| Page Range | 53245-53905 | |
| FR Document |
| Page and Subject | |
|---|---|
| 81 FR 53505 - Government in the Sunshine Act Meeting Notice | |
| 81 FR 53424 - Certain Hot-Rolled Steel Flat Products From Brazil: Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances, in Part | |
| 81 FR 53419 - Certain Hot-Rolled Steel Flat Products From the Republic of Korea: Final Determination of Sales at Less Than Fair Value | |
| 81 FR 53433 - Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products From the Republic of Turkey: Final Affirmative Determination | |
| 81 FR 53409 - Certain Hot-Rolled Steel Flat Products From Japan: Final Determination of Sales at Less Than Fair Value and Final Affirmative Determination of Critical Circumstances | |
| 81 FR 53439 - Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products From the Republic of Korea: Final Affirmative Determination | |
| 81 FR 53416 - Countervailing Duty Investigation of Certain Hot-Rolled Steel Flat Products From Brazil: Final Affirmative Determination, and Final Determination of Critical Circumstances, in Part | |
| 81 FR 53406 - Certain Hot-Rolled Steel Flat Products From Australia: Final Determination of Sales at Less Than Fair Value | |
| 81 FR 53436 - Certain Hot-Rolled Steel Flat Products From the United Kingdom: Final Determination of Sales at Less Than Fair Value | |
| 81 FR 53428 - Certain Hot-Rolled Steel Flat Products From the Republic of Turkey: Final Determination of Sales at Less Than Fair Value | |
| 81 FR 53421 - Certain Hot-Rolled Steel Flat Products From the Netherlands: Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances | |
| 81 FR 53271 - Drawbridge Operation Regulations | |
| 81 FR 53402 - Sunshine Act Meeting Notice | |
| 81 FR 53486 - Dietary Supplements: New Dietary Ingredient Notifications and Related Issues; Revised Draft Guidance for Industry; Availability | |
| 81 FR 53483 - Sunshine Act Meetings | |
| 81 FR 53401 - Flathead Resource Advisory Committee | |
| 81 FR 53489 - Agency Information Collection Activities: Submission to OMB for Review and Approval; Public Comment Request; Health Center Program Application Forms | |
| 81 FR 53271 - Final Priority-Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program | |
| 81 FR 53476 - Applications for New Awards; Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program | |
| 81 FR 53475 - Applications for New Awards; Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program; Correction | |
| 81 FR 53497 - National Customs Automation Program (NCAP) Test Concerning Electronic Filing of Protests in the Automated Commercial Environment (ACE) | |
| 81 FR 53541 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel SURGE; Invitation for Public Comments | |
| 81 FR 53403 - Notice of Availability of a Draft Programmatic Environmental Impact Statement for the Central Region of the Nationwide Public Safety Broadband Network and Notice of Public Meetings | |
| 81 FR 53542 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel MATTARAY; Invitation for Public Comments | |
| 81 FR 53540 - Agency Requests for Renewal of a Previously Approved Information Collection(s): Merchant Marine Medals and Awards | |
| 81 FR 53414 - Solid Urea From the Russian Federation: Preliminary Results of Antidumping Duty Administrative and New Shipper Reviews and Rescission of Administrative Review, in Part; 2014-2015 | |
| 81 FR 53431 - Lightweight Thermal Paper From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review; 2014-2015 | |
| 81 FR 53542 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel PWD #315; Invitation for Public Comments | |
| 81 FR 53481 - Reopening; Applications for New Awards; Promoting Student Resilience | |
| 81 FR 53464 - Pacific Island Fisheries; Public Meeting | |
| 81 FR 53463 - New England Fishery Management Council; Public Meeting | |
| 81 FR 53464 - New England Fishery Management Council; Public Meeting | |
| 81 FR 53412 - Certain Cut-to-Length Carbon Steel Plate From the People's Republic of China: Preliminary Results of Antidumping Administrative Review, Preliminary Determination of No Shipments, in Part, and Partial Rescission; 2014-2015 | |
| 81 FR 53541 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel TENACITY; Invitation for Public Comments | |
| 81 FR 53433 - Ammonium Nitrate From the Russian Federation: Final Results of Sunset Review and Revocation of Antidumping Duty Order | |
| 81 FR 53482 - Environmental Impact Statements; Notice of Availability | |
| 81 FR 53247 - National Poultry Improvement Plan and Auxiliary Provisions | |
| 81 FR 53537 - Petition for Exemption; Summary of Petition Received; TransPac Aviation Academy | |
| 81 FR 53536 - Petition for Exemption; Summary of Petition Received; USA Jet Airlines | |
| 81 FR 53379 - Receipt of Several Pesticide Petitions Filed for Residues of Pesticide Chemicals in or on Various Commodities | |
| 81 FR 53538 - Petition for Exemption; Summary of Petition Received; Mr. Karl Beutner | |
| 81 FR 53537 - Petition for Exemption; Summary of Petition Received; Boeing Executive Flight Operations | |
| 81 FR 53466 - Procurement List; Additions and Deletions | |
| 81 FR 53466 - Procurement List; Proposed Deletions | |
| 81 FR 53536 - Union Pacific Railroad Company-Discontinuance of Service Exemption-in Port of Los Angeles' San Pedro Subdivision, Los Angeles, CA | |
| 81 FR 53535 - Pacific Harbor Line, Inc.-Discontinuance of Service Exemption-in Los Angeles County, CA | |
| 81 FR 53481 - Energy Savings Performance Contract Energy Sales Agreement; Request for Information | |
| 81 FR 53343 - Chief Compliance Officer Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants; Amendments to Filing Dates | |
| 81 FR 53484 - Agency Information Collection Activities; Proposed Collection; Comment Request | |
| 81 FR 53535 - Southwestern Railroad, Inc.-Amended Lease and Operation Exemption-BNSF Railway Company | |
| 81 FR 53399 - Flathead Resource Advisory Committee | |
| 81 FR 53334 - Importation of Orchids in Growing Media From the Republic of Korea Into the Continental United States | |
| 81 FR 53398 - Environmental Impact Statement; Fruit Fly Eradication Program | |
| 81 FR 53396 - Okanagan Specialty Fruits, Inc.; Availability of Preliminary Finding of No Significant Impact, Preliminary Plant Pest Risk Similarity Assessment, and Preliminary Determination for an Extension of a Determination of Nonregulated Status for Non-Browning Arctic® Apple Event NF872 Apple | |
| 81 FR 53391 - Migratory Bird Hunting; Supplemental Proposals for Migratory Game Bird Hunting Regulations for the 2017-18 Hunting Season; Notice of Meetings | |
| 81 FR 53402 - Submission for OMB Review; Comment Request | |
| 81 FR 53400 - Flathead Resource Advisory Committee | |
| 81 FR 53543 - National Emergency Medical Services Advisory Council (NEMSAC); Notice of Federal Advisory Committee Meeting | |
| 81 FR 53495 - Agency Information Collection Activities: Submission for OMB Review; Comment Request | |
| 81 FR 53508 - License Amendment Requests for Changes to Emergency Response Organization Staffing and Augmentation | |
| 81 FR 53266 - Written Acknowledgment of Customer Funds From Federal Reserve Banks | |
| 81 FR 53467 - Order Exempting the Federal Reserve Banks From Sections 4d and 22 of the Commodity Exchange Act | |
| 81 FR 53533 - Submission for OMB Review; Comment Request | |
| 81 FR 53529 - Proposed Collection; Comment Request | |
| 81 FR 53494 - Agency Information Collection Activities: Proposed Collection; Comment Request | |
| 81 FR 53484 - Filing Dates for the Hawaii Special Election in the 1st Congressional District | |
| 81 FR 53506 - Meetings of Humanities Panel | |
| 81 FR 53508 - Notice of Public Meeting of Presidio Institute Advisory Council | |
| 81 FR 53538 - Notice To Rescind Notice of Intent To Prepare Environmental Impact Statement/Draft Section 4(f) Evaluation, MD 28/MD 198 Corridor Study, Montgomery and Prince George's County, Maryland | |
| 81 FR 53482 - Equal Employment Opportunity and Diversity | |
| 81 FR 53507 - Termination of Operating Licenses for Nuclear Reactors | |
| 81 FR 53492 - Center for Scientific Review; Notice of Closed Meetings | |
| 81 FR 53492 - National Human Genome Research Institute; Notice of Closed Meeting | |
| 81 FR 53491 - National Institute of Arthritis and Musculoskeletal and Skin Diseases; Notice of Meeting | |
| 81 FR 53491 - National Institute of Biomedical Imaging and Bioengineering; Notice of Closed Meetings | |
| 81 FR 53492 - National Institute on Minority Health and Health Disparities; Notice of Meeting | |
| 81 FR 53270 - Drawbridge Operation Regulation; Rockaway Inlet, Queens, NY | |
| 81 FR 53505 - Certain Computer Cables, Chargers, Adapters, Peripheral Devices and Packaging Containing the Same; Notice of To Review an Initial Determination Finding All Respondents in Default; Request for Written Submissions on Remedy, the Public Interest, and Bonding | |
| 81 FR 53493 - Request for Comment on Report Entitled: Advancing the Care of Pregnant and Parenting Women With Opioid Use Disorder and Their Infants: A Foundation for Clinical Guidance | |
| 81 FR 53512 - Blackrock Funds, et al.; Notice of Application | |
| 81 FR 53517 - Submission for OMB Review; Comment Request | |
| 81 FR 53509 - Submission for OMB Review; Comment Request | |
| 81 FR 53521 - Proposed Collection; Comment Request | |
| 81 FR 53534 - Tennessee Disaster Number TN-00091 | |
| 81 FR 53533 - Texas Disaster Number TX-00472 | |
| 81 FR 53521 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend NYSE MKT Rule 19-Equities To Specify in Exchange Rules the Exchange's Use of Data Feeds From Investors' Exchange, LLC for Order Handling and Execution, Order Routing, and Regulatory Compliance | |
| 81 FR 53518 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Specify in Exchange Rules the Exchange's Use of Data Feeds From Investors' Exchange, LLC for Order Handling and Execution, Order Routing, and Regulatory Compliance | |
| 81 FR 53531 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 19 To Specify in Exchange Rules the Exchange's Use of Data Feeds From Investors' Exchange, LLC for Order Handling and Execution, Order Routing, and Regulatory Compliance | |
| 81 FR 53524 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Section 3 of NYSE Arca Equities Rule 8 To Extend the Effectiveness of the Exchange Traded Product Incentive Program | |
| 81 FR 53527 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee Schedule | |
| 81 FR 53523 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Continuing Education Fees | |
| 81 FR 53519 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Update or Adopt Various Fees for Services Provided by the Financial Industry Regulatory Authority | |
| 81 FR 53509 - Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Rule 9.218 To Specify the List of Violations Eligible for Disposition Under IEX's Minor Rule Violation Plan | |
| 81 FR 53530 - Self-Regulatory Organizations; ICE Clear Credit LLC; Order Approving Proposed Rule Change To Revise the ICC End-of-Day Price Discovery Policies and Procedures | |
| 81 FR 53534 - Texas Disaster Number TX-00474 | |
| 81 FR 53496 - Quarterly IRS Interest Rates Used In Calculating Interest on Overdue Accounts and Refunds on Customs Duties | |
| 81 FR 53400 - Southwest Mississippi Resource Advisory Committee | |
| 81 FR 53465 - Submission for OMB Review; Comment Request | |
| 81 FR 53284 - Approval and Promulgation of Air Quality Implementation Plans; Texas; Interstate Transport of Air Pollution for the 2008 Ozone National Ambient Air Quality Standards | |
| 81 FR 53465 - BroadbandUSA Webinar Series | |
| 81 FR 53308 - Approval and Promulgation of Air Quality Implementation Plans; Louisiana; Interstate Transport of Air Pollution for the 2008 Ozone National Ambient Air Quality Standards | |
| 81 FR 53395 - Statement of Principles on Industrial Hemp | |
| 81 FR 53443 - Takes of Marine Mammals Incidental to Specified Activities; Marine Geophysical Survey in the Southeast Pacific Ocean, 2016-2017 | |
| 81 FR 53380 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Jackson Steel Superfund Site | |
| 81 FR 53245 - National Dairy Promotion and Research Program; Amendments to the Order | |
| 81 FR 53269 - Special Local Regulation; Allegheny River Mile 0.0-1.5; Pittsburgh, PA | |
| 81 FR 53441 - Polyethylene Terephthalate Film, Sheet, and Strip From Taiwan: Preliminary Results of Antidumping Duty Administrative Review and Preliminary Determination of No Shipments; 2014-2015 | |
| 81 FR 53311 - National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List: Deletion of the Jackson Steel Superfund Site | |
| 81 FR 53404 - Certain Pasta From Italy: Preliminary Results of Antidumping Duty Administrative Review; 2014-2015 | |
| 81 FR 53290 - Approval and Promulgation of Implementation Plans; Idaho: Stationary Source Permitting Revisions | |
| 81 FR 53337 - Procedural Rules for DOE Nuclear Activities | |
| 81 FR 53483 - Notice to All Interested Parties of the Termination of the Receivership of 10474 First Federal Bank, Lexington, Kentucky | |
| 81 FR 53503 - Notice of Availability of the Gunnison Sage-Grouse Rangewide Draft Resource Management Plan Amendment and Draft Environmental Impact Statement, Colorado and Utah | |
| 81 FR 53388 - Amateur Radio Service Rules To Permit Greater Flexibility in Data Communications | |
| 81 FR 53348 - Oil and Gas and Sulfur Operations in the Outer Continental Shelf-Decommissioning Costs for Pipelines | |
| 81 FR 53297 - Air Plan Approval; Indiana; Abengoa Bioenergy of Indiana, Commissioner's Order | |
| 81 FR 53362 - Approval and Promulgation of Implementation Plans; Washington: Updates to Incorporation by Reference and Miscellaneous Revisions | |
| 81 FR 53378 - Air Plan Approval; Indiana; Abengoa Bioenergy of Indiana, Commissioner's Order | |
| 81 FR 53309 - Wisconsin; Approval/Disapproval of Interstate Transport Requirements for the 2008 Ozone NAAQS | |
| 81 FR 53262 - Establishment of Class E Airspace; Linton, ND | |
| 81 FR 53265 - Establishment of Class E Airspace; Harvey, ND | |
| 81 FR 53342 - Proposed Amendment of Class E Airspace, Kahului, HI | |
| 81 FR 53264 - Revocation of Class D Airspace; North, SC | |
| 81 FR 53263 - Establishment of Class E Airspace; Platte, SD | |
| 81 FR 53539 - Agency Information Collection Activities; Renewal of a Currently-Approved Information Collection: Licensing Applications for Motor Carrier Operating Authority | |
| 81 FR 53381 - 340B Drug Pricing Program; Administrative Dispute Resolution | |
| 81 FR 53268 - Confined Spaces in Construction; Approval of Collections of Information | |
| 81 FR 53401 - Glenn and Colusa County Resource Advisory Committee | |
| 81 FR 53300 - Revision to the California State Implementation Plan; San Joaquin Valley; Demonstration of Creditable Emission Reductions From Economic Incentive Programs | |
| 81 FR 53280 - Revisions to the California State Implementation Plan, Sacramento Metropolitan Air Quality Management District | |
| 81 FR 53294 - Approval and Promulgation of Implementation Plans; California; San Joaquin Valley; Revisions to Motor Vehicle Emissions Budgets for Ozone and Particulate Matter | |
| 81 FR 53370 - Approval and Promulgation of Air Quality Implementation Plans; State of Colorado; Motor Vehicle Inspection and Maintenance, Clean Screen Program and the Low Emitter Index, On-Board Diagnostics, and Associated Revisions | |
| 81 FR 53501 - Federal Property Suitable as Facilities To Assist the Homeless | |
| 81 FR 53365 - Approval and Promulgation of State Implementation Plan Revisions to Primary Air Quality Standards, Minor Source Baseline Date, Incorporation by Reference, and 2008 Ozone NAAQS Infrastructure Requirements for CAA Section 110(a)(2)(C) and (D)(i)(II); Wyoming | |
| 81 FR 53252 - Airworthiness Directives; BAE Systems (Operations) Limited Airplanes | |
| 81 FR 53315 - Endangered and Threatened Wildlife and Plants; Removing the San Miguel Island Fox, Santa Rosa Island Fox, and Santa Cruz Island Fox From the Federal List of Endangered and Threatened Wildlife, and Reclassifying the Santa Catalina Island Fox From Endangered to Threatened | |
| 81 FR 53658 - Submission of Policies, Provisions of Policies, Rates of Premium, and Non-Reinsured Supplemental Policies | |
| 81 FR 53353 - Schedule for Rating Disabilities; Skin Conditions | |
| 81 FR 53544 - Proposed Collection; Comment Request for Form 8911 | |
| 81 FR 53850 - System Safety Program | |
| 81 FR 53255 - Airworthiness Directives; Airbus Airplanes | |
| 81 FR 53767 - Denial of Petition To Initiate Proceedings To Reschedule Marijuana | |
| 81 FR 53846 - Applications To Become Registered Under the Controlled Substances Act To Manufacture Marijuana To Supply Researchers in the United States | |
| 81 FR 53688 - Denial of Petition To Initiate Proceedings To Reschedule Marijuana | |
| 81 FR 53546 - Regulation SBSR-Reporting and Dissemination of Security-Based Swap Information |
Agricultural Marketing Service
Animal and Plant Health Inspection Service
Federal Crop Insurance Corporation
Forest Service
National Agricultural Statistics Service
First Responder Network Authority
International Trade Administration
National Oceanic and Atmospheric Administration
National Telecommunications and Information Administration
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Substance Abuse and Mental Health Services Administration
Coast Guard
U.S. Customs and Border Protection
Bureau of Safety and Environmental Enforcement
Fish and Wildlife Service
Land Management Bureau
Drug Enforcement Administration
Occupational Safety and Health Administration
National Endowment for the Humanities
Federal Aviation Administration
Federal Highway Administration
Federal Motor Carrier Safety Administration
Federal Railroad Administration
Maritime Administration
National Highway Traffic Safety Administration
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.
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Agricultural Marketing Service, USDA.
Final rule.
This final rule amends the Dairy Promotion and Research Order (Dairy Order). The amendment modifies the number of National Dairy Promotion and Research Board (Dairy Board) importer members. The total number of importer members would be reduced from 2 members to 1 member, and the domestic Dairy Board members would remain the same at 36. The Dairy Order requires that at least once every three years, after the initial appointment of importer members on the Dairy Board, the Secretary shall review the average volume of domestic production of dairy products compared to the average volume of imports of dairy products into the United States during the previous three years, and, on the basis of that review, if warranted, reapportion the importer representation on the Dairy Board to reflect the proportional shares of the United States market served by domestic production and imported dairy products.
Whitney A. Rick, Director, Promotion, Research and Planning Division, AMS, USDA, 1400 Independence Ave. SW., Room 2958-S, Stop 0233, Washington, DC 20250-0233. Phone: (202) 720-6909. Email:
This final rule is issued pursuant to the Dairy Production Stabilization Act (Dairy Act) of 1983 [7 U.S.C. 4501-4514], as amended.
The Office of Management and Budget has waived the review process required by Executive Order 12866 for this action.
This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This final rule is not intended to have a retroactive effect. In accordance with 7 U.S.C. 4512(a), this rule will not preempt or supersede any other program relating to dairy product promotion organized and operated under the laws of the United States or any State.
The Dairy Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under 7 U.S.C. 4509, any person subject to the Dairy Order may file with the Secretary of Agriculture (Secretary) a petition stating that the Dairy Order, any provision of the Dairy Order, or any obligation imposed in connection with the Dairy Order is not in accordance with the law and request a modification of the Dairy Order or to be exempted from the Dairy Order. Such person is afforded the opportunity for a hearing on the petition. After a hearing, the Secretary would rule on the petition. The Dairy Act provides that the district court of the United States in any district in which the person is an inhabitant or has his principal place of business, has jurisdiction to review the Secretary's ruling on the petition, provided a complaint is filed not later than 20 days after the date of the entry of the ruling.
In accordance with the Regulatory Flexibility Act (5 U.S.C. 601-612), the Agricultural Marketing Service has considered the economic impact of this action on small entities and has certified that this final rule will not have a significant economic impact on a substantial number of small entities. The purpose of the Regulatory Flexibility Act is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be disproportionately burdened.
The Dairy Act authorizes a national program for dairy product promotion, research and nutrition education. Congress found that it is in the public interest to authorize the establishment of an orderly procedure for financing (through assessment on all milk produced in the United States for commercial use and on imported dairy products) and carrying out a coordinated program of promotion designed to strengthen the dairy industry's position in the marketplace and to maintain and expand domestic and foreign markets and uses for fluid milk and dairy products.
The Small Business Administration [13 CFR 121.201] defines such entities with fewer than 500 employees as small businesses. According to 2013 data from the U.S. Census Bureau, 98.6 percent of these types of firms had fewer than 500 employees (
The final rule amends the Dairy Order, Section 1150.131(c), by reducing the number of Dairy Board importer representatives from 2 members to 1 member.
The amendment should not have a significant economic impact on persons subject to the Dairy Order. The changes allow representation on the Dairy Board to better reflect the volume of dairy product imports into the United States.
In accordance with the Office of Management and Budget (OMB) regulation [5 CFR part 1320] which implements the Paperwork Reduction Act of 1995 [44 U.S.C. chapter 35], the information collection requirements and record keeping provisions imposed by the Dairy Order have been previously approved by OMB and assigned OMB Control No. 0581-0093. No relevant Federal rules have been identified that duplicate, overlap, or conflict with this rule.
Upon publication of this rule, the Dairy Order is administered by a 37-member Dairy Board, 36 members representing 12 geographic regions within the United States and 1 member representing importers. The Dairy Order requires in Section 1150.131(f) that at least once every three years, after the initial appointment of importer representatives on the Dairy Board, the Secretary shall review the average volume of domestic production of dairy products compared to the average volume of imports of dairy products into the United States during the previous three years and, on the basis of that review, if warranted, reapportion the importer representation on the Dairy Board to reflect the proportional shares of the United States market served by domestic production and imported dairy products. This reapportionment review is the first conducted since importer members were appointed to the Dairy Board on November 2, 2011.
For initial representation of importers on the Dairy Board, the Dairy Act states “In making initial appointments to the Board of importer representatives, the Secretary shall appoint 2 members who represent importers of dairy products and are subject to assessment under the order.” 7 U.S.C. 4504(b)(6)(A). For subsequent representation of importers, the Dairy Act goes on to state “At least once every 3 years after the initial appointment of importer representatives under subparagraph (A), the Secretary shall review the average volume of domestic production of dairy products compared to the average volume of imports of dairy products into the United States during the previous 3 years and, on the basis of that review, shall reapportion importer representation on the Board to reflect the proportional share of the United States market by domestic production and imported dairy products.” 7 U.S.C. 4504(b)(6)(B).
Section 1150.131(f) of the Dairy Order states the basis for the comparison of domestic production of dairy products to imported products should be estimated total milk solids. The calculation of total milk solids of imported dairy products for reapportionment purposes “shall be the same as the calculation of total milk solids of imported dairy products for assessment purposes.” The reapportionment review was not conducted prior to 2015 because three full years' worth of data was not available.
Using National Agricultural Statistical Service (NASS) Annual Dairy Products Summary data, the average U.S. milk total solids for domestic dairy products for 2012 to 2014 was 23,462 billion pounds annually. Based on the total milk solids number, each of the 36 domestic Dairy Board producer members would represent 652 million pounds of total milk solids (23,462 billion pounds divided by 36 producer members equals 652 million pounds per producer).
Using information received from CBP, the average total milk solids imported during 2012 to 2014 was 589 million pounds (589 million pounds divided by 1 importer member equals 589 million pounds per importer).
Accordingly, Table 1 summarizes, based on U.S. total solids and imported total solids, the adopted number of Dairy Board seats for domestic and importer members.
On April 1, 2016, a proposed rule was published in the
One commenter opposed reducing the number of importer members on the Dairy Board, recognizing that approximately 1,400 importers paid assessments under the Dairy Order in 2014. The commenter stated that due to the limits of the Dairy Tariff-Rate Import Quota Licensing Program placed on the volume of cheese imported into the U.S., increasing import volumes by any appreciable amount is impossible.
A second commenter also opposed the proposal to reduce Dairy Board importer representation from two members to one member, and urged for the withdrawal of the proposed rule. The commenter recognized the Dairy Act requires importer representation to reflect the proportional share of the U.S. market by domestic production and imported dairy products. However, the commenter argued that increasing import volumes by any appreciable amount is impossible due to the limits placed on the volume of cheese imported into the U.S. by factors beyond the control of the market, namely quotas, tariffs and import licenses. The commenter also stated safeguard triggers require substantially higher tariffs if the triggers are breached and noted this occurred with butter in 2015 and may occur in the coming year with several cheeses. The commenter went on to state that the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP) agreements are focused on the reduction, if not elimination of tariffs and quotas. As a result, TPP and TTIP implementation would likely result in an increase in imported dairy products, including cheese, and would make the representation of importers on the Dairy Board even more meaningful.
As noted in the proposed rule, the Dairy Order requires and provides instruction on how to carry out a review to determine whether or not a reapportionment of importer members on the Dairy Board is warranted. Therefore, the proposed rule will not be withdrawn. Neither commenter disputed the method of nor the data used to conduct the reapportionment review. Similarly, an alternative process for conducting the review was not offered. Additionally, because the Secretary is required to review importer representation every three years, any increase in imported dairy products, cheese or otherwise, would be reflected in the calculations used to determine whether importer representation would increase, remain the same, or decrease.
This final rule adopts the proposed rule without change, and therefore Dairy Board importer representation is decreased from two importer members to one importer member.
Pursuant to 5 U.S.C. 553, it is found and determined that good cause exists for not postponing the effective date of this rule until 30 days after publication in the
Dairy products, Milk, Promotion, Research.
For the reasons set forth in the preamble, 7 CFR part 1150 is amended as follows:
7 U.S.C. 4501-4514 and 7 U.S.C. 7401.
(c) One member of the board shall be an importer who is subject to assessments under § 1150.152(b).
Animal and Plant Health Inspection Service, USDA.
Final rule.
We are amending the National Poultry Improvement Plan (NPIP), its auxiliary provisions, and the indemnity regulations for the control of H5 and H7 low pathogenic avian influenza. Specifically, we are clarifying who may participate in the NPIP, amending participation requirements, amending definitions for
Effective September 12, 2016.
Dr. Denise Brinson, DVM, Director, National Poultry Improvement Plan, VS, APHIS, USDA, 1506 Klondike Road, Suite 101, Conyers, GA 30094-5104; (770) 922-3496.
The National Poultry Improvement Plan (NPIP, also referred to below as “the Plan”) is a cooperative Federal-State-industry mechanism for controlling certain poultry diseases. The Plan consists of a variety of programs intended to prevent and control poultry diseases. Participation in all Plan programs is voluntary, but breeding flocks, hatcheries, and dealers must first qualify as “U.S. Pullorum-Typhoid Clean” as a condition for participating in the other Plan programs.
The Plan identifies States, flocks, hatcheries, dealers, and slaughter plants that meet certain disease control standards specified in the Plan's various programs. As a result, customers can buy poultry that has tested clean of certain diseases or that has been produced under disease-prevention conditions.
The regulations in 9 CFR parts 145, 146, and 147 (referred to below as the regulations) contain the provisions of the Plan. The Animal and Plant Health Inspection Service (APHIS, also referred to as “the Service”) of the U.S. Department of Agriculture (also referred to as “the Department”) amends these provisions from time to time to incorporate new scientific information and technologies within the Plan. In addition, the regulations in 9 CFR part 56 set out conditions for the payment of indemnity for costs associated with poultry that are infected with or exposed to H5/H7 low pathogenic avian influenza and provisions for a cooperative control program for the disease.
On March 24, 2016, we published in the
We solicited comments concerning our proposal for 60 days ending May 23, 2016. We received one comment by that date. It was from an individual. The issues raised by the commenter are discussed below.
In the March 2016 proposed rule, we proposed to amend the definition of
We are not making any changes to the final rule in response to this comment. As stated in the March 2016 proposed rule, the term “progeny” is more accurate than “chicks” in this context because it is more inclusive of both chicken and turkey flocks. Young turkeys are known as poults rather than chicks. In addition, as we noted in the proposed rule, the change in terminology also makes our definition of
The March 2016 proposed rule included a minor change to § 145.12, which contains requirements for the retention and examination of records for all flocks maintained primarily for hatching eggs. We proposed to specify, in paragraph (b) of that section, that records for all breeder flock hatcheries must be made available for annual examination by a State inspector. Historically, testing records were retained at the hatchery, which allowed for examination of the records during annual inspections, but that is no longer the case. Many commercial hatcheries now keep testing records at the corporate office or another site. Our proposed amendment to § 145.12 was intended to reflect this change in recordkeeping practices in the industry and also to allow flexibility in the regulations regarding who may make the records available to the State inspector.
The commenter objected to this proposed change, stating that the
We do not agree with this comment. As noted above, we are amending the regulations to reflect current practices in the industry. By allowing hatcheries the discretion to maintain records where they would most readily be accessible when needed, we are relieving a regulatory burden. The commenter provides no evidence to support the claim that having the records kept at sites other than the hatcheries will result in additional costs to taxpayers.
The commenter also stated that the proposed rule would have the effect of loosening testing standards, thereby increasing the risk of the spread of disease.
We did not propose to loosen existing testing standards, as the commenter claims. We proposed instead to make some editorial changes to § 145.14(b) to remove references to tests that are no longer being used, update terminology that is no longer current, and otherwise clarify the testing requirements in that section.
Finally, the commenter objected to our proposed changes to the slaughter plant inspection requirements in § 146.11.
We will not be making any changes to the final rule in response to this comment. The commenter did not offer a rationale for opposing the proposed amendments to § 146.11, which were intended to clarify our slaughter plant inspection requirements and remove language that conflicted with requirements set out elsewhere in part 146.
In this final rule, we are making one minor editorial change to correct an error in the regulatory text of the proposed rule.
Part 146 of the regulations contains the NPIP provisions for commercial poultry. Currently, the only disease addressed in this part is H5/H7 low pathogenic avian influenza; under part 146, table-egg layer flocks, meat-type chicken slaughter plants, meat-type turkey slaughter plants, and certain types of game birds and waterfowl may participate in U.S. H5/H7 Avian Influenza Monitored classifications.
Section 146.11 sets out the audit process for participating slaughter plants. Paragraph (b) states that flocks slaughtered at a slaughter plant will be considered to be not conforming to the required protocol of the classifications if there are no test results available, if the flock was not tested within 21 days before slaughter, or if the test results for the flocks were not returned before slaughter. We intended to amend paragraph (b) to state that “a flock will be considered to be conforming to protocol if it meets the requirements as described in §§ 146.33(a), 146.43(a), 146.53(a).” However, we inadvertently referred to § 145.33(a) instead of § 146.33(a). In this final rule, we are correcting that error.
Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the change discussed in this document.
This final rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.
In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available on the
We are amending the NPIP, its auxiliary provisions, and the indemnity regulations for the control of H5 and H7 low pathogenic avian influenza to align the regulations with international standards and make them more transparent to stakeholders and the general public. The changes in this final rule were voted on and approved by the voting delegates at the 2014 NPIP National Plan Conference.
The establishments that will be affected by the rule—principally entities engaged in poultry production and processing—are predominantly small by Small Business Administration standards. In those instances in which an addition to or modification of requirements could potentially result in a cost to certain entities, we do not expect the costs to be significant. NPIP membership is voluntary. The changes contained in this final rule were decided upon by the NPIP General Conference Committee on behalf of Plan members; that is, the changes were recognized by the poultry industry as being in their interest.
Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.
This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.)
This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.
In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.
Animal diseases, Indemnity payments, Low pathogenic avian influenza, Poultry.
Animal diseases, Poultry and poultry products, Reporting and recordkeeping requirements.
Accordingly, we are amending 9 CFR parts 56, 145, 146, and 147 as follows:
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
The addition reads as follows:
(a) The National Poultry Improvement Plan is a cooperative Federal-State-Industry program through which new or existing diagnostic technology can be effectively applied to improve poultry and poultry products by controlling or eliminating specific poultry diseases. The Plan consists of programs that identify States, flocks, hatcheries, dealers, and slaughter plants that meet specific disease control standards specified in the Plan. Participants shall maintain records to demonstrate that they adhere to the disease control programs in which they participate.
The revisions read as follows:
(a) * * *
(5) The official blood test shall include the testing of a sample of blood from each bird in the flock: Provided, That under specified conditions (see applicable provisions of §§ 145.23, 145.33, 145.43, 145.53, 145.63, 145.73, 145.83, and 145.93) the testing of a portion or sample of the birds may be used in lieu of testing each bird.
(b) * * *
(1) The official tests for
A.A. Ansari, R.F. Taylor, T.S. Chang, “Application of Enzyme-Linked Immunosorbent Assay for Detecting Antibody to Mycoplasma gallisepticum Infections in Poultry,”
H.M. Opitz, J.B. Duplessis, and M.J. Cyr, “Indirect Micro-Enzyme-Linked Immunosorbent Assay for the Detection of Antibodies to Mycoplasma synoviae and M. gallisepticum,”
H.B. Ortmayer and R. Yamamoto, “Mycoplasma Meleagridis Antibody Detection by Enzyme-Linked Immunosorbent Assay (ELISA),”
(b) Hatching eggs should be nest clean. They may be fumigated in accordance with part 147 of this subchapter or otherwise sanitized.
The revisions read as follows:
(c) * * *
(1) * * *
(i) It is a flock in which all birds or a sample of at least 300 birds has been tested for
(ii) It is a multiplier breeding flock which originated as U.S. M. Gallisepticum Clean baby poultry from primary breeding flocks and a random sample comprised of 50 percent of the birds in the flock, with a maximum of 200 birds and a minimum of 30 birds per flock or all birds in the flock if the flock size is less than 30 birds, has been tested for
(A) At intervals of not more than 90 days, a random sample of serum or egg yolk or a targeted bird sample of the choanal palatine cleft/fissure area using appropriate swabs from all the birds in the flock if flock size is less than 30, but at least 30 birds, shall be tested; or
(d) * * *
(1) * * *
(i) It is a flock in which all birds or a sample of at least 300 birds has been tested for
(ii) It is a multiplier breeding flock that originated as U.S. M. Synoviae Clean chicks from primary breeding flocks and from which a random sample comprised of 50 percent of the birds in the flock, with a maximum of 200 birds and a minimum of 30 birds per flock or all birds in the flock if the flock is less than 30 birds, has been tested for
(A) At intervals of not more than 90 days, a random sample of serum or egg yolk or a targeted bird sample of the choanal palantine cleft/fissure area using appropriate swabs from all the birds in the flock if the flock size is less than 30, but at least 30 birds shall be tested:
The revisions read as follows:
(f) * * *
(1) * * *
(i) Measures shall be implemented to control
(3) In order for a hatchery to sell products of paragraphs (f)(1)(i) through (f)(1)(vi) of this section, all products handled shall meet the requirements of the classification.
(b) Hatching eggs produced by primary and multiplier breeding flocks should be nest clean. They may be fumigated in accordance with part 147 of this subchapter or otherwise sanitized.
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
(c)(1) An Official State Agency may accept for participation a commercial table-egg layer pullet flock, commercial table-egg layer flock, or a commercial meat-type flock (including an affiliated flock) located in another participating State under a mutual understanding and agreement, in writing, between the two Official State Agencies regarding conditions of participation and supervision.
(2) An Official State Agency may accept for participation a commercial table-egg layer pullet flock, commercial table-egg layer flock, or a commercial meat-type flock (including an affiliated flock) located in a State that does not participate in the Plan under a mutual understanding and agreement, in writing, between the owner of the flock and the Official State Agency regarding conditions of participation and supervision.
(b) A flock will be considered to be conforming to protocol if it meets the requirements as described in § 146.33(a), § 146.43(a), or § 146.53(a).
(a) Participating commercial upland game bird slaughter plants, commercial waterfowl slaughter plants, raised-for-release upland game bird premises, raised-for-release waterfowl premises, and commercial upland game bird and commercial waterfowl producing eggs for human consumption premises shall comply with the applicable general provisions of subpart A of this part and the special provisions of this subpart E.
(c) Raised-for-release upland game bird premises, raised-for-release waterfowl premises, and commercial upland game bird and commercial waterfowl producing eggs for human consumption premises that raise fewer than 25,000 birds annually are exempt from the special provisions of this subpart E.
The additions read as follows:
(a) * * *
(4) It is a commercial upland game bird or waterfowl flock that produces eggs for human consumption where a minimum of 11 birds per flock have been tested negative to the H5/H7 subtypes of avian influenza as provided in § 146.13(b) within 30 days of disposal or within a 12 month period.
(5) It is a commercial upland game bird or waterfowl flock that has an on-going active and passive surveillance program for H5/H7 subtypes of avian influenza that is approved by the Official State Agency and the Service.
7 U.S.C. 8301-8317; 7 CFR 2.22, 2.80, and 371.4.
(d)
(a) Diagnostic test kits that are not licensed by the Service (
(1) The sensitivity of the kit will be evaluated in at least three NPIP authorized laboratories by testing known positive samples, as determined by the official NPIP procedures found in the NPIP Program Standards or through other procedures approved by the Administrator. Field samples for which the presence or absence of the target organism or analyte has been determined by the current NPIP test should be used, not spiked samples or pure cultures. Samples from a variety of field cases representing a range of low, medium, and high analyte concentrations should be used. In some cases it may be necessary to utilize samples from experimentally infected animals. Spiked samples (clinical sample matrix with a known amount of pure culture added) should only be used in the event that no other sample types are available. Pure cultures should never be used. Additionally, laboratories should be selected for their experience with testing for the target organism or analyte with the current NPIP approved test. If certain conditions or interfering substances are known to affect the performance of the kit, appropriate samples will be included so that the magnitude and significance of the effect(s) can be evaluated.
(2) The specificity of the kit will be evaluated in at least three NPIP authorized laboratories by testing known negative samples, as determined by tests conducted in accordance with the NPIP Program Standards or other procedures approved by the Administrator in accordance with § 147.53(d)(1). If certain conditions or interfering substances are known to affect the performance of the kit, appropriate samples will be included so that the magnitude and significance of the effect(s) can be evaluated.
(3) The kit will be provided to the cooperating laboratories in its final form and include the instructions for use. The cooperating laboratories must perform the assay exactly as stated in the supplied instructions. Each laboratory must test a panel of at least 25 known positive samples. In addition, each laboratory will be asked to test at least 50 known negative samples obtained from several sources, to provide a representative sampling of the general population. The cooperating laboratories must perform a current NPIP procedure or NPIP approved test on the samples alongside the test kit for comparison.
(4) Cooperating laboratories will submit to the kit manufacturer all raw data regarding the assay response. Each sample tested will be reported as positive or negative, and the official NPIP procedure used to classify the sample must be submitted in addition to the assay response value. A completed worksheet for diagnostic test evaluation is required to be submitted with the raw data and may be obtained by contacting the NPIP Senior Coordinator. Raw data and the completed worksheet for diagnostic test evaluation must be submitted to the NPIP Senior Coordinator 4 months prior to the next scheduled General Conference Committee meeting, which is when approval will be sought.
(5) The findings of the cooperating laboratories will be evaluated by the NPIP Technical Committee, and the Technical Committee will make a majority recommendation whether to approve the test kit to the General Conference Committee at the next scheduled General Conference Committee meeting. If the Technical Committee recommends approval, the final approval will be granted in accordance with the procedures described in §§ 147.46, 147.47, and 147.48.
(6) Diagnostic test kits that are not licensed by the Service (
(b)
(2) If the Technical Committee determines that only additional field data is needed at the time of submission for a modification of a previously approved test, allow for a conditional approval for 60 days for data collection side-by-side with a current test. The submitting party must provide complete protocol and study design, including criteria for pass/fail to the Technical Committee. The Technical Committee must review the data prior to final approval. This would only apply to the specific situation where a modified test needs additional field data with poultry to be approved.
(3) Approved diagnostic tests may be removed from the Plan by submission of a proposed change from a participant, Official State Agency, the Department, or other interested person or industry organization. The data in support of removing an approved test will be compiled and evaluated by the NPIP Technical Committee, and the Technical Committee will make a majority recommendation whether to remove the test kit to the General Conference Committee at the next scheduled General Conference Committee meeting. If the Technical Committee recommends removal, the final decision to remove the test will be granted in accordance with the procedures described in §§ 147.46, 147.47, and 147.48.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are superseding Airworthiness Directive (AD) 2010-10-13, for all BAE Systems (Operations) Limited Model BAe 146 and Avro 146 series airplanes. AD 2010-10-13 required repetitive inspections of the wing fixed leading edge and front spar structure for corrosion and cracking, and repair if necessary. This new AD requires revised inspection procedures that terminate a previously approved inspection procedure. This AD was prompted by revised inspection procedures issued by the Design Approval Holder (DAH). We are issuing this AD to detect and correct corrosion and cracking of the wing fixed leading edge and front spar structure, which could result in reduced structural integrity of the airplane.
This AD is effective September 16, 2016.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of September 16, 2016.
The Director of the Federal Register approved the incorporation by reference of a certain other publication listed in this AD as of June 21, 2010 (75 FR 27419, May 17, 2010).
For service information identified in this final rule, contact BAE Systems (Operations) Limited, Customer Information Department, Prestwick International Airport, Ayrshire, KA9 2RW, Scotland, United Kingdom; telephone +44 1292 675207; fax +44 1292 675704; email
You may examine the AD docket on the Internet at
Todd Thompson, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1175; fax 425-227-1149.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2010-10-13, Amendment 39-16292 (75 FR 27419, May 17, 2010) (“AD 2010-10-13”). AD 2010-10-13 applied to all BAE Systems (Operations) Limited Model BAe 146 and Avro 146 series airplanes. The NPRM published in the
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0047; corrected February 26, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”); to correct an unsafe condition. The MCAI states:
Corrosion of the wing fixed leading edge structure was detected on a BAe 146 aeroplane during removal of wing removable edge for a repair. The review of available scheduled tasks intended to detect environmental and fatigue deteriorations of the wing revealed that they may not have been sufficient to identify corrosion or fatigue damage in the affected structural area.
This condition, if not detected and corrected, could lead to degradation of the structural integrity of the wing.
To address this potential unsafe condition, EASA issued AD 2009-0014 [which corresponds to FAA AD 2010-10-13] to require repetitive inspections of fixed wing leading edge and front spar structure [for cracking and corrosion, and repair if necessary] in accordance with BAE Systems (Operations) Ltd Inspection Service Bulletin (ISB) ISB.57-072 which incorporated two possible inspection procedures, either method 1, a combination of a detailed visual inspection (DVI) and a visual inspection (VI) after removal of the outer fixed leading edge only, or method 2, a DVI only, after removal of the inner, centre and outer fixed leading edges.
Since that [EASA] AD was issued, BAE Systems (Operations) Ltd issued ISB.57-072 Revision 1 to correct a material reference number, Revision 2, which removed method 1 as an available inspection procedure to detect fatigue and environmental damage of the wing structure and Revision 3 to delete the requirement to install weights if the engines were removed when the leading edges were removed.
