as applicable, to handle those orders as the individual deems appropriate in accordance with CBOE's rules. The Exchange also believes that the proposed rule change is designed to not permit unfair discrimination among market participants, as it applies to all TPHs in the same manner. The Exchange believes it is appropriate to apply this optional cancellation functionality to day orders only resting on the book and not day orders resting on a PAR workstation or OMT, because the latter orders are not subject to the same risks of potential erroneous or unintended executions as the former orders.
CBOE does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange does not believe the proposed rule change will cause any burden on intramarket competition because the proposed rule change applies to all TPHs in the same manner. Use of the service to cancel day orders resting on the book in the event the CAS loses communication with a Client Application is voluntary. Additionally, whether a TPH enables the optional service or not, the TPH's day orders resting on a PAR workstation or OMT will continue to be manually handled as they are today, even if the CAS loses communication with a TPH's Client Application. The Exchange believes it is appropriate to apply this optional cancellation functionality to day orders resting only on the book and not on a PAR workstation or OMT, because, as discussed above, those orders are not subject to the same risks of potential erroneous or unintended executions as the orders resting on the book. Further, the Exchange does not believe that such change will impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change modifies a mechanism available on CBOE's system and applies only to orders resting in CBOE's book.
The Exchange neither solicited nor received comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to 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 the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the “Fee Schedule”).
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend its Fee Schedule to: (i) Increase the transaction fees for transactions in standard options in non-Penny Pilot classes for Public Customers
The Exchange is also proposing proportional fee changes applicable to Mini-Options in non-Penny Pilot classes, except that such fees applicable to Firms will be increased from $0.04 to $0.07 per contract, as described below. The Mini-Options transaction fee in
Specifically, the Exchange proposes to assess a $0.75 per contract fee for transactions in standard options in non-Penny Pilot classes by Public Customers that are not a Priority Customer. The Exchange also proposes to assess a $0.75 per contract fee for transactions in standard options in non-Penny Pilot classes by Non-MIAX Market Makers. Additionally, the Exchange proposes to assess a $0.75 per contract fee for transactions in standard options in non-Penny Pilot classes by Non-Member Broker-Dealers. The Exchange believes that these proposed fees are reasonable, equitable and not unfairly discriminatory because they are the same for all participants other than Priority Customers, who are not assessed transaction fees.
Finally, the Exchange proposes to assess a $0.75 per contract fee for transactions in standard options in non-Penny Pilot classes by Firms. The Exchange believes that this proposed fee increase for Firms in non-Penny Pilot classes is equitable and not unfairly discriminatory. While Firms are currently charged significantly less (
The Exchange also proposes to increase the transaction fees assessed for transactions in standard options in Penny Pilot classes for Firms from $0.37 to $0.45 per contract. The Exchange believes that this proposed fee increase is reasonable, equitable and not unfairly discriminatory because it creates a more even playing field among Public Customers that are not Priority Customers, non-MIAX Market Makers, non-Member Broker-Dealers, and Firms. The Exchange initially established the transaction fees for Firms at a significantly lower rate than the other named categories of participants as a competitive measure to attract order flow from Firms. The Exchange believes that a variety of incentives, including but not limited to transaction fees, now achieve this goal. Accordingly, the Exchange believes that it is reasonable, equitable and not unfairly discriminatory to increase the transaction fees in standard options for Firms in Penny Pilot classes to $0.45 per contract. This is still $0.02 less than the Penny Pilot class transaction fees for the other named categories of participants and the Exchange believes that it is still beneficial for competitive reasons to offer this fee to Firms.
The Exchange proposes to continue to offer Public Customers that are not a Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers and Firms the opportunity to reduce these transaction fees by $0.02 per contract in standard options.
The Exchange is also proposing to increase the transaction fees for Mini-Options in non-Penny classes from $0.06 to $0.07 for Public Customers that are not Priority Customers, Non-MIAX Market Makers and Non-Member Broker-Dealers. This represents a proportional increase in the applicable transaction fees for standard options in non-Penny Pilot classes. The Exchange is also proposing to increase the Mini-Option fee in non-Penny Pilot classes for Firms from its current $0.04 per contract to $0.07 per contract. This also represents a proportional increase relative to the proposed fees for non-Penny Pilot classes in standard options, placing Firms on an even playing field with other non-Priority Customer participants in Mini-Options.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Exchange's proposal to increase the transaction fees is reasonable because the Exchange's fees will remain competitive with fees at other options exchanges.
The Exchange believes that the proposed fee increase for standard options in Penny Pilot classes for Firms is reasonable, equitable and not unfairly discriminatory because it creates a more even playing field among Public Customers that are not Priority Customers, non-MIAX Market Makers, non-Member Broker-Dealers, and Firms.
The Exchange further believes that the proposed increase in transaction fees in Mini-Options in non-Penny Pilot classes for Firms from its current $0.04 per contract to $0.07 per contract is reasonable. equitable, and not unfairly discriminatory because it simply represents a proportional increase relative to the proposed fees for non-Penny Pilot classes in standard options, placing Firms on an even playing field with other non-Priority Customer participants in Mini-Options.
The Exchange's proposal to offer Public Customers that are not a Priority Customer, Non-MIAX Market Makers, Non-Member Broker-Dealers and Firms the continued opportunity to reduce transaction fees by $0.02 per contract in standard options is reasonable because the Exchange desires to offer all such market participants an opportunity to lower their transaction fees. The Exchange's proposal to offer such market participants the continued opportunity to reduce transaction fees by $0.02 per contract in standard options, provided certain criteria are met, is equitable and not unfairly discriminatory because the Exchange will offer all market participants that are charged transaction fees a means to reduce such transaction fees by reaching volume tiers in the Priority Customer Rebate Program. The Exchange believes that the opportunity to lower transaction fees through incentives to transact Priority Customer order flow benefits all market participants.
The Exchange believes that the proposal to allow the aggregation of trading activity of Members and their affiliates for purposes of the fee reduction is fair, equitable and not unreasonably discriminatory. The Exchange believes the proposed rule change is reasonable because it would allow aggregation of the trading activity of qualified affiliates only in very narrow circumstances, namely, where the affiliate meets the definition of an “affiliate” as stated in the Fee Schedule. Furthermore, other exchanges and MIAX have rules that permit the aggregation of the trading activity of affiliated entities for the purposes of calculating and assessing certain fees.
The Exchange believes that its proposal to assess transaction fees in non-Penny Pilot options classes, which differs from Penny Pilot options classes, is consistent with other options markets that also assess different transaction fees for non-Penny Pilot options classes as compared to Penny Pilot options classes. The Exchange believes that establishing different pricing for non-Penny Pilot options and Penny Pilot options is reasonable, equitable, and not unfairly discriminatory because Penny Pilot options are more liquid options as compared to non-Penny Pilot options. Additionally, other competing options exchanges differentiate pricing in a similar manner.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposal is similar to the transaction fees found on other options exchanges; therefore, the Exchange believes the proposal is consistent with robust competition by increasing the intermarket competition for order flow from market participants. The proposal more closely aligns the fees for Public Customers that are not a Priority Customer, Non-MIAX Market Makers, Non-Member Broker-dealers and Firms on the Exchange to those of other exchanges for the same market participants. To the extent that there is additional competitive burden on non-Member market participants, the Exchange believes that this is appropriate because charging non-Members higher transaction fees is a common practice amongst exchanges, and because Members are subject to other fees and dues associated with their membership to the Exchange that do not apply to non-Members. Enhanced market quality and increased transaction volume that results from the anticipated increase in order flow directed to the Exchange will benefit all market participants and improve competition on the Exchange.
The Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and to attract order flow. The Exchange believes that the proposal reflects this competitive environment.
Written comments were neither solicited nor received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act,
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form
• Send an email
• Send paper comments in triplicate to Secretary, Securities and Exchange
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice of an application under section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 18(c) and 18(i) of the Act and for an order pursuant to section 17(d) of the Act and rule 17d-1 under the Act.
Applicants request an order to permit certain registered closed-end management investment companies to issue multiple classes of shares of beneficial interest (“Shares”) and to impose asset-based service and/or distribution fees and contingent deferred sales loads (“CDSCs”).
Altegris KKR Commitments Master Fund (the “Fund”), Altegris Advisors, L.L.C. (the “Adviser”) and Altegris Investments, L.L.C. (the “Distributor”).
The application was filed on January 12, 2015, and amended on August 26, 2015.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing by writing to the Commission's Secretary and serving applicants with a copy of the request, personally or by mail. Hearing requests should be received by the Commission by 5:30 p.m. on January 11, 2016, and should be accompanied by proof of service on applicants, in the form of an affidavit or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by writing to the Commission's Secretary.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants, 1200 Prospect Street, Suite 400, La Jolla, CA 92037.
Kieran G. Brown, Senior Counsel, at (202) 551-6773 or Daniele Marchesani, Branch Chief, at (202) 551-6821 (Division of Investment Management, Chief Counsel's Office).
The following is a summary of the application. The complete application may be obtained via the Commission's Web site by searching for the file number, or an applicant using the Company name box, at
1. The Fund is a continuously offered closed-end management investment company registered under the Act and organized as a Delaware statutory trust. The Fund currently serves as the master fund in a master-feeder structure with one feeder fund.
2. The Adviser, a Delaware limited liability company, is registered as an investment adviser under the Investment Advisers Act of 1940. The Adviser serves as investment adviser to the Fund. The Distributor, a broker-dealer registered under the Securities Exchange Act of 1934 (“1934 Act”), acts as the distributor of the Fund. The Distributor is under common control with the Adviser and is an affiliated person, as defined in section 2(a)(3) of the Act, of the Adviser.
3. The Fund continuously offers its Shares
4. The Fund currently offers a single class of Shares (the “Initial Class”) at net asset value per share without a sales load and without an annual asset-based service and/or distribution fee. The Fund proposes to issue multiple classes of Shares and specifically proposes to offer a new Share class (the “New Class”) at net asset value that may (but would not necessarily) be subject to a front-end sales load and an annual asset-based service and/or distribution fee. The Fund intends to continue to offer Initial Class Shares, without a sales load and without a service and/or distribution fee.
5. In order to provide a limited degree of liquidity to shareholders, the Fund
6. Applicants request that the order also apply to any other continuously offered registered closed-end management investment company existing now or in the future for which the Adviser, the Distributor, or any entity controlling, controlled by, or under common control with the Adviser or the Distributor acts as investment adviser or principal underwriter, respectively, and which provides periodic liquidity with respect to its Shares through tender offers conducted in compliance with rule 13e-4 under the 1934 Act.
7. Applicants represent that any asset-based service and/or distribution fees will comply with the provisions of rule 2830(d) of the Conduct Rules of the National Association of Securities Dealers, Inc. (“NASD Conduct Rule 2830”) as if that rule applied to the Fund.
8. The Fund will allocate all expenses incurred by it among the various classes of Shares based on the net assets of the Fund attributable to each class, except that the net asset value and expenses of each class will reflect distribution fees, service fees, and any other incremental expenses of that class. Expenses of the Fund allocated to a particular class of Shares will be borne on a pro rata basis by each outstanding Share of that class. Applicants state that the Fund will comply with the provisions of rule 18f-3 under the Act as if it were an open-end investment company.
9. In the event the Fund imposes a CDSC, the applicants will comply with the provisions of rule 6c-10 under the Act, as if that rule applied to closed-end management investment companies. With respect to any waiver of, scheduled variation in, or elimination of the CDSC, the Fund will comply with rule 22d-1 under the Act as if the Fund were an open-end investment company.
1. Section 18(c) of the Act provides, in relevant part, that a closed-end investment company may not issue or sell any senior security if, immediately thereafter, the company has outstanding more than one class of senior security. Applicants state that the creation of multiple classes of Shares of the Fund may be prohibited by section 18(c).
2. Section 18(i) of the Act provides that each share of stock issued by a registered management investment company will be a voting stock and have equal voting rights with every other outstanding voting stock. Applicants state that permitting multiple classes of Shares of the Fund may violate section 18(i) of the Act because each class would be entitled to exclusive voting rights with respect to matters solely related to that class.
3. Section 6(c) of the Act provides that the Commission may exempt any person, security or transaction or any class or classes of persons, securities or transactions from any provision of the Act, or from any rule under the Act, if and to the extent such exemption is necessary or appropriate in the public interest and consistent with the protection of investors and the purposes fairly intended by the policy and provisions of the Act. Applicants request an exemption under section 6(c) from sections 18(c) and 18(i) to permit the Fund to issue multiple classes of Shares.
4. Applicants submit that the proposed allocation of expenses and voting rights among multiple classes is equitable and will not discriminate against any group or class of shareholders. Applicants submit that the proposed arrangements would permit the Fund to facilitate the distribution of its Shares and provide investors with a broader choice of shareholder options. Applicants assert that the proposed closed-end investment company multiple class structure does not raise the concerns underlying section 18 of the Act to any greater degree than open-end investment companies' multiple class structures that are permitted by rule 18f-3 under the Act. Applicants state that the Fund will comply with the provisions of rule 18f-3 as if it were an open-end investment company.
Applicants believe that the requested relief meets the standards of section 6(c) of the Act. Rule 6c-10 under the Act permits open-end investment companies to impose CDSCs, subject to certain conditions. Applicants state that any CDSC imposed by the Fund will comply with rule 6c-10 under the Act as if the rule were applicable to closed-end investment companies. The Fund also will disclose CDSCs in accordance with the requirements of Form N-1A concerning CDSCs as if the Fund were
1. Section 17(d) of the Act and rule 17d-1 under the Act prohibit an affiliated person of a registered investment company or an affiliated person of such person, acting as principal, from participating in or effecting any transaction in connection with any joint enterprise or joint arrangement in which the investment company participates unless the Commission issues an order permitting the transaction. In reviewing applications submitted under section 17(d) and rule 17d-1, the Commission considers whether the participation of the investment company in a joint enterprise or joint arrangement is consistent with the provisions, policies and purposes of the Act, and the extent to which the participation is on a basis different from or less advantageous than that of other participants.
2. Rule 17d-3 under the Act provides an exemption from section 17(d) and rule 17d-1 to permit open-end investment companies to enter into distribution arrangements pursuant to rule 12b-1 under the Act. Applicants request an order under section 17(d) and rule 17d-1 under the Act to permit the Fund to impose asset-based service and/or distribution fees. Applicants have agreed to comply with rules 12b-1 and 17d-3 as if those rules applied to closed-end investment companies.
The Fund agrees that any order granting the requested relief will be subject to the following condition:
Applicants will comply with the provisions of rules 6c-10, 12b-1, 17d-3, 18f-3 and 22d-1 under the Act, as amended from time to time or replaced, as if those rules applied to closed-end management investment companies, and will comply with NASD Conduct Rule 2830, as amended from time to time, as if that rule applied to all closed-end management investment companies.
For the Commission, by the Division of Investment Management, under delegated authority.
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.
Solicitation of expressions of interest from members of the public wishing to serve as representative members of the Department of State's Advisory Committee on International Postal and Delivery Services (IPoDS).
This notice announces that applications are now being accepted from members of the public who wish to serve on the IPoDS Committee, which was established in accordance with the provisions of the 39 U.S.C. 407(b)(3) and the Federal Advisory Committee Act, 5 U.S.C. Appendix.
Under the terms of its charter, the IPoDS Committee comprises members representing mailers, private sector delivery companies, stakeholders in international delivery services or others who are directly affected by international postal operations. The Committee also includes Federal members from several U.S. Government agencies including the Postal Regulatory Commission, and the United States Postal Service. Members are appointed by the Assistant Secretary of State for International Organization Affairs. The Committee provides advice to the Department of State with respect to U.S. foreign policy related to international postal services and other international delivery services and U.S. policy toward the Universal Postal Union and other international postal and delivery organizations. Representative members of the Committee serve on a voluntary basis and without compensation.
In order to be appointed to the Committee, interested individuals must represent identifiable users or providers of international postal or delivery services or others directly affected by international postal operations. There is no specified form for applications. Prospective Committee members should submit a letter expressing their interest in serving that explicitly identifies the group or entity they represent. They should also include a clear statement of the connection of that group or entity to the use or provision of international postal or delivery services. Letters must state whether a prospective Committee member is a registered lobbyist or registered foreign agent and must disclose all other interested parties, foreign and domestic, that the prospective member represents or advises in any capacity as well as the
Letters of interest should be no more than four pages in length and should be addressed to Mr. Joseph P. Murphy, the IPoDS Committee's designated federal officer. Prospective Committee members may submit scanned copies of their letters electronically to Mr. Murphy by email to
For further information, please contact Ms. Shereece Robinson of the Office of Specialized and Technical Agencies (IO/STA), Bureau of International Organization Affairs, U.S. Department of State, at tel. (202) 663-2649, by email at
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:
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Notice of public hearings.
NHTSA is announcing two public hearings to invite public comment on the planned upgrade to the New Car Assessment Program (NCAP) recently announced in a Request for Comments (RFC) Notice.
NHTSA will hold a public hearing at the Patrick McNamara Federal Building in Detroit, Michigan on January 14, 2016, that will begin at 9:00 a.m. The second hearing will be held at U.S. DOT Headquarters in Washington, DC on January 29, 2016, and will begin at 9:00 a.m. We will make every effort to accommodate all who wish to speak. Priority will be given to those who register in advance. Each hearing will continue until 1:00 p.m. or until everyone has had an opportunity to speak. Note, however, that the Patrick McNamara Federal Building closes at 5:30 p.m. If you would like to present oral testimony related to the RFC notice at one of the public hearings, please contact the person identified under
The January 14, 2016 public hearing will be held at the Patrick McNamara Federal Building, Room 1180, 477 Michigan Avenue, Detroit, MI 48226-2523. The January 29, 2016 public hearing will be held at the U.S. DOT Headquarters Building, Oklahoma City Room, 1200 New Jersey Avenue SE., Washington, DC 20590.
If you would like to present oral testimony at either of these public hearings, please contact Milton Cooper by the date specified under
The purpose of the public hearings is to provide the public with an opportunity to present oral comments regarding the planned upgrade to NHTSA's New Car Assessment Program. NCAP provides comparative information on the safety of new vehicles to assist consumers with vehicle purchasing decisions and to encourage motor vehicle manufacturers to make vehicle safety improvements. To keep pace with advancements in occupant protection and the introduction of advanced technologies, NHTSA has periodically updated the program. On December 16, 2015, NHTSA published in the
The RFC notice announces the beginning of a process NHTSA believes will provide the agency with significantly enhanced tools and techniques for better evaluating the safety of vehicles, generating star ratings, and stimulating the development of even safer vehicles for American consumers. The agency believes the revised rating system will result in even lower numbers of deaths and injuries resulting from motor vehicle crashes. These tools and techniques include:
• A new frontal oblique test to address a crash type that continues to result in deaths and serious injuries despite the use of seat belts, air bags, and the crashworthy structures of late-model vehicles;
• Use of the THOR 50th percentile male anthropomorphic test device (ATD) (
• Use of the WorldSID 50th percentile male ATD in both side pole and side moveable deformable barrier tests because of its advanced instrumentation and enhanced biofidelic properties;
• Pedestrian crashworthiness testing to measure the extent to which vehicles are designed to minimize injuries and fatalities when they strike pedestrians;
• An update of the rollover static stability factor risk curve using crash data from only newer electronic stability control equipped vehicles;
• The addition of a crash avoidance rating based on whether a vehicle offers any of the multiple technologies that will be added to NCAP and whether the technologies meet NHTSA performance measures;
○ These technologies would include forward collision warning, lane departure warning, blind spot detection, lower beam headlighting technologies, semi-automatic headlamp beam switching, amber rear turn signal lamps, rear automatic braking and pedestrian automatic emergency braking. (A decision concerning the addition of crash imminent braking and dynamic brake support to the technologies recommended by NCAP is the subject of a separate proceeding recently published.
• A new approach to determining a vehicle's overall 5-star rating that will, for the first time, incorporate advanced crash avoidance technology features, along with ratings for crashworthiness and pedestrian protection.
You can learn more about the planned upgrade by reviewing the RFC notice and the supplementary documents located at
Should it be necessary for the agency to cancel either public hearing due to inclement weather or any other emergencies, a decision to cancel will be made as soon as possible and emailed to those individuals who have registered to provide oral comments. If you do not have access to email, you may call the contacts listed in this announcement and leave your telephone number and/or email address. You will be contacted only if the public hearing is postponed or canceled.
NHTSA will conduct the hearings informally. Thus, technical rules of evidence will not apply. Panel members may ask clarifying questions during the oral presentations, but will not respond to the presentations at that time. You may make arrangements to obtain copies of the transcripts directly with the court reporter. Written statements and supporting information submitted during the comment period on the RFC notice will be considered with the same weight as oral comments and supporting information presented at the public hearings. The RFC notice provides that written comments should be submitted no later than February 16, 2016.
Surface Transportation Board, DOT.
Notice Tentatively Approving and Authorizing Finance Transaction.
On November 23, 2015, National Express LLC (National Express or Applicant), a non-carrier, filed an application under 49 U.S.C. 14303 so that it can acquire common control of White Plains Bus Company, Inc. (White Plains). The Board is tentatively approving and authorizing the transaction, and, if no opposing comments are timely filed, this notice will be the final Board action. Persons wishing to oppose the application must follow the rules at 49 CFR 1182.5 and 1182.8.
Comments must be filed by February 8, 2016. Applicant may file a reply by February 22, 2016. If no comments are filed by February 8, 2016, this notice shall be effective on February 9, 2016.
Send an original and 10 copies of any comments referring to Docket No. MCF 21065 to: Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. In addition, send one copy of comments to Applicant's representative: Andrew K. Light, Scopelitis, Garvin, Light, Hanson & Feary, P.C., 10 W. Market Street, Suite 1500, Indianapolis, IN 46204.
Nathaniel Bawcombe (202) 245-0376. Federal Information Relay Service (FIRS) for the hearing impaired: 1-800-877-8339.
Applicant, a non-carrier, states that it is a holding company organized under the laws of the state of Delaware. According to Applicant, it is indirectly controlled by a British corporation, National Express Group, PLC (Express Group). Applicant states that Express Group indirectly controls the following passenger motor carriers (National Express Affiliated Carriers): Beck Bus Transportation Corp. (Beck), Carrier Management Corporation (CMI), Durham School Services, L.P. (Durham), MV Student Transportation, Inc. (MV), National Express Transit Corporation (NETC), National Express Transit Services Corporation (NETSC), Petermann Ltd. (LTD), Petermann Northeast LLC (Northeast), Petermann Northwest LLC (Northwest), Petermann Southwest LLC (Southwest), Petermann STSA, LLC (STSA), Trans Express, Inc. (Trans Express), and Rainbow Management Service Inc. (Rainbow).
Applicant alleges the following facts regarding a number of interstate and intrastate for-hire passenger motor carrier authorities collectively held by the National Express Affiliated Carriers:
• Beck is a passenger motor carrier primarily engaged in providing student school bus transportation services in the states of Illinois and Indiana under contracts with regional and local school jurisdictions. Beck also provides charter passenger services to the public.
• CMI is a passenger motor carrier doing business as Matthews Bus Company and is primarily engaged in providing student school bus transportation services in the state of Pennsylvania under contracts with regional and local school jurisdictions. CMI also provides intrastate charter passenger services to the public.
• Durham is a passenger motor carrier primarily engaged in providing student school bus transportation services in approximately 32 states under contracts
• MV is a passenger motor carrier primarily engaged in providing student school bus transportation services in the state of Missouri under contracts with regional and local school jurisdictions. MV also provides charter passenger services to the public.
• NETC is an intrastate passenger motor carrier incorporated under the laws of the state of Delaware.
• NETSC is a passenger motor carrier engaged primarily in providing intrastate transit services in the areas of Westmoreland, Pa.; Arlington, Va.; Greensboro, N.C.; Vallejo, Cal.; and Yuma, Ariz.
• LTD is a passenger motor carrier primarily engaged in providing student school bus transportation services in the state of Ohio under contracts with regional and local school jurisdictions. LTD also provides charter passenger services to the public.
• Northeast is a passenger motor carrier primarily engaged in providing student school bus transportation services, primarily in the states of Ohio and Pennsylvania under contracts with regional and local school jurisdictions. Northeast also provides charter passenger services to the public.
• Northwest's principal place of business is located in Oakland, Cal.
• Southwest is a passenger motor carrier primarily engaged in providing student school bus transportation services in the state of Texas under contracts with regional and local school jurisdictions. In addition to its core school bus services, Southwest also provides charter passenger services to the public.
• STSA is a passenger motor carrier primarily engaged in providing student school bus transportation services, primarily in the state of Kansas under contracts with regional and local school jurisdictions. STSA also provides charter passenger services to the public.
• Trans Express provides point-to-point intrastate passenger transportation services between the boroughs of Brooklyn and Manhattan in the state of New York pursuant to authority provided by the New York Department of Transportation. Rainbow provides interstate and intrastate charter and special party passenger transportation services in the areas of New York City and the state of New York.
Applicant states that White Plains is a New York corporation that holds authority from the Federal Motor Carrier Safety Administration as a motor carrier of passengers (MC-160624). Applicant explains that the three shareholders of White Plains are Stephen Lennox, Terence Lennox, and John Silvanie.
Applicant states that White Plains operates primarily as a provider of non-regulated school bus transportation services, transporting children to and from school throughout the State of New York. White Plains also operates as a motor passenger carrier providing charter service to the public using its fleet of buses and vans. White Plains maintains a fleet of roughly 264 buses and transit vans and has approximately 154 drivers.
Applicant explains that National Express would assume direct 100 percent control of White Plains through stock ownership.
Under 49 U.S.C. 14303(b), the Board must approve and authorize a transaction that it finds consistent with the public interest, taking into consideration at least: (1) The effect of the proposed transaction on the adequacy of transportation to the public; (2) the total fixed charges that result; and (3) the interest of affected carrier employees. Applicant submitted information, as required by 49 CFR 1182.2, including information to demonstrate that the proposed transaction is consistent with the public interest under 49 U.S.C. 14303(b), and a statement that the aggregate gross operating revenues of the National Express Affiliated Carriers and White Plains exceeded $2 million for the preceding 12-month period.
Applicant submits that the proposed transaction would have no significant impact on the adequacy of transportation services to the public. According to Applicant, White Plains would continue to provide the services it currently provides using the same names for the foreseeable future. Applicant states that White Plains “will continue to operate, but going forward, it will be operating within the National Express corporate family, an organization already thoroughly experienced in passenger transportation operations.” (Appl. 10.)
Applicant states that “[t]he addition of [White Plains] to the National Express group is consistent with the practices within the passenger motor carrier industry of strong, well-managed transportation organizations adapting their corporate structure to operate several different passenger carriers within the same market niche but in different geographic areas.” (Appl. 10.) Applicant asserts that White Plains is experienced in some of the same market segments already served by National Express and some of the National Express Affiliated Carriers. Applicant expects the transaction to result in operating efficiencies and cost savings derived from economies of scale, all of which would help to ensure the provision of adequate service to the public.
Applicant also submits that, “[b]ringing [White Plains] within the National Express family will serve to enhance the viability of the overall National Express organization” and therefore the continued availability of adequate passenger transportation service for the public. (Appl. 11.)
Applicant further claims that neither competition nor the public interest would be adversely affected. According to Applicant, White Plains is a relatively small carrier in the overall markets in which it competes: intrastate point-to-point passenger service, and interstate and intrastate charter and special party passenger service. Applicant states that school bus operators typically occupy a limited portion of the charter business because (i) the equipment offered is not as comfortable as that offered by motor coach operators; and (ii) scheduling demands imposed by the primary school bus operation impose major constraints on charter services that can be offered by school bus operators. Applicant argues that even as a provider of charter services, White Plains operates a small fleet that does not have market power. It explains that the charter operations of White Plains are geographically dispersed and there is little overlap in service areas and/or in customer bases between the National Express Affiliated Carriers and White Plains.
Applicant asserts there are no fixed charges associated with the contemplated transaction or the proposed acquisition of control. Applicant also states that it does not anticipate a measurable reduction in force or changes in compensation and benefits, though some limited downsizing of back office or managerial level personnel could occur.
The Board finds that the acquisition proposed in the application is consistent with the public interest and should be tentatively approved and authorized. If any opposing comments are timely filed, these findings will be deemed vacated, and, unless a final decision can be made on the record as developed, a procedural schedule will be adopted to reconsider the application.
Board decisions and notices are available on our Web site at “
It is ordered:
1. The proposed transaction is approved and authorized, subject to the filing of opposing comments.
2. If opposing comments are timely filed, the findings made in this notice will be deemed vacated.
3. This notice will be effective February 9, 2016, unless opposing comments are filed by February 8, 2016.
4. A copy of this notice will be served on: (1) The U.S. Department of Transportation, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590; (2) the U.S. Department of Justice, Antitrust Division, 10th Street & Pennsylvania Avenue NW., Washington, DC 20530; and (3) the U.S. Department of Transportation, Office of the General Counsel, 1200 New Jersey Avenue SE., Washington, DC 20590.
By the Board, Chairman Elliott, Vice Chairman Begeman, and Commissioner Miller.
Surface Transportation Board.
Approval of rail cost adjustment factor.
The Board has approved the first quarter 2016 Rail Cost Adjustment Factor (RCAF) and cost index filed by the Association of American Railroads. The first quarter 2016 RCAF (Unadjusted) is 0.864. The first quarter 2016 RCAF (Adjusted) is 0.368. The first quarter 2016 RCAF-5 is 0.347.
Pedro Ramirez, (202) 245-0333. Federal Information Relay Service (FIRS) for the hearing impaired: (800) 877-8339.
Additional information is contained in the Board's decision, which is available on our Web site,
This action will not significantly affect either the quality of the human environment or energy conservation.
By the Board, Chairman Elliott, Vice Chairman Begeman, and Commissioner Miller.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Grant of petition for exemption.
This document grants in full the Maserati North America, Inc.'s, (Maserati) petition for an exemption of the Levante sports utility vehicle (SUV) line in accordance with 49 CFR part 543,
The exemption granted by this notice is effective beginning with the 2017 model year (MY).
Ms. Deborah Mazyck, Office of International Policy, Fuel Economy and Consumer Programs, NHTSA, W43-443, 1200 New Jersey Avenue SE., Washington, DC 20590. Ms. Mazyck's phone number is (202) 366-4139. Her fax number is (202) 493-2990.
In a petition dated October 23, 2015, Maserati requested an exemption from the parts-marking requirements of the Theft Prevention Standard for the Levante vehicle line beginning with MY 2017. The petition requested an exemption from parts-marking pursuant to 49 CFR part 543,
Under 49 CFR part 543.5(a), a manufacturer may petition NHTSA to grant an exemption for one vehicle line per model year. In its petition, Maserati provided a detailed description and diagram of the identity, design, and location of the components of the antitheft device for the Levante vehicle line. Maserati stated that beginning with the 2017 model year, its Levante vehicles will be equipped with a passive, antitheft device as standard equipment. Specifically, the device will consist of a vehicle alarm system (VTA), a remote keyless entry (RKE) system and a sentry key immobilizer system (SKIS). Key components of Maserati's antitheft device are a siren and/or horn, hood ajar switch, security indicator, RFHub/Keyless Ignition Node (KIN) and Key fob (FOBIK), Intrusion and Inclination Sensor, Door Ajar Switches, Intrusion Module, Central Body Controller, RKE and the SKIS. Maserati also informed the agency that an audible and visual vehicle alarm system (VTA) has been incorporated into the device to provide perimeter protection that will monitor the vehicle's doors, tailgate, ignition switch, interior vehicle intrusion and inclination sensors against unauthorized use or tampering. Maserati further stated that if unauthorized use or tampering with any of these protected areas is detected, the vehicle's horn/siren will sound and the exterior lamps will flash.
Maserati further stated that activation of its immobilizer device is automatically achieved when the ignition is turned from the “run” position to the “off” position. Once activated, only the use of a valid key can disable immobilization and allow the vehicle to run. Maserati stated that the device is deactivated by performing an unlock actuation via the RKE transmitter or by starting the vehicle with a valid RFHub key. Specifically, Maserati stated that to start the vehicle, the driver must press and hold the brake pedal while pressing the START/STOP button. The system takes over and engages the starter causing the starter motor to run and automatically disengage while the engine is running. Maserati also stated that the RFHub contains and controls the SKIS preventing the engine from running more than 2 seconds unless a valid FOBIK key is used to start the engine. Maserati stated that the vehicle's key fob with RKE transmitter, RFHub and the KIN contains over 50,000 possible electronic key combinations and allows
Maserati's submission is considered a complete petition as required by 49 CFR 543.7, in that it meets the general requirements contained in § 543.5 and the specific content requirements of § 543.6.
In addressing the specific content requirements of 543.6, Maserati provided information on the reliability and durability of its proposed device. To ensure reliability and durability of the device, Maserati conducted tests based on its own specified standards. Maserati provided a detailed list of the tests conducted (
Maserati compared its proposed device to the immobilizer antitheft device that has been installed on its Quattroporte and Ghibli vehicles as standard equipment since MY 2007. Maserati stated that the antitheft device proposed for installation on the Levante vehicle line will be identical to the antitheft device installed on its Quattroporte and Ghibli vehicle lines. Maserati further stated that the Levante vehicle line will incorporate identical vehicle/system architecture, powertrain, electrical and other vehicle systems similar in construction and design to the Quattroporte and Ghibli vehicle lines. The agency granted the petition for the Quattroporte vehicle line in full beginning with MY 2014, (see 78 FR 24304, April 24, 2013) and the Ghibli vehicle line beginning with the 2016 model year (see 80 FR 20065, April 14, 2015). Theft rate data reported in
Based on the supporting evidence submitted by Maserati on the antitheft device, the agency believes that the antitheft device for the Levante vehicle line is likely to be as effective in reducing and deterring motor vehicle theft as compliance with the parts-marking requirements of the Theft Prevention Standard (49 CFR part 541).
Pursuant to 49 U.S.C. 33106 and 49 CFR 543.7(b), the agency grants a petition for exemption from the parts-marking requirements of Part 541 either in whole or in part, if it determines that, based upon substantial evidence, the standard equipment antitheft device is likely to be as effective in reducing and deterring motor vehicle theft as compliance with the parts-marking requirements of Part 541. The agency finds that Maserati has provided adequate reasons for its belief that the antitheft device for the Levante vehicle line is likely to be as effective in reducing and deterring motor vehicle theft as compliance with the parts-marking requirements of the Theft Prevention Standard (49 CFR part 541). This conclusion is based on the information Maserati provided about its device.
The agency concludes that the device will provide the five types of performance listed in § 543.6(a)(3): promoting activation; attracting attention to the efforts of unauthorized persons to enter or operate a vehicle by means other than a key; preventing defeat or circumvention of the device by unauthorized persons; preventing operation of the vehicle by unauthorized entrants; and ensuring the reliability and durability of the device.
For the foregoing reasons, the agency hereby grants in full Maserati's petition for exemption for its Levante sports utility vehicle line from the parts-marking requirements of 49 CFR part 541. The agency notes that 49 CFR part 541, Appendix A-1, identifies those lines that are exempted from the Theft Prevention Standard for a given model year. 49 CFR part 543.7(f) contains publication requirements incident to the disposition of all Part 543 petitions. Advanced listing, including the release of future product nameplates, the beginning model year for which the petition is granted and a general description of the antitheft device is necessary in order to notify law enforcement agencies of new vehicle lines exempted from the parts-marking requirements of the Theft Prevention Standard.
If Maserati decides not to use the exemption for this line, it must formally notify the agency. If such a decision is made, the line must be fully marked according to the requirements under 49 CFR parts 541.5 and 541.6 (marking of major component parts and replacement parts).
NHTSA notes that if Maserati wishes in the future to modify the device on which this exemption is based, the company may have to submit a petition to modify the exemption. Part 543.7(d) states that a Part 543 exemption applies only to vehicles that belong to a line exempted under this part and equipped with the antitheft device on which the line's exemption is based. Further, Part 543.9(c)(2) provides for the submission of petitions “to modify an exemption to permit the use of an antitheft device similar to but differing from the one specified in that exemption.”
The agency wishes to minimize the administrative burden that Part 543.9(c)(2) could place on exempted vehicle manufacturers and itself. The agency did not intend in drafting Part 543 to require the submission of a modification petition for every change to the components or design of an antitheft device. The significance of many such changes could be
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 Schedule C (Form 1040), Profit or Loss From Business.
Written comments should be received on or before February 22, 2016 to be assured of consideration.
Direct all written comments to Michael A. Joplin, 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 Martha R. Brinson, Internal Revenue Service, Room 6129, 1111 Constitution Avenue NW., Washington, DC 20224, or through the Internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Fish and Wildlife Service, Interior.
Final rule.
We, the U.S. Fish and Wildlife Service (Service), determine endangered status for the lion subspecies
This rule is effective January 22, 2016.
This final rule is available on the Internet at
Branch of Foreign Species, Ecological Services, U.S. Fish and Wildlife Service, MS: ES, 5275 Leesburg Pike, Falls Church, VA 22041-3803; telephone, 703-358-2171; facsimile, 703-358-1735. If you use a telecommunications device for the deaf (TDD), call the Federal Information Relay Service (FIRS) at 800-877-8339.
We are listing two subspecies of lion,
This action revises the taxonomic classification of the Asiatic lion (currently classified as
The Endangered Species Act of 1973, as amended (Act) (16 U.S.C. 1531
In a final rule published in the
On March 1, 2011, we received a petition dated the same day from the International Fund for Animal Welfare, the Humane Society of the United States, Humane Society International, the Born Free Foundation/Born Free USA, Defenders of Wildlife, and the Fund for Animals requesting that the African lion subspecies be listed as endangered under the Act. The petition identified itself as such and included the information as required by 50 CFR 424.14(a). On November 27, 2012, we published a “positive” 90-day finding (77 FR 70727) indicating that we would initiate a status review of the African lion.
On October 29, 2014 (79 FR 64472) we published in the
We fully considered comments from the public and the peer reviewers on the proposed rule to determine our final listing status of lion. This final rule incorporates changes to our proposed rule based on the comments we received that are discussed under Summary of Comments and Responses and newly available scientific and commercial information that became available after the close of the comment period. We accept the taxonomy as recommended by the International Union for Conservation of Nature (IUCN) Species Survival Commission Cat Classification Task Force:
Based on comments by peer reviewers and others, we revised the section on trophy hunting, providing additional information on the practices that experts have identified as undermining the sustainability of trophy hunting, recommended best practices and reforms, biological impacts of trophy hunting on lion populations, and corruption in range countries, and expanded our assessment of the level of threat that trophy hunting presents to the species. Additionally, we have incorporated information on infanticide, corruption, traditional use of lion parts and products, disease, and climate change. Under the discussion of the 4(d) rule in the preamble, we further clarify factors we will consider when making an enhancement finding for importation of sport-hunted trophies of
Based on the information we received and our assessment of that information, we have altered our finding. Some of the information we received indicated threats may be worse than previously indicated. Due to significant differences in the impacts of threats within the species, we found that
The lion (
Based on morphology, traditional classifications recognize anywhere from zero subspecies (classifying lions as one monotypic species) up to nine subspecies (Mazak 2010, p. 194, citing several sources). The most widely referenced of the morphology-based taxonomies is an eight-subspecies (six extant) classification provided by Hemmer (1974, in Nowell and Jackson 1996, p. 312; Barnett
In 1987, O'Brien (1987a, entire; 1987b, entire) reported the first results of genetic studies conducted on lion samples from some, but not all, regions of the species' range using early genetic techniques. Lions in India differed from lions in Africa, supporting a two-subspecies classification for extant lions:
In recent years, several genetic studies have provided evidence of an evolutionary division within lions in Africa (see Barnett
These findings on lion genetic relationships are based primarily on analysis of mitochondrial DNA (mtDNA), which is inherited only from the mother. Because lions display sex-biased dispersal, in which males leave their natal range and females tend to remain in their natal range, one would expect gene flow in females to be lower than in males, resulting in greater geographic differentiation in females (Mazak 2010, p. 204). Consequently, some authors state that results of mtDNA analyses should be backed up by studies on nuclear DNA (nDNA, inherited from both parents) and morphological traits before assigning taxonomic importance to them (Barnett
Recently, Mazak (2010, entire) examined morphological characteristics of 255 skulls of wild lions and found considerable variation throughout the species' range, with variation being greater within populations than between them. However, according to Dubach
The recent results of genetic research renewed the debate on lion taxonomy among the experts. For this reason, the IUCN Species Survival Commission Cat Specialist Group commissioned a Cat Classification Task Force from among its expert members to reach a consensus on taxonomy for the group. As we explained in our proposed rule, until the results of the IUCN Cat Classification Task Force became available, we concluded that the taxonomy of the species was unresolved, but, as required by the Act, we based our status review in our proposed rule on the best available scientific and commercial information, which was the taxonomy that was most widely recognized by taxonomic experts:
In June 2015, after the close of the comment period on our proposed rule, IUCN posted an updated Red List Assessment for lion. In this assessment, a new two-subspecies classification is proposed based on the recommendation of the IUCN Cat Classification Task Force:
As required by the Act, and as explained in our proposed rule, we base our listing determinations on the best available scientific and commercial information. We accept the taxonomy as recommended by the IUCN Cat Classification Task Force, which is supported by mtDNA analysis, as well as analysis of nDNA sequence and microsatellite variation:
Currently, the Asiatic lion (
The lion is the second-largest extant cat species (second in size only to the tiger) and the largest carnivore in Africa (Ray
Characteristics include sharp, retractile claws, a short neck, a broad face with prominent whiskers, rounded ears and a muscular body. Lions are typically a tawny color with black on the backs of the ears and white on the abdomen and inner legs. Males usually have a mane around the head, neck and chest. Lions are sexually dimorphic, with males weighing about 20-27 percent more than females. Adult males, on average, weigh about 188 kilograms (kg) (414 pounds (lbs)) with the heaviest male on record weighing 272 kg (600 lbs). Females are smaller, weighing, on average, 126 kg (278 lbs). The male body length, not including the tail, ranges from 1.7 meters (m) to 2.5 m (5.6 feet (ft to 8.2 ft) with a tail from 0.9 m to 1 m (3 ft to 3.2 ft) (Nowell and Jackson, 1996).
Lions in India tend to be smaller than those in Africa. Adult males weigh between 160-190 kg (353-419 lb), while females weigh between 110-120 kg (243-265 lb) (Chellam
Historically, the species occurred in all habitats in Africa, except rainforest and the hyper-arid interior of the Sahara (Ray
Lions are well studied. Much information exists on habits, behavior, and ecology of lions in Africa. CITES (2014, p. 3) provides a general overview as follows:
Lions are generalist, cooperative hunters, with foraging preferences changing with season and with lion group size. Lions live in groups called “prides,” which are “fission-fusion” social units with a stable membership that sometimes divide into small groups throughout the range. Lions have no fixed breeding season. Females give birth every 20 months if they raise their cubs to maturity, but the interval can be as short as 4-6 months if their litter is lost. Gestation lasts 110 days, litter size ranges 1-4 cubs, and sex ratio at birth is 1:1. At about 4 years of age, females will have their first litter and males will become resident in a pride. Pride takeovers by male lions and subsequent infanticide of cubs sired by the ousted male lions greatly influences reproductive success. Lionesses defending their cubs from the victorious males are sometimes killed during the takeover. Infanticide accounts for 27 percent of cub mortality. Adult mortality is typically caused by humans, starvation, disease, or attacks from other lions. Injury and death can also occur during hunting attempts on some of their larger prey.
Prides vary in size and structure, but typically contain 5-9 adult females (range, 1-18), their dependent offspring, and a coalition of 2-6 immigrant males (Heinsohn and Packer 1995; Packer
. . . Lion productivity (measured as number of surviving cubs) is limited by food. . . . Cub mortality is high in lions and is linked to periods of prey scarcity and infanticide by male lions during pride takeovers (Packer and Pusey 1983b; Schaller 1972; Van Orsdol
. . . Lions are mainly active at night. . . . [They] usually hunt in groups; males hunt less frequently than do females, but males are stronger and can gain access to kills made by females (Bertram 1975a; Scheel and Packer 1991). Prey selection is related to seasonal weather patterns and the migration of large herbivores in some parts of Africa (Hanby
Lion prides in India tend to be smaller than those in Africa; most prides in India contain an average of two females, with the largest having five. Coalitions of males will defend home ranges that contain one or more groups of females, but unlike lions in Africa, in India male lions only associate with pride females when mating or on a large kill (Meena 2009, p. 7; Nowell and Jackson 1996, p. 37). Females are approximately 4 years old at first reproduction, males 5-8 years (Banerjee and Jhala 2012, p. 1424; Nowell and Jackson 1996, p. 37). Banerjee and Jhala (2012, p. 1424) found that mating occurred throughout the year, but mostly in winter. Gestation lasts 110 days; births peaked in the summer (April-May). Average litter size is 2.5 cubs, but as many as 5 have been observed (Banerjee and Jhala 2012, pp. 1424, 1427; Nowell and Jackson 1996, p. 37). Lion reproduction in India appears to coincide with the fawning peak of chital deer (
Lions are opportunistic hunters and scavengers. As scavengers, lions are dominant and can usually readily displace other predators from their kills (Packer 1986, Schaller 1972, in Haas
Lions are generalists and have been recorded to consume virtually every mammal species larger than 1 kg in their range, as well as a wide variety of larger reptiles and birds (Nowell & Jackson 1996; Sunquist & Sunquist 2002). The constraints of large physical size and extended social groups, however, bind them to large-bodied prey, and their diet is dominated by medium-large ungulates. In fact, only a few species of large ungulates comprise a majority of their diet wherever they occur (Schaller 1972; Stander 1992; Packer
In India, the lion's diet is comprised of both small and medium prey, as well as vulnerable livestock (Meena
Prey availability affects the reproduction, recruitment, and foraging behavior of lions and, as a result, strongly influences lion movements, abundance, and population viability (Winterbach
Availability of prey is perhaps the primary factor that determines the ranging behavior of large carnivores (Gittleman & Harvey 1982, Van Orsdol
The historical range of the lion included most current continental African countries (Chardonnet 2002, pp. 25-28) and extended from Greece through eastern Europe, southwest Asia (the Middle East), and India (Bauer
The confirmed lion range in western Africa (the total size of protected areas where lions were confirmed) is estimated at 49,000 km
The general distribution of lions in Africa is summarized by Ray
Currently, lions are restricted mainly to protected areas and surrounding conservancies or `game management areas,' with the largest populations in East and southern Africa. Where protection is poor, particularly outside protected areas, range
Estimates of lion abundance on a large geographical scale are few in number. For a variety of reasons—including low densities, large ranges, cryptic coloration, nocturnal and wary habits—lions are difficult to count (Riggio
The earliest estimates of lion abundance in Africa were educated guesses made during the latter half of the 20th Century. Bauer
There have been few efforts in the past to estimate the number of lions in Africa. Myers (1975) wrote, “Since 1950, their [lion] numbers may well have been cut in half, perhaps to as low as 200,000 in all or even less.” Later, Myers (1986) wrote, “In light of evidence from all the main countries of its range, the lion has been undergoing decline in both range and numbers, often an accelerating decline, during the past two decades.” In the early 1990s, IUCN SSC Cat Specialist Group members made educated “guesstimates” of 30,000 to 100,000 for the African Lion population (Nowell and Jackson 1996).
Ferreras and Cousins (1996, entire) provided the first quantitatively derived estimate of lion abundance in Africa using a GIS-based model calibrated with information obtained from lion experts. Ferreras and Cousins predicted lion abundance in Africa in 1980 to be 75,800. Later, four additional efforts—Chardonnet (2002), Bauer and Van Der Merwe (2004), IUCN (2006a, 2006b), and Riggio
Between 2006 and 2012, Henschel
Bauer
As previously stated, extant lion populations are limited to protected areas. These populations are largely isolated and many are small.
Based on the best available information, lion range and numbers have clearly declined over the past several decades. However, not all lion populations have declined—some have increased or remained stable, and some have been restored to areas from which they were previously extirpated (Bauer
Bauer
Although these trends are based on 47 sample populations, they comprise a substantial portion of the total remaining lion populations; therefore, the authors are confident in applying the observed trends to regions and the species as a whole (Bauer
Using these rates of change, the authors calculated that the population in 5 countries (Botswana, India, Namibia, South Africa, and Zimbabwe), or 25 percent of the lion's range, increased by 12 percent, while the population in the remaining 75 percent of the range decreased by 60 percent (Bauer
The growth rate estimates discussed above are the best available information on global trends for lion populations, although Bauer
The work of Packer
Today, lions are mainly restricted to protected areas; however, they still face serious threats that stem from inadequate management of those areas and increasing pressure on natural resources to meet the needs of a growing human population. Habitat loss has been extensive throughout the range of the lion, resulting in local and regional lion population extirpations and a dramatically reduced range with isolated lion populations that are increasingly limited to protected areas. As the human population increases, the protected areas where lions occur will be under increased pressure as more land is needed to satisfy the agricultural needs of the human population.
Inadequate management and law enforcement has led to poaching of the lion's prey base in Africa for bushmeat, which has been critically depleted. Additionally, human population growth in Africa has led to human-lion conflict, particularly on the edge of protected areas, when pastoralists invade protected areas to allow their herds to graze or when lions move out of protected areas in search of prey, often preying on domestic livestock. Human-lion conflict leads to indiscriminate killing of lions, primarily as a result of retaliatory or preemptive actions to protect livestock and human lives. The close proximity of lions to humans and domestic livestock throughout their range exposes them to diseases, mainly transmitted through livestock and domestic dogs, which can impact general fitness, reproduction, and lifespan. These are in addition to diseases that naturally occur in lion populations in Africa. Furthermore, in some areas of Africa improper management has resulted in reduced lion numbers due to excessive lion harvests from trophy hunting. Subsequently, some lion populations are negatively impacted by infanticide following pride takeovers by new males.
Because habitat loss has resulted in small, isolated populations across its range, lions face threats from stochastic events, such as a disease epidemic and inbreeding depression. An emerging threat to lions is trade in bones and other body parts for traditional medicine. These causes of lion population declines are widespread and likely to continue. The impacts of these threats are likely to be exacerbated by climate change. Projected changes indicate negative impacts to available habitat and, therefore, the range of the lion, prey availability, and the number of disease outbreaks as well as susceptibility to those diseases.
Habitat destruction and degradation have been extensive throughout the range of the lion, resulting in local and regional lion population extirpations, reduced lion densities, a dramatically reduced range (see
The main cause of lion habitat loss and degradation is expansion of human settlements and activities, particularly due to agriculture and intensive livestock grazing (IUCN 2006a, p. 18; IUCN 2006b, p. 23; Ray
Based on a comparison of land-use and human population data, Riggio
Expansion of human settlements, agriculture, and/or livestock grazing are reported as occurring in or on the periphery of several areas identified by Riggio
In southern Africa, the extent of current habitat destruction and degradation appears to vary widely. For example, according to the Zambia Wildlife Authority (2009 pp. 4-5), unplanned human settlement and other land-use activities in game management areas are a major threat to the long-term survival of the lion in Zambia. They note that conversion of natural habitat in game management areas for cropping and grazing of livestock has led to habitat destruction and indicate that elimination of tsetse flies and subsequent increase in pastoralist activities in game management areas places the lion under renewed direct conflict with humans. On the other hand, according to Funston (2008, pp. 123-126), in several areas of southern Africa where lions were recently extirpated, lions are reestablishing as a result of, among other factors, adequate protection of habitat and prey.
Projections of future growth in human populations, areas converted to agriculture, and livestock numbers suggest suitable lion habitat will continue to decrease across its range into the foreseeable future. Between 2015 and 2050, half of the world's population growth is expected to occur in 9 countries, 6 of which are within the lion's range (India, Nigeria, Democratic Republic of the Congo (DRC), Ethiopia, Tanzania, and Uganda (UN 2015, p. 4). Africa has the fastest population growth rate in the world (UN 2015, pp. 3, 9; UNEP 2012a, p. 2), and future population growth in sub-Saharan Africa is projected to be large and rapid (UN 2013, p. 9). By 2100, Angola, Burundi, DRC, Malawi, Mali, Niger, Somalia, Uganda, Tanzania and Zambia are projected to increase by at least five-fold (UN 2015, p. 9).
