81 FR 35608 - Clarifying Language in the Basin Regulations-Water Supply Charges Relating to Certificates of Entitlement

DELAWARE RIVER BASIN COMMISSION

Federal Register Volume 81, Issue 107 (June 3, 2016)

Page Range		35608-35609
FR Document		2016-13011
The Delaware River Basin Commission is codifying revisions to its Basin Regulations--Water Supply Charges. The revisions involve no changes in the substance or administration of the rule. They were made in order to clarify the language of the rule to conform to the Commission's decisions and practices so as to provide better notice to users regarding how the Commission implements its entitlements program and to avoid future controversy.
Federal Register, Volume 81 Issue 107 (Friday, June 3, 2016)
[Federal Register Volume 81, Number 107 (Friday, June 3, 2016)]
[Rules and Regulations]
[Pages 35608-35609]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-13011]


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DELAWARE RIVER BASIN COMMISSION

18 CFR Part 420


Clarifying Language in the Basin Regulations--Water Supply 
Charges Relating to Certificates of Entitlement

AGENCY: Delaware River Basin Commission.

ACTION: Final rule.

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SUMMARY: The Delaware River Basin Commission is codifying revisions to 
its Basin Regulations--Water Supply Charges. The revisions involve no 
changes in the substance or administration of the rule. They were made 
in order to clarify the language of the rule to conform to the 
Commission's decisions and practices so as to provide better notice to 
users regarding how the Commission implements its entitlements program 
and to avoid future controversy.

DATES: This final rule is effective July 5, 2016.

FOR FURTHER INFORMATION CONTACT: Pamela Bush, 609-477-7203.

SUPPLEMENTARY INFORMATION: 

Background

    The Delaware River Basin Commission (``DRBC'' or ``Commission'') is 
a federal-interstate compact agency charged with managing the water 
resources of the Delaware River Basin on a regional basis without 
regard to political boundaries. Its members are the governors of the 
four basin states--Delaware, New Jersey, New York and Pennsylvania--and 
the North Atlantic Division Commander of the U.S. Army Corps of 
Engineers, representing the federal government.
    By Resolution No. 2006-2 on March 1, 2006, the Commission approved 
revisions to its Basin Regulations--Water Supply Charges, 18 CFR part 
420, to clarify the language of the rule to conform to the Commission's 
decisions and practices, in order to provide better notice to users 
regarding how the Commission implements its entitlements program and to 
avoid future controversy. The revisions involved no changes in the 
substance or administration of the rule. Although the adopted revisions 
were incorporated into the Commission's Administrative Manual Part 
III--Basin Regulations--Water Supply Charges, which uses a unique 
numbering system, the corresponding sections of the Code of Federal 
Regulations were never updated to include them. This final rule adds 
the approved changes to the federal code.
    Notice of the proposed revisions was published in the Federal 
Register at 70 FR 60496, October 18, 2005. Notice also appeared in the 
Delaware Register of Regulations, 9 DE Reg. 674, November 1, 2005; New 
Jersey Register, 37 N.J.R. 4206, November 7, 2005; New York State 
Register, November 2, 2005 (page 4); and Pennsylvania Bulletin, 35 
Pa.B. 6094, Nov. 5, 2005. The Commission held a public hearing on the 
proposed revisions on December 7, 2005 and accepted written comments on 
them through January 10, 2006. The changes were adopted by unanimous 
vote approving Resolution No. 2006-2 at the Commission's public 
business meeting on March 1, 2006.

Additional Materials

    Additional materials can be found on the Commission's Web site, 
www.drbc.net. These include: the notice of the proposed amendments 
published in the Federal Register, at http://nj.gov/drbc/library/documents/water-charges-codify/1_FR_PropRule_CertsEntitle101805.pdf; 
and in the state registers at http://www.nj.gov/drbc/about/regulations/other-rulemakings.html; the text of the draft revisions as proposed, at 
http://nj.gov/drbc/library/documents/water-charges-codify/6_ProposedText_WaterSupplyChargingRegs_Art5.2.pdf; Resolution No. 2006-
2, adopting the revisions as final, at http://nj.gov/drbc/library/documents/water-charges-codify/7_Res2006-02_CertEntitle_adopted030106.pdf; and the Minutes of the Commission's 
business meeting of March 1, 2006, explaining the differences between 
the proposed and adopted rule text, at http://nj.gov/drbc/library/documents/water-charges-codify/8_Min_030106_note-pgs18-21.pdf.
    With adoption of this final rule, the Commission will reference the 
CFR version of the Basin Regulations--Water Supply Charges for most 
purposes. For the foreseeable future, however, both versions will 
remain posted on the Commission's Web site, at http://www.nj.gov/drbc/about/regulations/.