For the reasons described above, this [EASA] AD retains the requirements of EASA AD 2009-0014, which is superseded, but requires accomplishment of the [repetitive] inspections in accordance with updated inspection procedures,
This [EASA] AD is re-published to correct a typographical error in Table 1, restoring a compliance time as previously required by EASA AD 2009-0014.
The repetitive inspection interval for the detailed visual inspection for cracking and corrosion of the wing fixed leading edge and front spar structure is:
• 12 years or 36,000 flight cycles, whichever occurs earlier, for airplanes on which the enhanced corrosion protection has not been accomplished.
• 6 years or 36,000 flight cycles, whichever occurs earlier, for airplanes on which the enhanced corrosion protection has been accomplished.
You may examine the MCAI in the AD docket on the Internet at
We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.
We reviewed the available data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
BAE Systems (Operations) Limited has issued Service Bulletin ISB.57-072, Revision 3, dated August 31, 2010. The service information describes procedures for inspection and repair for cracking and corrosion of the wing fixed leading edge and front spar structure. 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 estimate that this AD affects 4 airplanes of U.S. registry.
The actions required by AD 2010-10-13, and retained in this AD take about 12 work-hours per product, and 1 work-hour per product for reporting, at an average labor rate of $85 per work-hour. Based on these figures, the estimated cost of the actions that are required by AD 2010-10-13 is $1,105 per product.
The new requirements of this AD add no additional economic burden.
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this AD.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective September 16, 2016.
This AD replaces AD 2010-10-13, Amendment 39-16292 (75 FR 27419, May 17, 2010) (“AD 2010-10-13”).
This AD applies to BAE Systems (Operations) Limited Model BAe 146-100A, -200A, and -300A series airplanes; and Model Avro 146-RJ70A, 146-RJ85A, and 146-RJ100A airplanes; certificated in any category, all serial numbers.
Air Transport Association (ATA) of America Code 57, Wings.
This AD was prompted by revised inspection procedures issued by the Design Approval Holder. We are issuing this AD to detect and correct corrosion and cracking of the wing fixed leading edge and front spar structure, which could result in reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
This paragraph restates the requirements of paragraph (f) of AD 2010-10-13, with an added provision for terminating action. Accomplishing the initial inspection required by paragraph (j) of this AD terminates the requirements of paragraph (g) of this AD.
(1) At the applicable time identified in paragraph (g)(1)(i), (g)(1)(ii), or (g)(1)(iii) of this AD: Perform a detailed visual inspection and visual inspection (Method 1) or a detailed visual inspection (Method 2) for cracking and corrosion of the wing fixed leading edge and front spar structure, in
(i) For airplanes with less than 9 years since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness as of the effective date of this AD: Within 18 months after June 21, 2010 (the effective date of AD 2010-10-13).
(ii) For airplanes with 9 years or more, but less than 15 years, since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness as of June 21, 2010 (the effective date of AD 2010-10-13): Within 18 months after June 21, 2010, or within 16 years since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness, whichever occurs first.
(iii) For airplanes with 15 years or more since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness as of June 21, 2010 (the effective date of AD 2010-10-13): Within 6 months after June 21, 2010.
(2) After doing the initial inspection required by paragraph (g)(1) of this AD, at the applicable intervals specified in paragraph (g)(2)(i) or (g)(2)(ii) of this AD, accomplish the repetitive inspections of the wing fixed leading edge and front spar structure for cracking and corrosion in the “area of inspection” specified in table 1 of paragraph 1.D., “Compliance,” of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008. Do the inspections in accordance with paragraph 2.C. (Method 1) or paragraph 2.D. (Method 2) of the Accomplishment Instructions of BAE SYSTEMS (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008. Where previously applied, enhanced corrosion protection may then be re-applied, as an option, in accordance with paragraph 2.E. of the Accomplishment Instructions of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008. Perform the repetitive inspections at the times specified in paragraph (g)(2)(i) or (g)(2)(ii) of this AD, as applicable.
(i) For airplanes having enhanced corrosion protection that was applied during the previous inspection: Inspect at intervals not to exceed 144 months.
(ii) For airplanes not having enhanced corrosion protection that was applied during the previous inspection: Inspect at intervals not to exceed 72 months.
(3) After doing the initial inspection required by paragraph (g)(1) of this AD, at intervals not to exceed 36,000 flight cycles, accomplish fatigue inspections in accordance with paragraph 2.C. (Method 1) or paragraph 2.D. (Method 2) of the Accomplishment Instructions of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008.
(4) If any cracking or corrosion is found during any inspection required by paragraph (g) of this AD, before further flight, repair in accordance with the Accomplishment Instructions of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008.
(5) No repair terminates the inspection requirements of this AD.
(6) Actions done before June 21, 2010 (the effective date of AD 2010-10-13), in accordance with BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, dated February 22, 2008, are considered acceptable for compliance with the corresponding actions specified in this AD.
(7) Submit a report of the findings (both positive and negative) of the inspection required by paragraph (f)(1) of this AD to Customer Liaison, Customer Support (Building 37), BAE Systems (Operations) Limited, Prestwick International Airport, Ayrshire, KA9 2RW, Scotland; fax +44 (0) 1292 675432; email
(i) If the inspection was done on or after June 21, 2010 (the effective date of AD 2010-10-13): Submit the report within 30 days after the inspection.
(ii) If the inspection was done before June 21, 2010 (the effective date of AD 2010-10-13): Submit the report within 30 days after June 21, 2010.
This paragraph restates the corrosion protection information in Note 2 of AD 2010-10-13, with no changes. At the discretion of the airplane owner/operator, corrosion protection may be embodied on those areas subject to a detailed visual inspection, in accordance with paragraph 2.E. or paragraph 2.F. of the Accomplishment Instructions of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008. Embodiment of enhanced corrosion protection in accordance with paragraph 2.E. of the Accomplishment Instructions of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008, allows the interval of the repetitive inspections (as required by paragraph (g)(2) of this AD) to be extended in the area(s) of application in accordance with paragraph (g)(2)(i) or (g)(2)(ii) of this AD, as applicable.
This paragraph restates the inspection information in Note 3 of AD 2010-10-13, with no changes. The inspections required by this AD prevail over the Maintenance Review Board Report (MRBR), Maintenance Planning Document (MPD), Corrosion Prevention and Control Program (CPCP), and Supplemental Structural Inspection Document (SSID) inspections defined in paragraph 1.C.(3) of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008.
At the applicable time identified in paragraph (j)(1), (j)(2), or (j)(3) of this AD; or within 6 months after the effective date of this AD; whichever occurs later: Perform a detailed visual inspection for cracking and corrosion of the wing fixed leading edge and front spar structure, in accordance with paragraph 2.C. of the Accomplishment Instructions of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 3, dated August 31, 2010. Repeat the inspection thereafter at the applicable intervals specified in paragraph 1.D.2. of BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 3, dated August 31, 2010. Accomplishing the initial inspection required by this paragraph terminates the requirements of paragraph (g) of this AD.
(1) For airplanes with less than 9 years since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness as of June 21, 2010 (the effective date of AD 2010-10-13): Within 18 months after June 21, 2010, or within 9 years since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness, whichever occurs later.
(2) For airplanes with 9 years or more, but less than 15 years, since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness as of June 21, 2010 (the effective date of AD 2010-10-13): Within 18 months after June 21, 2010, or within 16 years since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness, whichever occurs first.
(3) For airplanes with 15 years or more since the date of issuance of the original airworthiness certificate or the date of issuance of the original export certificate of airworthiness as of June 21, 2010 (the effective date of AD 2010-10-13): Within 6 months after June 21, 2010.
If any crack or corrosion is found during any inspection required by paragraph (j) of this AD: Before further flight, repair using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or BAE Systems (Operations) Limited's EASA Design Organization Approval (DOA).
Accomplishment of any repair, as required by paragraph (k) of this AD, does not constitute terminating action for inspections required by this AD.
This paragraph provides credit for actions required by this AD, if those actions were performed before the effective date of this AD
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-004; corrected February 26, 2015; for related information. This MCAI may be found in the AD docket on the Internet at
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (p)(5) and (p)(6) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(3) The following service information was approved for IBR on September 16, 2016.
(i) BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 3, dated August 31, 2010.
(ii) Reserved.
(4) The following service information was approved for IBR on June 21, 2010 (75 FR 27419, May 17, 2010).
(i) BAE Systems (Operations) Limited Inspection Service Bulletin ISB.57-072, Revision 1, dated September 25, 2008.
(ii) Reserved.
(5) For service information identified in this AD, contact BAE Systems (Operations) Limited, Customer Information Department, Prestwick International Airport, Ayrshire, KA9 2RW, Scotland, United Kingdom; telephone +44 1292 675207; fax +44 1292 675704; email
(6) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.
(7) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for all Airbus Model A318, A319, A320, and A321 series airplanes. This AD was prompted by reports of premature aging of certain passenger chemical oxygen generators that resulted in the generators failing to activate. This AD requires an inspection to determine if certain passenger chemical oxygen generators are installed and replacement of affected passenger chemical oxygen generators. 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 the airplane occupants.
This AD is effective September 16, 2016.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 16, 2016.
For Airbus service information identified in this final rule, 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 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
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2015-0117, dated June 24, 2015; corrected August 7, 2015 (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:
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) A35N006-14, 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 * * * (later revised) to require identification and replacement of the affected oxygen generators.
Since EASA AD 2014-0275R1 was issued, and following new investigation results, EASA have 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 the EASA AD 2014-0275R1, 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.
This [EASA] AD is re-published to correct a template error, removing the word ‘Proposed’ and replacing the acronym ‘PAD’ with ‘AD’.
You may examine the MCAI in the AD docket on the Internet at
We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM (80 FR 63136, October 19, 2015) and the FAA's response to each comment.
United Airlines (UAL) and Delta Air Lines, Inc. (DAL) requested an extension of the 30-day compliance time for the part number inspection. UAL stated that the time required for the part number inspection and the size of UAL's fleet is prohibitive to meeting the 30-day compliance time and requested that we extend the initial compliance time to 24 months. DAL stated that the time required for the part number inspection and the size of DAL's fleet is prohibitive to meeting the 30-day compliance time and requested that we extend the initial compliance time for the part number inspection to 90 days. DAL pointed out that a 90-day compliance time would allow ample time to route airplanes and schedule the required work on the first group of affected airplanes.
We disagree with the requests to extend the 30-day compliance time for the part number inspection. The commenters did not provide any justification to substantiate how increasing the compliance time from 30 days to 90 days or 24 months would provide an acceptable level of safety. After considering all of the available information, we have determined that the compliance time, as proposed, represents an appropriate interval of time in which the required actions can be performed in a timely manner with the affected fleet, while still maintaining an adequate level of safety. In developing an appropriated compliance time, we considered the safety implications, parts availability, and normal maintenance schedules for timely accomplishment of the replacement, overall risk to the fleet, including the severity of the identified unsafe condition and the likelihood of the occurrence of the unsafe condition. However, under the provisions of paragraph (n)(1) of this AD, operators may apply for an extension of the compliance time by providing rationale explaining why a compliance time extension provides an acceptable level of safety. We have not changed this AD in this regard.
DAL requested that we revise the Costs of Compliance section provided in the NPRM. DAL pointed out that the cost estimate may not properly account for the number of products per airplane and that they believe the costs are significantly higher than the estimate included in the NPRM. DAL also provided revised cost estimates based on their fleet.
We partially agree with the request to revise the Costs of Compliance section. We disagree that the cost estimate should be revised based on airplane configuration, findings, and associated costs based only on the DAL fleet. The configuration of each airplane and inspection findings may vary among U.S. operators. We agree that the Costs of Compliance section provided in the NPRM might not have accurately represented the actual cost. After considering the data presented by DAL, we also agree that the number of work-hours required is higher than our previous estimate. The Costs of Compliance section of this final rule has been revised accordingly.
UAL requested that we remove the reporting requirement in the proposed AD. UAL pointed out that reporting could expose operators to compliance risk. UAL also pointed out that they do not find any value in the information being requested by the reporting requirement. UAL stated that they will provide any feedback as requested.
We disagree with the request to remove the reporting requirement. We disagree that the information requested provides no value. Reporting is necessary for the airframe manufacturer to determine the extent of the unsafe condition and any necessary follow-up actions. We have not changed this AD in this regard.
Mr. Ricardo Erazo requested that we revise the AD to reference B/E Aerospace Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015. Mr. Erazo did not provide rationale for this request.
We agree with the request to revise this AD to reference B/E Aerospace Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015, and have revised this AD accordingly. B/E Aerospace Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015, clarifies references to additional service information. As a result, we have also added paragraph (m) to this AD, to give credit for actions accomplished before the effective date of this AD using B/E Aerospace Service Bulletin 117042-35-001, dated December 10, 2014; B/E Aerospace Service Bulletin 117042-35-001, Revision 001, dated April 9, 2015; B/E Aerospace Service Bulletin 117042-35-001, Revision 002, dated May 29, 2015; or B/E Aerospace Service Bulletin 117042-35-001, Revision 003, dated June 25, 2015.
We have revised paragraphs (h) and (i) of this AD to refer to Airbus AOT A35N006-14, dated December 10, 2014, including Appendix 1, as an additional appropriate source of service information for the 15-minute passenger chemical oxygen generators.
We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.
We reviewed the following service information.
• Airbus AOT A35N006-14, dated December 10, 2014, including Appendix 1.
• B/E Aerospace Inc. Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015.
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
We estimate that this AD affects 953 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
We estimate the following costs to do any necessary replacements that would be required based on the results of the required inspection. We have no way of determining the number of airplanes that might need these replacements:
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective September 16, 2016.
None.
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, except those that have embodied Airbus modification 33125 (gaseous system for all oxygen containers) in production.
(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 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 the 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), and 117042-24 (22 min—4 masks) to determine the date of manufacture as specified in Airbus Alert Operators Transmission (AOT) A35N006-14, dated December 10, 2014, including Appendix 1. Refer to figures 1 and 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 Airbus AOT A35N006-14, dated December 10, 2014, including Appendix 1 (for 15-minute and 22-minute passenger chemical oxygen generators); or the Accomplishment Instructions of B/E Aerospace Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015 (for 15-minute passenger chemical oxygen generators).
(1) For passenger chemical oxygen generators that have a date of manufacture in 1999: Within 30 days after the effective date of this AD.
(2) For passenger chemical oxygen generators that have a date of manufacture in 2000: Within 6 months after the effective date of this AD.
(3) For passenger chemical oxygen generators that have a date of manufacture in 2001: 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 Airbus AOT A35N006-14, dated December 10, 2014, including Appendix 01, undated (for 15-minute and 22-minute passenger chemical oxygen generators); or the Accomplishment Instructions of B/E Aerospace Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015 (for 15-minute passenger chemical oxygen generators).
For the purpose of this AD, a serviceable unit is a passenger chemical oxygen generator having P/N 117042-XX 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 A35N006-14, dated December 10, 2014, including Appendix 1. The report must include the information specified in Appendix 1 of Airbus AOT A35N006-14, dated December 10, 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 specified in paragraph (j) of this AD.
This paragraph provides credit for actions required by paragraphs (h) and (i) of this AD, if those actions were performed before the effective date of this AD using the service information specified in paragraphs (m)(1), (m)(2), (m)(3), or (m)(4).
(1) B/E Aerospace Service Bulletin 117042-35-001, dated December 10, 2014.
(2) B/E Aerospace Service Bulletin 117042-35-001, Revision 001, dated April 9, 2015.
(3) B/E Aerospace Service Bulletin 117042-35-001, Revision 002, dated May 29, 2015.
(4) B/E Aerospace Service Bulletin 117042-35-001, Revision 003, dated June 25, 2015.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) European Aviation Safety Agency (EASA) AD 2015-0117, dated June 24, 2015; corrected August 7, 2015; for related information. This MCAI may be found in the AD docket on the Internet at
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (p)(3) and (p)(4) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Airbus Alert Operators Transmission A35N006-14, dated December 10, 2014, including Appendix 01, undated.
(ii) B/E Aerospace Service Bulletin 117042-35-001, Revision 004, dated October 13, 2015.
(3) For Airbus 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:
(4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E en route domestic airspace in the Linton, ND, area. Controlled airspace is necessary at Linton Municipal Airport to facilitate vectoring of Instrument Flight Rules (IFR) aircraft under control of Minneapolis Air Route Traffic Control Center (ARTCC). This action enhances the safety and management of IFR operations within the National Airspace System (NAS).
Effective 0901 UTC, November 10, 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 on line at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Raul Garza, Jr., Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone: (817) 222-5874.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes controlled airspace at Linton Municipal Airport, Linton, ND.
On May 6, 2016, the FAA published in the
Class E airspace designations are published in paragraph 6006 of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR part 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.9Z, airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 1,200 feet above the surface within a 125-mile radius of Linton Municipal Airport, Linton, ND, to facilitate vectoring of IFR aircraft under control of Minneapolis ARTCC. Controlled airspace is needed for the safety and management of IFR operations within the NAS.
Class E airspace designations are published in Paragraph 6006 of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
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, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 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.
That airspace extending upward from 1,200 feet above the surface within a 125-mile radius of Linton Municipal Airport.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E en route domestic airspace in the Platte, SD, area. Controlled airspace is necessary at Platte Municipal Airport to facilitate vectoring of Instrument Flight Rules (IFR) aircraft under control of Minneapolis Air Route Traffic Control Center (ARTCC). This action enhances the safety and management of IFR operations within the National Airspace System (NAS).
Effective 0901 UTC, November 10, 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 on line at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Raul Garza, Jr., Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone: (817) 222-5874.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes controlled airspace at Platte Municipal Airport, Platte, SD.
On May 6, 2016, the FAA published in the
Class E airspace designations are published in paragraph 6006 of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR part 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.9Z, airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 1,200 feet above the surface within a 75-mile radius of Platte Municipal Airport, Platte, SD, to facilitate vectoring of IFR aircraft under control of Minneapolis ARTCC. Controlled airspace is needed for the safety and management of IFR operations within the NAS.
Class E airspace designations are published in Paragraph 6006 of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
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, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120, E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 1,200 feet above the surface within a 75-mile radius of Platte Municipal Airport.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action removes Class D Airspace at North, SC, as the North Air Force Auxiliary Field Air Traffic Control Tower is no longer staffed, and the controlled Class D airspace area is no longer required.
Effective 0901 UTC, November 10, 2016. The Director of the Federal Register approves this incorporation by reference action under Title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments.
FAA Order 7400.9Z, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
John Fornito, Operations Support Group, Eastern Service Center, Federal Aviation Administration, P.O. Box 20636, Atlanta, Georgia 30320; telephone (404) 305-6364.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it removes Class D airspace at North Air Force Auxiliary Field, North, SC.
On March 28, 2016, the FAA published in the
Class D airspace designations are published in paragraphs 5000 of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR part 71.1. The Class D airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 removes Class D airspace at North Air Force Auxiliary Field, North, SC. The air traffic control tower is no longer in use. Therefore, the Class D airspace area is no longer necessary.
The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist
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.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E en route domestic airspace in the Harvey, ND, area for Harvey Municipal Airport. Controlled airspace is necessary to facilitate vectoring of Instrument Flight Rules (IFR) aircraft under control of Minneapolis Air Route Traffic Control Center (ARTCC). This action enhances the safety and efficiency of aircraft operations within the National Airspace System.
Effective 0901 UTC, November 10, 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 on line at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Raul Garza, Jr., Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone: (817) 222-5874.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it establishes controlled airspace at Harvey Municipal Airport, Harvey, ND.
On May 6, 2016, the FAA published in the
This document amends FAA Order 7400.9Z, airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 1,200 feet above the surface within a 100-mile radius of Harvey Municipal Airport, Harvey, ND, to facilitate vectoring of IFR aircraft under control of Minneapolis ARTCC. Controlled airspace is needed for the safety and management of IFR operations in the National Airspace System.
Class E airspace designations are published in Paragraph 6006 of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
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, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 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.
That airspace extending upward from 1,200 feet above the surface within a 100-mile radius of Harvey Municipal Airport, excluding that airspace within Canada.
Commodity Futures Trading Commission.
Final rule.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is amending its regulations to revise or repeal certain provisions related to the requirement that a derivatives clearing organization (“DCO”) obtain from a Federal Reserve Bank acting as a depository for customer funds a written acknowledgment that the Federal Reserve Bank was informed that the customer funds deposited therein are those of customers and are being held in accordance with Section 4d of the Commodity Exchange Act (“CEA”).
Effective August 12, 2016.
Eileen A. Donovan, Deputy Director, 202-418-5096,
On June 2, 2016, the Commission published for public comment in the
In response to the request for public comment, CME Group Inc. noted that the proposed order would be inconsistent with Regulation 1.20(g)(4)(ii).
Brokers, Commodity futures, Consumer protection, Reporting and recordkeeping requirements.
For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 1 as follows:
7 U.S.C. 1a, 2, 5, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6l, 6m, 6n, 6o, 6p, 6r, 6s, 7, 7a-1, 7a-2, 7b, 7b-3, 8, 9, 10a, 12, 12a, 12c, 13a, 13a-1, 16, 16a, 19, 21, 23, and 24 (2012).
(g) * * *
(4) * * *
(i) A derivatives clearing organization must obtain a written acknowledgment from each depository prior to or contemporaneously with the opening of a futures customer funds account;
(ii) The written acknowledgment must be in the form as set out in appendix B to this part.
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.
Today, the Commission continues its work to ensure the resiliency of clearinghouses and protect customers in our markets. To provide the necessary context for these efforts, it is useful to look back at recent history.
Most participants in our markets will recall what happened at the beginning of the financial crisis in September 2008, when the Reserve Fund—a money market fund—“broke the buck” following the bankruptcy of Lehman Brothers. Redemptions were suspended and investors were not able to make withdrawals. As a result, many futures commission merchants (FCMs) were not able to access customer funds invested in the Reserve Fund. Absent relief by the CFTC, many would have been undercapitalized, potentially ending up in bankruptcy. In addition, clearinghouses could not liquidate investments in the Reserve Fund. And there could have easily been a widespread run on money market funds, but for the emergency actions taken by the U.S. government.
As a result of the crisis, as well as the collapse of MF Global, the CFTC and our self-regulatory organizations took a number of actions to better protect customer funds. We required customer funds to be strictly segregated and limited the ways they can be invested. We enhanced accounting and auditing procedures at FCMs, including by requiring daily verification from depositories of the amounts deposited by FCMs.
Today, CFTC rules require that customer funds be invested in highly liquid assets and be convertible into cash within one business day without a material discount in value. Our rules also require that clearinghouses invest initial margin deposits in a manner that allows them to promptly liquidate any such investment.
Over the last few years, the Securities and Exchange Commission (SEC) has also taken action in response to the lessons of the financial crisis, by adopting a number of measures to address the potential vulnerabilities of money market funds. One such recent reform, which takes effect in October of this year, sets forth the circumstances where prime money market funds are permitted, or in some circumstances required, to suspend redemptions in order to prevent the risk of investor runs.
While we recognize the benefit of the SEC's new rule in preventing investor runs, a suspension of redemptions by a money market fund would mean investments in such funds are not accessible and cannot be promptly liquidated. Such an event could result in customers, FCMs, and clearinghouses being unable to access the funds necessary to satisfy margin obligations.
Therefore, CFTC staff is today providing guidance making clear that Commission rules prohibit a clearing member from investing customer funds, or a clearinghouse from investing amounts deposited as initial margin, in such money market funds.
Some industry participants have suggested we should interpret or revise our rules to permit investments of at least some customer monies in such money market funds unless and until redemptions are suspended. We have declined to do so, as it would be too late to protect customers at that point. Moreover, there are alternatives to prime funds, including certain government money markets funds or Treasury securities. In fact, investments in prime money market funds represent a relatively small portion of the total customer funds on deposit and the total initial margin deposits at clearinghouses. Some of our clearinghouses and FCMs do not have any investments in prime funds.
Staff has been careful not to be overly restrictive, and therefore has issued no-action relief to allow FCMs to invest certain “excess” proprietary funds held in customer accounts in these money market funds. That is, our existing rules require FCMs to deposit their own funds (
Finally, the Commission is taking action today that will further ensure the safety of customer funds. We are issuing an order that will help make it possible for systemically important clearinghouses to deposit customer funds at Federal Reserve Banks. Our order makes clear that a Federal Reserve Bank that opens such an account would be subject to the same standards of liability that generally apply to it as a depository, rather than any potentially conflicting standard under the commodity laws.
Although Federal Reserve accounts for customer funds held by systemically important clearinghouses do not exist today, they are allowed under the Dodd-Frank Act, and we have been working with the Board of Governors to facilitate them. The two clearinghouses designated as systemically important in our markets have been approved to open Federal Reserve Bank accounts for their proprietary funds. We hope that with today's action, accounts for customer funds can be opened soon. Doing so will help protect customer funds and enhance the resiliency of clearinghouses.
I thank the dedicated CFTC staff and my fellow Commissioners for their work on these matters.
I am pleased to concur with the two Commission actions: the “Order Exempting the Federal Reserve Banks from Sections 4d and 22 of the Commodity Exchange Act” and “Written Acknowledgment of Customer Funds from Federal Reserve Banks.” I have long believed that, in order to protect customer funds, we need to keep that money at our central bank. In the event of a major market event, I, and I believe the rest of the American people, would feel much better knowing that investors' money is at the Federal Reserve instead of at multiple central counterparties. I am glad that our agency and the Federal Reserve have come to an agreement on an effective way to accomplish this.
I am similarly pleased with the Division of Clearing and Risk's (DCR) “Staff Interpretation Regarding CFTC Part 39 In Light Of Revised SEC Rule 2a-7,” which clearly outlines the staff's understanding that, given the limitations that the Securities and Exchange Commission (SEC) has imposed on redemptions for prime money market funds, that they are no longer considered Rule 1.25 assets. This is the correct interpretation. The key feature in a Rule 1.25 asset is that it must be available quickly in times of crisis or illiquidity. And
For that very reason, I have concerns about the Division of Swap Dealer and Intermediary Oversight's (DSIO) “No-Action Relief With Respect to CFTC Regulation 1.25 Regarding Money Market Funds.” While the 4(c) exemption and the DCR interpretation are clearly customer protection initiatives, the DSIO no action letter is not. This no action letter would allow FCMs to keep money in segregated customer accounts that actually would not be readily available in a crisis. Thus, while it may appear that an FCM had considerable funds available to settle customer accounts during a market dislocation, in fact that would be only be an illusion; a portion of those funds could be locked down behind the prime money market funds' gates and therefore not actually be available when needed.
I do not think that the staff of the Commission should be supporting this kind of “window dressing”—giving the impression of greater security than there actually is. If the funds are not suitable investments for customer funds, then they are not suitable for the additional capital that the FCMs put in those accounts to protect against potential shortfalls. Having lived through bankruptcies, such as MF Global and Peregrine, I have a healthy respect for the importance of having strong clearing members with a large cushion of funds that can be accessed when needed. This no action letter undermines that effort. Given the importance of this topic to the general public, we should at least have asked for comments or even held a roundtable before making this change. I therefore hope to reexamine this subject in the near future.
Occupational Safety and Health Administration (OSHA), Department of Labor.
Final rule.
This rule is a technical amendment revising OSHA's regulations to reflect the approval by the Office of Management and Budget (OMB) of the collections of information contained in OSHA's standard for Confined Spaces in Construction.
Effective August 12, 2016.
Todd Owen, OSHA, Directorate of Standards and Guidance, Room N-3609, U.S. Department of Labor, 200 Constitution Avenue NW., Washington, DC 20210; telephone (202) 693-2222.
OSHA published a final rule for Confined Spaces in Construction on May 4, 2015 (80 FR 25365) to provide new protections to employees working in confined spaces in construction. This new subpart replaced OSHA's general training requirement for work in confined spaces (29 CFR 1926.21(b)(6)) with a comprehensive standard. The new standard includes a permit program designed to protect employees from exposure to many hazards associated with work in confined spaces, including atmospheric and physical hazards. Those requirements contained collections of information approved by OMB under control number 1218-0258, which OSHA publicized in the
Additional opportunity for public comment on this rule is unnecessary because the public has already had the opportunity to comment on the collections of information and OMB has approved them. This revision of § 1926.5 is a purely technical step to increase public awareness of OMB's approval of the collections of information.
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, directed the preparation of this notice. The authority for this notice is the Paperwork Reduction Act of 1995 (44 U.S.C. 3506
Occupational safety and health, Reporting and recordkeeping requirements.
For the reasons stated in the preamble in this document, the Occupational Safety and Health Administration amends 29 CFR part 1926 as follows:
40 U.S.C. 3701
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a special local regulation for all waters of the Allegheny River mile 0.0-1.5. This special local regulation is necessary to provide safety for the participants in the “Pittsburgh Triathlon and Adventure Race” marine event. This rulemaking prohibits persons and vessels from being in the special local regulated area unless authorized by the Captain of the Port Pittsburgh or a designated representative.
This rule is effective from 6 a.m. on August 13, 2016, through 9 a.m. on August 14, 2016.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email MST1 Jennifer Haggins, Marine Safety Unit Pittsburgh, U.S. Coast Guard, at telephone 412-221-0807, email
This annually recurring event and special local regulation is currently listed as the “Friends of the Riverfront Inc./Pittsburgh Triathlon and Adventure Races” under 33 CFR 100.801, Table 1, line no. 21, scheduled for two days during the last two weekends in July or first weekend of August. This year the event sponsor changed the date to the second weekend of August, and informed the Coast Guard of this date change on June 6. The event will consist of at least 400 swimmers and takes place on the Allegheny River. This temporary final rule reflects the date changes to the event. The Captain of the Port Pittsburgh (COTP) has determined that the special local regulation under 33 CFR 100.801 is still necessary to protect participants, spectators, and waterway users during this event.
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” It is impracticable to publish an NPRM because we must establish this special local regulation by August 13, 2016.
We are issuing this rule, and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making it effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1233. The Captain of the Port Pittsburgh (COTP) has determined the need to protect participants during the “Pittsburgh Triathlon and Adventure Race” from 6 a.m. to 9 a.m. on August 13, 2016 and August 14, 2016. This rule is needed to protect personnel, vessels, and these navigable waters before, during, and after the scheduled event.
The Captain of the Port Pittsburgh is establishing this special local regulated area from 6 a.m. to 9 a.m. on August 13, 2016 and August 14, 2016 for all waters of the Allegheny River mile 0.0-1.5. The duration of the special local regulated area is intended to ensure the safety of vessels, participants, spectators and other waterway users before, during, and after the scheduled event. No vessel or person is permitted to enter the special local regulated area without obtaining permission from the COTP or a designated representative. The regulatory text we are establishing appears at the end of this document.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.
This regulatory action determination is based on the size, location, duration, and time-of-day of the special local regulated area.
This special local regulation restricts transit on the Allegheny River from mile 0.0-1.5 for a short duration of 3 hours each day. Vessel traffic will be informed about the special local regulated area through local notices to mariners. Moreover, the Coast Guard will issue Broadcast Notices to Mariners via VHF-FM marine channel 16 about the area and the rule allows vessels to seek permission to transit the area.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the special local regulated area may be small entities, for the reasons stated in section V.A above this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121),
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves special local regulated area that would prohibit entry to unauthorized vessels. It is categorically excluded from further review under paragraph 34(h) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Marine safety, Navigation (water), Reporting and recordkeeping requirements, and Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:
33 U.S.C. 1233.
(a)
(b)
(c)
(2) Persons or vessels requiring entry into or passage through the area must request permission from the COTP or a designated representative. The COTP representative may be contacted at 412-221-0807.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Marine Parkway Bridge across the Rockaway Inlet, mile 3.0, at Queens, New York. This deviation is necessary to allow the bridge owner to replace span guide rollers, counterweight guide shoes and trunnion journal at the bridge.
This deviation is effective from 7 a.m. on October 17, 2016 to 5 p.m. on October 28, 2016.
The docket for this deviation, [USCG-2016-0752] is available at
If you have questions on this temporary deviation, call or email Judy Leung-Yee, Project Officer, First Coast Guard District, telephone (212) 514-4330, email
The Marine Parkway Bridge, mile 3.0, across the Rockaway Inlet, has a vertical clearance in the closed position of 55 feet at mean high water and 59 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.795(a).
The waterway is transited by commercial barge traffic of various sizes.
The bridge owner, MTA Bridges and Tunnels, requested a temporary deviation from the normal operating schedule to replace span guide rollers, counterweight guide shoes and trunnion journal at the bridge.
Under this temporary deviation, the Marine Parkway Bridge shall remain in the closed position from 7 a.m. on October 17, 2016 to 5 p.m. October 28, 2016.
Vessels able to pass under the bridge in the closed position may do so at anytime. 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 inform the users of the waterways through our Local Notice and Broadcast to Mariners of the change in operating schedule for the bridge so that vessel operations can arrange their transits to minimize any impact caused by the temporary deviation. The Coast Guard notified various companies of the commercial oil and barge vessels and they have no objections to 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.
Office of Special Education and Rehabilitative Services, Department of Education.
Final priority.
The Assistant Secretary for Special Education and Rehabilitative Services announces a final priority under the Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program. The Assistant Secretary may use this priority for competitions in fiscal year 2016 and later years. We take this action to provide training and technical assistance to better prepare novice interpreters to become highly qualified, nationally certified sign language interpreters.
This priority is effective September 12, 2016.
Kristen Rhinehart-Fernandez, U.S. Department of Education, 400 Maryland Avenue SW., Room 5062, Potomac Center Plaza (PCP), Washington, DC 20202-2800. Telephone: (202) 245-6103 or by email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
29 U.S.C. 772(f).
We published a notice of proposed priority (NPP) for this competition in the
We group major issues according to subject. Generally, we do not address technical and other minor changes, or suggested changes the law does not authorize us to make under the applicable statutory authority. In addition, we do not address general comments that raised concerns not directly related to the proposed priority.
First, commenters supported trilingual interpreting in ASL/English/Spanish and argued that there is still a critical need for more training for interpreters in Spanish-influenced settings. One commenter stated that existing training developed for ASL/English/Spanish is still in its very initial stages and, if continued, has the potential to develop model partnerships that could be replicated into a training process for other spoken languages.
Second, commenters supported continued funding for training for deaf-blind interpreting. They indicated that deaf-blind consumers are one of the least well-served groups and there continues to be a critical need to increase the number of interpreters skilled in this area. For example, one commenter shared that there is a new movement occurring within the deaf-blind community around the concept of “pro-tactile,” which is altering the nature of communication, language, leadership, and interaction, and is one of the new areas in which interpreters need to be skilled to effectively work with individuals who are deaf-blind.
Finally, one commenter stated that the importance of accessible and advanced training for interpreters in healthcare and legal settings is underscored in a report entitled “Preparing Interpreters for Tomorrow: Report on a Study of Emerging Trends in Interpreting and Implications for Interpreter Education.” This report was prepared by a current grantee under this program, the National Interpreter Education Center, Northeastern University, in January 2015. According to this report, interpreters and consumers continue to identify these two specialty areas as areas of priority training needs for interpreters.
Specific to trilingual interpreting, we also believe there may be parts of the country where multiple languages are spoken by deaf individuals. Therefore, we are permitting applicants to address multiple language combinations in their proposals.
However, we believe it would be an inefficient use of Federal resources to allocate funds to focus solely on replicating rather than scaling up or expanding existing training or to train interpreters where there is no need. Therefore, applicants proposing to provide training in existing specialty areas will be expected to describe how their proposed projects expand on, rather than replicate, existing training in these areas. Applications for training in existing specialty areas will also be expected to specify that they plan to serve areas of the country in which there are not enough interpreters to adequately meet the communication needs of deaf, hard-of-hearing, and deaf-blind consumers.
We added language to Specialty Area 2 to allow applicants to propose multiple language combinations in their proposals. As such, in this specialty area, we will require applicants to propose a framework that will be used to provide trilingual interpreter training and to develop separate modules for each language in order to ensure the training content appropriately addresses the cultural nuances of each language.
Additionally, we revised Specialty Area 3: Field-initiated projects to allow specialty area training for deaf-blind interpreting, health care interpreting, legal interpreting, interpreting in a Vocational Rehabilitation (VR) setting, interpreting provided by Deaf interpreters, and video remote interpreting and video relay interpreting. We added language requiring that applicants ensure that projects will improve, update, and develop new material for training in these specialty areas. We also added language requiring applicants to demonstrate the demand for interpreters in these specialty areas and, to the extent possible, specify areas of the country in which there are not enough interpreters to adequately meet the communication needs of deaf, hard-of-hearing, and deaf-blind consumers. Finally, we added language that applicants proposing to continue existing training in these areas without improvement, update, or addition of new material will not be eligible for funding.
There are other vehicles funded by the Department that protect and advocate for individuals with disabilities, many of which teach self-advocacy skills. For example, the Client Assistance Program (CAP) is designed to advise and inform clients, client applicants, and other individuals with disabilities of all the available services and benefits under the Rehabilitation Act of 1973, as amended, and of the services and benefits available to them under Title I of the Americans with Disabilities Act (ADA). In addition, CAP grantees may assist and advocate for clients and client applicants about projects, programs, and services provided under the Rehabilitation Act. In providing assistance and advocacy under Title I of the Rehabilitation Act, a CAP agency may provide assistance and advocacy about services directly related to employment for the client or client applicant.
The Department also funds Parent Training and Information Centers (PTI centers) authorized under the Individuals with Disabilities Education Act (IDEA). Each State has at least one PTI center to provide training and information to students with disabilities and their families about their rights and services under IDEA. In addition, RSA currently funds seven State and regional PTI centers under section 303(c) of the Rehabilitation Act. All of these PTI centers provide training and information to enable individuals and their families to participate more effectively in meeting the vocational, independent living, and rehabilitation needs of such individuals.
Finally, the Centers for Independent Living authorized under title VII of the Rehabilitation Act and administered by the Department of Health and Human Services provide advocacy services for individuals with disabilities, and the modules developed on DSAT are among the tools they may use to teach deaf consumers to advocate for their rights. The existence of the programs described here, and their ability to use DSAT materials developed in previous grant cycles make it less necessary to continue to support DSAT through this competition.
We also believe that there is sufficient demand in the market for DSAT to sustain the curriculum without Federal investment. Since the DSAT curriculum was unveiled in 2010, more than 2,000 deaf, hard of hearing, and deaf-blind consumers have attended a DSAT consumer training and more than 250 deaf, hard of hearing, and deaf-blind individuals have been trained as DSAT trainers. In 2013, the DSAT curriculum was expanded to include deaf-blind-specific adaptations, and 10 deaf-blind individuals undertook a rigorous four-day deaf-blind self advocacy training (DBSAT) train the trainer course in preparation to provide future DBSAT to their peers.
We agree that the DSAT curriculum fills a significant gap experienced by educators, VR counselors, and community agency personnel, such as staff from centers for independent living and community rehabilitation programs. For example, as part of the Postsecondary Educational Programs Network (pepnet 2) Building State Capacity Summit, the team from Georgia recognized the value of the training materials and focused their five-year plan on improving self-advocacy and self-determination skills among deaf and hard of hearing high school and middle school students across the State. After piloting the project, they have worked closely with DSAT trainers to ensure that the curriculum addressed the needs of the population served. We expect that these and other strategies for using the existing DSAT materials will grow.
Another commenter asked whether an application may focus on multiple specialty areas, such as dysfluent language competencies and trilingual interpreting. For example, the commenter stated that for many deaf refugees in the United States, ASL is their first readily accessible language, and it becomes their primary communication choice despite their recent acquisition of this language. These individuals could benefit from interpreters who trained as trilingual interpreters and are familiar with working with dysfluent individuals.
We also agree that applicants may submit proposals that focus on more than one specialty area. We regard these combined proposals as field-initiated topics that should be submitted under Specialty Area 3.
However, as to the comment suggesting combining dysfluent language competencies and trilingual interpreting, we believe applicants could include trilingual interpreting as a secondary focus for working interpreters along with training in dysfluent language competencies. Applications for this combination should still be submitted under Specialty Area 1.
Under Specialty Area 1, we added language allowing applicants to include trilingual interpreting as a secondary focus for working interpreters who may require both training as trilingual interpreters and gaining familiarity working with dysfluent individuals.
As a technical matter, AA/AAS programs are eligible, but the focus of this program is to prepare working interpreters to work in VR settings. To that end, in order to be eligible, applicants must be able to provide training to working interpreters in such settings, and such applicants would typically be institutions granting baccalaureate degrees.
For example, the commenter stated that equivalent alternative criteria that could be allowable in lieu of the educational requirements might include life experience, years of professional experience, and years of education (credit hours) not totaling a formal degree. The commenter noted that RID also accepts continuing education credits in addition to these other requirements in order to satisfy the educational equivalency requirements.
We believe there is limited information available on the reliability and validity of assessments used by States to confer certifications and licensures. For example, in some cases, an individual pays a fee to receive a license to work as an interpreter in a State, regardless of skill or competency. In other cases, assessments, such as the BEI, are State specific, and there is no information about how the specific levels of skills and competencies they assess compare with the level of skills and competencies required to pass other State-level licensure tests.
Applicants may use national and State-level licensures and certifications, as applicable, to assess participant progress in competency and skill level. Any proposed instruments must be valid and reliable and the applicant must submit a rationale to support the use of each instrument. However, the Department does not consider it appropriate at this time to require all applicants to adopt specific national or State-level certifications or licensures.
The commenter also does not believe there is data to indicate whether a sufficiently large pool of working interpreters that possess baccalaureate degrees in ASL-English and three years of interpreting experience who also possess competence in the proposed specialty training areas.
This commenter recommended the Department include flexibility on the qualifications of trainers, as well in the definition of “working interpreter.”
As stated earlier, we have also amended the definition of “working interpreter” to include interpreters with a baccalaureate degree in ASL-English who possess a minimum of three years of relevant experience as an interpreter or equivalence such as relevant professional experience, and years of education (credit hours) not totaling a formal degree.
One commenter recommended interaction with other Department-funded projects and stated that dysfluent language evident in deaf adults can be traced, in part, to inadequate language models early in life. According to this commenter, coordination of interpreter education efforts between children and adults could be a key step to addressing dysfluency among future Deaf generations.
We will not further specify how this communication, collaboration, or coordination will occur because we believe applicants are well suited to make this determination.
The Department is committed to transparency and will make available to the public abstracts of successful applications. Products produced as a result of these grants will be made available to the public through the National Clearinghouse of Rehabilitation Training Materials.
During the project, applicants must develop and deliver training of sufficient scope, intensity, and duration for working interpreters to achieve increased skill, knowledge, and competence in a specialty area. Applicants may develop a new training program or stand-alone modules that could also be incorporated into an existing baccalaureate degree ASL-English program. The training program or modules must be developed by the end of the first year of the project period and delivered in years two, three, four, and five of the project period. Applicants must provide adequate justification in their application if they determine additional time may be necessary to fully develop a curriculum and obtain input and feedback from key partners, relevant stakeholders, and consumers.