By 2050, the UN projects the human population of Tanzania to almost triple its 2010 population, reaching a density of 137 people per km
Although urbanization is increasing in sub-Saharan Africa, the majority of the population is rural (UN 2014, p. 20). About 60-70 percent of the sub-Saharan population relies on agriculture and livestock for their livelihood (UNEP 2006, pp. 82, 100, 106; IAASTD 2009, p. 2). Much of the agriculture and livestock-raising is at subsistence level (IAASTD 2009, pp. 8, 28). As a result, a large portion of the growing population will depend directly on expansion of agriculture and livestock grazing to survive. Between 2010 and 2050, the population of sub-Saharan Africa is projected to more than double to more than 2 billion (from 831 million to 2.1 billion) (UN 2013, p. 9). During about this same time period (2005 to 2050), the area of cultivated land is projected to increase by 51 million ha (approximately 21 percent) (Alexandratos and Bruinsma 2012, p. 107). However, this figure does not include range land, and the majority of agricultural land in Africa is devoted to grazing (UNEP 2012b, p. 68). The number of livestock (cattle, sheep, and goats) in sub-Saharan Africa is projected to increase about 73 percent, from 688 million to 1.2 billion, by 2050 (Alexandratos and Bruinsma 2012, p. 133).
Expansion of human settlements and activities into lion habitat renders the habitat unsuitable for lions primarily because it results in reduced availability of the wild prey that lions depend on for survival (see
Large carnivores with low potential for cohabitation with humans have a high risk of local extinction. In order to survive, they require larger contiguous habitats with fewer negative human impacts than do more resilient species (Winterbach
Urbanization is also increasing in India, but like sub-Saharan Africa, the majority of the population is rural (UN 2014, p. 22; Swain
Growing human populations have been associated with declines in large carnivore populations all over the world, and high human density is strongly associated with local extirpation of large carnivores (Linnell
One of the most important requirements for carnivore survival, including lion, is prey availability, as it affects reproduction, recruitment, and foraging behavior and, therefore, also impacts lion movement, abundance, and population viability (Winterbach
Humans in Africa rely on protein obtained from bushmeat, resulting in direct competition for prey between humans and lions, and commercial poaching of wildlife is becoming a significant threat to many species, including those that lions rely upon for food. Subsistence hunting was traditionally carried out with the use of spears, which had minimal impact to wildlife populations. Spears have since been replaced by automatic weaponry (Chardonnet
The human population in a majority of African countries within the range of the lion has quadrupled since the 1960s (Riggio
The sale of bushmeat is an important livelihood in Africa (Chardonnet
This growing demand and the availability of modern weapons have led to many African wildlife species being hunted at unsustainable levels and the lion prey base becoming depleted in many areas (Hoppe-Dominik
Significant decreases in prey abundance have occurred in protected areas throughout Africa (Lindsey
Low lion population densities have been found to correspond with low prey densities (Van Orsdol
Continent-wide decreases in prey abundance in African protected areas are driven by human population growth (Craigie
Throughout the African range countries, hunting of wildlife is regulated by various laws and regulations and harvests are controlled through permitting systems and quotas (Lindsey
The human population in the developing world is projected to increase rapidly, suggesting human pressure on protected areas will also increase (Lindsey
The lion population in and around the Gir Protected Area, India, lives among and is surrounded by many pastoral and forest settlements (Banerjee and Jhala 2012, p. 1421; Singh and Gibson 2011 in Banerjee and Jhala 2012, p. 1421; Banerjee
Although human-lion conflict is not currently considered a threat to the lion population in India due to tolerance of lion presence by the pastoralist community (Banerjee
Human-lion conflict and associated retaliatory killing of lions has played a major role in the reduction of lion populations throughout Africa (Lion Guardians 2013, p. 1; Lion Guardians 2011, p. 2; Hazzah and Dolrenry 2007, p. 21; Frank
Human-lion conflict stems from human population growth and the resulting overlap of humans and wildlife habitat, with associated livestock encroachment and decreasing availability of prey (Hoppe-Dominik
The most significant cause of human-lion conflict is livestock depredation. In addition to bushmeat trade, the demand for food to meet increasing needs of a growing population has been met by intensified agriculture and livestock practices (Chardonnet
Pastoralists allow increasing numbers of livestock to graze in and adjacent to protected areas, and villagers farm up to the boundaries of protected areas, subjecting livestock and humans to lions and increasing the risk of predation and the number of livestock lost to predation (Brugiére
The use of fences to subdivide rangeland interferes with traditional wet and dry season grazing schedules for livestock and wildlife (Hazzah 2006, pp. 58-59). Restricting wildlife movement reduces wild prey and, when combined with an increase in livestock numbers, increases the rate of human-lion conflict (Hazzah 2006, pp. 59, 61). Although well-built bomas (a livestock enclosure) can effectively constrain cattle and keep predators out (Frank
Rates of livestock depredation vary with regional rainfall that correlate with prey availability, including changes in herding strategies, movement of prey, and movement of lions (Lion Guardians 2011, p. 6; Moghari 2009, p. 32; Hazzah 2006, pp. 17, 18; Patterson
Traditional livestock husbandry practices are effective at reducing depredation of livestock by lions (Chardonnet
In the Pendjari area of Benin, traditional enclosures are low with few branches. These structures and the lack of enclosures encourage livestock predation (Butler 2000, Mazzolli
Although lions generally avoid people, they will occasionally prey on humans, causing serious injury or death (Dickman 2013, pp. 380, 384; Chardonnet
Provoked attacks on humans are usually associated with someone approaching a lion too closely or trying to injure or kill it and stealing a lion's prey for bushmeat (Chardonnet
Livestock provide an economic value to humans, particularly those in extreme
The availability of guns and poison makes killing suspected predators cheaper and easier than other control methods, such as reinforcing bomas (Hazzah
In areas of high conflict, identifying the responsible animal is often difficult, and a token animal may be killed instead (Hazzah 2006, p. 25), leaving the problem lion to continue to attack and the potential for additional retaliatory killings. In Tanzania, game officers kill numerous lions each year in retaliation for attacks (Frank
Studies have shown that lion populations are declining in areas where pastoralism persists and the presence of mobile pastoralists are a good indicator of lion extinction (Brugiére
Several anthropogenic factors drive the level of resentment towards lions and the extent of retaliatory killing (Dickman 2013, pp. 379, 385), including the extent of the loss caused by the lions and the wealth and security of the people affected (Dickman 2013, p. 381; Mesochina
Lions are particularly vulnerable to retributive killing because they are often driven by a perceived level of lion predation on livestock rather than actual levels of conflict. In some locations, other predators (
Cultural beliefs and traditions can have a negative impact on lions. Because cattle are of great cultural significance to Maasai, their loss can impose social or cultural costs and incite greater resentment and higher levels of retributive killing (Dickman 2013, p. 384; Kissui 2008, p. 429; Hazzah 2006, p. 99). Cultural beliefs still motivate ritual lion hunts for young Maasai warriors. Despite being outlawed, this practice persists due to community secrecy. However, it is easily disguised as retaliatory killings for livestock predation. The prohibition of ritual lion hunts provides a greater incentive for participating in retaliatory hunts (Hazzah
Cultural beliefs can also have a positive impact on lions. An association with a totem is an important component of certain cultures and could explain why retaliatory killing is uncommon in some areas despite negative perceptions. However, the positive impact may not continue as cultural beliefs dwindle due to urbanization and modernization (Sogbohossou
Social tensions within tribes and between local communities and other communities, the government, park officials, or tourists can lead to conflict and retributive killing of lions (Dickman 2013, p. 382; Hazzah 2006, p. 75). Locals often report that wildlife authorities do not react effectively when chronic livestock raiders are reported (Frank
Lions are a key species in sport hunting, or trophy hunting, as they are considered one of the “big five” African species (lion, leopard, elephant, rhino, and cape buffalo) touted to be the most challenging to hunt due to their nimbleness, speed, and behavioral unpredictability (Lindsey
Trophy hunting is carried out in a number of range countries and is considered an important management tool for conserving land and providing financial resources for lion conservation. However, management programs are not always sufficient to deter unsustainable off takes (harvests), which has occurred in many areas (Lindsey
In response to growing international recognition of reduced population numbers, many countries began implementing moratoriums banning the sport hunting of lions. In this document we use the terms moratorium and ban interchangeably. A ban or moratorium can be permanent, long term, or temporary, and can occur in countries that have hunting quotas in place (
Trophy hunting is currently banned in 12 range countries: Angola, Botswana, Congo, Gabon, Ghana, India, Kenya, Malawi, Mauritania, Niger, Nigeria, and Rwanda (CITES 2014, p. 14; Meena 2014, p. 26; Lindsey
As of May 2014, approximately 18 countries in Africa allowed legal hunting of lions for trophies: Benin, Burkina Faso, CAR, DRC, Ethiopia, Côte d'Ivoire, Mali, Mozambique, Namibia, Senegal, Somalia, RSA, Sudan, Tanzania, Togo, Uganda, Zambia (nationwide moratorium on sport hunting of cats is currently in place), and Zimbabwe. However, in 2013 lion trophy hunting was documented to occur in only 8 countries, specifically Benin, Burkina Faso, CAR, Mozambique, Namibia, South Africa (RSA), Tanzania, and Zimbabwe (Lindsey 2013, pers. comm.). Four countries, Burundi, Guinea Bissau, Lesotho, and Swaziland, provide no legal protection for lions (CITES 2014, p. 14).
Where trophy hunting occurs, quotas are set by the government for the purpose of limiting the actual number of lions killed (offtake) during a given timeframe. A scientifically based quota is the maximum number of a given species that can be removed from a specific population without damaging the biological integrity and sustainability of that population (World Wildlife Fund (WWF) 1997, p. 9). Two primary concerns have been raised by the scientific and international community with regard to current lion quotas. These are that (1) existing quotas are set above sustainable levels, and (2) the data used for setting quotas is inconsistent and not scientifically based (Hunter
Generally, the conservation principle behind scientifically based quotas is to limit total offtake of the species to either equal or slightly lower than the growth rate of the target specimens (
Creel and Creel (1997, p. 83, executive summary) suggest that, for a quota to be considered sustainable for lions, it should be limited to no more than 5 percent of the population. Distinct from the quota, Packer
Several countries have begun to reduce their quotas as they have begun implementing recommendations as outlined by Lindsey
Proponents and most lion experts support trophy hunting as a conservation tool for the lion if it is practiced in a sustainable and scientifically based manner (Henschel 2015, pers. comm.; Hunter 2011, entire; van der Merwe 2013, entire; Hunter
As habitat loss has been identified as one of the primary threats to lion populations, it is notable that the total amount of land set aside for hunting throughout Africa, although not ameliorating threats to habitat loss, exceeds the total area of the national parks, accounting for approximately half of the amount of viable habitat currently available to lions (Chardonnet
In Botswana, despite the current ban on lion hunting, the country currently has over 128,000 km
As a species with a considerable range (up to 1,000 km
If trophy hunting is part of a scientifically based management program, it may provide direct economic benefits to the local communities and may potentially create incentives for local communities to conserve lions, reduce the pressure on lion habitat, and reduce retaliatory killing, primarily because lions are viewed as having value. Conversely, lack of incentives could cause declines in lion populations because lions are viewed as lacking value and they kill livestock, which are of great value to communities (see
Over the last few decades, conservationists and range countries have realized the integral role local communities play in the conservation of lions and their habitat; when communities benefit from a species, they have incentive to protect it. Therefore, using wildlife as a source of income for rural populations has increasingly been employed throughout the lion's range countries in Africa. Many of these countries are classified as “developing” nations; specifically, seven of the ten countries (we include Cameroon here) where trophy hunting is permitted have 27-64 percent of their human populations living in severe poverty (United Nations Development Programme's (UNDP) 2014, unpaginated; Barnett and Patterson 2005, p. iii). These countries often have high population growth, high unemployment, limited industry, and a Gross Domestic Product (GDP) per capita lower than the poverty level (Barnett and Patterson 2005, p. iii). These combined challenges highlight the need for innovative solutions. Conservationists and range countries recognize the value of the wildlife sector; if managed sustainably, there is potential to contribute to rural economic development while simultaneously protecting the unique ecological habitats and species contained therein (Chardonnet
For species such as the lion to persist, local communities must benefit from or receive a percentage of funds generated from tourism such as wildlife viewing, photography, or trophy hunting (White 2013, p. 21; Martin 2012, p. 57; Kiss [editor] 1990, pp. 1, 5-15). The economic value of a species, such as lion, can encourage range countries to develop management and conservation programs that involve local communities and which would ultimately discourage indiscriminate killings by local communities (Groom 2013, pp. 3, 5; Hazzah
Community conservancies that benefit from trophy hunting have specifically been formed as a way to protect wildlife and habitat. As an example, in Namibia, 160,000 km
Many range countries have recognized the need to incorporate incentives and local community benefits into their trophy hunting regulations, land management policies, and lion conservation action plans (Lindsey
Many range countries rely heavily on tourism (predominantly ecotourism and safari hunting) to provide funding for wildlife management (IUCN 2006a, p. 24). Additionally, revenue generated from these industries provides jobs, such as game guards, cooks, drivers, and security personnel and often brings in revenue for local microbusinesses that sell art, jewelry, and other crafts. Revenue generated from scientifically based management programs can be used to build and maintain fences, provide security personnel with weapons and vehicles, provide resources for anti-poaching activities, and provides resources for habitat acquisition and management (Chardonnet
Depending on the country in which a hunter visits, there may be several different fees associated with trophy hunts, including game fees, observer fees, conservation fees, permit fees, trophy handling fees, and government payments in terms of taxes, as well as safari operator fees (Barnett and Patterson 2005, p. 71). In the late 1990s, Tanzania reported annual revenue of $29.9 million USD from all trophy hunting, South Africa $28.4 million USD, Zimbabwe $23.9 million USD, Botswana $12.6 million USD, and Namibia $11.5 million USD; the revenue generated solely from lion hunting was not broken out (Barnett and Patterson 2005, p. iv). According to Groom (2013, p. 4), a 21-day lion hunt in Savé Valley Conservancy, Zimbabwe, may be sold for approximately $2,500 USD per day, with an additional trophy fee of approximately $10,000 USD. Between 2005 and 2011, lion hunting in Savé Valley Conservancy provided an estimated net income (based on 26 lions) of approximately $1,365,000 USD in per-night charges and roughly $260,000 USD in trophy fees (Groom 2013, p. 4). In the past, government and private landowners were the primary beneficiaries of the revenue gained; currently, efforts are being made in many range countries to incorporate incentives at the local level (Barnett and Patterson 2005, p. vi).
In summary, if part of a scientifically based management program (including a scientifically based quota), trophy hunting of lions can provide direct benefits to the species and its habitat, both at the national and local levels. Trophy hunting and the revenue generated from trophy hunting are tools that range countries can use to facilitate maintaining habitat to sustain large ungulates and other lion prey, protecting habitat for lions, supporting the management of lion habitat, and protecting both lions and their prey base through anti-poaching efforts. While scientifically based trophy hunting alone will not address all of the issues that are contributing to the declined status of the lion, it can provide benefits to the species.
An issue critical to the conservation of lions is sustainable management of trophy hunting by lion range countries. Lion experts agree that, if trophy hunting is well regulated and managed, it can be a tool for conservation (Bauer
As discussed above, one of the primary practices experts identify as undermining sustainable trophy hunting is the use of non-scientific information underlying the development of quotas (Lindsey
Lions are particularly vulnerable to excessive harvests due to impacts associated with the removal of males (Hunter
Most experts consider the recommendation by Packer
Species experts also recommend, as part of reforming trophy hunting, adoption by range countries of an adaptive quota management system that would allow for quotas to fluctuate annually based on the population trends of the species. An adaptive quota management system would not only prevent over-harvesting of lions, but would also prevent excessively conservative quotas (Hunter
Recognizing the inconsistencies in the process of setting a quota and the information on which they are based, range countries and conservationists have been working to establish a set of best practices in order to create a more consistent, scientifically based approach to determining quotas. The recommended best practices include: (1) establishing processes and procedures that are clearly outlined, transparent, and accountable; (2) establishing processes and procedures that are CITES compliant; (3) demonstrating management capacity; (4) standardizing information sources; (5) establishing monitoring systems for critical data; (6) recording and analyzing trophy hunting data; (7) conducting data collection and analysis for each hunting block and concession; and (8) establishing a primary body who will approve quotas (Burnett and Patterson 2005, p. 103).
Each country that allows trophy hunting has some data collection system in place; most countries have a central wildlife authority that requires operators to submit data collection forms or questionnaires providing details of each of their hunts. However, according to the authors, these guidelines have not been followed throughout much of the range countries, which has led to a variety of compliance issues. Some systems have been overly complex and cumbersome. “In 2000, Zimbabwe, for example, had nine different forms, which contain essentially the same information, that had to be completed by safari operators for each client and submitted to different government departments” (Barnett and Patterson 2005, p. 100). Additionally, governmental bodies have sometimes failed to analyze data and provide feedback to operators; experts agree this failure undermines the purpose of the system and encourages noncompliance.
In the absence of reliable population estimates, age restriction on trophy harvests can ensure sustainability (Lindsey
Implementing this approach in the field involves conducting an age assessment of male lions using identification techniques, such as mane development, facial markings, nose pigmentation, and tooth-aging to establish the relative age of the target lion. Tooth wear on incisors, yellowing and chipping of teeth, coupled with scars, head size, mane length and color, and thinning hair on the face, as well as other factors can be an indicator of advanced age in lions (Whitman and Packer 2006, entire).
Whitman
According to Lindsey
Species experts place high emphasis on the requirement for both enforcement and transparency in the strategy. A fully transparent quota allocation system would be one in which a quota allocation system is based on scientific data received from all hunting areas and concession units annually, and would require trophies to be independently evaluated, data on the trophies (
Lion experts recommend age-based strategies be incorporated into lion management action plans (Hunter
Additionally, experts believe that importing countries should have the ability to ascertain that the imported trophies originated from hunting concessions that fully comply with best practices. According to Lindsey
Harvesting of males that are too young can have devastating impacts to the population. If male lions are harvested too young (even as old as 3 years of age), combined with quotas that are too high, the population will be driven to extinction as female populations collapse as they eventually are unable to mate (Whitman
Further, when an adult male lion in a pride is killed, surviving males who form the pride's coalition are vulnerable to takeover by other male coalitions, and this often results in injury or death of the remaining males (Davidson
Recently, Elliot (2014, p. 1054) postulated that the impacts of male takeovers due to trophy hunting may be more severe than previously recognized. Specifically, when a pride male is removed and a new male takes over, subadults may be forced to disperse from the pride. These males are then at a disadvantage as they are often inexperienced and physically smaller which may prevent them from being able to compete with older males for territory. In the study, Elliot found 100 percent fatality for all males who dispersed earlier than 31 months old. The study concluded that dispersal of subadults is highly related to the presence of incoming males, resulting in a type of delayed infanticide, as many of the subadults do not survive the dispersal. This effect may be amplified in populations that have a high offtake rate. Therefore, the author concluded that age restriction and reducing offtake could reduce takeover rates by new males, allowing subadults a longer period to mature prior to dispersal and
A lack of mature males dispersing reduces the genetic viability of populations and may contribute to local population extinctions (See
Whitman
Species experts have suggested an additional mechanism that could help reduce infanticide. In concessions where operators can distinguish between resident and solitary individuals, removal of the nomadic males may reduce the likelihood of a possible conflict and take-over (Packer
Hunter
Lindsey
Another deficiency in current trophy hunting management is the use of fixed quotas. There are two primary types of quotas, “fixed” and “optional.” Trophy fees for fixed quotas require the payment of a portion (40-100 percent) of the lion trophy fee, regardless of whether the hunt is successful, whereas optional quotas are paid by operators only when the lion is shot. Until 1999, male lions were typically on fixed quotas, whereas female lions were under optional quotas. According to Lindsey
To ensure hunters have adequate time to be selective in trophies harvested, and to ensure the revenue earning potential is maximized, experts recommend that a minimum stipulated hunt length be set at 21 days. However, many countries either have no limits on length of hunting safaris or have too short a minimum length (Lindsey
Several other problems with current management of lion trophy hunting are likely to worsen negative impacts associated with hunting of lions and undermine conservation incentives. Corruption, allocation of hunting concessions, and lack of benefits and recognition of the role communities play in conservation have been identified (Lindsey
Corruption is widespread within the range of the lion (Transparency International 2014, unpaginated). All but one lion range country (Botswana) scored below 50 (out of 100) on Transparency International's 2014 Corruption Perception Index (CPI), which measures perceived levels of public sector corruption based on expert opinion and is based on a scale of 0 (highly corrupt) to 100 (very clean). Approximately half of the current lion range countries—including Tanzania and Kenya, where more than half of all wild lions occur—are among the most corrupt countries in the world, ranking in the lower 30 percent of 174 countries
Corruption is particularly prevalent in areas with extreme poverty (Transparency International 2014, unpaginated; Michler 2013, pp. 1-3; Kimati 2012, p. 1; Garnett
Corruption manifests itself in several ways, such as embezzling of public funds, fraud, demanding or accepting bribes to overlook illegal activities, interference in decisions to implement conservation measures, and offering patronage, nepotism, and political influence (Vargas-Hernandez 2013 in Smith
Peh and Dori (2010, pp. 336-337) show that global indices of corruption and governance are highly correlated with those of environmental performance—countries with high levels of corruption have lower levels of environmental performance. Further, Smith
In recent years, leadership in several African lion range countries has taken steps to address corruption, or activities that facilitate corruption, associated with wildlife management. For example, in 2013, the Tourism Minister of Zambia banned hunting in 19 game management areas for 1 year due to allegations of corruption and malpractice among the hunting companies and various government departments. Some game management areas and privately owned game ranches were not included in the ban, but lion hunting appears to be prohibited throughout the country (Michler 2013, pp. 1-3). Whether recent reforms taken by various lion range countries will reduce the effect of corruption on lion management and, therefore, lion populations is as yet unknown.
Most concessions in the African range of the lion use a closed-tender process for land management. A closed-tender system is the process of selling a product by inviting a specific group of potential buyers to provide a written offer by a specified date. In the case of a hunting concession, the owner of the property thus sells a lease on a property for a given length of time. Countries that use this process for state-owned lands include Benin (lease is for 5 years); Burkina Faso (20 years); Cameroon (10 years, renewable); CAR (10 years (renewable); Mozambique (10+ years); Tanzania (5 years); and Zambia (10-15 years based on status of wildlife). In Namibia, state concessions lease land by public auctions for 3-year periods, while community conservancies lease for a 5-year period via a closed-tender process. Zimbabwe holds a public auction for state safari areas, with the option to extend 5 years based on performance. Communal Areas Management Programme for Indigenous Resources (CAMPFIRE) areas are leased on 3-10 year-period using a closed-tender process (Lindsey
The chief complaint regarding this system is that concession areas are leased to operators without regard for the operators' track record in conservation. Zimbabwe is the only country that renews based on operator performance (Lindsey
As discussed under
In the past, government and private land owners were the primary beneficiaries of the revenue gained; currently efforts are being made in many range countries to incorporate incentives at the local level (Barnett and Patterson 2005, p. vi). Many range countries are now recognizing the need to incorporate incentives and local community benefits into their trophy hunting regulations, land management policies, and lion conservation action plans. Most countries that allow lion trophy hunting have developed National Poverty Reduction Strategies and
In analyzing threats to a species, we focus our analysis on threats acting upon wild specimens within the native range of the species, because the goal of the Act is survival and recovery of the species within its native ecosystem. We do not separately analyze “threats” to captive-held specimens because the statutory five factors under section 4 (16 U.S.C. 1533) are not well-suited to consideration of specimens in captivity, and captive-held specimens are not eligible for separate consideration for listing. However, we do consider the extent to which specimens held in captivity create, contribute to, reduce, or remove threats to the species.
In 2009, approximately 3,600 captive-held lions were managed for trophy hunting across 174 breeding facilities in South Africa ((Lindsey
We note that while the captive-lion industry may not be contributing to the conservation of the species in the wild via reintroduction, the captive-lion industry in South Africa may reduce the pressures of trophy hunting on the wild populations in South Africa (Hargreaves 2010b in Lindsey
Limited research has been conducted on the use of captive-raised lions for reintroduction purposes. Existing research has generally found that captive-raised lions are not as able to successfully adapt to conditions out of captivity and therefore, the success rate is much reduced compared to the use of wild-caught lions. Although some potential exists that the captive-lion industry in South Africa may benefit some local wild populations, additional research would be needed to verify this claim. As a result, we do not believe that the captive-lion industry currently contributes to, reduces, or removes threats to the species.
If trophy hunting of lions is part of a scientifically based management program, it can provide considerable benefits to the species by reducing or removing incentives to kill lions in retaliation for livestock losses, and by reducing the conversion of lion habitat to agriculture. Trophy hunting, if managed well and with local communities in mind, can bring in needed revenue, jobs, and a much-needed protein source to impoverished local communities, demonstrating the value of lions (Groom 2013, pp. 1-3; Lindsey
The main problem with mismanaged trophy hunting stems from excessive harvests and impacts associated with removal of males (Hunter
Most
Of the 18 countries documented to allow lion trophy hunting, 10 are in the range of
Unless reforms are made to the current management of trophy hunting, we expect the declines specifically documented from excessive offtakes in Benin, Cameroon, Tanzania, Zambia, and Zimbabwe to continue. Furthermore, we expect excessive harvests to further contribute to declines in the species across its African range.
The lion species (
An Appendix-I listing includes species threatened with extinction whose trade is permitted only under exceptional circumstances, which generally precludes commercial trade. The import of specimens (both live and dead, as well as parts and products) of an Appendix-I species generally requires the issuance of both an import and export permit under CITES. Import permits are issued only if findings are made that the import would be for purposes that are not detrimental to the survival of the species in the wild and that the specimen will not be used for primarily commercial purposes. For live specimens, a finding must also be made that the recipient is suitably equipped to house and care for the specimens (CITES Article III(3)). Export permits are issued only if findings are made that the specimen was legally acquired and the export is not detrimental to the survival of the species in the wild, and that a living specimen will be so prepared and shipped as to minimize the risk of injury, damage to health, or cruel treatment, and that the CITES Management Authority of the exporting country is satisfied that an import permit has been granted for the specimen (CITES Article III(2)).
CITES Appendix II includes species that are less vulnerable to extinction than species listed in Appendix I, and “although not necessarily now threatened with extinction, may become so unless trade in specimens of such species is subject to strict regulation in order to avoid utilization incompatible with their survival.” Species listed in Appendix II of CITES may be commercially traded, subject to several restrictions.
Although each country has its own method of regulating trophy hunting, international trade of lion trophies must adhere to CITES. International trade of lion parts and products (including trophies) are reported by both the exporting and importing countries and tracked by the United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC).
According to the UNEP-WCMC CITES Trade Database, between 2005 and 2012, exports of lion trophies demonstrated a decreasing trend, if exports of captive-born lions from South Africa are excluded (UNEP-WCMC 2014, unpaginated). UNEP-WCMC indicates that 521 lion trophies were exported (excluding South Africa) in 2005 and 303 were reported (excluding South Africa) in 2012.
It should be noted that there are limitations to interpreting the above reported information. The 2004 guide to using the CITES Trade Database indicates that the outputs produced by the CITES Trade Database can be easily misinterpreted if one is not familiar with it (CITES 2004b, p. 5). The number of “trophies” reported does not necessarily equate to the number of lions hunted. Additionally, the number of trophies reported for a given year in the trade report does not equate directly to the number of animals hunted in that given year (CITES export permits are generally valid for 6 months, and a trophy could in theory be exported the year after it was hunted). The second limitation to interpreting this information is that, although many permits may indicate that an animal is of wild origin (source code “W”), these permits may be incorrectly coded. This is true for South Africa, where during the period of 2000 to 2009, animals that were captive born and released into private reserve systems were assigned an incorrect source code of “W.” South Africa has since requested their provincial authorities to use the correct source code for “captive bred” in order to correctly reflect the source of sport-hunted lion trophies; however, some provinces are not complying (RSA 2013, pp. 8-9). Based on South African trade data, the bulk of lion exports and their parts and products (including trophies) are from captive-born lions (RSA 2013, p. 7).
Tanzania, with one of the largest lion populations (Hamunyela
Additionally, some trophies are exported from source countries under the “skins” category. According to the most recent data available, the United States imported skins of wild origin from four African countries in 2013; 9 from Mozambique, 5 from Tanzania, 2 from South Africa, and 22 from Zimbabwe. The purpose code for these imports was “Trophy Hunt,” except for the two skins from South Africa which were coded as “Commercial.”
For 2013, the most recent year for which complete CITES trade data are available, U.S. CITES Annual Report trade data indicate that the United States allowed the direct import of lion
Based on CITES trade data, lion trophy exports have decreased throughout most of the lion's range, including Tanzania, which has one of the largest lion populations. South Africa is the only country where exports have increased because most of these trophies are of captive origin.
Lion parts and products are used in many African countries as medicine, nutrition, talismans, and decorations, and in traditional ceremonies and rituals (CITES 2014, p. 7; Burton
While quantitative data is lacking, according to a peer reviewer (Bauer 2015, pers. comm.), trade in lion parts and products is very common within western and central Africa. Responses to the CITES periodic review consultation process support this claim: Trade in lion skins and partial skins is described as “frequent” in street markets in Abidjan, Côte d'Ivoire; lion skins and canines are described as “easily found” in the markets of Dakar, Senegal; and the scale of domestic trade in illegal lion products is described as “massive” in Nigeria (CITES 2014, pp. 5-6). Further, in the central African country of Cameroon, the estimated value of a single lion carcass exceeds the trophy fee, and at a lion conservation conference the Government of Cameroon identified trade in lion skins as a major cause of the decline in lion populations in western and central Africa (LAGA pers. comm., in CITES 2014, p. 12). According to Henschel (in CITES 2014, p. 12), the trade in lion skins is most likely one of the biggest threats to lion survival in western Africa due to the rarity of lions in the region, the extent of the trade, and the high price of lion skins.
In southern and eastern Africa, trade in lion parts, particularly lion bone, to Asia is generally considered a severe potential threat to the species (Bauer 2015, pers. comm.). According to CITES (2014, p. 14), there is “clear scope for the international trade in lion body parts for [traditional Chinese medicine and traditional African medicine] to grow uncontrollably, as it has done for other big cats.”
Lion bones are used as a substitute for tiger (
Tigers are categorized by IUCN as endangered (Goodrich 2015, p. 2). Globally, the tiger population has declined from what is believed to have been 100,000 at the turn of the 19th century (Jackson 1993, in Nijman and Shepherd 2015, p. 1) to an estimated 5,000-7,000 in 1998, to 3,159 tigers in 2014 (Goodrich 2015, p. 7; Seidensticker
Certain aspects of the current lion bone trade suggest that the potential for the trade to impact wild lion populations may be high. For example, evidence suggests that demand from Asia for lion bone is increasing rapidly. Based on Williams (2015, pp. ix-x, 46), during 1982-2000, only nine lion skeletons were exported from worldwide sources, destined primarily to Europe. CITES permit records show only three exported from South Africa prior to 2008, destined for Denmark. In 2008, South Africa began issuing CITES permits for the export of skeletons of captive-bred lions to Asia. These exports currently appear to come primarily from South Africa's captive-bred lion hunting industry as a byproduct of trophy hunting. The number of lion skeletons for which South Africa issued permits for export to Asia (China, Viet Nam, Thailand and Lao PDR) increased tenfold from 2008 to 2011, from about 50 to about 573 skeletons, respectively, representing a total of 1,160 skeletons or about 10.8 metric tons (11.9 US tons) of lion bone in 4 years (Williams 2015, pp. ix-x, 46). Further, according to the Government of Kenya (2015, p. 3), the declared exports of bones, skulls, and skeletons derived from wild lions also show an increasing trend through the period 2003-2012, with total declared specimens in 2012 more than ten times those in 2003. With respect to meeting demand for lion bone, Lindsey
In addition, recent evidence strongly suggests live lions are being used to supply the lion bone trade (Williams
Evidence also indicates “well established” links between South Africa's legal lion bone trade and the Xaysavang Network, an international wildlife trafficking syndicate that is also involved in the illicit rhino horn trade in South Africa (Williams
Lastly, evidence suggests incentive to poach wild lions for the bone trade may currently exist. According to Williams
While the lion bone trade appears to currently be based primarily in South Africa's captive-bred lion hunting industry, the trade appears to be having little or no impact on wild lion populations in South Africa at this time—lion populations in South Africa are stable or increasing and there is little poaching of wild lions in the country (Funston and Levendal 2014, pp. 1, 26; Williams
Wild lions are known to be infected with various pathogens (Hunter
As a result of human population expansion into lion habitat, lions are increasingly exposed to diseases from domestic animals (IUCN 2006b, p. 26). Because lions are a top predator, they are at a particularly high risk of exposure to pathogens (Keet
Feline calicivirus, feline herpesvirus, feline parvovirus, feline coronavirus, and feline leukemia virus are endemic viruses known to occur in lions of Serengeti National Park, Ngorongoro Crater, Lake Manyara National Park, Kruger National Park, and Etosha National Park (but not all viruses are known in all parks). However, these diseases are not known to affect lion survival (Hunter
Lions within Kruger National Park and Hluhluwe-iMfolozi Park, South Africa, and Serengeti National Park, Tanzania, are known to be infected with
The social behavior of buffalo and lions allows
Clinical signs of bTB in lions include emaciation, respiratory complications, swollen lymph nodes, draining sinuses, ataxia, and lameness (Keet
Epidemics of canine distemper virus (CDV) are known to have occurred in the Serengeti-Mara Ecosystem, an area that encompasses the Serengeti National Park, Ngorongoro Conservation Area, and Maasai Mara National Reserve (Craft 2008, pp. 13-14; Cleaveland
CDV generally lacks clinical signs or measurable mortality in lions, and most CDV events have been harmless. However, in 1994 and 2001, CDV epidemics in the Serengeti National Park/Maasai Mara National Reserve and Ngorongoro Crater, respectively, resulted in unusually high mortality rates (Hunter
Exposure to either CDV or
Feline immunodeficiency virus (FIV) is an endemic pathogen in many lion populations of southern and eastern Africa (Maas
FIV causes immune deficiencies that allow for opportunistic infections in the host (Roelke
The role of disease in determining survival and reproductive potential in lions is almost completely unknown. It is often difficult to determine whether mortality was due to a single or combination of factors. Lions could be infected with and become debilitated by a disease, but the cause of death could ultimately be due to other factors (LionAid 2014a, pp. 4-5). Available studies do not indicate that infection with a single disease is causing detrimental impacts to lions at the species level, although general body condition, health, and lifespan may be compromised and result in negative impacts at the individual or population level.
Co-infections, however, could have synergistic effects that lead to greater impacts on lions than a single infection. Lions impacted by the 1994 CDV outbreak in Serengeti National Park/Maasai Mara National Reserve may have been more susceptible to CDV due to depleted immunity caused by FIV (O'Brien
Pathogen-pathogen interactions may become more important when lions are under additional stress (
Species with reduced genetic variation may be less able to mount an effective immune response against an emerging pathogen (O'Brien
Although disease is known in several populations, the impacts are known in only a few populations where disease has been frequently studied. Precise estimates of lions lost to disease are lacking, due to the difficulty in detection. However, disease appears to be a secondary factor influencing the decline of lions when co-infections occur or when disease is combined with other factors, including environmental changes, reduced prey density, and inbreeding depression. Diseases weaken individuals and allow them to succumb to other diseases or factors. Although disease does not appear to be a major driver in the status of the lion, populations can suffer significant losses; some may recover to pre-outbreak levels, others may not. Given the small and declining lion populations that remain, any loss of individuals from the populations could be detrimental.
The risk of disease may increase with time due to loss of genetic variation associated with continued fragmentation of populations, whether by habitat loss or fencing of habitat, and increased proximity to humans and domestic livestock that may expose lions to new diseases (IUCN 2006b, pp. 19, 26). Additionally, changes in climate may increase disease outbreaks in prey species, as well as lions (See
The risk of extinction is related to the moment when a declining population becomes a small population and is often estimated using minimum viable population (MVP) sizes (Traill
Björklund (2003, p. 520) found that the most important determining factors for the level of inbreeding in lions is the number of prides and male dispersal. The MVP for lions has not been formally established and agreed upon by species experts (Riggio
Male dispersal also plays an important role in determining the level of inbreeding in lion populations. Even if only a fraction of males do not disperse, inbreeding rapidly increases with each generation (approximately 5 years) (Björklund 2003, pp. 518, 520). Even when migration rates of males is as high as 95 or 99 percent, the likelihood of inbreeding is clearly higher than if 100 percent of males disperse. Using a 95 percent dispersal rate, the probability of inbreeding reached 57 percent and 20 percent for 10 and 100 prides within 30 generations (150 years) (Björklund 2003, pp. 518-519). One example is the lion population in Ngorongoro Crater. New males rarely migrate into the population due to physical barriers, and inbreeding has been shown to occur (Packer
Because the number of prides and male dispersal are the most important factors for maintaining viability, sufficient areas are needed to support at least 50 prides, but preferably 100 prides, and allow unrestricted male dispersal (Björklund 2003, p. 521). Unfortunately, few lion populations meet these criteria as almost all lion populations in Africa that historically exceeded 500 individuals are declining, and few protected areas are large enough to support viable populations (Bauer
Small populations (
The lion population in India is one of the few populations that are increasing (Bauer
The establishment of another free-ranging population geographically separate from Gir would reduce the risk of extinction of this population due to stochastic events (
Regulatory mechanisms in place to provide protections to African lions vary substantially throughout Africa. The lion species (
National and international conservation strategies rely on protected areas to protect natural resources from negative impacts of human populations (Craigie
Effective management requires adequate funding, resources, and staff. Packer
Of 12 protected areas assessed in western Africa, 6 had no budget for management activities or the budget was too low to conserve lion populations; nine reported having either no law enforcement activity or major deficiencies in staff and resources to conduct patrols. In Comoé National Park, the staff was found to be too small for the size of the park (Henschel
Poor management leads to many of the threats that lions face, including encroachment by pastoralists, increased poaching pressure, collapse of prey populations, and persecution by pastoralists (Brugiére
In India, most lions occur within five designated protected areas: Gir National Park and Gir Wildlife Sanctuary (Gir Protected Area) and Pania, Mitiyala, and Girnar sanctuaries (Bauer
Because of the protections afforded by the Government of Gujarat, threats that contributed to the decline of this population have been ameliorated and most threats faced by lions are not an immediate threat. Protections ensure food security, water availability, habitat suitability, and safety for these lions (Meena 2014, p. 26). However, because this population is small and isolated, it is vulnerable to extinction from stochastic events. Although a second location has been proposed to establish another free-ranging population geographically separate from Gir to reduce the risk of extinction of this population, translocation of lions from Gujarat are still pending (see
Consideration of ongoing and projected climate change is a component of our analysis under the Act. The term “climate change” refers to a change in the mean, variability, or seasonality of climate variables over time periods of decades or hundreds of
Within the past 50-100 years, the surface temperature in Africa and Asia has increased (Hijioka
Across Africa, trends in annual precipitation indicate a small but statistically significant decline in rainfall (Niang
Overall, projections indicate temperatures will continue to increase in Africa and Asia and rainfall will continue to decrease in Africa but increase in India, although regional variations exist (Hijioka
Annual precipitation shows greater regional variations, although predictions of precipitation contain high levels of uncertainty. Generally speaking, both Africa and Asia are expected to experience harsher drought and stronger floods during the wet season (Hijioka
In contrast, eastern Africa and northern India are expected to experience an increase in mean annual precipitation (Niang
In South Asia, including India, future declines in the number of rainy days and increases in extreme precipitation events related to monsoons are very likely (Hijioka et al. 2014a, p. 1334; Gosling
Climate change is likely to become a main driver of change in large mammal populations in the future (Scholte 2011, p. 7). In the mid-Holocene, mammals responded rapidly to climate change with a series of local extinctions and near-extinctions, driving a decrease in species richness, and a dramatic increase in xerophytic taxa (Grayson 2000 and Graham 1992 in Thuiller
Peterson
In India, an increase in average rainfall in the past two decades has resulted in the conversion of dry savanna to forestland (Hijioka
Current lion habitat and suitable habitat predicted to remain under climate change scenarios will be under increasing pressure due to land conversions to meet the needs of the growing human population. As stated earlier, and supported by Carr
Although lions occur in a variety of temperature and precipitation regimes, suggesting the species may be tolerant of some climatic changes (The Heinz Center 2012, p. 13), lions appear to thrive under specific climate parameters (Leighton-Jones 2004 in Celesia
Lion demography is also influenced by environmental factors. Many variables are associated with aspects of demography, but the strongest associations are with rainfall, temperature, and landscape features (
Drought conditions can also contribute to reduced prey availability by altering the timing of migration (Peterson
Climate conditions also influence prey abundance. In Kruger Park, South Africa, almost all ungulate species are extremely sensitive to lack of rainfall during the dry season, which is predicted to increase in the future. This factor may be important to retain green forage during a period when the risk of malnutrition is higher (Thuiller
Variation in lion home ranges may have an impact on the frequency of human-lion conflict especially in situations where lion home ranges expand into areas inhabited by humans (Peterson
Climate projections point toward a drier climate for western, central, and southern Africa (Niang
When lion prey on livestock, they primarily focus on cattle (Patterson
Climate change may increase the number and intensity of disease outbreaks in lion prey species, as well as lions (The Heinz Center 2012, p. 12; Baylis 2006, p. 4). Diseases can be directly and indirectly affected by climate change by impacting distribution, the timing of outbreaks, and the intensity of outbreaks (Baylis 2006, p. 4). Higher temperatures may increase the rates of development of pathogens and parasites, shorten generation times, and increase the number of generations per year, increasing the population (Baylis 2006, p. 8; Thuiller
There has been awareness for several years that conservation strategies need to be implemented for the lion due to the apparent decrease in its population numbers (Hamunyela
Many African countries with very small lion populations have developed or updated their conservation plans for the lion. Some of these include Benin, Cameroon, Uganda, and Malawi. Some range countries participate in transboundary conservation projects and are collaborating on transboundary lion conservation initiatives for shared lion populations. Most range countries have a national lion action plan or strategies in place, particularly if there are economic incentives for them to have viable lion populations (Groom 2013, p. 4; Namibia 2013, pp. 11-12; Zambia Wildlife Authority 2012, p.3;
Habitat loss represents one of the main threats facing lions in Africa (Bauer
Two conservation tools used by African range countries for lions include the establishment of protected areas and the enforcement of protections in these areas (Mesochina
Despite encroachment, protected areas are somewhat effective at protecting wildlife and habitat as rates of habitat loss tend to be lower in protected areas than outside them (Green
Another mechanism for protecting habitat is to reconnect fragmented habitat across national boundaries. Corridors are being restored, fences are being removed, and protected areas are being connected. Restoration of these corridors allows wildlife to travel between areas of suitable habitat (Jones
Tanzania is an example of a country attempting to reconnect habitat. As of 2002, the Tanzanian Government, with donor and NGO support, was reconnecting the nine largest blocks of forest in the East Usambara Mountains using wildlife corridors (Newmark 2002, various). Additionally, the 2009 Wildlife Act of Tanzania allows the Minister, in consultation with relevant local authorities, to designate wildlife corridors, dispersal areas, buffer zones, and migratory routes. The 2010-2015 National Elephant Management Plan of Tanzania indicates that corridors are the primary objective of the plan, and although primarily designed for elephants, these corridors allow for continuity of populations of other large mammal species such as lions (Jones
In 2011, Kenya (which neighbors Tanzania to the North), completed a 28-km corridor through an area that had been heavily impacted by human-wildlife conflict. The purpose of the corridor was primarily to reduce human-elephant conflict and appears to have been successful (Mount Kenya Trust 2011, p. 1). The corridor also allows other wildlife such as lions to disperse through habitat that otherwise would have been unfavorable for wildlife to travel through (Mount Kenya Trust 2011, p. 1). It was an expensive project, but the effort appears to have served its purpose: Elephants are using the corridor on a regular basis (particularly an underpass under a highway), and humans are reporting less human-wildlife conflict (Mount Kenya Trust 2011, p. 1).
However, connectivity alone does not ensure the dispersal of animals (Roever
In the latter half of the 20th century, lions in India were on the verge of extinction. However, conservation measures were put in place to protect lion habitat. In 1965, Gir Wildlife Sanctuary was created and became the first protected area in Gujarat. In 1972, the Gir Lion Sanctuary Project began. Two-thirds of the pastoral families living in the Sanctuary, and their livestock, were relocated outside Gir forests (Singh and Gibson 2011, p. 1754). The area of Gir Wildlife Sanctuary was expanded and the core area designated as Gir National Park in 1975.
Following these actions, habitat began to recover, the wild ungulate population increased, and, subsequently, lion numbers increased (Singh and Gibson 2011, pp. 1754, 1755). Habitat adjacent to Gir was also declared a Sanctuary (Pania Sanctuary) in 1989. This area and surrounding community lands were declared protected forests to serve as a buffer area to the Gir Forests (Singh and Gibson 2011, p. 1754). As the lion population began to increase, lion
After 40 years, the protected areas of India have experienced habitat recovery, a 10-fold increase in ungulates, and an increase in lion numbers (Singh and Gibson 2011, pp. 1754, 1756). Since 1968, India's Forest Department has conducted wildlife censuses every 5 years (Singh and Gibson 2011, p. 1754), documenting a steady increase in the lion population. Community pride and love of lions, the media, and political pressure has ensured efforts are made to protect these lions. When problems arise, they are quickly assessed and a solution found. For example, when 6 lions were hit and killed by trains, immediate action was taken to rectify the problem (Meena 2014, p. 26). Because of these actions, lions in India now number 523 (BBC 2015, unpaginated).
Lions, like most large carnivores, prey upon a variety of species including buffalo, plains zebra, wildebeest, giraffe, gemsbok, kob, and warthog (Kenya Wildlife Service 2013, p. 13; Beg and Beg 2011, p. 4; Nowell and Jackson 1996, p. 18). Depletion of these prey species due to competition with humans represents a threat to the lion (Chardonnet
Reconnecting fragmented habitat has the additive effects of not only conserving the biodiversity of the lion's habitat, but also that of its prey base (Lindsey
To address the increasing consumption of bushmeat, host countries have employed a variety of different strategies, including the development of alternative industries for communities. Helping local communities develop alternate industries represents one of the ways range countries can reduce their dependence on bushmeat. Throughout Africa, several ideas have been attempted with varying levels of success. For example, the Anne Kent Taylor Fund (AKTF) helps local Maasai women to buy beads and other supplies to produce traditional items for the local tourist industry (AKTF 2012, p. 7; Lindsey
Studies compiled by Hazzah (2013 pp. 1, 8) have shown that local communities who live near protected areas with more lenient policies have a more positive attitude and relationship with both the manager and the protected area as a whole. This open approach to protected area management reflects a trend in recent years to bring in local communities to assist in the management of protected areas (Lindsey
Namibia has had great success in setting up community-run conservancies. After gaining independence in 1990, Namibia began to turn over ownership of wildlife areas to local communities (van Vliet 2011, p. 29; Bandyopadhyay
As the human population expands, the potential for conflict with wildlife increases. In Africa, conflict between villagers and lions, who prey upon livestock, represent a threat to the species (Chardonnet
Historically, range countries seek to mitigate human-lion conflict through controlling rather than conserving the predator population. In countries such as Malawi, for example, the Department of Game, Fish and Tsetse Control would shoot large carnivores that preyed upon livestock. Because of this policy, more than 560 predators (which include lions) were killed in the country between 1948 and 1961, (Mesochina
Current governmental management of lions in countries such as Malawi, Tanzania, and Zambia are managed by the Problem Animal Control units (Mesochina
NGOs are also assisting in protecting lions. Intervention by NGOs often takes the form of interacting with the local community (Winterbach
In addition, Lion Guardians work with tribal elders to dissuade young men from killing lions for ceremonial purposes. Historically, the killing of lions through ritualized lion hunts called
We found that many of the lion range states are trying to address lion conservation through the establishment of protected areas, wildlife management areas, wildlife corridors, and reconnecting habitat. In some areas, creating incentives for lion conservation is occurring through community conservation programs in range countries. In other cases, participatory strategies have been implemented to enhance local tolerance for large carnivores in Africa. An increasing number of programs encourage local communities to solve problems that arise from human-lion conflict without killing lions. However, the effectiveness of these measures still ranges from successful to unsuccessful, due in part to lack of resources, political will, and infighting. It is imperative that range countries continue to recognize and support the role that local communities play in lion conservation. Greater support by countries to address the needs of local communities, and thereby address the needs of lions, may be the single-most important role these countries can play in changing the trajectory of lion declines.
Section 4 of the Act (16 U.S.C. 1533) and implementing regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Federal Lists of Endangered and Threatened Wildlife and Plants. Under section 4(a)(1) of the Act, a species may be determined to be an endangered species or a threatened species based on any of the following five factors:
(A) The present or threatened destruction, modification, or curtailment of its habitat or range;
(B) Overutilization for commercial, recreational, scientific, or educational purposes;
(C) Disease or predation;
(D) The inadequacy of existing regulatory mechanisms; or
(E) Other natural or manmade factors affecting its continued existence.
A species is “endangered” for purposes of the Act if it is in danger of extinction throughout all or a significant portion of its range and is “threatened” if it is likely to become endangered within the foreseeable future throughout all or a significant portion of its range. The “foreseeable future” is the period of time over which events or effects reasonably can or should be anticipated, or trends extrapolated.
As required by the Act, we conducted a review of the status of the species and considered the five factors in assessing whether the lion is in danger of extinction throughout all or a significant portion of its range or likely to become endangered within the foreseeable future throughout all or a significant portion of its range. We examined the best scientific and commercial information available regarding the past, present, and future threats faced by the lion. We reviewed the petition, information available in our files, other available published and unpublished information, and comments received from peer reviewers and the general public.
When considering what factors might constitute threats to a species, we must look beyond the mere exposure of the species to a factor to evaluate whether the species may respond to the factor in a way that causes actual impacts to the species. If there is exposure to a factor
Overall, the lion population has declined and is expected to continue to decline. Across its range, the lion is facing threats stemming from human population growth. We find a number of factors are currently impacting the species and will impact the species in the future. In general, these factors include: Habitat fragmentation, degradation, and loss (Factor A); excessive mortality due to trophy hunting and trade in lion bone (Factor B); disease (Factor C); loss of prey base, retaliatory killing due to human-lion conflict, deleterious effects due to small populations, and climate change (Factor E); and inadequate regulatory mechanisms and weak management of protected areas (Factor D).
Overall, the lion population has decreased by 43 percent over the last 21 years. Regional variations indicate an 8 percent increase in southern Africa and a 55 percent increase in India; however, the eastern region and western and central region (combined) decreased by 59 and 66 percent, respectively, in the past 21 years. Furthermore, almost all lion populations in Africa that historically exceeded 500 individuals, the minimum number estimated to constitute a viable population, are declining.
Human population growth has led to a substantial decrease in lion habitat over the past 50 years. Current savanna habitat that is suitable for lions is fragmented and totals only 25 percent of African savanna habitat. This loss of habitat has resulted in local and regional lion population extirpations, reduced lion densities, and a dramatically reduced range; this decrease in habitat also partially explains why lions are now largely limited to protected areas. Due to good protection and management, lions in India have dispersed to additional forested habitat outside the protected area, extending their range. Lion habitat in Africa, however, continues to be threatened by expansion of human settlements, despite occurring within protected areas.
Expansion of human settlements, agriculture, and/or livestock grazing are reported as occurring in or on the periphery of several areas identified by Riggio
Prey availability is essential to lion survival as it affects reproduction, recruitment, and foraging behavior and, therefore, also impacts lion movement, abundance, and population viability. Prey abundance does not appear to be a concern for lion populations in India. Conservation initiatives have ensured that ample prey is available, and the pastoral communities that cohabitate with lions are primarily vegetarian; therefore, there is no competition for food and no demand for bushmeat. In Africa, lions are under serious threat due to decreased prey abundance. Widespread decreases in prey species have been driven by human population growth and unsustainable, increasingly commercialized bushmeat hunting in and around protected areas.
Bushmeat is an important source of protein and livelihood in Africa. The growing human population increases the demand for bushmeat, fueling trade, urban markets, and international markets. Bushmeat sold at elevated prices increases commercialization and the number of hunters. These hunters, who are often poor, are enticed by the quick income to find more efficient hunting methods, putting unprecedented pressure on wildlife. Bushmeat contributes significantly to food security, and is often the most important source of protein in rural areas. It comprises between 6 percent (southern Africa) and 55 percent (CAR) of a human's diet within the lion's African range. In western Africa, bushmeat is a secondary source of protein, with fish being the primary source. However, when widespread loss of jobs and income occurs due to poor fish harvests, bushmeat becomes an important source of income and sustenance, leading to increased presence of hunters in protected areas and higher than average declines in wildlife.