List of Subjects in 18 CFR Part 420

    Water supply.

    For the reasons set forth in the preamble, the Delaware River Basin 
Commission amends part 420 of title 18 of the Code of Federal 
Regulations as follows:

PART 420--BASIN REGULATIONS--WATER SUPPLY CHARGES

0
1. The authority citation for part 420 continues to read as follows:

    Authority: Delaware River Basin Compact, 75 Stat. 688.

0
2. Revise Sec.  420.31(d) through (f) to read as follows:


Sec.  420.31  Certificate of entitlement.

* * * * *
    (d) Limitations. (1) A certificate of entitlement is granted to a 
specific user for water withdrawals or diversions at a specific 
facility in the amount of the Legal Entitlement as defined in Sec.  
420.23(b).
    (2) A certificate of entitlement shall not be applied, transferred 
or modified to apply to a facility other than the facility initially 
specified in the certificate.
    (3) A certificate of entitlement may not be transferred from the 
certificate holder to another user, except as provided in the 
exceptions set forth in paragraph (f) of this section.
    (4) A certificate of entitlement does not exempt the certificate 
holder from paying water supply charges for any portion of water 
withdrawals or diversions used outside the facility specified in the 
certificate and any additional service area to which the facility 
supplied water as of October 27, 1961 or at the facility specified in 
the certificate by a user other than the certificate holder. For 
purposes of this paragraph (d)(4), a certificate holder claiming an 
exemption from charges for water supplied within a service area shall 
submit proof satisfactory to the Commission identifying the facility's 
service area as of October 27, 1961. In the absence of proof of the 
service area as of October 27, 1961, the service area defined in the 
Commission docket, if any, for the facility in effect at the time the 
certificate was issued shall be deemed to be the facility's service 
area. In the absence of proof of a service area, the certificate shall 
only exempt the certificate holder from paying water supply charges for 
water used at the facility.
    (e) Termination of certificate. (1) A certificate of entitlement 
terminates pursuant to this section and without the need for Commission 
action if at least one of the following occurs:
    (i) The certificate holder dissolves or otherwise ceases to exist;
    (ii) The certificate holder ceases the withdrawals or diversions at 
the facility to which the certificate of entitlement

[[Page 35609]]