The projects must be designed to achieve, at a minimum, the following outcomes:
(a) An increase in the number of interpreters who are trained to work with deaf consumers who require specialized interpreting; and
(b) An increase in the number of interpreters trained in specialty areas who obtain or advance in employment in the areas for which they were prepared.
To be considered for funding, applicants must meet the requirements contained in this final priority, which are as follows:
(a) Demonstrate, in the narrative section of the application under “Significance of the Project,” how the proposed project will address the need for sign language interpreters in a specialty area. To address this requirement, applicants must:
(1) Present applicable data demonstrating the need for interpreters in the specialty area for which training will be developed by the project in at least three distinct, noncontiguous geographic areas, which may include the U.S. Territories;
(2) Present baseline data for the number or estimated number of working interpreters currently trained in a specialty area. In the event that an applicant proposes training in a new specialty area that does not currently exist or for which there are no baseline data, the applicant should provide an adequate explanation of the lack of reliable data and may report zero as a baseline;
(3) Explain how the project will increase the number of working interpreters in a specialty area who demonstrate the necessary competencies to meet the communication needs of individuals who are deaf, hard of hearing, or deaf-blind. To meet this requirement, the applicant must—
(i) Identify competencies that working interpreters must demonstrate in order to provide high-quality services in the identified specialty area using practices that are promising or based on instruction supported by evidence and intervention, when available; and
(ii) Demonstrate that the identified competencies are based on practices that are promising or supported by evidence that will result in effectively meeting the communication needs of individuals who are deaf, hard of hearing, or deaf-blind.
(b) Demonstrate, in the narrative section of the application under “Quality of Project Design,” how the proposed project will—
(1) Provide training in person or remotely to at least three distinct, noncontiguous geographic areas identified in paragraph (a)(1);
(2) Identify and partner with trainers who are certified and recognized in the specialty area through formal or informal certification to develop and deliver the training. If certification is not available in the specialty area, provide evidence of relevant training and experience (
(3) Be based on current research and make use of practices that are promising or supported by evidence. To meet this requirement, the applicant must describe—
(i) How the proposed project will incorporate current research and practices that are promising or supported by evidence in the development and delivery of its products and services;
(ii) How the proposed project will engage working interpreters with different learning styles; and
(iii) How the proposed project will ensure that working interpreters interact with deaf individuals who have a range of communication skills, from those with limited language skills to those with high-level, professional language skills.
(c) In the narrative section of the application under “Quality of Project Services,” the applicant must—
(1) Demonstrate how the project will ensure equal access and treatment for eligible project participants who are members of groups who have traditionally been underrepresented based on race, color, national origin, gender, age, or disability;
(2) Describe the criteria that will be used to identify high-quality applicants for participation in the program, including any pre-assessments that may be used to determine the skill, knowledge base, and competence of the working interpreter;
(3) Describe the recruitment strategies the project will use to attract high-quality working interpreters, including specific strategies targeting high-quality participants from traditionally underrepresented groups (
(4) Describe how the project will ensure that all training activities and materials are fully accessible;
(5) Describe the approach that will be used to enable more working interpreters to participate in and successfully complete the training program, specifically participants who need to work while in the program, have child care or elder care considerations, or live in geographically isolated areas. The approach must emphasize innovative instructional delivery methods, such as distance learning or block scheduling (a type of academic scheduling that offers students fewer classes per day for longer periods of time), which would allow working interpreters to more easily participate in the program;
(6) Describe the approach that will be used to enable working interpreters to successfully complete the program or stand-alone modules, to include mentoring, monitoring, and accommodation support services;
(7) Describe how the project will incorporate practices that are promising and supported by evidence for adult learners;
(8) Demonstrate how the project is of sufficient scope, intensity, and duration to adequately prepare working interpreters in the identified specialty area of training. To address this requirement, the applicant must describe how—
(i) The components of the proposed project will support working interpreters' acquisition and enhancement of the competencies identified in paragraph (a)(2)(i);
(ii) The components of the project will allow working interpreters to apply their content knowledge in a practical setting;
(iii) The proposed project will provide working interpreters with ongoing guidance and feedback; and
(iv) The proposed project will provide ongoing induction opportunities and support working interpreters after completion of the specialty area program.
(9) Demonstrate how the proposed project will actively engage representation from consumers, consumer organizations, and service providers, especially vocational rehabilitation (VR) agencies, interpreters, interpreter training programs, and individuals who are deaf and deaf-blind in the project, including project development, design, implementation, delivery of training, dissemination, sustainability planning, program evaluation, and other relevant areas as determined by the applicant;
(10) Describe how the project will conduct dissemination and coordination activities. To meet this requirement, the applicant must—
(i) Describe its plan for disseminating information to and coordinating with VR agencies, American Job Centers and other workforce partners regarding finding interpreters with the specialized interpreting skills needed; disseminating information to working interpreters about training available in the specialty area, and broadly disseminating successful strategies for preparing working interpreters in a specialty area;
(ii) Describe its strategy for disseminating products developed during the project period. To meet this requirement the applicant must—
(A) Develop and maintain a state-of-the-art archiving and dissemination system that is open and available to the public and provides a central location for later use of training materials, including curricula, audiovisual materials, Webinars, examples of emerging and promising practices, and any other relevant material;
(B) Provide a minimum of three Webinars or video conferences over the course of the project. Applicants may determine the audience, content, and goals of this activity. For instance, applicants may consider disseminating information to working interpreters not enrolled in the program about training in a specialty area, as well as interacting with interpreter educators about the curriculum or training module design, challenges, solutions, and results achieved.
All products produced by the grantees must meet government- and industry-recognized standards for accessibility, including section 508 of the Rehabilitation Act.
(iii) Describe its approach for incorporating the use of information technology (IT) into all aspects of the project. The approach must include establishing and maintaining a state-of-the-art IT platform that is sufficient to support Webinars, teleconferences, video conferences, and other virtual methods of dissemination of information.
In meeting the requirements mentioned in paragraphs (c)(10)(ii)(A) and
(iv) Describe its approach for conducting coordination and collaboration activities. To meet this requirement, the applicant must—
(A) Establish a community of practice
(B) Communicate, collaborate, and coordinate with other relevant Department-funded projects, as applicable;
(C) Maintain ongoing communication with the RSA project officer and other RSA staff as required; and
(D) Communicate, collaborate, and coordinate, as appropriate, with key staff in State VR agencies, such as the State Coordinators for the Deaf; State and local partner programs; consumer organizations and associations, including those that represent individuals who are deaf, hard of hearing, deaf-blind, and late deafened; and relevant RSA partner organizations and associations.
(d) In the narrative section of the application under “Quality of the Evaluation Plan,” include an evaluation plan for the project. To address this requirement, the evaluation plan must describe—
(1) An approach, using pre- and post-assessments, for assessing the level of knowledge, skills, and competencies gained among participants;
(2) An approach for assessing the application of knowledge, skills, and competencies after completion; and
(3) An approach for incorporating oral and written feedback from trainers, from deaf consumers, and any feedback from mentoring sessions conducted with the participants;
(4) Evaluation methodologies, including instruments, data collection methods, and analyses that will be used to evaluate the project;
(5) Measures of progress in implementation, including the extent to which the project's activities and products have reached their target populations; intended outcomes or results of the project's activities in order to evaluate those activities; and how well the goals and objectives of the proposed project, as described in its logic model,
(6) How the evaluation plan will be implemented and revised, as needed, during the project. The applicant must designate at least one individual with sufficient dedicated time, experience in evaluation, and knowledge of the project to coordinate the design and implementation of the evaluation. For example, coordination with any identified partners in the application and RSA to make revisions post award to the logic model in order to reflect any changes or clarifications to the model and to the evaluation design and instrumentation with the logic model (
(7) The standards and targets for determining effectiveness of the project;
(8) How evaluation results will be used to examine the effectiveness of implementation and the progress toward achieving the intended outcomes; and
(9) How the methods of evaluation will produce quantitative and qualitative data that demonstrate whether the project activities achieved their intended outcomes.
(e) Demonstrate, in the narrative section of the application under “Adequacy of Project Resources,” how—
(1) The proposed project will encourage applications for employment with the project from persons who are members of groups that have historically been underrepresented based on race, color, national origin, gender, age, or disability;
(2) The proposed project personnel, consultants, and subcontractors have the qualifications and experience to provide training to working interpreters and to achieve the project's intended outcomes;
(3) The applicant and any identified partners have adequate resources to carry out the proposed activities; and
(4) The proposed costs are reasonable in relation to the anticipated results and benefits;
(f) Demonstrate, in the narrative section of the application under “Quality of the Management Plan,” how—
(1) The proposed management plan will ensure that the project's intended outcomes will be achieved on time and within budget. To address this requirement, the applicant must describe—
(i) Clearly defined responsibilities for key project personnel, consultants, and subcontractors, as applicable; and
(ii) Timelines and milestones for accomplishing the project tasks.
(2) Key project personnel and any consultants and subcontractors will be allocated to the project and how these allocations are appropriate and adequate to achieve the project's intended outcomes, including an assurance that such personnel will have adequate availability to ensure timely communications with stakeholders and RSA;
(3) The proposed management plan will ensure that the products and services provided are of high quality; and
(4) The proposed project will benefit from a diversity of perspectives, especially relevant partners, groups, and organizations described throughout this notice, in its development and operation.
(g) Address the following application requirements. The applicant must—
(1) Include, in Appendix A, a logic model that depicts, at a minimum, the goals, activities, outputs, and intended outcomes of the proposed project;
(2) Include, in Appendix A, person-loading charts and timelines, as applicable, to illustrate the management plan described in the narrative; and
(3) Include, in the budget, attendance at a one-day intensive review meeting in Washington, DC, during the third quarter of the third year of the project period.
With this final priority, the Secretary intends to fund four national projects in the following specialty areas: (1) Interpreting for consumers with dysfluent language competencies (
Applicants may submit proposals under one or more specialty area.
Applicants may combine more than one specialty and these applications must be submitted under Specialty Area 3: Field-initiated topics.
Interpreting for deaf and hard of hearing, and deaf-blind consumers with dysfluent language competencies include: (1) Those with limited, idiosyncratic, or differing levels of first and second language fluency in English and ASL); (2) those who have families using non-English spoken languages at home and have limited or no fluency in English and ASL; and (3) those with cognitive and physical disabilities that impact linguistic competencies. Under this specialty area, applicants may include trilingual interpreting as a secondary focus for working interpreters who may require both training as trilingual interpreters and gaining familiarity working with dysfluent individuals.
Trilingual interpreting is interpreting between three different languages; that is, two spoken languages such as English and Spanish, and ASL. This requires a working interpreter to be competent in three different languages and seamlessly facilitate communication between those languages in real time. RSA is seeking to fund similar projects in trilingual interpreting that includes languages that may be spoken in the United States. Applications may address multiple language combinations. In this instance, applicants must propose a framework that will be used to provide trilingual interpreter training. Applicants must develop separate modules for each language and ensure the training content appropriately addresses the cultural nuances of the language.
Applicants that choose to focus on trilingual interpreting in English/Spanish/ASL must propose to improve, update, and develop new material to support existing specialty training in this area. Applicants must describe in their application specific improvements, updates, and new material to be developed and provide rationale for why this is needed. Applicants must provide evidence to support the demand for trilingual interpreters in English/Spanish/ASL and, to the extent possible, specify areas of the country in which there are not enough trilingual English/Spanish/ASL interpreters to adequate meet the communication needs of Deaf, hard-of-hearing, and Deaf-blind consumers.
Trilingual interpreting in English/Spanish/ASL that proposes only to continue existing training developed during the 2010-2016 grant cycle or earlier cycles is
Field-initiated topics that address the needs of working interpreters to acquire specialized knowledge and competencies. These topics may address new specialty areas that require development of training modules of sufficient intensity, duration, and scope of sequence to warrant funding of an entire grant. Proposed topics may also replace training in an established specialty area that is no longer relevant. For instance, applicants may propose new or updated training, such as interpreting in a VR setting given reauthorization of the Rehabilitation Act, as amended, by WIOA. Applicants may also propose new subsets of training in established specialty areas. For instance, in health care interpreting, mental health might be one permissible subset of training because it has its own unique challenges and complexities in terms of setting and deaf consumer needs. In addition, applicants must provide sufficient evidence to demonstrate the need for the proposed new specialty training project or to show that an existing specialty training project is not adequately meeting the training needs of interpreters in order to better meet the linguistic and communication needs of deaf, hard-of-hearing, and deaf-blind consumers.
Applicants may also propose to enhance existing training developed in prior grant cycles for deaf-blind interpreting, health care interpreting, legal interpreting, interpreting in a VR setting, interpreting provided by Deaf interpreters, and video remote interpreting and video relay interpreting. In this instance, applicants must propose to improve, update, and develop new material to support existing specialty training in these areas. Applicants must describe in their application specific improvements, updates, and new material to be developed and provide rationale for why this is needed. Applicants must demonstrate the demand for interpreters in these existing specialty areas and, to the extent possible, specify areas of the country in which there are not enough trained interpreters to adequately meet the communication needs of deaf, hard-of-hearing, and deaf-blind consumers.
Applications that propose only to continue existing training in these areas are not eligible for funding. Additional field-initiated topics not eligible under this final priority include topics focusing on educational interpreting for pre-k-12 and deaf self-advocacy training.
The Secretary intends to fund a total of four projects in FY 2016 that have been awarded at least eighty-percent of the maximum possible points, including at least one project from each of the three specialty areas. As a result, the Secretary may fund applications out of rank order.
When inviting applications for a competition using one or more priorities, we designate the type of each priority as absolute, competitive preference, or invitational through a notice in the
This notice does not preclude us from proposing additional priorities, requirements, definitions, or selection criteria, subject to meeting applicable rulemaking requirements.
This notice does
As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: the public understands the Department's collection instructions, respondents can provide the requested
This final priority contains information collection requirements that are approved by OMB under the National Interpreter Education program 1820-0018; this final priority does not affect the currently approved data collection.
Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—
(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);
(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.
This final regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.
We have also reviewed this final regulatory action under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—
(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and
(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.
Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”
We are issuing this final priority only on a reasoned determination that its benefits justify its costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that this regulatory action is consistent with the principles in Executive Order 13563.
We also have determined that this regulatory action does not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.
In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.
Through this priority, training will be provided to working interpreters for English-ASL interpreter training in specialty areas. These activities will help interpreters to more effectively meet the communication needs of individuals who are deaf or hard of hearing and individuals who are Deaf-blind. The training ultimately will improve the quality of VR services and the competitive integrated employment outcomes achieved by individuals with disabilities. This priority will promote the efficient and effective use of Federal funds.
This document provides early notification of our specific plans and actions for this program.
You may also access documents of the Department published in the
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is finalizing a partial approval and partial disapproval of revisions to the Sacramento Metropolitan Air Quality Management District (SMAQMD or District) portion of the California State Implementation Plan (SIP). This action was proposed in the
This rule is effective on September 30, 2016.
The EPA has established docket number
James Shears, EPA Region IX, (213) 244-1810,
Throughout this document, “we,” “us” and “our” refer to the EPA.
On January 15, 2016 (81 FR 2136), the EPA proposed to partially approve and partially disapprove the following documents that were submitted for incorporation into the California SIP:
We proposed to approve the 2006 RACT SIP and Updated RACT SIP with the exception of Rule 455, Pharmaceutical Manufacturing, and the municipal waste landfill category as satisfying the RACT requirements of CAA section 182(b)(2) and (f).
Also under CAA section 110(k)(3), we proposed to disapprove those elements of the 2006 RACT SIP and Updated RACT SIP that pertain to Rule 455 and the municipal waste landfill category because we found that these elements did not meet all of the applicable CAA requirements. In particular, we found that Rule 455, Pharmaceuticals Manufacturing, (amended 11/29/83 and 9/5/96) lacks test methods, recordkeeping, and monitoring requirements that are necessary to support enforcement of the rule. See CAA section 110(a). We also found that the California SIP did not contain any provisions to implement RACT for volatile organic compounds (VOCs) at the Kiefer landfill, which is a major source of VOCs located within the Sacramento Metro area.
SMAQMD's submittal also included a number of negative declarations. CAA Sections 182(b)(2) and (f) require that SIPs for ozone nonattainment areas classified as moderate or above implement RACT for any source covered by a Control Techniques Guidelines (CTG) document and any major stationary source of VOCs or nitrogen oxides (NO
Our proposed action contains more information on the basis for this rulemaking and on our evaluation of the 2006 RACT SIP and Updated RACT SIP.
The EPA's proposed action provided a 30-day public comment period. During this period, we received no comments.
For the reasons provided in our January 15, 2016 proposed rule, the EPA is partially approving and partially disapproving SMAQMD's 2006 RACT SIP and Updated RACT SIP under CAA section 110(k)(3). In particular, we are approving all elements of the 2006 RACT SIP and Updated RACT SIP, with the exception of elements pertaining to Rule 455, Pharmaceutical Manufacturing, and the municipal waste landfill category, as satisfying the RACT requirements of CAA section 182(b)(2) and (f). We are disapproving those elements of the 2006 RACT SIP and Updated RACT SIP that pertain to Rule 455 and the municipal waste landfill category because we have determined that they do not meet all of the applicable CAA requirements.
The EPA is committed to working with the District and CARB to resolve the identified RACT deficiencies. We note that SMAQMD will not be required to submit a revised CAA section 182 RACT SIP demonstration for the 1997 8-hour ozone NAAQS if it submits for SIP approval, rules and/or permit provisions that implement RACT for the pharmaceutical manufacturing source category, as well as RACT for VOCs for the Kiefer landfill, and the EPA fully approves them into the SIP. On April 28, 2016, SMAQMD repealed Rule 455 and adopted amendments to Rule 464, Organic Chemical Manufacturing Operations to incorporate the pharmaceutical manufacturing requirements from Rule 455 along with other improvements to implement RACT into Rule 464. SMAQMD plans,
Because we are finalizing a partial disapproval of the 2006 RACT SIP and Updated RACT SIP, the EPA must promulgate a federal implementation plan (FIP) under section 110(c) unless we approve subsequent SIP revisions that correct the rule deficiencies within 24 months of the effective date of this action. In addition, sanctions will be imposed under CAA section 179 and 40 CFR 52.31, unless the EPA approves subsequent SIP revisions that correct the rule deficiencies or issues an interim final determination that submitted revisions correct the deficiencies within 18 months of the effective date of this action.
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, will result from this action.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not impose additional requirements beyond those imposed by state law.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.
The EPA lacks the discretionary authority to address environmental justice in this rulemaking.
This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Under CAA section 307(b)(1), petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(382) * * *
(ii) * * *
(C) Sacramento Metropolitan Air Quality Management District.
(
(
(
(475) A new plan for the following AQMD was submitted January 21, 2009 by the Governor's designee.
(i) [Reserved]
(ii) Additional Material.
(A) Sacramento Metropolitan Air Quality Management District.
(
(a) * * *
(2) * * *
(iv)
(b) The following Reasonably Available Control Technology (RACT) determinations are disapproved because they do not meet the requirements of Part D of the Clean Air Act.
(1) Sacramento Air Quality Management District.
(i) RACT Determinations for the Pharmaceutical Products Manufacturing Source Category and the Kiefer Landfill (volatile organic compounds only), in
(ii) [Reserved]
(2) [Reserved]
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is disapproving the portion of a Texas State Implementation Plan (SIP) submittal pertaining to interstate transport of air pollution which will significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone National Ambient Air Quality Standard (NAAQS) in other states. Disapproval establishes a 2-year deadline for the EPA to promulgate a Federal Implementation Plan (FIP) for Texas to address the Clean Air Act (CAA) interstate transport requirements pertaining to significant contribution to nonattainment and interference with maintenance of the 2008 ozone NAAQS in other states, unless the EPA approves a SIP that meets these requirements. Disapproval does not start a mandatory sanctions clock for Texas.
This rule is effective on September 12, 2016.
The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2012-0985. All documents in the docket are listed on the
Carl Young, 214-665-6645,
Throughout this document, “we,” “us,” and “our” means the EPA.
This rulemaking addresses an infrastructure SIP submittal from the state of Texas addressing, among other things, the requirements of CAA section 110(a)(2)(D)(i)(I), also known as the good neighbor provision (or interstate transport prongs 1 and 2), with respect to the 2008 ozone NAAQS. The background for this action is discussed in detail in our April 11, 2016 proposal (81 FR 21290). In that action we proposed to disapprove the portion of the December 13, 2012 Texas SIP submittal pertaining to CAA section 110(a)(2)(D)(i)(I) which requires that the State prohibit any emissions activity within the state from emitting air pollutants which will significantly contribute to nonattainment (prong 1) or interfere with maintenance (prong 2) of the 2008 ozone NAAQS in other states.
We received three comments during the comment period on our proposed SIP disapproval. The comments were submitted by the State of Texas (Texas Commission on Environmental Quality “TCEQ”), Luminant (a Texas electricity producer) and a member of the public. A synopsis of the comments and our responses are provided below.
With respect to the timeliness of the EPA's action on the Texas SIP submittal, CAA section 110(k)(2) requires the EPA to act on SIPs within one year after a submittal is determined to be complete. We determined that the Texas infrastructure SIP submittal, which includes transport, was complete on December 20, 2012. While the EPA generally agrees that prompt action on state SIP submittals can be beneficial to the states' planning efforts, in this case, the D.C. Circuit's decision in
Whether the EPA appropriately proposed the CSAPR Update is outside the scope of this action, and is irrelevant to the question of whether the Texas SIP should be disapproved. The bases for the disapproval are further explained in both the proposal and this final action, and do not rely upon the proposed CSAPR Update. As described in the proposal and earlier in this document, whether or not the EPA had proposed the CSAPR Update, Texas' SIP submittal failed to include an analysis that appropriately evaluated the impact of state emissions on areas in other states, regardless of current nonattainment designations and considering the ability of areas currently measuring clean data to maintain that standard. These deficiencies are completely independent of any analysis conducted to support the CSAPR Update proposal.
Moreover, while the CSAPR Update proposal also relied upon the same modeling and contribution information to identify which states might be subject to a FIP in the final rulemaking, in the absence of an approvable SIP, the proposed disapproval of the Texas SIP did not rely upon the proposed findings in the CSAPR Update but rather cited, in addition to other deficiencies identified with the Texas SIP, technical data that was relevant to and informative for both proposals.
Our actions are consistent with CAA section 110(c) prerequisites in promulgating a FIP. In our December 3, 2015
Finally, the EPA disagrees with the commenters' claim that had we reviewed the SIP revision before proposing the CSAPR Update for Texas, the state would have had the opportunity contemplated by the CAA to correct any problems with its SIP in a timely fashion in order to avoid the imposition of the FIP. Contrary to commenters' assertions, CAA does not contemplate that a state have an opportunity to correct deficiencies with its SIP either before the EPA takes action to act on the SIP or before the EPA imposes a FIP after disapproval of a SIP. CAA section 110(c) provides that the EPA “shall promulgate a [FIP]
With respect to the “interfere with maintenance” requirement, the court in
Although the TCEQ questions how it could have completed such an analysis without explicit guidance from the EPA and before the EPA had conducted air quality modeling evaluating downwind air quality and contributions, as explained earlier, states bear the primary responsibility for demonstrating that their plans contain adequate provisions to address the statutory interstate transport provisions and the EPA is not required to issue guidance. In separate interstate transport actions, the EPA has reviewed and finalized action on interstate transport SIPs in states where air quality modeling was not available or where the total weight of evidence for finalizing action on the state's SIP was not solely based on air quality modeling, according to these standards.
Further, the comments state that because some states are linked to receptors in marginal nonattainment areas, the EPA is requiring emissions reductions from upwind states, including Texas, to assist states that do not have make emission reductions or institute control strategies of their own. Further, the comments claim that we have failed to identify any balance between local controls in areas with potential maintenance problems and reductions that it is requiring of states upwind that it models as contributing at least 1% of the relevant NAAQS to these areas with modeled, not monitored, issues.
The commenters also disagree with the EPA's finding that the Texas SIP submittal did not give independent significance to the CAA “interfere with
The EPA disagrees with the commenter's assertion that this standard or requirement did not exist at the time the statutory obligation to submit a transport SIP matured. At the time Texas was obligated to submit a SIP addressing interstate transport requirements for the 2008 ozone NAAQS, CAA section 110(a)(2)(D)(i)(I) clearly required states to submit a plan containing adequate provisions prohibiting any source or other type of emissions activity within the state from emitting any air pollutant in amounts which will interfere with maintenance by any other state with respect to a particular NAAQS. This requirement has not changed since Texas' obligation to submit a transport SIP matured, and contrary to commenter's assertion, the EPA is not obligated to identify a required or recommended methodology for giving independent consideration to possible contributions that may interfere with maintenance in downwind areas prior to proposing action on a SIP addressing such statutory requirement. Nonetheless, the State's SIP made no attempt to evaluate the maintenance prong with respect to the 2008 ozone NAAQS aside from its conclusory assertion that the requirements were satisfied.
To the extent the commenter has raised concerns with respect to the EPA's interpretation and application of the CAA, including the “interfere with maintenance” clause, in the context of the CSAPR Update rulemaking, such comments are appropriately raised and addressed in that rulemaking. The EPA is not finalizing in this rule any determinations regarding the identification of specific downwind maintenance receptors, the magnitude of Texas' contribution to those receptors, and the quantity of any emission reductions that might be necessary. Such determinations will be made in the context of the CSAPR Update rulemaking. To the extent that Luminant refers to the EPA's approach as not compliant with the Supreme Court's
Nonetheless, while the EPA cited the modeling conducted for the CSAPR Update as showing Texas may significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone NAAQS in downwind states, we did not propose to make a specific finding of contribution or to quantify any specific emissions reduction obligation. We did not rely upon a 1% contribution threshold for this action. Rather, the evaluation of whether emissions from Texas significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone NAAQS downwind, relying upon the use of a 1% contribution threshold, and if so what reductions are necessary to address that contribution, is being conducted in the context of the CSAPR Update rulemaking. Accordingly, this comment relates to the CSPAR Update rulemaking and not our action today. Thus, it is outside the scope of this action and would be more appropriately addressed in that separate rulemaking. The EPA will consider timely-submitted comments regarding the EPA's air quality modeling and various associated legal and policy decisions in finalizing that rulemaking.
The EPA has proposed its intended response to address the D.C. Circuit's remand of the CSAPR ozone season NO
For the reasons described in the proposal and in this final action, the EPA is disapproving a portion of the December 13, 2012 SIP submittal from Texas seeking to address the required infrastructure element under CAA section 110(a)(2)(D)(i)(I) with respect to the State's significant contribution to nonattainment or interference with maintenance of the 2008 ozone NAAQS in other states, known as prongs 1 and 2 of the good neighbor provision.
In a separate action, we disapproved the portion of the SIP submittal pertaining to the CAA section 110(a)(2)(D)(i)(II) requirement to address the interstate transport of air pollution which will interfere with other states' programs for visibility protection (81 FR 296, January 5, 2016). We proposed to approve the other portions of the infrastructure SIP submittal on February 8, 2016 (81 FR 6483). We expect to take final action on the other portions of the Texas infrastructure SIP at a later date.
Pursuant to CAA section 110(c)(1), this disapproval establishes a 2-year deadline for the EPA to promulgate a FIP for Texas to address the requirements of CAA section 110(a)(2)(D)(i) with respect to the 2008 ozone NAAQS unless Texas submits and we approve a SIP that meets these requirements. Disapproval does not start a mandatory sanctions clock for Texas pursuant to CAA section 179 because this action does not pertain to a part D plan for nonattainment areas required under CAA section 110(a)(2)(I) or a SIP call pursuant to CAA section 110(k)(5).
This final action is not a “significant regulatory action” and was therefore not submitted to the Office of Management and Budget for review.
This final action does not impose an information collection burden under the PRA because it does not contain any information collection activities.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action merely disapproves a SIP submittal as not meeting certain CAA requirements.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. This action does not apply on any Indian reservation land, any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, or non-reservation areas of Indian country. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it merely disapproves a SIP submittal as not meeting certain CAA requirements.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
The EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. This action merely disapproves a SIP submittal as not meeting certain CAA requirements.
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See CAA section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Ozone.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(l) The portion of the SIP submitted on December 13, 2012 addressing Clean Air Act section 110(a)(2)(D)(i)(I) for the 2008 ozone NAAQS is disapproved.
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is approving, and incorporating by reference, revisions to
This final rule is effective September 12, 2016.
The EPA has established a docket for this action under Docket ID No. EPA-R10-OAR-2015-0397. All documents in the docket are listed on the
Kristin Hall, Air Planning Unit, Office of Air and Waste (AWT-150), Environmental Protection Agency—Region 10, 1200 Sixth Ave., Seattle, WA 98101; telephone number: (206) 553-6357; email address:
Throughout this document wherever “we,” “us,” or “our” is used, it is intended to refer to the EPA.
On May 21, 2015, Idaho submitted revisions to the Idaho State Implementation Plan. On June 19, 2016, the EPA proposed to approve the submitted revisions, with the exception of certain provisions that are inappropriate for SIP approval (81 FR 37170). Please see our proposed rulemaking for further explanation and the basis for our finding. The public comment period for this proposal ended on July 11, 2016. We received no comments on the proposal.
The EPA is approving, and incorporating by reference, the following revisions to the Idaho SIP submitted on May 21, 2015:
• IDAPA 58.01.01.006
• IDAPA 58.01.01.011
• IDAPA 58.01.01.107
• IDAPA 58.01.01.157
• IDAPA 58.01.01.175
• IDAPA 58.01.01.176
• IDAPA 58.01.01.177
• IDAPA 58.01.01.178
• IDAPA 58.01.01.179
• IDAPA 58.01.01.180
• IDAPA 58.01.01.181
• IDAPA 58.01.01.201
• IDAPA 58.01.01.202
• IDAPA 58.01.01.401
• IDAPA 58.01.01.579
• IDAPA 58.01.01.725
• IDAPA 58.01.01.790
• IDAPA 58.01.01.791
• IDAPA 58.01.01.793
• IDAPA 58.01.01.794
• IDAPA 58.01.01.795
• IDAPA 58.01.01.796
• IDAPA 58.01.01.797
• IDAPA 58.01.01.798
• IDAPA 58.01.01.799
In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference as described in the amendments to 40 CFR part 52 set forth below. These materials have been approved by the EPA for inclusion in the State Implementation Plan, have been incorporated by reference by the EPA into that plan, are fully federally-enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of the EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because this action does not involve technical standards; and
• does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. In those areas of Indian country, the rule does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.
42 U.S.C. 7401
For the reasons set forth in the preamble, 40 CFR part 52 is amended as follows:
42 U.S.C. 7401
The revisions and additions read as follows:
(c) * * *
(a) The State of Idaho Rules for Control of Air Pollution in Idaho, specifically, IDAPA 58.01.01.005 through 007 (definitions), IDAPA 58.01.01.107.03.a, .b, .c (incorporations by reference), IDAPA 58.01.01.200 through 222 (permit to construct rules); IDAPA 58.01.01.510 through 516 (stack height rules); and IDAPA 58.01.01.575 through 581 (standards, increments and area designations) (except IDAPA 58.01.01.577), are approved as meeting the requirements of title I, part C, subpart 1 of the Clean Air Act for preventing significant deterioration of air quality.
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is taking final action to approve and conditionally approve revisions to the State of California's State Implementation Plan (SIP) for the San Joaquin Valley (SJV) area. The revisions consist of an update to the Motor Vehicle Emissions Budgets (“budgets”) for nitrogen oxides (NO
This rule is effective on September 30, 2016.
The EPA has established a docket for this action under Docket ID Number EPA-R09-OAR-2015-0711. All documents in the docket are listed on the
John Ungvarsky, Air Planning Office (AIR-2), U.S. Environmental Protection Agency, Region 9, (415) 972-3963,
Throughout this document, “we,” “us” and “our” refer to the EPA.
On May 18, 2016 (81 FR 31212), the EPA proposed, under section 110(k)(3) of the Clean Air Act (CAA or “Act”), to approve a revision to the California SIP submitted by the California Air Resources Board (CARB) on November 13, 2015.
The EPA previously approved the SJV budgets for the 1997 8-hour ozone standard and the 24-hour PM
In our May 18, 2016 proposed rule, we reviewed the revised budgets for the 1997 8-hour ozone standard in the November 13, 2015 submittal, evaluated them for compliance with statutory and regulatory requirements, and concluded that they meet all applicable requirements. More specifically, under CAA section 110(k)(3), we proposed to approve the revised VOC and NO
Second, under CAA section 110(k)(4), the EPA proposed to conditionally approve the revised direct PM
Third, the EPA also proposed to approve the revised direct PM
Lastly, on the effective date of today's action, the previously-approved budgets for the 1997 8-hour ozone standard and the 1987 24-hour PM
Please see our May 18, 2016 proposed rule for more information concerning the background for this action and for a more detailed discussion of the rationale for approval of the revised budgets.
Our May 18, 2016 proposed rule provided a 30-day public comment period, which closed on June 17, 2016. We received no comments on our proposal during this period.
For the reasons discussed in the May 18, 2016 proposed rule and summarized above, the EPA is approving, or conditionally approving, revised motor vehicle emissions budgets submitted on November 13, 2015 by CARB for the SJV area as a revision to the California SIP. More specifically, the EPA is approving, under CAA section 110(k)(3), revised VOC and NO
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve State choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves revisions to motor vehicle emission budgets as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide the EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).
Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires the EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” “Policies that have Tribal implications” is defined in the Executive Order to include regulations that have “substantial direct effects on one or more Indian tribes, on the relationship between the Federal government and the Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian Tribes.”
Eight Indian tribes are located within the boundaries of the SJV air quality planning area for the 1997 8-hours ozone standard and 24-hour PM
The EPA's approval into the SIP of the SJV revised budgets submitted by CARB would not have tribal implications because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the SIP approvals do not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental regulations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur dioxide, Volatile organic compounds.
42 U.S.C. 7401
Chapter I, title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(476) The following revision was submitted on November 13, 2015 by the Governor's designee.
(i) [Reserved]
(ii) Additional materials.
(A) California Air Resources Board.
(
The EPA is conditionally approving a California State Implementation Plan (SIP) revision submitted on November 13, 2015 updating the motor vehicle emissions budgets for nitrogen oxides (NO
Environmental Protection Agency (EPA).
Direct final rule.
The Environmental Protection Agency (EPA) is approving a revision to the Indiana State Implementation Plan (SIP) submitted by the Indiana Department of Environmental Management (IDEM) on October 16, 2015. The submittal consists of an order issued by the Commissioner of IDEM (Commissioner's Order No. 2015-01) approving alternative control technology requirements for Abengoa Bioenergy of Indiana (Abengoa). These requirements include the use of a carbon adsorption/absorption hydrocarbon vapor recovery system with a minimum overall control efficiency of 98% to control volatile organic compound (VOC) emissions from the ethanol loading racks at Abengoa. A continuous emissions monitoring system (CEMS) must be used to monitor the carbon adsorption/absorption hydrocarbon vapor recovery system for breakthrough of VOC emissions. For the reasons discussed below, EPA is approving this submittal as a revision to Indiana's SIP.
This direct final rule will be effective October 11, 2016, unless EPA receives adverse comments by September 12, 2016. If adverse comments are received, EPA will publish a timely withdrawal of the direct final rule in the
Submit your comments, identified by Docket ID No. EPA-R05-OAR-2015-0724, at
Jenny Liljegren, Physical Scientist, Attainment Planning and Maintenance Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886-6832,
Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:
IDEM requested on October 16, 2015, that EPA approve as a revision to the SIP alternative control technology requirements for Abengoa. These requirements include the use of a carbon adsorption/absorption hydrocarbon vapor recovery system with a minimum overall control efficiency of 98% to control VOC emissions from the ethanol loading racks at Abengoa. A CEMS must be used to monitor the carbon adsorption/absorption hydrocarbon vapor recovery system for breakthrough of VOC emissions. These requirements are contained in Commissioner's Order No. 2015-01 issued by the IDEM Commissioner on September 8, 2015.
In Abengoa's initial construction and operating permit issued by IDEM, the ethanol loading racks were subject to the statewide case-by-case Best Available Control Technology (statewide BACT) determination required under SIP-approved Title 326 Article 8 Rule 1-6 of the Indiana Administrative Code (326 IAC 8-1-6). The statewide BACT for Abengoa's ethanol loading racks was determined to be enclosed flares with a minimum overall control efficiency of 98%. Since then, Abengoa has modified its plant design, including the ethanol loading racks, and is now subject to a newer SIP-approved state rule, 326 IAC 8-5-6, Fuel Grade Ethanol Production at Dry Mills, which created an industry-specific statewide BACT standard and which replaced the statewide case-by-case BACT rule (326 IAC 8-1-6) for fuel grade ethanol production dry mills that have no wet milling operations. EPA approved this rule into the SIP on February 20, 2008 (73 FR 9201).
The three VOC control options under 326 IAC 8-5-6 are: (1) A thermal oxidizer with a minimum overall control efficiency of 98% or resulting in a VOC concentration of not more than ten (10) parts per million (ppm), (2) a wet scrubber with a minimum overall control efficiency of 98% or resulting in a VOC concentration of not more than twenty (20) ppm, and (3) an enclosed flare with a minimum overall control efficiency of 98%. The VOC control options under 326 IAC 8-5-6 do not include a carbon adsorption/absorption hydrocarbon vapor recovery system. Abengoa has opted to use a carbon adsorption/absorption hydrocarbon vapor recovery system rather than one of the VOC control options under 326 IAC 8-5-6. However, like the VOC control options under 326 IAC 8-5-6, Abengoa's carbon adsorption/absorption system has a minimum overall control efficiency of 98%. IDEM considers the system Reasonably Available Control Technology (RACT) under SIP rule 326 IAC 8-1-5 (Petition for a site-specific reasonably available control technology (RACT) plan).
As a result, pursuant to 326 IAC 8-1-5, Indiana has issued Commissioner's Order No. 2015-01 approving Abengoa's use of this system as an alternative site-specific RACT in lieu of the industry-specific statewide BACT options under 326 IAC 8-5-6. The carbon adsorption/absorption system will control VOC emissions at a minimum overall control efficiency of 98%, which is the same level of control of the industry-specific BACT options under 326 IAC 8-5-6; therefore, there will be no relaxation of the emission reduction requirements at Abengoa as a result of this SIP revision. As an added benefit, Abengoa's use of the carbon adsorption/absorption system is expected to result in fewer criteria air pollutant emissions, since, unlike enclosed flares, carbon adsorption/absorption does not involve the combustion of natural gas.
It should be noted that Condition #3 of the “Conditions of Approval” in Commissioner's Order 2015-01 states: “The overall efficiency for the carbon adsorption/absorption hydrocarbon vapor recovery system (C-2101), including the capture efficiency and adsorption/absorption efficiency, shall be at least 98%. The Petitioner shall demonstrate compliance using methods approved by the department. Testing shall be conducted in accordance with the provisions of 326 IAC 3-6 (Source Sampling Procedures)”. IDEM has confirmed in an email to EPA dated June 6, 2016, that this provision requires testing using EPA Method 25 (40 CFR part 60, appendix A-7).
EPA is approving the requirements in Commissioner's Order No. 2015-01 as a revision to the Indiana SIP. This is based on EPA's finding that the 98% minimum overall control efficiency adsorption/absorption system with a CEMS qualifies as alternative site-specific RACT under 326 IAC 8-1-5 of the Indiana SIP for Abengoa's ethanol loading racks. EPA also finds that this system constitutes statewide BACT under 326 IAC 8-1-6 of the Indiana SIP in lieu of the industry-specific statewide BACT options under 326 IAC 8-5-6 of the Indiana SIP. There will be no relaxation of the emission reduction requirements at Abengoa as a result of this SIP revision. Since this is not a relaxation, section 110(l) of the Clean Air Act (CAA) is satisfied and no backsliding is occurring as a result of this SIP revision. As an added benefit, Abengoa's use of the carbon adsorption/absorption system is expected to result in fewer criteria air pollutant emissions, since, unlike enclosed flares, carbon adsorption/absorption does not involve the combustion of natural gas.
We are publishing this action without prior proposal because we view this as a noncontroversial amendment and anticipate no adverse comments. However, in the proposed rules section of this
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 Indiana Regulations described in the amendments to 40 CFR part 52 set forth below. Therefore, these materials have been approved by EPA for inclusion in the State implementation plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Reporting and recordkeeping requirements, Volatile organic compounds.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(d) * * *
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is finalizing a limited approval and limited disapproval of a demonstration of creditable emission reductions submitted by California for approval into the San Joaquin Valley (SJV) portion of the California State Implementation Plan (SIP). This SIP submittal demonstrates that certain state incentive funding programs have achieved specified amounts of reductions in emissions of nitrogen oxides (NO
This rule is effective on September 30, 2016.
The EPA has established docket number EPA-R09-OAR-2015-0489 for this action. Generally, documents in the docket for this action are available electronically at
Idalia Pérez, EPA Region IX, (415) 972 3248,
Throughout this document, “we,” “us” and “our” refer to the EPA.
On August 24, 2015 (80 FR 51147), the EPA proposed to approve the “Report on Reductions Achieved from Incentive-based Emission Reduction Measures in the San Joaquin Valley” (Emission Reduction Report) and, based on California's documentation therein of actions taken by grantees in accordance with the identified incentive program guidelines, to approve 7.8 tpd of NO
The EPA's proposed action provided a 30-day public comment period. During this period, we received comments from Adenike Adeyeye, Earthjustice, by email dated and received September 16, 2015. The comments and our responses are summarized below.
As we explained in our proposed rule, where a state relies on a discretionary economic incentive program (EIP) or other voluntary measure to satisfy an attainment planning requirement under the CAA (
The EPA evaluated the Emission Reduction Report in accordance with the Agency's guidance on discretionary EIPs.
A “financial mechanism EIP” is an EIP that indirectly reduces emissions by increasing costs for high emitting activities—
As explained further in Response 2 below, the portions of the Proposition 1B: Goods Movement Emission Reduction Program (Prop 1B program) and Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program) guidelines discussed in the Emission Reduction Report are consistent with the EPA's recommendations for “financial mechanism EIPs” in the 2001 EIP Guidance. First, CARB and the District are directly responsible for ensuring that the Prop 1B program and Carl Moyer Program are implemented in accordance with State law.
In sum, although an enforceable state commitment would ordinarily be necessary for a SIP submission that relies on a discretionary EIP to satisfy CAA enforceability requirements, such a commitment is not necessary in this case because the Emission Reduction Report was not submitted to satisfy a future emission reduction requirement and, instead, demonstrates only that certain Prop 1B program and Carl Moyer Program incentive projects achieved specified amounts of emission reductions in the past. The portions of the Prop 1B program and Carl Moyer Program guidelines that apply to the identified incentive projects ensure that program funds are used as expected and that the EPA and citizens have access to all emissions-related information obtained from participating sources. Based on our review of the available project records for a subset of the projects identified in the Emission Reduction Report, we find that the identified projects achieved the necessary emission reductions, with the exception of one source category discussed further below. Therefore, it is not necessary for the Emission Reduction Report to provide a mechanism for citizen suits against a responsible entity.