Due to growing demand and availability of modern weapons, many wildlife species, including the lion's prey base, have become depleted in many areas. Hunters are increasingly focusing on protected areas since wildlife has been depleted in non-protected areas. Bushmeat hunting is illegal, yet weak management and inadequate law enforcement have facilitated poaching of bushmeat in protected areas. Significant decreases in large mammal populations, including lion prey species, have occurred in protected areas throughout Africa. Overall, the large mammal population has declined 59 percent. Regional differences in herbivore population abundance were also detected. Because prey availability is an important factor for lions, decreases in prey densities result in decreases in lion density.
Expansion of human settlements and agricultural and pastoral activities into protected areas not only decreases prey availability, it increases exposure of livestock and humans to lions, thus resulting in human-lion conflict. Most conflict occurs at protected area boundaries where villages are established and human encroachment occurs, which increases the chance of human-lion encounters. Furthermore, cattle herders enter protected areas, and lions move beyond the borders of protected areas in search of food, increasing interactions between humans and lions and the risk of human-lion conflict.
The most significant cause of human-lion conflict is livestock depredation and, to a lesser extent, attacks on humans. As a result of prey species becoming depleted in many areas, lions will seek out livestock. Additionally, when pastoralists graze increasing numbers of livestock in and adjacent to protected areas and cultivate land up to and within the boundaries of protected areas, humans and livestock are subjected to lions, and the risk of predation and the number of livestock lost to predation increases. Conversion of rangeland to agricultural land has blocked migratory prey routes, forcing lions to rely more on livestock. Additionally, because most protected areas are too small to support a lion's large home range, adjacent dispersal areas are often used by lions in search of prey, putting them into greater contact with livestock and humans. Conditions worsen as livestock numbers and areas under cultivation increase, leading to overgrazing, further habitat
Livestock provide an economic value to humans, particularly those in extreme poverty. When lions have no economic value to local communities and they kill or are perceived to kill livestock, the economic impact to local communities can be significant. Impacts on victims of lion attacks create resentment towards lions and lion conservation, and a greater likelihood of retaliation. The most common solution to lion attacks is retaliatory killing. Spearing, shooting, trapping, and poisoning of lions occur regularly. Retaliatory killings have been reported as a significant threat to lion populations in protected areas of western and central Africa, Botswana, South Africa, Cameroon, Kenya, Tanzania, and Zimbabwe. Despite close occupation of India's lion population with human settlements, increased predation on livestock, and some retaliatory killing of lions, human-lion conflict and associated retaliatory killing is not a major source of lion mortality for that population.
Every year, human-lion conflicts intensify due to habitat loss, poor livestock management, and decreased availability of wild prey. Because most human-lion conflict occurs at the borders of protected areas, only those prides that occur near the borders are subjected to human-lion conflict. However, when these lions are removed via retaliatory killing, territorial gaps are then filled with lions that may have occurred closer to the core of protected areas, causing these border areas to serve as population sinks and exposing more lions to human-lion conflict and retaliation. Retaliatory killing of lions continues in many areas, and this practice impacts the viability of lion populations across their range. The killing of lions due to human-lion conflict is enough to result in the local extirpation of lion populations.
Lions are a key species in sport hunting, or trophy hunting, which is carried out in a number of range countries. If managed correctly, trophy hunting can be an important management tool for conserving land and providing financial resources for lion conservation. However, management programs are not always sufficient to deter unsustainable offtakes, which has resulted in declines in lion populations in many areas. The main problem with mismanaged trophy hunting stems from excessive harvests because of impacts associated with removal of males.
Six management weaknesses have been identified in the current management of lion hunting. These weaknesses include: (1) A lack of scientifically based quotas, which results in excessive harvests; (2) a lack of enforcement in age restrictions, which leads to unsustainable harvests, increased rates of infanticide, and population declines; (3) hunting of female lion in Namibia, which decreases reproduction success, thereby decreasing males available for trophy hunting; (4) the use of fixed quotas that, which encourages hunters to be unselective in their take of a trophy (
Documented declines in lion populations of Africa are a result, in part, of mismanaged trophy hunting. Multiple researchers have documented declines in lion populations across the range of the species as a result of mismanaged trophy hunting. Specifically, negative impacts to lions from excessive offtakes have been documented in Benin, Cameroon, Tanzania, Zambia, and Zimbabwe. Additionally, the effects of over-harvesting can extend into adjacent national parks where hunting is prohibited.
Except in Mozambique, trophy hunting quotas are higher than the recommended maximum harvest of 1 lion per 2,000 km
In the absence of reliable population estimates, age restriction on trophy harvests can ensure sustainability. If offtake is restricted to males older than 6 years of age, trophy hunting will likely have minimal impact on the pride's social structure and young. By removing only males 6 years of age or older, younger males remain in residence long enough to rear a cohort of cubs (allowing their genes to enter the gene pool; increasing the overall genetic diversity); recruitment of these cubs ensures lion population growth and, therefore, sustainability. However, harvesting males that are too young causes male replacements, which results in increased infanticide rates and death of the surviving male coalition. Additionally, a study found a 100 percent fatality rate for males that are prematurely forced to disperse due to a new male takeover. A lack of mature males dispersing, whether it's due to trophy hunting or retaliatory killing, reduces the genetic viability of populations and may contribute to local population extinctions.
Lion experts recommend age-based strategies be incorporated into lion management action plans. Although the 6-year method has the potential to reduce the rate of infanticide in lion populations subject to trophy hunting, the issue of incorporating this strategy into each country's conservation strategy and/or action plan, and following up with implementation, enforcement, and transparency, has yet to be observed in many of the lion's range countries. Lack of implementation of age-based strategies may undermine the successful use of trophy hunting as a sustainable conservation strategy.
Trade in lion parts and products are common in western and central Africa. Lion populations in these regions are small and declining and, therefore, the common use of lions in these regions for their parts and products is likely unsustainable. Further, there seems to be a burgeoning trade in lion bone to supplement or replace tiger bone. There is potential that the current legal trade in lion bone will eventually not be enough to supply demand, resulting in poaching of lions in the future for the Asian medicinal trade.
As a result of human population expansion into lion habitat, lions are increasingly exposed to diseases from domestic animals. Because lions are a top predator, they are at a particularly high risk of exposure to pathogens. Available studies do not indicate that infection with a single disease is causing detrimental impacts to lions at the species level, although general body condition, health, and lifespan may be compromised and result in negative impacts at the individual or population level. Co-infections, however, could have synergistic effects that lead to greater impacts on lions than a single infection.
Disease appears to be a secondary factor influencing the decline of lions when co-infections occur or when disease is combined with other factors, including environmental changes, reduced prey density, and inbreeding depression. Diseases weaken individuals and allow them to succumb to other diseases or factors. Although disease does not appear to be a major driver in the status of the lion, populations can suffer significant losses;
The viability of a lion population partly depends on the number of prides and ability of males to disperse and interact with other prides, which affects exchange of genetic material. Without genetic exchange, or variation, individual fitness is reduced and species are less able to adapt to environmental changes and stress, increasing the risk of extinction.
Male dispersal plays an important role in determining the level of inbreeding in lion populations. The fewer number of males present to contribute genes to the next generation, the more inbred the population will be. Therefore, not only does dispersal impact inbreeding, so does the loss of male lions due to excessive trophy hunting and infanticide. Because the number of prides and male dispersal are the most important factors for maintaining viability, sufficient areas are needed to support at least 50 prides, but preferably 100 prides, and allow unrestricted male dispersal. Unfortunately, few lion populations meet these criteria as almost all lion populations in Africa that historically exceeded 500 individuals are declining, and few protected areas are large enough to support viable populations. Furthermore, research indicates that there is a general lack of gene flow in most lion conservation units.
Lack of dispersal and genetic variation can negatively impact the reproductive fitness of lions in these populations and local extirpation is likely. Loss of fecundity leads to a decrease in population size, fewer prides in a population, and increased inbreeding which contributes to a decline in the population and increases the risk of extinction. Additionally, lack of genetic variation can impact the ability of lions to withstand stochastic events or limit the lion's ability to evolve responses to climate change.
India's lion population is isolated and genetically less diverse. Currently, there is no evidence of depressed demographic parameters. However, intense management may interfere with natural selection by ensuring survival of unfit lions, which facilitates the propagation of deleterious genes in the population. Being a small, isolated population and less genetically diverse, therefore, it is more vulnerable to the loss of any individuals due to environmental and stochastic events, and more prone to local extinction events. The establishment of another geographically separated, free-ranging population would reduce the risk of extinction. Establishment of a new population at Kuno Wildlife Sanctuary in Madhya Pradesh State has been proposed. However, the Government of Gujarat has refused to allow any lions from Gir to be transferred.
As human populations continue to rise in sub-Saharan Africa, the amount of land required to meet the expanding human population's needs is constantly increasing. Lions are increasingly limited to protected areas, and human population growth rates around protected areas in Africa tend to be higher than the average rural growth rate. Considering the majority of the human population in sub-Saharan Africa is rural, and land supports the livelihood of most of the population, loss and degradation of lion habitat, loss of prey base, and increased human-lion conflict can reasonably be expected to accompany the rapid growth in sub-Saharan Africa's human population into the foreseeable future.
Impacts described above from existing and predicted anthropogenic pressures on the species and its habitat are likely to be exacerbated by climate change. The general warming and drying trend projected for Africa could further reduce lion range, numbers, and prey base. Lions may also have to travel greater distances to find food or shift their diet to livestock, increasing conflict with humans and the risk of retaliatory killings. Additionally, changes in climate may increase the number and intensity of disease outbreaks in lions and their prey.
Under different climate change scenarios between the years 2040 and 2070, no broad new areas will become suitable for lion. Southern Africa, where the broadest areas of suitable conditions occur, is projected to become less suitable because of climate change. A broad swath of potential distributional area in western Africa is projected to become “distinctly less suitable or even uninhabitable.” A decrease in the lion's range could mean that stochastic events impact a larger portion of the whole species, especially if it occurs where the species and its habitat occur. Additionally, reductions in populations and geographic range may limit the lion's ability to respond to climate change. Conversely, climate change effects on potential lion distribution are projected to be more neutral in eastern Africa than across the entire range. Reserves in this region are more likely to sustain lion populations under climate change scenarios in the medium-term.
Increases in average rainfall in the past 20 years have resulted in the conversion of dry savanna to forestland in India; however, these lions have used both habitats. Therefore, habitat conversion due to climate change may not be as detrimental to lions in India. However, increased risks of flooding could pose a problem for lions. Additionally, lions could face threats following flood events, such as an outbreak of disease. Because this population is small, isolated, and less genetically diverse, it is more vulnerable to stochastic events and more prone to local extinction events.
Current lion habitat and suitable habitat predicted to remain under climate change scenarios will be under increasing pressure due to land conversions to meet the needs of the growing human population. Projected changes in Africa's climate will increase this pressure as land becomes more arid and food security concerns are exacerbated. Adaptive responses may result in further encroachment into natural habitats. Land conversion will restructure the landscape, disrupt prey migration, and decrease prey available to lion. Lion densities decrease with increasing mean temperature and decreasing rainfall. Therefore, lion density, or carrying capacity of protected areas, in sub-Saharan Africa is likely to decline with climate warming and drying.
The loss of lions could also mean the loss of genetic variation. Combined with declining populations, the risk of inbreeding and associated complications could increase. Drought conditions can also contribute to reduced prey availability by altering the timing of migration. Climate conditions also influence prey abundance, and the loss of prey species can result in lions shifting their diet towards livestock, which may increase retaliatory killings by humans.
Diseases can be directly and indirectly affected by climate change by impacting distribution, the timing of outbreaks, and the intensity of outbreaks. Severe climate change could synchronize temporal and spatial convergence of multiple infectious agents, triggering epidemics with greater mortality than infections from a single pathogen.
National and international conservation strategies rely on protected areas to protect natural resources from negative impacts of human populations. The lion is largely limited to protected areas; therefore, effective management is crucial to the survival of the species. However, weak management of protected areas has been documented
Based on the best scientific and commercial information, we find that several factors are negatively impacting the lion and contributing to the risk of extinction. However, we find there is a substantial difference in the magnitude of these threats to the risk of extinction between the subspecies
The range of
Remaining African populations are particularly threatened by expansion of human settlements, agriculture, and/or livestock grazing. Expansion of agriculture and livestock grazing are reported in or around two of the larger African populations of
Significant decreases in prey abundance have occurred in protected areas throughout Africa. In western Africa, specifically, herbivore populations have decreased by 85 percent. As a result of prey species becoming depleted in many areas, lions seek out livestock for food; attacks on livestock occur at the highest frequency in areas where natural prey abundance is lowest. Traditional livestock husbandry practices can reduce depredation rates, but these traditional practices are being replaced with less diligent practices. For example, in the Pendjari area of Benin, traditional enclosures are low with few branches. These structures and the lack of enclosures encourage livestock predation. People do not invest much into improving enclosures even though they appear to be economically efficient, ecologically effective, and culturally acceptable. Even enclosures that were built as part of a conservation project were not used full time due to lack of labor and, in some cases, the herd being too large for the enclosures. When lions in Africa cause or are perceived to cause damage to livestock, property, or people, the response is generally to kill them. Retaliatory killings are reported to be a significant threat to lion populations in western and central Africa.
Some countries in the African range of this subspecies allow hunting of
Trade in lion parts and products is very common in western and central Africa. Many African countries, including Nigeria, Burkina Faso, and Cameroon, maintain local markets in lion products. Trade in lion skins and partial skins is described as “frequent” in street markets in Abidjan, Côte d'Ivoire, and the scale of domestic trade in illegal lion products is described as “massive” in Nigeria. In the central African country of Cameroon, the estimated value of a single lion carcass exceeds the trophy fee, and at a lion conservation conference, the Government of Cameroon identified trade in lion skins as a major cause of the decline in lion populations in western and central Africa. Trade in lion skins is most likely one of the biggest threats to lion survival in western Africa due to the rarity of lions in the region, the extent of the trade, and the high price of lion skins. Lion populations in western and central Africa are small and declining and, therefore, the common use of lions in these regions for their parts and products is likely unsustainable.
The viability of a lion population partly depends on the number of prides and the ability of males to disperse and interact with other prides, which affects exchange of genetic material. Without genetic exchange, or variation, the more inbred the population will be, individual fitness is reduced, reproductive fitness is reduced, and species are less able to adapt to environmental changes and stress or stochastic events. Loss of fecundity leads to a decrease in population size, fewer prides in a population, and increased inbreeding which contributes to a decline in the population and may result in local extirpation. The entire
Although there are laws meant to protect wildlife, including lions and their prey species, the drastic and continuing decline of the species and its prey indicate these regulatory mechanisms are not adequate to ameliorate threats to
The lion population in India is one population of
As previously stated, threats to the lion are expected to continue or increase in conjunction with predicted human population growth. The human population, and thus negative impacts to lions, as well as decreases in lion populations, associated with human population growth, is expected to increase substantially by 2050. If regional trends continue at their current rate, western and central Africa will likely lose a third of its population in 5 years and half the population in 10 years. Lion bone may be increasingly used as a replacement for tiger bone in traditional Asian medicine and in Asian luxury products. Therefore, trade in lion bone could become lucrative, spur considerable demand from suppliers of the black market, result in extensive poaching of wild lions, and have significant impacts to lion populations. Additionally, future development in India could alter habitat vital for dispersal. Tolerance to loss of livestock may also wane as traditional beliefs and traditional value systems are rapidly changing under the influence of globalization. Furthermore, effects of climate change on lion habitat are projected to manifest as early as 2040. Under climate change scenarios, a broad swath of potential distributional area in western Africa is projected to become distinctly less suitable or even uninhabitable. Increases in rainfall predicted for India may not have detrimental impacts on lion habitat; however, increased risks of flooding could result in increased mortality, and post-flooding conditions could be conducive to disease outbreaks and are a serious concern to the persistence of the lion population as this population is more vulnerable to stochastic events and local extinction.
Threats acting on
Threats continue to act on this subspecies. Due to small population size and lack of connectivity between populations, most populations are not able to recover from the loss of suitable habitat or individuals. Furthermore, because all populations are small and isolated, the subspecies lacks resiliency to recover from stochastic or catastrophic events and is thus highly vulnerable to extirpation. Threats are currently affecting the subspecies and the impacts on the subspecies are expected to continue or even intensify over time as the human population increases and as climate change progresses, negatively impacting availability of suitable habitat, lion distribution, and lion numbers. Based on the current distribution and size of
The range of
Expansion of human settlements, agriculture, and/or livestock grazing is occurring in or on the major populations and is particularly a threat in eastern Africa and some parts of southern Africa. In particular, expansion of agriculture and livestock grazing is occurring in or around major populations in Kenya, Tanzania, and Zambia and both are major threats to lion survival in these countries. Expansion of human settlements and activities into lion habitat renders it unsuitable for lions, primarily because human expansion results in reduced availability of wild prey and lion mortality due to increases in human-lion conflict. Both of these factors influence the distribution and population viability of lions. However, in some parts of southern Africa, lions are repopulating areas where lions were recently extirpated due to adequate protection of habitat and prey.
Significant decreases in prey abundance have occurred in protected areas throughout Africa, including Botswana, Kenya, Mozambique, Sudan, Zambia, and Zimbabwe. Herbivore populations have decreased by 52 percent in eastern Africa, although they have increased by 24 percent in southern Africa. Protected areas in Ethiopia, Mozambique, Tanzania, and Zambia are increasingly settled; decreases in prey abundance in African protected areas are driven by human population growth, especially along the boundaries of protected areas where human population growth rates are high, encroachment and habitat loss occurs, and people are dependent on bushmeat. Additionally, many communities lack the rights over land and in most cases in Botswana, Tanzania, Zambia, and Zimbabwe, the government retains a significant portion of revenue from wildlife; therefore, those that bear the costs of wildlife do not receive benefits, and bushmeat hunting is the only way to benefit from
As a result of prey species becoming depleted in many areas, lions seek out livestock for food; attacks on livestock occur at the highest frequency in areas where natural prey abundance is lowest. Additionally, traditional livestock husbandry practices can reduce depredation rates, but these traditional practices are being replaced with less diligent practices. In Kenya and Tanzania, social changes are altering traditional Maasai pastoral livelihoods, reducing dependency on livestock, and reducing traditional livestock care and management, leaving livestock more vulnerable to predation. Although lions generally avoid people, they will occasionally prey on humans, causing serious injury or death. Attacks on humans appear to be more frequent in the range of
Some
The captive-breeding industry has publicized captive breeding and reintroduction of captive-born species into the wild as a potential solution to the decrease in wild lion populations. However, lions raised in captivity often develop a variety of issues that make them unsuitable for reintroduction, and reintroduction efforts have not been shown to address the underlying causes of population declines throughout the species' range. Existing research has generally found that captive-raised lions are not as able to adapt successfully to conditions out of captivity and, therefore, the success rate is much reduced compared to the use of wild-caught lions.
While it is argued that South Africa's captive-bred lion industry may reduce pressures of trophy hunting on wild South African populations, there is no substantial or peer-reviewed science to support such a claim. Likewise, there is no record or evidence to support claims that the captive-bred lion industry is supporting reintroduction into the wild in any significant way. However, future efforts to control hunting of captive-bred lions could potentially increase the demand for wild lion trophies and result in excessive harvests. Additionally, trade in bones of captive lions could stimulate harvest of wild lions to supply a growing bone trade. Hunting of captive lions could also potentially undermine the price of wild hunts and reduce incentives for conservation of wild lions in other African countries.
Lion parts and products are used in many African countries as medicine, nutrition, talismans, and decorations, and in traditional ceremonies and rituals. Kenya and Somalia maintain local markets in lion products. Lion skins and canines are also described as “easily found” in the markets of Dakar, Senegal. In southern and eastern Africa, trade in lion parts, particularly lion bone, to Asia is generally considered a severe potential threat to the species. According to CITES, there is “clear scope for the international trade in lion body parts for [traditional Chinese medicine and traditional African medicine] to grow uncontrollably, as it has done for other big cats.” According to Kenya, the declared exports of bones, skulls, and skeletons derived from wild lions also show an increasing trend through the period 2003-2012, with total declared specimens in 2012 more than ten times those in 2003. Evidence suggests incentive to poach wild lions for the bone trade may currently exist as prices paid to South African game farmers and landowners for lion bones exceeded the per capita GDP (gross domestic product) in many lion range states. Thus, the current price paid for lion bone appears to provide incentive in some countries to poach wild lions.
The viability of a lion population partly depends on the number of prides and ability of males to disperse and interact with other prides, which affects the exchange of genetic material. Without genetic exchange, or variation, the more inbred the population will be, individual fitness is reduced, reproductive fitness is reduced, and species are less able to adapt to environmental changes and stress or stochastic events. Loss of fecundity leads to a decrease in population size, fewer prides in a population, and increased inbreeding, which contributes to a decline in the population and local extirpation. Research indicates that there is a general lack of gene flow in most lion conservation units. Furthermore, the suggested minimum number of lions estimated to constitute a viable population is at least 250 lions, but preferably 500 lions, or 50-100 prides. Almost all lion populations in Africa that historically exceeded 500 individuals are declining, and few protected areas are large enough to support viable populations.
While the lion bone trade appears to currently be based primarily in South Africa's captive-bred lion hunting industry, the trade appears to be having little or no impact on wild lion populations in South Africa at this time—lion populations in South Africa are stable or increasing and there is little poaching of wild lions in the country (Funston and Levendal 2014, pp. 1, 26; Williams
Although there are laws in place in lion range countries that are meant to protect wildlife, including lions and their prey species, the drastic and continuing decline of the species and its prey in some parts of its range indicate these regulatory mechanisms are not adequate to ameliorate threats to the
As indicated above,
Under the Act and our implementing regulations, a species may warrant listing if it is endangered or threatened throughout all or a significant portion of its range. The term “species” includes “any subspecies of fish or wildlife or plants, and any distinct population segment [DPS] of any species of vertebrate fish or wildlife which interbreeds when mature.” We published a final policy interpreting the phrase “Significant Portion of its Range” (SPR) (79 FR 37578, July 1, 2014). The final policy states that (1) if a species is found to be endangered or threatened throughout a significant portion of its range, the entire species is listed as endangered or threatened, respectively, and the Act's protections apply to all individuals of the species wherever found; (2) a portion of the range of a species is “significant” if the species is not currently endangered or threatened throughout all of its range, but the portion's contribution to the viability of the species is so important that, without the members in that portion, the species would be in danger of extinction, or likely to become so in the foreseeable future, throughout all of its range; (3) the range of a species is considered to be the general geographical area within which that species can be found at the time the Service or the National Marine Fisheries Service makes any particular status determination; and (4) if a vertebrate species is endangered or threatened throughout an SPR, and the population in that significant portion is a valid DPS, we will list the DPS rather than the entire taxonomic species or subspecies.
We found the lion subspecies
The purposes of the ESA are to provide a means whereby the ecosystems upon which endangered species and threatened species depend may be conserved, to provide a program for the conservation of such endangered species and threatened species, and to take such steps as may be appropriate to achieve the purposes of the treaties and conventions set forth in the ESA. When a species is listed as endangered, certain actions are prohibited under section 9 of the ESA and are implemented through our regulations in 50 CFR 17.21. These include, among others, prohibitions on take within the United States, within the territorial seas of the United States, or upon the high seas; import; export; and shipment in interstate or foreign commerce in the course of a commercial activity. Exceptions to the prohibitions for endangered species may be granted in accordance with section 10 of the ESA and our regulations at 50 CFR 17.22.
The ESA does not specify particular prohibitions and exceptions to those prohibitions for threatened species. Instead, under section 4(d) of the ESA, the Secretary, as well as the Secretary of Commerce depending on the species, was given the discretion to issue such regulations as deemed necessary and advisable to provide for the conservation of such species. The Secretary also has the discretion to prohibit by regulation with respect to any threatened species any act prohibited under section 9(a)(1) of the ESA. Exercising this discretion, the Service has developed general prohibitions in the ESA regulations (50 CFR 17.31) and exceptions to those prohibitions (50 CFR 17.32) that apply to most threatened species. Under 50 CFR 17.32, permits may be issued to allow persons to engage in otherwise prohibited acts for certain purposes.
Under section 4(d) of the ESA, the Secretary, who has delegated this authority to the Service, may also develop specific prohibitions and exceptions tailored to the particular conservation needs of a threatened species. In such cases, the Service issues a 4(d) rule that may include some or all of the prohibitions and authorizations set out in 50 CFR 17.31 and 17.32, but which also may be more or less restrictive than the general provisions at 50 CFR 17.31 and 17.32. For
We are adding a 4(d) (special) rule for
The intent of this 4(d) rule is to provide for the conservation of
In connection with this 4(d) rule, the Service notes that
In the case of the
Finally, due to our concerns about the increasing trade in lion bones and evidence that live lions are being exported to Asia, presumably for the bone trade, we find that unregulated trade and the taking of live lions could further contribute to the lion bone trade. Further, the noncommercial imports of live lions could be a cover for the establishment of lion bone trade within the United States. As with captive tigers and the use of live animals for the bone trade, the Service finds that the unregulated movement of lions within the United States, as well as the import or export of these animals is reasonably likely to be used as a loophole for the bone trade and serve as cover for the establishment of lion bone trade within the United States. By requiring permits for all otherwise prohibited activities
Therefore, we find that regulation of the importation of all
Our threatened species permitting regulations at 50 CFR 17.32 provide issuance criteria for threatened species permits (50 CFR 17.32(a)(2)), but do not specify what would constitute the enhancement of propagation or survival with regard to authorizing the import of parts or products of
The Service will evaluate any application received that involves
(i) Whether the purpose for which the permit is required is adequate to justify removing from the wild or otherwise changing the status of the wildlife sought to be covered by the permit;
(ii) The probable direct and indirect effect that issuing the permit would have on the wild populations of the wildlife sought to be covered by the permit;
(iii) Whether the permit, if issued, would in any way, directly or indirectly, conflict with any known program intended to enhance the survival probabilities of the population from which the wildlife sought to be covered by the permit was or would be removed;
(iv) Whether the purpose for which the permit is required would be likely to reduce the threat of extinction facing the species of wildlife sought to be covered by the permit;
(v) The opinions or views of scientists or other persons or organizations having expertise concerning the wildlife or other matters germane to the application; and
(vi) Whether the expertise, facilities, or other resources available to the applicant appear adequate to successfully accomplish the objectives stated in the application.
In addition to these factors, particularly in relation to sport hunting, we find the
The SSC document lays out five guiding principles that, considered in conjunction with our threatened species issuance criteria, will aid the Service when making an enhancement finding for importation of sport-hunted trophies of
(a)
(b)
(c)
(d)
(e)
The Service's approach to enhancement findings for the importation of sport-hunted trophies of
When evaluating whether the importation of a trophy of
Management programs for
As stated, under this 4(d) rule any person wishing to conduct an otherwise prohibited activity, including all imports of
This action revises the taxonomic classification of the Asiatic lion (currently classified as
Conservation measures provided to species listed as endangered or threatened under the Act include recognition of conservation status, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing encourages and results in public awareness and conservation actions by Federal and State governments in the United States, foreign governments, private agencies and groups, and individuals.
Section 7(a) of the Act, as amended, and as implemented by regulations at 50 CFR part 402, requires Federal agencies to evaluate their actions that are to be conducted within the United States or upon the high seas, with respect to any species that is proposed to be listed or is listed as endangered or threatened. Because
Section 8(a) of the Act authorizes the provision of limited financial assistance for the development and management of programs that the Secretary of the Interior determines to be necessary or useful for the conservation of endangered or threatened species in foreign countries. Sections 8(b) and 8(c) of the Act authorize the Secretary to encourage conservation programs for foreign listed species, and to provide assistance for such programs, in the form of personnel and the training of personnel.
Section 9 of the Act and our implementing regulations at 50 CFR 17.21 and 50 CFR 17.31 set forth a series of general prohibitions that apply to all endangered and threatened wildlife, respectively, except where a 4(d) rule applies to threatened wildlife, in which case the 4(d) rule contains all the applicable prohibitions and exceptions. Under the 4(d) rule for
We based this action on a review of the best scientific and commercial information available, including all information received during the public comment period. In the October 2014 proposed rule, we requested that all interested parties submit information that might contribute to development of a final rule. We also contacted appropriate scientific experts and organizations and invited them to comment on the proposed listing. We received tens of thousands of comments.
We reviewed all comments we received from the public for substantive issues and new information regarding the proposed listing of this species, and we address those comments below. Overall, most commenters supported the proposed listing, but did not provide additional scientific or commercial data for consideration. We have not included responses to comments that supported the listing decision but did not provide specific information for consideration. Most of the commenters that did not support the proposed listing were affiliated with the trophy hunting industry and opposed the rule due to potential impacts on importing trophies. These comments are addressed below.
In accordance with our policy published on July 1, 1994 (59 FR 34270), we solicited expert opinions from ten individuals with scientific expertise that included familiarity with the species, the geographic region in which wild members of the species occur, and conservation biology principles. We received responses from five of the peer reviewers from whom we requested comments. The peer reviewers generally supported our rule; however, they provided updated information on taxonomy, current population estimates, and population trends. They also found our analysis of some of the threats to be inaccurate. Specifically, they provided comments and additional information on loss of prey base, trophy hunting, infanticide, corruption, and trade in lion bones. In some cases, a correction is indicated in the citations by “personal communication” (pers. comm.), which could indicate either an email or telephone conversation; in other cases, the research citation is provided.
Recently, Hazzah
Our 4(d) rule for
Because we are listing
We have determined that we do not need to prepare an environmental assessment, as defined under the authority of the National Environmental Policy Act of 1969, in connection with regulations adopted under section 4(a) of the Act for the listing, delisting, or reclassification of species. We published a notice outlining our reasons for this determination in the
A list of all references cited in this document is available at
The primary authors of this rule are staff of the Branch of Foreign Species, Ecological Services, U.S. Fish and Wildlife Service.
Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.
Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below:
16 U.S.C. 1361-1407; 1531-1544; and 4201-4245; unless otherwise noted.
(h) * * *
(r) Lion (
(1)
(2) The import exemption found in § 17.8 for threatened wildlife listed in Appendix II of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) does not apply to this subspecies. A threatened species import permit under § 17.32 is required for the importation of all specimens of
(3) All applicable provisions of 50 CFR parts 13, 14, 17, and 23 must be met.
Securities and Exchange Commission.
Proposed rule.
We are proposing Rule 13q-1 and an amendment to Form SD to implement Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act relating to disclosure of payments by resource extraction issuers. Rule 13q-1 was initially adopted by the Commission on August 22, 2012, but it was subsequently vacated by the U.S. District Court for the District of Columbia. Section 1504 of the Dodd-Frank Act added Section 13(q) to the Securities Exchange Act of 1934, which directs the Commission to issue rules requiring resource extraction issuers to include in an annual report information relating to any payment made by the issuer, a subsidiary of the issuer, or an entity under the control of the issuer, to a foreign government or the Federal Government for the purpose of the commercial development of oil, natural gas, or minerals. Section 13(q) requires a resource extraction issuer to provide information about the type and total amount of such payments made for each project related to the commercial development of oil, natural gas, or minerals, and the type and total amount of payments made to each government. In addition, Section 13(q) requires a resource extraction issuer to provide information about those payments in an interactive data format.
We are providing two comment periods for this proposal. Initial comments are due on January 25, 2016. Reply comments, which may respond only to issues raised in the initial comment period, are due on February 16, 2016. In developing the final rules, the Commission may rely on both new comments and comments that have been received to date, including those that were provided in connection with the prior rules that the Commission issued under Section 13(q).
Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment forms (
• Send an email to
• Use the Federal Rulemaking Portal (
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
Studies, memoranda or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the SEC's Web site. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Shehzad K. Niazi, Special Counsel; Office of Rulemaking, Division of Corporation Finance, at (202) 551-3430; or Elliot Staffin, Special Counsel; Office of International Corporate Finance, Division of Corporation Finance, at (202) 551-3450, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
We are proposing Rule 13q-1
On August 22, 2012, the Commission adopted a rule and form amendments
Section 13(q) was added in 2010 by Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Act”).
Based on the statutory text and the legislative history, we understand that Congress enacted Section 1504 to increase the transparency of payments made by oil, natural gas, and mining companies to governments for the purpose of the commercial development of their oil, natural gas, and minerals. As discussed in more detail below, the legislation reflects U.S. foreign policy interests in supporting global efforts to improve transparency in the extractive industries. The goal of such transparency is to help combat global corruption and empower citizens of resource-rich countries to hold their governments accountable for the wealth generated by those resources.
Section 13(q) provides the following definitions of several key terms:
• “resource extraction issuer” means an issuer that is required to file an annual report with the Commission and engages in the commercial development of oil, natural gas, or minerals;
• “commercial development of oil, natural gas, or minerals” includes exploration, extraction, processing, export, and other significant actions relating to oil, natural gas, or minerals, or the acquisition of a license for any such activity, as determined by the Commission;
• “foreign government” means a foreign government, a department, agency or instrumentality of a foreign government, or a company owned by a foreign government, as determined by the Commission;
• “payment” means a payment that:
• is made to further the commercial development of oil, natural gas, or minerals;
• is not de minimis; and
• includes taxes, royalties, fees (including license fees), production entitlements, bonuses, and other material benefits, that the Commission, consistent with the guidelines of the Extractive Industries Transparency Initiative (“EITI”) (to the extent practicable), determines are part of the commonly recognized revenue stream for the commercial development of oil, natural gas, or minerals.
Section 13(q) specifies that “[t]o the extent practicable, the rules . . . shall support the commitment of the Federal Government to international transparency promotion efforts relating to the commercial development of oil, natural gas, or minerals.”
Pursuant to Section 13(q), the rules must require a resource extraction issuer to submit the payment information included in an annual report in an interactive data format
• The total amounts of the payments, by category;
• the currency used to make the payments;
• the financial period in which the payments were made;
• the business segment of the resource extraction issuer that made the payments;
• the government that received the payments and the country in which the government is located; and
• the project of the resource extraction issuer to which the payments relate.
Section 13(q) further authorizes the Commission to require electronic tags for other information that we determine are necessary or appropriate in the public interest or for the protection of investors.
Section 13(q) requires, to the extent practicable, that the Commission make publicly available online a compilation of the information required to be submitted by resource extraction issuers under the new rules.
Finally, Section 13(q) provides that the final rules “shall take effect on the date on which the resource extraction issuer is required to submit an annual report relating to the fiscal year . . . that ends not earlier than one year after the date on which the Commission issues final rules . . . .”
We adopted final rules implementing Section 13(q) on August 22, 2012.
• Issue a proposed rule within 30 days of the granting of summary judgment in its favor or on August 1, 2015, whichever comes first;
• open a 45-day period for public notice and comment; and
• promulgate a final rule within 45 days after the end of said period, with the final rule promulgated no later than November 1, 2015.
On September 2, 2015, the court issued an order holding that the Commission unlawfully withheld agency action by not promulgating a final rule.
Since the U.S. District Court for the District of Columbia's decision in 2013, the European Parliament and Council of the European Union have adopted two directives that include payment disclosure rules similar to the 2012 Rules.
The EU Directives are similar to the 2012 Rules in that they require disclosure of the same payment types on a per project and per government basis and do not provide any exemption from the disclosure requirements. Further, each of these regulations also requires public disclosure of payment information, including the issuer's identity. There are, however, significant differences from the 2012 Rules. One difference is that the EU Directives define the term “project,”
Canada also has adopted a federal resource extraction disclosure law, the Extractive Sector Transparency Measures Act (“ESTMA”), which is similar to the 2012 Rules.
In addition to the developments in the European Union and Canada, which govern a large percentage of the companies that would be impacted by
Since the 2012 Rules were vacated, numerous parties have also submitted comment letters to the Commission and have met with members of the Commission or the staff.
In general, the proposed rules, which are described in more detail in Part II below, would require resource extraction issuers to file a Form SD on an annual basis that includes information about payments related to the commercial development of oil, natural gas, or minerals that are made to governments. The following are the key provisions of the proposed rules:
• The term “resource extraction issuer” would apply to all U.S. companies and foreign companies that are required to file annual reports pursuant to Section 13 or 15(d) of the Exchange Act and are engaged in the commercial development of oil, natural gas, or minerals.
• The term “commercial development of oil, natural gas, or minerals” would mean exploration, extraction, processing, and export, or the acquisition of a license for any such activity, consistent with Section 13(q).
• The term “payment” would mean payments that are made to further the commercial development of oil, natural gas, or minerals, are “not de minimis,” and includes taxes, royalties, fees (including license fees), production entitlements, and bonuses, consistent with Section 13(q). We also propose including dividends and payments for infrastructure improvements in the definition. In addition, we propose defining “not de minimis” to mean any payment, whether a single payment or a series of related payments, that equals or exceeds $100,000 during the most recent fiscal year.
• In addition to the payments it makes directly, a resource extraction issuer would be required to disclose payments made by its subsidiaries and other entities under its control. An issuer would disclose those payments that are included in its consolidated financial statements made by entities that are consolidated or proportionately consolidated, as determined by applicable accounting principles.
• The term “project” would be defined. We propose to define it in a manner similar to the EU Directives, using an approach focused on the legal agreement that forms the basis for payment liabilities with a government. In certain circumstances this definition would also include operational activities governed by multiple legal agreements.
• The term “foreign government” would mean a foreign national government as well as a foreign subnational government, such as the government of a state, province, county, district, municipality, or territory under a foreign national government, consistent with Section 13(q).
• The term “Federal Government” would mean the United States Federal Government.
• The proposed rules would require a resource extraction issuer to file its payment disclosure on Form SD, on the Commission's Electronic Data Gathering, Analysis, and Retrieval System (“EDGAR”), no later than 150 days after the end of its fiscal year. Form SD would require issuers to include a brief statement directing users to detailed payment information provided in an exhibit.
• Recognizing the discretion granted to us under Section 13(q), the proposed rules would require issuers to disclose the payment information publicly, including the identity of the issuer.
• The proposed rules would not include any express exemptions. Instead, resource extraction issuers could apply for, and the Commission would consider, exemptive relief on a case-by-case basis.
• In light of recent developments in the European Union and Canada, as well as the developments with the U.S. Extractive Industries Transparency Initiative (“USEITI”), Form SD would include a provision by which resource extraction issuers could use a report prepared for foreign regulatory purposes or for USEITI to comply with the proposed rules if the Commission deems the foreign jurisdiction's applicable requirements or the USEITI reporting regime to be substantially similar to our own.
• Resource extraction issuers would be required to present the payment disclosure using the eXtensible Business Reporting Language (“XBRL”) electronic format and the electronic tags identified in Item 2.01 of Form SD. These tags would include those listed in Section 13(q), as well as tags for the type and total amount of payments made for each project, the type and total amount of payments made to each government, the particular resource that is the subject of commercial development, and the subnational geographic location of the project.
• Resource extraction issuers generally would be required to comply with the rules starting with their fiscal year ending no earlier than one year after the effective date of the adopted rules.
Section 13(q) reflects U.S. foreign policy interests in supporting global efforts to improve the transparency of payments made in the extractive industries. The use of securities law disclosure requirements to advance foreign policy objectives is uncommon, and therefore foreign policy is not a topic we routinely address in our rulemaking.
Accordingly, we have carefully examined the legislative history, relevant materials from the Executive Branch, and the many comments we have received, in order to develop our understanding of the objectives of Section 13(q). To assist us further in understanding the governmental interests, Commission staff consulted with relevant staff from the Department of State, the Department of the Interior, and the U.S. Agency for International Development.
An important component of the U.S. foreign policy agenda is “to stem corruption around the world and hold to account those who exploit the public's trust for private gain.”
One area of particular concern for the U.S. Government is corruption within the governments of developing countries that are rich in oil, gas, or minerals.
The costs of such corruption to the national economies of these resource-rich developing countries can be “enormous.”
In recent years, a global consensus has begun to emerge that increasing revenue transparency through the public disclosure of revenue payments made by companies in the resource extraction sector to foreign governments can be an important tool to help combat the corruption that resource-rich developing countries too often experience.
In accordance both with the U.S. Government's long-standing foreign policy objective to reduce global corruption and with the increased appreciation that resource extraction payment transparency may help combat corruption, Congress in 2010 enacted the Section 13(q) public disclosure requirement.
United States and multilateral efforts to promote extractive industries transparency are intended to work within the bounds of the political will and technical capacity of the resource-rich countries. With their revenue windfall, some of these nations are increasingly intransigent in resisting outside pressure. This has led some to urge that the U.S. should take steps domestically to promote transparency overseas, much as the Foreign Corrupt Practices Act was U.S. domestic legislation to thwart corruption abroad. One such proposal is to mandate revenue reporting for companies listed with the Securities and Exchange Commission and working in extractives abroad.
Senate Report, at 20. This report's findings served as the basis for Section 13(q).
Given the important governmental interests underlying Section 13(q) and this rulemaking, we have considered the manner in which the public disclosure of resource extraction payments might best promote those governmental interests. As detailed in Section II of this release, we are proposing a requirement for company-specific, project-level, public disclosure. By “project-level” reporting, we refer to “project” as defined by our proposed rules—a definition that is generally based on the operational activities that are governed by a single contract, license, lease, concession or similar legal agreement and that forms the basis for payment liabilities.
Scholars and other experts have noted that “[t]he extractive sector presents particularly strong asymmetries of information across the principal stakeholders: Citizens, governments, and companies.”
The public disclosure of resource extraction payments that are made to foreign governments can become an important step towards combatting the information asymmetries that can foster corruption and a lack of governmental accountability.
Information asymmetries facilitate rent-seeking behavior and permit those in charge to utilize the country's resource wealth to advance their personal and political aims. In such a context, where informational asymmetries are key characteristics of power differentials, transparency is both difficult and a potential agent of change . . . Demystifying the extractive sector and financial flows dilutes some of the center's power by enabling other actors to participate more fully. It eliminates informational enclaves where incentives favor self-interested behavior.
While public disclosure of information about resource extraction payments to foreign governments should help reduce the information asymmetries that allow corruption to occur, the question remains of what form that disclosure should take to best reduce corruption consistent with the statutory objectives. Having considered the public comments received, information the staff learned from inter-agency consultations, relevant academic literature, and other expert analyses (as well as the mandatory disclosure regimes that have recently been adopted by the European Union and Canada), we are proposing to require company-specific, project-level, public disclosure of payment information as the means best designed to advance the U.S. Government's interests in reducing corruption and promoting accountability and good governance.
An important consideration in support of detailed project-level disclosure of the type proposed is that such disaggregated information may help local communities and subnational governments combat corruption by enabling them to verify that they are receiving the resource extraction revenue allocations from their national government that they may be entitled to under law.
The Cameroonian Mining Code states that municipality and local communities are entitled to 25 percent of the Ad Valorem tax and Extraction tax paid by companies for the projects located in their jurisdiction . . . . [W]ithout project-level fiscal data, local populations will not be able to cross-check whether or not they are receiving the share of revenues they are legally entitled to.
Company-specific, project-level, public data also may permit citizens, civil society groups, and others to actively engage in the monitoring of revenue flows in various other ways that may reduce corruption and increase accountability.
Furthermore, to the extent that a company's specific contractual or legal obligations to make resource extraction payments to a foreign government are known (or are discoverable), company-specific, project-level disclosure may help assist citizens, civil society groups, and others “to monitor individual company's contributions to the public finances and ensure firms are meeting their payment obligations.”
Additionally, we note that various commenters have asserted that “[p]roject-level reporting in particular will help communities and civil society [groups] to weigh the costs and benefits of an individual project.”
Finally, in proposing company-specific, project-level, public disclosure of resource extraction payments to foreign governments, we are mindful that this new transparency alone would likely not eliminate corruption in connection with resource extraction payments to foreign governments.
Lastly, it appears to us that the U.S. Government may have few other means beyond the disclosure mechanism required by Section 13(q) to directly target governmental corruption associated with the extractive sector in foreign countries.
Section 13(q) defines a resource extraction issuer in part as an issuer that is “required to file an annual report with the Commission.” We believe this language could reasonably be read either to cover or to exclude issuers that file annual reports on forms other than Forms 10-K, 20-F, or 40-F. We are proposing, however, to cover only issuers filing annual reports on forms 10-K, 20-F, or 40-F. Specifically, the proposed rules would define the term “resource extraction issuer” to mean an issuer that is required to file an annual report with the Commission pursuant to Section 13 or 15(d) of the Exchange Act and that engages in the commercial development of oil, natural gas, or minerals.
We believe that covering other issuers would do little to further the transparency objectives of Section 13(q) but would add costs and burdens to the existing disclosure regimes governing those categories of issuers. In this regard, we note that none of the Regulation A issuers with qualified offering statements between 2009 and 2014 appear to have been resource extraction issuers at the time of those filings.
As noted above, the proposed definition of the term “resource extraction issuer” would apply only to issuers that are required to file an annual report with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. As with the 2012 Rules, we are not proposing exemptions to the definition of resource extraction issuer based on size, ownership, foreign private issuer status,
In contrast to the call to provide exemptions, some commenters on the 2010 Proposing Release requested that the Commission extend the disclosure requirements to foreign private issuers that are exempt from Exchange Act registration and reporting obligations pursuant to Exchange Act Rule 12g3-2(b).
As noted above, Section 13(q) defines “commercial development of oil, natural gas, or minerals.”
As noted in the 2010 Proposing Release, the proposed definition of “commercial development” is intended to capture only activities that are directly related to the commercial development of oil, natural gas, or minerals.
In response to commenters' prior requests for clarification of the activities covered by the proposed definition of “commercial development,” we are identifying the activities that would be covered by the terms “extraction” and “export” and providing examples of the activities that would be covered by the term “processing.” We note, however, that whether an issuer is a resource extraction issuer would depend on the specific facts and circumstances. “Extraction” would mean the production of oil and natural gas as well as the extraction of minerals.
We do not believe that “processing” should include the downstream activities of refining or smelting. The objective of the disclosure required by Section 13(q) is to make more transparent the payments that resource extraction issuers make to governments, which are primarily generated by “upstream” activities like exploration and extraction. Issuers do not typically make payments to the host government in connection with refining or smelting. We also note that in other contexts Congress has treated midstream activities like “processing” and downstream activities like “refining” as separate activities, which further supports our view that Congress did not intend to include “refining” and “smelting” as “processing” activities.
“Export” would mean the transportation of a resource from its country of origin to another country by an issuer with an ownership interest in the resource.
In an effort to emphasize substance over form or characterization and to reduce the risk of evasion, we are also proposing an anti-evasion provision.
Section 13(q) defines “payment” to mean a payment that:
• Is made to further the commercial development of oil, natural gas, or minerals;
• is not de minimis; and
• includes taxes, royalties, fees (including license fees), production entitlements, bonuses, and other material benefits, that the Commission, consistent with the EITI's guidelines (to the extent practicable), determines are part of the commonly recognized revenue stream for the commercial development of oil, natural gas, or minerals.
Consistent with the 2012 Rules, the proposed rules define payments to include the specific types of payments identified in the statute. In addition to the statutory mandate to include these types of payments, we note that these payments are identified in the EITI's guidelines,
Some commenters suggested that we include a broad, non-exhaustive list of payment types or category of “other material benefits.”
We agree with certain commenters who stated that it would be appropriate to add some of the types of payments included under the EITI that are not explicitly mentioned under Section 13(q).
The proposed list of payment types subject to disclosure would also include payments for infrastructure improvements, such as building a road or railway to further the development of oil, natural gas, or minerals. Several commenters stated that, because resource extraction issuers often make payments for infrastructure improvements either as required by contract or voluntarily, those payments constitute “other material benefits” that are part of the commonly recognized revenue stream for the commercial development of oil, natural gas, or minerals.
In sum, the comments described above and the EITI's inclusion of dividend and infrastructure payments provide substantial support for our determination that that they are part of the commonly recognized revenue stream for the commercial development of oil, natural gas, or minerals. Moreover, including payment types in the proposed rules that are required to be disclosed under the EITI would be consistent with the statute's directive.
The proposed rules do not require a resource extraction issuer to disclose social or community payments, such as payments to build a hospital or school, because it remains unclear whether these types of payments are part of the commonly recognized revenue stream. In this regard, we note that other recently enacted international transparency promotion efforts, such as the EU Directives and ESTMA, do not include social or community payments.
Consistent with Section 13(q), the proposed rules would require a resource extraction issuer to disclose fees, including license fees, and bonuses paid to further the commercial development of oil, natural gas, or minerals. In response to requests by some commenters,
Consistent with Section 13(q), the proposed rules would require a resource extraction issuer to disclose taxes. In addition, the proposed rules include an instruction to clarify that a resource extraction issuer would be required to disclose payments for taxes levied on corporate profits, corporate income, and production, but would not be required to disclose payments for taxes levied on consumption, such as value added taxes, personal income taxes, or sales taxes.
Many commenters supported the inclusion of in-kind payments, particularly in connection with production entitlements.
Finally, as mentioned above,
Request for Comment
The proposed rules would define a “not de minimis” payment in the same way as the 2012 Rules. A “not de minimis” payment would be one that equals or exceeds $100,000, or its equivalent in the issuer's reporting currency, whether made as a single payment or series of related payments.
We considered whether to define the term using a standard based on the materiality of the payment to the issuer, as some commenters recommended.
Among the suggested approaches for defining “not de minimis,”
Although some commenters thought a $100,000 threshold was too high,
In addition to requiring an issuer to disclose its own payments, Section 13(q) also requires a resource extraction issuer to disclose payments by a subsidiary or an entity under the control of the issuer made to a foreign government or the Federal Government relating to the commercial development of oil, natural gas, or minerals. In a change from the 2012 Rules, however, the proposed rules would define the terms “subsidiary” and “control” based on accounting principles rather than using the definitions of those terms
Under the proposed approach, a resource extraction issuer would have “control” of another entity when the issuer consolidates that entity or proportionately consolidates an interest in an entity or operation under the accounting principles applicable to its financial statements included in the periodic reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act. Thus, for purposes of determining control, the resource extraction issuer would follow the consolidation requirements under generally accepted accounting principles in the United States (“U.S. GAAP”) or under the International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”), as applicable.
In addition, as commenters have noted, using this definition would be more transparent for investors and less costly for issuers, because issuers already apply the definition for financial reporting purposes.
In the 2012 Rules, we stated that “determinations made pursuant to the relevant accounting standards applicable for financial reporting may be indicative of whether control exists, [but] we do not believe it is determinative in all cases.”
Consistent with Section 13(q), the proposed rules would require a resource extraction issuer to disclose payments made to governments relating to the commercial development of oil, natural gas, or minerals by type and total amount per project.
The EU Directives and ESTMA Specifications both state that a “project” means “the operational activities that are governed by a single contract, license, lease, concession or similar legal agreements and form the basis for payment liabilities with a government. Nonetheless, if multiple such agreements are substantially interconnected, this shall be considered a project.”
Similar to the EU Directives and the draft Canadian definitions, we are proposing to define “project” as operational activities that are governed by a single contract, license, lease, concession, or similar legal agreement, which form the basis for payment liabilities with a government.
In order to assist resource extraction issuers in determining whether two or more agreements may be treated as a single project, we are proposing an instruction that provides a non-exclusive list of factors to consider when determining whether agreements are “operationally and geographically interconnected” for purposes of the definition of project, no single one of which would necessarily be determinative. Those factors include whether the agreements relate to the same resource and the same or contiguous part of a field, mineral district, or other geographic area, whether they will be performed by shared key personnel or with shared equipment, and whether they are part of the same operating budget.
In proposing this approach, we have considered the wide variety of recommendations provided by commenters, both before and after the 2012 Adopting Release, including defining “project” as a reporting unit or by reference to a materiality standard.
While substantially consistent with other international disclosure regimes in its overall approach, our proposed definition would differ in one aspect. Specifically, it would provide additional flexibility compared to those regimes by allowing for aggregation of payments made for activities that relate to multiple agreements that are both operationally and geographically interconnected without requiring the terms of the agreements to be substantially similar. In that respect, it should reduce the burdens associated with disaggregating payments. It may also reduce the risk of sensitive information being released, which should help alleviate concerns about competitive harm and the security of personnel and assets, while also providing payment information that is useful to citizens in resource-rich countries.