applies, or abandons the intake, provided that a shutdown of the 
facility for maintenance or improvement, or a replacement of the 
intake, that is performed at the earliest practicable commercially 
reasonable time following commencement of the shutdown or replacement, 
shall not be deemed to be a cessation of withdrawal or diversion;
    (iii) The certificate holder through contract, lease or other 
agreement ceases to be the user or public water system supplier of the 
water withdrawn or diverted at the facility; or
    (iv) There is a change in the ownership or control of the facility. 
Once terminated, a certificate of entitlement may not be reinstated or 
reissued.
    (2) A change in ownership or control of the facility includes, but 
is not limited to, any transaction, acquisition, merger or event 
(collectively ``transaction'') resulting in at least one of the 
following:
    (i) A transfer of title to the facility;
    (ii) A person or entity or the shareholders or other owners of an 
entity becoming the beneficial owner, directly or indirectly, or 
acquiring alone or in concert the power or right to vote at least 20 
percent of any class of ownership interest in a certificate holder or 
any of its parent entities, regardless of the tier in the corporate or 
entity structure at which the transaction occurs;
    (iii) A change in ownership or control for purposes of any of the 
certificate holder's or any of its parent corporations' employee 
agreements; or
    (iv) A change of the de facto controlling interest in a certificate 
holder or any of its parent entities, regardless of the tier in the 
corporate or entity structure at which the change occurs.
    (3) A change of the de facto controlling interest in an entity 
includes, but is not limited to, a change of the persons or entities 
with the ability or authority, expressed or reserved, to direct the 
management or policies of an entity and/or to take at least one of the 
following actions:
    (i) Amend or change the entity's identity (e.g. joint venture 
agreement, unincorporated business status);
    (ii) Appoint or remove at least 50% of the members of the Board of 
Directors or Trustees of a corporation, general partner of a 
partnership, or a similar member of the governing body of an entity;
    (iii) Amend or change the by-laws, constitution, or other operating 
or management direction of the entity;
    (iv) Control the sale of, use of or access to any or all of the 
entity's assets;
    (v) Encumber the entity's assets by way of mortgage or other 
indebtedness;
    (vi) Control any or all of the assets or other property of the 
entity upon the sale or dissolution of the entity;
    (vii) Dissolve the entity;
    (viii) Arrange for the sale or transfer of the entity to a new 
ownership or control;
    (ix) Select or change the management of the entity or determine 
management compensation; or
    (x) Set operating policies, financial policies or budgets.
    (4) For purposes of applying paragraph (e)(3) of this section, 
consideration may be given to circumstances particular to the person or 
entity and certificate holder involved, including without limitation 
the ability of that person or entity to take actions in light of the 
number of shares in the certificate holder or its parent entities that 
are actively voted, the practice of any majority shareholder in 
exercising or refraining from exercising majority rights, and any 
agreements giving the person or entity the right to control votes of 
others.
    (5) A series of transactions undertaken pursuant to a plan or that 
are otherwise related shall be considered a single transaction for 
purposes of this section. For purposes of calculating the twenty 
percent threshold in paragraph (e)(2)(ii) of this section, the 
securities, shares or other interests held immediately prior to the 
transaction shall be added to the securities, shares or other interests 
acquired in the transaction.
    (f) Exceptions-(1) Agricultural exception. (i) Whenever ownership 
or possession of land in agricultural use is transferred, any 
certificate of entitlement with respect to such land shall be deemed to 
run with the land, if but only if within sixty days following the land 
transfer the new user demonstrates to the Executive Director that it 
will continue to use the water withdrawn or diverted for agricultural 
irrigation. Following any such timely demonstration, the Executive 
Director shall transfer the certificate of entitlement to the new user. 
The Executive Director may extend the sixty day period for good cause 
shown.
    (ii) A certificate of entitlement that has been transferred 
pursuant to paragraph (f)(1)(i) of this section relieves the user of 
the obligation to pay water supply charges only with respect to the 
quantity of water in fact used by the new certificate holder for 
agricultural irrigation up to the Legal Entitlement specified in the 
certificate, and not with respect to the quantity of water used for any 
other purposes. The provisions of Sec.  420.43 shall apply to water 
uses outside the scope of the certificate of entitlement.
    (iii) A certificate of entitlement that has been transferred 
pursuant to paragraph (f)(1)(i) of this section terminates pursuant to 
this paragraph (f)(1) and without the need for Commission action if and 
when the certificate holder ceases using the water for agricultural 
irrigation, provided that if the cessation occurs in conjunction with a 
transfer of ownership or possession of the land in agricultural use, 
the certificate of entitlement may be transferred to a new user 
pursuant to paragraph (f)(1)(i). Once terminated, a certificate of 
entitlement may not be reinstated or reissued.
    (2) Corporate reorganization exceptions. The following provisions 
apply where a corporate parent directly or indirectly owning 100% of 
each class of shares of all of its subsidiary corporations decides to 
reorganize those subsidiary corporations without affecting the 
corporate parent's 100% ownership interest.
    (i) Whenever a corporate reorganization consists solely of a change 
of the name, identity, internal corporate structure, or place of 
organization of a corporate certificate holder or any of its parent 
corporations, the Executive Director may reissue a certificate of 
entitlement in the name of the new owner of the facility, provided that 
the reorganization does not affect ownership and/or control by the 
certificate holder's corporate family of companies within the meaning 
of paragraphs (e)(2) through (5) of this section and does not alter the 
ultimate corporate parent's 100% ownership interest.
    (ii) A merger or other plan, transaction or series of transactions 
that effectuates a change of ownership or control within the meaning of 
paragraphs (e)(2) through (5) does not fall within the exemption of 
paragraph (f)(2)(i) of this section on the basis that a corporate 
reorganization constitutes part of the merger, plan, transaction or 
series of transactions.