According to Earthjustice, to determine whether the stationary and portable farm engine projects were counted only for the years during which
First, actions required of grantees under the applicable portions of the Prop 1B and Carl Moyer Program guidelines are independently verifiable through (1) pre-project and post-project on-site inspections (with photographic documentation) that the District and/or CARB must carry out pursuant to the applicable guidelines, and (2) documents that each grantee is required to maintain and/or submit to the District in accordance with detailed contract provisions.
For example, the 2008 and 2010 Prop 1B guidelines require, among other things, that (1) all project applications include documentation of current equipment and activity information (
Similarly, the 2005, 2008 and 2011 Carl Moyer Program Guidelines require, among other things, that (1) all project applications include documentation of existing engine usage in previous years (
Second, the applicable portions of the 2008 and 2010 Prop 1B guidelines and the 2005, 2008 and 2011 Carl Moyer Program guidelines specifically define the required elements of each contract and the types of actions that constitute violations of such contracts. For example, under the 2008 and 2010 Prop 1B guidelines, each equipment project contract must include: (1) A unique “tracking number”; (2) the equipment owner's contact information; (3) the original application submitted by the equipment owner; (4) requirements for the equipment owner to submit reports to the local agency annually or biennially; (5) the equipment owner's agreement to allow ongoing evaluations and audits of equipment and documentation by the District, CARB, or their designated representative(s); and (6) requirements for the equipment owner to retain all records pertaining to the program (
Similarly, under the 2005, 2008 and 2011 Carl Moyer Program Guidelines, each equipment project contract must include: (1) The name and contact information of the grantee; (2) specified timeframes for “project completion” (the date the project post-inspection confirms that the project has become operational) and “project implementation” (the project life used in the project cost-effectiveness calculation); (3) detailed information on both baseline and new vehicles, equipment, and/or engines, including documentation adequate to establish historical annual usage; (4) requirements for the grantee to maintain the vehicle, equipment and/or engine according to the manufacturer's specifications for the life of the project; (5) annual reporting requirements; (6) a provision authorizing the District, CARB, and their designees to conduct fiscal audits and to inspect the project engine, vehicle, and/or equipment and associated records during the contract term, and (7) requirements to maintain and retain project records for at least two years after contract expiration or three years after final project payment, whichever is later.
Third, the applicable portions of the Prop 1B guidelines and Carl Moyer Program guidelines require that all grantees submit specific types of project records to the District and also require the District to maintain such records for specified periods of time. Specifically, as discussed above, under the 2008 Prop 1B guidelines, the 2010 Prop 1B guidelines, and the 2005, 2008 and 2011 Carl Moyer Program guidelines, each contract executed by the District must require the grantee to maintain project records for at least two years after contract expiration or three years after final project payment, whichever is later, and to submit annual or biennial reports to the District.
To demonstrate how the public can quantify and verify the emission reductions identified in the Emission Reduction Report, we randomly selected 0.5% of the projects in Appendix H of the Emission Reduction Report and requested that CARB provide to us the information necessary to verify the emission reduction calculations for these projects. From Appendix H.1, which lists the Carl Moyer projects included in the Emission Reduction Report, we randomly selected the projects identified in Table 1.
From Appendix H.2, which lists the Prop 1B Heavy Duty Diesel Truck Replacement projects included in the Emission Reduction Report, we randomly selected the projects identified in Table 2.
We independently calculated the emission reductions for the selected projects using additional project information submitted by CARB at our request and found that the emission reduction calculations for all of the selected projects were replicable, with the exception of one project that was erroneously included in the Emission Reduction Report and accounted for 0 reductions.
For Carl Moyer project C-2570, the project application contains information about the existing and new engine (including engine make, model year, horsepower, and tier), engine function and type (
Similarly, for Prop 1B project G07GMCT3_01246, the project application contains information about the existing and new engine (including engine make, model year, gross vehicle weight rating (GVWR), Vehicle Identification Number (VIN), and horsepower), the annual vehicle-miles-traveled (VMT) for both the existing and new engine, and percentage of usage in the San Joaquin Valley.
Any member of the public can obtain project-related documents maintained by the State and/or District by submitting a request for such documents under the California Public Records Act.
We also disagree with Earthjustice's assertion that there is no way to verify whether the emission reductions attributed to the projects identified in the Emission Reduction Report are “surplus” to existing requirements. As an initial matter, we note that both the Carl Moyer Program guidelines and the Prop 1B guidelines generally require that funded projects achieve emission reductions not required by any federal, state or local regulation or other legal mandate.
Earthjustice highlights “stationary and portable farm engines” as a source category for which the project life varies from two to ten years and claims that there is no way to know whether or not these projects were counted for only the years in which their emission reductions were surplus. We assume the commenter intended to refer to the “Stationary and Portable Agricultural Engines” source category under the Carl Moyer Program. Two of the Carl Moyer projects that we randomly selected for evaluation (identified in Table 1) are within this source category (project numbers C-2570 and C-14205). According to CARB, these two projects were of the equipment type “Stationary Agricultural Irrigation Pump.”
The emission reductions attributed to project C-14205 and project C-2570 engine #1 during the January 1-December 31, 2014 timeframe were surplus to the requirements of the Stationary Engine ATCM because they occurred before the earliest ATCM compliance deadline applicable to these engines, which was December 31, 2014. The emission reductions attributed to project C-2570 engine #2 during the January 1-December 31, 2014 timeframe, however, were not entirely surplus because that engine was required to comply with the Stationary Engine ATCM's NO
Given this information, we have assumed conservatively that all emission reductions attributed to Carl Moyer Program projects in the “Stationary and Portable Agricultural Engines” source category in the Emission Reduction Report are not surplus and, therefore, are not creditable for SIP purposes at this time. Stationary and portable agricultural engine projects account for 2.829 tpd of the NO
We are therefore subtracting these amounts from the total amounts of NO
Earthjustice argues that in order to determine whether these projects were counted only for the years during which they could be considered surplus, one would need to know the type of engine that was used as a replacement; the horsepower of the engine used as a replacement; the tier of the original agricultural engine; and fleetwide particulate matter (“PM”) levels. We agree that information about the type of engine that was used as a replacement, the horsepower of the new engine, and the tier of the original agricultural engine is necessary to determine whether the emission reductions attributed to a particular Carl Moyer project are surplus. As explained above, project documents that the District is required to maintain under the Carl Moyer and Prop 1B program guidelines, which CARB submitted to the EPA at our request, identify all of this information. With respect to fleetwide PM levels, we note that this information is not necessary to determine the ATCM compliance date applicable to a stationary agricultural engine, because the requirements of the Stationary Engine ATCM do not vary based on fleetwide PM levels.
Based on these reviews, we find that the Emission Reduction Report contains information adequate to enable the EPA and citizens to obtain emissions-related information necessary to quantify and verify the emission reductions attributed to the identified Carl Moyer Program and Prop 1B projects.
Under sections 110(k)(3) and 301(a) of the Act, the EPA is finalizing a limited approval and limited disapproval of the Emission Reduction Report and crediting the incentive projects identified therein with 4.971 tpd of NO
This limited disapproval does not trigger any sanctions clocks under CAA section 179(a) because the Emission Reduction Report was not submitted to address a requirement of part D, title I of the Act or in response to a finding of substantial inadequacy as described in CAA section 110(k)(5) (
Additional information about these statutes and Executive Orders can be found at
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, will result from this action.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not impose additional requirements beyond those imposed by state law.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.
The EPA lacks the discretionary authority to address environmental justice in this rulemaking.
This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements.
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:
42 U.S.C. 7401
(c) * * *
(477) The following plan revision was submitted on November 17, 2014 by the Governor's designee.
(i) [Reserved]
(ii)
(A) California Air Resources Board.
(
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is disapproving the portion of a Louisiana State Implementation Plan (SIP) submittal pertaining to interstate transport of air pollution which will significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone National Ambient Air Quality Standards (NAAQS) in other states. Disapproval will establish a 2-year deadline, under Clean Air Act (CAA) Section 110(c), for the EPA to promulgate a Federal Implementation Plan (FIP) for Louisiana to address the CAA interstate transport requirements pertaining to significant contribution to nonattainment and interference with maintenance of the 2008 ozone NAAQS in other states, unless the EPA approves a SIP that meets these requirements. Disapproval does not start a mandatory sanctions clock for Louisiana.
This rule is effective on September 12, 2016.
The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2013-0464. All documents in the docket are listed on the
Sherry Fuerst 214-665-6454,
Throughout this document, “we,” “us,” and “our” means the EPA.
This rulemaking addresses an infrastructure SIP submittal from the State of Louisiana addressing, among other things, the requirements of CAA section 110(a)(2)(D)(i)(I), also known as the good neighbor provision, with respect to the 2008 ozone NAAQS. The background for this action is discussed in detail in our June 7, 2016 proposal (81 FR 36496). In that action we proposed to disapprove the portion of the June 4, 2013 Louisiana SIP submittal pertaining to CAA 110(a)(2)(D)(i)(I) which requires that the State prohibit the interstate transport of air pollution which will significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone NAAQS in other states.
In proposing to disapprove the State's SIP submittal as to the good neighbor provision, we noted two specific deficiencies in the Louisiana submission. First, Louisiana cited the State's approved Clean Air Interstate Rule (CAIR) SIP as support for its conclusion that the State satisfied its section 110(a)(2)(D)(i)(I) obligation with respect to the 2008 ozone NAAQS. However, as explained in our proposal, CAIR was invalidated by the D.C. Circuit in
EPA is disapproving a portion of a June 4, 2013 SIP submittal from Louisiana pertaining to interstate transport of air pollution which will significantly contribute to nonattainment or interfere with maintenance of the 2008 ozone NAAQS in other states. Disapproval will establish a 2-year deadline, under the CAA Section 110(c), for the EPA to promulgate a FIP for Louisiana to address the CAA interstate transport requirements pertaining to significant contribution to nonattainment and interference with maintenance of the 2008 ozone NAAQS in other states, unless the EPA approves a SIP that meets these requirements. Disapproval does not start a mandatory sanctions clock for Louisiana pursuant to CAA section 179 because this action does not pertain to a part D plan for nonattainment areas required under CAA section 110(a)(2)(I) or a SIP call pursuant to CAA section 110(k)(5).
This final action is not a “significant regulatory action” because it is not categorized as “significant” under section 3(f) of Executive Order 12866 and therefore was not submitted to the Office of Management and Budget for review.
This final action does not impose an information collection burden under the PRA because it does not contain any information collection activities.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action merely disapprove a SIP submission as not meeting the CAA.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. This action does not apply on any Indian reservation land, any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, or non-reservation areas of Indian country. Thus, Executive Order 13175 does not apply to this action.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it merely disapproves a SIP submission as not meeting the CAA.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. This action merely disapproves a SIP submission as not meeting the CAA.
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, and Ozone.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(a) The portion of the SIP submitted on June 4, 2013 addressing Clean Air Act section 110(a)(2)(D)(i)(I) for the 2008 ozone NAAQS is disapproved.
(b) [Reserved]
Environmental Protection Agency (EPA).
Final rule.
The Environmental Protection Agency (EPA) is partially approving and partially disapproving elements of State Implementation Plan (SIP) submission from Wisconsin regarding the infrastructure requirements of section 110 of the Clean Air Act (CAA) for the 2008 ozone National Ambient Air Quality Standards (NAAQS). The infrastructure requirements are designed to ensure that the structural components of each state's air quality management program are adequate to meet the state's responsibilities under the CAA. This action pertains specifically to infrastructure requirements concerning interstate transport provisions for which Wisconsin made a SIP submission that, among other things, certified that the existing SIP was sufficient to meet the interstate transport requirements for the 2008 ozone NAAQS.
This final rule is effective on September 12, 2016.
EPA has established a docket for this action under Docket ID No. EPA-R05-OAR-2014-0704. All documents in the docket are listed on the
Sarah Arra, Environmental Scientist, Attainment Planning and Maintenance Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886-9401,
Throughout this document whenever
I. What is the background of this SIP submission?
II. What action did EPA propose on the SIP submission?
III. What is our response to comments received on the proposed rulemaking?
IV. What action is EPA taking?
V. Statutory and Executive Order Reviews.
This rulemaking addresses CAA section 110(a)(2)(D)(i) requirements in an infrastructure SIP submission addressing the applicable infrastructure requirements with respect to the 2008 ozone NAAQS, submitted by the Wisconsin Department of Natural Resources (WDNR) on June 20, 2013, and clarified in a letter dated January 28, 2015.
The requirement for states to make a SIP submission of this type arises out of CAA section 110(a)(1). Pursuant to section 110(a)(1), states must make SIP submissions “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof),” and these SIP submissions are to provide for the “implementation, maintenance, and enforcement” of such NAAQS. The statute directly imposes on states the duty to make these SIP submissions, and the requirement to make the submissions is not conditioned upon EPA's taking any action other than promulgating a new or revised NAAQS.
Section 110(a)(2) includes a list of specific elements that “[e]ach such plan” submission must address. EPA commonly refers to such state plans as “infrastructure SIPs.”
This rulemaking takes action on two CAA section 110(a)(2)(D)(i) requirements which apply to these submissions. In particular, section 110(a)(2)(D)(i)(I) requires SIPs to include provisions prohibiting any source or other type of emissions activity in one state from contributing significantly to nonattainment of the NAAQS (“prong one”), or interfering with maintenance of the NAAQS (“prong two”), by any another state. Section 110(a)(2)(D)(i)(II) requires that infrastructure SIPs include provisions prohibiting any source or other type of emissions activity in one state from interfering with measures required to prevent significant deterioration (PSD) of air quality (“prong three”) and to protect visibility (“prong four”) in another state. This rulemaking addresses prongs one and two of this CAA section. The majority of the other infrastructure elements were approved in rulemakings on September 11, 2015 (80 FR 54725).
The proposed rulemaking associated with today's final action was published on March 16, 2016 (81 FR 14025). In that action, EPA proposed to disapprove the Wisconsin SIP for the prong two requirement because the WDNR SIP submission did not provide an adequate technical analysis demonstrating that the state's SIP contained adequate provisions prohibiting emissions that will significantly contribute to nonattainment or interfere with the 2008 ozone NAAQS in any other state and because EPA's most recent modeling indicated that emissions from Wisconsin were projected to contribute to projected downwind maintenance receptors in another state. EPA also proposed to approve the Wisconsin SIP for the prong one requirement because, although WDNR did not provide information or analyses explaining why existing SIP provisions are adequate to prevent significant contribution to nonattainment in downwind states, EPA's independent modeling presented in the Notice of Data Availability and the Cross-State Air Pollution Update Rule indicated that Wisconsin emissions were not linked to any projected downwind nonattainment receptors. Therefore, EPA proposed to find that the Wisconsin SIP had adequate provisions to prevent such significant contribution to nonattainment for the 2008 ozone standard.
During the comment period, which ended on April 15, 2016, EPA did not receive any comments on the Wisconsin portion of the proposed notice. Comments pertaining to Ohio and Indiana are addressed in a June 15, 2016 rulemaking (81 FR 38957).
EPA, as proposed, is approving prong one and disapproving prong two of a required infrastructure element with respect to CAA section 110(a)(2)(D)(i), interstate transport, for the 2008 ozone NAAQS. The approval is based on the June 20, 2013 SIP submission in which Wisconsin certified that the current SIP is sufficient to meet the CAA requirements. The disapproval portion of this action triggers an obligation under CAA section 110(c) for EPA to promulgate a Federal Implementation Plan (FIP) no later than two years from the effective date of this disapproval, if EPA has not approved a SIP revision or revisions addressing the deficiencies identified in this action. The disapproval in this action is not tied to attainment planning requirements and therefore does not start any sanction clocks.
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This rule does not impose an information collection burden under the provisions of the PRA.
The Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This action merely proposes to disapprove state law as not meeting Federal requirements and imposes no additional requirements beyond those imposed by state law.
This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments. Thus, Executive Order 13175 does not apply to this rule.
This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children because it proposes to disapprove a state rule.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations.
The Congressional Review Act, 5 U.S.C. 801
Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 11, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone.
40 CFR part 52 is amended as follows:
42 U.S.C. 7401
(g) Approval—In a June 20, 2013, submission with a January 28, 2015, clarification, Wisconsin certified that the state has satisfied the infrastructure SIP requirements of section 110(a)(2)(A) through (H), and (J) through (M) for the 2008 ozone NAAQS. For 110(a)(2)(D)(i)(I), we are approving prong one and disapproving prong two. We are not taking action on the prevention of significant deterioration requirements related to section 110(a)(2)(C), (D)(i)(II), and (J) and the state board requirements of (E)(ii). We will address these requirements in a separate action.
Environmental Protection Agency (EPA).
Direct final rule.
The Jackson Steel Superfund site (Site), located in the Village of Mineola, Nassau County, New York, contains a building formerly used as a metal-forming facility. The Site is bordered to the north by commercial spaces and single-family dwellings, to the east by a two-story apartment complex, to the south by a daycare center and to the west by an office building and restaurant.
The Environmental Protection Agency (EPA) Region 2 is publishing this direct final Notice of Deletion (NOD) of the Site from the National Priorities List (NPL). The NPL, promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended, is an appendix of the National Oil and Hazardous Substances Pollution Contingency Plan (NCP). This direct final deletion is being published by EPA with the concurrence of the State of New York, through the New York State Department of Environmental Conservation (NYSDEC), because EPA has determined that all appropriate response actions under CERCLA have been completed at the Site and that the soil on the Site and the groundwater beneath the Site no longer pose a threat to public health or the environment. Because elevated concentrations of volatile organic compounds (VOCs) are present under the slab of the vacant Jackson Steel building and the occupied daycare center, operation and maintenance of the subslab vapor intrusion mitigation systems under the daycare center, periodic vapor intrusion monitoring, and five-year reviews will continue. The deletion does not preclude future actions under Superfund.
This direct final deletion will be effective September 26, 2016 unless EPA receives adverse comments by September 12, 2016. If adverse comments are received, EPA will publish a timely withdrawal of this direct final NOD in the
Submit your comments, identified by Docket ID no. EPA-HQ-SFUND-2000-0006, by one of the following methods:
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•
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Joel Singerman, Chief, Central New York Remediation Section, by mail at Emergency and Remedial Response Division, U.S. Environmental Protection Agency, Region 2, 290 Broadway, 20th Floor, New York, NY 10007-1866; telephone at 212-637-4258; fax at 212-637-3966; or email at
EPA Region 2 is publishing this direct final NOD of the Site from the NPL. The NPL constitutes Appendix B of 40 CFR part 300, which is the NCP, which EPA promulgated pursuant to Section 105 of CERCLA, as amended. EPA maintains the NPL as the list of releases that appear to present a significant risk to public health, welfare, or the environment. The releases on the NPL may be the subject of remedial actions financed by the Hazardous Substance Superfund (Fund). As described in Section 300.425(e)(3) of the NCP, a site deleted from the NPL remains eligible for Fund-financed remedial action if future conditions at the site warrant such actions.
Section II of this document explains the criteria for deleting sites from the NPL. Section III discusses procedures that EPA is using for this action. Section IV discusses the Site and demonstrates how it meets the deletion criteria. Section V discusses EPA's action to delete the Site from the NPL unless adverse comments are received during the public comment period.
The NCP establishes the criteria that EPA uses to delete sites from the NPL. In accordance with 40 CFR 300.425(e), sites may be deleted from the NPL where no further response is appropriate. In making such a determination pursuant to 40 CFR 300.425(e), EPA will consider, in consultation with the State, whether any of the following criteria have been met:
i. Responsible parties or other parties have implemented all appropriate response actions required;
ii. all appropriate Fund-financed responses under CERCLA have been implemented, and no further action by responsible parties is appropriate; or
iii. the remedial investigation (RI) has shown that the release of hazardous substances poses no significant threat to public health or the environment and, therefore, taking of remedial measures is not appropriate.
Pursuant to CERCLA Section 121(c) and the NCP, EPA conducts five-year reviews to ensure the continued protectiveness of remedial actions where hazardous substances, pollutants, or contaminants remain at a site above levels that allow for unlimited use and unrestricted exposure. EPA conducts such five-year reviews even if a site is deleted from the NPL. EPA may initiate further action to ensure continued protectiveness at a deleted site if new information becomes available that indicates it is appropriate. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system.
The following procedures apply to the deletion of the Site:
(1) EPA consulted with the State of New York prior to developing this direct final NOD and the NOID also published today in the “Proposed Rules” section of the
(2) EPA has provided the State with 30 working days for review of this notice and the parallel NOID prior to their publication today, and the State,
(3) Concurrent with the publication of this direct final NOD, a notice of the availability of the parallel NOID is being published in a major local newspaper, the
(4) EPA placed copies of documents supporting the proposed deletion in the Deletion Docket and made these items available for public inspection and copying at the Site information repositories identified above.
(5) If adverse comments are received within the 30-day public comment period on this deletion action, EPA will publish a timely notice of withdrawal of this direct final NOD before its effective date and will prepare a response to comments. If appropriate, EPA may continue with the deletion process based on the NOID and the comments already received.
The NPL is designed primarily for informational purposes and to assist EPA's management of sites. Section 300.425(e)(3) of the NCP states that the deletion of a site from the NPL does not preclude eligibility for further response actions should future conditions warrant such actions.
The following information provides the Agency's rationale for deleting the Site from the NPL.
The 1.5-acre Site (CERCLIS ID NYD001344456) contains a one-story, 43,000-square-foot building formerly used as a metal-forming facility and an approximately 10,000-square foot paved parking area. It is bordered to the north by commercial spaces and single-family dwellings, to the east by a two-story apartment complex, to the south by a daycare center, and to the west by an office building and restaurant.
The property was used from the mid-1970s until 1991 as a “roll form metal shapes” manufacturing facility. Degreasers, including tetrachloroethylene (PCE), trichloroethylene, and 1,1,1-trichloroethane, were used at the facility until 1985. Sludges from degreasing equipment were stored in drums and in an on-property 275-gallon tank.
The analytical results from samples collected by the Nassau County Department of Health (NCHD) in the early 1990s from within, around, and below three on-property dry wells indicated the presence of VOCs at depths down to 40 feet below the ground surface. VOCs were also detected in groundwater samples collected from monitoring wells located downgradient of the dry wells.
Dumping of wastes into the dry wells and spills and leaks from drums storing various chemicals during the facility's operations are the likely sources of the contamination that was found at the Site.
The Site was proposed for listing on the NPL on October 22, 1999 (40 CFR part 300 [FRL-6462-2]). The Site was listed on the NPL on February 4, 2000 (40 CFR part 300 [FRL-6532-7]).
Following the commencement of RI-related field work in October 2001, because of concerns about the proximity of the Site to the daycare center, NCHD performed air sampling inside the daycare center building. The air samples detected PCE at levels below the New York State Department of Health's (NYSDOH's) guideline for indoor PCE exposure. Given the sensitivity of the population exposed (preschool children), NCHD collected additional samples in December 2001. At that time, indoor testing was also conducted inside the Jackson Steel building and the restaurant located adjacent to the Site. The results indicated that PCE levels in the indoor air of several rooms in the daycare center were above NYSDOH's guideline for PCE. As a result, in January 2002, a subslab depressurization system (
The results of the RI, which was completed in 2002, indicated that VOCs, semi-volatile organic compounds, pesticides, and metals contamination were present in the surface soil, and VOC contamination was present at several subsurface soil locations. In addition, contamination was found in a trench and sumps located inside the building and dry wells located under the parking lot at the Site.
Groundwater from the three hydrogeologic units underlying the site—the Upper Glacial Aquifer (upper aquifer), Magothy Confining Bed (a low permeability, clay layer separating the upper and deep aquifers), and the Magothy Aquifer (deep aquifer)—were also sampled. VOC contamination above state and federal standards was detected both in the Upper Glacial Aquifer and Magothy Aquifer.
Based upon the results of the RI and a feasibility study, in September 2004, EPA selected a remedy for the Site in a Record of Decision (ROD). The ROD outlined the following remedial action objectives (RAOs):
• Minimize or eliminate contaminant migration from contaminated soils and dry wells to the groundwater;
• minimize or eliminate any contaminant migration from contaminated soils and groundwater to indoor air;
• restore groundwater to levels which meet state and federal standards within a reasonable time frame;
• mitigate the migration of the affected groundwater; and
• reduce or eliminate any direct contact, ingestion, or inhalation threat associated with contaminated soils, soil vapor, contaminated surfaces in the on-property building, and groundwater.
The selected remedy includes the following actions:
• Decontamination of the Jackson Steel building floor;
• in-situ soil vapor extraction (ISVE) to treat the contaminated subsurface soil;
• excavation and off-Site disposal of the contaminated surface soil and contaminated material in on-Site sumps, a trench, and dry wells;
• in-situ chemical oxidation (ISCO) to treat the contaminated groundwater in the Upper Glacial Aquifer;
• extraction and treatment of the contaminated groundwater in the deep aquifer if confirmatory groundwater sampling indicates that the Site is a principal source of the groundwater contamination to the aquifer underlying the Site;
• if it is determined that the Site is a principal source of the groundwater contamination to the deep aquifer underlying the Site, the selected remedy would be expanded, as necessary, to include off-property groundwater contamination; and
• long-term groundwater monitoring.
The soil cleanup objectives were established pursuant to New York State Technical and Administrative Guidance
The building decontamination and the excavation of the contaminated surface soil and the contaminated material in the building sumps and trench and in the dry wells and their disposal were performed from 2005 to 2006. A total of 170 cubic yards of material was excavated and disposed of at an EPA-approved off-Site facility.
Groundwater ISCO injections were performed between July and December 2005. Approximately, 15,000 gallons of iron-catalyzed sodium persulfate (with small amounts of buffering agents) and 600 gallons of hydrogen peroxide were injected into the aquifer through a network of 20 injection wells to treat the contamination in the Upper Glacial Aquifer.
After a successful pilot test, an ISVE system consisting of nine ISVE wells and 11 vapor monitoring probes began operating in 2005.
A supplemental groundwater investigation was conducted from 2005 to 2006 to determine the source of the Magothy Aquifer contamination underneath the Site and to establish whether there was a relationship between the contamination at the Site and the VOC contamination detected in nearby Village of Mineola Supply Well #4. Based on the results of the investigation, it was concluded that the Site was not a current source of contamination in the Magothy Aquifer. Therefore, EPA decided not to implement the Magothy Aquifer groundwater remedy. An Explanation of Significant Differences (ESD) was issued in 2007, documenting this decision.
While the cleanup objectives for the Upper Glacial Aquifer and soil were met in 2006 and 2008, respectively, EPA continued to operate the ISVE system until 2013 because VOC vapors were still being recovered from underneath the Jackson Steel building. The operation of the ISVE system was discontinued when the levels of vapor removal became too low for the system to continue to be efficient.
The aboveground ISVE infrastructure was removed by EPA in June 2013. From March to April 19, 2016, the groundwater monitoring wells, ISVE wells, vapor monitoring wells, ISCO injection wells, and ISCO monitoring wells, were decommissioned.
Although EPA successfully remediated the soil and the groundwater aquifer immediately underlying the Site, residual levels of VOCs remain. VOCs, even at low levels, can migrate as vapors through the soil into buildings. This process, which is called vapor intrusion, can result in unacceptable human exposures to VOCs inside occupied buildings. This pathway is currently incomplete at the Site, because the building on the site is currently unoccupied, and subslab vapor intrusion mitigation systems prevent the migration of vapors into an adjacent occupied building.
Because the residual levels of VOCs are expected to dissipate slowly, EPA concluded that preventing human exposure to VOCs at the occupied building will be needed for a number of years to ensure the protectiveness of the remedy. Therefore, the existing vapor intrusion mitigation systems will need to continue to operate, and additional actions, from monitoring to the installation of an additional vapor mitigation system, may be needed should the currently unoccupied building be occupied or replaced with another structure in the future. EPA determined that institutional controls (ICs) (
EPA issued an ESD on June 20, 2016, documenting its determination to incorporate into the remedy ICs to prevent exposure through vapor intrusion. The ICs will remain in place until the residual VOCs fully dissipate in the subsurface. EPA noted in the ESD that a Vapor Intrusion Management Plan (VIMP) and Institutional Control Implementation and Assurance Plan (ICIAP) would be prepared to ensure that the ICs were appropriately implemented and maintained. In addition, in the ESD EPA noted that it would communicate directly with the Village of Mineola Superintendent of Buildings, requesting that EPA and NYSDEC be notified if the existing building is to be refurbished and used for human occupancy or demolished and a new structure constructed. The correspondence would also request that the Village not issue a Certificate of Occupancy until necessary vapor intrusion-related actions identified by EPA and NYSDEC are carried out.
A VIMP and ICIAP were completed on June 20, 2016.
On June 20, 2016, EPA sent a letter to the Village of Mineola Superintendent of Buildings, requesting that EPA and NYSDEC be notified if the existing building is to be refurbished and used for human occupancy or demolished and a new structure constructed and requested that the Village not issue a Certificate of Occupancy until necessary vapor intrusion-related actions identified by EPA and NYSDEC are carried out. Periodic reminders will be issued to the Village to help ensure the effectiveness of this measure.
On July 27, 2016, notices were placed on the deed of the two parcels occupied by the daycare center and the parcel occupied by the Jackson Steel building. The notice on the deed of the daycare center requires that the subslab vapor intrusion mitigation systems be operated as long as elevated levels of vapors remain under the buildings on the property and the buildings are occupied. The notice on the deed of the Jackson Steel building alerts any potential purchaser, lessee, or other user of the property that EPA and NYSDEC must be notified if and when a determination is made that the existing building will be refurbished and used for human occupancy or demolished and a new structure constructed. EPA intends to effect an environmental easement on the Jackson Steel property in the future once a new owner takes control of the property.
It is the policy of EPA to conduct five-year reviews when remedial activities, including monitoring, will continue for more than five years. A five-year review that is required by policy is triggered by the date of the approval of the Preliminary Close-Out Report, which documents that EPA has determined that construction at a site has been completed. For this Site, the Preliminary Close-Out Report was approved on August 30, 2007.
The first five-year review was completed in August 2012. The review concluded that the remedy was functioning as intended in the decision
Subsequent to the 2012 five-year review, EPA determined that ICs were necessary to ensure the protectiveness of the remedy, as discussed above. Five-year reviews will be conducted as long as residual VOC levels remain that perpetuate the vapor intrusion concerns described in this ESD. The next five-year review will be conducted by August 2017.
Public participation activities for the Site have been satisfied as required pursuant to CERCLA Sections 113(k) and 117, 42 U.S.C. 9613(k) and 9617. As part of the remedy selection process, the public was invited to comment on the proposed remedy. All other documents and information that EPA relied on or considered in recommending this deletion are available for the public to review at the information repositories identified above.
All of the cleanup requirements for the Site have been met, as described in the September 2006 groundwater Interim Groundwater Remedial Action Report, September 2008 soil Remedial Action Report, August 2007 Preliminary Close-Out Report, July 2016 Final Close-Out Report, and 2012 Five-Year Review report. The State of New York, in a July 29, 2016 letter, concurred with the proposed deletion of the Site from the NPL.
The NCP specifies that EPA may delete a site from the NPL if “all appropriate Fund-financed response under CERCLA has been implemented, and no further response action by responsible parties is appropriate.” 40 CFR 300.425(e)(1)(ii). EPA, with the concurrence of the State of New York, through NYSDEC, believes that this criterion for the deletion of the Site has been met in that that the soil on the Site and the groundwater beneath the Site no longer pose a threat to public health or the environment. Consequently, EPA is deleting the Site from the NPL. Documents supporting this action are available in the deletion docket at
EPA, with the concurrence of the State of New York through NYSDEC, has determined that other than the ongoing operation and maintenance of the vapor intrusion mitigation systems at the daycare center, periodic vapor intrusion monitoring, insuring that the ICs are in place and effective, and five-year reviews, all appropriate responses under CERCLA have been completed at the Site. The soil and groundwater immediately underlying the Site no longer pose a threat to public health or the environment. Therefore, EPA is deleting the Site from the NPL. Periodic vapor intrusion monitoring and five-year reviews will still be required for the Site. The deletion does not preclude future action under CERCLA. Because EPA considers this action to be noncontroversial and routine, EPA is taking this action without prior publication. This action will be effective September 26, 2016 unless EPA receives adverse comments by September 12, 2016. If adverse comments are received within the 30-day public comment period of this action, EPA will publish a timely withdrawal of this direct final NOD before the effective date of the deletion and the deletion will not take effect. EPA will prepare a response to comments and continue with the deletion process on the basis of the NOID and the comments received. In such a case, there will be no additional opportunity to comment.
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
For the reasons set out in this document, 40 CFR part 300 is amended as follows:
33 U.S.C. 1321(c)(2); 42 U.S.C. 9601-9675; E.O. 12777, 56 FR 54757, 3 CFR 1991 Comp., p. 351; E.O. 12580, 52 FR 2923, 3 CFR 1987 Comp., p. 193.
Fish and Wildlife Service, Interior.
Final rule.
We, the U.S. Fish and Wildlife Service (Service), are removing the San Miguel Island fox (
This rule is effective September 12, 2016.
This final rule is available on the Internet at
Stephen P. Henry, Field Supervisor, U.S. Fish and Wildlife Service, Ventura Fish and Wildlife Office, 2493 Portola Road, Suite B, Ventura, CA 93003; telephone 805-644-1766; facsimile 805-644-3958. If you use a telecommunications device for the deaf (TDD), call the Federal Information Relay Service (FIRS) at 800-877-8339.
On December 10, 2001, we published a proposal to list four subspecies of island foxes as endangered species (66 FR 63654). Please refer to this proposed rule for information on Federal actions prior to December 10, 2001. On March 5, 2004, we published a final rule listing the four subspecies of island foxes as endangered species (69 FR 10335). Please refer to the final Recovery Plan for Four Subspecies of Island Fox (
We published a notice announcing the initiation of a review of the status of the San Miguel Island fox, Santa Rosa Island fox, Santa Cruz Island fox, and Santa Catalina Island fox under section 4(c)(2) of the Act (16 U.S.C. 1531
Please refer to the final Recovery Plan for Four Subspecies of Island Fox (
The island fox (
We did not make substantive changes in this final rule based on the comments that we received during the public comment period, but we added text to clarify some information presented in the proposed rule, added new information to the climate change analysis, and revised population data to reflect information updated since the publication of the proposed rule. For example, peer reviewers recommended we include information about genetic variability present in the current island fox populations and new information about climate change. This information and other clarifications are incorporated into the final rule where appropriate, including in the Summary of Comments and Recommendations, below.
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. We published a notice announcing the availability of the final recovery plan for the San Miguel Island fox, Santa Rosa Island fox, Santa Cruz Island fox, and Santa Catalina Island fox on March 9, 2015 (80 FR 12521).
The recovery plan (Service 2015, pp. 47-53) includes the recovery goals, recovery objectives, and recovery criteria that we outline below to reclassify the island fox subspecies from endangered species to threatened species and to remove island fox subspecies from the List of Endangered and Threatened Wildlife. Please see the February 16, 2016, proposed rule (81 FR 7723) for a detailed discussion of the recovery goal, objectives, and criteria and how they apply to the status of the San Miguel Island fox, Santa Rosa Island fox, Santa Cruz Island fox, and Santa Catalina Island fox. The objectives and progress toward these objectives (measured by explicit criteria) are summarized below.
Recovery objectives identify mechanisms for measuring progress toward and achieving the recovery goal of delisting for each subspecies.
Recovery Objective 1: Each federally listed subspecies of island fox exhibits demographic characteristics consistent with long-term viability.
Recovery Objective 2: Land managers are able to respond in a timely fashion to predation by nesting golden eagles (
In order for any one of the four listed subspecies of island fox to be considered for downlisting from endangered to threatened status, recovery objective 1 should be met for that subspecies. In order for any one of the four listed subspecies of island fox to be considered for delisting, recovery
Island fox recovery criteria are measurable standards for determining whether a subspecies has achieved its recovery objectives and may be considered for downlisting or delisting. Island fox recovery criteria in the recovery plan (Service 2015, pp. 50-55) are organized by factors under section 4(a)(1) of the Act to demonstrate how criteria indicate threats under that factor have been ameliorated. The following is a summary of the recovery criteria.
To address recovery objective 1, the subspecies must be protected from other natural or manmade factors known to affect their continued existence. This is accomplished when the following has occurred:
E/1: An island fox subspecies has no more than 5 percent risk of quasi-extinction over a 50-year period as determined by use of the population viability graphing/analysis tool found in appendix 2 of the recovery plan (Service 2015, pp. 131-136).
To address recovery objective 2, the magnitude and imminence of disease and predation threats must be reduced. This is accomplished when the following has occurred:
C/1: Golden eagle predation (applies only to the northern Channel Islands): The rate of golden eagle predation is reduced and maintained at a level no longer considered a threat to island fox recovery through development of a golden eagle management strategy, and the golden eagle prey base of mule deer (
C/2: Disease: A disease management strategy is developed, approved, and implemented that includes vaccination recommendations and a monitoring program that provides for timely detection of a potential epidemic, and an associated emergency response strategy as recommended by the appropriate subject-matter experts.
Population monitoring has been implemented for each listed subspecies, and population viability analyses using the graphing/analysis tool found in appendix 2 of the recovery plan (Service 2015, pp. 131-136) indicate all subspecies have an acceptably small risk of extinction. The extinction risk has been less than 5 percent since 2008 for San Miguel, Santa Cruz, and Santa Catalina Islands, and since 2011 for Santa Rosa Island. As of 2015, island fox populations had increased to greater than 700 individuals on San Miguel Island, greater than 1,200 on Santa Rosa Island (Guglielmino and Coonan 2016, pp. 12, 18), greater than 2,100 on Santa Cruz Island (Boser 2016a, pers. comm.), and greater than 1,800 on Santa Catalina Island (King and Duncan 2016, p. 10). All populations with the exception of Santa Rosa Island are at or above their pre-decline population estimates (Coonan 2015a, pers. comm.; King and Duncan 2014, pp. 1, 10). On San Miguel Island, low reproductive effort coupled with declining survival suggests that the San Miguel Island subspecies has reached carrying capacity (the maximum population size of a species that the habitat can support) (Coonan 2015a, p. 8). We conclude, based on population viability analyses, that recovery objective 1 is achieved for all four island fox subspecies. Detailed results of the graphing/analysis tool through 2015 can be found in the supplementary material “Results of graphing/analysis tool to assess island fox recovery criterion E/1” (derived from Guglielmino and Coonan 2016, pp. 17, 22; Boser 2016b, pers. comm.; King and Duncan 2016, p. 13) on the Internet at
To ensure that land managers are able to respond in a timely fashion to predation by golden eagles, a final golden eagle management strategy has been approved (NPS 2015a, entire), and is being implemented by NPS and TNC. The strategy outlines actions, many of which have already been implemented by NPS and TNC, including: Complete removal of all golden eagles; ongoing prevention of golden eagle nesting; and removal of all nonnative golden eagle prey, including deer and elk from Santa Rosa Island.
To ensure that land managers are able to respond in a timely fashion to a potential or incipient disease outbreak, the epidemic response plans for northern Channel Islands foxes (Hudgens
With the golden eagle management strategy in place, complete removal of golden eagles and their nonnative prey-base from the northern Channel Islands (San Miguel, Santa Rosa, and Santa Cruz Islands), development and implementation of an epidemic response plan, and population levels consistent with long-term viability, recovery objectives 1 and 2, and the associated recovery criteria, are met for the San Miguel, Santa Rosa, and Santa Cruz Island foxes. With population levels consistent with long-term viability, recovery objective 1 is met for the Santa Catalina Island fox. However, objective 2 has not been met for the Santa Catalina Island fox because currently there are no assurances that current monitoring and management actions will continue in the future, and, because Santa Catalina Island has an elevated risk compared to the northern Channel Islands of introduced pathogens from the mainland, a disease outbreak could occur without detection or appropriate response to mediate the threat to the subspecies.
Section 4 of the Act and its implementing regulations (50 CFR part 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 or delisted on the same basis.
A recovered species is one that no longer meets the Act's definition of an endangered species or a threatened species. Determining whether a species is recovered requires consideration of whether the species is endangered or
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 Act does not define the term “foreseeable future.” The population viability analyses used to determine the risk of quasi-extinction (the population level below which extinction is likely due to demographic or genetic effects), which we define as a population size of less than or equal to 30 individuals for each subspecies, estimates risk over a 50-year period (Bakker
The word “range” in the significant portion of its range phrase in the definition of endangered species and threatened species refers to the range in which a species currently exists. For the purposes of this analysis, we first evaluate the status of each subspecies throughout its range, which we consider to be the island that any given island fox subspecies inhabits. We then consider whether any of the subspecies are in danger of extinction or likely to become so in any significant portion of their ranges.
Primary threats to island foxes identified in the March 5, 2004, listing rule (69 FR 10335) include predation by golden eagles, disease, and stochastic risks to small populations and lack of genetic variability. Since the listing, impacts of feral cat aggression, poisoning, and entrapment on Santa Catalina Island, and fire, drought, and global climate change for all four islands were identified as possible new threats. A thorough analysis and discussion of the current status of the San Miguel, Santa Rosa, Santa Cruz, and Santa Catalina Island foxes are found in the recovery plan (Service 2015, pp. 21-29) and proposed rule to remove the San Miguel Island fox, Santa Rosa Island fox, and the Santa Cruz Island fox from the Federal List of Endangered and Threatened Wildlife, and to reclassify the Santa Catalina Island fox from an endangered species to a threatened species (81 FR 7723; February 16, 2016). The following sections provide a summary of the past, current, and potential future threats impacting the San Miguel, Santa Rosa, Santa Cruz, and Santa Catalina Island foxes.
At the time of listing in 2004, habitat modification by nonnative grazing animals (
Eradication programs on all islands have greatly reduced the number of nonnative herbivores on the islands and therefore the magnitude of impacts to the habitat and island foxes (Laughrin 1973, p. 14; Schoenherr
NPS guidance supports the continued management of island fox habitat to benefit northern Channel Islands subspecies of island foxes. Title 54 of the U.S. Code, section 100101, paragraph (a), states that the NPS “shall promote and regulate the use of the National Park System . . . to conserve the scenery, natural and historic objects, and wild life in the System units and to provide for the enjoyment of the scenery, natural and historic objects, and wild life in such manner and by such means as will leave them unimpaired for the enjoyment of future generations.” Specifically, in its management plan, Channel Islands National Park identified restoration and maintenance of natural ecosystems and processes as a priority; NPS staff would continue to eradicate, where feasible, nonnative flora and fauna from the islands.