We also found it significant that several of the alternative definitions of “project” suggested previously by commenters would likely result in disclosure of payment information that is more greatly aggregated and less granular than what would be provided by the definition we are proposing. For example, commenters suggested defining “project” at the country level;
In a comment submitted after the 2012 Rules were vacated, and in subsequent presentations to the staff, API has advanced a proposal that would “defin[e] projects according to subnational political jurisdictions.”
For several reasons, we are not proposing such a definition of “project.” First, we do not agree that engaging in similar extraction activities across a single subnational political jurisdiction provides the type of defining feature to justify aggregating those various activities together as a solitary project. To put this in perspective using API's own illustrations, API's proposed definition would treat every natural gas extraction well that an issuer may have drilled across the 22,500 square miles of Aceh, Indonesia—a territory that is slightly larger than the total land area of the States of Massachusetts and Maryland—as a solitary project, primarily because those wells have been drilled in the same subnational political jurisdiction. Similarly, under API's proposed definition, every oil well that an issuer drills across the approximately 27,000 square miles of the Niger Delta—a territory that is slightly larger than the total land area of the States of West Virginia and Delaware—would be a single project.
Although a resource extraction issuer could enter into a contract that covers an entire country or subnational political jurisdiction, it is our understanding that this is not common industry practice.
Moreover, by so heavily focusing on subnational political jurisdictions as a defining consideration, API's definition appears to disregard the economic and operational considerations that we believe would more typically—and more appropriately—be relevant to determining whether an issuer's various extraction operations should be treated together as one project. This stands in contrast to the definition of “project” under the EU Directives and the ESTMA Specifications. Second, API's proposal would not generate the level of transparency that, as discussed above in Section I.E, we believe would be necessary and appropriate to achieve the U.S. Government's anticorruption and transparency objectives.
Similarly, local communities (and others assisting them) would be unable to assess certain costs and benefits of particular licenses and leases to help ensure that the national government or the subnational government had not struck a corrupt or otherwise inappropriate arrangement, and these local residents would be unable to meaningfully compare the revenues from the individual extraction efforts within the subnational jurisdiction to potentially verify that companies were paying a fair price for the concessions. Further, aggregating the extraction activities into a single project could undercut the deterrent effect that governmental officials and companies would experience; as discussed above, the more detailed and disaggregated the project-level disclosures, the greater likelihood that unlawful misuse of those funds may be deterred or detected.
We acknowledge that API's definition of “project” could lower the potential for competitive harm when compared to our proposed approach, which requires public disclosure of contract-level data. Nevertheless, as we discuss below,
24. Should we, as proposed, define “project” as operational activities that are governed by a single contract, license, lease, concession, or similar legal agreement, which form the basis for payment liabilities with a government? Why or why not? Given the U.S. foreign policy interests reflected in Section 13(q), does our proposed definition advance the governmental interests in promoting transparency and combatting global corruption? Should we define “project” in a different manner? If yes, how should we define the term? For example, should we adopt a definition of “project” that is identical to that found in the EU Directives and the ESTMA Specifications?
25. Is there an alternative to using a contract based definition of “project” that
26. Would our proposed contract-based definition of “project” lead to more granular disclosure than API's suggested definition? What is the typical geopolitical and geographic scope of contracts in the resource extraction industry? Are the examples discussed above representative of current industry practice?
27. Should we permit two or more agreements that are both operationally and geographically interconnected to be treated by the issuer as a single project, as proposed? What are the advantages or disadvantages of such a treatment? Should we instead require that these agreements have substantially similar terms as in the EU Directives and the ESTMA Specifications?
28. Should we use another jurisdiction's definition of “project” or one suggested by commenters, such as API? If so, which definition and why?
29. Would defining “project” in the manner we are proposing, or a similar manner, allow for comparability of data among issuers? How could the proposed rules be changed to improve such comparability?
30. Should we adopt the approach we took in the 2012 Rules and not define “project?” If so, please explain why.
In Section 13(q), Congress defined “foreign government” to mean a foreign government, a department, agency, or instrumentality of a foreign government, or a company owned by a foreign government, while granting the Commission the authority to determine the scope of the definition.
For purposes of identifying the foreign governments (as defined in proposed Item 2.01(c) of Form SD) that received the payments, as required by proposed Item 2.01(a)(7) of Form SD, we believe that an issuer should identify the administrative or political level of subnational government that is entitled to a payment under the relevant contract or foreign law. As noted in the 2012 Adopting Release, if a resource extraction issuer makes a payment that meets the definition of payment to a third party to be paid to the government on its behalf, disclosure of that payment would be covered under the proposed rules.
Additionally, the proposed rules clarify that a company owned by a foreign government means a company that is at least majority-owned by a foreign government.
The proposed rules also clarify that “Federal Government” means the United States Federal Government.
31. Should the definition of “foreign government” include a foreign government, a department, agency, or instrumentality of a foreign government, or a company owned by a foreign government, as proposed? If not, why not? Should it include anything else?
32. Under Section 13(q) and the proposal, the definition of “foreign government” includes “a company owned by a foreign government.” We are proposing to include an instruction in the rules clarifying that a company owned by a foreign government is a company that is at least majority-owned by a foreign government. Should we provide this clarification in the rules? Should a company be considered to be owned by a foreign government if government ownership is less than majority-ownership? Should the rules provide that a company is owned by a foreign government if government ownership is greater than majority-ownership? If so, what level of ownership would be appropriate and why? Are there some levels of ownership of companies by a foreign government that should be included in or excluded from the proposed definition of “foreign government?”
33. Are there some levels of subnational government that should be excluded from the proposed definition of foreign government? If so, please explain why and provide specific examples of those levels of subnational government that should be excluded.
34. Should we provide any additional guidance on the statutory terms “foreign government” and “Federal Government?” If so, what guidance would be helpful?
Section 13(q) mandates that a resource extraction issuer provide the payment disclosure required by that section in an annual report but otherwise does not specify the location of the disclosure, either in terms of a specific form or in terms of location within a form. Consistent with the approach in the 2012 Rules, we believe that resource extraction issuers should provide the required disclosure about payments on Form SD.
Form SD is already used for specialized disclosure not included within an issuer's periodic or current reports, such as the disclosure required by the rule implementing Section 1502 of the Act.
In addition to considering allowing issuers to use Forms 10-K, 20-F, or 40-F, we also considered commenters' suggestions that we require the disclosure on Form 8-K or Form 6-K.
While Section 13(q) mandates that a resource extraction issuer include the relevant payment disclosure in an “annual report,” it does not specifically mandate the time period in which a resource extraction issuer must provide the disclosure. Although two commenters on the 2010 Proposing Release believed that the reporting period for the resource extraction disclosure should be the calendar year,
After considering the comments expressing concern over the difficulty of providing the payment disclosure within the current annual reporting cycle,
35. Section 13(q) requires disclosure of the payment information in an annual report but does not specify the type of annual report. Should we require resource extraction issuers to provide the payment disclosure mandated under Section 13(q) on Form SD, as proposed? Should we require, or permit, resource extraction issuers to provide the payment information in an annual report on Forms 10-K, 20-F, or 40-F or on a different form? What would be the costs and benefits of each approach for users of the information or resource extraction issuers?
36. Should the proposed disclosure be subject to the officer certifications required by Exchange Act Rules 13a-14 and 15d-14 or a similar requirement? Why or why not?
37. As noted above, Section 13(q) mandates that a resource extraction issuer provide the required payment disclosure in an annual report, but it does not specifically mandate the time period for which a resource extraction issuer must provide the disclosure. Is it reasonable to require resource extraction issuers to provide the mandated payment information for the fiscal year covered by the applicable annual report, as proposed? Why or why not? Should the rules instead require disclosure of payments made by resource extraction issuers during the most recent calendar year?
38. Should the filing deadline for Form SD be 150 days after the end of the most recent fiscal year as proposed? Should it be longer or shorter? Should issuers be able to apply for an extension on a case-by-case basis? Or should there be a provision for an automatic extension with or without a showing of cause? Should we amend Exchange Act Rule 12b-25
39. Should the proposed rules provide an accommodation to filers that are subject to both Rules 13p-1 and 13q-1, such as an alternative filing deadline, to minimize the possibility that a resource extraction issuer would be required to file two Form SD filings in the same year? If so, how should that deadline be structured?
As noted in the U.S. District Court for the District of Columbia's opinion discussed above, Section 13(q) provides us with the discretion to determine whether or not we should require public
In response to the 2010 Proposing Release and the court's order to vacate the 2012 Rules, several commenters suggested permitting issuers to submit the payment disclosure confidentially.
Recognizing the purposes of Section 13(q) and the discretion provided in the statute, and taking into account the views expressed by various commenters, we are proposing to require resource extraction issuers to provide the required disclosure publicly. Several factors support this approach. First, the statute requires us to adopt rules that further the interests of international transparency promotion efforts, to the extent practicable.
Furthermore, we believe that requiring public disclosure of the information required to be submitted under the statute is supported by the text, structure, and legislative history of Section 13(q). In our view, our exercise of discretion in this manner is consistent with the statute's use of the term “annual report,” which is typically a publicly filed document, and Congress's inclusion of the statute in the Exchange Act, which generally operates through a mechanism of public disclosure.
We note that some commenters sought an exemption from public disclosure for circumstances in which an issuer believes that disclosure might jeopardize the safety and security of its employees and operations.
As more fully discussed in the 2012 Adopting Release, we are unpersuaded that these concerns warrant a blanket or per se exemption.
In sum, we believe that the purpose of Section 13(q) is best served when public disclosure is provided that enables citizens in resource-rich countries to hold their governments accountable for the wealth generated by those resources.
40. Should the rules permit an issuer to submit the required payment disclosure on a confidential basis? Why or why not?
41. Should the rules provide an exemption from public disclosure for existing or future agreements that contain confidentiality provisions? Would such an exemption be consistent with the purpose of Section 13(q) or would it frustrate it? Would it be necessary or appropriate in the public interest and consistent with the protection of investors?
42. Are there circumstances in which the disclosure of the required payment information would jeopardize the safety and security of a resource extraction issuer's operations or employees? If so, should the rules provide an exemption for those circumstances?
43. Are there any other circumstances in which we should provide an exemption from the public disclosure requirement? For instance, should we provide an exemption for competitively sensitive information, or when disclosure would cause a resource extraction issuer to breach a contractual obligation?
44. If issuers are permitted to provide certain information on a confidential basis, should such issuers also be required to publicly file certain aggregate information? Should the Commission consider such an approach? What would be the costs and benefits of this approach?
Many commenters supported an exemption from the disclosure requirements when the required payment disclosure is prohibited under the host country's laws.
Other commenters opposed an exemption for foreign laws that prohibits disclosure of payment information.
Given these conflicting positions and representations, and consistent with the EU Directives and ESTMA, we are not proposing an exemption when the required disclosure is prohibited by host country law. Instead, we will consider using our existing authority under the Exchange Act to provide exemptive relief at the request of a resource extraction issuer, if and when warranted.
This approach would allow us to determine if and when exemptive relief may be warranted based on the issuer's specific facts and circumstances.
45. As noted above, we will consider using our existing exemptive authority, where appropriate, to exempt issuers from the resource payment disclosure requirements. This could include, for example, situations where host country laws prohibit the disclosure called for by the rules. Is a case-by-case exemptive process a better alternative than providing a rule-based blanket exemption for specific countries or other circumstances, or providing no exemptions?
46. What are the advantages and disadvantages, if any, of relying on our existing exemptive authority under the Exchange Act?
47. Do any foreign laws prohibit the disclosure that would be required by the proposed rules? Is there any information that has not been previously provided by commenters to support an assertion that such prohibitions exist and are not limited in application? If so, please provide such information and identify the specific law and the corresponding country.
48. We note that the EU Directives and ESTMA do not provide an exemption for situations when disclosure is prohibited under host country law. Has this presented any problems for resource extraction issuers subject to these reporting regimes? If so, please identify specific problems that have arisen and explain how companies are managing those situations.
As noted above, several countries have implemented resource extraction payment disclosure laws since the 2012 Rules.
More specifically, the proposed provision would allow, in certain circumstances, issuers subject to resource extraction payment disclosure requirements in a foreign jurisdiction to file the report it prepared under those foreign requirements in lieu of the report that would otherwise be required by our disclosure rules. The proposed rules would permit compliance under this framework only after the Commission has determined that the foreign disclosure requirements are substantially similar to the requirements in its rules.
The alternative reporting provision would also be extended, to the extent appropriate,
This framework for alternative reporting would allow a resource extraction issuer to avoid the costs of having to prepare a separate report meeting the requirements of our proposed disclosure rules when it already files a substantially similar report in another jurisdiction or under USEITI. Adoption of such a provision would also be consistent with the approach taken in the EU Directives and ESTMA.
We are proposing to require resource extraction issuers to file the substantially similar report as an exhibit to Form SD. A resource extraction issuer would also be required to state in the body of its Form SD filing that it is relying on our accommodation and identify the alternative reporting regime for which the report was prepared (
We anticipate that we would make determinations about the similarity of a foreign jurisdiction's disclosure requirements either unilaterally or pursuant to an application submitted by an issuer or a jurisdiction. We anticipate following the same process in determining whether USEITI disclosures are substantially similar. We would then publish the determinations in the form of a Commission order. We would consider, among others, the following criteria in making a determination whether USEITI or a foreign jurisdiction's reporting requirements are substantially similar to ours: (1) The types of activities that trigger disclosure; (2) the types of payments that are required to be disclosed; (3) whether project-level disclosure is required and, if so, the definition of “project;” (4) whether the disclosure must be publicly filed and whether it includes the identity of the issuer; and (5) whether the disclosure must be provided using an interactive data format that includes electronic tags. When considering whether to allow substituted reporting based on a foreign jurisdiction's reporting requirements, we would also consider whether disclosure of payments to subnational governments is required and whether there are any exemptions allowed and, if so, whether there are any conditions that would limit the grant or scope of the exemptions.
49. Should we include a provision in the rules that would allow for issuers subject to reporting requirements in certain foreign jurisdictions or under the USEITI to submit those reports in satisfaction of our requirements? Why or why not? If so, what criteria should we apply when making a determination that the alternative disclosure requirements are substantially similar to the disclosure requirements under Rule 13q-1? Are there additional criteria, other than those identified above, that we should apply in making such a determination? Are there criteria identified above that we should not apply? Should we align our criteria with criteria used in foreign jurisdictions, such as the EU Directives?
50. We propose to base our determination on a finding that the foreign jurisdiction's or the USEITI's requirements are substantially similar to our own. Is this the standard we should use? Should we consider other standards, for example, a determination that a foreign jurisdiction's or the USEITI's requirements are “equivalent” or “comparable?”
51. Given the specificity of the disclosures required, should we consider a stricter or more flexible standard? Are there other standards for determining when reliance on foreign or USEITI requirements is appropriate that we should consider? If so, please describe the standard and why it should be used.
52. In making the determination that a foreign jurisdiction's or the EITI's disclosure requirements are substantially similar to our own, should we make the determination unilaterally on our own initiative, require an issuer to submit an application prior to making the determinations, allow jurisdictions to submit an application, or allow all of these methods? If we should require an application, what supporting evidence should we require? For example, should we require a legal opinion that the disclosure requirements are substantially similar?
53. Under Exchange Act Rule 0-13, we could consider requests for substituted compliance upon application by an applicant or the jurisdiction itself and after notice and an opportunity for public comment.
54. Is there another process for the Commission to use to consider substituted compliance requests other than the Rule 0-13 process? For example, should the Commission use the process set forth in Rule 0-12? Should the Commission permit someone other than a resource extraction issuer or a foreign or domestic authority to submit an application for substituted compliance?
55. As noted above, in making a determination about the similarity of a foreign jurisdiction's disclosure requirement, the Commission would consider, among other things, whether the disclosure must be provided using an interactive data format that includes electronic tags. If a foreign jurisdiction requires an interactive data format other than XBRL, but otherwise calls for disclosure substantially similar to our own, should we nonetheless require resource extraction issuers to file these disclosures in XBRL? Would having the payment data tagged using different interactive formats adversely affect the ability of users to compile and analyze the data? In these circumstances, are there other alternatives we should consider?
56. Given the progress in the development of resource extraction payment disclosure rules in certain jurisdictions, should we consider making a determination regarding the similarity of certain foreign reporting requirements when the final rule is adopted? Currently, payment disclosure rules are in place in the United Kingdom, Norway, and Canada. Should we determine whether rules in all of these jurisdictions are substantially similar for purposes of the final rule? Are there other jurisdictions that also have payment disclosure rules in place that we should consider for purposes of compliance with Rule 13q-1?
57. The USEITI reporting framework only requires disclosure of payments made to the U.S. federal government while the proposed rules would require disclosure of payments to foreign governments and the Federal Government. Thus, as proposed, if the Commission were to find that the USEITI reporting standards are “substantially similar” to the requirements of the proposed rules, the Commission would permit issuers to file reports submitted in full compliance with the USEITI in lieu of the disclosure required by the proposed rules concerning payments made by resource extraction issuers to the Federal Government. In these circumstances, any payments made to foreign governments would still need to be reported in accordance with Form SD. In light of the reporting differences between the USEITI and our proposed rules, however, should the Commission preclude the use of USEITI reports under the alternative reporting provision when a resource extraction issuer would also have to disclose payments made to foreign governments pursuant to the proposed rules?
We are proposing requirements for the presentation of the mandated payment information similar to those set forth in the 2012 Rules. The proposed rules would require a resource extraction issuer to file the required disclosure on EDGAR in an XBRL exhibit to Form SD. Providing the required disclosure elements in a machine readable (electronically-tagged) format would enable users easily to extract, aggregate, and analyze the information in a manner that is most useful to them. For example, it would allow the information received from the issuers to be converted by EDGAR and other commonly used software and services into an easily-readable tabular format.
Section 13(q) requires the submission of certain information in interactive data format.
• The total amounts of the payments, by category;
• The currency used to make the payments;
• The financial period in which the payments were made;
• The business segment of the resource extraction issuer that made the payments;
• The government that received the payments, and the country in which the government is located; and
• the project of the resource extraction issuer to which the payments relate.
In addition to the electronic tags specifically required by the statute, a resource extraction issuer would also be required to provide and tag the type and total amount of payments made for each project and the type and total amount of payments for all projects made to each government. These additional tags relate to information that is specifically required to be included in the resource extraction issuer's annual report by Section 13(q).
For purposes of identifying the subnational geographic location of the project, an instruction to the disclosure item would specify that issuers must provide information regarding the location of the project that is sufficiently detailed to permit a reasonable user of the information to identify the project's specific, subnational location.
In proposing to require the use of XBRL as the interactive data format, we note that a number of the commenters who addressed the issue prior to the 2012 Rules supported the use of XBRL.
Consistent with the statute, the proposed rules would require a resource extraction issuer to include an electronic tag that identifies the currency used to make the payments. The statute also requires a resource extraction issuer to present the type and total amount of payments made for each project and to each government, but does not specify how the issuer should report the total amounts. Although some commenters suggested requiring the reporting of payments only in the currency in which they were made,
We are proposing an instruction to Form SD clarifying that issuers would have to report the amount of payments made for each payment type, and the total amount of payments made for each project and to each government in U.S. dollars or in the issuer's reporting currency if not U.S. dollars.
Consistent with Section 13(q) and the 2012 Rules, the proposed rules would not require the resource extraction payment information to be audited or provided on an accrual basis. We note that, in this regard, the EITI approach is different from Section 13(q). Under the EITI, companies and the host country's government generally each submit payment information confidentially to an independent administrator selected by the country's multi-stakeholder group, frequently an independent auditor, who reconciles the information provided by the companies and the government, and then the administrator produces a report.
Consistent with the statute and the 2012 Rules, the proposed rules would require a resource extraction issuer to include an electronic tag that identifies the business segment of the resource extraction issuer that made the payments. As suggested by commenters,
We note that some of the electronic tags, such as those pertaining to category, currency, country, and financial period would have fixed definitions and would enable interested persons to evaluate and compare the payment information across companies and governments. Other tags, such as those pertaining to business segment, government, and project, would be customizable to allow issuers to enter information specific to their business. To the extent that payments, such as corporate income taxes and dividends, are made for obligations levied at the entity level, issuers could omit certain tags that may be inapplicable (
Finally, we note that Section 13(q)(3) directs the Commission, to the extent practicable, to provide a compilation of the disclosure made by resource extraction issuers. The proposed rules would require that the disclosures only be made available on EDGAR in an XBRL exhibit. The Commission does not anticipate making an additional or different compilation of information available to the public. Information provided on Form SD using the XBRL standard can be electronically searched and extracted and therefore, in our view, would function as an effective and efficient compilation for public use by allowing data users to create their own compilations and analyses. Moreover, the functionality provided by EDGAR would allow a user to create an up-to-date compilation in real time (rather than looking to a potentially dated, periodically released Commission compilation) and to create a compilation that is tailored to the specific parameters that the user may direct EDGAR to compile.
58. Should we require a resource extraction issuer to present some or all of the required payment information in the body of the annual report on Form SD instead of, or in addition to, presenting the information in the exhibits? If we should require disclosure of some or all the payment information in the body of the annual report, please explain what information should be required and why. For example, should we require a
59. How should the total amount of payments be reported when payments are made in multiple currencies? Do the three proposed methods for calculating the currency conversion described above provide issuers with sufficient options to address any possible concerns about compliance costs, the comparability of the disclosure among issuers, or other factors? Why or why not?
60. Should we require the resource extraction payment disclosure to be electronically formatted in XBRL and provided in a new exhibit, as proposed? Is XBRL the most suitable interactive data standard for purposes of this rule?
61. Section 13(q) and our proposed rules require an issuer to include an electronic tag that identifies the issuer's business segment that made the payments. Should we define “business segment” differently than we have proposed? If so, what definition should we use?
62. As proposed, should we require resource extraction issuers to tag the particular resource that is the subject of commercial development and the subnational geographic location of the project? Why or why not? Would these additional tags further enhance the usefulness of the data without significantly increasing compliance costs?
63. As we have noted, we believe that it is important that the project-level disclosures enable local communities to identify the revenue streams associated with particular extractive projects. When combined with the other tagged information, would our proposed approach to describing the geographic location of the project provide sufficient detail to users of the disclosure? Would users be able to identify the location of the project and distinguish that project from other projects in the same area? Would allowing resource extraction issuers flexibility in describing the location of their projects reduce comparability and the usefulness of the disclosure? Should we prescribe a different method for describing the location of a project? If so, what should that method be?
64. Proposed Instruction 3 to Item 2.01 states that the “geographic location of the project” must be sufficiently detailed to permit a “reasonable user of the information” to identify specific, subnational geographic locations. Should we provide more guidance as to what is a sufficient level of detail or how such instruction should be applied?
65. Is there additional or other information that should be required to be electronically tagged to make the disclosure more useful to local communities and other users of the information? If so, what additional information should be required and why?
66. Section 13(q)(3) directs the Commission, to the extent practicable, to provide a compilation of the disclosure made by resource extraction issuers. We believe that we satisfy the statutory requirement by making each resource extraction issuer's disclosures available on EDGAR in XBRL format. Is a different compilation necessary? If so, what information should this compilation include and how often should it be provided? Should a compilation be provided on a calendar year basis, or would some other time period be more appropriate?
Consistent with the 2012 Rules, the proposed rules would require resource extraction issuers to file the payment information on Form SD. Commenters on the 2010 Proposing Release had divergent views as to whether the required information should be furnished or filed,
Additionally, many commenters on the 2010 Proposing Release believed that investors would benefit from the payment information being “filed” and subject to Exchange Act Section 18 liability.
Some commenters argued that the disclosure should be furnished because the information is not material to investors.
67. Should we, as proposed, require the resource extraction payment disclosure to be filed, rather than furnished? If not, why not? Are there compelling reasons why the disclosures should not be subject to Section 18 liability?
68. Should we require that certain officers, such as the resource extraction issuer's principal executive officer, principal financial officer, or principal accounting officer, certify the Form SD filing's compliance with the requirements of Section 13(q) of the Exchange Act or that the filing fairly presents the information required to be disclosed under Rule 13q-1? Are there any other certifications we should require officers of resource extraction issuers to make?
Section 13(q) provides that, with respect to each resource extraction issuer, the final rules issued under that section shall take effect on the date on which the resource extraction issuer is required to submit an annual report relating to the issuer's fiscal year that ends not earlier than one year after the date on which the Commission issues the final rules under Section 13(q).
Upon adoption, if any provision of these proposed rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.
69. Should we provide a compliance date linked to the end of the nearest commonly used quarterly period following the effective date, as proposed? Should we adopt a shorter or longer transition period?
70. Should our rules provide for a longer transition period for certain categories of resource extraction issuers, such as smaller reporting companies or emerging growth companies? Should the rules provide for a longer transition period for smaller reporting companies or emerging growth companies to allow for data to be collected on the impact the EU Directives or ESTMA would have on companies of similar size? Why or why not?
We request and encourage any interested person to submit comments regarding:
• The proposed amendments that are the subject of this release;
• additional or different changes; or
• other matters that may have an effect on the proposals contained in this release, particularly any developments since the rules adopted in 2012 were vacated.
We request comment on whether we have properly identified the objectives of Section 13(q) and the governmental interests that the statute and our rules are designed to advance. We also are interested in comments that provide evidence of whether public disclosure (particularly company specific, project-level, public disclosure) supports the commitment of the Federal Government to international transparency promotion efforts, helps to combat corruption, or promotes governmental accountability.
We request comment from the point of view of companies, investors, other market participants, and civil society actors. We also request comment from the U.S. Department of State, the U.S. Agency for International Development, the U.S. Department of the Interior and any other relevant department or agency on the implications of this rulemaking for international transparency promotion efforts. With regard to any comments, we note that such comments are of great assistance to our rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments.
As discussed in detail above, we are proposing Rule 13q-1 and an amendment to Form SD to implement Section 13(q), which was added to the Exchange Act by Section 1504 of the Act. Section 13(q) directs the Commission to issue rules that require a resource extraction issuer to disclose in an annual report filed with the Commission certain information relating to payments made by the issuer (including a subsidiary of the issuer or an entity under the issuer's control) to a foreign government or the U.S. Federal Government for the purpose of the commercial development of oil, natural gas, or minerals. The proposed rule and form amendments implement Section 13(q).
As discussed above, Congress intended that the rules issued pursuant to Section 13(q) would help advance the important U.S. foreign policy objective of combatting global corruption and, in so doing, to potentially improve accountability and governance in resource-rich countries around the world.
We are sensitive to the costs and benefits of the proposed rules, and Exchange Act Section 23(a)(2) requires us, when adopting rules, to consider the impact that any new rule would have on competition. In addition, Section 3(f) of the Exchange Act directs us, when engaging in rulemaking that requires us to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. We have considered the costs and benefits that would result from the proposed rule and form amendments, as well as the potential effects on efficiency, competition, and capital formation. Many of the potential economic effects of the proposed rules would stem from the statutory mandate, while others would be a result of the discretion we are proposing to exercise in implementing the Congressional mandate. The discussion below addresses the costs and benefits that might result from both the statute and our proposed discretionary choices, and the comments we received about these matters.
As part of our analysis, we have quantified the potential economic effects wherever possible. Given both the nature of the statute's intended benefits and the lack of data regarding the benefits and the costs, in some cases we have been unable to provide a quantified estimate. Nevertheless, as described more fully below, we provide both a qualitative assessment of the potential effects and a quantified estimate of the potential aggregate initial and aggregate ongoing compliance costs. We reach our estimates by carefully considering comments we previously received on potential costs and taking into account additional data and information, including recent global developments in connection with resource extraction payment transparency. We rely particularly on those comment letters that provided quantified estimates and were transparent about their methodologies. As discussed in more detail below, after considering the comment letters, we determined that it was appropriate to modify and/or expand upon some of the submitted estimates and methodologies to reflect data and information submitted by other commenters, as well as our own judgment and experience.
The baseline the Commission uses to analyze the potential effects of the proposed rules is the current set of regulations and market practices.
To estimate the number of potentially affected issuers, we use data from Exchange Act annual reports for 2014, the latest full calendar year. We consider all Forms 10-K, 20-F, and 40-F filed in 2014 by issuers with oil, natural gas, and mining Standard Industrial Classification (“SIC”) codes
In the following economic analysis, we discuss the potential benefits and costs and likely effects on efficiency, competition, and capital formation that might result from both the new reporting requirement mandated by Congress and from the specific implementation choices that we have made in formulating these proposed rules.
As noted above, we understand that Section 13(q) and the rules required thereunder are intended to advance the important U.S. foreign policy objective of combatting global corruption and, in so doing, to potentially improve accountability and governance in resource-rich countries around the world.
We also think it is important to observe that, despite our inability to quantify the benefits, Congress has directed us to promulgate this disclosure rule. Thus, we believe it reasonable to rely on Congress's determination that the rule will produce the foreign policy and other benefits that Congress sought in imposing this mandate. Because Congress expressly directed us to undertake this rulemaking and because it implicates important foreign policy objectives, we decline to second-guess its apparent conclusion that the benefits from this rule justify its adoption.
Moreover, as noted above, we concur with Congress' judgment that the disclosures could help to achieve a critical foreign policy objective of the U.S. Government. In reaching this conclusion, we are particularly mindful that a broad international consensus has developed regarding the potential benefits of revenue transparency. Not only have the Canadian government
While the objectives of Section 13(q) do not appear to be ones that would necessarily generate measurable, direct economic benefits to investors or issuers, investors and issuers might benefit from the proposed rule's indirect effects. In the following paragraphs, we discuss existing theoretical arguments and empirical evidence that reduced corruption and better governance could have longer term positive impacts on economic growth and investment in certain countries where the affected issuers operate, which could in turn benefit issuers and their shareholders.
There are several theoretical causal explanations for why reducing corruption might increase economic growth and political stability, which in turn might reduce investment risk.
A number of empirical studies have also shown that reducing corruption might result in an increase in the level of GDP and higher rate of economic growth through more private investments, better deployment of human capital, and political stability.
Although there is no conclusive empirical evidence that would confirm whether the project-level, public disclosure that we are proposing will in fact reduce corruption, we note that many commenters emphasized the potential benefits to civil society of such public disclosure.
We also note that some commenters (including a number of large investors) have stated that the disclosures required by Section 13(q) could provide useful information to them in making investment decisions.
Many commenters stated that the reporting regime mandated by Section 13(q) would impose significant compliance costs on issuers. Several commenters specifically addressed the cost estimates presented in the Paperwork Reduction Act (“PRA”) section of the 2010 Proposing Release.
Some commenters on the 2010 Proposing Release disagreed with our industry-wide estimate of the total annual increase in the collection of information burden and argued that it underestimated the actual costs that would be associated with the rules.
Commenters also noted that modifications to issuers' core enterprise resource planning systems and financial reporting systems would be necessary to capture and report payment data at the project level, for each type of payment, government payee, and currency of payment.
These commenters added that these estimated costs could be significantly greater depending on the scope of the final rules.
Two commenters stated that arriving at a reliable estimate for the ongoing annual costs of complying with the rules would be difficult because the rules were not yet fully defined but suggested that a “more realistic” estimate than the estimate included in the 2010 Proposing Release is hundreds of hours per year for each large issuer that has many foreign locations.
One commenter estimated that ongoing compliance with the rules implementing Section 13(q) would require 100-200 hours of work at the head office, an additional 100-200 hours of work providing support to its business units, and 40-80 hours of work each year by each of its 120 business units, resulting in an approximate yearly total of 4,800-9,600 hours and $2,000,000-$4,000,000.
Other commenters believed that concerns over compliance costs have been overstated.
Another commenter stated that, in addition to issuers already collecting the majority of information required to be made public under Section 13(q) for internal record-keeping and audits, U.S. issuers already report such information to tax authorities at the lease and license level.
One commenter, while not providing competing estimates, questioned the accuracy of the assertions relating to costs from industry participants.
To assess the potential initial and ongoing costs of compliance with the proposed rules, we use the quantitative information supplied by commenters in response to the 2010 Proposing Release.
To address the first consideration, we searched the filed annual forms and forms' metadata for issuers that have a business address, are incorporated, or are listed on markets in the EEA or Canada. For purposes of our analysis, we assume that those issuers may already be subject to similar resource extraction payment disclosure rules in those jurisdictions by the time the proposed rules are adopted and, thus, that the additional costs to comply with our proposed rules would be much lower than costs for other issuers. We identified 268 such issuers.
Second, among the remaining 609 issuers (
Taking these estimates of the number of excluded issuers together, we estimate that approximately 471 issuers (
To establish an upper and lower bound for the initial compliance costs estimates, we use the initial compliance cost estimates from Barrick Gold and ExxonMobil referenced above. We note, however, that these cost estimates were provided by the commenters during the comment period after the 2010 Proposing Release and were based on policy choices made in that proposal and reflected the other international regulatory regimes in place at that time. Since then we have changed our approach (
In our methodology to estimate the initial compliance costs, we take the specific issuer estimates from Barrick Gold and ExxonMobil, $500,000 and $50,000,000, respectively,
We calculate the average total assets of the 471 potentially affected issuers to be approximately $5.8 billion.
We also recognize that it is possible that some compliance costs may not scale by issuer size and that smaller issuers in particular may be subject to certain fixed costs that do not vary with the size of the issuers' operations. While commenters did not provide any information on what fraction of the initial compliance costs would be fixed versus variable, we assume that fixed costs are equal to $500,000—the lower of the two compliance cost estimates provided by commenters. To find the lower and upper bound estimates of compliance costs in this case, we assume that each issuer's costs are the maximum between the fixed costs of $500,000 and, respectively, the lower bound (0.002% of total assets) or the upper bound (0.021% of total assets) of the variable costs. Applying these lower and upper bounds to each issuer and summing across all issuers, we find that the lower bound estimate is $262 million (or, on average, $0.56 million per issuer) and the upper bound estimate is $726 million (or, on average, $1.54 million per issuer).
The table below summarizes the upper and lower bound of total initial compliance costs under two fixed costs assumptions.
We acknowledge significant limitations on our analysis that may result in the actual costs being significantly lower. First, the analysis is limited to two large issuers' estimates from two different industries, mining and oil and gas, and the estimates may not accurately reflect the initial compliance costs of all affected issuers. Second, the commenters' estimates were generated based on our initial proposal and they do not reflect the current proposed rules or the international transparency regimes that subsequently have been adopted by other jurisdictions.
We also acknowledge certain limitations on our analysis that could potentially cause the cost to be higher than our estimates. First, we assume that the variable part of the compliance costs is a constant fraction of total assets, but the dependence of costs on issuer size might not be linear (
We estimate ongoing compliance costs using the same method under the assumptions of no fixed costs and fixed costs of $200,000 per year (as explained below). After the 2010 Proposing Release, we received quantitative information from three commenters—Rio Tinto, National Mining Association, and Barrick Gold—that we used in the
Similarly to our estimates of the initial costs, we then consider fixed costs equal to the lowest of three estimates given by the commenters, the Barrick Gold's estimate of $200,000 per year. To find the lower and upper bound estimates, we assume that each issuer's costs are the maximum between the fixed costs of $200,000 and either the lower bound (0.0008% of total assets) or the upper bound (0.02% of total assets) of the variable costs, respectively. Applying these lower and upper bounds to each issuer and summing across all issuers, we find that the lower bound estimate is $105 million per year (or, on average, $0.22 million per issuer per year) and the upper bound estimate is $601 million per year (or, on average, $1.28 million per issuer per year). Our estimates are summarized in the following table. Finally, we note that, if the actual fixed costs component is between $0 and $200,000, the lower and upper bounds of compliance costs estimates would be between our lower and upper bounds estimates for the two opposite fixed costs cases.
As noted above, we expect that the initial and ongoing compliance costs associated with the proposed rule are likely to be greater for larger, multinational issuers as compared to smaller, single country based issuers, as larger issuers would likely need more complex systems to track and report the required information. However, to the extent there is a significant fixed component to the proposed rules' overall compliance costs, such costs could be disproportionately burdensome for smaller reporting companies and emerging growth companies. In this case, the proposed rules could give rise to competitive disadvantages for these smaller issuers and could provide incentive for these issuers to consider exiting public capital markets to avoid reporting requirements (possibly incurring a higher cost of capital and potentially limited access to capital in the future). We estimate that approximately 50% of affected issuers are smaller reporting companies and approximately 6% of affected issuers are emerging growth companies.
In addition to direct compliance costs, we anticipate that the statute could result in significant indirect effects. Issuers that have a reporting obligation under Section 13(q) could have a competitive disadvantage compared to private companies and foreign companies that are not subject to the reporting requirements of the United States federal securities laws and therefore do not have such an obligation. For example, such competitive disadvantage could result from, among other things, any preference by the government of the host country to avoid disclosure of covered payment information, or any ability of market participants to use the information disclosed by reporting issuers to derive contract terms, reserve data, or other confidential information.
Industry commenters have stated that confidential production and reserve data can be derived by competitors or other interested persons with industry knowledge by extrapolating from the payment information required to be disclosed.
To the extent that the requirement to disclose payment information does impose a competitive disadvantage on an issuer, such issuer possibly could be motivated to sell assets affected by such competitive disadvantage at a price that does not fully reflect the value of such assets absent such competitive impact.
Addressing other potential costs, one commenter referred to a potential economic loss borne by shareholders, without quantifying such loss, which the commenter believed could result from highly disaggregated public disclosure of competitively sensitive information causing competitive harm.
Some commenters suggested that we permit issuers to submit payment data confidentially to the Commission and make public only an aggregated compilation of the information.
As noted above, the cost of compliance for this provision would be primarily borne by the issuer thus potentially diverting capital away from other productive opportunities which may result in a loss of allocative efficiency.
As discussed in detail in Section II, we have revised the rules from the 2010 Proposing Release and the 2012 Adopting Release to address matters identified in the U.S. District Court for the District of Columbia's decision in the API Lawsuit. In developing the proposed rules, we have also considered relevant international developments, input from staff consultations with other U.S. Government agencies, and the public comments that we have received. We discuss below the significant choices that we are proposing to implement the statute and the associated benefits and costs of those choices. We are unable to quantify the impact of each of the proposals we discuss below with any precision because reliable, empirical evidence about the effects is not readily available to the Commission. We do, however,
Absent potential exemptive relief, resource extraction issuers operating in countries which prohibit, or may in the future prohibit, the disclosure required under Section 13(q) could bear substantial costs.
A foreign private issuer with operations in a country that prohibits disclosure of covered payments, or a foreign issuer that is domiciled in such country, might face different types of costs. For example, it might decide it is necessary to delist from an exchange in the United States, deregister, and cease reporting with the Commission,
Affected issuers also could suffer substantial losses if they have to terminate their operations and redeploy or dispose of their assets in the host country under consideration. These losses would be magnified if an issuer cannot redeploy the assets in question easily, or it has to sell them at a steep discount (a fire sale). Even if the assets could be easily redeployed, an issuer could suffer opportunity costs if they are redeployed to projects with inferior rates of return. In the 2012 Adopting Release we estimated that such losses could amount to billions of dollars.
A number of factors may serve to mitigate the costs and competitive burdens arising from the impact of foreign laws on the required disclosure. For example, the widening global influence of the EITI and the recent trend of other jurisdictions to promote transparency, including listing requirements adopted by the Hong Kong Stock Exchange and the requirements adopted pursuant to the EU Directives and ESTMA, may discourage governments in resource-rich countries from rigorously enforcing any such prohibitions or from adopting new prohibitions on payment disclosure.
In addition, these potential costs could be substantially mitigated under our proposed rules. We intend to consider using our existing authority under the Exchange Act to provide exemptive relief on a case-by-case basis, if and when warranted, upon the request of a resource extraction issuer.
An alternative to using our exemptive authority on a case-by-case basis would be to provide a blanket or per se exemption where specific countries have a law prohibiting the required disclosure. Although a blanket exemption would reduce potential economic costs (
Finally, we believe that the more tailored case-by-case exemptive approach that we are proposing could improve the comparability of payment information among resource extraction issuers and across countries. As such, it may increase the benefit to users of the Section 13(q) disclosure. Also, although not providing a blanket exemption could encourage issuers to not list on U.S. markets, to the extent that other jurisdictions are developing and adopting similar initiatives (
As discussed above, host country laws that prohibit the type of disclosure required under the proposed rules could lead to significant additional economic costs that are not captured by the compliance cost estimates in Section III.B.2.b. We believe that affording exemptive relief from the proposed disclosure requirements on a case-by-case basis, as circumstances warrant, should substantially mitigate such costs. However, we acknowledge that, if this relief were not provided, issuers could potentially incur costs associated with the conflict between our requirements and those foreign law prohibitions. Below, we have attempted, to the extent possible, to assess the magnitude of those potential costs if exemptive relief were not granted.
We base our analysis on the four countries that some commenters claimed have versions of such laws.
We can, however, assess if the costs of withdrawing from these four countries are in line with one commenter's estimate of tens of billions of dollars.
As we discuss above, we were able to identify a total of 49 issuers that mentioned that they are active in these countries (some operate in more than one country). The table below provides information from the 20 issuers, out of the 49 described above, that provide geographic segment data detailed at the country level and that specifically identify the value of assets in one of these four countries.
The magnitude of potential total loss of assets in the host countries is represented in the last column of the table, the estimated market value of country assets. For the 12 issuers domiciled in the United States that have assets in one of these four host countries, the estimated total loss range is between $1.5 million and $9.7 billion, with a median loss of $188.8 million. The aggregate fraction of total assets that might be affected is 2.5%.
As shown in the table above, eight issuers have a foreign address associated with their Form 10-K or 20-F filing. As we discussed above, issuers that are domiciled in foreign countries might face different types of costs. For example, they are more likely to decide it is necessary to delist from an exchange in the United States, deregister, and cease reporting with the Commission, thus incurring a higher cost of capital and potentially limited access to capital in the future, rather than to sell their assets abroad. Due to limited data availability, we cannot reliably quantify these costs.
Even though our analysis was limited to less than half of issuers that are active in these four countries, these estimates suggest that commenters' concerns about such host country laws potentially adding billions of dollars of costs to affected issuers could be warranted. Additional costs at that scale could have a significant impact on resource extraction issuers' profitability and competitive position. The analysis above assumes that a total loss of assets located in the host countries would occur. In a more likely scenario, however, these issuers would be forced to sell their assets in the above-mentioned host countries at fire sale prices. While we do not have data on fire sale prices for the industries of the affected issuers, economic studies on fire sales of real assets in other industries could provide some estimates to allow us to quantify the potential costs to affected issuers from having to sell assets at fire sale prices. For example, a study on the airline industry finds that planes sold by financially distressed airlines bring 10 to 20 percent lower prices than those sold by undistressed airlines.
To understand how relevant these discounts are to the resource extraction issuers affected by the rule, we examine the ease with which real assets could be disposed of in different industries. If the forced disposal of real assets is more easily facilitated in the resource extraction industries compared to other industries (
We note, however, that the index, as constructed, will also reflect the industry's typical financial leverage, not just the liquidity of its assets. To the extent that different industries have different leverages, these differences in leverage could explain some of the cross-industry variation of the index. Additionally, the index measures the ease with which ownership of assets is changed over the time period under consideration. Hence, the index is expected to adjust to intertemporal changes in the ease with which assets in a certain industry can be disposed of, which is important because it is well-established that control transactions tend to be cyclical in nature.
We construct the index for all industries, identified by three-digit SIC codes. For each industry, after
The table below presents summary statistics for the liquidity index for all industries and the resource extraction industries during the period 2010-2014.
The results in the table show that the liquidity of real assets in the resource extraction industries is low (an average liquidity index of 0.02) compared with the liquidity in other industries (an average liquidity index of 0.11). That is, it is harder to dispose of assets in the extractive industries relative to other industries. In fact, the liquidity index of resource extraction industries is in the lowest quartile of the distribution of the index for all industries. As mentioned above, this could reflect the fact that resource issuers have higher financial leverage than other industries. All other things being equal, higher financial leverage will result in a lower liquidity index. To control for the effects of financial leverage, we compare the liquidity index of resource extraction industries to that of industries with similar leverage.
Because we lack data to construct the liquidity index at the country level, we cannot quantify the liquidity of the single-country market for real assets. The table below lists the number of corporate control transactions in each of the four countries under consideration from 2010 through 2014, broken down by type of industry.
Given the lower liquidity of the market for the real assets of resource extraction issuers, we believe that the upper limit of the fire sale discount range would be more appropriate when estimating the fire sale prices at which affected issuers could dispose of their assets in countries with disclosure prohibition laws, should such need arise. If we apply those discount percentages to the market value of the issuers' assets in these host countries, this would reduce our estimates of their potential losses. For the U.S.-based issuers, if we apply the highest discount of 69 percent, the range of losses would be between $1 million and $6.7 billion, with a median loss of $130.3 million. If the true fire sale discounts in the countries with disclosure prohibition laws are lower than our highest estimate, the losses of affected issuers would be lower. In addition to the dollar costs, the process of disposing of assets could involve substantial time, which could further increase the total cost of the restructuring. We acknowledge, however, that the fire sale discount estimates are based on data from other industries that are very different from the industries of affected issuers. Thus, our estimates may not accurately reflect the true fire sale discounts that affected issuers could face.
Alternatively, an issuer could redeploy these assets to other projects that would generate cash flows. If an issuer could redeploy these assets relatively quickly and without a significant cost to projects that generate similar rates of returns as those in the above-mentioned countries, then the issuer's loss from the presence of such host country laws would be minimal. The more difficult and costly it is for an
Overall, the results of our analysis are consistent with commenters' assertions that the presence of host country laws that prohibit the type of disclosure required under the proposed rules could be costly, although, as mentioned in the above paragraph, in some instances there may be mitigating factors that could decrease those costs. It is also possible that under certain circumstances affected issuers could lose 100% of their assets in a given country. The size of the potential loss to issuers would depend on the presence of other similar opportunities, third parties willing to buy the assets at fair-market values in the above-mentioned host countries, and the ability of issuers to avoid fire sales of these assets. Finally, as we discussed above at the beginning of this section, a number of other factors should substantially mitigate the competitive burdens arising from the required disclosure, including our intent to consider exemptive relief on a case-by-case basis.
In a change from the 2012 Adopting Release, the proposed rules would allow resource extraction issuers subject to a foreign jurisdiction's resource extraction payment disclosure requirements that we have determined are substantially similar to our requirements to satisfy their filing obligations by filing the report required by that foreign jurisdiction with the Commission. This proposed approach would decrease the compliance costs for issuers that are cross-listed or incorporated in a foreign jurisdiction and have to satisfy at least one similar foreign disclosure requirement. Those issuers would save on compliance costs associated with filing a Form SD pursuant to Section 13(q). We estimated above that approximately 268 issuers would be subject to other regulatory regimes that may allow them to utilize the proposed provision.
As an alternative, we could have decided not to propose such a provision. Such an alternative would have increased the compliance costs for issuers that are subject to similar foreign disclosure requirements. These issuers would have to comply with multiple disclosure regimes and bear compliance costs for each regime, although it is possible that the marginal costs for complying with an additional disclosure regime would not be high given the potential similarities that may exist between these reporting regimes and the final rules that we may adopt.
Section 13(q) requires resource extraction issuers to disclose payments made by a subsidiary or entity under the control of the issuer. As discussed above in Section II.D above, we are proposing rules that would define the term “control” based on accounting principles. Alternatively, we could have used a definition based on Exchange Act Rule 12b-2 as in the 2012 Rules.
Under the definition we adopted in the 2012 Rules, a resource extraction issuer would have been required to make a factual determination as to whether it has control of an entity based on a consideration of all relevant facts and circumstances. This alternative would have required issuers to engage in a separate analysis of which entities are included within the scope of the required disclosures (apart from the consolidation determinations made for financial reporting purposes) and could have increased the compliance costs for issuers compared to the approach we are proposing.
As in the 2012 Rules, the proposed rules define “commercial development of oil, natural gas, or minerals” to include exploration, extraction, processing, and export, or the acquisition of a license for any such activity. As described above, the rules that we are proposing generally track the language in the statute. We are sensitive to the fact that a broader definition of “commercial development of oil, natural gas, or minerals” could increase issuers' costs. We are also sensitive to the fact that expanding the definition in a way that is broader than other reporting regimes could potentially lead to a competitive disadvantage for those issuers covered only by our proposed rules. Further, we recognize that limiting the definition to these specified activities could potentially negatively affect those using the payment information if disclosure about payments made for activities not included in the list of specified activities, such as refining, smelting, marketing, or stand-alone transportation services (that is, transportation that is not otherwise related to export), would be useful to users of the information.
As noted above, to promote the transparency goals of Section 13(q), the proposed rules include an anti-evasion provision that requires disclosure with respect to an activity or payment that, although not in form or characterization one of the categories specified under the proposed rules, is part of a plan or scheme to evade the disclosure required under Section 13(q).
In response to commenters' request for clarification of the activities covered by the proposed rules, we also are providing guidance about the activities covered by the terms “extraction,” “processing,” and “export.” The
As in the 2012 Rules, the proposed rules would add two categories of payments to the list of payment types identified in the statute that must be disclosed: Dividends and payments for infrastructure improvements. We include these payment types in the proposed rules because, based on the comments we have received, we believe they are part of the commonly recognized revenue stream. For example, payments for infrastructure improvements have been required under the EITI since 2011. Additionally, we note that the EU Directives and ESTMA also require only these payment types to be disclosed. Thus, including dividends and payments for infrastructure improvements (
As discussed earlier, under the proposed rules, resource extraction issuers would incur costs to provide the payment disclosure for the payment types identified in the statute. For example, there would be costs to modify the issuers' core enterprise resource planning systems and financial reporting systems so that they can capture and report payment data at the project level, for each type of payment, government payee, and currency of payment.
The proposed rules do not require disclosure of certain other types of payments, such as social or community payments. We recognize that excluding those payments reduces the overall level of disclosure. We have not, however, proposed requiring disclosure of those payments because we do not believe they are part of the commonly recognized revenue stream for the commercial development of oil, natural gas, or minerals.
Under the proposed rules, issuers may disclose payments that are made for obligations levied at the entity level, such as corporate income taxes, at that level rather than the project level. This accommodation also should help reduce compliance costs for issuers without significantly interfering with the goal of achieving increased payment transparency.
Under the proposed rules, issuers must disclose payments made in-kind. The EU Directives and ESTMA require disclosure of in-kind payments. This requirement is also consistent with the EITI and should help further the goal of supporting international transparency promotion efforts and enhance the effectiveness of the disclosure. At the same time, this requirement could impose costs if issuers have not previously had to value their in-kind payments. To minimize the potential additional costs, the proposed rules provide issuers with the flexibility of reporting in-kind payments at cost, or if cost is not determinable, at fair market value. We believe this approach could lower the overall compliance costs associated with our decision to include the disclosure of in-kind payments within the proposed rules.
Section 13(q) requires the disclosure of payments that are “not de minimis,” leaving that term undefined. Consistent with the 2012 Rules, the proposed rules define “not de minimis” to mean any payment, whether made as a single payment or a series of related payments, that equals or exceeds $100,000, or its equivalent in the issuer's reporting currency. Although we considered leaving “not de minimis” undefined, we believe that defining this term should help to promote consistency in payment disclosures and reduce uncertainty about what payments must be disclosed under Section 13(q) and the related rules, and therefore should facilitate compliance.
We considered proposing a definition of “not de minimis” that was based on a qualitative principle or a relative quantitative measure rather than an absolute quantitative standard. We chose the absolute quantitative approach for several reasons. An absolute quantitative approach should promote consistency of disclosure and, in addition, would be easier for issuers to apply than a definition based on either a qualitative principle or relative quantitative measure.
In choosing the $100,000 “de minimis” threshold, we selected an amount that we believe strikes an appropriate balance in light of varied commenters' concerns and the purpose of the statute. Although commenters suggested various thresholds,
Section 13(q) requires a resource extraction issuer to disclose information about the type and total amount of payments made to a foreign government or the Federal Government for each project relating to the commercial development of oil, natural gas, or minerals, but it does not define the term “project.” As noted above, in a change from the 2012 Rules, the proposed rules define “project” as operational activities governed by a single contract license, lease, concession, or similar legal agreement, which forms the basis for payment liabilities with a government. The definition is based on the definition in the EU Directives and the draft ESTMA definition, but allows for greater flexibility when operational activities governed by multiple legal agreements may be deemed a project.