    Dated: May 26, 2016.
Pamela M. Bush,
Commission Secretary and Assistant General Counsel.
[FR Doc. 2016-13011 Filed 6-2-16; 8:45 am]
 BILLING CODE 6301-01-P
35608 Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations

Dated: May 23, 2016. Manual Part III—Basin Regulations— of the Code of Federal Regulations as
Kevin J. Wolf, Water Supply Charges, which uses a follows:
Assistant Secretary for Export unique numbering system, the
Administration. corresponding sections of the Code of PART 420—BASIN REGULATIONS—
[FR Doc. 2016–12734 Filed 6–2–16; 8:45 am] Federal Regulations were never updated WATER SUPPLY CHARGES
BILLING CODE 3510–33–P to include them. This final rule adds the
■ 1. The authority citation for part 420
approved changes to the federal code.
continues to read as follows:
Notice of the proposed revisions was
published in the Federal Register at 70 Authority: Delaware River Basin Compact,
DELAWARE RIVER BASIN
FR 60496, October 18, 2005. Notice also 75 Stat. 688.
COMMISSION
appeared in the Delaware Register of ■ 2. Revise § 420.31(d) through (f) to
18 CFR Part 420 Regulations, 9 DE Reg. 674, November 1, read as follows:
2005; New Jersey Register, 37 N.J.R. § 420.31 Certificate of entitlement.
Clarifying Language in the Basin 4206, November 7, 2005; New York
Regulations—Water Supply Charges State Register, November 2, 2005 (page * * * * *
Relating to Certificates of Entitlement 4); and Pennsylvania Bulletin, 35 Pa.B. (d) Limitations. (1) A certificate of
6094, Nov. 5, 2005. The Commission entitlement is granted to a specific user
AGENCY: Delaware River Basin for water withdrawals or diversions at a
Commission. held a public hearing on the proposed
revisions on December 7, 2005 and specific facility in the amount of the
ACTION: Final rule. Legal Entitlement as defined in
accepted written comments on them
through January 10, 2006. The changes § 420.23(b).
SUMMARY: The Delaware River Basin (2) A certificate of entitlement shall
Commission is codifying revisions to its were adopted by unanimous vote
not be applied, transferred or modified
Basin Regulations—Water Supply approving Resolution No. 2006–2 at the
to apply to a facility other than the
Charges. The revisions involve no Commission’s public business meeting
facility initially specified in the
changes in the substance or on March 1, 2006.
certificate.
administration of the rule. They were Additional Materials (3) A certificate of entitlement may
made in order to clarify the language of not be transferred from the certificate
the rule to conform to the Commission’s Additional materials can be found on
holder to another user, except as
decisions and practices so as to provide the Commission’s Web site,
provided in the exceptions set forth in
better notice to users regarding how the www.drbc.net. These include: the notice
paragraph (f) of this section.
Commission implements its of the proposed amendments published (4) A certificate of entitlement does
entitlements program and to avoid in the Federal Register, at http://nj.gov/ not exempt the certificate holder from
future controversy. drbc/library/documents/water-charges- paying water supply charges for any
DATES: This final rule is effective July 5, codify/1_FR_PropRule_ portion of water withdrawals or
2016. CertsEntitle101805.pdf; and in the state diversions used outside the facility
FOR FURTHER INFORMATION CONTACT:
registers at http://www.nj.gov/drbc/ specified in the certificate and any
Pamela Bush, 609–477–7203. about/regulations/other- additional service area to which the
rulemakings.html; the text of the draft facility supplied water as of October 27,
SUPPLEMENTARY INFORMATION:
revisions as proposed, at http://nj.gov/ 1961 or at the facility specified in the
Background drbc/library/documents/water-charges- certificate by a user other than the
The Delaware River Basin codify/6_ProposedText_ certificate holder. For purposes of this
Commission (‘‘DRBC’’ or WaterSupplyChargingRegs_Art5.2.pdf; paragraph (d)(4), a certificate holder
‘‘Commission’’) is a federal-interstate Resolution No. 2006–2, adopting the claiming an exemption from charges for
compact agency charged with managing revisions as final, at http://nj.gov/drbc/ water supplied within a service area
the water resources of the Delaware library/documents/water-charges- shall submit proof satisfactory to the
River Basin on a regional basis without codify/7_Res2006-02_CertEntitle_ Commission identifying the facility’s
regard to political boundaries. Its adopted030106.pdf; and the Minutes of service area as of October 27, 1961. In
members are the governors of the four the Commission’s business meeting of the absence of proof of the service area
basin states—Delaware, New Jersey, March 1, 2006, explaining the as of October 27, 1961, the service area
New York and Pennsylvania—and the differences between the proposed and defined in the Commission docket, if
North Atlantic Division Commander of adopted rule text, at http://nj.gov/drbc/ any, for the facility in effect at the time
the U.S. Army Corps of Engineers, library/documents/water-charges- the certificate was issued shall be
representing the federal government. codify/8_Min_030106_note-pgs18- deemed to be the facility’s service area.
By Resolution No. 2006–2 on March 21.pdf. In the absence of proof of a service area,
1, 2006, the Commission approved With adoption of this final rule, the the certificate shall only exempt the
revisions to its Basin Regulations— Commission will reference the CFR certificate holder from paying water
Water Supply Charges, 18 CFR part 420, version of the Basin Regulations—Water supply charges for water used at the
to clarify the language of the rule to Supply Charges for most purposes. For facility.
conform to the Commission’s decisions the foreseeable future, however, both (e) Termination of certificate. (1) A
and practices, in order to provide better versions will remain posted on the certificate of entitlement terminates
notice to users regarding how the Commission’s Web site, at http:// pursuant to this section and without the
mstockstill on DSK3G9T082PROD with RULES