The majority of island fox habitat on all four islands is currently in some form of conservation ownership and management by NPS, TNC, or CIC. Therefore, we expect that habitat loss as a result of conversion due to development would be rare or limited. However, there is the potential for some development on privately owned lands that are not in conservation ownership. The island fox, as the species
While past and ongoing effects of habitat modification by nonnative grazing animals (
As stated in the listing rule (69 FR 10335; March 5, 2004), although island foxes were used in the past for their pelts by Native Americans (Collins 1991, p. 215), these activities no longer occur. Research scientists are currently engaged in recovery activities via Service-issued section 10(a)(1)(A) recovery permits. Researchers conducting studies on NPS property must have a valid Research and Collecting Permit through NPS. The State of California requires a Scientific Collecting Permit and Memorandum of Understanding to collect, capture, mark, or salvage species listed as threatened under CESA for scientific and educational purposes (Fish and Game Code section 1002; and title 14, sections 650 and 670.7). Currently, none of the four subspecies is being threatened by overutilization for any purposes, and we expect, even without the protections of the Act, research activities to be managed by the State and by land management agencies to ensure that such activities do not result in overutilization in the future.
For Santa Catalina Island fox at the time of listing, a canine distemper virus (CDV) epidemic was considered the primary threat (69 FR 10335; March 5, 2004) to the subspecies. The listing rule also expressed some concern regarding the potential impacts of canine adenovirus and canine parvovirus. For the northern Channel Islands foxes (San Miguel, Santa Rosa, and Santa Cruz Island foxes) at the time of listing, golden eagle predation was the primary threat (69 FR 10335; March 5, 2004), but potential for disease was also a concern, particularly given the small population sizes at the time.
In 2014, a final epidemic response plan was approved and is being implemented by CIC to detect and facilitate appropriate response to a potential future disease outbreak for Santa Catalina Island foxes (Hudgens
In addition, ear tumor prevalence in the Santa Catalina Island fox population remains an actively managed source of mortality (Vickers
While CIC is currently implementing ongoing monitoring and management, at this time there is no assurance of continued funding for long-term monitoring and management that could detect a novel disease outbreak and facilitate threat abatement, as recommended in the epidemic response plan. Lack of assurances for long-term monitoring and management for Santa Catalina Island fox is of particular concern because the island has a permanent human population, experiences heavy visitation, and has many points of access. The presence of a permanent human population on the island poses a greater risk of disease introduction than that for the northern Channel Islands. CIC manages the majority of fox habitat on the island but does not manage the City of Avalon, and, therefore, CIC does not control all potential avenues for introduction of possible disease vectors. Santa Catalina Island currently allows visitors and residents to own and transport pets, including domestic dogs and cats, to and from the island (King and Duncan 2011, p. 15), and dogs are frequently observed off-leash (Anderson 2012, pers. obs.; King 2012a, p. 1; Vissman and Anderson 2013 and 2014, pers. obs.; King 2015, p. 22). Transport of domestic and wild animals to and from Santa Catalina Island and their presence on the island increases the risk to island foxes of another disease outbreak. Additionally, with unrestricted access to the island by residents and visitors, there is the possibility of inadvertently transporting other animals that could carry disease; to date, four stowaway raccoons have been removed from the island, but a fifth observed in 2010 was not captured (King and Duncan 2011, p. 15). There is no quarantine period for transported pets, and proof of current vaccination is only required by the City of Avalon when licensing dogs (rabies only), and for CIC employees and lessees with pets living in company-owned housing (King and Duncan 2011, p. 15). Because access to the island by potentially unvaccinated or incompletely vaccinated domestic animals is not controlled or managed, there is a higher risk of disease introduction for Santa Catalina Island than for the three northern Channel Islands.
CIC manages the majority of fox habitat on the island (but not the City of Avalon) and implements measures
In 2013, a final epidemic response plan was approved and is being implemented by NPS and TNC to detect and facilitate appropriate response to a potential disease outbreak for the northern Channel Islands (Hudgens
In summary, the possibility exists for domestic or wild animals carrying a disease or parasite to migrate or be transported to all the Channel Islands. The possibility is greater for Santa Catalina Island due to a permanent human population, heavy visitation, and many points of access. On all islands, an epidemic response plan is approved and being implemented (Hudgens
As identified in the 2004 listing rule, golden eagle predation was the primary cause for the decline of the northern Channel Islands fox subspecies and the primary reason for listing the species as endangered under the Act (69 FR 10335; March 5, 2004). Before golden eagles started using the northern Channel Islands in the 1990s, the only known predator of island foxes was the red-tailed hawk (
In the 2004 listing rule, the Federal Bald and Golden Eagle Protection Act (BGEPA; 16 U.S.C. 668-668d) and the California Fish and Game Code, section 3511, were thought to have delayed or precluded the implementation of needed recovery actions for island foxes. The protections afforded to golden eagles by the BGEPA were thought to limit lethal management alternatives to protect island foxes. The California Fish and Game Code, section 3511, deemed golden eagles a fully protected species, which did not allow any take to be authorized. In 2003, California amended this law to allow authorization of the take of fully protected species for scientific research, including research on recovery for other imperiled species (Senate Bill 412).
To address the unprecedented number of golden eagles and the effects they were having on island foxes, in August 1999, NPS and TNC initiated a nonlethal golden eagle removal program to protect island foxes on the northern Channel Islands. Between November 1999 and July 2006, 44 golden eagles, including 22 adults or near adults, were removed from Santa Rosa and Santa Cruz Islands and released in northeastern California (Latta
To ensure that golden eagles would be less likely to attempt to establish territories again on Santa Rosa and Santa Cruz Islands, TNC and NPS initiated a program in 2005 and 2011, respectively, to remove nonnative animals from those islands (Macdonald and Walker 2007, p. 20). The last known feral pig was removed from Santa Cruz Island in January 2007 (Parkes
The 2004 listing rule also identified the extirpation of bald eagles from the Channel Islands as a likely contributor to the colonization of the northern Channel Islands by golden eagles. Bald eagles aggressively defend their territories from golden eagles (69 FR 10335, March 5, 2004, pp. 10343-10344), and their presence on the islands likely would have discouraged dispersing golden eagles from establishing residence. Prior to listing, NPS, the Institute for Wildlife Studies, and TNC were actively engaged in the Montrose Settlements Restoration Program to reintroduce bald eagles to the Channel Islands, including Santa Catalina Island. The success of bald eagle reintroduction on the Channel Islands continues, with approximately 50 total resident bald eagles on the islands (Montrose Settlements Restoration Program 2015, p. 1).
In summary, although golden eagle predation of island foxes may occasionally occur (Coonan
To reduce the threat of disease, a subset of each island fox subspecies is protected from CDV and rabies through preventative vaccinations when available and through monitoring as recommended in epidemic response plans to detect and facilitate appropriate responses in the event of an epidemic. NPS and TNC are committed through signed conservation management agreements (CMAs) to monitor and conduct other management actions for detecting and appropriately responding to a potential disease outbreak in the future, as recommended in the epidemic response plans (Service and NPS 2015; Service and TNC 2015). Therefore, the best available data indicate potential disease outbreaks are no longer a threat to the Santa Rosa Island fox, San Miguel Island fox, and Santa Cruz Island fox now and in the future.
Mortality due to disease was the primary reason for the decline and listing of Santa Catalina Island foxes. Currently, the epidemic response plan is being implemented on Santa Catalina Island, but the potential for an epidemic remains on Santa Catalina Island because of heavy visitation, many points of access, and few controls for pets and stowaway wild animals that could carry disease. In addition, there is no assurance of continued implementation of the epidemic response plan in the future on Santa Catalina Island to detect and mitigate for future disease outbreaks, and the new CDV vaccine may not be adequate. Efficacy and availability of vaccines will require ongoing evaluation by the Island Fox Conservation Working Group as part of implementing the epidemic response plan. Overall, the best available data indicate potential disease outbreaks to be a threat to the Santa Catalina Island fox now and in the future.
Mortality due to golden eagle predation was the primary reason for the decline and listing of northern Channel Islands foxes (San Miguel, Santa Rosa, and Santa Cruz Island foxes). This threat has been substantially reduced by measures including the complete removal of golden eagles, eradication of golden eagles' nonnative prey, and reintroduction of bald eagles. Additionally, NPS and TNC are committed through signed CMAs to monitor and conduct other management actions for detecting and appropriately responding to predation by golden eagles in the future, as recommended in the golden eagle management strategy (Service and NPS 2015; Service and TNC 2015). Thus, given the recent golden eagle and prey-base eradication efforts and reintroduction of bald eagles to prevent golden eagle presence in the future, along with ongoing management commitments, we no longer consider predation by golden eagles to be a threat resulting in significant impacts at the population scale (
Under this factor, we examine whether existing regulatory mechanisms are inadequate to address the threats to the four island fox subspecies discussed under other factors. Section 4(b)(1)(A) of the Act requires the Service to take into account “those efforts, if any, being made by any State or foreign nation, or any political subdivision of a State or foreign nation, to protect such species.” In relation to Factor D under the Act, we interpret this language to require us to consider relevant Federal, State, and Tribal laws, regulations, and other such mechanisms that may minimize any of the threats we describe in the threats analyses under the other four factors, or otherwise enhance conservation of the species. We give strongest weight to statutes and their implementing regulations and to management direction that stems from those laws and regulations; an example would be State governmental actions enforced under a State statute or constitution, or Federal action under statute.
For currently listed species, we consider the adequacy of existing regulatory mechanisms to address threats to the species absent the protections of the Act. Therefore, we examine whether other regulatory mechanisms would remain in place if the species were delisted, and the extent to which those mechanisms will continue to help ensure that future threats will be reduced or minimized.
In our discussion under Factors A, B, C, and E, we evaluated the significance of the threat as mitigated by any such conservation efforts and existing regulatory mechanisms. Where threats exist, we analyze under Factor D the extent to which existing regulatory mechanisms are inadequate to address the specific threats to the species. Regulatory mechanisms, if they exist, may reduce or eliminate the impacts from one or more identified threats.
As noted in our discussion under the other factors, conservation measures and existing regulatory mechanisms (such as continued implementation of the epidemic response plan and golden eagle management strategy) have reduced the primary threats of disease and predation by golden eagles on the northern Channel Islands and will continue to be controlled through appropriate management. Other previously identified threats affecting the San Miguel Island fox, Santa Rosa Island fox, Santa Cruz Island fox, and Santa Catalina Island fox, such as habitat modification by nonnative grazing animals and nonnative plant invasion and habitat conversion (Factor A), have been and are continuing to be controlled through appropriate management, and we anticipate that these efforts will continue in the future. Other sources of mortality are assessed under Factor E and found to not exert significant impacts on island foxes at either the population or rangewide scales, now or in the future. Consequently, we find that conservation measures along with existing regulatory mechanisms are adequate to address these specific threats.
The remaining threat to island fox on Santa Catalina Island is the potential for a disease epidemic because of heavy visitation, many points of access, and few controls for pets and stowaway wild animals that could carry disease. In addition, we do not have the assurance of continued implementation of the epidemic response plan in the future on Santa Catalina Island to detect and mitigate for future disease outbreaks. Therefore, under Factor C, we still consider potential disease outbreaks to be a threat to the Santa Catalina Island fox at this time and in the future. Consequently, our analysis here examines how existing regulatory mechanisms address this remaining identified threat to the Santa Catalina Island fox.
There are currently no regulations restricting transport of domestic animals to the island, and limited vaccination requirements for domestic animals owned by City of Avalon residents, thus providing the potential for introduction of disease to the island. CIC manages the majority of fox habitat on Santa Catalina Island, but not the City of Avalon; CIC regulations require all nonnative animals entering CIC property be licensed and that all dogs and cats be vaccinated against distemper and rabies (CIC 2015, entire). Reduction of the risk of disease introduction also occurs through CIC outreach and education of local authorities and the public. However, enforcement of CIC regulations is labor-intensive and costly because the island is large with many remote coves and beaches where private boats can anchor, and CIC does not have the funding or staff to patrol these areas regularly. Therefore, current measures to control introduction of diseases by domestic animals and stowaway wildlife on Santa Catalina Island, while providing some protection, are limited and thus do not fully address the threat of disease to Santa Catalina Island fox (see Factor C discussion, above).
In summary, we have discussed that the threats previously facing the three northern Channel Islands subspecies of island fox have been removed or reduced and are being adequately managed; however, disease remains a threat to the Santa Catalina Island fox. In examining how existing regulatory mechanisms address this identified threat, we find current measures to control introduction of diseases by domestic animals and stowaway wildlife on Santa Catalina Island, while providing some protection, are limited in addressing the threat of potential disease outbreaks to Santa Catalina Island fox. Therefore, we still consider potential disease outbreaks to be a threat to the Santa Catalina Island fox now and in the future under Factor C, noting that this threat is not addressed by existing regulatory mechanisms.
The 2004 listing rule identified stochastic risks to small populations and lack of genetic variability as threats to all four island fox subspecies under Factor E (69 FR 10335; March 5, 2004). Road mortalities were also discussed under Factor E in the 2004 listing rule. Since the time of listing, the impacts of feral cat aggression, poisoning, and entrapment on Santa Catalina Island, as well as fire, drought, and global climate change for all four islands, have been identified as possible new threats.
Island endemics, such as island foxes, have a high extinction risk due to isolation and small total population sizes relative to mainland subspecies (MacArthur and Wilson 1967, entire), both of which make them more vulnerable, especially to stochastic events such as drought and wildfire (Miller
Genetic diversity in island fox populations is considered low due to the population bottlenecks they experienced during past extreme, low population numbers (Gilbert
The fearlessness of island foxes, coupled with relatively high vehicle traffic on Santa Catalina Island, results in multiple fox collisions each year. On the northern Channel Islands, vehicle use is limited, restricted to only land management personnel and researchers, and is expected to remain limited into the future. On Santa Catalina Island, 10 of the 21 fox mortalities in 2015 were caused by vehicle strikes (King and Duncan 2016, p. 18). The island-wide 25 mile per hour speed limit (CIC 2015, no page number) likely minimizes the number of vehicle strike mortalities that would otherwise occur. Even with current mortality of island foxes caused by various factors including vehicle strikes, the Santa Catalina Island fox population showed significant growth between 2002 and 2015, and has hovered around 1,800 individual foxes for the past 3 years. Given island fox population growth over the past 13 years during a time when the number of vehicles on the road has increased, we do not expect the population effect from vehicle mortality to increase in the future. Additionally, there is less than a 5 percent chance of the Santa Catalina Island fox subspecies going extinct given current and expected future conditions (King and Duncan 2016, pp. 12-13; Service 2015, pp. 167-168). Therefore, even though vehicle strikes remain the primary human-caused source of individual mortality on this island, mortality by motor vehicles is not considered a threat resulting in
Feral cats and domestic dogs occur on Santa Catalina Island and may negatively affect foxes through interactions including direct aggression and competition for food and habitat resources (Laughrin 1978, pp. 5-6; Kovach and Dow 1981, p. 443). Direct aggression between Santa Catalina Island foxes and cats has been documented in the wild, primarily near public coves and campgrounds that provide food and shelter for feral cats (Guttilla 2007, p. 9). Researchers have routinely captured foxes that have severe injuries consistent with cat encounters (Guttilla 2007, p. 9). Aggressive exclusion of foxes by feral cats has also been observed. When cats move into fox habitat, foxes are no longer observed; when cats are no longer resident, foxes move back in to occupy the area (King 2013c, pers. comm.; Anderson 2013, pers. obs.).
In the 2004 listing rule (69 FR 10335; March 5, 2004), we noted that California's Food and Agricultural Code 31752.5 prohibited lethal control of feral cats unless cats are held for a minimum of 6 days, which was thought to prevent CIC from taking steps to eradicate feral cats on Santa Catalina Island. In 2008, a Feral Animal Task Force was convened by the City of Avalon, with representatives of CIC and other island stakeholders, to address feral and free-ranging cats in the city and on the rest of the island, and most importantly, to draft legislation for consideration by the City Council for approval and incorporation into City ordinance. This task force is not currently active, however, and progress has stalled in initiating new feral cat control measures and enacting new legislation (King 2016, pers. comm.). Currently, the CIC practice regarding feral cats is consistent with that of the Catalina Island Humane Society: animals trapped accidentally during fox-trapping/monitoring are examined, and, if free from incurable and contagious disease, are spayed or neutered and released. Animals found to test positive for Feline Leukemia or Feline Immunodeficiency are humanely euthanized. Younger cats including kittens may be adopted from the Catalina Island Humane Society (CIC 2016,
Instances of fox mortality from domestic dog attacks have been observed over the past decade (Gaffney 2011, p. 1; Munson and Gaffney 2011, p. 1; King and Duncan 2011, pp. 12-13; King and Duncan 2012, p. 14; King 2012a, p. 1; 2012b, p. 1; King 2015, p. 1). While mortality due to domestic dog attacks has been reported, it is limited in effect to individual foxes, and does not have significant impacts to island fox at either the population or rangewide scales now nor do we anticipate that it will in the future.
We do not anticipate an increase in the number of feral cats and domestic dogs on Santa Catalina Island in the future. Because growth of the Santa Catalina Island fox population over the past 13 years occurred during a time when feral cats and foxes and domestic dogs and foxes have been interacting, we do not expect that interactions with feral cats or domestic dogs will result in negative population effects in the future. Overall, given the lack of significant impacts at either the population or rangewide scales, interactions with feral cats and domestic dogs are not considered a threat to the Santa Catalina Island fox now or in the future.
Other impacts to Santa Catalina Island foxes resulting from human interaction include mortality from poisoning and entrapment (Duncan and King 2012, p. 4; King and Duncan 2015, pp. 18, 20; Vickers 2012a, p. 2; Vickers 2012b, p. 1; King and Duncan 2015, p. 18). A Santa Catalina Island fox died in 2012 from rodenticide poisoning (Duncan and King 2012, p. 4), another was euthanized because of poisoning in 2014 (King and Duncan 2015, p. 18), and a third was sickened in 2014 by insecticide poisoning (King and Duncan 2015, p. 20). Entrapment of foxes may occur in areas where development projects are ongoing. Examples include: Two foxes falling into a power line pole construction pit (CIC 2009,
On the northern Channel Islands, the frequency and intensity of wildland fire is less than on the adjacent mainland, because there are fewer ignition sources on the islands, and the typical maritime fog moisture inhibits fire spread. Natural lightning-strike fires are extremely rare; only three fires between 1836 and 1986 on the Channel Islands were started by lightning (Carroll
Though not identified as a threat at the time of listing, Santa Catalina Island regularly experiences wildfires (CIC 2011) that could reduce food availability, alter the habitat, or directly result in the loss of individual foxes (Service 2004, p. 10347). Duncan and King's (2009, p. 384) findings indicate fire seasonality has an influence on fox survival; fires that occur when pups are young and most dependent on adults for mobility are most damaging. However, in general, the best available data indicate that neither the 2006 Empire Fire nor the 2007 Island Fire had significant effects to island fox at the population level (Duncan and King 2009, p. 384).
In summary, wildfires are infrequent on the northern Channel Islands and more frequent on Santa Catalina Island. On all islands, while wildfire can result in mortality of individuals, especially juveniles depending on when the fires
The Channel Islands, as well as the rest of southern California, are currently in the midst of a drought that began in 2012, and, as of mid-April 2016, has not abated (United States Drought Monitor 2016, entire). Island foxes have endured many droughts during their 10,000-year persistence on the islands (California Department of Water Resources 2015, entire). Deep multi-year droughts have occurred on the Channel Islands about once every 2 decades since 1900 (Coonan 2015, unpubl. data). General drought conditions in the late 1920s and early 1930s, combined with overgrazing, denuded most vegetation, particularly on San Miguel Island, creating massive sand barrens, remnants of which are still evident today (Johnson 1980, entire). Even so, island foxes survived this period of soil erosion and episodic landscape stripping.
The current drought is the first opportunity to study the effect of drought on island foxes, since foxes have recovered to historic numbers. On San Miguel Island, average adult weights declined in 2013 and 2014, to the lowest ever recorded, and fox reproduction was negligible in 2013 and 2014 (Coonan
Our analyses under the Act include consideration of ongoing and projected changes in climate. Scientific measurements spanning several decades demonstrate that changes in climate are occurring, and that the rate of change has increased since the 1950s. Examples include warming of the global climate system, and substantial increases in precipitation in some regions of the world and decreases in other regions (
Various changes in climate may have direct or indirect effects on species. These effects may be positive, neutral, or negative, and they may change over time, depending on the species and other relevant considerations, such as threats in combination and interactions of climate with other variables (for example, habitat fragmentation) (IPCC 2014, pp. 4-11). Identifying likely effects often involves aspects of climate change vulnerability analysis. Vulnerability refers to the degree to which a species (or system) is susceptible to, and unable to cope with, adverse effects of climate change, including climate variability and extremes. Vulnerability is a function of the type, magnitude, and rate of climate change and variation to which a species is exposed, its sensitivity, and its adaptive capacity (Glick
Statewide and regional probabilistic estimates of temperature and precipitation changes for California and the greater Los Angeles region were evaluated by Pierce
Probably the most potentially vulnerable aspect of island fox biology to climate change is indirect effects from affected invertebrates that are parasites and disease vectors. Invertebrates, because they are exothermic (cold-blooded), are particularly responsive to the effects of a warming climate that typically speeds development and enhances survival. For disease vectors such as mosquitos, survival may occur where it was previously too cold during the coolest nights of the year for overwintering. Invertebrates are also
Considering that island foxes are opportunistic feeders, and climate warming could increase the subspecies' insect prey base abundance, it is possible climate change could positively affect food quantity and quality. For example, increased consumption of insect species by mice associated with a warmer, drier climate on South African islands has been documented (Chown and Smith 1993, pp. 508-509). In addition, because island foxes have shown relative plasticity with regard to utilizing nonnative insects (Cypher
Global climate change has the potential to negatively and positively affect island fox populations. There is still uncertainty associated with predictions relative to the timing, location, and magnitude of future climate changes. Probably the most vulnerable aspect of island fox biology to climate change is indirect effects to the fox from affected invertebrates. Given the indications that the Channel Islands may be somewhat buffered from the more extreme effects of a warming climate and past demonstrated ability of island foxes to survive pervasive drought, current healthy population numbers, and the apparent ability of foxes to respond to changes in precipitation by shifting resource allocation, we do not consider changes in temperature or precipitation projected due to climate change to be a threat to island foxes at this time or in the future. While we cannot accurately predict the effects of climate change on island fox subspecies, because the foxes are generalists and exhibit plasticity with regards to prey and habitat use, we do not expect negative effects of such magnitude that would result in significant impacts at either the population or rangewide scales (
In summary, during the period when populations were at their lowest, the four subspecies of Channel Island foxes were extremely vulnerable to extinction from stochastic events. The populations have now increased substantially and the likelihood of extinction has accordingly been reduced. The combined effects of interactions with feral cats and domestic dogs, motor vehicle collisions, mortality due to wildfire, and other human-caused mortalities result in the deaths of multiple individuals throughout Santa Catalina Island on an annual basis, but they do not constitute a combined threat to the relatively large population at this time nor do we anticipate that they will in the future. Given the past demonstrated ability of island foxes to survive pervasive drought, their current healthy population numbers, and their apparent ability to respond to drought by shifting resource allocation, we do not consider drought to be a threat to island foxes at this time or in the future. While we cannot accurately predict the effects of climate change on island fox subspecies because the foxes are generalists and exhibit plasticity with regards to prey, habitat use, and resource allocation, we do not consider climate change to be a threat to island foxes now nor in the future.
At time of listing in 2004 (69 FR 10335; March 5, 2004), predation by golden eagles was the primary threat to San Miguel, Santa Rosa, and Santa Cruz Island foxes, and disease was the primary threat to the Santa Catalina Island fox. The threat of predation by golden eagles on the northern Channel Islands has been significantly reduced since the time of listing. This reduction in predation by golden eagles is in direct response to the extensive removal of golden eagles from the northern Channel Islands, golden eagle prey being removed successfully from Santa Rosa and Santa Cruz Islands, and the successful reintroduction of bald eagles.
Potential disease outbreaks continue to pose a threat to Santa Catalina Island foxes due to relatively uncontrolled movement of vectors from the mainland that carry diseases for which the population may not be vaccinated. The primary measures in place on all islands to reduce the threat of disease are vaccination of a subset of the fox population for CDV and rabies, and monitoring of population sentinels to detect the start of another epidemic and respond appropriately to mitigate the outbreak. While disease is currently controlled on Santa Catalina Island, we do not have assurance that monitoring and management of Santa Catalina Island foxes necessary to detect and mitigate an epidemic in Santa Catalina Island foxes will continue in the future.
During the period when the island fox populations were at their lowest, they were extremely vulnerable to extinction from stochastic events. There will always be some inherent risk of extinction due to stochastic events because each island fox subspecies is a single breeding population. However, the populations have now increased substantially, show stable or increasing trends, and are returning to historical population levels, and the threat of extinction from demographic stochasticity has accordingly been reduced.
Mortality due to motor vehicle strikes, habitat loss, feral cats, and domestic dogs results in loss of individuals, but these mortality factors are not resulting in significant impacts to island foxes at either the population or rangewide scales as documented by current population numbers and trends. When population numbers are healthy, island foxes respond to drought by shifting resource allocation; therefore, we do not consider drought to be a threat to island foxes at this time or in the future. The impacts of climate change are hard to predict. Some effects to island fox populations could be negative while others could be positive. Predicting likely future climate scenarios and understanding the complex effects of climate change are high priorities for island fox conservation planning.
When mortality mechanisms or other stressors occur together, one may exacerbate the effects of another, causing effects not accounted for when stressors are analyzed individually. Synergistic or cumulative effects may be observed in a short amount of time or may not be noticeable for years into the future, and could affect the long-term viability of island fox populations. For example, if a stressor hinders island fox survival and reproduction or affects the availability of habitat that supports island foxes, then the number of individuals the following year(s) will be reduced, increasing vulnerability to stochastic events like a disease epidemic or wildfire. The combined effects of interactions with feral cats and domestic dogs, motor vehicle collisions, mortality due to wildfire, and other human-caused mortalities result in the deaths of multiple individuals throughout Santa Catalina Island on an annual basis, but they do not constitute a combined threat to the relatively large population at this time nor do we anticipate that they will in the future. Another example is San Miguel Island where there have been combined effects of low reproductive output, dry climate, parasites, and low genetic variability. However, population estimates for the total San Miguel Island fox population likely represents carrying capacity for the island (Coonan 2014, p. 8), which has resulted in a general decline in reproductive effort as the population has increased. In addition, according to population viability analyses the San Miguel Island fox subspecies is at acceptably low risk of extinction (Guglielmino and Coonan 2016, p. 17) indicating that low reproductive output, dry climate, parasites, and low genetic variability do not constitute a combined threat to the population at this time nor do we anticipate that they will in the future. In conducting this analysis, we have considered whether the individual stressors identified for each island, considered in combination, result in a threat to the species. The combination of low mortality and robust population growth puts each island fox subspecies at acceptably low risk of extinction, according to population viability analyses. While synergistic or cumulative effects may occur when mortality mechanisms or other stressors occur together, given the robust populations and ongoing management and monitoring, these effects do not pose significant impacts to San Miguel, Santa Rosa, and Santa Cruz Island foxes at either the population or rangewide scales at this time nor do we anticipate that they will in the future. Synergistic or cumulative effects do not pose significant impacts to Santa Catalina Island fox at either the population or rangewide scales at this time given the robust populations and current ongoing management and monitoring, but could in the future if there are lapses in monitoring and management in the future.
An assessment of the need for a species' protection under the Act is based on whether a species is in danger of extinction or likely to become so because of any of 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 human-made factors affecting its continued existence. As required by section 4(a)(1) of the Act, we conducted a review of the status of these species and assessed the five factors to evaluate whether the San Miguel, Santa Rosa, Santa Cruz, and Santa Catalina Island foxes are in danger of extinction, or likely to become so in the foreseeable future throughout all or a significant portion of their ranges. We examined the best scientific and commercial information available regarding the past, present, and future threats faced by these subspecies. We also consulted with species experts and land management staff with NPS, TNC, and CIC, who are actively managing for the conservation of island foxes.
In considering what factors might constitute threats, we must look beyond the mere exposure of the species to the factor to determine whether the exposure causes actual impacts to the species. If there is exposure to a factor, but no response, or only a positive response, that factor is not a threat. If there is exposure and the species responds negatively, the factor may be a threat and we then attempt to determine how significant the threat is. If the threat is significant, it may drive, or contribute to, the risk of extinction of the species such that the species warrants listing as an endangered species or threatened species as those terms are defined by the Act. This determination does not necessarily require empirical proof of a threat. The combination of exposure and some corroborating evidence of how the species is likely impacted could suffice. The mere identification of factors that could impact a species negatively is not sufficient to compel a finding that listing is appropriate; we require evidence that these factors are operative threats that act on the species to the point that the species meets the definition of an endangered species or threatened species under the Act.
At the time of listing in 2004 (69 FR 10335; March 5, 2004), the Santa Catalina Island fox experienced a devastating CDV epidemic that resulted in an almost complete loss of the eastern subpopulation, which made up the majority of the island population. The precipitous decline of the northern Channel Island foxes (San Miguel, Santa Rosa, and Santa Cruz Island foxes) that led to their listing as endangered species was the result of depredation by golden eagles, facilitated by the presence of a nonnative, mammalian prey-base on the northern Channel Islands.
As a result of concerted management efforts, golden eagle predation has been reduced to such a degree that it is no longer considered a threat to the northern island subspecies. Additional management efforts, including captive breeding and ongoing vaccinations for disease, have contributed to the substantial increase of all island fox populations. Although golden eagles will most likely continue to occasionally occur on the islands as transients, the removal of the nonnative prey-base and the constant presence of bald eagles are permanent, long-term deterrents to golden eagles establishing breeding territories and remaining on the northern Channel Islands. Ongoing management and monitoring are designed to detect any reemergence of threats and to take corrective actions should any threats be detected.
Based on the information presented in this final rule and the proposed rule (81 FR 7723; February 16, 2016), the recovery criteria in the recovery plan have been achieved and the recovery objectives identified in the recovery plan have been met for the three northern Channel Island subspecies of island fox. San Miguel, Santa Rosa, and Santa Cruz Island fox abundance has increased steadily to the point where the number of individuals is again within the range of historical population estimates, save Santa Rosa Island where
Having determined that the San Miguel, Santa Rosa, and Santa Cruz Island foxes are not in danger of extinction, or likely to become so, throughout all of their ranges, we next consider whether there are any significant portions of their ranges in which the island foxes are in danger of extinction or likely to become so. Under the Act and our implementing regulations, a species may warrant listing if it is an endangered species or a threatened species. The Act defines “endangered species” as any species which is “in danger of extinction throughout all or a significant portion of its range,” and “threatened species” as any species which is “likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” The 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.” On July 1, 2014, we published a final policy interpreting the phrase “significant portion of its range” (SPR) (79 FR 37578). 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 an endangered species or a threatened species, 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.
The SPR policy is applied to all status determinations, including analyses for the purposes of making listing, delisting, and reclassification determinations. The procedure for analyzing whether any portion is an SPR is similar, regardless of the type of status determination we are making. The first step in our analysis of the status of a species is to determine its status throughout all of its range. If we determine that the species is in danger of extinction, or likely to become so in the foreseeable future, throughout all of its range, we list the species as an endangered (or threatened) species and no SPR analysis will be required. Because we are reclassifying the listing status of the Santa Catalina Island fox as a threatened species under the Act (see
When we conduct an SPR analysis, we first identify any portions of the species' range that warrant further consideration. The range of a species can theoretically be divided into portions in an infinite number of ways. However, there is no purpose to analyzing portions of the range that are not reasonably likely to be significant and either endangered or threatened. To identify only those portions that warrant further consideration, we determine whether there is substantial information indicating that (1) the portions may be significant and (2) the species may be in danger of extinction in those portions or likely to become so within the foreseeable future. We emphasize that answering these questions in the affirmative is not a determination that the species is endangered or threatened throughout a significant portion of its range—rather, it is a step in determining whether a more detailed analysis of the issue is required. In practice, a key part of this analysis is whether the threats are geographically concentrated in some way. If the threats to the species are affecting it uniformly throughout its range, no portion is likely to warrant further consideration. Moreover, if any concentration of threats apply only to portions of the range that clearly do not meet the biologically based definition of “significant” (
If we identify any portions that may be both (1) significant and (2) endangered or threatened, we engage in a more detailed analysis. As discussed above, to determine whether a portion of the range of a species is significant, we consider whether, under a hypothetical scenario, 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. This analysis considers the contribution of that portion to the viability of the species based on the conservation biology principles of redundancy, resiliency, and representation. (These concepts can similarly be expressed in terms of abundance, spatial distribution, productivity, and diversity.) The identification of an SPR does not create a presumption, prejudgment, or other determination as to whether the species in that identified SPR is in danger of extinction or likely to become so. We must go through a separate analysis to determine whether the species is in danger of extinction or likely to become so in the SPR. To determine whether a species is endangered or threatened throughout an SPR, we will use the same standards and methodology that we use to determine if a species is endangered or threatened throughout its range.
Depending on the biology of the species, its range, and the threats it faces, it may be more efficient to address either the significance question first, or the status question first. Thus, if we determine that a portion of the range is not “significant,” we do not need to determine whether the species is endangered or threatened there; if we determine that the species is not
Applying the process described above, we evaluated the respective ranges of the San Miguel Island fox, Santa Rosa Island fox, and Santa Cruz Island fox to determine if any area could be considered a significant portion of any one of the subspecies' ranges. As mentioned above, one way to identify portions for further analyses is to identify areas that may be significant, such as any natural divisions within the range that might be of individual biological or conservation importance to the species. We conducted our review based on examination of the recovery plan (Service 2015; entire) and other relevant and more recent information on the biology and life history of the northern Channel Island foxes. Because each of the three northern Channel Island fox subspecies is a narrow endemic where the foxes on each island constitute a single population, we determined that there are no natural divisions or separate areas of the range of each subspecies that contribute separately to the conservation of that particular subspecies. In other words, for each subspecies of island fox, there is only one biologically defined portion, and there are no notably separate or distinct portions that contribute independently to the conservation (
We have carefully assessed the best scientific and commercial data available and determined that the San Miguel Island fox, Santa Rosa Island fox, and Santa Cruz Island fox are no longer in danger of extinction throughout all or significant portions of their ranges, nor are they likely to become so within the foreseeable future. As a consequence of this determination, we are removing the San Miguel, Santa Rosa, and Santa Cruz Island fox from the Federal List of Endangered and Threatened Wildlife.
The Santa Catalina Island fox exhibits demographic characteristics consistent with long-term viability. The population has continued to increase over the past 11 years, reaching an estimated high of 1,852 individuals in 2013 (King and Duncan 2015, p. 11), then dropping slightly to 1,812 in 2015 (King and Duncan 2016, p. 10). Population viability analysis indicates the Santa Catalina Island fox population has an acceptably small risk of extinction—less than 5 percent since 2008. With population levels consistent with long-term viability, the intent of recovery objective 1 has been met for the Santa Catalina Island fox. However, objective 2 has not been met because we do not have assurance that the monitoring and management as prescribed in the epidemic response plan for Santa Catalina Island foxes will be funded and implemented in the future to ensure that the threat of disease continues to be managed. While population levels are currently consistent with long-term viability (indicating that the subspecies is no longer currently in danger of extinction), lack of adequate control of potential vectors along with lack of assured long-term monitoring could allow for lapses in management and monitoring and reemergence of disease that may cause epidemics and population declines before they can be detected and acted upon. We coordinated with CIC to determine their ability to enter into an agreement to provide assurances for long-term funding and a commitment for long-term implementation of the epidemic response plan. Though we do not have assurances of long-term funding that would allow them to commit to long-term implementation of the epidemic response plan, we recognize that CIC's efforts have significantly contributed to a reduction of impacts to the Santa Catalina Island fox and its habitat. As a result, we have determined that the Santa Catalina Island fox is no longer in danger of extinction throughout all of its range, but instead is threatened with becoming endangered in the foreseeable future throughout all of its range. Therefore, we are reclassifying the status of the Santa Catalina Island fox from an endangered species to a threatened species. Because we have determined the Santa Catalina Island fox is likely to become an endangered species in the foreseeable future throughout all of its range, no portion of its range can be significant for purposes of the definitions of endangered species or threatened species (see 79 FR 37578; July 1, 2014) (also see Significant Portion of the Range, above).
Section 4(a)(3)(A) of the Act, as amended, and implementing regulations (50 CFR 424.12) require that we designate critical habitat, to the maximum extent prudent and determinable, at the time a species is listed as endangered or threatened.
On November 9, 2005 (70 FR 67924), we determined that habitat on Santa Catalina Island (as well as the other three islands occupied by the island fox described herein) did not meet the definition of critical habitat under the Act. We made this determination based on the island fox being a generalist in all aspects of its life history. We stated that foxes are opportunistic omnivores that eat a wide variety of plants and animals in whatever habitat they use, and as such, they use all habitat available on each of the islands (70 FR 67927). We were not aware at that time nor are we aware currently of any existing or anticipated threats to Santa Catalina Island habitats that would likely affect the Santa Catalina Island fox. Accordingly, we continue to conclude that there is no information to support a conclusion that any specific habitat on Santa Catalina Island is essential to the conservation of the Santa Catalina Island fox. Thus, we do not find any habitat on Santa Catalina Island that meets the definition of critical habitat in section 3(5)(A) of the Act. Because there continues to be no habitat that meets the definition of critical habitat for the Santa Catalina Island fox, there is none to designate.
This final rule revises 50 CFR 17.11(h) by removing the San Miguel Island fox, Santa Rosa Island fox, and Santa Cruz Island fox from the Federal List of Endangered and Threatened Wildlife. The prohibitions and conservation measures provided by the Act, particularly through sections 7 and 9, no longer apply to these subspecies. Federal agencies are no longer required to consult with the Service under section 7 of the Act in to ensure that any
This rule also revises 50 CFR 17.11(h) to reclassify the Santa Catalina Island fox from an endangered species to a threatened species on the Federal List of Endangered and Threatened Wildlife. However, this reclassification does not change the protection afforded to this subspecies under the Act. Anyone taking, attempting to take, or otherwise possessing this species, or parts thereof, in violation of section 9 of the Act or its implementing regulations, is subject to a penalty under section 11 of the Act. Pursuant to section 7 of the Act, Federal agencies must ensure that any actions they authorize, fund, or carry out are not likely to jeopardize the continued existence of the Santa Catalina Island fox. Whenever a species is listed as threatened, the Act allows promulgation of special rules under section 4(d) that modify the standard protections for threatened species found under section 9 of the Act and Service regulations at 50 CFR 17.31 (for wildlife) and 17.71 (for plants), when it is deemed necessary and advisable to provide for the conservation of the species. No special section 4(d) rules are proposed, or anticipated to be proposed, for Santa Catalina Island fox, because there is currently no conservation need to do so for this subspecies. Recovery actions directed at Santa Catalina Island fox will continue to be implemented, as funding allows, as outlined in the recovery plan for this species (Service 2015, entire).
Section 4(g)(1) of the Act requires us, in cooperation with the States, to implement a monitoring program for not less than 5 years for all species that have been recovered and delisted. The purpose of this post-delisting monitoring (PDM) is to verify that a species remains secure from risk of extinction after the protections of the Act are removed, by developing a program that detects the failure of any delisted species to sustain itself. If, at any time during the monitoring period, data indicate that protective status under the Act should be reinstated, we can initiate listing procedures, including, if appropriate, emergency listing under section 4(b)(7) of the Act.
NPS and TNC have agreed to partner with us in the implementation of the post-delisting monitoring for the northern Channel Island foxes. The post-delisting monitoring is designed to verify that San Miguel, Santa Rosa, and Santa Cruz Island foxes remain secure from risk of extinction after their removal from the Federal List of Endangered and Threatened Wildlife by detecting changes in population trend and mortality/survival. Post-delisting monitoring for the northern Channel Island fox subspecies will be conducted as recommended in the epidemic response plan for northern Channel Island foxes (Hudgens
Although the Act has a minimum post-delisting monitoring requirement of 5 years, the post-delisting monitoring plan for northern Channel Island foxes includes a 10-year monitoring period to account for environmental variability (for example, extended drought) that may affect fox populations and to document the range of population fluctuation as fox populations reach carrying capacity. If a decline in abundance is observed or a substantial new threat arises, post-delisting monitoring may be extended or modified as described below.
Island foxes will be monitored for both population size and trend, and for annual survival and cause-specific mortality, as specified by the epidemic response plan for northern Channel island foxes (Hudgens
Annual survival and cause-specific mortality of island foxes will be monitored, as they are now, via tracking of radio-collared foxes. Mortality checks will be conducted weekly on radio-collared foxes, and necropsies will be conducted on fox carcasses to determine the cause of mortality. A sample of at least 40 radio-collared foxes is maintained on each island, as that is the number of monitored foxes determined to be necessary to detect an annual predation rate of 2.5 percent (Rubin
In cooperation with NPS and TNC, we will annually review the results of monitoring, which include annual estimated adult population size, annual adult survival, and identified causes of mortality. If there are apparent sharp declines in population size or survival, or if the information indicates the appearance of significant mortality causes, the data will be reviewed by the Island Fox Conservation Working Group for evaluation and assessment of threat level. Monitoring results may also reach thresholds which precipitate increased monitoring or implementation of management actions, as specified in the epidemic response plan and golden eagle management strategy. At the end of the 10-year post-delisting monitoring period, NPS, TNC, and the Service will determine whether monitoring should continue beyond the 10-year monitoring period.
In the proposed rule published on February 16, 2016 (81 FR 7723) in the
In accordance with our peer review policy published on July 1, 1994 (59 FR 34270), we solicited expert opinion from three knowledgeable individuals with scientific expertise that included familiarity with the island fox and its habitat, biological needs, and threats. We received responses from all three of the peer reviewers.
We reviewed all comments we received from the peer reviewers for substantive issues and new information regarding the status of the island fox. The peer reviewers generally concurred with our methods and conclusions, and provided new information and suggestions to improve the final rule. This information has been incorporated
We requested written comments from the public on the proposed rule. To that end, we specifically sought comments concerning: (1) Additional information on the distribution, population size, and population trends of the San Miguel, Santa Rosa, Santa Cruz, and Santa Catalina Island foxes; (2) relevant information concerning any current or likely future threats (or lack thereof) to the island foxes; (3) current or planned activities within the range of the island foxes and their possible impacts; (4) regional climate change models and whether they are reliable and credible to use in assessing the effects of climate change on the island foxes and their habitats; and (5) our draft post-delisting monitoring plan.
During the open comment period, which closed on April 18, 2016, we received 10 comment letters from organizations or individuals directly addressing the proposed removal of the San Miguel, Santa Rosa, and Santa Cruz Island fox from the Federal List of Endangered and Threatened Wildlife, or reclassification of the Santa Catalina Island fox from an endangered to a threatened species. Seven of these letters opposed the proposal, and three provided support. Two of these letters provided substantive comments (beyond a succinct expression of agreement or opposition) on the proposed rule, one of which supported and one of which opposed our proposal. Substantive information has been incorporated into the final rule as appropriate. The public comments are addressed in the following summary.