Compared to the 2012 Rules, the proposed definition of “project” should help reduce costs for issuers listed in both the United States and the European Union or in Canada by not requiring different disaggregation of project-related costs due to different definitions of the term. It also likely would reduce the competitive disadvantage for issuers that could be required to make more granular disclosure of information than their competitors under a narrower definition. Our proposed approach also would provide more flexibility in, and reduce the burdens associated with, disaggregating payments made for activities that relate to multiple agreements that are both operationally and geographically interconnected.
Our proposed approach may, however, increase the compliance costs for issuers that would be required to implement systems to track payments at a different level of granularity than what they currently track. In a similar vein, it may increase the risk of sensitive contract information being released, thus increasing the likelihood of competitive harm for some affected issuers. At the same time, the ability of issuers to define as a “project” agreements that do not have substantially similar terms may reduce the risk of sensitive information being released.
As an alternative, we could have proposed to leave “project” undefined, as in the 2012 Rules. Leaving the term “project” undefined could have provided issuers more flexibility in applying the term to different business contexts depending on factors such as the particular industry or business in which the issuer operates or the issuer's size. Under such an approach, however, resource extraction issuers could have incurred costs in determining their “projects.” Moreover, leaving the term undefined could result in higher costs for some resource extraction issuers than others if an issuer's determination of what constitutes a “project” would result in more granular information being disclosed than another issuer's determination of what constitutes a “project.” In addition, leaving the term “project” undefined may not be as effective in achieving the transparency benefits contemplated by the statute because resource extraction issuers' determinations of what constitutes a “project” may differ, which could reduce the comparability of disclosure across issuers.
Finally, we could have adopted the API definition of project, which would have defined project-level reporting to allow issuers to combine as one “project” all of the similar extraction activities within a major subnational political jurisdiction. We acknowledge that this aggregated disclosure could potentially impose fewer costs on resource extraction issuers—particularly those issuers with many similar resource extraction activities occurring within a subnational jurisdiction—as the API suggested definition would not require issuers to expend the time and resources necessary to achieve the type of granular reporting that our proposed rules would require.
Section 13(q) provides that the resource extraction payment disclosure must be “include[d] in an annual report.” The proposed rules require an issuer to file the payment disclosure in an annual report on new Form SD, rather than furnish it in one of the existing Exchange Act annual report forms. Form SD would be due no later than 150 days after the end of the issuer's most recent fiscal year. This should lessen the burden of compliance with Section 13(q) and the related rules because issuers generally would not have to incur the burden and cost of providing the payment disclosure at the same time that they must fulfill their disclosure obligations with respect to Exchange Act annual reports.
Resource extraction issuers would incur costs associated with preparing and filing each Form SD. We do not believe, however, that the costs associated with filing each Form SD instead of furnishing the disclosure in an existing form would be significant. Requiring covered issuers to file, instead of furnish, the payment information in Form SD may create an incremental risk of liability in litigation under Section 18 of the Exchange Act. This incremental risk of legal liability could be a benefit to users of the information to the extent that issuers would be more attentive to the information they file, thereby increasing the quality of the reported information. However, we note that Section 18 does not create strict liability for “filed” information.
Finally, the proposed rules do not require the resource extraction payment information to be audited or provided on an accrual basis. Not requiring the payment information to be audited or provided on an accrual basis may result in lower compliance costs than otherwise would be the case if resource extraction issuers were required to provide the information on an accrual basis or audited information.
Section 13(q) requires the payment disclosure to be electronically formatted using an interactive data format. Consistent with the 2012 Rules, the proposed rules would require a resource extraction issuer to provide the required payment disclosure in an XBRL exhibit to Form SD that includes all of the electronic tags required by Section 13(q) and the proposed rules.
Our choice of XBRL as the required interactive data format may increase compliance costs for some issuers. The electronic formatting costs would vary depending upon a variety of factors, including the amount of payment data disclosed and an issuer's prior experience with XBRL. While most issuers are already familiar with XBRL because they use it for their annual and quarterly reports filed with the Commission, issuers that are not already filing reports using XBRL (
Consistent with the statute, the proposed rules require a resource extraction issuer to include an electronic tag that identifies the currency used to make the payments. Under the proposed rules, if multiple currencies are used to make payments for a specific project or to a government, a resource extraction issuer may choose to provide the amount of payments made for each payment type and the total amount per project or per government in either U.S. dollars or the issuer's reporting currency.
We request comment on the potential costs and benefits of the proposed rules and whether the rules, if adopted, would promote efficiency, competition, and capital formation or have an impact or burden on competition. In particular, we request comments on the potential effect on efficiency, competition, and capital formation should the Commission not adopt certain exceptions or accommodations. Commenters are requested to provide empirical data, estimation methodologies, and other factual support for their views, in particular, on costs and benefits estimates. Our specific questions follow.
Certain provisions of the proposed rules contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
• “Form SD” (OMB Control No. 3235-0697).
Form SD is currently used to file Conflict Minerals Reports pursuant to Rule 13p-1 of the Exchange Act. We are proposing amendments to Form SD to accommodate disclosures required by Rule 13q-1, which would require resource extraction issuers to disclose information about payments made by the issuer, a subsidiary of the issuer, or an entity under the control of the issuer to foreign governments or the U.S. Federal Government for the purpose of the commercial development of oil, natural gas, or minerals. Form SD would be filed on EDGAR with the Commission.
The proposed rules and amendment to the form would implement Section 13(q) of the Exchange Act, which was added by Section 1504 of the Act. Section 13(q) requires the Commission to “issue final rules that require each resource extraction issuer to include in an annual report of the resource extraction issuer information relating to any payment made by the resource extraction issuer, a subsidiary of the resource extraction issuer, or an entity under the control of the resource extraction issuer to a foreign government or the Federal Government for the purpose of the commercial development of oil, natural gas, or minerals, including—(i) the type and total amount of such payments made for each project of the resource extraction issuer relating to the commercial development of oil, natural gas, or minerals, and (ii) the type and total amount of such payments made to each government.”
Compliance with the rules by affected issuers would be mandatory. Responses to the information collections would not be kept confidential and there would be no mandatory retention period for the collection of information.
The number, type, and size of the issuers that would be required to file the payment information required in Form SD, as proposed to be amended, is uncertain, but, as discussed in the economic analysis above, we estimate that the number of potentially affected issuers is 877.
After considering the comments in connection with the 2010 Proposing Release, international developments, and the differences between the proposed rules and the 2012 Rules, we have revised our PRA estimates from those discussed in the 2012 Adopting Release.
When determining the estimates described below, we have assumed that 75% of the burden of preparation is carried by the issuer internally and 25% of the burden of preparation is carried by outside professionals retained by the issuer at an average cost of $400 per hour.
In connection with the 2010 Proposing Release, some commenters estimated implementation costs of tens of millions of dollars for large filers and millions of dollars for smaller filers.
Generally, we note that some of the estimates we received may reflect the burden to a particular commenter, and may not represent the burden for other resource extraction issuers.
As discussed above, we estimate that 471 issuers would bear the full costs of compliance and 268 issuers may be subject to similar resource extraction payment disclosure rules by the time the proposed rules are adopted, such that the additional costs to comply with our proposed rules would be much lower than costs for other issuers. We also estimate that 138 smaller issuers would bear no compliance costs because it is likely that any payments they make for the purpose of the commercial development of oil, natural gas, or minerals would be considered de minimis under the proposed rules. We have used the cost estimates provided by commenters to estimate the compliance burden for affected issuers for PRA purposes. To distinguish between the burden faced by the two groups of affected issuers described above, we have assumed that the issuers who may already be complying with a similar foreign disclosure regime would have compliance costs of approximately five percent of the issuers that bear the full costs of compliance. For issuers bearing the full costs, we note that Barrick Gold estimated an initial compliance burden of 1,000 hours (500 hours for initial changes to internal books and records and 500 hours for initial compliance).
We believe that the burden associated with this collection of information would be greatest during the implementation period to account for initial set up costs, but that ongoing compliance costs would be less because companies would have already made any necessary modifications to their
Thus, using the three-year average of the expected burden during the first year and the expected ongoing burden during the next two years, we estimate that the incremental collection of information burden associated with the proposed rules would be 667 burden hours per fully affected respondent (1000 + 500 + 500)/3 years). We estimate that the proposed rules would result in an internal burden of approximately 235,618 hours (471 responses × 667 hours/response × .75) for issuers bearing the full costs and 6,703 hours (268 responses × 33.35 hours/response × .75) for issuers that are subject to similar resource extraction payment disclosure rules in other jurisdictions, amounting to a total incremental company burden of 242,321 hours (235,618 + 6,703).
Outside professional costs would be $31,415,700 (471 responses × 667 hours/response × .25 × $400) for issuers bearing the full costs and $893,780 (268 responses × 33.35 hours/response × .25 × $400) for issuers that are subject to similar resource extraction payment disclosure rules in other jurisdictions, amounting to total outside professional costs of $32,309,480 ($31,415,700 + $893,780). Barrick Gold also indicated that its initial compliance costs would include $100,000 for IT consulting, training, and travel costs. Again, we believe this to be a conservative estimate given the size of Barrick Gold compared to our estimate of the average resource extraction issuer's size. We do not, however, believe that these initial IT costs would apply to the issuers that are already subject to similar resource extraction payment disclosure rules, since those issuers should already have such IT systems in place to comply with a foreign regime. Thus, we estimate total IT compliance costs to be $47,100,000 (471 issuers × $100,000). We have added the estimated IT compliance costs to the cost estimates for other professional costs discussed above to derive total professional costs for PRA purposes of $79,409,480 ($32,309,480 + $47,100,000) for all issuers.
We request comments in order to evaluate: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information would have practical utility; (2) the accuracy of our estimate of the burden of the proposed collection of information; (3) whether there are ways to enhance the quality, utility, and clarity of the information to be collected; (4) whether there are ways to minimize the burden of the collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology; and (5) whether the proposed amendments would have any effects on any other collections of information not previously identified in this section.
Any member of the public may direct to us any comments about the accuracy of these burden estimates and any suggestions for reducing these burdens. Persons submitting comments on the collection of information requirements should direct the comments to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should send a copy to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090, with reference to File No. S7-25-15. Requests for materials submitted to OMB by the Commission with regard to these collections of information should be in writing, refer to File No. S7-25-15, and be submitted to the Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE., Washington, DC 20549-2736. OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this release. Consequently, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication.
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996,
• An annual effect on the U.S. economy of $100 million or more;
• a major increase in costs or prices for consumers or individual industries; or
• significant adverse effects on competition, investment, or innovation.
We request comment on whether our proposal would be a “major rule” for purposes of the Small Business Regulatory Enforcement Fairness Act. We solicit comment and empirical data on:
• The potential effect on the U.S. economy on an annual basis;
• any potential increase in costs or prices for consumers or individual industries; and
• any potential effect on competition, investment, or innovation.
This Initial Regulatory Flexibility Act Analysis has been prepared in accordance with 5 U.S.C. 603. It relates to proposed rule and form amendments to implement Section 13(q) of the Exchange Act, which concerns certain disclosure obligations of resource
The proposed rule and form amendments are designed to implement the requirements of Section 13(q), which was added by Section 1504 of the Dodd-Frank Act. Specifically, the proposed rule and form amendments would require a resource extraction issuer to disclose in an annual report certain information relating to any payment made by the issuer, a subsidiary of the issuer, or an entity under the issuer's control to a foreign government or the United States Federal Government for the purpose of the commercial development of oil, natural gas, or minerals. An issuer would have to include that information in an exhibit to Form SD. The exhibit would have to be formatted in XBRL.
We are proposing the rule and form amendments pursuant to Sections 3(b), 12, 13, 15, 23(a), and 36 of the Exchange Act.
The proposals would affect small entities that are required to file an annual report with the Commission under Section 13(a) or Section 15(d) of the Exchange Act, and are engaged in the commercial development of oil, natural gas, or minerals. Exchange Act Rule 0-10(a)
The proposed rule and form amendments would add to the annual disclosure requirements of companies meeting the definition of resource extraction issuer, including small entities, by requiring them to provide the payment disclosure mandated by Section 13(q) in Form SD. That information must include:
• The type and total amount of payments made for each project of the issuer relating to the commercial development of oil, natural gas, or minerals; and
• the type and total amount of those payments made to each government.
The same payment disclosure requirements would apply to U.S. and foreign resource extraction issuers.
We believe there are no federal rules that duplicate, overlap, or conflict with the proposed rules.
The Regulatory Flexibility Act directs us to consider significant alternatives that would accomplish the stated objectives, while minimizing any significant adverse impact on small entities. In connection with the proposals, we considered the following alternatives:
(1) Establishing different compliance or reporting requirements which take into account the resources available to smaller entities;
(2) Exempting smaller entities from coverage of the disclosure requirements, or any part thereof;
(3) The clarification, consolidation, or simplification of disclosure for small entities; and
(4) Use of performance standards rather than design standards.
Section 13(q) does not contemplate separate disclosure requirements for small entities that would differ from the proposed reporting requirements, or exempting them from those requirements. The statute is designed to enhance the transparency of payments by resource extraction issuers to governments and providing different disclosure requirements for small entities or exempting them from the coverage of the requirements may impede the transparency and comparability of the disclosure mandated by Section 13(q). We have requested comment as to whether we should provide an exemption or delayed compliance for smaller reporting companies.
The proposed rules would require clear disclosure about the payments made by resource extraction issuers to foreign governments and the U.S. Federal Government, which may result in increased transparency about those payments. The required electronic formatting of the exhibit would simplify the search and retrieval of payment information about resource extraction issuers, including small entities, for users of the information.
We have used design rather than performance standards in connection with the proposed amendments because the statutory language, which requires electronic tagging of specific items, contemplates specific disclosure requirements. We further believe that the proposed rules would be more useful to users of the information if there are specific disclosure requirements that promote transparent and comparable disclosure among all resource extraction issuers. Such requirements should help further the statutory goal of supporting international transparency promotion efforts.
We encourage the submission of comments with respect to any aspect of this Initial Regulatory Flexibility Analysis. In particular, we request comments regarding:
• How the proposed rule and form amendments can achieve their objective while lowering the burden on small entities;
• the number of small entity companies that may be affected by the proposed rule and form amendments;
• the existence or nature of the potential impact of the proposed rule and form amendments on small entity companies discussed in the analysis; and
• how to quantify the impact of the proposed rule and form amendments.
We are proposing the rule and form amendments contained in this document under the authority set forth in Sections 3(b), 12, 13, 15, 23(a), and 36 of the Exchange Act.
Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, we are proposing to amend Title 17, Chapter II of the Code of Federal Regulations as follows:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
(a) A resource extraction issuer must file a report on Form SD (17 CFR 249b.400) within the period specified in that Form disclosing the information required by the applicable items of Form SD as specified in that Form.
(b) Disclosure is required under this section in circumstances in which an activity related to the commercial development of oil, natural gas, or minerals, or a payment or series of payments made by a resource extraction issuer to a foreign government or the Federal Government for the purpose of commercial development of oil, natural gas, or minerals is not, in form or characterization, within one of the categories of activities or payments specified in Form SD, but is part of a plan or scheme to evade the disclosure required under this section.
(c)
15 U.S.C. 78a
Section 249b.400 is also issued under secs. 1502 and 1504, Public Law 111-203, 124 Stat. 2213 and 2220.
The addition and revision read as follows:
The text of Form SD does not, and this amendment will not, appear in the Code of Federal Regulations.
This Form shall be used for a report pursuant to Rule 13p-1 (17 CFR 240.13p-1) and Rule 13q-1 (17 CFR 240.13q-1) under the Securities Exchange Act of 1934 (the “Exchange Act”).
1. * * *
2.
3. If the deadline for filing this Form occurs on a Saturday, Sunday or holiday on which the Commission is not open for business, then the deadline shall be the next business day.
4. The information and documents filed in this report shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, unless the registrant specifically incorporates it by reference into such filing.
(a)
(1) The type and total amount of such payments made for each project of the resource extraction issuer relating to the commercial development of oil, natural gas, or minerals;
(2) The type and total amount of such payments for all projects made to each government;
(3) The total amounts of the payments, by category listed in paragraph (c)(9)(iii) of this Item;
(4) The currency used to make the payments;
(5) The financial period in which the payments were made;
(6) The business segment of the resource extraction issuer that made the payments;
(7) The governments (including any foreign government or the Federal Government) that received the payments and the country in which each such government is located;
(8) The project of the resource extraction issuer to which the payments relate;
(9) The particular resource that is the subject of commercial development; and
(10) The subnational geographic location of the project.
(b)
(c)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(i) Is made to further the commercial development of oil, natural gas, or minerals;
(ii) Is not de minimis; and
(iii) Is one or more of the following:
(A) Taxes;
(B) Royalties;
(C) Fees;
(D) Production entitlements;
(E) Bonuses;
(F) Dividends; and
(G) Payments for infrastructure improvements.
(10)
(11)
(i) Is required to file an annual report with the Commission pursuant to Section 13 or 15(d) of the Exchange Act (15 U.S.C. 78m or 78o(d)); and
(ii) Engages in the commercial development of oil, natural gas, or minerals.
(12)
(1) If a resource extraction issuer is controlled by another resource extraction issuer that has filed a Form SD disclosing the information required by Item 2.01 of this Form for the controlled entity, then such controlled entity shall not be required to file the disclosure required by this Item 2.01 separately. In such circumstances, the controlled entity must file a notice on Form SD indicating that the required disclosure was filed on Form SD by the controlling entity, identifying the controlling entity and the date it filed the disclosure. The reporting controlling entity must note that it is filing the required disclosure for a controlled entity and must identify the controlled entity on its Form SD filing.
(2) An issuer must report the amount of payments made for each payment type, and the total amount of payments made for each project and to each government, during the reporting period in either U.S. dollars or the issuer's reporting currency. If an issuer has made payments in currencies other than U.S. dollars or its reporting currency, it may choose to calculate the currency conversion between the currency in which the payment was made and U.S. dollars or the issuer's reporting currency, as applicable, in one of three ways: (a) by translating the expenses at the exchange rate existing at the time the payment is made; (b) using a weighted average of the exchange rates during the period; or (c) based on the exchange rate as of the issuer's fiscal year end. A resource extraction issuer
(3) The “geographic location of the project” as used in Item 2.01(a)(10) must be sufficiently detailed to permit a reasonable user of the information to identify the project's specific, subnational, geographic location. In identifying the location, resource extraction issuers may use subnational jurisdiction(s) (
(4) If a government levies a payment obligation, such as a tax or a requirement to pay a dividend, at the entity level rather than on a particular project, a resource extraction issuer may disclose that payment at the entity level. To the extent that payments, such as corporate income taxes and dividends, are made for obligations levied at the entity level, an issuer may omit certain tags that may be inapplicable (
(5) When a resource extraction issuer proportionately consolidates an entity or operation under U.S. GAAP or IFRS, as applicable, and must disclose payments made by such entity or operation pursuant to this Item, such payments must be disclosed on a proportionate basis and must describe the proportionate interest.
(6) Although an entity providing only services to a resource extraction issuer to assist with exploration, extraction, processing or export would generally not be considered a resource extraction issuer, where such a service provider makes a payment that falls within the definition of “payment” to a government on behalf of a resource extraction issuer, the resource extraction issuer must disclose such payment.
(7) “Processing,” as used in this Item 2.01, would include, but is not limited to, midstream activities such as the processing of gas to remove liquid hydrocarbons, the removal of impurities from natural gas prior to its transport through a pipeline, and the upgrading of bitumen and heavy oil, through the earlier of the point at which oil, gas, or gas liquids (natural or synthetic) are either sold to an unrelated third party or delivered to a main pipeline, a common carrier, or a marine terminal. It would also include the crushing and processing of raw ore prior to the smelting phase. It would not include the downstream activities of refining or smelting.
(8) A resource extraction issuer must disclose payments made for taxes on corporate profits, corporate income, and production. Disclosure of payments made for taxes levied on consumption, such as value added taxes, personal income taxes, or sales taxes, is not required.
(9) Fees include license fees, rental fees, entry fees, and other considerations for licenses or concessions. Bonuses include signature, discovery, and production bonuses.
(10) Dividends paid to a government as a common or ordinary shareholder of the issuer that are paid to the government under the same terms as other shareholders need not be disclosed. The issuer, however, must disclose any dividends paid in lieu of production entitlements or royalties.
(11) If a resource extraction issuer makes an in-kind payment of the types of payments required to be disclosed, the issuer must disclose the payment. When reporting an in-kind payment, an issuer must determine the monetary value of the in-kind payment and tag the information as “in-kind” for purposes of the currency. For purposes of the disclosure, an issuer may report the payment at cost, or if cost is not determinable, fair market value and should provide a brief description of how the monetary value was calculated.
(12) The following is a non-exclusive list of factors to consider when determining whether agreements are “operationally and geographically interconnected” for purposes of the definition of “project”: (a) whether the agreements relate to the same resource and the same or contiguous part of a field, mineral district, or other geographic area; (b) whether the agreements will be performed by shared key personnel or with shared equipment; and (c) whether they are part of the same operating budget.
List below the following exhibits filed as part of this report:
Exhibit 1.01—Conflict Minerals Report as required by Items 1.01 and 1.02 of this Form.
Exhibit 2.01—Resource Extraction Payment Report as required by Item 2.01 of this Form.
*Print name and title of the registrant's signing executive officer under his or her signature.
By the Commission.
Commodity Futures Trading Commission.
Notice of proposed rulemaking.
The Commodity Futures Trading Commission (“Commission”) is proposing enhanced requirements for a derivatives clearing organization's testing of its system safeguards, as well as additional amendments to reorder and renumber certain paragraphs within the regulations and make other minor changes to improve the clarity of the rule text.
Comments must be received by February 22, 2016.
You may submit comments, identified by RIN 3038-AE29, by any of the following methods:
•
•
•
•
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
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
Eileen A. Donovan, Deputy Director, 202-418-5096,
Section 5b(c)(2) of the Commodity Exchange Act (“CEA”)
Regulation 39.18 implements Core Principle I and, among other things, specifies: (1) The requisite elements, standards, and resources of a DCO's program of risk analysis and oversight with respect to its operations and automated systems; (2) the requirements for a DCO's business continuity and disaster recovery plan, emergency procedures, and physical, technological, and personnel resources described therein; (3) the responsibilities, obligations, and recovery time objective of a DCO following a disruption of its operations; and (4) other system safeguards requirements related to reporting, recordkeeping, testing, and coordination with a DCO's clearing members and service providers. As discussed below, the Commission is proposing clarifications and enhanced requirements for a DCO's testing of its system safeguards, as well as additional amendments to reorder and renumber certain paragraphs and make other minor changes to improve the clarity of the rule text. The Commission is also proposing corresponding technical corrections to § 39.34.
Recent studies have identified a consistent, growing cybersecurity threat to the financial sector. A survey of 46 global securities exchanges conducted by the International Organization of Securities Commissions (“IOSCO”) and the World Federation of Exchanges (“WFE”) found that as of July 2013, over half of exchanges worldwide had experienced a cyber attack during the previous year.
Concerned about these developments, in March 2015, Commission staff held a Roundtable on Cybersecurity and System Safeguards Testing (“CFTC Roundtable”) to, among other things, discuss the issue and identify critical areas of concern.
Experts have identified a number of important topics surrounding cybersecurity that financial institutions should take into consideration. First, the financial sector is facing increasing numbers of more dangerous cyber adversaries, with expanding and worsening motivations and goals.
Second, financial institutions face increasing cyber capabilities from both non-state actors and state-sponsored intruders. For example, there has been an increase in sophistication on the part of most actors in the cyber arena, both in terms of technical capability and the capacity to organize and carry out attacks.
Third, the financial sector is experiencing an increase in the duration of cyber attacks.
Fourth, financial institutions face a broadening cyber threat field. They must consider cyber vulnerabilities not only with respect to desktop computers and their own automated systems, but also with respect to mobile devices and data in the cloud.
Finally, financial institutions cannot achieve cyber resilience by addressing threats to themselves alone: They also face threats due to the increasing interconnectedness of financial services firms.
In the current environment, cybersecurity testing is crucial to efforts by exchanges, clearing organizations, swap data repositories, and other entities in the financial sector to strengthen cyber defenses; mitigate operational, reputational, and financial risk; and maintain cyber resilience and the ability to recover from cyber attacks. To maintain the effectiveness of cybersecurity controls, such entities must regularly test their system safeguards in order to find and fix vulnerabilities before an attacker exploits them.
An entity's testing should be informed by how its controls and countermeasures stack up against the techniques, tactics, and procedures used by its potential attackers.
Cybersecurity testing is a well-established best practice generally and for financial sector entities. The Federal Information Security Management Act (“FISMA”), which is a source of cybersecurity best practices and also establishes legal requirements for federal government agencies, calls for “periodic testing and evaluation of the effectiveness of information security policies, procedures, and practices, to be performed with a frequency depending on risk, but no less than annually. . . .”
The Federal Financial Institutions Examination Council (“FFIEC”),
Financial institutions should have a testing plan that identifies control objectives; schedules tests of the controls used to meet those objectives; ensures prompt corrective action where deficiencies are identified; and provides independent assurance for compliance with security policies. Security tests are necessary to identify control deficiencies. An effective testing plan identifies the key controls, then tests those controls at a frequency based on the risk that the control is not functioning. Security testing should include independent tests conducted by personnel without direct responsibility for security administration. Adverse test results indicate a control is not functioning and cannot be relied upon. Follow-up can include correction of the specific control, as well as a search for, and correction of, a root cause. Types of tests include audits, security assessments, vulnerability scans, and penetration tests.
Some experts further note that cybersecurity testing may become a requirement for obtaining cyber insurance. Under such an approach, insurance coverage might be conditioned on cybersecurity testing and assessment, followed by implementation of appropriate prevention and detection procedures.
Cybersecurity testing is also supported internationally. IOSCO has emphasized the importance of testing to ensure effective controls, in light of risks posed by the complexity of markets caused by technological advances.
As discussed above, § 39.18 requires a DCO to establish and maintain a program of risk analysis and oversight with respect to its operations and automated systems. As part of this program, a DCO is required to conduct regular, periodic, and objective testing and review of its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity. DCOs are specifically required, under § 39.18(d), to follow “generally accepted standards and industry best practices with respect to the development, operation, reliability, security, and capacity of automated systems” in addressing the categories of risk analysis and oversight specified in § 39.18. As discussed in the Commission's proposing release for § 39.18, “DCO compliance with generally accepted standards and best practices with respect to the development, operation, reliability, security, and capacity of automated systems can reduce the frequency and severity of automated system security breaches or functional failures, thereby augmenting efforts to mitigate systemic risk.”
Specifically, the Commission is proposing to strengthen the current system safeguards regulatory framework by specifying five fundamental types of systems testing and assessment that are required under § 39.18. The Commission is proposing to require that these types of testing and assessment be conducted at a frequency determined by an appropriate risk analysis, but no less frequently than a proposed minimum, which varies based on the particular type of testing or assessment. To strengthen the objectivity and reliability of the testing, assessment, and information available to the Commission in this regard, the Commission is proposing to require that independent contractors perform a significant portion of the testing and assessment. In developing these requirements, the Commission has relied on various industry standards and best practices for assessment of information security systems, which are referenced in the following discussion. The Commission has not proposed a definition of the term “independent contractor.” Proposed definitions of terms related to the proposed testing requirements are discussed in the respective section setting forth each proposed testing requirement.
Identification of cyber and automated system vulnerabilities is a critical component of a DCO's ongoing assessment of risks to its systems. NIST standards call for organizations to scan for automated system vulnerabilities both on a regular and ongoing basis, and when new vulnerabilities potentially affecting their systems are identified and reported.
The proposed minimum standards and frequencies for vulnerability testing are intended to strengthen a DCO's systems oversight program. Accordingly, in § 39.18(a) the Commission is proposing to define “vulnerability testing” as the testing of a DCO's automated systems to determine what information may be discoverable through a reconnaissance analysis of those systems and what vulnerabilities may be present on those systems. This definition is consistent with NIST standards for such testing.
Proposed § 39.18(e)(2) would also require that vulnerability testing include automated vulnerability scanning, as well as an analysis of the test results to identify and prioritize all identified vulnerabilities that require remediation.
Furthermore, the Commission is proposing to require DCOs to conduct vulnerability testing at a frequency determined by an appropriate risk analysis, but no less frequently than quarterly.
In addition, the proposed rule would require DCOs to engage independent contractors to conduct two of the required quarterly vulnerability tests each year, while permitting DCOs to conduct other vulnerability testing using employees who are not responsible for development or operation of the systems or capabilities being tested. The Commission believes that important benefits are provided when a testing program includes both testing by independent contractors and testing by entity employees not responsible for building or operating the system being tested. While testing needs to be performed internally, it also needs to be conducted from the viewpoint of an outsider, particularly where testing against the possible tactics or techniques of a particular threat actor is concerned.
The Commission also notes that best practices support having testing conducted by both independent contractors and entity employees. Regarding the benefits provided by independent contractor testing, NIST notes that engaging third parties (
Accordingly, following consideration of the recommendations set forth in the standards mentioned above, the Commission believes that requiring two of the four tests to be conducted by independent contractors is a balanced approach. Other vulnerability tests may be performed by employees of the DCO who are not responsible for development or operation of the systems or capabilities being tested. In light of the best practices and the current level of cyber threat to the financial sector discussed above, the Commission believes that the proposed rule provisions regarding vulnerability testing by independent contractors are
Though complementary to vulnerability testing, penetration testing differs from vulnerability testing in that its purpose is to identify ways that the vulnerabilities identified above could be exploited.
NIST defines penetration testing as “[a] test methodology in which assessors, typically working under specific constraints, attempt to circumvent or defeat the security features of an information system.”
In addition, generally accepted standards and industry best practices support annual penetration testing. For example, NIST calls for at least annual penetration testing of an organization's network and systems.
The primary benefit of a penetration test is that it identifies the extent to which a system can be compromised before the attack is identified and assesses the effectiveness of the response mechanism.
As discussed above, the Commission notes that generally accepted standards and industry best practices require annual penetration testing. Moreover, DCOs currently are required to follow generally accepted standards and industry best practices, which support a minimum frequency of annually for internal penetration testing, and as discussed in more detail in the Cost-Benefit Analysis in Section IV.C. below, DCOs are conducting penetration testing on at least an annual basis. However, the Commission acknowledges that Securities and Exchange Commission (“SEC”) Regulation SCI, which is applicable to DCOs that are registered with the SEC as clearing agencies,
In addition, and consistent with generally accepted standards and industry best practices, proposed § 39.18(e)(3) would require DCOs to engage independent contractors to perform the required annual external penetration tests. Independent testing provides for impartiality, meaning that penetration testers are free from conflicts of interest with respect to the development, operation, or management of the system(s) that are the targets of the testing.
Controls provide reasonable assurance that security management is effective, and adequate control testing is therefore critical to ensuring the confidentiality, integrity, and availability of information and information systems.
Generally accepted standards and industry best practices call for organizations to conduct regular, ongoing controls testing that over time includes testing of all their system safeguards-related controls. For example, NIST calls for organizations to assess “the security controls in the information system and its environment of operation to determine the extent to which the controls are implemented correctly, operating as intended, and producing the desired outcome with respect to meeting established security requirements.”
Consistent with industry best practices, the Commission proposes to define “controls testing” in § 39.18(a) as an assessment of a DCO's controls to determine whether such controls are implemented correctly, are operating as intended, and are enabling the DCO to meet the system safeguards requirements set forth in § 39.18.
In addition, the Commission is proposing to require controls testing in § 39.18(e)(5), which would include testing of each control included in the DCO's risk analysis and oversight program, to be conducted at a frequency indicated by an appropriate risk analysis, but no less frequently than every two years. The Commission believes that this would ensure that each such control is tested with sufficient frequency to confirm the continuing adequacy of the DCO's system safeguards. The Commission recognizes, however, that appropriate risk analysis may well determine that more frequent testing of either certain key controls or all controls is necessary. The Commission notes that industry best practices support information security continuous monitoring (“ISCM”), which is defined as “maintaining ongoing awareness of information security, vulnerabilities, and threats to support organizational risk management decisions.”
The Commission also proposes to permit such testing to be conducted on a rolling basis over the course of the period determined by appropriate risk analysis in recognition of the fact that an adequate system safeguards program for a DCO must necessarily include large numbers of controls, and therefore it could be impracticable and unduly burdensome to require testing of all controls in a single test. This provision is designed to give a DCO flexibility concerning how and when to test controls during the applicable minimum period, and is intended to reduce burdens associated with testing every control to the extent possible while still safeguarding and managing the DCO's security.
The proposed rule would also require testing of key controls to be conducted by independent contractors. As noted above, the Commission believes that the impartiality and credibility provided by independent testing supports the proposed requirement that testing of key controls be done by independent contractors. However, the Commission is proposing to give DCOs the discretion to test other controls using either independent contractors or employees of the DCO who are independent of the systems being tested.
The Commission recognizes that adequate cyber resilience requires organizations to have sufficient capacity to detect, contain, eliminate, and recover from a cyber intrusion, and believes that security incident response plans,
NIST urges organizations to have a security incident response plan that “establishes procedures to address cyber attacks against an organization's information systems. These procedures are designed to enable security personnel to identify, mitigate, and recover from malicious computer incidents, such as unauthorized access to a system or data, denial of service, or unauthorized changes to system hardware, software, or data (
a. Provide the organization with a roadmap for implementing its incident response capability;
b. Describe the structure and organization of the incident response capability;
c. Provide a high-level approach for how the incident response capability fits into the overall organization;
d. Meet the unique requirements of the organization, which relate to mission, size, structure, and functions;
e. Define reportable incidents;
f. Provide metrics for measuring the incident response capability within the organization;
g. Define the resources and management support needed to effectively maintain and mature an incident response capability; and
h. Be reviewed and approved by [appropriate organization-defined personnel or roles].
In addition, NIST states that organizations should test their security incident response capabilities, at appropriate frequencies, to determine their effectiveness, and to document test results.
FINRA's best practices also call for firms to have security incident response plans. FINRA's 2015 Report on Cybersecurity Practices states: “Firms should establish policies and procedures, as well as roles and responsibilities for escalating and responding to cybersecurity incidents. Effective practices for incident response include . . . involvement in industry-wide and firm-specific simulation exercises as appropriate to the role and scale of a firm's business.”
The Commission believes that industry best practices require the development, implementation, and testing of a security incident response plan.
The proposed rule would define a “security incident” as a cybersecurity or physical security event that actually or potentially jeopardizes automated system operation, reliability, security, or capacity, or the availability, confidentiality, or integrity of data.
The Commission proposes to define “security incident response plan testing” in § 39.18(a) as the testing of a DCO's security incident response plan to determine the plan's effectiveness, identify potential weaknesses or deficiencies, enable regular plan updating and improvement, and maintain organizational preparedness and resiliency with respect to security incidents. Methods of conducting security incident response plan testing may include, but would not be limited to, checklist completion, walk-through or table-top exercises, simulations, and comprehensive exercises.
ETRA is an important part of a DCO's risk assessment program because it helps the DCO produce a broad determination of its system safeguards-related risks.
The Commission notes that with respect to ETRA, best practices provide a number of sources for such risk assessment frameworks,
The Commission proposes to define “ETRA” in § 39.18(a) as a written assessment that includes, but is not limited to, an analysis of threats and vulnerabilities in the context of mitigating controls. An ETRA identifies, estimates, and prioritizes risks to a DCO's operations or assets (which include, for example, mission, functions, image, and reputation risks), or to market participants, individuals, and other entities, resulting from impairment of the confidentiality, integrity, or availability of data and information or the reliability, security, or capacity of automated systems.
The Commission believes that the scope of a DCO's testing should be based on a proper risk analysis that takes into account the DCO's particular automated systems and networks and vulnerabilities, including any recent changes to them, as well as the nature of the DCO's possible adversaries and their capabilities as revealed by current cybersecurity threat analysis.
Accordingly, the Commission is proposing that the scope of all testing and assessment required by its system safeguards regulations for DCOs should be broad enough to include all testing of automated systems and controls necessary to identify any vulnerability which, if exploited or accidentally triggered, could enable an intruder or unauthorized user or insider to: Interfere with the DCO's operations or with fulfillment of its statutory and regulatory responsibilities; impair or degrade the reliability, security, or capacity of the DCO's automated systems; add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the DCO's regulated activities; or undertake any other unauthorized action affecting the DCO's regulated activities or the hardware or software used in connection with those activities. The Commission believes that this proposed scope is broad enough to address all significant threats to the DCO, while still providing sufficient guidance regarding the elements of the DCO's program.
Under current § 39.18(j)(3)
Accordingly, proposed § 39.18(e)(10) would also require DCOs to establish and follow appropriate procedures for the remediation of issues identified through such review, and for evaluation of the effectiveness of testing and assessment protocols. The proposed rule would also add a provision requiring a DCO to analyze the results of the testing and assessment required by the applicable system safeguards rules, in order to identify all vulnerabilities and deficiencies in its systems, and to remediate those vulnerabilities and deficiencies to the extent necessary to enable the DCO to fulfill the requirements of part 39 and meet its statutory and regulatory obligations. The proposed rule would require such remediation to be timely in light of appropriate risk analysis with respect to the risks presented.
In addition to the changes discussed above, the Commission is proposing to reorder and renumber certain paragraphs in § 39.18 to make certain technical corrections to improve the clarity of the rule text.
The Commission is proposing to amend the introductory text of § 39.18(a) to make clear that the definitions therein are also applicable to § 39.34, which sets forth additional system safeguards requirements for SIDCOs and Subpart C DCOs.
The Commission also is proposing to revise the definitions of “relevant area” and “recovery time objective” to make the language consistent with that used elsewhere in § 39.18.
Finally, the Commission is proposing to change references to “the clearing and settlement of existing and new products” to “the processing, clearing, and settlement of transactions” and a single reference to “an entity” to “a [DCO].”
Regulation 39.18(b) requires a DCO to have a program of risk analysis and oversight with respect to its operation and systems that addresses the following elements, set forth in § 39.18(c): (1) Information security; (2) business continuity and disaster recovery planning and resources; (3) capacity and performance planning; (4) systems operations; (5) systems development and quality assurance; and (6) physical security and environmental controls. Specific requirements concerning business continuity and disaster recovery are addressed in § 39.18(e), but the regulation does not provide any further guidance on the other five elements. Therefore, the Commission is proposing to amend § 39.18(c) (renumbered as § 39.18(b)(2))
Regulation 39.18(e)(1) requires that a DCO maintain a business continuity and disaster recovery plan, emergency procedures, and physical, technological, and personnel resources sufficient to enable the timely recovery and resumption of operations and the fulfillment of each obligation and responsibility of the DCO following any disruption of its operations. Regulation 39.18(e)(2) explains that the “responsibilities and obligations” described in § 39.18(e)(1) include the daily processing, clearing, and settlement of transactions. Because these provisions are so closely linked, the Commission is proposing to combine them into a new § 39.18(c)(1).
Regulation 39.18(f) allows a DCO to satisfy the resource requirement in § 39.18(e)(1) (renumbered as § 39.18(c)(1)) using its own employees and property or through written contractual arrangements with another DCO or other service provider (
In addition, the Commission is proposing to amend § 39.18(f)(2)(i) (renumbered as § 39.18(d)(2)), which states that, if a DCO chooses to use outsourced resources, the DCO retains liability for any failure to meet the responsibilities specified in § 39.18(e)(1) (renumbered as § 39.18(c)(1)), “although it is free to seek indemnification from the service provider.” Regulation 39.18 contains no restrictions that would prevent a DCO from seeking indemnification from its service provider; therefore, the Commission is proposing to delete this unnecessary language.
Under current § 39.18(i), a DCO is required to maintain, and provide to Commission staff upon request, current
Under current § 39.18(g)(1), a DCO is required to promptly notify Commission staff of any cybersecurity incident that materially impairs, or creates a significant likelihood of material impairment of, automated system operation, reliability, security, or capacity. The Commission is proposing a conforming amendment to § 39.18(g)(1), to replace the term “cybersecurity incident” with “security incident,” as the proposed definition of “security incident” would include a cybersecurity incident.
The Commission is proposing to amend § 39.34 to update several cross-references to various provisions of § 39.18.
The Commission requests comment on all aspects of the proposed amendments to §§ 39.18 and 39.34. With respect to testing, the Commission is particularly interested in the following:
Are the testing requirements being proposed in § 39.18 consistent with the DCO core principles set forth in the CEA, particularly the goals of Core Principle I? If so, in what ways? If not, why not?
Are the proposed testing frequencies sufficient to safeguard DCOs against cyber attacks? In particular, should the proposed control testing be done more frequently, or less frequently? In each case, please provide any data you may have that supports an alternate frequency for such testing.
Should the Commission define the term “independent contractor”? If so, how should such term be defined? If not, why not?
What alternatives, if any, would be more effective in reducing systemic risk, mitigating the growing cybersecurity threats faced by DCOs, and achieving compliance with the DCO core principles set forth in the CEA?
The Commission requests that commenters include a detailed description of any such alternatives and estimates of the costs and benefits of such alternatives. Can the proposed changes to § 39.18 be effectively implemented and complied with? If not, what changes could be made to increase the likelihood of effective implementation and compliance?
The Regulatory Flexibility Act (“RFA”) requires that agencies consider whether the regulations they propose will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis respecting the impact.
The Paperwork Reduction Act of 1995 (“PRA”)
The proposed rulemaking contains provisions that would qualify as collections of information, for which the Commission has already sought and obtained a control number from the Office of Management and Budget (“OMB”). The title for this collection of information is “Risk Management Requirements for Derivatives Clearing Organizations” (OMB Control Number 3038-0076). If adopted, responses to this collection of information would be mandatory. As discussed below, the Commission believes the proposal will not impose any new recordkeeping or reporting requirements that are not already accounted for in collection 3038-0076.
The Commission will protect proprietary information according to the Freedom of Information Act (“FOIA”) and 17 CFR part 145, “Commission Records and Information.” In addition, section 8(a)(1) of the CEA strictly prohibits the Commission, unless specifically authorized by the Act, from making public “data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.” The Commission is also required to protect certain information contained in a government system of records according to the Privacy Act of 1974.
The Commission notes that DCOs are already subject to system safeguard-related recordkeeping and reporting requirements. As discussed above in section II, the Commission is proposing to amend and renumber current § 39.18(i) as § 39.18(f), to clarify the system safeguard recordkeeping and reporting requirements for DCOs. The proposed regulation would require DCOs, in accordance with § 1.31,
The Commission invites comment on any aspect of the proposed information collection requirements discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission will consider public comments on such proposed requirements in: (1) Evaluating 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; (2) evaluating 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; (3) enhancing the quality, utility, and clarity of the information proposed to be collected; and (4) minimizing the burden of collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological information collection techniques.
Copies of the submission from the Commission to OMB are available from the CFTC Clearance Officer, 1155 21st Street NW., Washington, DC 20581, (202) 418-5160 or from
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.
As an initial matter, the Commission considers the incremental costs and benefits of these regulations, that is the costs and benefits that are above the current system safeguard practices and requirements under the CEA and the Commission's regulations for DCOs. Where reasonably feasible, the Commission has endeavored to estimate quantifiable costs and benefits. Where quantification is not feasible, the Commission identifies and describes costs and benefits qualitatively.
The Commission requests comment on the costs and benefits associated with the proposed regulations. As discussed below, the Commission has identified certain costs and benefits associated with the proposed regulations and requests comment on all aspects of its proposed consideration of costs and benefits, including identification and assessment of any costs and benefits not discussed herein. In addition, the Commission requests that commenters provide data and any other information or statistics that the commenters relied on to reach any conclusions regarding the Commission's proposed consideration of costs and benefits, including the series of questions in section 3(f).
As discussed above, the Commission believes that the current cyber threats to the financial sector have expanded dramatically over recent years.
The Commission recognizes that any economic effects, including costs and benefits, should be compared to a baseline that accounts for current regulatory requirements. The baseline for this cost and benefit consideration is the set of requirements under the CEA and the Commission's regulations for DCOs. Currently, § 39.18(j)(1)(i) requires a DCO to conduct regular, periodic, and objective testing and review of its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity.
The Commission notes, however, that in certain instances the cost estimates provided by the DCOs included estimates at the parent company level of the DCO. Where parent level estimates were provided, the DCOs explained that they generally share the same automated systems and system safeguard programs with other entities within the corporate structure and were therefore unable to apportion the actual costs to particular entities. The Commission further notes that some of the DCOs that supplied cost information are also registered with the Commission in other capacities (as DCMs and/or swap data repositories). These DCOs provided cost estimates that cover all of their Commission-regulated functions because they generally share the same automated systems and system safeguard programs. Therefore, the Commission has attempted to account for these distinctions, where appropriate.
The Commission believes that certain entities that would be subject to the proposal already comply with most of the testing requirements while others may need some modest enhancements to their system safeguard program to achieve compliance. In this same regard, the Commission notes that some DCOs are larger or more complex than others, and the proposed requirements may impact DCOs differently depending on their size and the complexity of their systems. Thus, the Commission expects that the costs and benefits may vary somewhat among DCOs. The Commission also believes that to the extent the new requirements impose additional costs, the primary costs will be in the form of more frequent testing, including some testing that would have to be carried out by independent contractors on behalf of the DCO. As a result, the proposed rules may increase operational costs for DCOs by requiring additional resources. The Commission is sensitive to the economic effects of the proposed regulations, including costs and benefits. Accordingly, the Commission seeks comment on the costs and benefits of the proposed regulations, including where possible, quantitative data.
While certain costs are amenable to quantification, other costs are not easily estimated, such as the costs to the public or market participants in the event of a cybersecurity incident at a DCO. The Commission's proposed regulations are intended to further mitigate the frequency and severity of system security breaches or functional failures, and therefore, serve an important, if unquantifiable, public benefit. Although the benefits of effective regulation are difficult to value in dollar terms, the Commission believes that they are no less important to consider given the Commission's mission to protect market participants and the public and to promote market integrity.
The discussion of costs and benefits that follows begins with a summary of the current testing requirements and sources for industry best practices as well as a summary of each proposed regulation and a consideration of the corresponding costs and benefits. At the conclusion of this discussion, the Commission considers the costs and benefits of the proposed regulations collectively in light of the five factors set forth in section 15(a) of the CEA.
As discussed above in section II, proposed § 39.18(a) would add to the existing list of definitions, definitions for the following terms: (1) Controls; (2) controls testing; (3) enterprise technology risk assessment; (4) external penetration testing; (5) internal penetration testing; (6) key controls; (7) security incident; (8) security incident response plan; (9) security incident response plan testing; and (10) vulnerability testing.
The proposed definitions simply provide context to the specific system safeguard tests and assessments that a DCO would be required to conduct on an ongoing basis. Accordingly, the costs and benefits of these terms are attributable to the substantive testing requirements and, therefore, are discussed in the cost and benefit considerations related to the rules describing the requirements for each test.
As discussed above in section II(A)(1), proposed § 39.18(a) defines “vulnerability testing” as testing of a DCO's automated systems to determine what information may be discoverable through a reconnaissance analysis of those systems and what vulnerabilities may be present on those systems. Regulation 39.18(e)(2) requires such testing to be of a scope sufficient to satisfy the testing scope requirements of proposed § 39.18(e)(8). Regulation 39.18(e)(2)(i) requires a DCO to conduct vulnerability testing at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than quarterly. Among the four vulnerability tests conducted annually, the proposed regulations would require a DCO to engage independent contractors to perform two of the required quarterly tests each year for the DCO, although other vulnerability testing may be conducted by employees of the DCO who are not responsible for development or operation of the systems or capabilities being tested. The vulnerability test would also require automated vulnerability scanning, which may be authenticated or unauthenticated.
The Commission believes that the scope requirement of proposed § 39.18(e)(2) will not impose new costs on DCOs. Comprehensive vulnerability testing is an industry best practice,
Proposed § 39.18(e)(2)(ii) would require a DCO to conduct vulnerability tests that include automated vulnerability scanning on an
Under proposed § 39.18(e)(2)(iii), for at least two of the required quarterly vulnerability tests each year, vulnerability testing must be conducted by an independent contractor. However, the remaining two vulnerability tests may be conducted by a DCO's employees so long as those employees are not responsible for development or operation of the systems or capabilities being tested.
Vulnerability testing identifies, ranks, and reports vulnerabilities that, if exploited, may result in an intentional or unintentional compromise of a system.
The Commission acknowledges, as described above, that some DCOs may incur additional costs as a result of the new requirement in proposed § 39.18(e)(2)(iii) that independent contractors complete the vulnerability testing. Nevertheless, the Commission believes that the use of independent contractions for vulnerability testing—a practice that many DCOs report already doing—will strengthen this important system safeguard, significantly benefitting the DCO, financial markets, and the public by mitigating systemic risk.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(2), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
As discussed above in section II(A)(2), proposed § 39.18(a) defines “external penetration testing” as “attempts to penetrate a [DCO's] automated systems from outside the systems' boundaries to identify and exploit vulnerabilities,” and proposed § 39.18(e)(3) requires such testing to be of a scope sufficient to satisfy the testing scope requirements of proposed § 39.18(e)(8). Proposed § 39.18(e)(3)(i) would require a DCO to conduct external penetration testing at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually. The proposed rule also provides that independent contractors must perform the required annual external penetration test on behalf of the DCO. However, other external penetration testing may be performed by appropriately qualified DCO employees not responsible for development or operation of the systems or capabilities being tested.
The Commission believes that the scope requirement of proposed § 39.18(e)(3) will not impose new costs on DCOs. Comprehensive external penetration testing is an industry best practice
In addition, the Commission believes that the frequency requirement of proposed § 39.18(e)(3)(i) will not impose new costs on DCOs. The Commission notes that industry best practices specifically state that external penetration testing should be conducted “at least annually.”
The Commission believes that the requirement of proposed § 39.18(e)(3)(ii) to use an independent contractor will not impose new costs on DCOs. Current § 39.18(j)(2) requires external penetration testing to be conducted by a qualified, independent professional, who can be employed by the DCO so long as he or she is not responsible for development or operation of the systems or capabilities being tested. However, as discussed above,
The Commission requests comment on the potential costs of proposed § 39.18(e)(3) on DCOs, including, where possible, quantitative data.
External penetration testing benefits DCOs by identifying the extent to which its systems can be compromised before an attack is identified.
As stated above, industry best practices require DCOs to engage independent contractors to conduct annual external penetration testing. Further, to the extent there is a lack of clarity regarding the applicability of certain industry best practices in light of the language in current § 39.18(j)(2), proposed § 39.18(e)(3)(ii) would provide additional clarity. Moreover, the Commission believes that testing by an independent contractor has particular value with respect to external penetration testing because the test comes from the viewpoint of an outsider, which may differ from the views of current tactics, techniques, and threat vectors of current threat actors held by DCO employees. The Commission believes that external penetration testing helps DCOs, which constitute critical infrastructures important to the national economy, to be adequately protected against the level of cybersecurity threat now affecting the financial sector.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(3), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
As discussed above in section II(A)(2), proposed § 39.18(a) defines “internal penetration testing” as “attempts to penetrate a [DCO's] automated systems from inside the systems' boundaries to identify and exploit vulnerabilities.” Proposed § 39.18(e)(4) requires such testing to be of a scope sufficient to satisfy the testing scope requirements of proposed § 39.18(e)(8). Proposed § 39.18(e)(4)(i) requires a DCO to conduct internal penetration testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually. The test may be conducted by independent contractors, or by appropriately qualified DCO employees not responsible for development or operation of the systems or capabilities being tested.
The Commission believes that the scope requirement of proposed § 39.18(e)(4) will not impose new costs on DCOs. Comprehensive internal penetration testing is an industry best practice,
Proposed § 39.18(e)(4)(i) would require a DCO to conduct internal penetration testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually. As discussed above, industry best practices require annual internal penetration testing, as well as after any significant infrastructure or application upgrade or modification.”
The Commission also believes that proposed § 39.18(e)(4)(ii) will not impose new costs on DCOs. Proposed § 39.18(e)(4)(ii) requires DCOs to conduct internal penetration testing by engaging independent contractors, or by using employees of the DCO who are not responsible for development or operation of the systems or capabilities being tested. Regulation 39.18(j)(2) currently requires testing to be conducted by a qualified, independent professional, who can be employed by the DCO so long as he or she is not responsible for development or operation of the systems or capabilities being tested. Accordingly, proposed § 39.18(e)(4)(ii) would not change current regulatory requirements.