Commission implements its www.nj.gov/drbc/about/regulations/. need for Commission action if at least
entitlements program and to avoid List of Subjects in 18 CFR Part 420 one of the following occurs:
future controversy. The revisions (i) The certificate holder dissolves or
involved no changes in the substance or Water supply. otherwise ceases to exist;
administration of the rule. Although the For the reasons set forth in the (ii) The certificate holder ceases the
adopted revisions were incorporated preamble, the Delaware River Basin withdrawals or diversions at the facility
into the Commission’s Administrative Commission amends part 420 of title 18 to which the certificate of entitlement

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Federal Register / Vol. 81, No. 107 / Friday, June 3, 2016 / Rules and Regulations 35609

applies, or abandons the intake, (v) Encumber the entity’s assets by outside the scope of the certificate of
provided that a shutdown of the facility way of mortgage or other indebtedness; entitlement.
for maintenance or improvement, or a (vi) Control any or all of the assets or (iii) A certificate of entitlement that
replacement of the intake, that is other property of the entity upon the
has been transferred pursuant to
performed at the earliest practicable sale or dissolution of the entity;
(vii) Dissolve the entity; paragraph (f)(1)(i) of this section
commercially reasonable time following
(viii) Arrange for the sale or transfer terminates pursuant to this paragraph
commencement of the shutdown or
of the entity to a new ownership or (f)(1) and without the need for
replacement, shall not be deemed to be
control; Commission action if and when the
a cessation of withdrawal or diversion;
(iii) The certificate holder through (ix) Select or change the management certificate holder ceases using the water
contract, lease or other agreement ceases of the entity or determine management for agricultural irrigation, provided that
to be the user or public water system compensation; or if the cessation occurs in conjunction
supplier of the water withdrawn or (x) Set operating policies, financial with a transfer of ownership or
diverted at the facility; or policies or budgets. possession of the land in agricultural
(iv) There is a change in the (4) For purposes of applying use, the certificate of entitlement may be
ownership or control of the facility. paragraph (e)(3) of this section, transferred to a new user pursuant to
Once terminated, a certificate of consideration may be given to paragraph (f)(1)(i). Once terminated, a
entitlement may not be reinstated or circumstances particular to the person
certificate of entitlement may not be
reissued. or entity and certificate holder involved,
reinstated or reissued.
(2) A change in ownership or control including without limitation the ability
of that person or entity to take actions (2) Corporate reorganization
of the facility includes, but is not
in light of the number of shares in the exceptions. The following provisions
limited to, any transaction, acquisition,
certificate holder or its parent entities apply where a corporate parent directly
merger or event (collectively
‘‘transaction’’) resulting in at least one that are actively voted, the practice of or indirectly owning 100% of each class
of the following: any majority shareholder in exercising of shares of all of its subsidiary
(i) A transfer of title to the facility; or refraining from exercising majority corporations decides to reorganize those
(ii) A person or entity or the rights, and any agreements giving the subsidiary corporations without
shareholders or other owners of an person or entity the right to control affecting the corporate parent’s 100%
entity becoming the beneficial owner, votes of others. ownership interest.
directly or indirectly, or acquiring alone (5) A series of transactions undertaken
pursuant to a plan or that are otherwise (i) Whenever a corporate
or in concert the power or right to vote reorganization consists solely of a
at least 20 percent of any class of related shall be considered a single