Santa Rosa Island foxes have likely not reached carrying capacity. Carrying capacity is not a threshold for recovery or for healthy populations; rather, carrying capacity is the maximum number of individuals that the habitat can support. Most populations function below that threshold and still exhibit demographic characteristics for healthy, stable populations. Populations do not need to be at carrying capacity to have stable or increasing demographics consistent with long-term viability. On Santa Rosa Island, significant mortality during the early phase of reintroduction and again in 2010 prevented the Santa Rosa subspecies from attaining the level of biological recovery that the San Miguel and Santa Cruz Islands subspecies had attained by 2013. However, the predicted extinction risk (over the next 50 years) has been less than 5 percent since 2011 for Santa Rosa Island (Guglielmino and Coonan 2016, p. 22). As of 2015, all Roosevelt elk and mule deer have been removed from Santa Rosa Island, and the island fox population has increased to greater than 1,200 foxes (Coonan 2015b, pers. comm.; Guglielmino and Coonan 2016, p. 18). With the golden eagle management strategy in place, complete removal of golden eagles and their nonnative prey-base from the northern Channel Islands, development and implementation of an epidemic response plan, and population levels consistent with long-term viability, the intent of recovery objectives 1 and 2, and the associated recovery criteria, are met for the San Miguel, Santa Rosa, and Santa Cruz Island foxes.
The combination of low mortality and the population at likely carrying capacity (
We have determined that environmental assessments and environmental impact statements, as defined under the authority of the National Environmental Policy Act, need not be prepared in connection with listing, delisting, or reclassification of a species as an endangered or threatened species under the Endangered Species Act. We published a notice outlining our reasons for this determination in the
A complete list of references cited in this rulemaking is available on the Internet at
The primary authors of this final rule are staff members of the Ventura Fish and Wildlife Office in Ventura, California, in coordination with the Pacific Southwest Regional Office in Sacramento, California, and the Carlsbad Fish and Wildlife Office in Carlsbad, California.
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; 4201-4245, unless otherwise noted.
The revision reads as follows:
(h) * * *
Animal and Plant Health Inspection Service, Department of Agriculture.
Proposed rule.
We are proposing to amend the regulations governing the importation of plants for planting to add orchid plants of the genera
We will consider all comments that we receive on or before October 11, 2016.
You may submit comments by either of the following methods:
•
•
Supporting documents and any comments we receive on this docket may be viewed at
Mr. William Aley, Senior Regulatory Specialist, Plants for Planting Policy, PPQ, APHIS, 4700 River Road, Unit 133, Riverdale, MD 20737; (301) 851-2130.
The regulations in 7 CFR part 319 prohibit or restrict the importation into the United States of certain plants and plant products into the United States to prevent the introduction of plant pests and noxious weeds. The regulations in “Subpart—Plants for Planting,” §§ 319.37 through 319.37-14 (referred to below as the regulations) contain, among other things, prohibitions and restrictions on the importation of plants, plant parts, and seeds for propagation.
Paragraph (a) of § 319.37-8 of the regulations requires, with certain exceptions, that plants offered for importation into the United States be free of sand, soil, earth, and other growing media. This requirement is intended to help prevent the introduction of plant pests that might be present in the growing media; the exceptions to the requirement take into account factors that mitigate that plant pest risk. Those exceptions, which are found in paragraphs (b) through (e) of § 319.37-8, consider either the origin of the plants and growing media (paragraph (b)), the nature of the growing media (paragraphs (c) and (d)), or the use of a combination of growing conditions, approved media, inspections, and other requirements (paragraph (e)).
Paragraph (e) of § 319.37-8 provides conditions under which certain plants established in growing media may be imported into the United States. In addition to specifying the types of plants that may be imported, § 319.37-8(e) also:
• Specifies the types of growing media that may be used;
• Requires plants to be grown in accordance with written agreements between the Animal and Plant Health Inspection Service (APHIS) and the national plant protection organization (NPPO) of the country where the plants are grown and between the foreign NPPO and the grower;
• Requires the plants to be rooted and grown in a greenhouse that meets certain requirements for pest exclusion and that is used only for plants being grown in compliance with § 319.37-8(e);
• Restricts the source of the seeds or parent plants used to produce the plants, and requires grow-out or treatment of parent plants imported into the exporting country from another country;
• Specifies the sources of water that may be used on the plants, the height of the benches on which the plants must be grown, and the conditions under which the plants must be stored and packaged; and
• Requires that the plants be inspected in the greenhouse and found free of evidence of plant pests no more than 30 days prior to the exportation of the plants.
A phytosanitary certificate issued by the NPPO of the country in which the plants were grown that declares that the above conditions have been met, must accompany the plants at the time of importation. These conditions have been used successfully to mitigate the risk of pest introduction associated with the importation into the United States of approved plants established in growing media.
Currently, orchid plants of the genera
The regulations in § 319.37-8(g) provide that requests such as the one made by the NPPO of the Republic of Korea be evaluated by APHIS using a pest risk assessment (PRA) that uses specific pest risk evaluation standards that are based on pest risk analysis guidelines established by the International Plant Protection Convention of the United Nations' Food and Agriculture Organization. Such analyses are conducted to determine the
In the PRA, titled “Importation of
The PRA identified
However, the PRA acknowledged that the risk presented by these plant pests is consistent with pests associated with any propagative orchid materials. Further, it is important to note that those plant pest risks are present in the absence of the mitigative effects of the requirements in § 319.37-8(e), which are designed to establish and maintain a pest-free production environment and ensure the use of pest-free seeds or parent plants. Given that, the risk management document (RMD) concluded that the safeguards in § 319.37-8(e) would allow the safe importation of
Accordingly, we are proposing to amend the regulations in § 319.37-8(e) by adding
This proposed rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.
In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available by contacting the person listed under
Orchids are the single largest group of potted flowering plants sold in the United States, comprising about $266 million of the $788 million in 2014 sales for this industry. In 2014,
The proposed rule would enable Korean exporters to provide higher-valued, mature potted plants directly to wholesalers and retailers. However, such a scenario is considered unlikely, given the technical challenges and marketing costs incurred when shipping finished plants in pots. A more likely scenario is for the Republic of Korea to export immature plants as bare root plants or in approved growing media to U.S. nurseries to grow and sell as finished plants.
The United States imported more than 6,760 metric tons (MT) of live orchids valued at about $83 million in 2014, with Taiwan supplying almost 84 percent. The Republic of Korea expects to export to the United States from 2 to 5 million
We expect the quantity of orchids in approved growing media imported from the Republic of Korea will also be limited because of the U.S. market's competitive environment. Import levels would depend on the ability of Korean producers and exporters to cover their production, transportation, and marketing costs given U.S. market prices. U.S. nurseries that purchased the Korean orchids in approved growing media would benefit from their improved quality and reduced production time in comparison to bare-rooted plants. The proposed rule would increase competition for U.S. producers and importers of immature
U.S. orchid producers numbered 158 in 2012. Of those producers, it is unknown how many are small entities. Given the relatively small quantity of orchid plants in approved growing media that we expect to be imported from the Republic of Korea, the Administrator of the Animal and Plant Health Inspection Service has determined that this action, if promulgated, will not have a significant economic impact on a substantial number of small entities.
This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this proposed rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.
To provide the public with documentation of APHIS' review and analysis of any potential environmental impacts associated with the proposed importation of
The environmental assessment may be viewed on the
In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
APHIS is proposing to amend the regulations governing the importation of plants for planting to add orchid plants of the genera
Adding orchid plants of the genera
The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning these information collection activities. APHIS needs this outside input to help accomplish the following:
(1) Evaluate whether the information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;
(2) Evaluate the accuracy of our estimate of burden of the information collection, 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 information collection on those who are to respond, (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
(Due to rounding, the total annual burden hours may not equal the product of the annual number of responses multiplied by the average reporting burden per response.)
A copy of the information collection may be viewed on the
APHIS is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this proposed rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.
Coffee, Cotton, Fruits, Imports, Logs, Nursery stock, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Rice, Vegetables.
Accordingly, we propose to amend 7 CFR part 319 as follows:
7 U.S.C. 450, 7701-7772, and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3.
The addition and revisions read as follows:
(e) * * *
(2) * * *
(xiii) Plants for planting of
Office of Enterprise Assessments, Office of Enforcement, Office of Nuclear Safety Enforcement, Department of Energy.
Notice of proposed rulemaking.
The U.S. Department of Energy (DOE) is proposing to amend its Procedural Rules for DOE Nuclear Activities to clarify that the Department may assess civil penalties against certain contractors and subcontractors for violations of the prohibition against retaliating against an employee who reports violations of law, mismanagement, waste, abuse, or dangerous/unsafe workplace conditions, among other protected activities, concerning nuclear safety (referred to as “whistleblowers”). Specifically, this proposed rule would clarify that the prohibition against whistleblower retaliation is a DOE Nuclear Safety Requirement to the extent that it concerns nuclear safety. The proposed rule would also explain the circumstances under which DOE would investigate alleged violations of this prohibition. The proposed rule would also delineate which DOE regulations are DOE Nuclear Safety Requirements.
DOE will accept comments, data, and information regarding this notice of proposed rulemaking (NOPR) submitted on or before September 12, 2016.
Any comments submitted must identify the NOPR for Procedural Rules for DOE Nuclear Activities and provide docket number EA-RM-16-PRDNA and/or regulatory information number (RIN) 1992-AA52. Comments may be submitted using any of the following methods:
1.
2.
3.
As a result of potential delays in the receipt and processing of mail sent through the U.S. Postal Service, DOE encourages respondents to submit comments electronically to ensure timely receipt.
For detailed instructions on submitting comments and additional information on the rulemaking process, see section III of this document (Public Participation).
Steven Simonson, U.S. Department of Energy, Office of Enterprise Assessments/Germantown Building, 1000 Independence Ave. SW., Washington, DC 20585-1290. Phone: (301) 903-2816. Email:
K.C. Michaels, U.S. Department of Energy, Office of the General Counsel, 1000 Independence Ave. SW., Washington, DC 20585-0121. Phone: (202) 586-3430. Email:
Pursuant to the Atomic Energy Act of 1954 (AEA) (42 U.S.C. 2011
Separate from part 820, DOE has also issued regulations at 10 CFR part 708 (part 708) that prohibit a contractor or subcontractor from retaliating against employees for reporting violations of law, mismanagement, waste, abuse, or dangerous/unsafe workplace conditions, participating in proceedings, or refusing to participate in an activity that may constitute a violation of law or cause a reasonable fear of injury (referred to as “whistleblowers”). These regulations establish an affirmative duty on the part of contractors not to retaliate against whistleblowers; and establish a process for an employee alleging retaliation to file a claim for reinstatement, transfer-preference, back-pay, and legal fees among other forms of relief.
DOE is proposing to amend part 820 to clarify that DOE may impose civil penalties against a contractor or subcontractor for violating the prohibition against whistleblower retaliation found in part 708, to the extent it concerns nuclear safety. The proposed rule would not alter the existing procedures for imposing civil penalties, but would establish requirements specific to whistleblower retaliation concerning nuclear safety. The proposed rule would also provide, in the text of part 820, a list of all other DOE Nuclear Safety Requirements.
The current version of part 820 includes a definition for “DOE Nuclear Safety Requirements,” and it states that DOE has authority to impose civil penalties for violations of any DOE Nuclear Safety Requirement set forth in the Code of Federal Regulations, Compliance Orders issued under subpart C to part 820, and any program, plan, or other provision required to implement one of these rules or orders.
DOE proposes to amend part 820 to update the definition of DOE Nuclear Safety Requirements, to add a new section to part 820, and to amend the guidance in appendix A to part 820—General Statement of Enforcement Policy. In particular, DOE proposes that the following are enforceable DOE Nuclear Safety Requirements to the extent they concern nuclear safety:
10 CFR part 830 (nuclear safety management);
10 CFR part 835 (occupational radiation protection);
10 CFR 820.11 (information accuracy requirements);
Compliance Orders issued pursuant to 10 CFR part 820, subpart C;
10 CFR 708.43 (duty of contractors not to retaliate against whistleblowers).
The lack of a definitive list of regulations included in the definition of DOE nuclear safety requirements in the text of part 820 has led to a question regarding the scope of DOE's authority to issue civil penalties for violations of these regulations, particularly the prohibition against whistleblower retaliation in part 708. To address this question, DOE proposes to amend part 820 to clarify that part 830, part 835, § 820.11, Compliance Orders issued pursuant to subpart C to part 820, and § 708.43 as it concerns nuclear safety each represent DOE Nuclear Safety Requirements and that DOE may assess civil penalties for violations of these rules. This amendment is consistent with the original intent in promulgating part 820, as evidenced by appendix A of this part, the preambles to previous rulemakings (
DOE considers each of these provisions to be a DOE Nuclear Safety Requirement and has previously exercised enforcement activity on the basis of violations of these regulations. Parts 830 and 835 both have a clear connection to nuclear safety in that each regulation directly and explicitly governs the conduct of persons whose conduct may affect nuclear safety. Further, part 830 states explicitly that the requirements of part 830 are DOE Nuclear Safety Requirements and 10 CFR 830.5 provides that violations of part 830 may be enforced through civil penalties in accordance with part 820.
Compliance Orders issued pursuant to subpart C to part 820 and § 820.11 also have a clear connection to nuclear safety. Subpart C allows the Secretary of Energy to order any person involved in a DOE nuclear activity to remediate a situation that violates or potentially violates the AEA, another statute relating to a DOE nuclear activity, or a DOE Nuclear Safety Requirement. Because the underlying violations would involve nuclear safety, Compliance Orders issued under subpart C govern conduct that relates to and may affect nuclear safety. Section 820.11 requires that information pertaining to a nuclear activity that is provided to or maintained for inspection by DOE must be complete and accurate in all respects and prohibits any person involved in a nuclear activity from concealing or destroying information concerning a violation of a DOE Nuclear Safety Requirement. If information regarding a nuclear activity is incomplete or inaccurate, this impedes DOE's ability to conclude that a contractor is adhering to proper safety precautions. Likewise, if a person willfully destroys information regarding a safety violation, it becomes less likely that the violation will be rectified.
Section 708.43 establishes an affirmative duty on the part of DOE contractors (including subcontractors) not to retaliate against whistleblowers. Section 708.36 provides various forms of relief to whistleblower employees. Providing this relief is important, but the Department also has a strong interest in preventing whistleblower retaliation and ensuring that workers feel free to raise important safety concerns. DOE and its contractors rely to a significant extent on workers to bring attention to unsafe conditions. If workers witness any retaliation against an employee for raising a potential nuclear safety issue, it may contribute to a chilled work environment in which workers do not feel free to report such issues. Accordingly, § 708.43, as it applies to activities at DOE nuclear facilities that concern nuclear safety, constitutes a DOE Nuclear Safety Requirement.
An employee alleging retaliation by a DOE contractor or subcontractor has several different mechanisms to file a claim for relief, including filing a claim pursuant to part 708, with the DOE Office of the Inspector General, with the Department of Labor under 29 CFR part 24, or in federal or state court. For most of these mechanisms, a contractor employee may seek a “make whole” remedy including reinstatement, transfer-preference, back-pay, and legal fees, among other forms of compensation. DOE considers the imposition of civil penalties for whistleblower retaliation as a complementary process to these proceedings. Relief to contractor employees who have been found to suffer retaliation is important, but DOE also has a separate and strong interest in deterring future whistleblower retaliation in connection with nuclear safety issues. A “make whole” remedy to the employee may not be sufficiently punitive to deter future retaliation against whistleblowers. In these situations, separate enforcement with the possibility of imposing civil penalties would allow DOE to craft a remedy that is specifically designed to address these safety concerns.
As a matter of regulatory concern, DOE recognizes that conducting enforcement proceedings concerning retaliation in parallel with administrative or judicial proceedings may lead to conflicting results. DOE's current enforcement policy explains that DOE will generally await the completion of an administrative proceeding before deciding whether to take action. DOE proposes to codify this policy into the regulatory text with respect to proceedings before DOE under part 708, the DOE Office of the Inspector General under 41 U.S.C. 4705 or 4712, the Department of Labor under 29 CFR part 24, or a federal or state court. Specifically, DOE proposes that it will not take any action under part 820 with respect to alleged retaliation until after the deadlines have passed for filing a claim under part 708 or 29 CFR part 24—
DOE proposes that it will generally exercise enforcement discretion that is consistent with the final decision of an
DOE is aware that the various statutory and regulatory prohibitions against whistleblower retaliation are not identical. Section 708.43 prohibits retaliation against an employee who engages in one of a number of specified activities. It is conceivable that a contractor could retaliate against an employee for an action that is not protected under § 708.43, but that is protected under a different statutory or regulatory prohibition. Therefore, in the event that a final decision finds that a prohibited retaliation has taken place, DOE will make a determination of whether that retaliation also constitutes a violation of § 708.43 before pursuing remedial measures under part 820 against the contractor.
Section XIII to appendix A to part 820 currently sets forth DOE's Whistleblower Enforcement Policy. As mentioned in this preamble, this appendix is a general statement of policy and is not binding on DOE or its contractors. In addition to codifying DOE's existing policy to await the completion of administrative proceedings, as described in this preamble, DOE also proposes to codify two other statements of the enforcement policy into a new section of part 820 governing whistleblower enforcement. Specifically, DOE proposes to codify paragraphs d and e of section XIII, which provide that DOE may collect information gathered during administrative proceedings and give appropriate weight to that information in DOE's enforcement process, respectively. DOE also proposes to codify paragraph k of section XIII, which provides that the commencement of an administrative or judicial proceeding regarding an alleged retaliation does not prevent DOE from investigating violations of DOE Nuclear Safety Requirements other than § 708.43.
Under this NOPR, DOE is also proposing amendments to section XIII of appendix A to conform with the proposed changes to the regulatory text of part 820.
DOE will accept comments, data, and information regarding this proposed rule submitted on or before the date provided in the
If you submit information that you believe to be exempt by law from public disclosure, you should submit one complete copy marked “confidential,” and one copy marked “non-confidential” with the information believed to be confidential deleted. DOE is responsible for the final determination with regard to disclosure or nondisclosure of the information and for treating it accordingly under the DOE Freedom of Information regulations at 10 CFR 1004.11. Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person that would result from public disclosure; (6) when such information might lose its confidential character due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
DOE has determined that this rulemaking does not raise the kinds of substantial issues or impacts that, pursuant to 42 U.S.C. 7191, would require DOE to provide an opportunity for oral presentation of views, data and arguments. Therefore, DOE has not scheduled a public hearing on these proposed amendments to part 820.
This notice of proposed rulemaking has been determined not to be a significant regulatory action under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993). Accordingly, this notice of proposed rulemaking was not subject to review by the Office of Information and Regulatory Affairs of the Office of Management and Budget.
The Regulatory Flexibility Act (5 U.S.C. 601
DOE has reviewed this proposed rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. The proposed rule would amend DOE's Procedural Rules for DOE Nuclear Activities to clarify that DOE may assess civil penalties against certain contractors and subcontractors for violations of the prohibition against retaliating against whistleblowers. While the amended part 820 would expose small entities that are contractors and subcontractors to potential liability for civil penalties, DOE does not expect that a substantial number of these entities will violate a DOE Nuclear Safety Requirement resulting in the imposition of a civil penalty. On this basis, DOE certifies that this proposed rule would 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's certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration pursuant to 5 U.S.C. 605(b).
This proposed rule would not impose new information or record keeping requirements. Accordingly, OMB clearance is not required under the Paperwork Reduction Act, 44 U.S.C. 3501
DOE has determined that this proposed rule is covered under the Categorical Exclusion in DOE's National Environmental Policy Act regulations at paragraph A.5 of appendix A to subpart D, 10 CFR part 1021, which applies to rulemaking that interprets or amends an existing rule or regulation without changing the environmental effect of the rule or regulation that is being amended. The proposed rule would amend DOE's regulations on civil penalties with respect to certain DOE contractors and subcontractors in order to clarify that civil penalties are available for violations of the prohibition against whistleblower retaliation found in § 708.43 that concern nuclear safety. These proposed amendments are procedural and would not change the environmental effect of part 820. Accordingly, neither an environmental assessment nor an environmental impact statement is required.
Title II of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531
Section 654 of the Treasury and General Government Appropriations Act, 1999, 5 U.S.C. 601 note, requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family wellbeing. While this proposed rule would apply to individuals who may be members of a family, the rule would 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.
Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this proposed rule and has determined that it would not preempt State law and 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. No further action is required by Executive Order 13132.
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Executive agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. With regard to the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this proposed rule meets the relevant standards of Executive Order 12988.
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 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this notice of proposed rulemaking 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 the Office of Information and Regulatory Affairs (OIRA) a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgates 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 proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. This regulatory action has been determined to not be a significant regulatory action, and it would not have an adverse effect on the supply, distribution, or use of energy. Thus, this action is not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.
The Secretary of Energy has approved the publication of this proposed rule.
Administrative practice and procedure, Enforcement, Government contracts, Nuclear safety, Penalties, Whistleblowing.
For the reasons stated in the preamble, DOE hereby proposes to amend part 820 of chapter III of title 10 of the Code of Federal Regulations as set forth below:
42 U.S.C. 2201; 2282(a); 7191; 28 U.S.C. 2461 note; 50 U.S.C. 2410.
(i) 10 CFR part 830;
(ii) 10 CFR part 835;
(iii) 10 CFR 820.11;
(iv) Compliance Orders issued pursuant to 10 CFR part 820, subpart C; and
(v) 10 CFR 708.43.
(a)
(b)
(c)
(d)
(1) A final agency decision pursuant to 10 CFR part 708;
(2) A final decision or order of the Secretary of Labor pursuant to 29 CFR part 24;
(3) A decision by the Secretary upon a report by the Inspector General;
(4) A decision by a federal or state court.
(e)
(f)
(a)
(b)
a. DOE contractors may not retaliate against any employee because the employee has taken any actions listed in 10 CFR 708.5(a) through(c), including disclosing information, participating in proceedings, or refusing to participate in certain activities. DOE contractor employees may seek relief for allegations of retaliation through one of several mechanisms, including filing a complaint with DOE pursuant to 10 CFR part 708 (part 708), the Department of Labor (DOL) under sec. 211 of the Energy Reorganization Act (sec. 211), implemented in 29 CFR part 24, or the DOE Inspector General (IG).
b. An act of retaliation by a DOE contractor, prohibited by 10 CFR 708.43, that results from a DOE contractor employee's involvement in an activity listed in 10 CFR 708.5(a) through (c), may constitute a violation of a DOE Nuclear Safety Requirement under 10 CFR part 820 if it concerns nuclear safety. To avoid the potential for inconsistency with one of the mechanisms available to an aggrieved DOE contractor employee alleging retaliation referenced in section XIII.a, the Director will not take any action under this part with respect to an alleged violation of 10 CFR 708.43 until a request for relief under one of these mechanisms, if any, has been fully adjudicated, including appeals. With respect to an alleged retaliation, the Director will generally only take action that is consistent with the findings of a final decision of an agency or court. If a final decision finds that retaliation occurred, the Department will consider whether that retaliation constitutes a violation of § 708.43, and if so, whether to take action under part 820. If a final decision finds that no retaliation occurred, the Director will generally not take any action under part 820 with respect to the alleged retaliation absent significant new information that was not available in the prior proceeding.
c. DOE encourages its contractors to cooperate in resolving whistleblower
d. In considering what remedy is appropriate for an act of retaliation concerning nuclear safety, the Director will also consider the egregiousness of the particular case including the level of management involved in the alleged retaliation and the specificity of the acts of retaliation.
e. When the Director undertakes an investigation of an allegation of DOE contractor retaliation against an employee under part 820, the Director will apprise persons interviewed and interested parties that the investigative activity is being taken pursuant to the nuclear safety procedures of part 820 and not pursuant to the procedures of part 708.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to modify Class E airspace designated as an extension to a Class C surface area, and modify Class E airspace extending upward from 700 feet above the surface at Kahului Airport, Kahului, HI. Due to changes to the available instrument flight procedures since the last review and advances in Global Positioning System (GPS) mapping accuracy, the FAA found airspace modifications are necessary to ensure the safety and management of Instrument Flight Rules (IFR) operations at the airport with a minimum amount of airspace restriction.
Comments must be received on or before September 26, 2016.
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.
Tom Clark, Federal Aviation Administration, Operations Support Group, Western Service Center, 1601 Lind Avenue SW., Renton, WA 98057; telephone (425) 203-4511.
The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part, A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would amend Class E airspace at Kahului Airport, Kahului, HI.
Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2014-1068; Airspace Docket No. 14-AWP-12.” The postcard will be date/time stamped and returned to the commenter.
An electronic copy of this document and other recently published rulemaking documents may be accessed and downloaded through the Internet at
You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the
This document proposes to amend FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) Part 71 to modify the Kahului Airport, Kahului, HI, Class E airspace area designated as an extension to a Class C surface area. The current Class E surface area airspace extension to the north is not required and to the south is longer than required to support IFR operations to/from the airport. The proposed Class E surface airspace includes that area within 3 miles each side of the airport 203° bearing extending from the airport 5-mile radius to 7 miles southwest of the airport.
This proposal would also modify the Class E airspace area extending upward from 700 feet above the surface by excluding that area extending beyond 12 miles from the coast, and would slightly expand the airspace northeast of the airport to within 3.6 miles each side of the 038° bearing from the airport extending from the 5-mile radius to 11.7 miles northeast of the airport. The airspace area would otherwise remain the same, except as noted above. The expanded Class E airspace area is necessary to contain IFR arrival
This proposal would also remove reference to the Maui VORTAC from the airspace legal descriptions for the Class E3 airspace area designated as an extension to the Class C surface area, and the Class E5 airspace area extending upward from 700 feet above the surface. Changes to the available instrument flight procedures since the last review, advances in GPS mapping accuracy, and a reliance on precise geographic coordinates to define airport and airspace reference points have made the proposed airspace redesign necessary for the safety and management of Instrument Flight Rules (IFR) operations.
Class E airspace designations are published in paragraphs 6003, and 6005, respectively, of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
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, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.
Airspace, Incorporation by reference, Navigation (air).
Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g), 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from the surface within 3 miles each side of the Kahului Airport 203° bearing extending from the 5-mile radius of the airport to 7 miles southwest of the airport. This Class E airspace area is effective during the specific dates and times established in advance by a Notice to Airmen. The effective date and time will thereafter be continuously published in the Pacific Chart Supplement.
That airspace extending upward from 700 feet above the surface within a 5-mile radius of Kahului Airport, and within 3.6 miles each side of the airport 038° bearing extending from the 5-mile radius of the airport to 11.7 miles northeast of the airport, and within 2 miles each side of the airport 065° bearing extending from the 5-mile radius of the airport to 10 miles northeast of the airport, and within 3 miles each side of the airport 203° bearing extending from the 5-mile radius of the airport to 10.3 miles southwest of the airport, and within the area bounded by the airport 318° bearing clockwise to the airport 013° bearing extending from the 5-mile radius of the airport to 8.5-miles northeast of the airport, excluding that airspace beyond 12 miles from the coast.
Commodity Futures Trading Commission.
Notice of proposed rulemaking.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is proposing to amend certain provisions of its regulations concerning Chief Compliance Officers (“Proposal”). The regulation that is the subject of the Proposal addresses chief compliance officers (“CCOs”) of futures commission merchants (“FCMs”), swap dealers (“SDs”), and major swap participants (“MSPs”) (collectively, “Registrants”). The proposed amendments would: Codify existing no-action relief regarding the timing of when a Registrant must furnish its CCO annual report to the Commission; clarify filing requirements for Registrants located in a jurisdiction for which the Commission has issued a comparability determination; and delegate to the Director of the Division of Swap Dealer and Intermediary Oversight (“DSIO”) authority to grant extensions to the CCO annual report filing deadline.
Comments must be received on or before September 12, 2016.
You may submit comments, identified by RIN 3038-AE49, by any of the following methods:
•
•
•
•
Please submit your comments using only one of these methods.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from
Eileen Flaherty, Director, 202-418-5326,
Section 4s(k)(3) of the Commodity Exchange Act (“CEA”) requires CCOs for SDs and MSPs, in accordance with rules prescribed by the Commission, to prepare and sign an annual report (“CCO Annual Report”) describing, among other things, the SD's or MSP's compliance with the CEA and CFTC regulations.
Regulations 3.3(e) and (f) codify the duty to prepare and furnish to the Commission a CCO Annual Report for all Registrants.
Since the adoption of the 60-day filing requirement, DSIO has continuously provided no-action relief for CCO Annual Reports submitted to the Commission within 90 days of a Registrant's fiscal year-end.
Recently, the U.S. Securities and Exchange Commission (“SEC”) adopted final rules corresponding to Regulation 3.3, and implementing a provision of Title VII of the Dodd-Frank Act the text of which is effectively identical to CEA section 4s(k)(3)(B).
In December 2013, the Commission issued comparability determinations deeming an SD or MSP located in Canada, the European Union, Hong Kong, Japan, or Switzerland (“Substituted Compliance Registrants”) to be in compliance with Regulation 3.3(e) if it complies with the applicable corresponding regulation in its home jurisdiction.
The Commission is proposing to codify the current no-action relief by amending Regulation 3.3(f)(2). The amendments would permit an FCM to furnish its CCO Annual Report to the Commission not more than 30 days after submission of the Form 1-FR-FCM
Regulation 3.3(e) requires a broad and detailed assessment of each Registrant's compliance program over the preceding year as well as a discussion of planned changes and remedial steps to be taken for non-compliance matters. The Commission believes that providing up to 30 days after a Registrant's applicable financial reports are due would provide Registrants an appropriate amount of time to complete the in-depth review and analyses required by Regulation 3.3(e). As a policy matter, the Commission recognizes that the periodic self-evaluation that underlies each CCO Annual Report is a critical step in promoting an active and robust compliance culture within firms.
In codifying the relief provided in CFTC Staff Letter No. 15-15, the Commission is clarifying that the statutory requirement for an SD or MSP's CCO Annual Report to “accompany each appropriate financial report” allows for the CCO Annual Report to be furnished to the Commission not more than 30 days after the submission of a Registrant's annual financial report.
The Commission is also proposing to amend Regulation 3.3(f) to address the timing of the filing requirement for Comparable Annual Reports. If the requirements of the Substituted Compliance Registrant's home jurisdiction identify a specific date by which the Comparable Annual Reports must be completed, then the Commission is proposing that Comparable Annual Reports may be furnished to the Commission electronically up to 15 days after the date on which the Comparable Annual Report must be completed.
Pursuant to Regulation 3.3(f)(5), Registrants may request from the Commission an extension of time to furnish their CCO Annual Reports if the failure to timely furnish the report could not be avoided absent “unreasonable effort or expense.” The rule provides the Commission with discretion in granting such extensions. To expedite review and consideration of requests for extensions, the Commission is proposing to delegate to the Director of DSIO, or such other employee(s) that the Director may designate, the authority to grant extensions of time subject to the same standard set forth in Regulation 3.3(f)(5). The Commission notes that the exercise of such delegated authority would need to be consistent with Regulation 3.3(f)(5) and therefore would be limited to unique facts and circumstances that clearly demonstrate that the inability to timely furnish the report to the Commission could not have been eliminated absent unreasonable effort or expense. The Commission believes that such delegation is prudent given that the decision to provide an extension requires consideration of specific facts and circumstances and often this consideration needs to occur within a relatively short period of time. As is the case with existing delegations to staff, the Commission would continue to reserve the right to perform the functions described in Regulation 3.3(f)(5) itself at any time.
The Commission requests comment on the appropriateness of the proposed delegation and whether additional procedural detail is necessary.
The Commission seeks comments regarding the following matters:
• Given the current filing requirements for the Form 1-FR-FCM and FOCUS Reports, and the anticipated
• Does codifying the relief granted in CFTC Staff Letter No. 15-15 sufficiently address Registrants' concerns?
• Should the Commission provide any further clarification of the requirements of Regulation 3.3(f) as they apply to entities located in jurisdictions for which comparability determinations have been issued?
The Regulatory Flexibility Act
The Paperwork Reduction Act of 1995 (“PRA”)
As discussed above, the Commission is proposing amendments to the filing requirements for CCO Annual Reports in Regulation 3.3 that would: (1) Increase the amount of time registrants have to file their CCO Annual Reports with the Commission; and (2) clarify the filing requirements for Comparable Annual Reports. The baseline for this cost and benefit consideration is existing Regulation 3.3. Although CFTC Staff Letter No. 15-15, as discussed above, currently offers no-action relief that is substantially similar to the relief that the proposed amendments would grant Registrants, as a no-action letter, it only represents the position of the issuing Division or Office and cannot bind the Commission or other Commission staff.
The Commission received no comments during the rulemaking process for Regulation 3.3 regarding costs associated with the timing of the filing deadline for the CCO Annual Report. The proposed amendment does not change the report contents or require any additional actions to be taken by Registrants. The additional 30 days (or up to 15 days after the date on which a Comparable Annual Report must be completed under applicable home jurisdiction standards that allow more time) provided by the proposal lengthens the time before senior management or the board of the Registrants and the Commission may receive the CCO Annual Reports. The additional time to furnish the reports should not materially impact regulatory oversight given that the purpose of the reports is to provide a status update for the Registrant's compliance activities over the course of the preceding fiscal year and planned changes for the coming year. The reports generally do not serve to address crisis situations for which immediacy is critical. Therefore, the additional time allowed will not materially impact the usefulness of the information in the reports.
The Commission believes that the proposal would provide relief for Registrants from time pressures in preparing and filing their CCO Annual Reports. The additional time provided will allow Registrants to more carefully complete their internal processes used to develop the broad variety of information needed for the reports resulting in more accurate and complete reports. The Commission invites comment regarding the nature and extent of these and any other benefits that could result from adoption of the proposal—including benefits to other market participants, the market itself, or the general public—and, to the extent they can be quantified, monetary and other numerical estimates thereof.
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.
The Commission recognizes that there are trade-offs between reducing regulatory burdens and ensuring that the Commission has sufficient, timely information to fulfill its regulatory mission. The proposed amendments to Regulation 3.3 are intended to reduce some of the regulatory burdens on Registrants. While the amendment will delay the time by which the Commission will receive the CCO Annual Reports, the delay is relatively short given that the information in the reports looks back over the entire year-long reporting period and identifies planned improvements for the coming year. Accordingly, the Commission preliminarily believes that the short delay will not affect the protection of market participants and the public.
The Commission believes that the proposed amendments to Regulation 3.3 could improve allocational efficiency for participants in the market by reducing the burden of preparing the CCO Annual Report in a shorter time-frame, thereby allowing them to allocate compliance resources more efficiently over the report preparation period. The Commission preliminarily believes that the proposed amendments to Regulation 3.3 will not have any market efficiency, competitiveness, or market integrity impacts because the reports address internal compliance programs of each Registrant and are not publicly available.
The Commission preliminarily believes that the proposed amendments to Regulation 3.3 would not impact on price discovery. Given the fact that the proposed amendments affect only the timing of when the CCO Annual Reports are filed with the Commission and the CCO Annual Reports generally would not contain trade information or be available to the public, the proposed amendments would not affect price discovery.
The Commission preliminarily believes that the proposed amendments would not have a meaningful effect on the risk management practices of Registrants. While the CCO Annual Reports may discuss certain risk management aspects related to the compliance programs of the Registrants, the proposal would only amend the timing of delivery of the reports to the Commission, not the contents of the reports. As described above under subsection 4.a, the short delay in delivery of the reports provided for by the proposal is not significant given the nature of the information included in the report and allowing additional time to prepare the CCO Annual Reports might allow the Registrants to prepare better reports that more effectively address the information contained therein.
The Commission has not identified any other public interest considerations for this rulemaking.
The Commission invites comment on all aspects of its preliminary consideration of the costs and benefits associated with the proposal and the five factors the Commission is required to consider under CEA section 15(a). In addressing these areas and any other aspect of the Commission's preliminary cost-benefit considerations, the Commission encourages commenters to submit any data or other information they may have quantifying and/or qualifying the costs and benefits of the proposal.
Administrative practice and procedure, Brokers, Commodity futures, Major swap participants, Reporting and recordkeeping requirements, Swap dealers.
For the reasons stated in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR part 3 as follows:
5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b-1, 6c, 6d, 6e, 6f, 6g, 6h, 6
The revision and addition to read as follows:
(f) * * *
(2)(i) Except as provided in paragraph (f)(2)(ii) of this section, the annual report shall be furnished electronically to the Commission not more than 30 days after the submission of Form 1-FR-FCM, as required under § 1.10(b)(1)(ii) of this chapter, the Financial and Operational Combined Uniform Single Report, as required under § 1.10(h) of this chapter, or the financial condition report, as required under section 4s(f) of the Act, as applicable. Until such time as the Commission adopts and implements a regulation establishing the time for filing the financial condition report, a swap dealer or major swap participant shall furnish the annual report electronically to the Commission not more than 90 days after the end of its fiscal year.
(ii) The annual report of a swap dealer or major swap participant that is eligible to comply with a substituted compliance regime for paragraph (e) of this section pursuant to a comparability determination of the Commission may be furnished to the Commission electronically up to 15 days after the date on which the comparable annual report must be completed under the requirements of the applicable substituted compliance regime. If the substituted compliance regime does not specify a date by which the comparable annual report must be completed, then the annual report shall be furnished to the Commission by the date specified in paragraph (f)(2)(i) of this section.
(h)
The following appendix 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.
Bureau of Safety and Environmental Enforcement, Department of the Interior.
Proposed rule.
The Bureau of Safety and Environmental Enforcement (BSEE) proposes to amend the regulations requiring lessees and owners of operating rights to submit summaries of actual decommissioning expenditures incurred for certain decommissioning activities related to oil and gas and sulfur operations on the Outer Continental Shelf (OCS). The proposed rule would expand the scope of the current regulations to require lessees, owners of operating rights, and right-of-way (ROW) holders to submit summaries of actual expenditures incurred for pipeline decommissioning activities.
Submit comments by September 12, 2016. BSEE may not fully consider comments received after this date. You may submit comments to the Office of Management and Budget (OMB) on the information collection burden in this proposed rule by September 12, 2016.
You may submit comments on this proposed rulemaking by any of the following methods. Please use the Regulation Identifier Number (RIN) 1014-AA32 as an identifier in your message. BSEE may post all submitted comments on a public Web site.
1. Submit comments electronically via the Federal eRulemaking Portal:
2. Mail or hand-carry comments to the Department of the Interior (DOI); Bureau of Safety and Environmental Enforcement; Attention: Regulations and Standards Branch; 45600 Woodland Road, Sterling, VA 20166, VAE-ORP. Please reference “Decommissioning Costs for Pipelines, 1014-AA32” in your comments and include your name and return address.
3. Comments on the information collection contained in this proposed rule should be submitted separately from those on the substance of the proposed rule. Send comments on the information collection burden in this proposed rule to: OMB, Interior Desk Officer 1014-AA32, 202-395-5806 (fax); or email:
Betty Cox, Regulatory Analyst, Regulations and Standards Branch,
BSEE promotes safety, protects the environment, and conserves natural resources through vigorous regulatory oversight and enforcement of certain activities on the OCS. BSEE derives its authority primarily from the Outer Continental Shelf Lands Act (OCSLA), 43 U.S.C. 1331-1356a. Congress enacted OCSLA in 1953, codifying Federal control over the OCS and authorizing the Secretary of the Interior (Secretary) to regulate oil and natural gas exploration, development, and production operations on the OCS. The Secretary has authorized BSEE to perform certain of these functions, including overseeing decommissioning. (
BSEE encourages you to participate in this proposed rulemaking by submitting written comments, as discussed in the
Before including your address, phone number, email address, or other personal identifying information in your comment on this proposed rule,
Among its responsibilities, BSEE regulates certain types of oil and gas pipelines used on the OCS. (
Pipelines regulated by BSEE generally fall within two categories: (1) “lease term” pipelines (
As of August 1, 2016, BSEE regulates 4,842 active pipeline segments
BSEE's requirements for decommissioning a pipeline are found at §§ 250.1750-250.1754. Pursuant to § 250.1751, requirements for decommissioning a pipeline in place include: pigging (to remove any residual hydrocarbons from the pipeline), unless the Regional Supervisor determines that pigging is not practical; flushing and filling the pipeline with seawater; cutting and plugging the ends of the pipeline; and burying the ends at least 3 feet below the seafloor or covering the ends with protective concrete mats, if required by the Regional Supervisor. Section 250.1751(g) also requires removal of all valves and other fittings that could unduly interfere with other uses of the OCS.
In addition, under § 250.1754, BSEE has the authority to require that lessees, owners of operating rights, and ROW holders remove pipelines previously decommissioned in place if and when the Regional Supervisor determines that the pipeline is an obstruction.
BSEE's requirements for decommissioning by removing all or part of a pipeline are found at § 250.1752 and include, in part, pigging and flushing the pipeline (unless the Regional Supervisor determines that pigging is not practical) before removal.
In 2009, BSEE's predecessor agency, the Minerals Management Service (MMS), proposed new reporting requirements related to lease term pipelines when MMS approves a lease assignment. (
In a final rule published on December 4, 2015, BSEE amended its regulations to require lessees and owners of operating rights to submit summaries of actual decommissioning expenditures for certain required decommissioning activities within 120 days after completion of each such activity. (
Effective July 28, 2016, BSEE's Well Control final rule revised paragraph (g) in § 250.1704, added a new paragraph (h), and redesignated existing paragraphs (h) and (i) as paragraphs (i) and (j), respectively. (
On April 27, 2016, BSEE issued a Notice to Lessees and Operators (NTL), No. 2016-N03,
BSEE did not include reporting of expenditures for pipeline decommissioning in the December 2015 final rule because the 2009 proposed rule did not expressly refer to pipeline decommissioning expenditures. BSEE has determined, however, that accurate information about expenditures incurred for pipeline decommissioning activities is needed to better estimate future decommissioning costs for those activities.
As BSEE explained in the December 2015 final rule, with regard to expenditures for other types of decommissioning activities under § 250.1704(i), summaries of actual decommissioning expenditures will help BSEE better estimate future decommissioning costs. (
Accordingly, BSEE proposes to expand the scope of § 250.1704(i) to require that lessees, owners of operating rights, and pipeline ROW holders submit certified summaries of actual expenditures for decommissioning of pipelines.
Executive Order (E.O.) 12866 provides that OMB, Office of Information and Regulatory Affairs (OIRA), will review all significant rules. BSEE has determined that this proposed rule would not be a significant regulatory action as defined by section 3(f) of E.O. 12866 because:
Accordingly, BSEE has not prepared an economic analysis beyond the analysis required under the Paperwork Reduction Act, and OIRA has not reviewed this proposed rule.
E.O. 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the Nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. E.O. 13563 directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. It also emphasizes that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. BSEE developed this proposed rule in a manner consistent with these requirements.
BSEE certifies that this proposed rule would not have a significant economic effect on a substantial number of small entities under the RFA (5 U.S.C. 601
This proposed rule could affect some additional companies (
However, the proposed rule would not impose significant economic impacts on the potentially affected small entities. The proposed requirement to submit pipeline decommissioning cost summaries would not result in significant additional costs or burdens for any affected entity. As indicated in the Paperwork Reduction Act section of this document, the annual burden of the proposed rule is estimated to be only 500 hours in total for all affected entities (whether or not small) to prepare and submit their pipeline decommissioning summaries. Accordingly, since the changes reflected in the proposed rule would not have a significant economic effect on a substantial number of small entities, the RFA does not require BSEE to prepare a regulatory flexibility analysis for this proposed rule.