The Commission requests comment on the potential costs of proposed § 39.18(e)(4) on DCOs, including, where possible, quantitative data.
By attempting to penetrate a DCO's automated systems from inside the systems' boundaries, internal penetration tests allow DCOs to assess system vulnerabilities from attackers that penetrate the DCO's perimeter defenses and from trusted insiders, such as former employees and contractors. In addition to being an industry best practice, the Commission believes that an annual internal penetration testing is important because such potential attacks by trusted insiders generally pose a unique and substantial threat due to their more sophisticated understanding of a DCO's systems. Moreover, “[a]n advanced persistent attack may involve an outsider gaining a progressively greater foothold in a firm's environment, effectively becoming an insider in the process. For this reason, it is important to perform penetration testing against both external and internal interfaces and systems.”
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(4), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
As discussed above in section II(A)(3), proposed § 39.18(a) defines “controls testing” as an assessment of the DCO's controls to determine whether such controls are implemented correctly, are operating as intended, and are enabling the DCO to meet the requirements of proposed § 39.18, and proposed § 39.18(e)(5) requires such testing to be of a scope sufficient to satisfy the testing scope requirements of proposed § 39.18(e)(8). Proposed § 39.18(e)(5)(i) would require a DCO to conduct controls testing, which includes testing of each control included in its program of risk analysis and oversight, at a frequency determined by an appropriate risk analysis, but no less frequently than every two years.
Pursuant to proposed § 39.18(e)(5)(ii), a DCO would be required to engage independent contractors to test and assess its “key controls,” which are defined in proposed § 39.18(a) as “controls that an appropriate risk analysis determines are either critically important for effective system safeguards or intended to address risks that evolve or change more frequently and therefore require more frequent review to ensure their continuing effectiveness in addressing such risks.” DCOs may conduct any other non-key controls testing by using independent contractors or employees of the DCO who are not responsible for development or operation of the systems or capabilities being tested.
The Commission does not believe that the scope requirement of proposed § 39.18(e)(5) will impose new costs on DCOs. Comprehensive controls testing is an industry best practice.
Proposed § 39.18(e)(5)(i) would require control testing to be conducted at a frequency determined by an appropriate risk analysis, but no less frequently than every two years. The Commission recognizes, however, that appropriate risk analysis may well determine that more frequent testing of either certain key controls or all controls is necessary. For example, the Commission notes that the February 2015 DCR Survey indicated that most DCOs conduct controls testing at least annually.
Proposed § 39.18(e)(5)(ii) would require DCOs to engage independent contractors to test and assess its key controls. Regulation 39.18(j)(2) currently requires testing to be conducted by a qualified, independent professional, who can be employed by the DCO so long as he or she is not responsible for development or operation of the systems or capabilities being tested. The Commission notes that at least 11 of the 13 DCOs responding to the February 2015 DCR Survey already employ independent contractors to conduct key controls testing.
The Commission does not have quantification or estimation of the costs associated with proposed § 39.18(e)(5)(i) or proposed § 39.18(e)(5)(ii). Nonetheless, in qualitative terms, the Commission recognizes that, compared to the status quo, this proposed requirement may impose some costs on DCOs equal to the difference between conducting controls testing every two years in-house and hiring an independent contractor to do so. In addition, with respect to the frequency requirement in the proposed rule, a DCO would be required to test each control included in its program of system safeguards-related risk analysis oversight, at a frequency determined by appropriate risk analysis, but no less frequently than every two years. The Commission further recognizes that actual costs may vary as a result of numerous factors, including the size of the DCO and the complexity of the automated systems. Moreover, these proposed regulations may require DCOs to establish and implement internal policies and procedures that are reasonably designed to address the workflow associated with the controls test, which may include the communication and cooperation between the DCO and independent contractor, communication and cooperation between the DCO's legal, business, technology, and compliance departments, appropriate authorization to remediate vulnerabilities identified by the independent contractor, implementation of the measures to address such vulnerabilities, and verification that these measures are effective and appropriate.
The Commission requests comment on the potential costs of proposed § 39.18(e)(5) on DCOs, including, where possible, quantitative data.
Controls testing is essential in determining risk to an organization's operations and assets, to individuals, and to other organizations, and to the Nation resulting from the use of the organization's systems.
In addition, the Commission acknowledges that, as described above, some DCOs may incur some additional costs as a result of the need to conduct testing by an independent contractor. However, the Commission believes that testing by an independent contractor has particular value because the test comes from the viewpoint of an outsider, which may differ from the views of current tactics, techniques, and threat vectors of current threat actors held by DCO employees. The Commission also acknowledges that, as described above, some DCOs may incur some additional costs as a result of the need to accelerate the testing of some controls in order to comply with the two-year cycle requirement. Nevertheless, the Commission believes that it is essential for each control to be tested within the two-year cycle requirement in order to confirm the continuing adequacy of the DCO's system safeguards and maintain market stability. Additionally, the Commission notes that the proposed rule would permit such testing to be conducted on a rolling basis over the course of a two year period or period determined by appropriate risk analysis. The rolling basis provision in the proposed rule is designed to give a DCO flexibility concerning when controls are tested during the required minimum frequency period. This flexibility is intended to reduce burdens associated with testing every control while still ensuring the needed minimum testing frequency. The Commission also notes that testing on a rolling basis is consistent with best practices.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(5), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
As discussed above in section II(A)(4), proposed § 39.18(a) defines security incident response plan testing as testing of a DCO's security incident response plan to determine the plan's effectiveness, identifying its potential weaknesses or deficiencies, enabling regular plan updating and improvement, and maintaining organizational preparedness and resiliency with respect to security incidents. Methods of conducting security incident response plan testing would include, but not be limited to, checklist completion, walk-through or table-top exercises, simulations, and comprehensive exercises.
Proposed § 39.18(e)(6)(i) would require DCOs to conduct such testing at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually. Proposed § 39.18(e)(6)(ii) would require the DCO's security incident response plan to include, without limitation, the entity's definition and classification of security incidents, its policies and procedures for reporting security incidents and for internal and external communication and information sharing regarding security incidents, and the hand-off and escalation points in its security incident response process. Under proposed § 39.18(e)(6)(iii), the DCO may coordinate its security incident response plan testing with other testing required by this section or with testing of its other business continuity-disaster recovery and crisis management plans. Moreover, proposed § 39.18(e)(6)(iv) would permit the DCO to conduct security incident response plan testing by engaging independent contractors or by using its own employees.
The Commission believes that proposed § 39.18(e)(6)(i) will not impose new costs on DCOs. Security incident response plan testing is an industry best practice and therefore is required to be conducted under current Commission regulations.
The Commission requests comment on the potential costs of proposed § 39.18(e)(6) on DCOs, including, where possible, quantitative data.
Security incident response plans, and adequate testing of such plans, reduce the damage caused by breaches of a DCO's network security. Network security breaches are highly likely to have a substantial negative impact on a DCO's operations. They can increase costs through lost productivity, lost current and future market participation or swap data reporting, compliance penalties, and damage to the DCO's reputation and brand. Moreover, the longer a cyber intrusion continues, the more its impact may be compounded.
As noted above, and consistent with industry best practices, the Commission believes that annual security incident response testing increases the ability of a DCO to mitigate the duration and impact in the event of a security incident.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(6), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
Proposed § 39.18(a) defines an “enterprise technology risk assessment” as a written assessment that includes, but is not limited to, an analysis of threats and vulnerabilities in the context of mitigating controls. Proposed § 39.18(a) also provides that an enterprise technology risk assessment identifies, estimates, and prioritizes risks to a DCO's operations or assets, or to market participants, individuals, or other entities, resulting from impairment of the confidentiality, integrity, or availability of data and information or the reliability, security, or capacity of automated systems. Proposed § 39.18(e)(7) requires such assessment to be of a scope sufficient to satisfy the requirements of proposed § 39.18(e)(8). Proposed § 39.18(e)(7)(i) requires DCOs to conduct an enterprise technology risk assessment at a frequency determined by an appropriate risk analysis, but no less frequently than annually. Proposed § 39.18(e)(7)(ii) provides that DCOs may use independent contractors or employees of the DCO not responsible for development or operation of the systems or capabilities being assessed to conduct an enterprise technology risk assessment.
The Commission does not believe that the scope requirement of proposed § 39.18(e)(7) will impose new costs on DCOs. Comprehensive enterprise technology risk assessments are an industry best practice.
Proposed § 39.18(e)(7)(i) would require a DCO to conduct an enterprise technology risk assessment at a frequency determined by an appropriate risk analysis, but no less frequently than annually. As discussed above,
Proposed § 39.18(e)(7)(ii) requires DCOs to conduct enterprise technology risk assessments by using independent contractors or employees of the DCO not responsible for development or operation of the systems or capabilities being assessed. Regulation 39.18(j)(2) currently requires testing to be conducted by a qualified, independent professional, who can be employed by the DCO so long as he or she is not responsible for development or operation of the systems or capabilities being tested. Accordingly, the Commission does not believe that DCOs will incur additional costs as a result of the adoption of proposed § 39.18(e)(7)(ii).
The Commission believes that enterprise technology risk assessments are essential components of a comprehensive system safeguard program. Enterprise technology risk assessments can be viewed as a strategic approach through which a DCO identifies risks and aligns its systems goals accordingly. The Commission believes that these requirements are necessary to support a strong risk management framework for DCOs, thereby helping to protect DCOs, their members, and other market participants, and helping to mitigate the risk of market disruptions.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(7), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
As discussed above in section II(B), proposed § 39.18(e)(8) provides that the scope for all system safeguards testing and assessment required by proposed § 39.18 must be broad enough to include all testing of automated systems, networks, and controls necessary to identify any vulnerability which, if exploited or accidentally triggered, could enable an intruder or unauthorized user or insider to: (1) Interfere with the entity's operations or with fulfillment of the entity's statutory and regulatory responsibilities; (2) impair or degrade the reliability, security, or adequate scalable capacity of the entity's automated systems; (3) add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the entity's regulated activities; and (4) undertake any other unauthorized action affecting the entity's regulated activities or the hardware or software used in connection with those activities.
The Commission believes that the costs and benefits associated with the scope for testing and assessment are generally attributable to the substantive testing requirements, and therefore, are discussed above in the cost and benefit considerations related to the rules describing the requirements for each test or assessment.
As discussed above in section II(C), proposed § 39.18(e)(9) provides that both the senior management and the board of directors of the DCO must receive and review reports setting forth the results of the testing and assessment required by proposed § 39.18. Moreover the DCO would be required to establish and follow appropriate procedures for the remediation of issues identified through such review, as provided in proposed § 39.18(e)(10), and for evaluation of the effectiveness of testing and assessment protocols.
As discussed above, review of system safeguard testing and assessments by
Nevertheless, the Commission requests comment on any potential costs of proposed § 39.18(e)(9) on DCOs, including, where possible, quantitative data.
The Commission believes that internal reporting and review are an essential component of a comprehensive and effective system safeguard program. While senior management and the DCO's board of directors may have to devote resources to reviewing testing and assessment reports, active supervision by these individuals promotes responsibility and accountability by ensuring they receive and review the results of all system safeguard testing and assessments, thereby affording them the opportunity to evaluate the effectiveness of the testing and assessment protocols. Moreover, the attention by the board of directors and senior management should help to promote a focus on such reviews and issues, and enhance communication and coordination regarding such reviews and issues among the business, technology, legal, and compliance personnel of the DCO. Such focus could cause a DCO to internalize and/or more appropriately allocate certain costs that would otherwise be borne by clearing members, customers of clearing members, and other relevant stakeholders. Active supervision by senior management and the board of directors also promotes a more efficient, effective, and reliable DCO risk management and operating structure. Consequently, the DCO should be better positioned to strengthen the integrity, resiliency, and availability of its automated systems.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(9), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
As discussed above in section II(C), proposed § 39.18(e)(10) requires a DCO to analyze the results of the testing and assessment required by proposed § 39.18 to identify all vulnerabilities and deficiencies in its systems. The DCO would also be required to remediate those vulnerabilities and deficiencies to the extent necessary to enable the DCO to fulfill its statutory and regulatory obligations. The remediation would have to be timely in light of appropriate risk analysis with respect to the risks presented by such vulnerabilities and deficiencies.
The Commission believes that, based on a DCO's risk analysis, the DCO generally remediates the vulnerabilities and deficiencies revealed by testing and assessment in the ordinary course of business to mitigate harm to the DCO and to satisfy current statutory and regulatory requirements. As discussed above, remediation of vulnerabilities and deficiencies revealed by cybersecurity testing is an industry best practice,
The Commission requests comment on any potential costs of proposed § 39.18(e)(10) on DCOs, including, where possible, quantitative data.
The Commission believes that effective remediation is a critical component of a comprehensive and effective system safeguard program. As discussed above, the Commission believes that the remediation of vulnerabilities and deficiencies revealed by cybersecurity testing is a current industry best practice and therefore already required under current regulations. Moreover, remediation may reduce the frequency and severity of systems disruptions and breaches for DCOs. In addition, remediation helps ensure that DCOs dedicate appropriate resources to timely address system safeguard-related deficiencies and would place an emphasis on mitigating harm to market participants while promoting market integrity. Without a timely remediation requirement, the impact of the vulnerabilities or deficiencies identified by the testing or assessment could persist and have a detrimental effect on the derivatives markets generally, as well as market participants. The Commission also believes that remediation could potentially result in DCOs reviewing and revising their existing policies and procedures to ensure that they are sufficiently thorough in the context of the new regulatory requirements, which would also assist their staffs in responding appropriately to vulnerabilities or deficiencies identified by the testing and assessments.
The Commission requests comments on the potential benefits to a DCO in complying with all aspects of proposed § 39.18(e)(10), and any benefits that would be realized by members of DCOs and their customers, as well as other market participants or the financial system more broadly. The Commission specifically requests comment on alternative means to address these issues, and the benefits associated with such alternatives.
Automated systems are critical to a DCO's operations, which provide essential counterparty credit risk protection to market participants and the investing public. Proposed § 39.18 is designed to further enhance DCOs' risk analysis programs in order to ensure that such automated systems are reliable, secure, and have an adequate scalable capacity. Accordingly, the Commission believes that the proposed rules will further help protect the derivatives markets by promoting more robust automated systems and therefore fewer disruptions and market-wide closures, systems compliance issues, and systems intrusions.
Additionally, providing the Commission with reports concerning the system safeguards testing and assessments required by the proposed regulations will further facilitate the Commission's oversight of derivatives markets, augment the Commission's efforts to monitor systemic risk, and will further the protection of market participants and the public by helping to ensure that a DCO's automated systems are available, reliable, secure, have adequate scalable capacity, and are effectively overseen.
The costs of this proposed rulemaking would be mitigated by the countervailing benefits of improved design, more efficient and effective processes, and enhanced planning that would lead to increased safety and soundness of DCOs and the reduction of
The proposed amendments to § 39.18 would help preserve the efficiency and financial integrity of the derivatives markets by promoting comprehensive oversight and testing of a DCO's operations and automated systems. Specifically, the proposed amendments will further reduce the probability of a cyber attack that could lead to a disruption in clearing services which could, in turn, cause disruptions to the efficient functioning and financial integrity of the derivatives markets. Preventing cyber attacks could prevent monetary losses to DCOs, and thereby help protect their financial integrity.
The Commission does not anticipate the proposed amendments to have a significant impact on the competitiveness of the derivatives markets.
The Commission does not anticipate the proposed amendments to § 39.18 to have a direct effect on the price discovery process. However, ensuring that DCOs' automated systems function properly to clear trades protects the price discovery process to the extent that a prolonged disruption or suspension in clearing at a DCO may cause potential market participants to refrain from trading.
The proposed amendments to § 39.18 would strengthen and promote sound risk management practices across DCOs. Specifically, the proposed amendments would build upon the current system safeguards requirements by ensuring that tests of DCOs' key system safeguards are conducted at minimum intervals and, where appropriate, by independent professionals. The applicable tests are each recognized by industry best practices as essential components of a sound risk management program. Moreover, the benefits of the proposed rules will be shared by market participants and the investing public as DCOs, by their nature, serve to provide such parties with counterparty credit risk protection.
In addition, reliably functioning computer systems and networks are crucial to comprehensive risk management, and being able to request reports of the system safeguards testing required by the proposed regulations will assist the Commission in its oversight of DCOs and will bolster the Commission's ability to assess systemic risk levels.
The Commission notes the public interest in promoting and protecting public confidence in the safety and security of the financial markets. DCOs are essential to risk management in the financial markets, both systemically and on an individual firm level. Proposed § 39.18, by explicating current requirements and identifying several additional key tests and assessments, promotes the ability of DCOs to perform these functions free from disruption due to both internal and external threats to its systems.
In addition to the requests for comment specified above, the Commission requests comment on the following:
What are the potential costs and benefits resulting from, or arising out of, requiring DCOs to comply with the proposed changes to § 39.18? In considering costs and benefits, commenters are requested to address the effect of the proposed regulation not only on a DCO, but also on the DCO's clearing members, the customers of clearing members, and the financial system more broadly. The Commission requests that, where possible, commenters provide quantitative data in their comments, particularly with respect to estimates of costs and benefits.
The Commission has identified the baseline as current regulatory requirements. Is this baseline correct? If not, what should the baseline be, and how would the alternative baseline change the costs and benefits associated with the proposed changes to § 39.18?
Do rules impose costs above those required by current system safeguards rule and identified by the Commission? Specify and provide data to support.
Do rules provide benefits above those required by current system safeguards rule and identified by the Commission? Specify and provide data to support.
Do the costs or impacts of the proposed rules differ depending on the size of a DCO? Do they differ depending on the complexity of a DCO's systems?
Commodity futures, Reporting and recordkeeping requirements, System safeguards.
For the reasons stated in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR part 39 as follows:
7 U.S.C. 2, 7a-1, and 12a; 12 U.S.C. 5464; 15 U.S.C. 8325.
(a)
(b)
(i) The development of appropriate controls and procedures; and
(ii) The development of automated systems that are reliable, secure, and have adequate scalable capacity.
(2)
(i) Information security, including, but not limited to, controls relating to: Access to systems and data (
(ii) Business continuity and disaster recovery planning and resources, including, but not limited to, the controls and capabilities described in paragraph (c) of this section; and any other elements of business continuity and disaster recovery planning and resources included in generally accepted best practices;
(iii) Capacity and performance planning, including, but not limited to, controls for monitoring the derivatives clearing organization's systems to ensure adequate scalable capacity (
(iv) Systems operations, including, but not limited to, system maintenance; configuration management (
(v) Systems development and quality assurance, including, but not limited to, requirements development; pre-production and regression testing; change management procedures and approvals; outsourcing and vendor management; training in secure coding practices; and any other elements of systems development and quality assurance included in generally accepted best practices; and
(vi) Physical security and environmental controls, including, but not limited to, physical access and monitoring; power, telecommunication, and environmental controls; fire protection; and any other elements of physical security and environmental controls included in generally accepted best practices.
(3)
(4)
(c)
(2)
(3)
(i) Coordinate its business continuity and disaster recovery plan with those of its clearing members, in a manner adequate to enable effective resumption of daily processing, clearing, and settlement of transactions following a disruption;
(ii) Initiate and coordinate periodic, synchronized testing of its business continuity and disaster recovery plan with those of its clearing members; and
(iii) Ensure that its business continuity and disaster recovery plan takes into account the plans of its providers of essential services, including telecommunications, power, and water.
(d)
(i) Using its own employees as personnel, and property that it owns, licenses, or leases; or
(ii) Through written contractual arrangements with another derivatives clearing organization or other service provider.
(2)
(3)
(e)
(i) Its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity; and
(ii) Its business continuity and disaster recovery capabilities, using testing protocols adequate to ensure that the derivatives clearing organization's backup resources are sufficient to meet the requirements of paragraph (c) of this section.
(2)
(i) A derivatives clearing organization shall conduct such vulnerability testing at a frequency determined by an appropriate risk analysis, but no less frequently than quarterly.
(ii) Such vulnerability testing shall include automated vulnerability scanning. Where indicated by appropriate risk analysis, such scanning shall be conducted on an authenticated basis,
(iii) A derivatives clearing organization shall engage independent contractors to conduct two of the required quarterly vulnerability tests each year. A derivatives clearing organization may conduct other vulnerability testing by using employees of the derivatives clearing organization who are not responsible for development or operation of the systems or capabilities being tested.
(3)
(i) A derivatives clearing organization shall conduct such external penetration testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(ii) A derivatives clearing organization shall engage independent contractors to conduct the required annual external penetration test. A derivatives clearing organization may conduct other external penetration testing by using employees of the derivatives clearing organization who are not responsible for development or operation of the systems or capabilities being tested.
(4)
(i) A derivatives clearing organization shall conduct such internal penetration testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(ii) A derivatives clearing organization shall conduct internal penetration testing by engaging independent contractors, or by using employees of the derivatives clearing organization who are not responsible for development or operation of the systems or capabilities being tested.
(5)
(i) A derivatives clearing organization shall conduct controls testing, which includes testing of each control included in its program of risk analysis and oversight, at a frequency determined by an appropriate risk analysis, but no less frequently than every two years. A derivatives clearing organization may conduct such testing on a rolling basis over the course of the period determined by such risk analysis.
(ii) A derivatives clearing organization shall engage independent contractors to test and assess the key controls, as determined by appropriate risk analysis, included in the derivatives clearing organization's program of risk analysis and oversight no less frequently than every two years. A derivatives clearing organization may conduct any other controls testing required by this section by using independent contractors or employees of the derivatives clearing organization who are not responsible for development or operation of the systems or capabilities being tested.
(6)
(i) The derivatives clearing organization shall conduct such security incident response plan testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(ii) The derivatives clearing organization's security incident response plan shall include, without limitation, the derivatives clearing organization's definition and
(iii) The derivatives clearing organization may coordinate its security incident response plan testing with other testing required by this section or with testing of its other business continuity-disaster recovery and crisis management plans.
(iv) The derivatives clearing organization may conduct security incident response plan testing by engaging independent contractors or by using employees of the derivatives clearing organization who are not responsible for development or operation of the systems or capabilities being tested.
(7)
(i) A derivatives clearing organization shall conduct an enterprise technology risk assessment at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(ii) A derivatives clearing organization may conduct enterprise technology risk assessments by using independent contractors or employees of the derivatives clearing organization not responsible for development or operation of the systems or capabilities being assessed.
(8)
(i) Interfere with the derivatives clearing organization's operations or with fulfillment of its statutory and regulatory responsibilities;
(ii) Impair or degrade the reliability, security, or capacity of the derivatives clearing organization's automated systems;
(iii) Add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the derivatives clearing organization's regulated activities; or
(iv) Undertake any other unauthorized action affecting the derivatives clearing organization's regulated activities or the hardware or software used in connection with those activities.
(9)
(10)
(f)
(1) Current copies of the derivatives clearing organization's business continuity and disaster recovery plan and other emergency procedures. Such plan and procedures shall be updated at a frequency determined by an appropriate risk analysis, but no less frequently than annually;
(2) All assessments of the derivatives clearing organization's operational risks or system safeguards-related controls;
(3) All reports concerning testing and assessment required by this section, whether conducted by independent contractors or by employees of the derivatives clearing organization; and
(4) All other documents requested by staff of the Division of Clearing and Risk, or any successor division, in connection with Commission oversight of system safeguards pursuant to the Act or Commission regulations, or in connection with Commission maintenance of a current profile of the derivatives clearing organization's automated systems.
(5) Nothing in this paragraph (f) of this section shall be interpreted as reducing or limiting in any way a derivatives clearing organization's obligation to comply with § 1.31 of this chapter.
(g)
(1) Any hardware or software malfunction, security incident, or targeted threat that materially impairs, or creates a significant likelihood of material impairment, of automated system operation, reliability, security, or capacity; or
(2) Any activation of the derivatives clearing organization's business continuity and disaster recovery plan.
(h)
(1) Planned changes to the derivatives clearing organization's automated systems that may impact the reliability, security, or capacity of such systems; and
(2) Planned changes to the derivatives clearing organization's program of risk analysis and oversight.
(a) Notwithstanding § 39.18(c)(2), the business continuity and disaster recovery plan described in § 39.18(c)(1) for each systemically important derivatives clearing organization and subpart C derivatives clearing organization shall have the objective of enabling, and the physical, technological, and personnel resources described in § 39.18(c)(1) shall be sufficient to enable, the systemically important derivatives clearing organization or subpart C derivatives clearing organization to recover its operations and resume daily processing, clearing, and settlement no later than two hours following the disruption, for any disruption including a wide-scale disruption.
(b) * * *
(3) The provisions of § 39.18(d) shall apply to these resource requirements.
(c) Each systemically important derivatives clearing organization and subpart C derivatives clearing organization must conduct regular, periodic tests of its business continuity and disaster recovery plans and resources and its capacity to achieve the required recovery time objective in the event of a wide-scale disruption. The
The following appendices will not appear in the Code of Federal Regulations.
On this matter, Chairman Massad and Commissioners Bowen and Giancarlo voted in the affirmative. No Commissioner voted in the negative.
I strongly support this proposed rule.
The risk of cyberattacks is perhaps the most important single issue we face in terms of financial market stability and integrity.
The examples of cyberattacks or significant technological disruptions from inside and outside the financial sector are all too frequent and familiar.
Today, the aims of these attacks can go beyond traditional financial motives. Today, we must be concerned about the possibility of attacks intended to destroy information and disrupt or destabilize our markets.
The risk to American businesses and the economy is dramatic. And the interconnectedness of our financial institutions and markets means that a failure in one institution can have significant repercussions throughout the system.
The proposed rule that we are issuing today is an important step toward enhancing the protections in our markets. It builds on our core principles—which already require clearinghouses to focus on system safeguards—by setting standards consistent with best practices. It requires robust testing of cyber protections, setting forth the types of testing that must be conducted, the frequency of testing and whether tests should be conducted by independent parties. In addition, it enhances standards for incident response planning and enterprise technology risk assessments.
Our requirements should come as no surprise—clearinghouses should already be doing extensive testing. Indeed, we hope that today's proposal sets a baseline that is already being met.
The proposal also complements what we as a Commission already do. We focus on these issues in our examinations to determine whether an institution is following good practices and paying adequate attention to these risks at the board level and on down.
This rule is largely in line with another system safeguards proposal that the Commission also approved today, which applies the same standards to other critical market infrastructure.
Since the 2009 G-20 agreement and the enactment of Dodd-Frank, clearinghouses have become increasingly important the financial system. As a result, I believe we must do all we can to ensure their strength and stability. This proposed rule is a critical component of this effort.
I thank the staff for their hard work on this proposal. Of course, we welcome public comment on both our system safeguards proposals, which will be carefully taken into account before we take any final action.
Today, we are considering two rule proposals that address an issue which is right at the heart of systemic risk in our markets—cybersecurity. The question that we face is: with a problem as immense as cybercrime, and the many measures already being employed to combat it, what would today's proposed rules accomplish? In answer to that question, I want to say a few words about our cybercrime challenge, what is currently being done to address it, and what I hope these proposed regulations would add to these efforts.
The problem is clear—our firms are facing an unrelenting onslaught of attacks from hackers with a number of motives ranging from petty fraud to international cyberwarfare. We have all heard of notable and sizable companies that have been the victim of cybercrime, including: Sony, eBay, JPMorgan, Target, and Staples—even the U.S. government has fallen victim.
In recent testimony before the House Committee on Financial Services, Subcommittee on Oversight and Investigations about cybercrime, the Director of the Center for Cyber and Homeland Security noted that the “U.S. financial services sector in particular is in the crosshairs as a primary target.”
Given the magnitude of the problem, it is not at all surprising that a lot is already being done to address it. The Department of Homeland Security and others have been working with private firms to shore up defenses. Regulators have certainly been active. The Securities and Exchange Commission (SEC), the Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board (FRB), the Federal Housing Finance Agency (FHFA), and our self-regulatory organization, the National Futures Association (NFA), have issued cybersecurity guidance. In Europe, the Bank of England (BOE) introduced the CBEST program to conduct penetration testing on firms, based on the latest data on cybercrime. We heard a presentation from the BOE about CBEST at a meeting of the Market Risk Advisory Committee this year.
I wanted to hear what market participants were doing to address the challenge of our cybersecurity landscape so I met with several of our large registrant dealers and asked them about their cybersecurity efforts. After these discussions, I was both alarmed by the immensity of the problem and heartened by efforts of these larger participants to meet that problem head on. They were employing best practices such as reviewing the practices of their third party providers, using third parties to audit systems, sharing information with other market participants, integrating cybersecurity risk management into their governance structure, and staying in communication with their regulators.
We have also been vigilant in our efforts to address cybersecurity. Under our current rule structure, many of our registrants have system safeguards requirements. They require, among other things, that the registrants have policies and resources for risk analysis and oversight with respect to their operations and automated systems, as well as reporting, recordkeeping, testing, and coordination with service providers. These requirements clearly include appropriate cybersecurity measures. We also regularly examine registrants for their adherence to the system safeguards requirements, including effective governance, use of resources, appropriate policies, and vigilant response to attacks.
So if all of this is happening, what would more regulation accomplish? In other words, what is the “value add” of the rules being proposed today? The answer is: A great deal. While some firms are clearly engaging in best practices, we have no guarantee that all of them are. And as I have said before, in a system as electronically interconnected as our financial markets, “we're collectively only as strong as our weakest link, and so we need a high baseline level of protection for everyone . . .”
We have to do this carefully though because once a regulator inserts itself into the cybersecurity landscape at a firm—the firm now has two concerns: Not just fighting the attackers, but managing its reputation with its regulator. So, if not done carefully, a regulator's attempt to bolster cybersecurity at a firm can instead undermine it by incentivizing the firm to cover up any weaknesses in its cybersecurity
I think these rulemakings are a great first step in accomplishing that balance. There are many aspects of these proposals that I like. First, they set up a comprehensive testing regime by: (a) Defining the types of cybersecurity testing essential to fulfilling system safeguards testing obligations, including vulnerability testing, penetration testing, controls testing, security incident response plan testing, and enterprise technology risk assessment; (b) requiring internal reporting and review of testing results; and (c) mandating remediation of vulnerabilities and deficiencies. Further, for certain significant entities, based on trading volume, it requires heightened measures such as minimum frequency requirements for conducting certain testing, and specific requirements for the use of independent contractors.
Second, there is a focus on governance—requiring, for instance, that firms' Board of Directors receive and review all reports setting forth the results of all testing. And third, these rulemakings are largely based on well-regarded, accepted best practices for cybersecurity, including The National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity (“NIST Framework”).
In all, I think the staff has put together two thoughtful proposals. Clearly, however, this is only a first step since all our registrants, not just exchanges, SEFs, SDRs and DCOs, need to have clear cybersecurity measures in place. I am also very eager to hear what the general public has to say about these proposals. Do they go far enough to incentivize appropriate cybersecurity measures? Are they too burdensome for firms that do not pose significant risk to the system? And given that this is a dynamic field with a constantly evolving set of threats, what next steps should we take to address cybercrime? Please send in all your thoughts for our consideration.
Commodity Futures Trading Commission.
Proposed rulemaking; advanced notice of proposed rulemaking.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is amending its system safeguards rules for designated contract markets, swap execution facilities, and swap data repositories, by enhancing and clarifying existing provisions relating to system safeguards risk analysis and oversight and cybersecurity testing, and adding new provisions concerning certain aspects of cybersecurity testing. The Commission is clarifying the existing system safeguards rules for all designated contract markets, swap execution facilities, and swap data repositories by specifying and defining the types of cybersecurity testing essential to fulfilling system safeguards testing obligations, including vulnerability testing, penetration testing, controls testing, security incident response plan testing, and enterprise technology risk assessment. The Commission is also clarifying rule provisions respecting the categories of risk analysis and oversight that statutorily-required programs of system safeguards-related risk analysis and oversight must address; system safeguards-related books and records obligations; the scope of system safeguards testing; internal reporting and review of testing results; and remediation of vulnerabilities and deficiencies. The new provisions concerning certain aspects of cybersecurity testing, applicable to covered designated markets (as defined) and all swap data repositories, include minimum frequency requirements for conducting the essential types of cybersecurity testing, and requirements for performance of certain tests by independent contractors. In this release, the Commission is also issuing an Advance Notice of Proposed Rulemaking requesting public comment concerning whether the minimum testing frequency and independent contractor testing requirements should be applied, via a future Notice of Proposed Rulemaking, to covered swap execution facilities (to be defined).
Comments must be received on or before February 22, 2016.
You may submit comments, identified by RIN number 3038-AE30, by any of the following methods:
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Please submit your comments using only one method. All comments must be submitted in English, or must be accompanied by an English translation. Contents will be posted as received to
Rachel Berdansky, Deputy Director, Division of Market Oversight, 202-418-5429,
Cyber threats to the financial sector continue to expand. As the Commission was informed by cybersecurity experts participating in its 2015 Staff Roundtable on Cybersecurity and System Safeguards Testing, these threats have a number of noteworthy aspects.
First, the financial sector faces an escalating volume of cyber attacks. According to the Committee on Payments and Market Infrastructures (“CPMI”) of the Bank for International Settlements (“BIS”), “Cyber attacks against the financial system are becoming more frequent, more sophisticated and more widespread.”
Second, financial sector entities also face increasing numbers of more dangerous cyber adversaries with expanding and worsening motivations and goals. Until recently, most cyber attacks on financial sector institutions were conducted by criminals whose aim was monetary theft or fraud.
Third, financial institutions may now encounter increasing cyber threat capabilities. According to a CFTC Roundtable participant, one current trend heightening cyber risk for the financial sector is the emergence of cyber intrusion capability—typically highest when supported by nation state resources—as a key tool of statecraft for most states.
Fourth, the cyber threat environment includes an increase in cyber attack duration.
The rise of a relatively new class of cyber-attack is especially troubling. This new class is referred to as an `Advanced Persistent Threat.' Advanced Persistent Threats (APTs) are usually directed at business and political targets for political ends. APTs involve stealth to persistently infiltrate a system over a long period of time, without the system displaying any unusual symptoms.
Fifth, there is now a broadening cyber threat field. Financial institutions should consider cyber vulnerabilities not only with respect to their desktop computers, but also with respect to mobile devices used by their employees.
Finally, financial institutions cannot achieve cyber resilience by addressing threats to themselves alone: They also face threats relating to the increasing interconnectedness of financial services firms.
Cybersecurity testing by designated contract markets (“DCMs”), swap execution facilities (“SEFs”), derivatives clearing organizations (“DCOs”), swap data repositories (“SDRs”), and other entities in the financial sector can harden cyber defenses, mitigate operations, reputation, and financial risk, and maintain cyber resilience and ability to recover from cyber attack.
Cybersecurity testing is a well-established best practice generally and for financial sector entities. The Federal Information Security Management Act (“FISMA”), which is a source of cybersecurity best practices and also establishes legal requirements for federal government agencies, calls for “periodic testing and evaluation of the effectiveness of information security policies, procedures, and practices, to be performed with a frequency depending on risk, but no less than annually.”
The Federal Financial Institutions Examination Council (“FFIEC”),
Financial institutions should have a testing plan that identifies control objectives; schedules tests of the controls used to meet those objectives; ensures prompt corrective action where deficiencies are identified; and provides independent assurance for compliance with security policies. Security tests are necessary to identify control deficiencies. An effective testing plan identifies the key controls, then tests those controls at a frequency based on the risk that the control is not functioning. Security testing should include independent tests conducted by personnel without direct responsibility for security administration. Adverse test results indicate a control is not functioning and cannot be relied upon. Follow-up can include correction of the specific control, as well as a search for, and correction of, a root cause. Types of tests include audits, security assessments, vulnerability scans, and penetration tests.
Some experts note that cybersecurity testing may become a requirement for obtaining cyber insurance. Under such an approach, coverage might be conditioned on cybersecurity testing and assessment followed by implementation of appropriate prevention and detection procedures.
Cybersecurity testing is also supported internationally. IOSCO has emphasized the importance of testing to ensure effective controls, in light of risks posed by the complexity of markets caused by technological advances.
The system safeguards provisions of the Commodity Exchange Act (“Act” or “CEA”) and Commission regulations applicable to all DCMs, SEFs, and SDRs require each DCM, SEF, and SDR to maintain a program of risk analysis and oversight to identify and minimize sources of operational risk.
Six categories of risk analysis and oversight are specified in the Commission's current regulations for DCMs, SEFs, and SDRs: Information security; business continuity-disaster recovery (“BC-DR”) planning and resources; capacity and performance planning; systems operations; systems development and quality assurance; and physical security and environmental controls.
The Commission is also proposing to add and define another enumerated category, enterprise risk management and governance, to the list of required categories of system safeguards-related risk analysis and oversight. As explained below, generally accepted best practices regarding appropriate risk analysis and oversight with respect to system safeguards—which form the basis for the proposed definition of this added category—also establish enterprise risk management and governance as an important category of system safeguards-related risk analysis and oversight. This category is therefore implicit in the Commission's existing system safeguard regulations, which already require each DCM, SEF, and SDR to maintain a program of risk analysis and oversight with respect to system safeguards.
As stated in the proposed rules, this category of risk analysis and oversight includes the following five areas:
• Assessment, mitigation, and monitoring of security and technology risk.
• Capital planning and investment with respect to security and technology.
• Board of directors and management oversight of system safeguards.
• Information technology audit and controls assessments.
• Remediation of deficiencies.
The category also includes any other enterprise risk management and governance elements included in generally accepted best practices. As noted above, this category of risk analysis and oversight is already implicit in the Commission's existing system safeguards rules for all DCMs, SEFs, and SDRs, as an essential part of an adequate program of risk analysis and oversight according to generally accepted standards and best practices. The Commission sets out below the best practices basis for its proposed definition of this category, which like the other proposed definitions is provided for purposes of clarity.
a. Assessment, Mitigation, and Monitoring of Security and Technology Risk
In the area of assessment, mitigation, and monitoring of security and technology risk, NIST calls for organizations to develop appropriate and documented risk assessment policies, to make effective risk assessments, and to develop and implement a comprehensive risk management strategy relating to the operation and use of information systems.
Leaders must recognize that explicit, well-informed risk-based decisions are necessary in order to balance the benefits gained from the operation and use of these information systems with the risk of the same systems being vehicles through which purposeful attacks, environmental disruptions, or human errors cause mission or business failure.
NIST standards further provide that an organization's risk management strategy regarding system safeguards
Security and technology capital planning and investment are also recognized as best practices for enterprise risk management and governance. NIST standards call for entities to determine, as part of their capital planning and investment control process, both the information security requirements of their information systems and the resources required to protect those systems.
Board of directors and management oversight of system safeguards is another recognized best practice for enterprise risk management and governance. NIST defines requirements for board of directors and management oversight of cybersecurity.
Information technology audit and controls assessments are an additional major aspect of best practices regarding enterprise risk management and governance. As the FFIEC has stated:
A well-planned, properly structured audit program is essential to evaluate risk management practices, internal control systems, and compliance with corporate policies concerning IT-related risks at institutions of every size and complexity. Effective audit programs are risk-focused, promote sound IT controls, ensure the timely resolution of audit deficiencies, and inform the board of directors of the effectiveness of risk management practices.
The FFIEC has also noted that today's rapid rate of change with respect to information technology and cybersecurity make IT audits essential to the effectiveness of an overall audit program.
The audit program should address IT risk exposures throughout the institution, including the areas of IT management and strategic planning, data center operations, client/server architecture, local and wide-area networks, telecommunications, physical and information security . . . systems development, and business continuity planning. IT audit should also focus on how management determines the risk exposure from its operations and controls or mitigates that risk.
Finally, remediation of deficiencies is another important part of enterprise risk management and governance best practices. NIST calls for organizations to ensure that plans of action and milestones for IT systems and security are developed, maintained, and documented, and for organizations to review such plans for consistency with organization-wide risk management strategy and priorities for risk response actions.
As stated in the proposed rules, this category of risk analysis and oversight includes, without limitation, controls relating to each of the following:
• Access to systems and data (
• User and device identification and authentication.
• Security awareness training.
• Audit log maintenance, monitoring, and analysis.
• Media protection.
• Personnel security and screening.
• Automated system and communications protection (
• Automated system and information integrity (
• Vulnerability management.
• Penetration testing.
• Security incident response and management.
The category also includes any other elements of information security included in generally accepted best practices. All of these important aspects of information security are grounded in generally accepted standards and best practices, such as the examples cited in the footnotes for each aspect given above. The Commission believes that information security programs that address each of these aspects continue to be essential to maintaining effective system safeguards in today's cybersecurity threat environment.
The Commission's current system safeguards regulations for DCMs, SEFs, and SDRs already contain detailed description of various aspects of this category of risk analysis and oversight. The regulations require DCMs, SEFs, and SDRs to maintain a BC-DR plan and BC-DR resources, emergency procedures, and backup facilities sufficient to enable timely resumption of the DCM's, SEF's, or SDR's operations, and resumption of its fulfillment of its responsibilities and obligations as a CFTC registrant following any such disruption.
Because the current system safeguards regulations already address these various aspects of the category of BC-DR planning and resources, the Commission is not proposing to further define this category at this time. The Commission notes that participants in the CFTC Roundtable discussed whether BC-DR planning and testing is at an inflection point: while such planning and testing has traditionally focused on kinetic events such as storms or physical attacks by terrorists, today cybersecurity threats may also result in loss of data integrity or long-term cyber intrusion. Future development of different types of BC-DR testing focused on cyber resiliency, and of new standards for recovery and resumption of operations may be warranted.
As provided in the proposed rule, this category of risk analysis and oversight includes (without limitation): Controls for monitoring DCM, SEF, or SDR systems to ensure adequate scalable capacity (
As set out in the proposed rule, this category of risk analysis and oversight includes (without limitation) each of the following elements:
• System maintenance.
• Configuration management (
• Event and problem response and management.
It also includes any other elements of system operations included in generally accepted best practices. All of these important aspects of systems operations are grounded in generally accepted standards and best practices, for example those cited in the footnotes for each aspect given above. The Commission believes that systems operations programs that address each of these aspects are essential to maintaining effective system safeguards in today's cybersecurity threat environment.
As set out in the proposed rule, this category of risk analysis and oversight includes (without limitation) each of the following elements:
• Requirements development.
• Pre-production and regression testing.
• Change management procedures and approvals.
• Outsourcing and vendor management.
• Training in secure coding practices.
It also includes any other elements of systems development and quality assurance included in generally accepted best practices. All of these important aspects of systems development and quality assurance are grounded in generally accepted standards and best practices, such as the examples cited in the footnotes for each aspect given above. The Commission believes that systems development and quality assurance programs that address each of these aspects are essential to maintaining effective system safeguards in today's cybersecurity threat environment.
As stated in the proposed rule, this category of risk analysis and oversight includes (without limitation) each of the following elements:
• Physical access and monitoring.
• Power, telecommunication, environmental controls.
• Fire protection.
It also includes any other elements of physical security and environmental controls included in generally accepted best practices. All of these important aspects of physical security and environmental controls are grounded in generally accepted standards and best practices, such as the examples cited in the footnote given above. The Commission believes that physical security and environmental controls programs that address each of these aspects are essential to maintaining effective system safeguards in today's cybersecurity threat environment.
The Commission's current regulations for DCMs and SDRs and its guidance for SEFs provide that such entities should follow best practices in addressing the categories which their programs of risk analysis and oversight are required to include.
In this NPRM, the Commission is proposing to make these three provisions mandatory for all DCMs, SEFs, and SDRs. The proposed rule provisions reflect this at appropriate points.
The Commission is proposing amendment of the current system safeguards rules requiring DCMs, SEFs, and SDRs to maintain a business continuity-disaster recovery plan and emergency procedures, by adding a requirement for such plans and procedures to be updated as frequently as required by appropriate risk analysis, but at a minimum at least annually. Updating such plans and procedures at least annually is a best practice. NIST standards provide that once an organization has developed a BC-DR plan, “the organization should implement the plan and review it at least annually to ensure the organization is following the roadmap for maturing the capability and fulfilling their [sic] goals for incident response.”
As noted previously, current Commission system safeguards regulations and guidance provide that all DCMs, SEFs, and SDRs should follow best practices in their required programs of risk analysis and oversight. The Commission understands that many DCMs, SEFs, and SDRs currently update their BC-DR plans and emergency procedures at least annually. In light of these facts, the Commission believes that the proposed requirement for updating such plans and procedures as often as indicated by appropriate risk analysis, and at a minimum at least annually, may not impose substantial additional burdens or costs on DCMs, SEFs, or SDRs.
The Commission's current system safeguards rules for all DCMs, SEFs, and SDRs contain a provision addressing required production of system safeguards-related documents to the Commission on request.
As noted in the text of the proposed rule, production of all such books and records is already required by the Act and Commission regulations, notably by Commission regulation § 1.31.
The Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
The Commission's clarification of existing testing requirements for DCMs, SEFs, and SDRs by specifying and defining five types of cybersecurity testing essential to fulfilling those testing requirements is designed to set out high-level, minimum requirements for these types of testing, with the expectation that the particular ways in which DCMs, SEFs, and SDRs conduct such testing may change as accepted standards and industry best practices develop over time and are reflected in the DCM's, SEF's, or SDR's risk analysis. This parallels the inclusion in the Commission's existing system safeguards rules and guidance for DCMs, SEFs, and SDRs of provisions that call for those entities to follow generally accepted standards and best practices in their programs of risk analysis and oversight with respect to system safeguards. Those similarly high-level provisions were also designed to allow DCMs, SEFs, and SDRs flexibility in adapting their programs to current industry best practices, which the Commission recognized and continues to recognize will evolve over time.
In this NPRM, as discussed in detail below, the Commission is also proposing that covered DCMs (as defined) and all SDRs would be subject to new minimum testing frequency requirements with respect to each type of system safeguards testing included in the clarification of the system safeguards testing requirement in the Commission's existing system safeguards rules. To strengthen the objectivity and reliability of the testing, assessment, and information available to the Commission regarding covered DCM and SDR system safeguards, the Commission is also proposing that for certain types of testing, covered DCMs and SDRs would be subject to new independent contractor testing requirements. The Commission believes that in light of the current cyber threat environment described above, the minimum frequency requirements being proposed are necessary and appropriate, and will give additional clarity concerning what is required in this respect. As discussed above, and discussed in detail below, the proposed minimum frequency requirements are all grounded in generally accepted standards and best practices.
The Commission believes that the minimum testing frequency and independent contractor testing requirements in the proposed rule should be applied to DCMs whose annual total trading volume is five percent or more of the annual total trading volume of all DCMs regulated by the Commission, as well as to all SDRs. This would give DCMs that have less than five percent of the annual total trading volume of all DCMs more flexibility regarding the testing they must conduct. As a matter of policy, the Commission believes it is appropriate to reduce possible costs and burdens for smaller entities when it is possible to do so consistent with achieving the fundamental goals of the Act and Commission rules. Accordingly, the Commission believes that applying the minimum frequency and independent contractor requirements in this proposed rule only to DCMs whose annual volume is five percent or more of the total annual volume of all regulated DCMs, and to SDRs, would be appropriate, in light of the fact that smaller DCMs will still be required to conduct testing of all the types clarified in the proposed rule as essential to fulfilling the testing requirements of the existing DCM system safeguards rules.
To give effect to this concept, the proposed rule would make this five percent volume threshold the basis for its definition of a “covered designated contract market,” and would require all DCMs to report their annual total trading volume to the Commission each year, as discussed below in section H. The proposed rule defines “annual total trading volume” as the total number of all contracts traded on or pursuant to the rules of a designated contract market. Under the proposed rule, a DCM would become a covered DCM, and thus become subject to the proposed testing frequency and independent contractor testing requirements, if it meets the five percent volume threshold with respect to calendar year 2015 or any calendar year thereafter.
It is possible that a DCM which has previously become a covered DCM subject to these requirements by meeting the five percent volume threshold could cease to meet the definition of a covered DCM if its annual total trading volume later fell below the five percent volume threshold. The proposed rule's frequency requirements for controls testing and for independent contractor testing of key controls specify that such testing must be performed no less frequently than every two years, the longest minimum frequency requirement included in the proposed rule. The Commission believes that a DCM which has become a covered DCM should complete an entire cycle of the testing required of covered DCMs before it ceases to be subject to those requirements by virtue of its annual total trading volume falling below the five percent threshold. Accordingly, the proposed rule's definition of “covered designated contract market” also specifies that such a DCM would cease to be a covered DCM when it has fallen below the five percent volume threshold for two consecutive years.
Testing to identify cyber and automated system vulnerabilities is a significant component of a DCM's, SEF's, or SDR's program of risk analysis
Cyber defenders must operate in a constant stream of new information: Software updates, patches, security advisories, threat bulletins, etc. Understanding and managing vulnerabilities has become a continuous activity, requiring significant time, attention, and resources.
Attackers have access to the same information, and can take advantage of gaps between the appearance of new knowledge and remediation. For example, when new vulnerabilities are reported by researchers, a race starts among all parties, including: Attackers (to “weaponize”, deploy an attack, exploit); vendors (to develop, deploy patches or signatures and updates), and defenders (to assess risk, regression-test patches, install).
Vulnerability testing is essential to cyber resilience.
Conducting ongoing vulnerability testing, including automated scanning, is a best practice with respect to cybersecurity. NIST standards call for organizations to scan for automated system vulnerabilities both on a regular and ongoing basis and when new vulnerabilities potentially affecting their systems are identified and reported.
The Council on CyberSecurity's Critical Security Controls call for organizations to “continuously acquire, assess, and take action on new information in order to identify vulnerabilities, remediate, and minimize the window of opportunity for attackers.”
The Data Security Standards (“DSS”) of the Payment Card Industry (“PCI”) Security Standards Council note that “[v]ulnerabilities are being discovered continually by malicious individuals and researchers, and being introduced by new software,” and accordingly provide that “[s]ystem components, processes, and custom software should be tested frequently to ensure security controls continue to reflect a changing environment.”
The Commission is proposing to clarify the existing testing requirements for all DCMs, all SEFs, and all SDRs by specifying vulnerability testing as an essential means of fulfilling those requirements, and defining it as testing of a DCM's, SEF's, or SDR's automated systems to determine what information may be discoverable through a reconnaissance analysis of those systems and what vulnerabilities may be present on those systems. This definition is consistent with NIST standards for such testing.
The proposed rule would require that vulnerability testing include automated vulnerability scanning, as well as an analysis of the test results to identify and prioritize all vulnerabilities that require remediation.
PCI Monitor, Vol. 2, Issue 26 (June 25, 2014), available at
The proposed rule would require all DCMs, SEFs, and SDRs to conduct vulnerability testing at a frequency determined by an appropriate risk analysis. Testing as often as indicated by appropriate risk analysis is a best practice. For example, the FFIEC states that “[t]he frequency of testing should be determined by the institution's risk assessment.”
The proposed rule would require covered DCMs and SDRs to conduct vulnerability testing no less frequently than quarterly. Best practices support this requirement. For example, PCI DSS standards provide that entities should run internal and external network vulnerability scans “at least quarterly,” as well as after any significant network changes, new system component installations, firewall modifications, or product upgrades.
The proposed rule would require covered DCMs and SDRs to engage independent contractors to conduct two of the required quarterly vulnerability tests each year, while permitting covered DCMs and SDRs to conduct other vulnerability testing using employees not responsible for development or operation of the systems or capabilities being tested.
Participants in the CFTC Roundtable agreed that important benefits are provided when a testing program includes both testing by independent contractors and testing by entity employees not responsible for building or operating the system being tested. As one participant noted, “[t]here are advantages to both, but neither can stand alone.”
Regarding the benefits provided by independent contractor testing, NIST notes that:
[E]ngaging third parties (
FFIEC states that testing by independent contractors provides credibility to test results.
Current Commission system safeguards rules leave to a DCM or SDR the choice of whether vulnerability testing or other system safeguards testing is conducted by independent contractors or entity employees not responsible for building or operating the systems being tested. The proposed requirement for some vulnerability testing to be performed by independent contractors is intended to ensure that covered DCM and SDR programs of risk analysis and oversight with respect to system safeguards include the benefits coming from a combination of testing by both entity employees and independent contractors, as discussed above. In light of the best practices and the current level of cyber threat to the financial sector discussed above, the Commission believes that the proposed rule provisions regarding vulnerability testing by independent contractors are appropriate in today's cybersecurity environment.