transaction for purposes of this section. change of the name, identity, internal
ownership interest in a certificate corporate structure, or place of
holder or any of its parent entities, For purposes of calculating the twenty
percent threshold in paragraph (e)(2)(ii) organization of a corporate certificate
regardless of the tier in the corporate or
of this section, the securities, shares or holder or any of its parent corporations,
entity structure at which the transaction
other interests held immediately prior to the Executive Director may reissue a
occurs;
(iii) A change in ownership or control the transaction shall be added to the certificate of entitlement in the name of
for purposes of any of the certificate securities, shares or other interests the new owner of the facility, provided
holder’s or any of its parent acquired in the transaction. that the reorganization does not affect
corporations’ employee agreements; or (f) Exceptions-(1) Agricultural ownership and/or control by the
(iv) A change of the de facto exception. (i) Whenever ownership or certificate holder’s corporate family of
controlling interest in a certificate possession of land in agricultural use is companies within the meaning of
holder or any of its parent entities, transferred, any certificate of paragraphs (e)(2) through (5) of this
regardless of the tier in the corporate or entitlement with respect to such land section and does not alter the ultimate
entity structure at which the change shall be deemed to run with the land, corporate parent’s 100% ownership
occurs. if but only if within sixty days following interest.
(3) A change of the de facto the land transfer the new user
demonstrates to the Executive Director (ii) A merger or other plan,
controlling interest in an entity
that it will continue to use the water transaction or series of transactions that
includes, but is not limited to, a change
withdrawn or diverted for agricultural effectuates a change of ownership or
of the persons or entities with the ability
or authority, expressed or reserved, to irrigation. Following any such timely control within the meaning of
direct the management or policies of an demonstration, the Executive Director paragraphs (e)(2) through (5) does not
entity and/or to take at least one of the shall transfer the certificate of fall within the exemption of paragraph
following actions: entitlement to the new user. The (f)(2)(i) of this section on the basis that
(i) Amend or change the entity’s Executive Director may extend the sixty a corporate reorganization constitutes
identity (e.g. joint venture agreement, day period for good cause shown. part of the merger, plan, transaction or
unincorporated business status); (ii) A certificate of entitlement that series of transactions.
(ii) Appoint or remove at least 50% of has been transferred pursuant to Dated: May 26, 2016.
the members of the Board of Directors paragraph (f)(1)(i) of this section relieves
the user of the obligation to pay water Pamela M. Bush,
or Trustees of a corporation, general
partner of a partnership, or a similar supply charges only with respect to the Commission Secretary and Assistant General
mstockstill on DSK3G9T082PROD with RULES

member of the governing body of an quantity of water in fact used by the Counsel.
entity; new certificate holder for agricultural [FR Doc. 2016–13011 Filed 6–2–16; 8:45 am]
(iii) Amend or change the by-laws, irrigation up to the Legal Entitlement BILLING CODE 6301–01–P
constitution, or other operating or specified in the certificate, and not with
management direction of the entity; respect to the quantity of water used for
(iv) Control the sale of, use of or any other purposes. The provisions of
access to any or all of the entity’s assets; § 420.43 shall apply to water uses

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Document Created: 2018-02-08 07:29:56
Document Modified: 2018-02-08 07:29:56
Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Rules and Regulations
Action		Final rule.
Dates		This final rule is effective July 5, 2016.
Contact		Pamela Bush, 609-477-7203.
FR Citation		81 FR 35608