This proposed rule is not a major rule under the SBREFA (5 U.S.C. 804(2)). This rule would not:
Your comments are important. The Small Business and Agriculture Regulatory Enforcement Ombudsman and 10 Regional Fairness Boards were established to receive comments from small businesses about Federal agency enforcement actions. The Ombudsman will annually evaluate the enforcement activities and rate each agency's responsiveness to small business. If you wish to comment on the actions of BSEE, call 1-888-734-3247. You may comment to the Small Business Administration (SBA) without fear of retaliation. Allegations of discrimination/retaliation filed with the SBA will be investigated for appropriate action.
This proposed rule would not impose an unfunded mandate on State, Tribal, or local governments or the private sector of more than $100 million per year. The proposed rule also would not have a significant or unique effect on State, Tribal, or local governments or the private sector. Thus, a statement containing the information required by
Under the criteria in E.O. 12630, this proposed rule would not effect a taking or otherwise have takings implications. This proposed rule is not a governmental action capable of interference with constitutionally protected property rights. Therefore, a Takings Implication Assessment is not required.
Under the criteria in E.O. 13132, this proposed rule would not have federalism implications. This proposed rule would not have a substantial direct effect on the States or the relationship between the Federal and State governments. To the extent that State and local governments have a role in OCS activities, this proposed rule would not affect that role. Accordingly, a federalism summary impact statement is not required.
This proposed rule complies with the requirements of E.O. 12988,
We have evaluated this proposed rule under the Department's tribal consultation policy and under the criteria in E.O. 13175 and have determined that it would have no substantial direct effects on federally recognized Indian tribes. As a result, consultation under the Department's tribal consultation policy is not required.
This proposed rule contains an information collection (IC) that will be submitted to the OMB for review and approval under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The title of the collection of information for this proposed rule is 30 CFR part 250, subpart Q,
Potential respondents comprise Federal OCS oil, gas, and sulfur lessees, owners of operating rights, and pipeline ROW holders. Responses to this collection are mandatory. The frequency of response is on occasion. The IC does not include questions of a sensitive nature. BSEE will protect confidential commercial and proprietary information according to FOIA (5 U.S.C. 552) and its implementing regulations (43 CFR part 2), and 30 CFR 250.197 (
Once the requirements of this proposed rulemaking have been codified, BSEE will consolidate these additional burden hours into the primary collection for 30 CFR part 250, subpart Q, under OMB Control Number 1014-0010 (expiration 10/31/16; 29,437 burden hours and $2,152,644 non-hour cost burdens). There are no non-hour cost burdens associated with this proposed rulemaking. The following table is a breakdown of the burden estimate:
An agency may not conduct or sponsor and you are not required to respond to, a collection of information unless it displays a currently valid OMB control number.
This proposed rule meets the criteria set forth in 516 Departmental Manual (DM) 15.4C(1) for a categorical exclusion because it involves modification of existing regulations, the impacts of which would be limited to administrative or economic effects with minimal environmental impacts.
We have also analyzed this proposed rule to determine if it meets any of the extraordinary circumstances set forth in 43 CFR 46.215 that would require an environmental assessment or an environmental impact statement for actions otherwise eligible for a categorical exclusion. We have concluded that this proposed rule would not meet any of the criteria for extraordinary circumstances.
In developing this proposed rule, we did not conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (44 U.S.C. 3516
Public Law 106-554, app. C § 515, 114 Stat. 2763, 2763A-153-154).
This proposed rule would not be a significant energy action under E.O. 13211 because:
We are required by E.O. 12866 and E.O. 12988, and by the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must:
If you feel that we have not met these requirements, send us comments by one of the methods listed in the
Administrative practice and procedure, Continental Shelf, Environmental impact statements, Environmental protection, Government contracts, Investigations, Oil and gas exploration, Penalties, Reporting and recordkeeping requirements, Sulfur.
For the reasons stated in the preamble, BSEE proposes to amend 30 CFR part 250 as follows:
30 U.S.C. 1751, 31 U.S.C. 9701, 33 U.S.C. 1321(j)(1)(C), 43 U.S.C. 1334.
Department of Veterans Affairs.
Proposed rule.
The Department of Veterans Affairs (VA) proposes to amend the portion of the VA Schedule for Rating Disabilities (VASRD or Rating Schedule) that addresses skin conditions. The purpose of these changes is to incorporate medical advances that have occurred since the last review, update current medical terminology, and provide clear evaluation criteria. The proposed rule reflects advances in medical knowledge, recommendations from the Skin Disorders Work Group, which is comprised of subject matter experts from both the Veterans Benefits Administration and the Veterans Health Administration, and comments from experts and the public gathered as part of a public forum. The public forum, focusing on revisions to the skin conditions section of the VASRD, was held in January 2012.
Written comments may be submitted through
Gary Reynolds, M.D., Regulations Staff (211C), Compensation Service, Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-9700. (This is not a toll-free number.)
The National Defense Authorization Act For Fiscal Year 2004, sec. 1501-07, Public Law 108-136, 117 Stat. 1392, established the Veterans' Disability Benefits Commission (Commission). Section 1502 of Public Law 108-136 mandated the Commission to study ways to improve the disability compensation system for disabled military veterans. The Commission consulted with the Institute of Medicine (IOM) to review the medical aspects of the current disability compensation policies for veterans. In 2007, the IOM released its report titled, “A 21st Century System for Evaluating Veterans for Disability Benefits.”
The IOM Report was notable in several respects. The IOM observed, in part, that the VASRD was inadequate at times because it contained obsolete information and did not sufficiently integrate current and accepted diagnostic procedures. In addition, the IOM observed that the current body system organization of the VASRD does not reflect current knowledge of the relationships between conditions and comorbidities. Institute of Medicine, Committee on Medical Evaluation of Veterans for Disability Compensation, “A 21st Century System for Evaluating Veterans for Disability Benefits,” 113 (Michael McGeary et al. eds. 2007).
Following release of the IOM report, VA created a Skin Disorders Work Group (Work Group). The goals adopted by the Work Group were to: 1) improve and update the criteria that VA uses to assign levels of disability after service connection is granted; 2) improve the level of fairness in adjudication of benefits related to service connected disabilities of Veterans; and 3) invite public participation. The Work Group was led by co-chairs from the Veterans Health Administration (VHA) and Veterans Benefits Administration (VBA). The workgroup was comprised of subject matter experts (SMEs) from within VA, DoD, and medical academia. In addition, members from several Veterans Service Organizations (VSOs) were invited to participate as representatives from the public. The Work Group held a public forum in New York City during January 2012, where several SMEs gave presentations focused on their particular area(s) of expertise.
After the public forum, the Work Group met periodically to continue the revision efforts. Participants from VBA, VHA, medical academia, and VSO representatives continued work within their areas of expertise. The regulation drafting phase began in September 2013, and continues through the publication of this proposed rule. The rule VA proposes is consistent with updating and improving criteria by using validated severity ratings specific to the skin for each of the disability rating levels. As discussed in more detail below, the newly adopted classifications are derived from current medical practice.
Section 4.118 currently lists 30 diagnostic codes (DCs) encompassing conditions involving injury or disease of the skin. VA proposes to revise these codes, through addition, removal, or other revisions, to reflect current medical science, terminology, and functional impairment.
VA would delete the current introductory paragraph to § 4.118. VA added the current paragraph to explain the applicability of the 2008 amendments to § 4.118, DCs 7800, 7801, 7802, 7804, and 7805. This rulemaking would make further amendments and would render outdated the current introductory paragraph. VA would add an applicability date paragraph to the dates section to explain this rulemaking's applicability. The existing provisions in § 4.118 concerning review of ratings and effective dates merely reflect generally applicable principles that need not be restated in the rating schedule.
VA would add a new introductory paragraph to state that, for the purposes of § 4.118, systemic therapy is treatment that is administered through any route (orally, injection, suppository, intranasally) other than the skin, and topical therapy is treatment that is administered through the skin. On March 1, 2016, the United States Court
VA proposes a General Rating Formula to evaluate several of the skin disorders: dermatitis or eczema (DC 7806), discoid lupus erythematosus (DC 7809), dermatophytosis (DC 7813), bullous disorders (DC 7815), psoriasis (DC 7816), infections of the skin not listed elsewhere (DC 7820), cutaneous manifestations of collagen-vascular diseases not listed elsewhere (DC 7821), papulosquamous disorders not listed elsewhere (DC 7822), and diseases of keratinization (DC 7824). Individually, each of the above referenced conditions involves similar superficial components of the skin. The severity of impairment for each condition increases as more skin is involved. All of the conditions have treatments which are applied directly to the skin, as well as taken systemically (
Similar to how these DCs are currently evaluated, this General Rating Formula accounts for percentages of areas affected, both of the entire body and exposed areas, as well as the level of treatment required. The percentage evaluations assigned under the General Rating Formula mirror the percentage evaluations currently assigned for these DCs. Specifically, VA proposes a 60 percent evaluation when at least one of the following is present: More than 40 percent of the entire body or more than 40 percent of exposed areas affected, or; Constant or near-constant systemic therapy including, but not limited to, corticosteroids, phototherapy, retinoids, biologics, photochemotherapy, PUVA or other immunosuppressive drugs required per 12-month period. VA proposes a 30 percent evaluation when at least one of the following is present: 20 to 40 percent of the entire body or 20 to 40 percent of exposed areas affected, or; Systemic therapy including, but not limited to, corticosteroids, phototherapy, retinoids, biologics, photochemotherapy, PUVA or other immunosuppressive drugs required for a total duration of six weeks or more, but not constantly, per 12-month period. VA proposes a 10 percent evaluation when at least one of the following is present: At least 5 percent, but less than 20 percent of the entire body affected, or; At least 5 percent, but less than 20 percent of exposed areas affected, or; Intermittent systemic therapy including, but not limited to, corticosteroids, phototherapy, retinoids, biologics, photochemotherapy, PUVA or other immunosuppressive drugs required for a total duration of less than six weeks per 12-month period. VA proposes a zero percent evaluation when no more than topical therapy is required per 12-month period and at least one of the following is present: Less than 5 percent of the entire body affected, or; Less than 5 percent of exposed areas affected.
Additionally, VA proposes to maintain the current rating instruction for DCs 7806, 7809, 7813-7816, and 7820-7822 which allows for evaluation under disfigurement of the head, face, or neck (DC 7800) or scars (DCs 7801, 7802, 7804, or 7805), depending upon the predominant disability, in lieu of using the General Rating Formula. This rating instruction does not apply to current or new DC 7824, and therefore, VA proposes to add a clarifying sentence to that effect to this instruction.
As for the expanded list of systemic therapies identified in the General Rating Formula, VA notes that the current VASRD lists only “corticosteroids or other immunosuppressive drugs” as examples of systemic therapy. However, since the last review and update of the schedule of disability ratings for the skin, a number of new systemic therapies have surfaced that are used to treat the conditions covered under the General Rating Formula. These include phototherapy, retinoids, biologics, photochemotherapy, and PUVA (
In addition to creating the General Rating Formula and applying it to DCs 7806, 7809, 7813, 7815, 7816, 7820, 7821, 7822, and 7824, VA proposes to amend certain individual DCs within § 4.118. The particular changes affecting each DC immediately follow.
Each of these DCs pertains to types of scars which are, in part, characterized as “nonlinear.” To broaden application of these DCs, VA proposes to remove the reference to “nonlinear” from each DC title. In addition, VA proposes to include a more descriptive reference to whether the scar involves underlying soft tissue damage in place of the current terms “superficial” and “deep”—to assist rating personnel. This latter proposed change eliminates the need for current note (1) in each DC, as well as the last sentence in note (2) in each DC; therefore, VA proposes removal of those items.
Currently, if a scar runs in two or more separate areas of the body, note (2) for DCs 7801 and 7802 is intended to allow for the assignment of a separate evaluation for each affected zone and then to combine those evaluations under 38 CFR 4.25. See 73 FR 54708, 54709, Sept. 23, 2008. Although VA has been applying note (2) in this way, VA finds that the note could be written more clearly. Therefore, VA proposes to rewrite note (2) in a clearer and more concise manner and to add a new note (1) to be placed under both DCs 7801 and 7802 that would define the zones of the body. Specifically, note (1) would define the six zones of the body as each extremity, the anterior trunk, and the posterior trunk. VA also proposes to move the statement that the midaxillary line is what divides the anterior and posterior trunk from note (2) to note (1).
Additionally, VA proposes to add language to note (2) to allow for an alternative evaluation. Specifically, VA proposes to allow for a single evaluation
This DC was deleted in October 2008. See 73 FR at 54710. However, several criteria reference this code. VA proposes to delete any and all references to DC 7803.
VA proposes to remove the reference to “linear” scars from DC 7805. The result of this change is that this DC applies to both linear and non-linear scars. As discussed above, VA proposes to remove the reference to “nonlinear” scars from DCs 7801 and 7802, expanding application of these codes to linear scars. Thus, the reference to linear scars should be removed from DC 7805 to avoid confusion by rating personnel.
VA proposes to retitle both DC 7809 and DC 7821 using current medical terminology. Current DC 7809 refers to “Discoid lupus erythematosus or subacute cutaneous lupus erythematosus.” VA proposes to remove the listed condition “subacute cutaneous lupus erythematosus” from DC 7809 and add it to DC 7821. The proposed DC 7809 will read as “Discoid lupus erythematosus. Current DC 7809 also provides that a rating under DC 7809 should not be combined with a rating under DC 6350. In order to maintain this provision, we would add a note to DC 7809. The rationale for transferring subacute cutaneous lupus erythematosus from DC 7809 to DC 7821 is that subacute cutaneous lupus erythematosus is a distinctly different condition which is more analogous to collagen-vascular diseases not listed elsewhere (
Current DC 7813 describes a number of variations of dermatophytosis, including tinea corporis, tinea capitis, tinea pedis, tinea barbae, tinea unguium, and tinea cruris. To update this DC title with current medical terminology, VA proposes to add “tinea versicolor” to this list as well as a parenthetical for tinea unguium—onychomycosis as these are also common variations of dermatophytosis seen in the veteran population. Id. at 1251-84. As previously discussed above, VA intends to rate conditions covered by DC 7813 under the General Rating Formula, which provides for similar evaluation criteria as are currently in effect.
Current medical practice indicates conditions rated under DC 7815 (bullous disorders) and DC 7816 (psoriasis) can affect additional areas beyond the skin (bullous disorders can affect mucosa of the ocular, oral, gastrointestinal, respiratory, and genitourinary tracts; psoriasis can affect oral mucosa, nails and the joints). Id. at 142, 148-55, 472-73, 482, and 487-89. Therefore, in addition to rating these conditions under the General Rating Formula, VA proposes a note for each of these DCs. The note to DC 7815 would instruct the rater to rate complications and residuals of mucosal involvement (ocular, oral, gastrointestinal, respiratory, and genitourinary) separately under the appropriate diagnostic code. The note to DC 7816 would instruct the rater to rate complications such as psoriatic arthritis and other clinical manifestations (oral mucosa, nails) under the appropriate diagnostic code.
VA proposes to retitle DC 7817, currently “Exfoliative dermatitis (erythroderma),” as “Erythroderma.” Erythroderma is the nomenclature being used in current medical practice. Id. at 171-81. In addition, it proposes to update the rating criteria to reflect up-to-date medical understanding of this condition. VA would also slightly reorganize the presentation of criteria for ease of field use. Currently, this condition is evaluated based upon level of involvement of the skin, presence of systemic manifestations, and the level of treatment required. VA does not propose any changes to the level of involvement of the skin, presence of systemic manifestations, or the level of treatment required. However, similar to the changes proposed in the General Rating Formula, the new rating criteria for DC 7817 would reflect additional systemic treatments appropriate for this condition. Currently, DC 7817 includes corticosteroids, immunosuppressive retinoids, PUVA (psoralen with long-wave ultraviolet-A light) or UVB (ultraviolet-B light) treatments, or electron beam therapy. VA proposes to add biologics to this list as several biological therapies have been approved for treatment of skin disorders in recent years. See M. Viguier, et al., “Efficacy and Safety of Biologics in Erythrodermic Psoriasis,” The British J. of Dermatology 167(2): 417-23 (2012). VA proposes that inclusion of this type of systemic therapy in the rating criteria would ensure consistent and accurate evaluations.
In addition to expanding the list of systemic therapies listed, VA proposes to include a criterion which considers an individual's level of response to treatment for both the 60 percent and 100 percent evaluations. Under the new criteria, VA would provide a 100 percent rating when the veteran is not currently undergoing treatment due to a documented history of treatment failure with 2 or more treatment regimens and a 60 percent rating when the veteran is not currently undergoing treatment due to a documented history of treatment failure with 1 treatment regimen. Historically, there have been a significant number of veterans with this disorder who fail to respond to treatment (frequently, the condition is related to an underlying malignancy that is not treated successfully, hence the treatment failure).
To assist rating personnel in applying the new rating criteria, VA proposes to add a note to DC 7817 which defines “treatment failure.” Modeled after a formula developed to study the efficacy of treatment in erythrodermic cutaneous T-cell lymphoma, VA proposes to define “treatment failure” as either disease progression or less than a 25 percent reduction in the extent and severity of disease after four weeks of prescribed therapy, as documented by medical records. See Zackheim HS, Kashani-Sabet M, et al., “Low-dose methotrexate to treat erythrodermic cutaneous T-cell lymphoma: Results in twenty-nine patients,” J. Am. Acad. of Dermatology 34(4):626-31 (1996); see also Bolognia, supra at 181 (erythroderma usually improves within two to six weeks of initiation).
VA proposes to update the description in this code to reflect current medical practice. Specifically, the condition mycosis fungoides is added to the list of papulosquamous disorders. See Bolognia, 2019-2027. Currently, mycosis fungoides is not listed in the rating schedule and has caused confusion among VA rating specialists on how to account for this condition, leaving VA rating specialists to invoke § 4.20, analogous ratings. This approach could lead to inconsistent ratings for this condition. Therefore, adding mycosis fungoides under DC 7822 would eliminate the need for an analogous rating and provide a consistent basis for evaluating this condition.
Chronic urticaria, also known as chronic hives, is defined as continuous urticaria at least twice per week off treatment for a period of six weeks or more. See Bolognia at 295. It can be caused by a number of mechanisms (physical stimulus, or touch; autoimmune causes; pseudoallergenic, infection-related; vasculitis-related; and, idiopathic, or unknown). Id. at 296. Chronic urticaria is currently evaluated based on the frequency of “episodes” or “debilitating episodes” and type of treatment. Regarding “episodes” or “debilitating episodes,” VA believes this term is non-specific and not helpful to rating personnel in evaluating this condition. Therefore, VA proposes to replace this term with “documented urticarial attacks.” Furthermore, VA proposes to revise all of the rating criteria to indicate both a minimum specified frequency of documented urticarial attacks within a 12 month period and the type of treatment required. VA proposes this approach to the criteria to introduce greater objectivity within the evaluation criteria based on current medical practice. VA acknowledges that an urticarial attack generally results in debilitation; however, this change makes it clear that the acute period of debilitation must be related to the service-connected skin disease itself rather than another condition.
Regarding the current 30 percent and 60 percent criteria, VA proposes to include examples of common “immunosuppressive therapy,” to include, but not limited to, cyclosporine or steroids. See Bolognia, supra at 300-05. For clarity and consistency, VA would replace the phrase occurring “at least four times during the past 12-month period” in the 30 and 60 percent criteria with “four or more times per 12-month period.”
VA also proposes to add two new sets of criteria under the 10 percent evaluation; the revised criteria would allow a 10 percent evaluation to be assigned in more circumstances based upon an individual's level of response to treatment. A 10 percent evaluation would be assigned if there are recurrent documented urticarial attacks occurring one to three times during the past 12-month period and intermittent systemic immunosuppressive therapy is required for control. VA would also assign a 10 percent evaluation if there are recurrent documented urticarial attacks occurring four or more times during the past 12-month period and treatment with antihistamines or sympathomimetics (including, but not limited to an epipen or intramuscular epinephrine) is required or, if there are no recurrent documented urticarial attacks, but continuous systemic immunosuppressive therapy medication is required for control (including, but not limited to, cyclosporine, steroids). VA also proposes to reorganize how the various criteria are presented for ease of field use.
VA believes that a 10 percent evaluation is appropriate in each of these cases because the treatment measures may impose slight disability upon the individual. For example, long term treatment with antihistamines can result in drowsiness (even the non-sedating kinds) and autonomic nervous system dysfunction (
Similar to DC 7825, VA proposes to update the criteria under current DC 7826, “Vasculitis, primary cutaneous.” First, VA proposes to replace the term “debilitating episodes,” which is a non-specific term not defined in the VASRD with the term “documented vasculitic episodes.” This change in terminology is more consistent with current medical practice. Next, VA proposes to modify the criteria to specify the minimum frequency of documented vasculitic episodes, the type of treatment required and the effectiveness of that treatment. In turn, increased disability would be reflected in objective terms (
For the 60 percent level of compensation, VA proposes to remove the phrase “occurring at least four times during the past 12 month period” and replace the term “recurrent” with “persistent” and the term “despite” with the phrase “refractory to.” The phrase removal and term replacements are to more clearly differentiate between the 60 percent and 30 percent compensation levels. For the 30 percent evaluation, VA proposes to replace the phrase “. . . at least four times during the past 12-month period . . .” with the phrase “four or more times per 12-month period” to clearly delineate the minimal frequency requirement and ease of field use. For the 10 percent evaluation, VA proposes to replace the phrase “one to three times during the past 12-month period” with “one to three times per 12-month period” for ease of field use. Additionally for the 10 percent evaluation, VA proposes to add that the absence of recurrent documented vasculitic episodes but requiring continuous systemic medication for control would also warrant compensation. This proposed revision allows a 10 percent evaluation to be assigned in more circumstances, namely, when the disorder is controlled through the use of systemic medications, but there may be slight disabling effects as a result of such medication. See Ebadi, supra; see also
VA proposes to revise and update the criteria for DC 7827, “Erythema multiforme; Toxic epidermal necrolysis.” First, each evaluation level would reference the presence of mucosal (leading to impaired mastication, that is, chewing), palmar (leading to impaired handgrip), or plantar involvement (leading to impaired ambulation, that is, walking). See Bolognia, supra at 320, 322, and 326-32. The mucosal, palmar, and/or plantar findings would be restricted to the past 12-month period for all evaluation levels. For clarity and consistency, VA would replace the phrase occurring “at least four times during the past 12-month period” in the 30 and 60 percent criteria with “four or more times per 12-month period.” For a 60 percent evaluation, recurrent mucosal, palmar, or plantar involvement impairing mastication, use of hands, or ambulation occurring four or more times per 12-month period despite ongoing immunosuppresive therapy would be required. For a 30 percent evaluation, recurrent mucosal, palmar, or plantar involvement not impairing mastication, use of hands, or ambulation occurring four or more times per 12-month period, and requiring intermittent systemic therapy would be required.
A 10 percent evaluation would be assigned for the following circumstances: (1) One to three episodes of mucosal, palmar, or plantar involvement not impairing mastication, use of hands, or ambulation occurring per 12-month period AND requiring intermittent systemic therapy, or (2) without recurrent episodes, but requiring continuous systemic medication for control. This allows a 10 percent evaluation to be assigned in more circumstances, based upon the level of response to treatment. Lastly, VA proposes to add a note at the end of DC 7827 defining, for the purposes of DC 7827 only, that systemic therapy may consist of one or more of the following treatment agents: Immunosuppressives, antihistamines, or sympathomimetics. See Ebadi, supra; see also Victor Cohen, PharmD, et al., “Toxic Epidermal Necrolysis Treatment & Management,” MEDSCAPE REFERENCE (Mar. 3, 2014),
VA proposes to update DC 7828, “Acne,” by removing the reference to “superficial cysts” in the zero percent rating criteria. This update is proposed based upon current medical terminology as the term “superficial cysts” is no longer used in the medical community. See Bolognia, supra at 547-50 and 555-58.
Current DC 7829 instructs rating personnel to evaluate chloracne based, in part, on either the presence of deep or superficial acne. The current evaluation criteria instructs that either a 10 or 30 percent evaluation should be assigned depending upon whether more or less than 40 percent of the face and neck are involved; VA does not propose changes to these criteria. However, a 10 percent evaluation is also assigned when there is “deep acne other than on the face and neck.” VA proposes to clarify that a 10 percent evaluation should only be assigned when deep acne affects non-intertriginous areas of the body other than the face and neck or less than 40 percent of the face and neck. Intertriginous areas of the body include the axilla of the arm, the anogenital region, and skin folds of the breast or between digits. Samuel T. Selden, MD, “Intertrigo,”Medscape Reference (Mar. 27, 2012),
Additionally, for reasons previously discussed in DC 7828, VA proposes to remove the term “superficial cysts” from the rating criteria under the zero percent evaluation. See Bolognia, supra at 547-50 and 555-58.
VA also proposes several technical amendments. We would update Appendix A, B, and C of part 4 to reflect the above noted proposed amendments.
Executive Orders 12866 and 13563 direct agencies to assess the 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 effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” requiring review by the Office of Management and Budget (OMB), unless OMB waives such review, as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.”
The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at
The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). This proposed rule would directly affect only individuals and would not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.
The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of
This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).
The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.104, Pension for Non-Service-Connected Disability for Veterans; 64.109, Veterans Compensation for Service-Connected Disability; and 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on August 1, 2016, for publication.
Disability benefits, Pensions, Veterans.
For the reasons set out in the preamble, the Department of Veterans Affairs proposes to amend 38 CFR part 4, subpart B as follows:
38 U.S.C. 1155, unless otherwise noted.
The revisions and additions read as follows:
For the purposes of this section, systemic therapy is treatment that is administered through any route (orally, injection, suppository, intranasally) other than the skin. For the purposes of this section, topical therapy is treatment that is administered through the skin.
The revisions and additions read as follows:
The additions and revisions read as follows:
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) proposes to approve State Implementation Plan revisions submitted by the Washington State Department of Ecology (Ecology) on July 11, 2016. The revisions update the incorporation by reference of Federal provisions cited in Ecology's general air quality regulations. The revisions also reflect changes to the primary and secondary National Ambient Air Quality Standards (NAAQS) for ozone, promulgated since Ecology's last update. Ecology also made minor corrections to typographical errors and non-substantive edits for clarity, such as standardizing the citation format.
Comments must be received on or before September 12, 2016.
Submit your comments, identified by Docket ID No. EPA-R10-OAR-2016-0394 at
Jeff Hunt, Air Planning Unit, Office of Air and Waste (AWT-150), Environmental Protection Agency, Region 10, 1200 Sixth Ave, Suite 900, Seattle, WA 98101; telephone number: (206) 553-0256; email address:
Throughout this document wherever “we,” “us,” or “our” is used, it is intended to refer to the EPA.
Section 110 of the Clean Air Act (CAA) governs the process by which a state submits air quality requirements to the EPA for approval into the State Implementation Plan (SIP). The SIP is a state's plan to implement, maintain and enforce the NAAQS. Ecology's general air quality regulations are set forth at Chapter 173-400 of the Washington Administrative Code (WAC). The EPA last approved changes to Chapter 173-400 WAC on April 29, 2015, which incorporates by reference certain Federal regulations, as of July 1, 2012 (80 FR 23721). Washington also adopts and implements changes to the NAAQS under Chapter 173-476 WAC, which the EPA last approved on March 4, 2014 (79 FR 12078). On July 11, 2016, Washington submitted a request to update Chapters 173-400 and 173-476 WAC in the SIP, with revised Federal citations as of January 1, 2016.
In order to streamline updates to Chapter 173-400 WAC and the Washington SIP, Ecology created a new section, WAC 173-400-025
One outcome of Ecology's update to Chapter 173-400 WAC relates to the Prevention of Significant Deterioration (PSD) permitting program for major stationary sources in attainment and unclassifiable areas. The Washington SIP, at WAC 173-400-720(4)(a)(vi), generally incorporates by reference the Federal PSD regulations contained in 40 CFR 52.21, with certain exceptions (80 FR 23721, April 29, 2015). As part of our April 29, 2015 final action on WAC 173-400-720(4)(a)(vi) we excluded the incorporation by reference of 40 CFR 52.21(b)(49)(v), 40 CFR 52.21(i)(5)(i), and 40 CFR 52.21(k)(2), as the Federal rules existed on July 1, 2012. These citations relate to Federal greenhouse gas, and fine particulate matter significant monitoring concentration and significant impact level provisions vacated by Federal courts after July 1, 2012 (see our proposed rulemaking for a full discussion, 80 FR 838, January 7, 2015, at page 842). After the court vacated the provisions, the EPA removed the provisions from 40 CFR 52.21 on December 9, 2013 (78 FR 73698) and August 19, 2015 (80 FR 50199). Ecology's revised incorporation by reference of these Federal regulations as of January 1, 2016, captures the EPA's removal of the vacated provisions. We are proposing to fully approve WAC 173-400-720(4)(a)(vi) because it meets current Federal requirements and is consistent with the court decisions. All other exceptions to our approval of Chapter 173-400 WAC remain unchanged since our April 29, 2015 final action.
Ecology also requested that the EPA update the Chapter 173-400 WAC citations for the Benton Clean Air Agency (BCAA) jurisdiction consistent with the exceptions noted in our November 17, 2015 final approval (80 FR 71695). As discussed in the proposed rulemaking for that action, BCAA does not implement WAC provisions related to the PSD program under WAC 173-400-116 and 173-400-700 through 173-400-750 (80 FR 55280, September 15, 2015, at page 55283). Also, as described in the proposed rulemaking for that action, BCAA local requirements contained in Regulation I, section 4.02 apply in lieu of the WAC provisions contained in WAC 173-400-040(4), WAC 173-400-040(9)(a), and WAC 173-400-040(9)(b). The EPA is therefore proposing to approve the update to Chapter 173-400 WAC for BCAA's jurisdiction consistent with the exceptions noted above. The EPA is also proposing to revise the visibility protection Federal Implementation Plan contained in 40 CFR 52.2498 to reflect the approval of WAC 173-400-117
The EPA last approved changes to Chapter 173-476 WAC on March 4, 2014, which contained all promulgated Federal NAAQS in existence at that time (79 FR 12078). In 2015, the EPA revised 40 CFR part 50 to include revised primary and secondary 8-hour ambient air quality standards for ozone at 0.070 parts per million (80 FR 65292, Oct. 26, 2015). Ecology's revision to Chapter 173-476 includes this update to the ozone standards and the interpretation method contained in 40 CFR part 50, Appendix U. We are proposing to approve the revisions to Chapter 173-476 WAC as meeting current Federal requirements.
We are proposing to approve and incorporate by reference in the Washington SIP at 40 CFR 52.2470(c) the following revisions to Chapters 173-400 and 173-476 WAC as shown in the table below.
We are also proposing to approve, but not incorporate by reference, the revised version of WAC 173-400-260
In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference the regulations in the table in section III above. The EPA has made, and will continue to make, these materials generally available through
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this proposed action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
The SIP is not approved to apply on any Indian reservation land in Washington except as specifically noted below and is also not approved to apply in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). Washington's SIP is approved to apply on non-trust land within the exterior boundaries of the Puyallup Indian Reservation, also known as the 1873 Survey Area. Under the
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.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve State Implementation Plan (SIP) revisions submitted by the State of Wyoming on May 28, 2015 and November 6, 2015. The amendments update the version of the Code of Federal Regulations (CFR) incorporated by reference into the rules of the State of Wyoming for Chapter 2, Section 12; Chapter 3, General Emission Standards, Section 9; and Chapter 6, Prevention of Significant Deterioration, Section 4. The May 28, 2015 submittal updates a citation to a
Written comments must be received on or before September 12, 2016.
Submit your comments, identified by Docket ID No. EPA-R08-OAR-2016-0366, at
Jody Ostendorf, Air Program, U.S. Environmental Protection Agency (EPA), Region 8, Mail Code 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129, (303) 312-7814,
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In this proposed rulemaking, we are proposing to approve three submittals into Wyoming's SIP.
The first May 28, 2015 submittal updates Chapter 3, General Emission Standards, Section 9, Incorporation by reference, to adopt by reference the July 1, 2013 Code of Federal Regulations. This submittal supersedes previously submitted updates to Section 9, Incorporation by reference. The EPA proposes to approve this submittal.
The second May 28, 2015 submittal updates Chapter 6, Section 4, Prevention of significant deterioration (PSD) program. The submittal updates a citation to a
The submittal also lists a new minor source baseline date of December 12, 2012 for fine particulate for Sweetwater County. On October 20, 2010, the EPA published a final rulemaking titled “Prevention of Significant Deterioration (PSD) for PM
The submittal also proposed to update Chapter 6, Section 14, Incorporation by reference, to adopt by reference from the July 1, 2013 CFR. This submittal and previously submitted updates to Section 14, Incorporation by reference have been superseded by a November 6, 2015 rulemaking (81 FR 35271). The EPA is not acting on any updates to Chapter 6, Section 14, Incorporation by reference.
The November 6, 2015 submittal proposes to revise Chapter 2, Section 2, Ambient standards for particulate matter, which establishes standards of ambient air quality for particulate matter as necessary to protect public health and welfare. This revision updates the primary ambient air quality standards for PM
The submittal also proposes to update Chapter 12, Incorporation by reference, to adopt by reference the July 1, 2014 CFR. This submittal supersedes previously submitted updates to the Chapter 12, Incorporation by reference. The EPA proposes to approve this submittal.
On March 12, 2008, the EPA promulgated a new NAAQS for ozone, revising the levels of the primary and secondary 8-hour ozone standards from 0.08 parts per million (ppm) to 0.075 ppm (73 FR 16436, March 27, 2008).
Under Sections 110(a)(1) and (2) of the CAA, states are required to submit infrastructure SIPs to ensure their SIPs provide for implementation,
The list of required elements provided in Section 110(a)(2) contains a wide variety of disparate provisions, some of which pertain to required legal authority, substantive program provisions, and both authority and substantive programs. The EPA does not believe that an action on a state's infrastructure SIP submission is necessarily the appropriate type of action to address possible deficiencies in a state's existing SIP. These issues include: (i) Existing provisions related to excess emissions from sources during periods of startup, shutdown, or malfunction (SSM) that may be contrary to the CAA and the EPA's policies addressing such excess emissions; (ii) existing provisions related to “director's variance” or “director's discretion” that may be contrary to the CAA because they purport to allow revisions to SIP-approved emissions limits while limiting public process or not requiring further approval by the EPA; and (iii) existing provisions for PSD programs that may be inconsistent with current requirements of the EPA's “Final NSR Improvement Rule,” 67 FR 80186, Dec. 31, 2002, as amended by 72 FR 32526, June 13, 2007 (“NSR Reform”).
CAA Section 110(a)(1) provides the procedural and timing requirements for SIP submissions after a new or revised NAAQS is promulgated. Section 110(a)(2) lists specific elements the SIP must contain or satisfy. Two elements identified in section 110(a)(2) are not governed by the three year submission deadline of Section 110(a)(1) and are therefore not addressed in this action. These elements relate to part D of Title I of the CAA, and submissions to satisfy them are not due within three years after promulgation of a new or revised NAAQS, but rather are due at the same time nonattainment area plan requirements are due under Section 172. The two elements are: (1) Section 110(a)(2)(C) to the extent it refers to permit programs (known as “nonattainment NSR”) required under part D; and (2) Section 110(a)(2)(I), pertaining to the nonattainment planning requirements of part D. As a result, this action does not address infrastructure elements related to the nonattainment NSR portion of Section 110(a)(2)(C) or related to 110(a)(2)(I). Furthermore, the EPA interprets the CAA Section 110(a)(2)(J) provision on visibility as not being triggered by a new NAAQS because the visibility requirements in part C, title 1 of the CAA are not changed by a new NAAQS.
In this action, the EPA is addressing 110(a)(2)(C), programs for enforcement of control measures and for construction or modification of stationary sources, and 110(a)(2)(D)(i)(II) element 3 for the 2008 ozone NAAQS. The EPA is addressing all other elements for the 2008 ozone NAAQS in a separate rulemaking.
The Wyoming Department of Environmental Quality (Department or WDEQ) submitted certification of Wyoming's infrastructure SIP for the 2008 ozone NAAQS on February 6, 2014. Wyoming's infrastructure certification demonstrates how the State, where applicable, has plans in place that meet the requirements of Section 110 for the 2008 ozone NAAQS. The Wyoming Air Quality Standards and Regulations (WAQSR) referenced in the State's submittal are publicly available at
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To generally meet the requirements of Section 110(a)(2)(C), the State is required to have SIP-approved PSD, nonattainment NSR, and minor NSR permitting programs that are adequate to implement the 2008 ozone NAAQS. As explained elsewhere in this action, the EPA is not evaluating nonattainment related provisions, such as the nonattainment NSR program required by part D of the Act. The EPA is evaluating the State's PSD program as required by part C of the Act, and the State's minor NSR program as required by Section 110(a)(2)(C).
Wyoming's Rule (02) II, Legal Authority, which the EPA approved into Wyoming's SIP,
With respect to Element (C), the EPA interprets the CAA to require each state to make an infrastructure SIP submission for a new or revised NAAQS demonstrating that the air agency has a complete PSD permitting program meeting the current requirements for all regulated NSR pollutants. The requirements of Element D(i)(II) may also be satisfied by demonstrating the air agency has a complete PSD permitting program that correctly addresses all regulated NSR pollutants. Wyoming has shown that it currently has a PSD program in place that covers all regulated NSR pollutants, including greenhouse gases (GHGs).
On July 25, 2011 (76 FR 44265), we approved a revision to the Wyoming PSD program that addressed the PSD requirements of the Phase 2 Ozone Implementation Rule promulgated on November 29, 2005 (70 FR 71612). As a result, the approved Wyoming PSD program meets the current requirements for ozone.
With respect to GHG's, on June 23, 2014, the United States Supreme Court addressed the application of PSD permitting requirements to GHG emissions.
In accordance with the Supreme Court decision, on April 10, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (the D.C. Circuit) in
The EPA is planning to take additional steps to revise the federal PSD rules in light of the Supreme Court and subsequent D.C. Circuit opinion. Some states have begun to revise their existing SIP-approved PSD programs in light of these court decisions, and some states may prefer not to initiate this process until they have more information about the planned revisions to the EPA's PSD regulations. The EPA is not expecting states to have revised their PSD programs in anticipation of the EPA's planned actions to revise its PSD program rules in response to the court decisions.
At present, the EPA has determined that Wyoming's SIP is sufficient to satisfy Elements (C) and (D)(i)(II) prong 3 with respect to GHGs. This is because the PSD permitting program previously approved by the EPA into the SIP continues to require that PSD permits issued to “anyway sources” contain limitations on GHG emissions based on the application of BACT. The EPA most recently approved revisions to Wyoming's PSD program on December 6, 2013 (78 FR 73445). The approved Utah PSD permitting program still contains some provisions regarding Step 2 sources that are no longer necessary in light of the Supreme Court decision and D.C. Circuit amended judgment. Nevertheless, the presence of these provisions in the previously-approved plan does not render the infrastructure SIP submission inadequate to satisfy Elements (C) and (D)(i)(II). The SIP contains the PSD requirements for applying the BACT requirement to greenhouse gas emissions from “anyway sources” that are necessary at this time. The application of those requirements is not impeded by the presence of other previously-approved provisions regarding the permitting of Step 2 sources. Accordingly, the Supreme Court decision and subsequent D.C. Circuit judgment do not prevent the EPA's approval of Wyoming's infrastructure SIP as to the requirements of Elements (C) and (D)(i)(II) prong 3.
Finally, we evaluate the PSD program with respect to current requirements for PM
On January 4, 2013, the U.S. Court of Appeals, in
The 2008 Implementation Rule addressed by
The court's decision with respect to the nonattainment NSR requirements promulgated by the 2008 Implementation Rule also does not affect the EPA's action on the present infrastructure action. The EPA interprets the Act to exclude nonattainment area requirements, including requirements associated with a nonattainment NSR program, from infrastructure SIP submissions due three years after adoption or revision of a NAAQS. Instead, these elements are typically referred to as nonattainment SIP or attainment plan elements, which would be due by the dates statutorily prescribed under subpart 2 through 5 under part D, extending as far as 10 years following designations for some elements.
The second PSD requirement for PM
The State has a SIP-approved minor NSR program, adopted under Section 110(a)(2)(C) of the Act. The minor NSR program is found in Chapter 6, Section 2 of the WAQSR. The EPA previously approved Wyoming's minor NSR program into the SIP (at that time as Chapter 1, Section 21), and has subsequently approved revisions to the program, and at those times there were no objections to the provisions of this program. (See, for example, 47 FR 5892, February 9, 1982). Since then, the State and the EPA have relied on the State's existing minor NSR program to assure that new and modified sources not captured by the major NSR permitting program do not interfere with attainment and maintenance of the NAAQS.
The EPA is proposing to approve Wyoming's infrastructure SIP for the 2008 ozone NAAQS with respect to the general requirement in Section 110(a)(2)(C) to include a program in the SIP that regulates the enforcement, modification, and construction of any stationary source as necessary to assure that the NAAQS are achieved.
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With regard to the PSD portion of CAA Section 110(a)(2)(D)(i)(II), this requirement may be met by a state's confirmation in an infrastructure SIP submission that new major sources and major modifications in the state are subject to a comprehensive EPA approved PSD permitting program in the SIP that applies to all regulated new source review (NSR) pollutants and that satisfies the requirements of the EPA's PSD implementation rules.
In-state sources not subject to PSD for a particular NAAQS because they are in a nonattainment area for that standard may also have the potential to interfere with PSD in an attainment or unclassifiable area of another state.
The EPA is proposing to approve the infrastructure SIP submission with regard to the requirements of prong 3 of Section 110(a)(2)(D)(i)(II) for the 2008 Ozone NAAQS.
The EPA is proposing to approve State Implementation Plan (SIP) revisions submitted by the State of Wyoming on May 28, 2015 and November 6, 2015. The amendments update the version of the CFR incorporated by reference into the rules of the State of Wyoming for Chapter 2, Ambient Standards for Particulate Matter, Section 12; and Chapter 3, General Emission Standards, Section 9. The EPA is also proposing to approve updates to a citation to a
In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference the Administrative Rules of Wyoming pertaining to General Emission Standards, Prevention of Significant Deterioration and Ambient Standards for PM
Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
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.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing approval of three State Implementation Plan (SIP) revisions submitted by the State of Colorado. The revisions involve amendments to Colorado's Regulation Number 11 “Motor Vehicle Emissions Inspection Program.” The revisions address the implementation of the Low Emitter Index component of Regulation No. 11's Clean Screen Program, the implementation of the On-Board Diagnostics component of Regulation No. 11, and several other associated revisions. The EPA is proposing approval of these SIP revisions in accordance with the requirements of section 110 of the Clean Air Act (CAA).
Written comments must be received on or before September 12, 2016.