Penetration testing to exploit cyber and automated system vulnerabilities, a testing type which complements vulnerability testing, is also a significant component of a DCM's, SEF's, or SDR's program of risk analysis and oversight to identify and minimize sources of operational risk. Penetration tests go beyond the uncovering of an organization's automated system vulnerabilities that vulnerability testing aims to achieve: They subject the system to real-world attacks by testing personnel, in order to identify both the extent to which an attacker could compromise the system before the organization detects and counters the attack, and the effectiveness of the organization's response mechanisms.
Penetration testing is a specialized type of assessment conducted on information systems or individual system components to identify vulnerabilities that could be exploited by adversaries. Such testing can be used to either validate vulnerabilities or determine the degree of resistance organizational information systems have to adversaries within a set of specified constraints (
The Council on CyberSecurity explains the need for penetration testing as follows:
Attackers often exploit the gap between good defensive designs and intentions and implementation or maintenance. . . . In addition, successful defense requires a comprehensive program of technical defenses, good policy and governance, and appropriate action by people. In a complex environment where technology is constantly evolving, and new attacker tradecraft appears regularly, organizations should periodically test their defenses to identify gaps and to assess their readiness.
Penetration testing starts from the identification and assessment of vulnerabilities that can be identified in the enterprise. It complements this by designing and executing tests that demonstrate specifically how an adversary can either subvert the organization's security goals (
[Penetration testing] exercises take a comprehensive approach at the full spectrum of organization policies, processes, and defenses in order to improve organizational readiness, improve training for defensive practitioners, and inspect current performance levels. Independent Red Teams can provide valuable and objective insights about the existence of vulnerabilities and the efficacy of defenses and mitigating controls already in place and even of those planned for future implementation.
Anecdotally, one CFTC Roundtable participant characterized the need for penetration testing by stating that, “you will never know how strong your security is until you try to break it yourself and try to bypass it,” adding that “if you're not testing to see how strong it is, I guarantee you, somebody
Best practices and standards provide that organizations should conduct two types of penetration testing: External and internal. Many best practices sources also describe the benefits of both types of penetration testing. The Council on CyberSecurity states that organizations should:
Conduct regular external and internal penetration tests to identify vulnerabilities and attack vectors that can be used to exploit enterprise systems successfully. Penetration testing should occur from outside the network perimeter (
FINRA's recent Report on Cybersecurity Practices provides a useful description of the benefits of penetration testing:
Penetration Testing (also known as “Pen Testing”) is an effective practice that simulates a real-world attack against a firm's computer systems. The goal of a third-party penetration test is to get an attacker's perspective on security weaknesses that a firm's technology systems may exhibit.
Penetration Tests are valuable for several reasons:
• Determining the feasibility of a particular set of attack vectors;
• identifying higher-risk vulnerabilities that result from a combination of lower-risk vulnerabilities exploited in a particular sequence;
• identifying vulnerabilities that may be difficult or impossible to detect with automated network or application vulnerability scanning software;
• assessing the magnitude of potential business and operational impacts of successful attacks;
• testing the ability of network defenders to successfully detect and respond to the attack; and
• providing evidence to support increased investments in security personnel and technology.
Penetration Tests can take different forms depending on a firm's specific objectives for the test. Each of these contributes in its own way to an overall defense-in-depth strategy.
FINRA also describes the different benefits of external and internal penetration testing, and emphasizes the need for both types:
External penetration testing is designed to test a firm's systems as they are exposed to the outside world (typically via the Internet), while internal penetration testing is designed to test a firm's systems' resilience to the insider threat. An advanced persistent attack may involve an outsider gaining a progressively greater foothold in a firm's environment, effectively becoming an insider in the process. For this reason, it is important to perform penetration testing against both external and internal interfaces and systems.
NIST standards for system safeguards call for organizations to conduct penetration testing, and reference both external and internal testing.
External security testing is conducted from outside the organization's security perimeter. This offers the ability to view the environment's security posture as it appears outside the security perimeter—usually as seen from the Internet—with the goal of revealing vulnerabilities that could be exploited by an external attacker.
NIST notes that internal penetration tests offer different benefits, as follows:
For internal security testing, assessors work from the internal network and assume the identity of a trusted insider or an attacker who has penetrated the perimeter defenses. This kind of testing can reveal vulnerabilities that could be exploited, and demonstrates the potential damage this type of attacker could cause. Internal security testing also focuses on system-level security and configuration—including application and service configuration, authentication, access control, and system hardening.
The Commission is proposing to clarify the existing testing requirements for all DCMs, all SEFs, and all SDRs by specifying both external and internal penetration testing as essential to fulfilling those requirements, and defining both. External penetration testing would be defined as attempts to penetrate a DCM's, SEF's, or SDR's automated systems or networks from outside their boundaries to identify and exploit vulnerabilities (including, but not limited to, methods for circumventing the security features of an application, system, or network). Internal penetration testing would be defined as attempts to penetrate a DCM's, SEF's, or SDR's automated systems or networks from inside their boundaries to identify and exploit vulnerabilities (including, but not limited to, methods for circumventing the security features of an application, system, or network). These definitions are consistent with the standards and best practices discussed above. In light of the best practices, and the external and internal penetration testing benefits noted above, the Commission believes that such testing is important in the context of today's cybersecurity threat environment.
The proposed rule would require all DCMs, SEFs, and SDRs to conduct both external and internal penetration testing at a frequency determined by an appropriate risk analysis. As discussed above, testing as often as indicated by appropriate risk analysis is a best practice.
The proposed rule would require covered DCMs and SDRs to conduct both external and internal penetration testing no less frequently than annually.
The proposed rule would require covered DCMs and SDRs to engage independent contractors to conduct the required minimum of an annual external penetration test. It would allow covered DCMs and SDRs to have internal penetration testing, and any additional external penetration testing needed in light of appropriate risk analysis, conducted either by independent contractors or by entity employees who are not responsible for development or operation of the systems or capabilities being tested.
As noted above, best practices support having some testing conducted by independent contractors.
[E]ngaging third parties (
Current Commission system safeguards rules leave to a DCM or SDR the choice of whether penetration testing or other system safeguards testing is conducted by independent contractors or entity employees not responsible for building or operation of the systems being tested. The proposed requirement for the required minimum annual external penetration testing to be performed by independent contractors is intended to ensure that covered DCM and SDR programs of risk analysis and oversight with respect to system safeguards include the benefits provided when independent contractors perform such testing. In light of the best practices and the current level of cyber threat to the financial sector discussed above, the Commission believes that the proposed rule provisions regarding external penetration testing by independent contractors are appropriate in today's cybersecurity environment.
As defined in the proposed rule, controls are the safeguards or countermeasures used by a DCM, SEF, or SDR to protect the reliability, security, or capacity of its automated systems or the confidentiality, integrity, and availability of its data and information, so as to fulfill its statutory and regulatory responsibilities. Controls testing is defined as assessment of all of the DCM's, SEF's, or SDR's system safeguards-related controls, to determine whether they are implemented correctly, are operating as intended, and are enabling the organization to meet system safeguards requirements. Regular, ongoing testing of all of an organization's system safeguards-related controls for these purposes is a crucial part of the program of risk analysis and oversight required of all DCMs, SEFs, and SDRs by the Act and Commission regulations.
Describing some of the important benefits of controls assessment, NIST notes that “[u]nderstanding the overall effectiveness of implemented security and privacy controls is essential in determining the risk to the organization's operations and assets . . . resulting from the use of the system,”
Security assessments: (i) Ensure that information security is built into organizational information systems; (ii) identify weaknesses and deficiencies early in the development process; (iii) provide essential information needed to make risk-based decisions as part of security authorization processes; and (iv) ensure compliance to vulnerability mitigation procedures.
Best practices and standards call for organizations to conduct regular, ongoing controls testing that over time includes testing of all their system safeguards-related controls. NIST calls for organizations to have a security assessment plan that:
Assesses the security controls in the information system and its environment of operation to determine the extent to which the controls are implemented correctly, operating as intended, and producing the desired outcome with respect to meeting established security requirements.
In this NPRM, the Commission is proposing to clarify the existing testing requirements for all DCMs, SEFs, and SDRs by specifying controls testing as essential to fulfilling those requirements, and defining it. The proposed rule's definitions of controls and controls testing are discussed above.
The proposed rule would require each DCM, SEF, and SDR to conduct controls testing, including testing of each control included in its program of system safeguards-related risk analysis and oversight, at a frequency determined by an appropriate risk analysis. As discussed above, testing at such a frequency is a best practice.
The proposed rule would call for a covered DCM or an SDR to conduct controls testing, including testing of each control included in its program of system safeguards-related risk analysis and oversight, no less frequently than every two years. It would permit such testing to be conducted on a rolling basis over the course of the two-year period or the period determined by appropriate risk analysis, whichever is shorter.
The proposed rule includes this frequency provision in order to ensure that in all cases, each control included in the system safeguards risk analysis and oversight program of a covered DCM or an SDR is tested at least every two years, or tested more frequently if that is indicated by appropriate analysis of the entity's system safeguards-related risks. The Commission believes that it is essential for each control to be tested at least this often in order to confirm the continuing adequacy of the entity's system safeguards in today's cybersecurity threat environment. The Commission also recognizes that appropriate risk analysis may well determine that more frequent testing of either certain key controls or all controls is necessary.
The provision permitting such testing to be done on a rolling basis is included in recognition of the fact that an adequate system safeguards program for a covered DCM or an SDR must necessarily include large numbers of controls of all the various types discussed above, and that therefore it could be impracticable and unduly burdensome to require testing of all controls in a single test. The rolling basis provision is designed to give flexibility to a covered DCM or an SDR concerning which controls are tested when during the applicable minimum period—either every two years or more often if called for by appropriate risk analysis—as long as each control is tested within the applicable minimum period. This flexibility is intended to reduce burdens associated with testing every control to the extent possible while still ensuring the needed minimum testing frequency. Testing on a rolling or recursive basis is also congruent with best practices. NIST states that a controls test can consist of either complete assessment of all controls or a partial assessment of controls selected for a particular assessment purpose.
The proposed rule would require covered DCMs and SDRs to engage independent contractors to test and assess each of the entity's key controls no less frequently than every two years.
Financial sector entities should maintain and test a security incident
Cyber incidents are now just part of our way of life. Even large, well-funded, and technically sophisticated enterprises struggle to keep up with the frequency and complexity of attacks. The question of a successful cyber-attack against an enterprise is not “if” but “when”. When an incident occurs, it is too late to develop the right procedures, reporting, data collection, management responsibility, legal protocols, and communications strategy that will allow the enterprise to successfully understand, manage, and recover. Without an incident response plan, an organization may not discover an attack in the first place, or, if the attack is detected, the organization may not follow good procedures to contain damage, eradicate the attacker's presence, and recover in a secure fashion. Thus, the attacker may have a far greater impact, causing more damage, infecting more systems, and possibly exfiltrate more sensitive data than would otherwise be possible were an effective incident response plan in place.
CFTC Roundtable participants recommended that the Commission consider SIRP testing in addressing the various types of testing needed in today's cyber threat environment.
Having and testing a cyber and physical security incident response plan is a best practice with regard to cybersecurity. NIST urges organizations to have a cyber incident response plan that:
Establishes procedures to address cyber attacks against an organization's information system(s). These procedures are designed to enable security personnel to identify, mitigate, and recover from malicious computer incidents, such as unauthorized access to a system or data, denial of service, or unauthorized changes to system hardware, software, or data (
NIST best practices for cybersecurity also call for organizations to test their incident response capabilities with respect to their information systems, at appropriate frequencies, to determine their effectiveness, and to document test results.
[H]ave information technology (IT) plans in place, such as contingency and computer security incident response plans, so that they can respond to and manage adverse situations involving IT. These plans should be maintained in a state of readiness, which should include having personnel trained to fulfill their roles and responsibilities within a plan, having plans exercised to validate their content, and having systems and system components tested to ensure their operability in an operational environment specified in a plan. These three types of events can be carried out efficiently and effectively through the development and implementation of a test, training, and exercise (TT&E) program. Organizations should consider having such a program in place because tests, training, and exercises are so closely related. For example, exercises and tests offer different ways of identifying deficiencies in IT plans, procedures, and training.
NIST adds that:
Organizations should conduct TT&E events periodically; following organizational changes, updates to an IT plan, or the issuance of new TT&E guidance; or as otherwise needed. This assists organizations in ensuring that their IT plans are reasonable, effective, and complete, and that all personnel know what their roles are in the conduct of each IT plan. TT&E event schedules are often dictated in part by organizational requirements. For example, NIST Special Publication 800-53 requires Federal agencies to conduct exercises or tests for their systems' contingency plans and incident response capabilities at least annually.
Coordinates contingency planning activities with incident handling activities. By closely coordinating contingency planning with incident handling activities, organizations can ensure that the necessary contingency planning activities are in place and activated in the event of a security incident.
FINRA's best practices also call for SIRPs. FINRA's 2015 Report on Cybersecurity Practices states that:
Firms should establish policies and procedures, as well as roles and responsibilities for escalating and responding to cybersecurity incidents. Effective practices for incident response include involvement in industry-wide and firm-specific simulation exercises as appropriate to the role and scale of a firm's business.
The FFIEC has said that “[e]very financial institution should develop an incident response policy that is properly integrated into the business continuity planning process.”
The Council on CyberSecurity's Critical Security Controls provide that organizations should protect their information, as well as their reputations, by developing and implementing an incident response plan and infrastructure “for quickly discovering an attack and then effectively containing the damage, eradicating the attacker's presence, and restoring the integrity of the network and systems.”
SIRP testing can take a number of possible forms, consistent with generally accepted standards and best practices, and accordingly, the proposed rule would apply the general requirement that the forms of testing addressed in an entity's security incident response plan should be aligned with an entity's appropriate analysis of its system safeguards-related risks. As noted in NIST's best practices regarding security incident response testing:
Organizations test incident response capabilities to determine overall effectiveness of the capabilities and to identify potential weaknesses or deficiencies. Incident response testing includes, for example, the use of checklists, walk-through or tabletop exercises, simulations (parallel/full interrupt), and comprehensive exercises. Incident response testing can also include a determination of the effects on organizational operations (
The Commission notes that its existing system safeguards rules and guidance for DCMs, SEFs, and SDRs provide that those entities should follow generally accepted standards and best practices in meeting the testing requirements applicable to their required program of risk analysis and oversight with respect to system safeguards, and that this applies with respect to SIRPs and their testing.
For example, NIST calls for an organization to develop, document, and distribute to the appropriate personnel “an incident response policy that addresses purpose, scope, roles, responsibilities, management commitment, coordination among organizational entities, and compliance,” as well as “procedures to facilitate the implementation of the incident response policy and associated incident response controls.”
1. Provides the organization with a roadmap for implementing its incident response capability;
2. Describes the structure and organization of the incident response capability;
3. Provides a high-level approach for how the incident response capability fits into the overall organization;
4. Meets the unique requirements of the organization, which relate to mission, size, structure, and functions;
5. Defines reportable incidents;
6. Provides metrics for measuring the incident response capability within the organization;
7. Defines the resources and management support needed to effectively maintain and mature an incident response capability; and
8. Is reviewed and approved by [appropriate organization-defined personnel or roles].
• Statement of management commitment.
• Purpose and objectives of policy.
• Scope of the policy (to whom and what it applies and under what circumstances).
• Definition of computer security incidents and related terms.
• Organizational structure and definition of roles, responsibilities, and levels of authority; should include the authority of the incident response team to confiscate or disconnect equipment and to monitor suspicious activity, the requirements for reporting certain types of incidents, the requirements and guidelines for external communications and information sharing (
• Prioritization or severity ratings of incidents.
• Performance measures.
• Reporting and contact forms.
In this NPRM, the Commission is proposing to clarify the existing testing requirements for all DCMs, SEFs, and SDRs by specifying SIRP testing as essential to fulfilling those requirements, and defining it. The proposed rule would define “security incident” as a cyber or physical security event that actually or potentially jeopardizes automated system operation, reliability, security, or capacity, or the availability, confidentiality, or integrity of data. The proposed rule would define “security incident response plan” as a written plan that documents the DCM's, SEF's, or SDR's policies, controls, procedures, and resources for identifying, responding to, mitigating, and recovering from security incidents, as well as the roles and responsibilities of management, staff, and independent contractors in responding to security incidents. This definition notes that a SIRP may be a separate document or a BC-DR plan section or appendix dedicated to security incident response. The proposed rule would define “security incident response plan testing” as testing of a DCM's, SEF's, or SDR's SIRP to determine its effectiveness, identify its potential weaknesses or deficiencies, enable regular updating and improvement, and maintain the entity's preparedness and resiliency with respect to security incidents. This definition adds that methods of conducting SIRP testing may include (without limitation) checklist completion, walk-through or table-top exercises, simulations, and comprehensive exercises.
The proposed rule would require all DCMs, SEFs, and SDRs to conduct SIRP testing at a frequency determined by an appropriate risk analysis. As discussed above, testing as often as indicated by appropriate risk analysis is a best practice.
The proposed rule would call for a covered DCM or an SDR to conduct SIRP testing no less frequently than annually.
The proposed rule would leave to covered DCMs and SDRs (as well as to all other DCMs and to all SEFs) the choice of having security incident response plan testing conducted by independent contractors or by employees of the covered DCM or SDR. This provision of the proposed rule therefore would not impose any additional burdens or costs on DCMs or SDRs.
The proposed rule would clarify the testing requirements of the Commission's current system safeguards rules for all DCMs, SEFs, and SDRs by specifying that conducting regular enterprise technology risk assessments (“ETRAs”) is essential to meeting those testing requirements. The proposed rule would define ETRAs as written assessments that include (without limitation) an analysis of threats and vulnerabilities in the context of mitigating controls. As further defined, an ETRA identifies, estimates, and prioritizes a DCM's, SEF's or SDR's risks to operations or assets, or to market participants, individuals, or other entities, resulting from impairment of the confidentiality, integrity, or availability of data and information or the reliability, security, or capacity of automated systems. The purpose of assessments of enterprise risk is identifying (a) threats and vulnerabilities, (b) the harm that could occur given the potential for threats that exploit vulnerabilities, and (c) the likelihood that such harm will occur, in order to produce a broad determination of the organization's system safeguards-related risks.
An ETRA may be used as the overarching vehicle through which a DCM, SEF, or SDR draws together and uses the results and lessons learned from each of the types of cybersecurity and system safeguards testing addressed in the proposed rule, in order to identify and mitigate its system safeguards-related risks. As NIST observes, “[s]ince no one technique can provide a complete picture of the security of a system or network, organizations should combine appropriate techniques to ensure robust security assessments.”
The proposed rule's testing scope provisions would require that DCMs, SEFs, and SDRs conduct ETRAs of a scope broad enough to identify any vulnerability that, if exploited or accidentally triggered, could enable: (1) Interference with the organization's operations or the fulfillment of its statutory and regulatory responsibilities, (2) impairment or degradation of the reliability, security, or capacity of the organization's automated systems, (3) addition, deletion, modification, exfiltration, or compromise of any data relating to the organization's regulated activities, or (4) any other unauthorized action affecting the organization's regulated activities or the hardware or software used in connection with them. The proposed rule would not, however, specify particular methods, structures, or frameworks for ETRAs. Best practices provide a number of sources for such risk assessment frameworks,
The proposed rule would require all DCMs, SEFs, and SDRs to conduct ETRAs at a frequency determined by an appropriate risk analysis. As noted above, conducting testing and assessment as often as indicated by such risk analysis is a best practice.
Regular performance of ETRAs is a best practice. In describing such assessments and emphasizing their importance, FFIEC states that:
Financial institutions must maintain an ongoing information security risk assessment program that effectively:
• Gathers data regarding the information and technology assets of the organization, threats to those assets, vulnerabilities, existing security controls and processes, and the current security standards and requirements;
• Analyzes the probability and impact associated with the known threats and vulnerabilities to their assets; and
• Prioritizes the risks present due to threats and vulnerabilities to determine the appropriate level of training, controls, and assurance necessary for effective mitigation.
The proposed rule would call for covered DCMs and SDRs to conduct an ETRA no less frequently than annually.
The proposed requirement to prepare a written assessment on at least an annual basis would not eliminate the need for a covered DCM or SDR to conduct risk assessment and monitoring on an ongoing basis, as best practices require. Rather, the proposed requirement is intended to formalize the risk assessment process and ensure that it is documented at a minimum frequency. As noted in the FFIEC Handbook: “Monitoring and updating the security program is an important part of the ongoing cyclical security process. Financial institutions should treat security as dynamic with active monitoring; prompt, ongoing risk assessment; and appropriate updates to controls.”
The proposed rule would permit covered DCMs and SDRs (as well as all other DCMs and all SEFs) to conduct ETRAs using either independent contractors or employees not responsible for development or operation of the systems or capabilities being assessed. Assessment by independent contractors is congruent with best practices. NIST and FFIEC note that assessment by independent contractors offers the benefit of an independent view and approach that might not be provided by internal assessors, and can lend credibility to assessment results.
As noted above, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
In this NPRM, in addition to clarifying the existing testing requirements for DCMs, SEFs, and SDRs by specifying and defining the five types of testing that these entities necessarily must perform to fulfill those requirements, the Commission also proposes to clarify the testing requirements by specifying and defining three other aspects of DCM, SEF, and SDR risk analysis and oversight programs that are necessary to fulfillment of the testing requirements and achievement of their purposes. These three aspects are: (1) The scope of testing and assessment, (2) internal reporting and review of test results, and (3) remediation of vulnerabilities and deficiencies revealed by testing. These risk analysis and oversight program aspects are generally recognized best practice for system safeguards. As best practices and also the Act and the regulations themselves make clear, it would be essentially impossible for a DCM, SEF, or SDR to fulfill its obligation to conduct testing sufficient to ensure the reliability, security, and capacity of its automated systems without conducting testing of appropriate scope; without performing appropriate internal reporting and review of test results; or without remediating vulnerabilities and deficiencies disclosed by testing, in line with appropriate risk analysis.
The Commission is proposing that the scope of all testing and assessment required by its system safeguards regulations for DCMs, SEFs, and SDRs should be broad enough to include all testing of automated systems and controls necessary to identify any vulnerability which, if exploited or accidentally triggered, could enable an intruder or unauthorized user or insider to interfere with the entity's operations or with fulfillment of its statutory and regulatory responsibilities; to impair or degrade the reliability, security, or capacity of the entity's automated systems; to add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the entity's regulated activities; or to undertake any other unauthorized action affecting the entity's regulated activities or the hardware or software used in connection with those activities.
Testing scope should take into account not only an organization's particular automated systems and networks and vulnerabilities, including any recent changes to them, but also the nature of the organization's possible adversaries and their capabilities as revealed by current cybersecurity threat analysis: iI short, it should be based on proper risk analysis.
The proposed rule would require that a DCM's, SEF's, or SDR's senior management and its Board of Directors receive and review reports of the results of all testing and assessment required by Commission rules. It also would require DCMs, SEFs, and SDRs to establish and follow appropriate procedures for remediation of issues identified through such review, and for evaluation of the effectiveness of the organization's testing and assessment protocols.
Oversight of an organization's cybersecurity and system safeguards program by both senior management and the Board of Directors is a best practice. According to FINRA:
Active executive management—and as appropriate to the firm, board-level involvement—is an essential effective practice to address cybersecurity threats. Without that involvement and commitment, a firm is unlikely to achieve its cybersecurity goals.
The proposed rule would require each DCM, SEF, and SDR to analyze the results of the testing and assessment required by the applicable system safeguards rules, in order to identify all vulnerabilities and deficiencies in its systems, and to remediate those vulnerabilities and deficiencies to the extent necessary to enable it to fulfill the applicable system safeguards requirements and meet its statutory and regulatory obligations. The proposed rule would require such remediation to be timely in light of appropriate risk analysis with respect to the risks presented.
Remediation of vulnerabilities and deficiencies revealed by cybersecurity testing is a best practice and a fundamental purpose of such testing. FFIEC calls for management of financial sector organizations to take appropriate and timely action to address identified cybersecurity and system safeguards problems and weaknesses.
Best practices recognize that risk mitigation decisions and activities need to be prioritized in light of appropriate risk analysis, and that prompt and sufficient corrective action should target not only significant deficiencies noted in testing and assessment reports but also the root causes of such deficiencies.
As discussed above in preamble section F, the proposed rule would create requirements applicable to covered DCMs, as defined, as well as to SDRs, concerning system safeguards testing frequency and testing by independent contractors. As also discussed above, the Commission believes that the minimum testing frequency and independent contractor testing requirements in the proposed rule should be applied to DCMs whose annual total trading volume is five percent or more of the annual total trading volume of all DCMs regulated by the Commission. This would give DCMs that have less than five percent of the annual total trading volume of all DCMs more flexibility regarding the testing they must conduct. With respect to DCMs, the Commission believes that applying the proposed frequency and independent contractor requirements only to DCMs whose annual total trading volume is five percent or more of the annual total trading volume of all regulated DCMs may be appropriate, in light of the fact that smaller DCMs will still be required to conduct testing of all the types addressed in the proposed rule pursuant to the existing DCM system safeguards rules.
In order to provide certainty to all DCMs concerning whether the testing frequency and independent contractor provisions of the propose rule would apply to them, it is necessary for the Commission to receive annually from each DCM, beginning in 2016, its annual total trading volume for the preceding year, and to notify each DCM annually, beginning in 2016, of the percentage of the annual total trading volume of all DCMs which is constituted by that DCM's annual total trading volume for the preceding year. The proposed rule therefore would require each DCM to report its annual total trading volume for 2015 to the Commission within 30 calendar days of the effective date of the
The Commission is considering proposing, by means of a future NPRM, that the most systemically important SEFs should be subject to the same new minimum testing frequency requirements proposed in this NPRM for covered DCMs and SDRs. It is also considering proposing, by means of a future NPRM, that the most systemically important SEFs should be subject to the same independent contractor testing requirements proposed in this NPRM for covered DCMs and SDRs. Accordingly, by means of this concluding section of the preamble and the related set of questions and requests for comment at the conclusion of the Requests for Comment section, the Commission is issuing an Advance Notice of Proposed Rulemaking (“ANPRM”) with respect to these subjects.
As discussed above, the Commission believes that, in light of the current cyber threat environment, the minimum frequency requirements and independent contractor testing requirements proposed in this NPRM for covered DCMs and SDRs are necessary and appropriate for ensuring the cybersecurity and resiliency of such entities, and are essential to the effectiveness of their cybersecurity testing and the adequacy of their programs of system safeguards risk analysis and oversight. As noted above, these requirements are grounded in generally accepted standards and best practices.
For the same reasons, the Commission believes that it is appropriate and necessary to consider applying these same minimum testing frequency and independent contractor testing requirements to the most systemically important SEFs. The Commission is aware that at this time SEFs are new CFTC-regulated entities still awaiting final registration by the Commission, and that the SEF market is still in an early stage of development. Nevertheless, the Commission believes that SEFs that trade swaps with significant notional value or that trade significant numbers of swaps may have become systemically important enough that such requirements for them may now have become essential, in light of today's cybersecurity threat environment (discussed above), the importance of the swap market to the U.S. economy, as recognized by the Dodd-Frank Act, and the notional value and volume of swaps traded on larger SEFs or pursuant to their rules.
Preliminarily, the Commission believes it is appropriate to consider defining the “covered SEFs” to which these requirements would be applied as those SEFs for which the annual total notional value of all swaps traded on or pursuant to the rules of the SEF is ten percent (10%) or more of the annual total notional value of all swaps traded on or pursuant to the rules of all SEFs regulated by the Commission. This threshold would give SEFs that have less than ten percent of the annual total notional value of all swaps traded more flexibility regarding the testing they must conduct. As a matter of policy, the Commission believes it is appropriate to reduce possible costs and burdens for smaller entities when it is possible to do so consistent with achieving the fundamental goals of the Act and Commission rules. Accordingly, the Commission believes, preliminarily, that applying the minimum frequency and independent contractor requirements in this proposed rule only to SEFs that have ten percent or more of the annual total notional value of all swap traded would be appropriate, in light of the fact that smaller SEFs will still be required, pursuant to this current NPRM, to conduct testing of all the types clarified in the NPRM as essential to fulfilling the testing requirements of the existing SEF system safeguards rules. The Commission also notes that, under this current NPRM and the parallel NPRM being issued with respect to DCOs, a non-covered SEF that shares common ownership and automated systems with a DCO, a covered DCM, or an SDR would in practice fulfill the testing frequency and independent contractor testing requirements by virtue of sharing automated systems and system safeguards with the DCO, covered DCM, or SDR.
However, the Commission will also consider whether it would be more appropriate to define “covered SEF” in terms of annual total notional value of swaps traded, or in terms of annual total number of swaps traded, and how notional value would best be defined in this context. It will also consider what percentage share of the annual total notional value of all swaps traded on all SEFs regulated by the Commission, or of the annual total number of swaps traded, should be used to define “covered SEF.” It will further consider whether it would be more appropriate for the definition to be applied with respect to the notional value or the number of swaps in each asset class separately, or to be applied with respect to the notional value or the number of all swaps combined regardless of asset class.
Accordingly, in the final part of the Request for Comment section below, the Commission is seeking comments regarding each of these considerations. The Commission will consider all such comments in determining what definition of “covered SEF” it should propose in a future NPRM on this subject, if such a proposal is made. The Commission is also seeking information relating to the possible costs and benefits of applying the minimum testing frequency and independent contractor testing requirements to covered SEFs, and how such benefits or costs could be quantified or estimated. In addition, the Commission seeks additional information regarding the extent to which SEFs are currently meeting these requirements. Finally, the Commission seeks additional information concerning the most appropriate method for SEFs to report annually to the Commission their annual total notional value of swaps traded or their annual total number of swaps traded.
The Regulatory Flexibility Act (“RFA”) requires that agencies consider whether the regulations they propose will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis respecting the impact.
The Paperwork Reduction Act of 1995 (“PRA”)
The proposed rulemaking contains provisions that would qualify as collections of information, for which the Commission has already sought and obtained control numbers from the Office of Management and Budget (“OMB”). The titles for these collections of information are “Part 38-Designated Contract Markets” (OMB Control Number 3038-0052), “Part 37-Swap Execution Facilities” (OMB Control Number 3038-0074), and “Part 49-Swap Data Repositories; Registration and Regulatory Requirements” (OMB Control Number 3038-0086). If adopted, responses to these collections of information would be mandatory. As discussed below, with the exception of proposed § 38.1051(n) that would require all DCMs to submit annual trading volume information to the Commission, the Commission believes the proposal will not impose any new recordkeeping or reporting requirements that are not already accounted for in existing collections 3038-0052,
The Commission will protect proprietary information according to the Freedom of Information Act (“FOIA”) and 17 CFR part 145, “Commission Records and Information.” In addition, section 8(a)(1) of the Act strictly prohibits the Commission, unless specifically authorized by the Act, from making public “data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.” The Commission is also required to protect certain information contained in a government system of records according to the Privacy Act of 1974.
The Commission notes that all DCMs, SEFs, and SDRs are already subject to system safeguard-related books and records obligations. However, with the exception of business continuity-disaster recovery testing, the records relating to a particular system safeguard test or assessment are not explicitly addressed in the current rules. Therefore, as discussed above in Section I.E., the Commission is proposing to amend §§ 38.1051(g), 37.1041(g), and 49.24(i) to clarify the system safeguard-related books and records obligations for all DCMs, SEFs, and SDRs. The proposed regulations would require these entities, in accordance with Commission regulation § 1.31,
Proposed § 38.1051(n) would require all DCMs to provide to the Commission for calendar year 2015, and each calendar year thereafter, its annual total trading volume. This information would be required within 30 calendar days of the effective date of the final version of this rule, and for 2016 and subsequent years by January 31 of the following calendar year. The Commission believes that all DCMs generally calculate their annual trading volume in the usual course of business and many of the DCMs already publish this information on their Web site. Consequently, the Commission believes that any burden incurred by the DCMs as a result of proposed § 38.1051(n) would be minimal. Presently, there are 15 registered DCMs that would be required to comply with proposed § 38.1051(n) and the burden hours for this collection have been estimated as follows:
The Commission invites comment on any aspect of the proposed information collection requirements discussed above. Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission will consider public comments on such proposed requirements in: (1) Evaluating 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; (2) Evaluating 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; (3) Enhancing the quality, utility, and clarity of the information proposed to be collected; and (4) Minimizing the burden of collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological information collection techniques.
Copies of the submission from the Commission to OMB are available from the CFTC Clearance Officer, 1155 21st Street NW., Washington, DC 20581, (202) 418-5160 or from
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.
As an initial matter, the Commission considers the incremental costs and benefits of these regulations, that is the
As discussed below, the Commission has identified certain costs and benefits associated with some of the proposed regulations and requests comment on all aspects of its proposed consideration of costs and benefits, including identification and assessment of any costs and benefits not discussed herein. In particular, the Commission requests that commenters provide data and any other information or statistics that the commenters relied on to reach any conclusions regarding the Commission's proposed consideration of costs and benefits, including the series of questions at the end of this section.
As discussed above in Section I.A., the Commission believes that the current cyber threats to the financial sector, including DCMs, SEFs, and SDRs regulated by the Commission, have expanded over the course of recent years. According to the Committee on Payments and Market Infrastructures of the Bank for International Settlements, “Cyber attacks against the financial system are becoming more frequent, more sophisticated and more widespread.”
The Commission recognizes that any economic effects, including costs and benefits, should be compared to a baseline that accounts for current regulatory requirements. The baseline for this cost and benefit consideration is the set of existing requirements under the Act and the Commission's regulations for DCMs, SEFs, and SDRs. As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
As discussed above, the Commission proposes to clarify the system safeguards and cybersecurity testing requirements of its existing rules for DCMs, SEFs, and SDRs, by specifying and defining five types of system safeguards testing that a DCM, SEF, or SDR necessarily must perform to fulfill the testing requirement. Each of the types of testing and assessment that would be required under the proposed rule—vulnerability testing, penetration testing, controls testing, security incident response plan testing, and enterprise technology risk assessment—is a generally recognized best practice for system safeguards, as discussed above and discussed in detail below. Moreover, the Commission believes, as the generally accepted standards and best practices noted in this NPRM make it clear, that it would be essentially impossible for a DCM, SEF, or SDR to fulfill its existing obligation to conduct testing sufficient to ensure the reliability, security, and capacity of its automated systems without conducting each type of testing addressed by the proposed rule. This has been true since before the testing requirements of the Act and the current regulations were adopted, and it would be true today even if the Commission were not issuing this NPRM.
To assist the Commission in its understanding of the current system safeguard practices at DCMs and SDRs, Commission staff collected some preliminary information from some DCMs and SDRs regarding their current costs associated with conducting vulnerability testing, external and internal penetration testing, controls testing, and enterprise technology risk assessments (“DMO Preliminary Survey”).
As noted above, and discussed more fully below, the Commission believes that to the extent that the proposal will impose additional costs, such costs will primarily impact covered DCMs (as defined) and SDRs as a result of the minimum testing frequency and independent contractor requirements.
While certain costs are amenable to quantification, other costs are not easily estimated, such as the costs to the public or market participants in the event of a cybersecurity incident at a DCM, SEF, or SDR. The public interest is served by these critical infrastructures performing their functions. The Commission's proposed regulations are intended to mitigate the frequency and severity of system security breaches or functional failures, and therefore, provide an important if unquantifiable benefit to the public interest. Although the benefits of effective regulation are difficult to estimate in dollar terms, the Commission believes that they are of equal importance in light of the Commission's mandate to protect market participants and the public and to promote market integrity.
The discussion of costs and benefits that follows begins with a summary of each proposed regulation and a consideration, where appropriate, of the corresponding costs and benefits. At the conclusion of this discussion, the Commission considers the costs and benefits of the proposed regulations collectively in light of the five factors set forth in section 15(a) of the CEA.
As discussed above in Section I.B., the proposed rules would, among other things, add enterprise risk management and governance to the list of required categories of system safeguards-related risk analysis and oversight.
As discussed in the preamble, the Commission believes that enterprise risk management and governance is implicit in the Commission's existing system safeguard regulations, which already require each DCM, SEF, and SDR to maintain a program of risk analysis and oversight with respect to system safeguards.
As discussed above in Section I.C., the proposed rules would make the existing provisions with respect to following best practices, ensuring tester independence, and coordinating BC-DR plans mandatory for DCMs, SEFs, and SDRs.
As discussed in the preamble, the Commission's existing rules for DCMs and SDRs and its guidance for SEFs provide that such entities should follow best practices in addressing the categories which their programs of risk analysis and oversight are required to include.
Making the provisions mandatory will align the system safeguards rules for DCMs, SEFs, and SDRs with the Commission's system safeguards rules for DCOs, which already contain mandatory provisions in these respects. The Commission believes that in today's cybersecurity threat environment, following generally accepted standards and best practices, ensuring tester independence, and coordinating BC-DR plans appropriately are essential to adequate system safeguards and cyber resiliency for DCMs, SEFs, and SDRs. The Commission also believes that clarity concerning necessary requirements in these respects will benefit DCMs, SEFs, and SDRs, their market participants and customers, and the public interest.
The Commission requests comment on the potential costs and benefits associated with the proposed provisions that would make it mandatory for DCMs, SEFs, and SDRs to follow best practices, ensure tester independence, and coordinate BC-DR plans, including, where possible, quantitative data.
As discussed above in Section I.D., the proposed rules would require a DCM, SEF, or SDR to update its BC-DR plan and emergency procedures at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually.
The Commission's existing rules provide that DCMs, SEFs, and SDRs must maintain BC-DR plans and emergency procedures, but do not specify a frequency in which such plans and procedures must be updated.
The Commission notes that updating BC-DR plans and emergency procedures at least annually is a generally accepted best practice, as it follows NIST and other standards. These standards highlight the importance of updating such plans and procedures at least annually to help enable the organization to better prepare for cyber security incidents. Specifically, the NIST standards provide that once an organization has developed a BC-DR plan, “the organization should implement the plan and review it at least annually to ensure the organization is following the roadmap for maturing the capability and fulfilling their [sic] goals for incident response.”
The Commission requests comment on the potential costs and benefits associated with complying with proposed regulations §§ 38.1051(c), 37.1401(c), and 49.24(d), including, where possible, quantitative data.
As discussed above in Section I.E., proposed §§ 38.1051(g), 37.1401(g), and 49.24(i) would require a DCM, SEF, or SDR, in accordance with Commission regulation § 1.31,
As discussed more fully above in the PRA section, all DCMs, SEFs, and SDRs are already subject to system safeguard-related books and records requirements. However, with the exception of BC-DR testing, the records relating to a particular system safeguard test or assessment are not explicitly addressed in the current rules. Therefore, the Commission is proposing §§ 38.1051(g), 37.1401(g), and 49.24(i) to clarify the system safeguard recordkeeping and reporting requirements for these entities. The Commission notes that the pertinent recordkeeping and reporting requirements of proposed § 38.1051(g) are contained in the provisions of current Commission regulations §§ 38.1051(g) and (h). The pertinent recordkeeping and reporting requirements of proposed § 37.1041(g) are contained in the provisions of current §§ 37.1041(f) and (g). In addition, the pertinent recordkeeping and reporting requirements of proposed § 49.24(i) are contained in the provisions of current Commission regulations §§ 49.24(i) and (j). Because the production of system-safeguard records is already required by the current rules, the Commission believes that the proposed rules would not impose any additional costs on DCMs, SEFs, and SDRs.
The recordkeeping requirements for DCMs, SEFs, and SDRs allow the Commission to fulfill its oversight role and effectively monitor a DCM's, SEF's, or SDR's system safeguards program and compliance with the Act and the Commission's regulations. In addition, such requirements enable Commission staff to perform efficient examinations of DCMs, SEFs, and SDRs, and increase the likelihood that Commission staff may identify conduct inconsistent with the requirements. Further, making all system safeguard-related documents available to the Commission upon request informs the Commission of areas of potential weaknesses, or persistent or recurring problems, across the DCMs, SEFs, and SDRs.
Proposed §§ 38.105(h)(1), 37.1041(h)(1), and 49.24(j)(1) would include definitions for the following terms: (1) Controls; (2) controls testing; (3) enterprise technology risk assessment; (4) external penetration testing; (5) internal penetration testing; (6) key controls; (7) security incident; (8) security incident response plan; (9) security incident response plan testing; and (10) vulnerability testing. Additionally, § 38.105(h)(1) would include the definition for covered designated contract market.
The proposed definitions simply provide context to the specific system safeguard tests and assessments that a DCM, SEF, or SDR would be required to conduct on an ongoing basis. Accordingly, the costs and benefits of these terms are attributable to the substantive testing requirements and, therefore, are discussed in the cost and benefit considerations related to the rules describing the requirements for each test.
As discussed above in Section I.F.3., proposed §§ 38.1051(h)(1), 37.1401(h)(1), and 49.24(j)(1) would define vulnerability testing as testing of a DCM's, SEF's, or SDR's automated systems to determine what information may be discoverable through a reconnaissance analysis of those systems and what vulnerabilities may be present on those systems. The proposed rules would require a DCM, SEF, or SDR to conduct vulnerability testing that is sufficient to satisfy the testing scope requirements in proposed §§ 38.1051(k), 37.1401(k), and 49.24(l), at a frequency determined by an appropriate risk analysis. Vulnerability testing would include automated vulnerability scanning, with some such scanning to be conducted on an authenticated basis (
As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
As discussed above, the proposed rules would require covered DCMs and SDRs to conduct vulnerability testing no less frequently than quarterly.
As discussed above, the proposed rules would require at least two of the required quarterly vulnerability tests each year to be conducted by an independent contractor. Current regulations §§ 38.1051(h) and 49.24(j) provide that testing of automated systems should be conducted by qualified, independent professionals.
The Commission's preliminary cost estimate for vulnerability testing, based on data collected from the DMO Preliminary Survey, suggests that on average, a covered DCM or SDR currently spends approximately $3,495,000 annually.
Vulnerability testing identifies, ranks, and reports vulnerabilities that, if exploited, may result in an intentional or unintentional compromise of a system.
With respect to the proposed minimum frequency requirement for covered DCMs and SDRs, the Commission believes that such entities have a significant incentive to conduct vulnerability testing at least quarterly in order to identify the latest threats to the
As noted above, the proposed rules would also require covered DCMs and SDRs to engage independent contractors to conduct two of the required quarterly vulnerability tests each year, while providing covered DCMs and SDRs with the flexibility to conduct other vulnerability testing using employees not responsible for development or operation of the systems or capabilities being tested. Consistent with the views shared by the panelists at the CFTC Roundtable, the Commission believes there are important benefits when a testing program includes both testing by independent contractors and testing by entity employees not responsible for building or operating the system being tested. One participant in the CFTC Roundtable noted, “[t]here are advantages to both, but neither can stand alone.”
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of vulnerability testing, including the minimum testing frequency and independent contractor requirement, and the extent to which the proposed rules clarify the standard. The Commission particularly solicits comments concerning the need for vulnerability testing and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity service providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
As discussed above in Section I.F.4., proposed §§ 38.1051(h)(1), 37.1401(h)(1), and 49.24(j)(1) would define external penetration testing as attempts to penetrate a DCM's, SEF's or SDR's automated systems from outside the systems' boundaries to identify and exploit vulnerabilities. The proposed rules would require a DCM, SEF, or SDR to conduct external penetration testing that is sufficient to satisfy the scope requirements in proposed §§ 38.1051(k), 37.1401(k), and 49.24(l), at a frequency determined by an appropriate risk analysis. At a minimum, covered DCMs and SDRs would be required to conduct external penetration testing no less frequently than annually. Covered DCMs and SDRs would also be required to engage independent contractors to perform the required annual external penetration test, although the entity could have other external penetration testing conducted by employees not responsible for development or operation of the systems or capabilities being tested.
As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
The proposed rules clarify the existing testing requirements by specifying external penetration testing as a necessary component. The Commission believes it has always been the case.
As discussed above, the proposed rules would require covered DCMs and SDRs to conduct external penetration testing no less frequently than annually. The current rules require DCMs and SDRs to conduct regular, periodic, objective testing of their automated systems.
As discussed above, the proposed rules would require the annual external penetration test to be conducted by an independent contractor. Current regulations §§ 38.1051(h) and 49.24(j) provide that testing of automated systems should be conducted by qualified, independent professionals.
Based on the cost information from the DMO Preliminary Survey, the Commission estimates that the average cost for a covered DCM or SDR to conduct external penetration testing annually is approximately $244,625. The Commission recognizes that the actual costs may vary widely as a result of many factors, including the size of the organization, the complexity of the automated systems, and the scope of the test. Where a covered DCM or SDR does not currently use an independent contractor to conduct the external penetration test, the Commission expects that such entities may also incur some additional minor costs as a result of the need to establish and implement internal policies and procedures that are reasonably designed to address the workflow associated with the test. For example, the Commission expects that such policies and procedures may include communication and cooperation between the entity and independent contractor, communication and cooperation between the entity's legal, business, technology, and compliance departments, appropriate authorization to remediate vulnerabilities identified by the independent contractor, implementation of the measures to address such vulnerabilities, and verification that these measures are effective and appropriate. The Commission acknowledges that covered DCMs and SDRs that currently do not use independent contractors for the external penetration test may need to dedicate time to reviewing and revising their existing policies and procedures to ensure that they are sufficient in the context of the proposed requirements. The Commission believes that any costs incurred by the entities as result of such review would be minor.
The benefits for external penetration testing, including the minimum testing frequency and independent contractors, are discussed below in conjunction with the benefits for internal penetration testing.
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of external penetration testing, including the minimum testing frequency and independent contractor requirement. The Commission particularly solicits comments concerning the need for external penetration testing and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity service providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
As discussed above in Section I.F.4., proposed §§ 38.1051(h)(1), 37.1401(h)(1), and 49.24(j)(1) would define internal penetration testing as attempts to penetrate a DCM's, SEF's, or SDR's automated systems from inside the systems' boundaries to identify and exploit vulnerabilities. The proposed rules would require a DCM, SEF, or SDR to conduct internal penetration testing that is sufficient to satisfy the scope requirements in proposed §§ 38.1051(k), 37.1401(k), and 49.24(l), at a frequency determined by an appropriate risk analysis. At a minimum, covered DCMs and SDRs would be required to conduct the internal penetration testing no less frequently than annually. The DCM or SDR may engage independent contractors to conduct the test, or the entity may use employees of the DCM or SDR who are not responsible for development or operation of the systems or capabilities being tested.
1. Internal Penetration Testing for All DCMs, SEFs, and SDRs
As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
As discussed above, the proposed rules would require covered DCMs and SDRs to conduct internal penetration testing no less frequently than annually. The current rules require DCMs and SDRs to conduct regular, periodic, objective testing of their automated systems.
Based on the data from the DMO Preliminary Survey, the Commission estimates that the current average cost for a covered DCM or SDR conducting internal penetration testing is approximately $410,625 annually. In providing these estimates, the Commission recognizes that the actual costs may vary significantly as a result of numerous factors, including the size of the organization, the complexity of the automated systems, and the scope of the test. Additionally, the Commission recognizes that the affected entities may undertake an evaluation, on an initial and ongoing basis, regarding internal policies and procedures that may need to be revised. If such an evaluation is required, the Commission believes that any incremental costs would be minor.
External penetration testing benefits DCMs, SEFs, and SDRs by identifying the extent to which its systems can be compromised before an attack is identified.
By attempting to penetrate a DCM's, SEF's or SDR's automated systems from inside the systems' boundaries, internal penetration tests allow the respective entities to assess system vulnerabilities from attackers that penetrate their perimeter defenses and from trusted insiders, such as former employees and contractors. In addition to being an industry best practice, the Commission believes that annual internal penetration testing is important because such potential attacks by trusted insiders generally pose a unique and substantial threat due to their more sophisticated understanding of a DCM's, SEF's, or SDR's systems. Moreover, “[a]n advanced persistent attack may involve an outsider gaining a progressively greater foothold in a firm's environment, effectively becoming an insider in the process. For this reason, it is important to perform penetration testing against both external and internal interfaces and systems.”
With respect to external penetration testing, the proposed requirement for annual testing to be performed by independent contractors is intended to ensure that covered DCM and SDR programs of risk analysis and oversight with respect to system safeguards include the benefits provided when independent contractors perform such testing. The Commission shares the view expressed by participants in the CFTC Roundtable that vendor testing has particular value with respect to external penetration testing because the test comes from the viewpoint of an outsider and against the current tactics, techniques, and threat vectors of current threat actors as revealed by current threat intelligence.
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of internal penetration testing, including the minimum testing frequency requirement. The Commission particularly solicits comments concerning the need for internal penetration testing and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best
As discussed above in Section I.F.5., proposed §§ 38.1051(h)(1), 37.1401(h)(1) and 49.24(j)(1) would define controls testing as an assessment of the DCM's, SEF's, or SDR's market controls to determine whether such controls are implemented correctly, are operating as intended, and are enabling the entity to meet the system safeguard requirements established by the respective chapters. The proposed rules would require a DCM, SEF, or an SDR to conduct controls testing that is sufficient to satisfy the scope requirements in proposed §§ 38.1051(k), 37.1401(k), and 49.24(l), at a frequency determined by an appropriate risk analysis. At a minimum, covered DCMs and SDRs would be required to conduct the controls testing no less frequently than every two years. The testing may be conducted on a rolling basis over the course of the minimum two-year period or over a minimum period determined by an appropriate risk analysis. The covered DCM and SDR must engage independent contractors to test and assess the key controls in the entity's risk analysis and oversight, no less frequently than every two years. The entities may conduct any other controls testing required by §§ 38.1051(h)(4) and 49.24(j)(4) by using either independent contractors or employees of the covered DCM or SDR who are not responsible for the development or operations of the systems or capabilities being tested.
As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
The proposed rules clarify the existing testing requirements by specifying controls testing as a necessary component. The Commission believes that this has always been the case.
As discussed above, the proposed rules would require a covered DCM or SDR to test each control included in its program of system safeguards-related risk analysis and oversight no less frequently than every two years. The proposed rules would also permit such testing to be conducted on a rolling basis over the course of the period determined by appropriate risk analysis. The current rules require DCMs and SDRs to conduct regular, periodic, objective testing of their automated systems.
As discussed above, the proposed rules would require a DCM or SDR to engage an independent contractor to test and assess the key controls no less frequently than every two years. Current regulations §§ 38.1051(h) and 49.24(j) provide that testing of automated systems should be conducted by qualified, independent professionals.
Based on the information from the DMO Preliminary Survey, the Commission estimates that the current average cost for a covered DCM or an SDR conducting controls testing is approximately $2,724,000 annually.
Controls testing is essential in determining risk to an organization's operations and assets, to individuals, and to other organizations, and to the nation resulting from the use of the organization's systems.
As noted above in the costs section, the proposed rules would require a covered DCM or SDR to test each control included in its program of system safeguards-related risk analysis oversight no less frequently than every two years. The Commission believes that it is essential for each control to be tested at least this often in order to confirm the continuing adequacy of the entity's system safeguards in today's cybersecurity threat environment. Additionally, the frequency requirement would benefit the affected entities by providing additional clarity concerning what is required of them in this respect. The proposed rules would also permit such testing to be conducted on a rolling basis over the course of the period determined by appropriate risk analysis. The rolling basis provision is designed to give a covered DCM or SDR flexibility concerning which controls are tested during the required minimum frequency period. This flexibility is intended to reduce burdens associated with testing every control to the extent possible while still ensuring the needed minimum testing frequency. The Commission also notes that testing on a rolling basis is consistent with industry best practices.
Additionally, as noted above, the proposed rules would require a covered DCM or SDR to engage independent contractors to test and assess each of the entity's key controls no less frequently than every two years. The entities would have the flexibility to conduct any other controls testing by either independent contractors or entity employees not responsible for development or operation of the systems or capabilities being tested. Independent testing of key controls is consistent with best practices. Significantly, the NIST Standards note the important benefits of independent testing and call for controls testing to include assessment by independent assessors, free from actual or perceived conflicts of interest, in order to validate the completeness, accuracy, integrity, and reliability of test results.
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of controls testing, including the minimum testing frequency and independent contractor requirement. The Commission particularly solicits comments concerning the need for controls testing and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity service providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
As discussed above in Section I.F.6., proposed §§ 38.1051(h)(1), 37.1401(h)(1), and 49.24(j)(1) would define security incident response plan testing as testing of a DCM's, SEF's, or SDR's security incident response plan to determine the plan's effectiveness, identifying its potential weaknesses or deficiencies, enabling regular plan updating and improvement, and maintaining organizational preparedness and resiliency with respect to security incidents. In addition, methods of conducting security incident response plan testing may include, but are not limited to, checklist completion, walk-through or table-top exercises, simulations, and comprehensive exercises. The DCM's, SEF's, or SDR's security incident response would be required to include, without limitation, the entity's definition and classification of security incidents, its policies and procedures for reporting security incidents and for internal and external communication and information sharing regarding security incidents, and the hand-off and escalation points in its security incident response process. The entities may coordinate its security incident response plan testing with other testing required by this section or with testing of its other BC-DR and crisis management plans. The proposed rules would
As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
The proposed rules clarify the existing testing requirements by specifying security incident response plan testing as a necessary component. The Commission believes that this has always been the case.
As discussed above, the proposed rules would require covered DCMs and SDRs to conduct security incident response plan testing at least annually. The current rules require DCMs and SDRs to conduct regular, periodic, objective testing of their automated systems.
At present, the Commission cannot quantify or estimate the current costs associated with security incident response plan testing at a covered DCM or SDR. Nevertheless, to the extent that the proposed rules would impose additional costs on covered DCMs and SDRs, the Commission believes that such costs may vary widely as result of numerous factors, including the size of the organization, the complexity of the automated systems, and the scope of the test. Additional costs incurred by the affected entities could include time in reviewing and revising existing policies and procedures, initially and on an ongoing basis, concerning security incident response testing to ensure that they are sufficient in the context of the proposed requirements. In such cases, the Commission believes that any costs would be minimal.
Security incident response plans, and adequate testing of such plans, reduce the damage caused by breaches of a DCM's, SEF's, or SDR's network security. Network security breaches are highly likely to have a substantial negative impact on a DCM's, SEF's, or SDR's operations. They can increase costs through lost productivity, lost current and future market participation or swap data reporting, compliance penalties, and damage to the DCM's, SEF's, or SDR's reputation and brand. Moreover, the longer a cyber intrusion continues, the more its impact may be compounded.
The proposed rules would provide clarity to covered DCMs and SDRs concerning the minimum testing frequency. The Commission believes the proposed frequency requirement would increase the likelihood that these entities could mitigate the duration and impact in the event of a security incident by making them better prepared for such an incident. Therefore, a covered DCM or SDR may also be better positioned to reduce any potential impacts to automated system operation, reliability, security, or capacity, or the availability, confidentiality, or integrity of its futures and swaps data.
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of the proposed security incident response plan testing requirement, including the minimum testing frequency requirement. The Commission also seeks comments on all aspects of the proposed security incident response plan testing requirement. The Commission particularly solicits comments concerning both the need for security incident response plans and plan testing and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity service providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
As discussed above in Section I.F.7., proposed §§ 38.1051(h)(1), 37.1401(h)(1), and 49.24(j)(1) would define ETRA as an assessment that includes an analysis of threats and vulnerabilities in the context of mitigating controls. In addition, the assessment identifies, estimates, and prioritizes risks to the entity's operations or assets, or to market participants, individuals, or other entities, resulting from impairment of the confidentiality, integrity, and availability of data and information or the reliability, security, or capacity of automated systems. The proposed rules
As discussed in the preamble, the Act requires each DCM, SEF, and SDR to develop and maintain a program of system safeguards-related risk analysis and oversight to identify and minimize sources of operational risk.
The Commission's existing system safeguards rules for DCMs, SEFs, and SDRs mandate that, in order to achieve these statutory requirements, each DCM, SEF, and SDR must conduct testing and review sufficient to ensure that its automated systems are reliable, secure, and have adequate scalable capacity.
The proposed rules clarify the existing testing requirements by specifying ETRAs as a necessary component.
As discussed above, the proposed rules would require covered DCMs and SDRs to conduct ETRAs at least annually. The current rules require DCMs and SDRs to conduct regular, periodic, objective testing of their automated systems.
Based on the information from the DMO Preliminary Survey, the Commission estimates that the current average cost for covered DCMs and SDRs conducting the assessment is approximately $1,347,950 annually. However, the Commission notes that actual costs may vary widely among the affected entities due to the size of the organization, the complexity of the automated systems, and the scope of the assessment. Additionally, the Commission recognizes that the affected entities may undertake an evaluation, on an initial and ongoing basis, regarding internal policies and procedures that may need to be revised. If such an evaluation is required, the Commission believes that any incremental costs would be minor.
The Commission believes that ETRAs are an essential component of a comprehensive system safeguard program. ETRAs can be viewed as a strategic approach through which DCMs, SEFs, and SDRs identify risks and aligns its systems goals accordingly. The Commission believes that these requirements are necessary to support a strong risk management framework for DCMs, SEFs, and SDRs, thereby helping to protect DCMs, SEFs, and SDRs, market participants, parties required by the Act or Commission regulations to report swaps data to SDRs, and helping to mitigate the risk of market disruptions.
The proposed rules would provide clarity to covered DCMs and SDRs concerning the minimum assessment frequency. Best practices support annual or more frequent assessment of technology and cybersecurity risk. For example, FINRA states that firms conducting appropriate risk assessment do so either annually or on an ongoing basis throughout the year, in either case culminating in an annual risk assessment report.
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of the enterprise technology risk assessment requirement, including the minimum testing frequency requirement. The Commission particularly solicits comments concerning the need for enterprise technology risk assessments and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity service providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
As discussed above in Section I.G.1., proposed §§ 38.1051(k), 37.1401(k), and 49.24(l) would require that the scope for all system safeguards testing and assessment required by this chapter must be broad enough to include all testing of automated systems, networks, and controls necessary to identify any vulnerability which, if triggered, could enable an intruder or unauthorized user or insider to: (1) Interfere with the entity's operations or with fulfillment of the entity's statutory and regulatory responsibilities; (2) impair or degrade the reliability, security, or adequate
The Commission believes that the costs and benefits associated with the scope for testing and assessment are generally attributable to the substantive testing requirements; therefore they are discussed in the cost and benefit considerations related to the rules describing the requirements for each test or assessment.
As discussed above in Section I.G.2. proposed §§ 38.1051(l), 37.1401(l), and 49.24(m) would require the senior management and the Board of Directors of the DCM, SEF, or SDR to receive and review reports setting forth the results of all testing and assessment required by this section. In addition, the proposed rules would require the DCM, SEF, or SDR to establish and follow appropriate procedures for the remediation of issues identified through such review, as provided in sections 38.1051(m), 37.1401(m), and 49.24(n) (Remediation), and for evaluation of the effectiveness of testing and assessment protocols.
As discussed in the preamble, the Commission proposes to clarify the testing requirements by specifying and defining certain aspects of DCM, SEF, and SDR risk analysis and oversight programs that are necessary to fulfillment of the testing requirements and achievement of their purposes. This clarification includes review of system safeguard testing and assessments by senior management and the DCM's, SEF's, or SDR's Board of Directors, which is recognized as best practice for system safeguards.
The Commission believes that internal reporting and review are an essential component of a comprehensive and effective system safeguard program. While senior management and the DCM's, SEF's, or SDR's board of directors will have to devote resources to reviewing testing and assessment reports, active supervision by senior management and the board of directors promotes responsibility and accountability by affording them greater opportunity to evaluate the effectiveness of the testing and assessment protocols. Moreover, the attention by the board of directors and senior management should help to promote a focus on such reviews and issues, and enhance communication and coordination regarding such reviews and issues among the business, technology, legal, and compliance personnel of the DCM, SEF, and SDR. Active supervision by senior management and the board of directors also promotes a more efficient, effective, and reliable DCM and SDR risk management and operating structure. Consequently, DCMs, SEFs, and SDRs should be better positioned to strengthen the integrity, resiliency, and availability of its automated systems.
The Commission requests comment on any potential costs of proposed §§ 38.1051(l), 37.1401(l), and 49.24(m) on DCMs, SEFs, and SDRs, including, where possible, quantitative data.
As discussed above in Section I.G.3., proposed §§ 38.1051(m), 37.1401(m), and 49.24(n) would require a DCM, SEF, or an SDR to analyze the results of the testing and assessment required by this section to identify all vulnerabilities and deficiencies in the entity's systems. The DCM, SEF, or SDR would also be required to remediate the vulnerabilities and deficiencies revealed by all testing and assessment, to the full extent necessary to enable the entity to fulfill the system safeguards requirements of this chapter, and to meet all statutory and regulatory obligations in connection with its regulated activities. The remediation must be timely in light of appropriate risk analysis with respect to the risks presented by such vulnerabilities and deficiencies.
As discussed in the preamble, the Commission proposes to clarify the testing requirements by specifying and defining certain aspects of DCM, SEF, and SDR risk analysis and oversight programs that are necessary to fulfillment of the testing requirements and achievement of their purposes. This clarification includes remediation. Remediation of vulnerabilities and deficiencies revealed by cybersecurity testing is a best practice and a fundamental purpose of such testing.
The Commission believes that effective remediation is a critical component of a comprehensive and effective system safeguard program. As discussed above, the Commission believes that the remediation of vulnerabilities and deficiencies revealed by cybersecurity testing is an industry best practice. Moreover, remediation may reduce the frequency and severity of systems disruptions and breaches for the DCMs, SEFs, and SDRs. In addition, remediation helps to ensure that the entities dedicate appropriate resources to timely address system safeguard-related deficiencies and would place an emphasis on mitigating harm to market participants while promoting market integrity. Without a timely remediation requirement, the impact of vulnerabilities or deficiencies identified by the testing or assessment could persist and have a detrimental effect on the futures and swaps markets generally as well as market participants.
As set out in more detail below in the Request for Comments section, the Commission seeks additional information regarding the costs and benefits of the remediation requirement. The Commission particularly solicits comments concerning the need for remediation and the associated costs and benefits, from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity service providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
Proposed § 38.1051(n) would require all DCMs to provide to the Commission for calendar year 2015, and each calendar year thereafter, its annual total trading volume. This information would be required within 30 calendar days of the effective date of the final version of this rule, and for 2016 and subsequent years by January 31 of the following calendar year.
As discussed above in the PRA section, the Commission believes that all DCMs generally calculate their annual trading volume in the usual course of business and many of the DCMs already publish this information on their Web site. Therefore, the Commission believes that any costs incurred by the DCMs as a result of proposed § 38.1051(n) would be minimal. The Commission estimates that each DCM would spend approximately half an hour to prepare and file the trading volume information with Commission at a cost of approximately $22.00 annually.
As a result of the Commission's proposal to apply the enhanced system safeguard requirements to DCMs whose annual trading volume in a calendar year is five percent or more of the combined annual trading volume of all DCMs regulated by Commission (
The Commission believes that the proposed rules should benefit the futures and swaps markets by promoting more robust automated systems and therefore fewer disruptions and market-wide closures, systems compliance issues, and systems intrusions. Because automated systems play a central and critical role in today's electronic financial market environment, oversight of DCMs, SEFs, and SDRs with respect to automated systems is an essential part of effective oversight of both futures and swaps markets. In addition, providing the Commission with reports concerning system safeguards testing and assessments required by the proposed rules will facilitate the Commission's oversight of futures and swaps markets, augment the Commission's efforts to monitor systemic risk, and will further the protection of market participants and the public by helping to ensure that automated systems are available, reliable, secure, have adequate scalable capacity, and are effectively overseen. As a result, the Commission also expects fewer interruptions to the systems that directly support the respective entities, including matching engines, regulatory and surveillance systems, and the dissemination of market data, which should help ensure compliance with the relevant statutory and regulatory obligations. Moreover, market participants will benefit from systems that are secure and able to protect their anonymity with respect to positions in the marketplace and other aspects of their personally-identifiable information.
A DCM or SEF that has system safeguard policies and procedures in place, including the timely remediation of vulnerabilities and deficiencies in light of appropriate risk analysis, will promote overall market confidence and could lead to greater market efficiency, competitiveness, and perceptions of financial integrity. Safeguarding the reliability, security, and capacity of DCM, SEF, and SDR computer systems are essential to mitigation of system risk for the nation's financial sector as a whole. A comprehensive testing program capable of identifying operational risks will enhance the efficiency, and financial integrity of the markets by increasing the likelihood that trading remains uninterrupted and transactional data and positions are not
Any interruption in trading on a DCM or SEF can distort the price discovery process. Similarly, any interruption in the operations of an SDR will hamper the Commission's ability to examine potential price discrepancies and other trading inconsistencies in the swaps market. Therefore, reliable functioning computer systems and networks are essential in protecting the price discovery process. The Commission believes that the proposed rules will reduce the incidence and severity of automated system security breaches and functional failures. In addition, the Commission views the proposed rules as likely to facilitate the price discovery process by mitigating the risk of operational market interruptions from disjoining forces of supply and demand. The presence of thorough system safeguards testing signals to the market that a DCM or SEF is a financially sound place to trade, thus attracting greater liquidity which leads to more accurate price discovery.
The proposed rules will benefit the risk management practices of both the regulated entities and the participants who use the facilities of those entities. Participants who use DCMs or SEFs to manage commercial price risks should benefit from markets that behave in an orderly and controlled fashion. If prices move in an uncontrolled fashion due to a cybersecurity incident, those who manage risk may be forced to exit the market as a result of unwarranted margin calls or deterioration of their capital. In addition, those who want to enter the market to manage risk may only be able to do so at prices that do not reflect the actual supply and demand fundamentals due to the effects of a cybersecurity incident. Relatedly, participants may have greater confidence in their ability to unwind positions because market disruptions would be less common. With respect to SDRs, the Commission believes that the ability of participants in the swaps market to report swap transactions to an SDR without interruption will serve to improve regulators' ability to monitor risk management practices through better knowledge of open positions and SDR services related to various trade, collateral, and risk management practices. The Commission notes regulator access (both domestic and foreign) to the data held by an SDR is essential for regulators to be able to monitor the swap market and certain participants relating to systemic risk.
The American economy and the American public depend upon the availability of reliable and secure markets for price discovery, hedging, and speculation. Ensuring the adequate safeguarding and the reliability, security, and capacity of the systems supporting these market functions is a core focus in the Commission's role in monitoring and assessing the level of systemic risk, and is central to its fulfillment of oversight responsibilities. As one CFTC Roundtable panelist explained, “if the futures system doesn't work many other things don't work, and it's a wholly interconnected system. And the more we can make all the parts more secure the more resilient it's going to be overall.”
The Commission requests comments from the public on all aspects of this NPRM. This specifically includes comments on all aspects of the Commission's preliminary consideration of costs and benefits associated with the Proposal, and all aspects of the Commission's preliminary consideration of the five factors that the Commission is required to consider under section 15(a) of the CEA. The Commission particularly solicits comments concerning all aspects of the Proposal and its associated costs and benefits from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
The questions below relate to areas that the Commission believes may be relevant. In addressing these questions or any other aspects of the Proposal and Commission's assessments, commenters are encouraged to submit any data or other information that they may have quantifying or qualifying the costs and benefits of the Proposal. Comments may be submitted directly to the Office of Information and Regulatory Affairs, by fax at (202) 395-6566 or by email at
1. Do commenters agree with the Commission's analysis of the costs and benefits of each provision in the Proposal? Please explain why or why not.
2. Do commenters believe that there are additional benefits or costs that could be quantified or otherwise estimated? If so, please identify those categories and, if possible, provide specific estimates or data.
3. Do commenters agree that the definitions of the categories of risk analysis and oversight to be addressed by DCM, SEF, and SDR programs of system safeguards-related risk analysis and oversight included in the Proposal are appropriate, sufficiently clear, and
4. Do commenters agree that following generally accepted standards and best practices, ensuring tester independence, and coordinating BC-DR plans appropriately are essential to adequate system safeguards and cyber resiliency for DCMs, SEFs, and SDRs, and that the current rule provisions and guidance providing that DCMs, SEFs, and SDRs should comply in these regards should be changed to require mandatory compliance? Please identify, and quantify insofar as possible, any new costs that DCMs, SEFs, or SDRs would incur due to making such compliance mandatory.
5. Do commenters agree that the definitions of terms included in the proposed §§ 38.1051(h)(1), 37.1401(h)(1), and 49.24(j)(1) are appropriate, sufficiently clear, and reflective of generally accepted best practices and standards? Please identify any suggested clarifications or changes respecting these definitions.
6. Do commenters agree that the types of system safeguards testing specified in the Proposal, including vulnerability testing, external and internal penetration testing, controls testing, security incident response plan testing, and enterprise technology risk assessment, are appropriate and necessary in today's cybersecurity environment? Please explain why or why not. Also, do commenters agree that each testing type is appropriately and adequately addressed by the Proposal? Please explain why or why not, and identify any suggested clarifications or changes in this connection.
7. Are the types of cybersecurity and system safeguards testing included in the Proposal sufficient in the aggregate to provide the cybersecurity and system safeguards protections needed by DCMs, SEFs, and SDRs to enable them to fulfill their statutory and regulatory requirements in the current cybersecurity environment? Please explain why or why not. Also, should the Commission consider requiring other types of cybersecurity and system safeguards testing not included in the Proposal? If so, please identify the other types of testing that should be required, and if possible provide information concerning the costs and benefits that would be involved.
8. The existing system safeguards rules for DCMs, SEFs, and SDRs require testing sufficient to ensure automated system reliability, security, and capacity. The Proposal clarifies these testing requirements by specifying and defining five types of system safeguards testing essential to fulfilling these existing requirements. Do commenters agree that this clarification will not impose new costs on DCMs, SEFs, and SDRs? Commenters who disagree are asked to specify which types of testing called for in the Proposal DCMs, SEFs, or SDRs do not currently conduct, and what new costs such entities would incur as the result of the clarification of required testing types.
9. Do commenters agree that the minimum testing frequency requirements included in the Proposal for each of the types of system safeguards testing are appropriate in today's cybersecurity environment? Please explain why or why not. In your response, please be specific with respect to the types of testing that you suggest should be conducted either more or less frequently than specified in the Proposal, and indicate the potential costs and benefits associated with each such modification.
10. Do commenters agree with the requirements included in the Proposal for certain testing to be conducted by independent contractors? Please explain why or why not. If not, please address what testing you believe should be conducted by independent contractors, and the frequency of independent contractor testing that should be required. Please also indicate the potential costs and benefits associated with each such modification.
11. What are the benefits of requiring certain tests to be conducted by independent contractors? In your response, please be specific with respect to which tests should be conducted by independent contractors and, if possible, provide specific estimates or data for the costs of each test.
12. For covered DCMs and SDRs, please identify and explain how any of the proposed testing requirements respecting minimum testing frequency and use of independent contractors differ from the current practice at the entity (
13. Do commenters agree that the testing scope requirements provided in the Proposal are appropriate, sufficiently clear, reflective of generally accepted best practices and standards, and sufficient to enable DCMs, SEFs, and SDRs to fulfill their statutory and regulatory responsibilities? Please identify any suggested clarifications or changes respecting these provisions.
14. Do commenters agree that the internal reporting and review requirements provided in the Proposal are appropriate, sufficiently clear, reflective of generally accepted best practices and standards, and sufficient to enable DCMs, SEFs, and SDRs to fulfill their statutory and regulatory responsibilities? Please identify any suggested clarifications or changes respecting these provisions.
15. Do commenters agree that the remediation requirements provided in the Proposal are appropriate, sufficiently clear, reflective of generally accepted best practices and standards, and sufficient to enable DCMs, SEFs, and SDRs to fulfill their statutory and regulatory responsibilities? Please identify any suggested clarifications or changes respecting these provisions.
16. Do commenters believe that there are any costs or benefits from the Proposal that could be quantified or monetized that are unique to a DCM, SEF, or an SDR? If so, please identify those costs or benefits, and if possible provide specific estimates or data.
17. Are there methods by which the Commission could reduce the costs imposed by the Proposal, while still maintaining the system safeguards for DCMs, SEFs, and SDRs that are required by law and are appropriate to today's cybersecurity threat environment? If so, please explain.
18. Are there any unintended consequences that would result from the Proposal? If so, please describe them, and explain how the unintended consequences would impact any of the costs or benefits associated with the Proposal, or would impact DCM, SEF, or SDR operations.
19. Does the Proposal appropriately describe the potential impacts on the protection of market participants and the public, efficiency and competition, financial integrity of the futures markets and price discovery, sound risk management practices, and other public interest considerations? If not, please provide specific examples.
20. Do commenters believe that there are reasonable alternatives to any aspect of the Proposal? In the response, please specifically describe such alternatives and identify their potential costs and benefits relative to the proposal. Please also describe the potential impacts of the alternatives on protection of market participants and the public, efficiency and competition, financial integrity of the futures markets and price discovery,
The Commission requests comments from the public on all aspects of the ANPRM included herein concerning possible future minimum testing frequency requirements and independent contractor testing requirements for covered SEFs. The Commission particularly solicits comments concerning all aspects of the ANPRM from DCMs, SEFs, and SDRs, from futures and swap market participants, from best practices and standards organizations, from cybersecurity providers and cybersecurity experts in both the private and public sectors, and from other financial regulators.
The questions below relate to areas that the Commission believes may be relevant. In addressing these questions or any other aspects of the ANPRM concerning possible future minimum testing frequency requirements and independent contractor testing requirements for covered SEFs, commenters are encouraged to submit any data or other information that they may have quantifying or qualifying costs and benefits that could be related to the ANPRM. Comments may be submitted directly to the Office of Information and Regulatory Affairs, by fax at (202) 395-6566 or by email at
The Commission is considering whether the minimum testing frequency and independent contractor testing requirements which this NPRM would apply to covered DCMs and SDRs should be applied, via a future NPRM, to the most systemically important SEFs, which such a future NPRM would define as “covered SEFs.” The Commission requests comments on all aspects of this question, including possible related costs and benefits. In addition, commenters are asked to address the particular aspects of this subject included in the questions below.
1. Should the minimum testing frequency and independent contractor testing requirements be applied, via a future NPRM, to the most systemically important SEFs, or to all SEFs, or should such requirements not be applied to SEFs at this time?
2. Given the nature of the swap market, would it be more appropriate to define “covered SEF” in terms of the annual total notional value of all swaps traded on or pursuant to the rules of a SEF, as compared with the annual total notional value of all swaps traded on or pursuant to the rules of all SEFs regulated by the Commission? Or would it be more appropriate to define “covered SEF” in terms of the annual total number of swaps traded on or pursuant to the rules of a SEF, as compared with the annual total number of swaps traded on all SEFs regulated by the Commission?
3. If defining “covered SEF” in terms of notional value is more appropriate, how should “notional value” be defined?
4. If defining “covered SEF” in terms of notional value is more appropriate, what percentage share of the annual total notional value of all swaps traded on all SEFs regulated by the Commission should be used to define “covered SEF”?
5. If defining “covered SEF” in terms of the annual total number of swaps traded is more appropriate, what percentage share of the annual total number of all swaps traded on all SEFs regulated by the Commission should be used to define “covered SEF”?
6. Would it be more appropriate for the definition to address the notional value or the number of swaps in each asset class separately, or to address the notional value or the number of all swaps combined regardless of asset class?
7. Do commenters agree that overall risk mitigation for the U.S. swap market as a whole would be enhanced if the minimum testing frequency and independent contractor testing requirements were applied to the most systemically important SEFs? Or do commenters believe that the testing requirements for all SEFs proposed in the current NPRM are sufficient for appropriate overall risk mitigation? Or do commenters believe the minimum testing frequency and independent contractor testing requirements should be applied to all SEFs in order to appropriately address the risk to the U.S. swap market?
8. The Commission is considering defining “covered SEF” as a SEF for which the annual total notional value of all swaps traded on or pursuant to the rules of the SEF is ten percent (10%) or more of the annual total notional value of all swaps traded on or pursuant to the rules of all SEFs regulated by the Commission. Via a future NPRM, such SEFs would be subject to the minimum testing frequency and independent contractor testing requirements proposed in this current NPRM for covered DCMs and SDRs. Do commenters agree that this percentage share provides the most appropriate means of determining which SEFs would be “covered SEFs” subject to these requirements? Would a different percentage share be more appropriate, and if so, what other percentage share should be used? Should the Commission consider a different methodology for defining covered SEFs? If so, please explain.
9. How should the benefits and costs of applying the minimum testing frequency and independent contractor testing requirements to covered SEFs be quantified or estimated? If possible, provide specific estimates or data.
10. For each of the five types of cybersecurity testing addressed in this NPRM, what costs would a covered SEF incur to comply with the minimum testing frequency and independent contractor testing requirements?
11. To what extent are SEFs currently meeting the minimum testing frequency and independent contractor testing requirements proposed in this NPRM? To the extent possible, please provide specific estimates or data.
12. How could a SEF most appropriately report to the Commission its annual total notional value of all swaps traded or its annual total number of swaps traded, in order to enable the Commission to notify it of whether it is a covered SEF?
13. Are there additional alternatives or factors which commenters believe the Commission should consider in determining what, if anything, to propose in connection with the definition of covered SEFs and minimum testing frequency and independent contractor testing requirements for covered SEFs?
Commodity futures, Reporting and recordkeeping requirements, System safeguards testing requirements.
Commodity futures, Reporting and recordkeeping requirements, System safeguards testing requirements.
Administrative practice and procedure, Reporting and recordkeeping requirements, System safeguards testing requirements.
For the reasons set forth in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR chapter I as follows:
7 U.S.C. 1a, 2, 5, 6, 6c, 7, 7a-2, 7b-3, and 12a, as amended by Titles VII and VIII of the Dodd Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376.
The revisions and additions read as follows:
(a) A swap execution facility's program of risk analysis and oversight with respect to its operations and automated systems must address each of the following categories of risk analysis and oversight:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(b) In addressing the categories of risk analysis and oversight required under paragraph (a) of this section, a swap execution facility shall follow generally accepted standards and best practices with respect to the development, operation, reliability, security, and capacity of automated systems.
(c) A swap execution facility must maintain a business continuity-disaster recovery plan and business continuity-disaster recovery resources, emergency procedures, and backup facilities sufficient to enable timely recovery and resumption of its operations and resumption of its ongoing fulfillment of its responsibilities and obligations as a swap execution facility following any disruption of its operations. Such responsibilities and obligations include, without limitation: Order processing and trade matching; transmission of matched orders to a designated clearing organization for clearing, where appropriate; price reporting; market surveillance; and maintenance of a comprehensive audit trail. The swap execution facility's business continuity-disaster recovery plan and resources generally should enable resumption of trading and clearing of swaps executed on or pursuant to the rules of the swap execution facility during the next business day following the disruption. Swap execution facilities determined by the Commission to be critical financial markets are subject to more stringent requirements in this regard, set forth in § 40.9 of this chapter. A swap execution facility must update its business continuity-disaster recovery plan and emergency procedures at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually.
(g) As part of a swap execution facility's obligation to produce books and records in accordance with § 1.31 of this chapter, Core Principle 10 (Recordkeeping and Reporting), and §§ 37.1000 and 37.1001, a swap execution facility must provide to the Commission the following system safeguards-related books and records, promptly upon the request of any Commission representative:
(1) Current copies of its business continuity-disaster recovery plans and other emergency procedures;
(2) All assessments of its operational risks or system safeguards-related controls;
(3) All reports concerning system safeguards testing and assessment required by this chapter, whether performed by independent contractors or by employees of the swap execution facility; and
(4) All other books and records requested by Commission staff in connection with Commission oversight of system safeguards pursuant to the Act or to part 37 of the Commission's regulations, or in connection with Commission maintenance of a current profile of the swap execution facility's automated systems.
(5) Nothing in paragraph (g) of this section shall be interpreted as reducing or limiting in any way a swap execution facility's obligation to comply with Core Principle 10 (Recordkeeping and
(h) A swap execution facility must conduct regular, periodic, objective testing and review of its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity. It must also conduct regular, periodic testing and review of its business continuity-disaster recovery capabilities. Such testing and review shall include, without limitation, all of the types of testing set forth in paragraph (h) of this section.
(1)
(2)
(i) Such vulnerability testing shall include automated vulnerability scanning. Where indicated by appropriate risk analysis, such scanning must be conducted on an authenticated basis,
(ii) Vulnerability testing for a swap execution facility shall be conducted by qualified, independent professionals. Such qualified independent professionals may be independent contractors or employees of the swap execution facility, but shall not be persons responsible for development or operation of the systems or capabilities being tested.
(3)
(A) External penetration testing for a swap execution facility shall be conducted by qualified, independent professionals. Such qualified independent professionals may be independent contractors or employees of the swap execution facility, but shall not be persons responsible for development or operation of the systems or capabilities being tested.
(B) [Reserved]
(ii)
(A) A swap execution facility may conduct internal penetration testing by engaging independent contractors, or by using employees of the swap execution facility who are not responsible for development or operation of the systems or capabilities being tested.
(B) [Reserved]
(4)
(i) Controls testing for a swap execution facility shall be conducted by qualified, independent professionals. Such qualified independent professionals may be independent contractors or employees of the swap execution facility, but shall not be persons responsible for development or operation of the systems or capabilities being tested.
(ii) [Reserved]
(5)
(i) A swap execution facility's security incident response plan shall include, without limitation, the swap execution facility's definition and classification of security incidents, its policies and procedures for reporting security incidents and for internal and external communication and information sharing regarding security incidents, and the hand-off and escalation points in its security incident response process.
(ii) A swap execution facility may coordinate its security incident response plan testing with other testing required by this section or with testing of its other business continuity-disaster recovery and crisis management plans.
(iii) A swap execution facility may conduct security incident response plan testing by engaging independent contractors or by using employees of the swap execution facility who are not responsible for development or operation of the systems or capabilities being tested.
(6)
(i) A swap execution facility may conduct enterprise technology risk assessments by using independent contractors or employees of the swap execution facility who are not responsible for development or operation of the systems or capabilities being assessed.
(ii) [Reserved]
(i) To the extent practicable, a swap execution facility shall:
(1) Coordinate its business continuity-disaster recovery plan with those of the market participants it depends upon to provide liquidity, in a manner adequate to enable effective resumption of activity in its markets following a disruption causing activation of the swap execution facility's business continuity-disaster recovery plan;
(2) Initiate and coordinate periodic, synchronized testing of its business continuity-disaster recovery plan with those of the market participants it depends upon to provide liquidity; and
(3) Ensure that its business continuity-disaster recovery plan takes into account the business continuity-disaster recovery plans of its telecommunications, power, water, and other essential service providers.
(k)
(1) Interfere with the swap execution facility's operations or with fulfillment of its statutory and regulatory responsibilities;
(2) Impair or degrade the reliability, security, or adequate scalable capacity of the swap execution facility's automated systems;
(3) Add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the swap execution facility's regulated activities; or
(4) Undertake any other unauthorized action affecting the swap execution facility's regulated activities or the hardware or software used in connection with those activities.
(l)
(m)
7 U.S.C. 1a, 2, 6, 6a, 6c, 6e, 6d, 6f, 6g, 6i, 6j, 6k, 6l, 6m, 6n, 7, 7a-2, 7b, 7b-1, 7b-3, 8, 9, 15, and 21, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376.
The revisions and additions read as follows:
(a) A designated contract market's program of risk analysis and oversight with respect to its operations and automated systems must address each of the following categories of risk analysis and oversight:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(b) In addressing the categories of risk analysis and oversight required under paragraph (a) of this section, a designated contract market shall follow generally accepted standards and best practices with respect to the development, operation, reliability, security, and capacity of automated systems.
(c) A designated contract market must maintain a business continuity-disaster recovery plan and business continuity-disaster recovery resources, emergency procedures, and backup facilities sufficient to enable timely recovery and resumption of its operations and resumption of its ongoing fulfillment of its responsibilities and obligations as a designated contract market following any disruption of its operations. Such responsibilities and obligations include, without limitation: Order processing and trade matching; transmission of matched orders to a designated clearing organization for clearing; price reporting; market surveillance; and maintenance of a comprehensive audit trail. The designated contract market's business continuity-disaster recovery plan and resources generally should enable resumption of trading and clearing of the designated contract market's products during the next business day following the disruption. Designated contract markets determined by the Commission to be critical financial markets are subject to more stringent requirements in this regard, set forth in § 40.9 of this chapter. Electronic trading is an acceptable backup for open outcry trading in the event of a disruption. A designated contract market must update its business continuity-disaster recovery plan and emergency procedures at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually.
(g) As part of a designated contract market's obligation to produce books and records in accordance with Commission regulation § 1.31 of this chapter, Core Principle 18 (Recordkeeping), and §§ 38.950 and 38.951, a designated contract market must provide to the Commission the following system safeguards-related books and records, promptly upon the request of any Commission representative:
(1) Current copies of its business continuity-disaster recovery plans and other emergency procedures;
(2) All assessments of its operational risks or system safeguards-related controls;
(3) All reports concerning system safeguards testing and assessment required by this chapter, whether performed by independent contractors or by employees of the designated contract market; and
(4) All other books and records requested by Commission staff in connection with Commission oversight of system safeguards pursuant to the Act or to part 38 of the Commission's regulations, or in connection with Commission maintenance of a current profile of the designated contract market's automated systems.
(5) Nothing in paragraph (g) of this section shall be interpreted as reducing or limiting in any way a designated contract market's obligation to comply with Core Principle 18 (Recordkeeping) or with § 1.31 of this chapter, or §§ 38.950 or 38.951 of the Commission's regulations.
(h) A designated contract market must conduct regular, periodic, objective testing and review of its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity. It must also conduct regular, periodic testing and review of its business continuity-disaster recovery capabilities. Such testing and review shall include, without limitation, all of the types of testing set forth in paragraph (h) of this section. A covered designated contract market, as defined in this section, shall be subject to the additional requirements regarding minimum testing frequency and independent contractor testing set forth in paragraph (h) of this section.
(1)
(2)
(i) Such vulnerability testing shall include automated vulnerability scanning. Where indicated by appropriate risk analysis, such scanning must be conducted on an authenticated basis,
(ii) At a minimum, a covered designated contract market shall conduct such vulnerability testing no less frequently than quarterly.
(iii) A covered designated contract market shall engage independent contractors to conduct two of the required quarterly vulnerability tests each year. The covered designated contract market may conduct other vulnerability testing by using employees of the covered designated contract market who are not responsible for development or operation of the systems or capabilities being tested.
(iv) Vulnerability testing for a designated contract market which is not a covered designated contract market as defined in this section shall be conducted by qualified, independent professionals. Such qualified independent professionals may be independent contractors or employees of the designated contract market, but shall not be persons responsible for development or operation of the systems or capabilities being tested.
(3)
(A) At a minimum, a covered designated contract market shall conduct such external penetration testing no less frequently than annually.
(B) A covered designated contract market shall engage independent contractors to conduct the required annual external penetration test. The covered designated contract market may conduct other external penetration testing by using employees of the covered designated contract market who are not responsible for development or operation of the systems or capabilities being tested.
(C) External penetration testing for a designated contract market which is not a covered designated contract market as defined in this section shall be conducted by qualified, independent professionals. Such qualified independent professionals may be independent contractors or employees of the designated contract market, but shall not be persons responsible for development or operation of the systems or capabilities being tested.
(ii)
(A) At a minimum, a covered designated contract market shall conduct such internal penetration testing no less frequently than annually.
(B) A designated contract market may conduct internal penetration testing by engaging independent contractors, or by using employees of the designated contract market who are not responsible for development or operation of the systems or capabilities being tested.
(4)
(i) At a minimum, a covered designated contract market shall such conduct controls testing no less frequently than every two years. The covered designated contract market may conduct such testing on a rolling basis over the course of the minimum two-year period or over a minimum period determined by an appropriate risk analysis, whichever is shorter.
(ii) A covered designated contract market shall engage independent contractors to test and assess the key controls included in its program of risk analysis and oversight no less frequently than every two years. The covered designated contract market may conduct
(iii) Controls testing for a designated contract market which is not a covered designated contract market as defined in this section shall be conducted by qualified, independent professionals. Such qualified independent professionals may be independent contractors or employees of the designated contract market, but shall not be persons responsible for development or operation of the systems or capabilities being tested.
(5)
(i) A designated contract market's security incident response plan shall include, without limitation, the designated contract market's definition and classification of security incidents, its policies and procedures for reporting security incidents and for internal and external communication and information sharing regarding security incidents, and the hand-off and escalation points in its security incident response process.
(ii) A designated contract market may coordinate its security incident response plan testing with other testing required by this section or with testing of its other business continuity-disaster recovery and crisis management plans.
(iii) At a minimum, a covered designated contract market shall conduct such security incident response plan testing no less frequently than annually.
(iv) A designated contract market may conduct security incident response plan testing by engaging independent contractors or by using employees of the designated contract market who are not responsible for development or operation of the systems or capabilities being tested.
(6)
(i) A covered designated contract market shall conduct an enterprise technology risk assessment no less frequently than annually.
(ii) A designated contract market may conduct enterprise technology risk assessments by using independent contractors or employees of the designated contract market who are not responsible for development or operation of the systems or capabilities being assessed.
(i) To the extent practicable, a designated contract market shall:
(k)
(1) Interfere with the designated contract market's operations or with fulfillment of its statutory and regulatory responsibilities;
(2) Impair or degrade the reliability, security, or adequate scalable capacity of the designated contract market's automated systems;
(3) Add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the designated contract market's regulated activities; or
(4) Undertake any other unauthorized action affecting the designated contract market's regulated activities or the hardware or software used in connection with those activities.
(l)
(m)
(n)
(2) Each designated contract market shall provide to the Commission for calendar year 2015 and each calendar year thereafter its annual total trading volume, providing this information for 2015 within 30 calendar days of the effective date of the final version of this rule, and for 2016 and subsequent years by January 31 of the following calendar year. For calendar year 2015 and each calendar year thereafter, the Commission shall provide to each designated contract market the percentage of the combined annual total trading volume of all designated contract markets regulated by the Commission which is constituted by that designated contract market's annual total trading volume, providing this information for 2015 within 60 calendar days of the effective date of the final version of this rule, and for 2016 and subsequent years by February 28 of the following calendar year.
7 U.S.C. 12a and 24a, as amended by Title VII of the Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010), unless otherwise noted.
The revisions and additions read as follows:
(b) A registered swap data repository's program of risk analysis and oversight with respect to its operations and automated systems must address each of the following categories of risk analysis and oversight:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(c) In addressing the categories of risk analysis and oversight required under paragraph (b) of this section, a registered swap data repository shall follow generally accepted standards and best practices with respect to the development, operation, reliability, security, and capacity of automated systems.
(d) A registered swap data repository shall maintain a business continuity-disaster recovery plan and business continuity-disaster recovery resources, emergency procedures, and backup facilities sufficient to enable timely recovery and resumption of its operations and resumption of its ongoing fulfillment of its duties and obligations as a swap data repository following any disruption of its operations. Such duties and obligations include, without limitation: The duties set forth in § 49.19, and maintenance of a comprehensive audit trail. The swap data repository's business continuity-disaster recovery plan and resources generally should enable resumption of swap data repository's operations and resumption of ongoing fulfillment of the swap data repository's duties and obligations during the next business day following the disruption. A swap data repository shall update its business continuity-disaster recovery plan and emergency procedures at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually.
(i) As part of a swap data repository's obligation to produce books and records in accordance with §§ 1.31 and 45.2 of this chapter, and § 49.12, a swap data repository must provide to the Commission the following system safeguards-related books and records, promptly upon the request of any Commission representative:
(1) Current copies of its business continuity-disaster recovery plans and other emergency procedures;
(2) All assessments of its operational risks or system safeguards-related controls;
(3) All reports concerning system safeguards testing and assessment required by this chapter, whether performed by independent contractors or by employees of the swap data repository; and
(4) All other books and records requested by Commission staff in connection with Commission oversight of system safeguards pursuant to the Act or Commission regulations, or in connection with Commission maintenance of a current profile of the swap data repository's automated systems.
(5) Nothing in paragraph (i) of this section shall be interpreted as reducing or limiting in any way a swap data repository's obligation to comply with §§ 1.31 or 45.2 of this chapter, or § 49.12 of the Commission's regulations.
(j) A registered swap data repository shall conduct regular, periodic, objective testing and review of its automated systems to ensure that they are reliable, secure, and have adequate scalable capacity. It shall also conduct regular, periodic testing and review of its business continuity-disaster recovery capabilities. Such testing and review shall include, without limitation, all of the types of testing set forth in paragraph (j) of this section.
(1)
(2)
(i) Such vulnerability testing shall include automated vulnerability scanning. Where indicated by appropriate risk analysis, such scanning must be conducted on an authenticated basis,
(ii) The swap data repository shall conduct such vulnerability testing at a frequency determined by an appropriate risk analysis, but no less frequently than quarterly.
(iii) The swap data repository shall engage independent contractors to conduct two of the required quarterly vulnerability tests each year. The swap data repository may conduct other vulnerability testing by using employees of the swap data repository who are not responsible for development or operation of the systems or capabilities being tested.
(3)
(A) The swap data repository shall conduct such external penetration testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(B) The swap data repository shall engage independent contractors to conduct the required annual external penetration test. The swap data repository may conduct other external penetration testing by using employees of the swap data repository who are not responsible for development or operation of the systems or capabilities being tested.
(ii)
(A) The swap data repository shall conduct such internal penetration testing at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(B) The swap data repository may conduct internal penetration testing by engaging independent contractors, or by using employees of the swap data repository who are not responsible for development or operation of the systems or capabilities being tested.
(4)
(i) The swap data repository shall conduct controls testing at a frequency determined by an appropriate risk analysis, but no less frequently than every two years. The swap data repository may conduct such testing on a rolling basis over the course of the minimum two-year period or over a minimum period determined by an appropriate risk analysis, whichever is shorter.
(ii) The swap data repository shall engage independent contractors to test and assess the key controls, as determined by appropriate risk analysis, included in the entity's program of risk analysis and oversight no less frequently than every two years. The swap data repository may conduct any other controls testing required by this paragraph (j)(4) of this section by using independent contractors or employees of the swap data repository who are not responsible for development or operation of the systems or capabilities being tested.
(5)
(i) The swap data repository's security incident response plan shall include, without limitation, the swap data repository's definition and classification of security incidents, its policies and procedures for reporting security incidents and for internal and external communication and information sharing regarding security incidents, and the hand-off and escalation points in its security incident response process.
(ii) The swap data repository may coordinate its security incident response plan testing with other testing required by this section or with testing of its other business continuity-disaster recovery and crisis management plans.
(iii) The swap data repository shall conduct such security incident response plan testing at a frequency determined by an appropriate risk analysis, but at a minimum no less frequently than annually.
(iv) The swap data repository may conduct security incident response plan testing by engaging independent contractors or by using employees of the swap data repository who are not
(6)
(i) The swap data repository shall conduct an enterprise technology risk assessment at a frequency determined by an appropriate risk analysis, but no less frequently than annually.
(ii) The swap data repository may conduct enterprise technology risk assessments by using independent contractors or employees of the swap data repository who are not responsible for development or operation of the systems or capabilities being assessed.
(k) To the extent practicable, a registered swap data repository shall:
(l)
(1) Interfere with the swap data repository's operations or with fulfillment of its statutory and regulatory responsibilities;
(2) Impair or degrade the reliability, security, or adequate scalable capacity of the swap data repository's automated systems;
(3) Add to, delete, modify, exfiltrate, or compromise the integrity of any data related to the swap data repository's regulated activities; or
(4) Undertake any other unauthorized action affecting the swap data repository's regulated activities or the hardware or software used in connection with those activities.
(m)
(n)
The following appendices will not appear in the Code of Federal Regulations.
On this matter, Chairman Massad and Commissioners Bowen and Giancarlo voted in the affirmative. No Commissioner voted in the negative.
I strongly support this proposed rule, which would enhance and clarify requirements to protect exchanges, swap execution facilities and swap data repositories from numerous cybersecurity risks.
This proposal, alongside a companion measure released by the Commission's Division of Clearing and Risk, ensures that the private companies that run the core infrastructure under our jurisdiction are doing adequate evaluation of cybersecurity risks and testing of their own cybersecurity and operational risk protections.
I believe this proposed rule will help address a number of concerns, such as information security, physical security, business continuity and disaster recovery. The proposal sets principles-based testing standards which are deeply rooted in industry best practices.
The rule identifies five types of testing as critical to a sound system safeguards program: Vulnerability testing, penetration testing, controls testing, security incident response plan testing and enterprise-wide assessment of technology risk. Such efforts are vital to mitigate risk and preserve the ability to detect, contain, respond to, and recover from a cyberattack or other type of operational problem.
The proposal applies the base standards to swap execution facilities. It also contains an anticipated notice of proposed rulemaking, which notes that the Commission is considering whether to apply minimum testing frequency and independent contractor testing requirements to the most systemically important swap execution facilities. I previously stated that I did not expect our proposal would apply to SEFs—not because cybersecurity isn't just as important for them—but because many SEFs are still in the very early stages of operation.
But my fellow commissioners have expressed concerns about potential vulnerabilities and felt that we should propose that the requirements apply to SEFs at this time. I appreciate their views and am committed to working collaboratively to address these issues.
As always, we welcome public comment on this and its companion proposal, which will be carefully considered before taking any final action.
Today, we are considering two rule proposals that address an issue which is right at the heart of systemic risk in our markets—cybersecurity. The question that we face is: With a problem as immense as cybercrime, and the many measures already being employed to combat it, what would today's proposed rules accomplish? In answer to that question, I want to say a few words about our cybercrime challenge, what is currently being done to address it, and what I hope these proposed regulations would add to these efforts.
The problem is clear—our firms are facing an unrelenting onslaught of attacks from hackers with a number of motives ranging from petty fraud to international cyberwarfare. We have all heard of notable and sizable companies that have been the victim of cybercrime, including: Sony, eBay, JPMorgan, Target, and Staples—even the U.S. government has fallen victim.
In recent testimony before the House Committee on Financial Services, Subcommittee on Oversight and Investigations about cybercrime, the Director of the Center for Cyber and Homeland Security noted that the “U.S. financial services sector in particular is in the crosshairs as a primary target.”
Given the magnitude of the problem, it is not at all surprising that a lot is already being done to address it. The Department of Homeland Security and others have been working with private firms to shore up defenses. Regulators have certainly been
I wanted to hear what market participants were doing to address the challenge of our cybersecurity landscape so I met with several of our large registrant dealers and asked them about their cybersecurity efforts. After these discussions, I was both alarmed by the immensity of the problem and heartened by efforts of these larger participants to meet that problem head on. They were employing best practices such as reviewing the practices of their third party providers, using third parties to audit systems, sharing information with other market participants, integrating cybersecurity risk management into their governance structure, and staying in communication with their regulators.
We have also been vigilant in our efforts to address cybersecurity. Under our current rule structure, many of our registrants have system safeguards requirements. They require, among other things, that the registrants have policies and resources for risk analysis and oversight with respect to their operations and automated systems, as well as reporting, recordkeeping, testing, and coordination with service providers. These requirements clearly include appropriate cybersecurity measures. We also regularly examine registrants for their adherence to the system safeguards requirements, including effective governance, use of resources, appropriate policies, and vigilant response to attacks.
So if all of this is happening, what would more regulation accomplish? In other words, what is the “value add” of the rules being proposed today? The answer is: A great deal. While some firms are clearly engaging in best practices, we have no guarantee that all of them are. And as I have said before, in a system as electronically interconnected as our financial markets, “we're collectively only as strong as our weakest link, and so we need a high baseline level of protection for everyone . . .”
We have to do this carefully though because once a regulator inserts itself into the cybersecurity landscape at a firm—the firm now has two concerns: Not just fighting the attackers, but managing its reputation with its regulator. So, if not done carefully, a regulator's attempt to bolster cybersecurity at a firm can instead undermine it by incentivizing the firm to cover up any weaknesses in its cybersecurity infrastructure, instead of addressing them. Further, we must be careful not to mandate a one-size-fits-all standard because firms are different. Thus, we must be thoughtful about how to engage on this issue. We need to encourage best practices, while not hampering firms' ability to customize their risk management plan to address their cybersecurity threats.
I think these rulemakings are a great first step in accomplishing that balance. There are many aspects of these proposals that I like. First, they set up a comprehensive testing regime by: (a) Defining the types of cybersecurity testing essential to fulfilling system safeguards testing obligations, including vulnerability testing, penetration testing, controls testing, security incident response plan testing, and enterprise technology risk assessment; (b) requiring internal reporting and review of testing results; and (c) mandating remediation of vulnerabilities and deficiencies. Further, for certain significant entities, based on trading volume, it requires heightened measures such as minimum frequency requirements for conducting certain testing, and specific requirements for the use of independent contractors.
Second, there is a focus on governance—requiring, for instance, that firms' Board of Directors receive and review all reports setting forth the results of all testing. And third, these rulemakings are largely based on well-regarded, accepted best practices for cybersecurity, including The National Institute of Standards and Technology Framework for Improving Critical Infrastructure Cybersecurity (“NIST Framework”).
In all, I think the staff has put together two thoughtful proposals. Clearly, however, this is only a first step since all our registrants, not just exchanges, SEFs, SDRs and DCOs, need to have clear cybersecurity measures in place. I am also very eager to hear what the general public has to say about these proposals. Do they go far enough to incentivize appropriate cybersecurity measures? Are they too burdensome for firms that do not pose significant risk to the system? And given that this is a dynamic field with a constantly evolving set of threats, what next steps should we take to address cybercrime? Please send in all your thoughts for our consideration.
In one of our very first conversations over a year and a half ago, Chairman Massad and I discussed the many risks that cyber threats pose to trading markets. We agreed that cyber and overall system security is one of the most important issues facing markets today in terms of trading integrity and financial stability.
Earlier this year, I called for a “bottom-up” approach to combating cyber threats.
It is appropriate that we are now taking up the subject of system safeguards. I commend Chairman Massad and CFTC staff for putting forth today's proposal. I believe it generally reflects the “bottom-up” approach I have advocated for market participants to follow industry adopted standards and best practices. I support its publication for notice and comment.
I believe it is right that the proposal covers not just designated contract markets (“DCMs”), but also swap execution facilities (“SEFs”). From my experience, SEFs are as concerned with cyber security as are DCMs. Nevertheless, it is true that the proposed rules will impose additional costs on some SEFs at a time when they are struggling to implement the myriad new Dodd-Frank requirements and obligations. Because system and cyber security should be a priority on our registrants' precious time and resources, the CFTC must find ways to alleviate unnecessary regulatory costs.
As I have said many times before, the best way to reduce unnecessary costs for SEFs is to correct the CFTC's flawed swaps trading rules that remain fundamentally mismatched to the distinct liquidity and trading dynamics of global swaps markets.
Given the constantly morphing nature of cyber risk, the best defenses provide no guarantee of protection. Therefore, it would be a perverse and unfortunate result if any final system safeguards rule were to have a chilling effect on robust cyber security efforts. Market participants who abide by the rule should not be afraid of a “double whammy” of a destructive cyber-attack followed shortly thereafter by a CFTC enforcement action. Being hacked, by itself, cannot be considered a rule violation subject to enforcement. The CFTC should offer clear guidance to market participants regarding their obligations under the rule and designate safe harbors for compliance with it.
In October, I called on the CFTC to add value to ongoing industry cyber security initiatives by designating a qualified cyber security information coordinator.
As market regulators, we can have no naïve illusions that cyber belligerents—foreign and domestic—view the world's financial markets as anything other than 21st century battlefields. Cyber-attacks on trading markets will not diminish anytime soon. They will be relentless for years, if not decades, to come. Cyber risk is a threat for which Dodd-Frank provides no guidance whatsoever. Together, market regulators and the regulated community must make cyber and system security our first priority in time and attention. Today's proposal is a constructive step towards that goal. I look forward to reviewing thoughtful comments from market participants and the public.
(a) The General Schedule (5 U.S.C. 5332(a)) at Schedule 1;
(b) The Foreign Service Schedule (22 U.S.C. 3963) at Schedule 2; and
(c) The schedules for the Veterans Health Administration of the Department of Veterans Affairs (38 U.S.C. 7306, 7404; section 301(a) of Public Law 102-40) at Schedule 3.
(a) The Executive Schedule (5 U.S.C. 5312-5318) at Schedule 5;
(b) The Vice President (3 U.S.C. 104) and the Congress (2 U.S.C. 4501) at Schedule 6; and
(c) Justices and judges (28 U.S.C. 5, 44(d), 135, 252, and 461(a)) at Schedule 7.
(b) The Director of the Office of Personnel Management shall take such actions as may be necessary to implement these payments and to publish appropriate notice of such payments in the
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| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
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