Submit your comments, identified by Docket ID No. EPA-R08-OAR-2016-0016 at
Tim Russ, Air Program, EPA, Region 8, Mailcode 8P-AR, 1595 Wynkoop, Denver, Colorado 80202-1129, (303) 312-6479,
What should I consider as I prepare my comments for the EPA?
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• Identify the rulemaking by docket number and other identifying information (subject heading,
• Follow directions and organize your comments;
• Explain why you agree or disagree;
• Suggest alternatives and substitute language for your requested changes;
• Describe any assumptions and provide any technical information and/or data that you used;
• If you estimate potential costs or burdens, explain how you arrived at your estimate in
sufficient detail to allow for it to be reproduced;
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• Explain your views as clearly as possible, avoiding the use of profanity or personal threats; and,
• Make sure to submit your comments by the comment period deadline identified.
In this action, the EPA is proposing approval of SIP revisions to Regulation No. 11 contained in three submittals from Colorado. The State's submittals were dated June 11, 2008, March 15, 2013, and March 3, 2014. Much of the content of the revisions involved minor updates to several sections of Regulation No. 11 and deletion of obsolete language. The following background discussion involves those revisions of greater significance:
Colorado's Regulation No. 11 (hereafter “Reg. No. 11”) addresses the implementation of the State's motor vehicle inspection and maintenance (I/M) program. The I/M program consists of an “enhanced” component that utilizes a dynamometer-based EPA IM240 test for 1982 and newer light-duty gasoline vehicles
The Clean Screen program component of Colorado's Reg. No. 11 was originally approved, for implementation in the Metro-Denver area, with the EPA's approval of the original Denver carbon monoxide (CO) redesignation to attainment and the maintenance plan (see: 66 FR 64751, December 14, 2001). The Clean Screen criteria that was approved in 2001 by the EPA (see: 66 FR 64751, December 14, 2001) required two valid passing remote sensing readings on different days or from different sensors, that met the applicable emissions reading requirements in Part F of Reg. No. 11, within a twelve-month period in order to clean-screen a vehicle.
Colorado revised Reg. No. 11 to expand the definition and requirements for a “clean-screened vehicle” to also include vehicles identified as low emitting vehicles in the state-determined Low Emitting Index (LEI) which have one passing remote sensing reading, prior to the vehicle's registration renewal date. As part of the LEI process, the Colorado Department of Public Health and Environment (CDPHE), Air Pollution Control Division (hereinafter, the “Division”) develops an LEI on or before July 1st of each year. The LEI is based on a tabulation of the previous calendar year's IM240 inspection program results for specific make, model, and model year vehicles that passed IM240 vehicle inspections the previous year at a minimum rate of a 98%.
By a letter dated June 11, 2008, the Governor of Colorado submitted the above 2007 Reg. No. 11 LEI revisions and other minor revisions involving changes/additions to the definitions in Reg. No. 11and the addition of Attachment 1 to the Technical Specifications in Appendix A. These SIP revisions are discussed in further detail below in section IV.
As noted above, Colorado's Reg. No. 11 addresses the implementation of a motor vehicle I/M program that consists of a an “enhanced” component IM240 test for 1982 and newer light-duty vehicles and a TSI test for 1981 and older light-duty gas vehicles. In addition, and beginning in January 2015, Colorado also began implementing an On-Board Diagnostics (OBD) test for certain model year vehicles. An OBD I/M test essentially means the electronic retrieval, by connecting to the computer port data link connector (DLC) in the vehicle with an OBD test analyzer, of information from a vehicle's computer system. The electronic information retrieved addresses items such as stored readiness status, diagnostic trouble codes (DTC), malfunction indicator light (MIL) illumination and other data from a vehicle's OBD system. Electronically interrogating a vehicle's OBD system allows for the determination of whether any emission related DTCs are present and if the MIL is commanded on. Should these aspects of an OBD test be present, that would indicate the existence of an emissions related malfunction with the vehicle being tested.
In addition, Colorado also extended the Reg. No. 11 exemption from I/M testing for new vehicles from four years to seven years. This revision was based on Colorado's gathering of emissions testing information over a period of several years which demonstrated that historically new and newer vehicles typically did not fail the IM240 or OBD emissions test within the first seven years of the vehicle's life.
By a letter dated March 15, 2013, the Governor of Colorado submitted the above 2012 Reg. No. 11 OBD test requirements, the seven year test exemption, and other minor revisions. These SIP revisions are discussed in further detail below in section V.
Colorado further revised Reg. No. 11 by updating Appendix A and Appendix B to remove text and incorporate by reference certain Attachments to Appendix A, to add new language to Appendix A, and to add new language and remove obsolete language in Appendix B.
Appendix A was revised to remove the text of three technical document attachments and to note that the documents are available at CDPHE's Emissions Technical Center Procedures Manual. The technical documents are incorporated by reference into Reg. No. 11. Appendix A. The technical documents that are incorporated by
Appendix B, which is entitled “Standards and Specifications for Calibration/Span Gas Suppliers,” was revised with updated language in Section 1 “Definitions,” Section 2 “Basic & Enhanced Idle Air Program/Technical Requirements,” Section 3, “Calibration/Span Gas Approval & Labeling,” Section 4 “Cylinder Tracking & Recall,” Section 5 “Enhanced IM & IG 240 Air Program/Technical Requirements,” Section 6 “Colorado Approval Process,” and Section 7 “Blender Facility Requirements & Documentation.” Obsolete language was also removed from Appendix B.
By a letter dated March 3, 2014, the Governor of Colorado submitted the above 2013 Reg. No. 11 revisions to Appendix A and Appendix B. These SIP revisions are discussed in further detail below in section VI.
Section 110(a)(2) of the CAA requires that a state provide reasonable notice and public hearing before adopting a SIP revision and submitting it to us.
On June 21, 2007 the Colorado Air Quality Control Commission (AQCC) conducted a public hearing to consider the adoption of revisions and additions to the Colorado SIP. The revisions affecting the SIP involved Reg. No. 11, the Clean Screen sections of Reg. No. 11, the LEI portion of the Clean Screen program, and associated revisions. After reviewing written comments, dated April 17, 2007, received from Rocky Mountain Clean Air Action and after conducting a public hearing, the AQCC adopted the proposed revisions to Reg. No. 11 on June 21, 2007. The SIP revisions became State effective on August 30, 2007.
We evaluated the State's June 11, 2008 submittal for Reg. No. 11 of the SIP and determined that the State met the requirements for reasonable notice and public hearing under section 110(a)(2) of the CAA. By a letter dated October 14, 2008, we advised James B. Martin, Executive Director of the CDPHE, that the SIP revisions submittal was deemed to have met the minimum “completeness” criteria found in 40 CFR part 51, Appendix V.
On December 20, 2012, the AQCC conducted a public hearing to consider the adoption of revisions and additions to the Colorado SIP. The revisions affecting the SIP involved Reg. No. 11, the OBD program, the seven model year exemption from I/M testing, and associated revisions. After reviewing one supportive email written comment, dated December 16, 2012, received from Bob Armott and after conducting a public hearing, the AQCC adopted the proposed revisions to Reg. No. 11 on December 20, 2012. The SIP revisions became State effective on February 15, 2013.
We evaluated the State's March 15, 2013 submittal for Reg. No. 11 of the SIP and determined that the State met the requirements for reasonable notice and public hearing under section 110(a)(2) of the CAA. By operation of law under section 110(k)(1)(B) of the CAA, the State's March 15, 2013 submittal was deemed complete on September 15, 2013.
On November 21, 2013, the AQCC conducted a public hearing to consider the adoption of revisions and additions to the Colorado SIP. The revisions affecting the SIP included updating Appendix A and Appendix B to Reg. No. 11 to remove text, incorporate by reference certain Attachments to Appendix A, to add new language to Appendix A, and to add new language and remove obsolete language in Appendix B. After conducting a public hearing, which did not have any public comments, the AQCC adopted the proposed revisions to Reg. No. 11 on November 21, 2013. The SIP revisions became State effective on December 30, 2013.
We evaluated the State's March 3, 2014 submittal for Reg. No. 11 of the SIP and determined that the State met the requirements for reasonable notice and public hearing under section 110(a)(2) of the CAA. By operation of law under section 110(k)(1)(B) of the CAA, the State's March 3, 2014 submittal was deemed complete on September 3, 2014.
We approved the Clean Screen program component of Colorado's Reg. No. 11, for implementation in the Metro-Denver area with our approval of the original Denver carbon monoxide (CO) redesignation to attainment and the associated maintenance plan (see: 66 FR 64751, December 14, 2001). Additional discussion of the Clean Screen program was provided in our August 22, 2001 proposed rule (66 FR 44097). In evaluating the Clean Screen program for the maintenance plan, the State used EPA's MOBILE5b motor vehicle emissions calculation model and the MOBILE model's remote sensing program credit utility dated 1996
For the Reg. No. 11 revisions that we approved on December 14, 2001, the State used the above tools and other data to evaluate the Clean Screen program for its implementation in the Metro-Denver area. Based on this evaluation and the review of information for the additional implementation of a Clean Screen program in Fort Collins (located in Larimer County, Colorado) and Greeley (located in Weld County, Colorado), the state concluded there would be an approximate 4% disbenefit for CO emissions and a 7% disbenefit for hydrocarbon (HC) emissions if it was assumed that 35% of the eligible vehicles were clean-screened.
We note that the version of Reg. No. 11 that the EPA approved on December 14, 2001 included the Clean Screen criteria which required an eligible vehicle for inspection to have at least two consecutive passing remote sensing emissions readings performed on different days, or at different approved Clean Screen inspection sites, prior to its registration renewal date.
With the 2007 Reg. No. 11 revisions, the AQCC adopted modifications as proposed by the Division that expanded the Clean Screen criteria to also include vehicles with one passing remote sensing reading prior to its registration
To assess the State's Clean Screen program and its LEI component, the EPA reviewed the available CDPHE Clean Screen annual reports for 2009,
The data from the State's Clean Screen reports, as excerpted and presented in the above tables, demonstrate that the disbenefit from the Clean Screen program and its LEI component continue to be within the original estimates from the Reg. No. 11 revisions that we approved on December 14, 2001. Although those original 2001 disbenefit estimates (4% for CO, 7% for HC, and assuming 35% clean-screened vehicles) were prepared with then current tools, the Clean Screen program and LEI component continue to perform within those estimates. Also, from the above four years of Clean Screen annual reports that we evaluated, the State's Reg. No. 11 revisions original estimate of 35% of the fleet being clean-screened has not been achieved. Based on the four referenced Clean Screen reports, we note that 22% or less of the eligible vehicles have been clean-screened. Therefore, the actual emission reduction disbenefit has been less than predicted, as more vehicles have then been required to go through the IM240 test.
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The EPA notes that Part F, section III.A.2 of Reg. No. 11 was also provided with the State's June 11, 2008 submittal. This section contains IM240 test light duty vehicle emissions cutpoints for 1996 and newer vehicles (all in grams per mile). The CO, HC, and NO
As we noted above, beginning in January 2015, Colorado began implementing an OBD test for certain model year vehicles. An OBD I/M test essentially means the electronic retrieval, by connecting to the computer port DLC in the vehicle with an OBD test analyzer, of information from a vehicle's computer system addressing items such as stored readiness status, DTCs, MIL illumination and other information from a vehicle's OBD system. Electronically interrogating a vehicle's OBD system allows for the determination if any emission related DTCs are present and if the MIL is commanded on. Should these aspects of an OBD test be present, that would indicate the existence of an emissions related malfunction with the vehicle being tested. More detailed information on OBD I/M testing is found in 40 CFR 85, Subpart W and at the EPA's Office of Transportation and Air Quality (OTAQ) Web site at:
The EPA has reviewed the OBD information in the State's Administrative documentation with its March 15, 2013 submittal, the OBD I/M test procedures contained in the Reg. No. 11 revisions to Part A, Part B, Part C, and Part F, all as detailed further below, and has concluded these revisions meet the requirements of 40 CFR 85, Subpart W for OBD I/M testing and the above cited EPA final rules.
We note the Colorado OBD test provisions that were adopted in 2012 are applicable to a portion of the vehicles that are subject to an I/M test. The Reg. No. 11 revisions of 2012 also increased the new vehicle model year exemption from four to seven years, required OBD testing for the next four years (two inspection cycles for the 8th through 11th years), and required I/M 240 testing to commence with the third inspection cycle. In addition, the Reg. No. 11 revisions of 2012 allowed OBD testing for OBD equipped vehicles that were otherwise hard to test with the IM240 procedures (for example, too short of a wheelbase for the dynamometer treadmills, vehicles with very large or small wheel/tire combinations, and certain all-wheel-drive vehicles with very sensitive traction control systems), eliminated the visual inspection for 1996 and newer vehicles (because of OBD testing), and required a full emissions retest for vehicles initially failing the gas cap test. The 2012 Reg. No. 11 revisions retained other aspects of the I/M program including the use of Clean Screen technology to clean screen vehicles and annual TSI testing for 1981 and older vehicles.
In consideration of the OBD testing component of the I/M program and the extension from four years to seven years to exempt new vehicles from I/M testing (discussed further below), the State prepared an estimated emissions benefit for the implementation of both the OBD testing and extended test exemption for seven years. This estimated emissions benefit information is contained in the Administrative Documentation, that is part of the State's March 15, 2013 SIP submittal, and is provided in the section entitled “SIP Emission Reduction Equivalency Demonstration.” The information notes that the Division conducted modeling of the 2012 revisions using the then current I/M program, as implemented in the seven Metro-Denver counties area, and the new program (OBD plus the seven-year testing exemption) as fully implemented in 2017. The year 2017 was selected as that would reflect the full completion of a two-year OBD inspection cycle on applicable vehicles. The Division's results are provided below in Table 3:
As shown in Table 3 above, implementation of the Reg. No. 11 provisions of the OBD component and the seven-year exemption from I/M testing were estimated to result in a small increase in CO emissions and a slight reduction in ozone precursor emissions (NO
The EPA has evaluated this negligible increase in estimated CO emissions and has concluded it will not have a detrimental effect on the most recently-approved revised Metro-Denver CO maintenance plan (72 FR 46148, August 17, 2007).
We do note that the slight reduction in ozone precursor emissions of NO
Included with the March 15, 2013 Reg. No. 11 SIP revision submittal were revised provisions to increase the I/M test exemption for newer vehicles from the EPA-approved four-year exemption to seven years. Additional information and rationale were provided by the Division in the “Air Quality Control Commission Regulation Number 11 Motor Vehicle Emissions Detailed Issue Statement” which was part of the SIP submittal's Administrative Documentation.
The Division's AQCC issue statement noted that the revision to Reg. No. 11, to increase new vehicle model year exemptions from four years to seven years, was allowed by Colorado law which authorizes the AQCC to extend the duration for which new vehicles are exempt from I/M testing; 42-4-310(1)(a)(II)(C) and 42-4-306(8)(b), Colorado Revised Statute (C.R.S.)
The Division noted that the revision to extend the new vehicle model year exemption results in an overall cost savings and increased convenience to the public for tests not performed. In addition, the Division stated that the population of vehicles in this age group, and their vehicle miles traveled, are relatively high; however, since they are relatively new vehicles, their emissions are lower than those of older vehicles.
The Division concluded that increasing the duration of the new vehicle exemption increases emissions from the entire fleet. However, the EPA notes that with this particular revision to Reg. No. 11, the State simultaneously included revisions to Reg. No. 11 to initiate OBD testing requirements for applicable vehicles. As discussed above and as presented in Table 3 above, the net result of the implementation of both the seven-year extended exemption for I/M test and OBD testing showed a negligible increase of CO emissions and a slight decrease in NO
There was a clarification to the gas cap test requirements and several other minor revisions included with the March 15, 2013 Reg. No. 11 SIP revision submittal.
The state revised Reg. No. 11 to clarify that, in accordance with federal law, a full I/M retest is required after a test failure due to the lack of a gas cap or a faulty gas cap. The EPA notes that missing or malfunctioning gas caps automatically cause a test failure and require replacement of the cap and then a full emissions retest. The full retest is necessary because the gas cap seals and pressurizes the entire fuel evaporative emissions control system. If other components of the evaporative system are functional, there will be no effect on tailpipe emissions; however, if other elements of the evaporative system are faulty replacing a faulty or missing gas cap can trigger a tailpipe emissions failure. In addition, the inclusion or replacement of a malfunctioning gas cap will reduce emissions of volatile organic compounds (VOC) from a vehicle's fuel tank. This is a beneficial as VOCs are a precursor emission to the formation of ground level ozone.
The Reg. No. 11 revisions also include several ‘housekeeping’ items including: Correcting typographical and grammatical errors; deleting obsolete language and implementation dates; removing titles and text that were inadvertently left unchanged from prior Reg. No. 11 changes; and renumbering and recodifications according to adopted language additions and deletions.
1.)
Part A, section II: A new definition number 20 was added entitled “Colorado On-Board Diagnostic (OBD) Test Analyzer System;” a new definition number 22 was added entitled “Diagnostic Trouble Code (DTC);” and, definitions number 23 to 43 were renumbered. A new definition number 44 was added and entitled “On-Board Diagnostics II (OBD or OBDII) Test” and definitions numbered 45 to 52 were renumbered.
Part A, section IV: Section IV. D was removed which involved obsolete language and section IV.E was renumbered IV.D and also had obsolete language removed.
2.)
3.)
Part C, section I.C.3: This involved minor language changes to clarify data transmission and analyzer requirements.
Part C, section II.A: This section was renumbered from II.A through II.F to instead become II.A.1 through II.A.11. Minor clarification language was added along with revised references to sections in Part C.
Part C, section II.G: This section was renumbered to II.B and clarifying
Part C, section II.C: A new section II.C (II.C 1 through II.C.9) was added which specifies which vehicles are to be OBD tested and the requirements and testing procedures for an OBD test.
Part C, section III.A: This section had clarifying language added and sections III.B and III.C were removed as they addressed the model year 1996 and newer visual inspection procedures. The remaining applicable portions of section III.C were then renumbered III.B. Sections III.D and III.E were renumbered to III.C and III.D.
Part C, section IV: A new section IV was added which addressed the requirements for applicable vehicles (1996 through those vehicles that had reached their 11th model year of age) to be evaluated with and OBD test.
Part C, prior section IV: The existing section IV was renumbered section V and also modified with clarifying language regarding the requirement for a full retest of vehicles which previously had a missing or malfunctioning gas cap.
Part C, section VIII.A.2: A new section VIII.A.2 was added which states that vehicles in their model years seven through 10 need to meet the OBD passing criteria in Part F, section VII. Sections VIII.A.2 through VIII.A.4 were renumbered VIII.A.3 through VIII.A.5.
Part C, sections VIII.B.1, VIII.B.2, and VIII.B.3: These sections had minor wording changes and deletion of obsolete language.
Part C, sections VIII.D.A through VIII.D.E: These sections were renumbered VIII.D.1 through VIII.D.5.
Part C, sections IX.G and X.A: These sections had minor clarifying language added.
4.)
Part F, section VII: A new section VII was added (sections VII.A through VII.F) which stated the required OBD diagnostic inspection test passing criteria.
5.)
In 2013, the AQCC adopted several minor changes to Reg. No. 11. These revisions were subsequently submitted to the EPA on March 3, 2014. The sections of Reg. No. 11 that were revised with the State's March 3, 2014 submittal were as follows:
a.)
b.)
c.)
d.)
e.)
f.)
1.) Appendix A was revised to remove the text of three technical document attachments and to note that the documents are available at CDPHE's Emissions Technical Center Procedures Manual. The technical documents are incorporated by reference into Reg. No. 11. Appendix A. The technical documents that are incorporated by reference into Reg. No. 11 are: Attachment I “PDF 1000 Scanner,” Attachment II “Thermal Transfer Printer,” and Attachment III “Colorado Automobile Dealers Transient Mode Test Analyzer System.”
2.) Updated Attachment IV, entitled “Colorado Department of Public Health and Environment Specification for Colorado 97 Analyzer,” to reflect technological changes to data specifications, communications protocols, and forms generation.
3.) Included a new Attachment V
g.)
1.) Attachment II; the “Calibration Span Gas” labels were updated to reflect the current version of the State-official labels.
h.) Overall revised formatting and other non-substantive changes were made throughout Reg. No. 11.
Our review of the State's Reg. No. 11 revisions, as presented above in sections IV, V, and VI, involved: 1.) The Low Emitter Index (LEI) and Clean Screen program components, 2.) The On-Board Diagnostics (OBD) I/M testing program component, 3.) The seven model-year exemption from I/M testing provisions, 4.) The requirement for a full I/M retest after the replacement of a missing or malfunctioning gas cap, 5.) New definitions, clarification language, and removal of obsolete language, 6.) Numerous revisions to Reg. No. 11 Parts A, B, C, F, G, Appendix A, and Appendix B, and 7.) Overall formatting, correction of typographic errors and other non-substantive changes. Based on our review and evaluation discussion presented above, we have determined that the Reg. No. 11 SIP revisions, submitted by the State in letters dated June 11, 2008, March 15, 2013 and March 3, 2014 sufficiently address applicable provisions in 40 CFR 51, Subpart S, 40 CFR 85, Subpart W, and applicable EPA guidance for I/M programs and that our approval is warranted.
Section 110(1) of the CAA states that a SIP revision cannot be approved if the revision would interfere with any applicable requirement concerning
For the LEI component of the Clean Screen program, we noted above that with our December 14, 2001 approval the Metro-Denver CO maintenance plan and implementation of the Clean Screen program as adopted at that time, the State concluded there would be an approximate 4% disbenefit for CO emissions and a 7% disbenefit for HC emissions if it was assumed that 35% of the eligible vehicles were clean-screened. Our further evaluation of the LEI component of the Clean Screen program, as discussed above in section IV, involved the review of the State's Clean Screen annual reports for 2009, 2011, 2012 and 2013. The annual reports detailed the overall effectiveness of the Clean Screen program and also contained the results of the random 2% sampling for the LEI component. The data from the State's Clean Screen reports demonstrate that the disbenefit from the Clean Screen program, including its LEI component, continue to be within the original estimates from the Reg. No. 11 revisions that we approved on December 14, 2001. Although those original 2001 disbenefit estimates (4% for CO, 7% for HC, and 35% vehicles being clean-screened) were prepared with then current tools, the Clean Screen program and LEI component continue to perform within those estimates. Also, from the above four years of Clean Screen annual reports that we evaluated, the State's Reg. No. 11 revisions original estimate of 35% of the fleet being clean-screened has not be been achieved. Based on the four referenced Clean Screen reports, we note that 22% or less of the eligible vehicles have been clean-screened. Therefore, the actual emissions reduction disbenefit has been less than predicted as more vehicles have then been required to go through the IM240 test.
With regard to the seven-year new vehicle exemption from I/M testing, as explained above in section V, we noted that with the implementation of the Reg. No. 11 provisions of the combination of the OBD testing component and the seven-year exemption from I/M testing there was estimated to be a small increase in CO emissions and a minor reduction in ozone precursor emissions (NO
With respect to other NAAQS that have the potential to be affected by our proposed approval of the above Reg. No. 11 revisions, we note that the Metro-Denver area is designated “unclassifiable/attainment” for the 1-hour NO
In addition to the above, we have determined the revisions to Reg. No. 11 contained in all three SIP revision submittals involving the language changes necessary to implement the LEI and Clean Screen program components, the OBD I/M testing program component, the seven model-year exemption from I/M testing provisions, the requirement for a full I/M retest after the replacement of a missing or malfunctioning gas cap, new definitions, clarification language, removal of obsolete language, numerous minor revisions to Parts A, B, C, F, G, Appendix A and Appendix B of Reg. No. 11, overall formatting, correction of typographic errors and other non-substantive changes do not affect emissions and therefore do not have CAA section 110(l) implications.
In view of the above, the EPA proposes to find that the revisions to Colorado's Reg. No. 11 that are contained in the State's SIP submittals dated June 11, 2008, March 15, 2013 and March 3, 2014 will not interfere with attainment, reasonable further progress, or any other applicable requirement of the CAA.
The EPA is proposing approval of the June 11, 2008 submitted SIP revisions to Colorado's Regulation Number 11, Part A, Part C, Part F, and Appendix A. The EPA notes that Part F, section III.A.2 was also provided with the State's June 11, 2008 submittal. This section contains IM240 test light duty vehicle emissions cutpoints for 1996 and newer vehicles (all in grams per mile). The CO, HC, and NO
In addition, the EPA is proposing approval of the March 15, 2013 submitted SIP revisions to Regulation Number 11, Part A, Part B, Part C, Part F, and Part G. Finally, the EPA is proposing approval of the March 3, 2014 submitted SIP revisions to Regulation Number 11, Part A, Part C, Appendix A, and Appendix B.
In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference Colorado Air Quality Control Commission, Regulation Number 11 as discussed in section IX of this preamble. The EPA has made, and will continue to make, these documents generally available electronically through
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations [42 U.S.C. 7410(k), 40 CFR 52.02(a)]. Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this proposed action merely approves some state law as meeting federal requirements and disapproves other state law because it does not meet federal requirements; this proposed action does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, Oct. 4, 1993);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, Aug. 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and,
• Does not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, Feb. 16, 1994).
The SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian Country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, and Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing to approve a revision to the Indiana State Implementation Plan (SIP) submitted by the Indiana Department of Environmental Management (IDEM) on October 16, 2015. The submittal consists of an order issued by the Commissioner of IDEM (Commissioner's Order No. 2015-01) approving alternative control technology requirements for Abengoa Bioenergy of Indiana (Abengoa). These requirements include the use of a carbon adsorption/absorption hydrocarbon vapor recovery system with a minimum overall control efficiency of 98% to control volatile organic compound (VOC) emissions from the ethanol loading racks at Abengoa. A continuous emissions monitoring system (CEMS) must be used to monitor the carbon adsorption/absorption hydrocarbon vapor recovery system for breakthrough of VOC emissions.
Comments must be received on or before September 12, 2016.
Submit your comments, identified by Docket ID No. EPA-R05-OAR-2015-0724, at
Jenny Liljegren, Physical Scientist, Attainment Planning and Maintenance Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 886-6832,
In the Final Rules section of this
Environmental Protection Agency (EPA).
Notice of filing of petitions and request for comment.
This document announces the Agency's receipt of several initial filings of pesticide petitions requesting the establishment or modification of regulations for residues of pesticide chemicals in or on various commodities.
Comments must be received on or before September 12, 2016.
Submit your comments, identified by docket identification (ID) number and the pesticide petition number (PP) of interest as shown in the body of this document, by one of the following methods:
•
•
•
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).
If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under
1.
2.
3.
EPA is announcing its receipt of several pesticide petitions filed under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, requesting the establishment or modification of regulations in 40 CFR part 180 for residues of pesticide chemicals in or on various food commodities. The Agency is taking public comment on the requests before responding to the petitioners. EPA is not proposing any particular action at this time. EPA has determined that the pesticide petitions described in this document contain the data or information prescribed in FFDCA section 408(d)(2), 21 U.S.C. 346a(d)(2); however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data support granting of the pesticide petitions. After considering the public comments, EPA intends to evaluate whether and what action may be warranted. Additional data may be needed before EPA can make a final determination on these pesticide petitions.
Pursuant to 40 CFR 180.7(f), a summary of each of the petitions that are the subject of this document, prepared by the petitioner, is included in a docket EPA has created for each rulemaking. The docket for each of the petitions is available at
As specified in FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), EPA is publishing notice of the petition so that the public has an opportunity to comment on this request for the establishment or modification of regulations for residues of pesticides in or on food commodities. Further information on the petition may be obtained through the petition summary referenced in this unit.
1.
2.
3.
An independently validated analytical method has been submitted for analyzing residues of parent afidopyropen (BAS 440 I) plus metabolite M440I007 with appropriate sensitivity in all crop and processed commodities. An independently validated analytical method has been submitted for analyzing residues of parent afidopyropen (BAS 440 I) plus metabolite M440I001, M440I003, and M440I060 in animal meat, fat and liver and egg and for BAS 440 I and metabolites M440I001, M440I005, and M440I060 in milk with appropriate sensitivity in the event tolerances are established. A multi-residue method using modified AOAC Official method 2007.01 for the determination of residues of afidopyropen (BAS 440 I) and metabolite M440I007 in plant matrices was successfully validated. C
4.
21 U.S.C. 346a.
Environmental Protection Agency (EPA).
Proposed rule; notice of intent for deletion.
The Environmental Protection Agency (EPA), Region 2, is issuing this Notice of Intent to Delete (NOID) the Jackson Steel Site, located in the Village of Mineola, Nassau County, New York, from the National Priorities List (NPL) and requests public comments on this proposed action. The NPL, promulgated pursuant to Section 105 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980, as amended, is an appendix of the National Oil and Hazardous Substances Pollution Contingency Plan. EPA and the State of New York, through the New York State Department of Environmental Conservation (NYSDEC), have determined that other than the ongoing operation and maintenance of the vapor intrusion mitigation systems at the daycare center, periodic vapor intrusion monitoring, ensuring that the institutional controls are in place and effective, and five-year reviews, all appropriate response actions under CERCLA have been completed at the Site and that the soil on the Site and the groundwater beneath the Site no longer pose a threat to public health or the environment.
Comments must be received by
Submit your comments, identified by Docket ID no. EPA-HQ-SFUND-2000-0006, by mail to Joel Singerman, Chief, Central New York Remediation Section, Emergency and Remedial Response Division, U.S. Environmental Protection Agency, Region 2, 290 Broadway, 20th Floor, New York, NY, 10007-1866. Comments may also be submitted electronically or through hand delivery/courier by following the detailed instructions in the “Addresses” section of the direct final rule located in the rules section of this
Joel Singerman at the address noted in the
In the “Rules and Regulations” Section of today's
For additional information, see the direct final NOD, which is located in the “Rules” section of this
Environmental protection, Air pollution control, Chemicals, Hazardous waste, Hazardous substances, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Superfund, Water pollution control, Water supply.
33 U.S.C. 1321(c)(2); 42 U.S.C. 9601-9675; E.O. 12777, 56 FR 54757, 3 CFR, 1991 Comp., p. 351; E.O. 12580, 52 FR 2923, 3 CFR, 1987 Comp., p. 193.
Health Resources and Services Administration, HHS.
Notice of proposed rulemaking.
The Health Resources and Services Administration (HRSA) implements section 340B of the Public Health Service Act (PHSA), which is referred to as the “340B Drug Pricing Program” or the “340B Program.” This proposed rule will apply to all drug manufacturers and covered entities that participate in the 340B Program. The proposed rule sets forth the requirements and procedures for the 340B Program's administrative dispute resolution process.
Submit written comments on or before October 11, 2016.
You may submit comments, identified by the Regulatory Information Number (RIN) 0906-AA90, by any of the following methods. Please submit your comments in only one of these ways to minimize the receipt of duplicate submissions.
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•
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All submitted comments will be available to the public in their entirety. All comments received may be posted without change to
CAPT Krista Pedley, Director, OPA, HSB HRSA, 5600 Fishers Lane, Mail Stop 08W05A, Rockville, MD 20857, or by telephone at 301-594-4353.
The President encourages Federal agencies through Executive Order 13563 to develop balanced regulations by encouraging broad public participation in the regulatory process and an open exchange of ideas. Accordingly, the Department of Health and Human Services (HHS or the Department) urges all interested parties to examine this regulatory proposal carefully and to share your views with us, including any data to support your positions. If you have questions before submitting comments, please see the
If you are a person with a disability and/or a user of assistive technology who has difficulty accessing this document, please contact HRSA's Regulations Officer at: Room 13N82, 5600 Fishers Lane, Rockville, MD 20857; or by telephone at 301-443-1785, to obtain this information in an accessible format. This is not a toll free telephone number.
Please visit
Section 602 of Public Law 102-585, the “Veterans Health Care Act of 1992,” enacted section 340B of the PHSA entitled “Limitation on Prices of Drugs Purchased by Covered Entities,” which was codified at 42 U.S.C. 256b. The 340B Program permits covered entities “to stretch scarce Federal resources as far as possible, reaching more eligible patients and providing more comprehensive services.” H.R. REP. No. 102-384(II), at 12 (1992). The Secretary of the HHS delegated the authority to operate section 340B of the PHSA to the Administrator of HRSA. Pursuant to this delegation of authority, HRSA established and administers the 340B Program. Operationally, the 340B Program is housed within HRSA's Healthcare Systems Bureau (HSB), Office of Pharmacy Affairs (OPA). Eligible covered entity types are defined in section 340B(a)(4) of the PHSA, as amended. Section 340B of the PHSA instructs HHS to enter into pharmaceutical pricing agreements (PPA) with manufacturers of covered outpatient drugs. Manufacturers are required by section 1927(a)(5)(A) of the Social Security Act to enter into agreements with the Secretary of HHS that comply with section 340B of the PHSA if they participate in the Medicaid Drug Rebate Program. When a drug manufacturer signs a PPA, it agrees that the prices charged for covered outpatient drugs to covered entities will not exceed defined 340B ceiling prices, which are based on quarterly pricing data reported by manufacturers to the Centers for Medicare & Medicaid Services (CMS).
Section 7102 of the Patient Protection and Affordable Care Act (Pub. L. 111-148), as amended by section 2302 of the Health Care and Education Reconciliation Act (Pub. L. 111-152), hereinafter referred to as the “Affordable Care Act,” added section 340B(d)(3) of the PHSA, which requires the Secretary of HHS (or the Secretary) to promulgate a regulation establishing
In 2010, HHS issued an advanced notice of proposed rulemaking (ANPRM) that requested comments on the development of an ADR process (75 FR 57233, September 20, 2010). The ANPRM specifically requested comments on: (1) Administrative procedures, (2) existing models, (3) threshold requirements, (4) hearings, (5) decision-making officials or bodies, (6) appropriate appeals procedures, (7) deadlines, (8) discovery procedures, (9) manufacturer audits, (10) consolidation of manufacturer claims, (11) covered entity consolidation of claims; (12) claims by organizations representing covered entities, and (13) integration of dispute resolution with other 340B requirements added by the Affordable Care Act. HHS received 14 comments on the ANPRM. The comments received were considered in the development of this proposed rule.
HHS encourages all stakeholders to provide written comments on this NPRM. This proposed regulation, when finalized, will replace the 340B Program's guidelines on the informal dispute resolution process developed to resolve disputes between covered entities and manufacturers, which was published on December 12, 1996 (61 FR 65406).
The proposed revisions to 42 CFR part 10 are described according to the applicable section of the regulations. The United States District Court for the District of Columbia vacated the 340B Program Regulations at 42 CFR part 10 relating to Orphan Drugs (subpart C). (
HHS is proposing to add the following definitions: “Administrative Dispute Resolution Process,” “Administrative Dispute Resolution Panel (340B ADR Panel),” “claim,” and “consolidated claim.”
(a) Members of the 340B ADR Panel.
As required by section 340B(d)(3)(B)(i), regulations promulgated by the Secretary shall designate or establish a decision-making official or body within HHS to review and make a binding decision for claims filed by covered entities and manufacturers. HHS proposes to establish a decision-making body (referred to as the “340B ADR Panel” or “Panel”) to review and resolve such claims.
The proposed 340B ADR Panel will ensure an unbiased and fair review of the claims, and reduce the individual burden associated with having a single decision-making official who is solely responsible for reviewing and resolving claims. The proposed 340B ADR Panel will include three members, chosen from a roster of eligible individuals alternating from claim to claim, and one ex-officio, non-voting member chosen from the staff of OPA to facilitate the review and resolution of claims within a reasonable time frame. The proposed roster of eligible individuals will be comprised of Federal employees (
HHS proposes that for each filed claim that is reviewed, HSB will review the qualifications of individuals on the 340B ADR Panel roster and select those with expertise or familiarity with the appropriate aspects of the 340B Program. HHS also proposes that individuals serving on a 340B ADR Panel may be removed for cause. For example, if it is determined prior to or during the course of a Panel member's review of a claim that there is a conflict of interest, as described in subsection (b), with respect to that claim, the Panel member will be removed from the Panel and replaced by another individual from the 340B ADR Panel roster.
HHS is soliciting specific comments on the proposed size and composition of the 340B ADR Panel, in particular whether the 340B ADR Panel should be comprised of a set number of voting members to maintain consistency and transparency across each claim that is reviewed, whether HHS should retain the flexibility to appoint a requisite number of voting members based on the complexity of the claim and other factors, and whether the 340B ADR Panel should include at least one OPA staff member as a voting member or whether the inclusion of an OPA staff member as an ex-officio, non-voting member is sufficient to ensure adherence to 340B policies and procedures.
(b) Conflicts of interest.
To ensure fairness and objectiveness, HHS proposes that each 340B ADR Panel member be screened prior to reviewing a claim and not allowed to conduct a review if any conflicts of interest exist. For example, the individual would not review a claim if he or she has a conflict of interest with respect to the parties involved in the claim or the subject matter of the claim. HHS proposes that individuals be screened for conflicts of interest in accordance with U.S. Office of Government Ethics policies and procedures applicable to Federal employees. Conflicts of interest may include the following: (1) Financial interest; (2) family or close relation to a party involved; and (3) current or former business or employment relation to a party. The specific procedures for screening members of the panel prior to their service on the 340B ADR Panel will be detailed in future guidance.
(c) Duties of the 340B ADR Panel.
In subsection (c), HHS proposes that once the 340B ADR Panel receives the claim, the 340B ADR Panel will consider all documentation provided by the parties and may request additional information or clarification from any party involved with the claim. HHS also proposes that the 340B ADR Panel review claims in a session closed to the parties involved, including any associations or organizations, or legal counsel representing the parties.
In this subsection, HHS also proposes that the 340B ADR Panel may consult with subject matter experts within OPA regarding 340B program requirements while reviewing a claim. The 340B ADR Panel will provide a final decision only with respect to the claim. HHS proposes that the 340B ADR Panel's final decision must represent the decision of a majority of the Panel members but need not be unanimous.
(a) Claims permitted.
Section 7102 of the Affordable Care Act added section 340B(d)(3) of the PHSA, which instructs the Secretary to establish and implement a binding ADR process to resolve certain 340B Program statutory violations. Section 340B(d)(3)(A) of the PHSA specifies that the ADR process is to be used to resolve: (1) Claims by covered entities that they have been overcharged by manufacturers for drugs purchased under this section and (2) claims by manufacturers, after a manufacturer has conducted an audit of a covered entity, as authorized by section 340B(a)(5)(C) of the PHSA, that a covered entity has violated the prohibitions against duplicate discounts and diversion (sections 340B(a)(5)(A) and (B) of the PHSA).
(b) Requirements for filing a claim.
In subsection (b), HHS proposes that the covered entity and the manufacturer meet certain requirements for filing a claim. These proposed requirements will ensure that a claim of the type specified in section 340B(d)(3)(A) of the PHSA is the subject of the dispute.
The Department is proposing that covered entities and manufacturers file a written claim, based on the facts available, to HSB within 3 years of the date of the sale (or payment) at issue in the alleged violation and that any claim not filed within 3 years shall be time barred. The proposed requirement that a claim be filed within 3 years is consistent with the record retention expectations for the 340B Program and will ensure that covered entities and manufacturers have access to relevant records needed to review and respond to claims. This proposal ensures documents must be submitted with each claim to verify that the alleged violation is not time barred. This proposed requirement will prevent a party from asserting a claim that is stale. HHS requests public comment concerning the 3 year limitation on claims submission.
HHS is also proposing that once a claim is submitted and the opposing party has been notified of the claim, any file, document, or record associated with a claim be maintained by the covered entity and/or manufacturer until the 340B ADR Panel's final agency decision is issued.
In section 10.21(b)(2), HHS proposes that to be eligible for the ADR process, each claim filed by a covered entity must include documents sufficient to demonstrate a covered entity's claim that it has been overcharged by a manufacturer, along with any such documentation as may be requested by HSB to evaluate the veracity of the claim. Such documentation may include: (1) A 340B purchasing account invoice which shows the purchase price by national drug code (NDC), less any taxes and fees; (2) the 340B ceiling price for the drug during the quarter(s) corresponding to the time period(s) of the claim; and (3) documentation of the attempts made to purchase the drug via a 340B account at the ceiling price, which resulted in the instance of overcharging. HHS believes that these documents are readily available to a covered entity through the usual course of business and should not be overly burdensome to produce, however HHS requests public comment on the feasibility or producing the documentation as proposed. HHS may also request that the covered entity provide it with a written summary of attempts to work in good faith to resolve the instance of overcharging with the manufacturer at issue.
Pursuant to section 340B(d)(1)(B) of the PHSA, HHS is developing a system to verify the ceiling price of a 340B drug and allow covered entities to access and verify the ceiling price. Until such system is developed, HHS has access to ceiling price data and will ensure that the 340B ADR panel will also have access as they evaluate any particular claim. Covered entities will be able to access ceiling price information through this system, which may lessen the burden in submitting the information accompanying a claim.
In section 10.21(b)(3), HHS proposes that to be eligible for the 340B ADR process, each claim filed by a manufacturer must include documents sufficient to demonstrate a manufacturer's claim that a covered entity has violated the prohibition on diversion and/or duplicate discount, along with any such documentation as may be requested by HSB to evaluate the veracity of the claim. Such documentation may include: (1) A final audit report which indicates that the manufacturer audited the covered entity for compliance with the prohibition on diversion (section 340B(a)(5)(B) of the PHSA) and/or duplicate discounts (section 340B(a)(5)(A) of the PHSA) and (2) the covered entity's written response to the manufacturer's audit finding(s). HHS may also request that the manufacturer submit a written summary of attempts to work in good faith to resolve the claim with the covered entity.
(c) Consolidation of claims.
In subsection (c), HHS proposes that, if requested, covered entities or manufacturers may be permitted to consolidate their individual claims. Section 340B(d)(3)(B)(vi) of the PHSA permits “multiple covered entities to jointly assert claims of overcharges by the same manufacturer for the same drug or drugs in one administrative proceeding. . . .” HHS proposes that for consolidated claims, the claim must list each covered entity and include documentation and/or information from each covered entity demonstrating that the covered entity meets all of the requirements for filing a claim with HHS and that a letter requesting consolidation of claims must also accompany the claim and must document that each covered entity consents to the consolidation of the claim.
Pursuant to section 340B(d)(3)(B)(vi) of the PHSA, consolidated claims are also permitted on behalf of covered entities by associations or organizations representing their interests. Therefore, HHS proposes that the covered entities must be members of the association or the organization representing them and that each covered entity must meet the requirements listed in subsection (b) for filing a claim with HSB. The proposed consolidated claim must assert overcharging by the same manufacturer for the same drug(s), and the organization or association will be responsible for filing the claim. HHS also proposes requiring that a letter requesting consolidation of claims must accompany the claim and must document that each covered entity consents to the organization or association asserting a claim on its behalf.
Similarly, at the request of two or more manufacturers, section 340B(d)(3)(B)(v) of the PHSA permits the consolidation of claims brought by more than one manufacturer against the same covered entity if consolidation is consistent with the statutory goals of fairness and economy of resources. This NPRM proposes that the claim must list each manufacturer and include documentation and/or information from each manufacturer demonstrating that the manufacturer meets the
With regard to the consolidation of claims by manufacturers against a covered entity, HHS is seeking specific comment on the grounds under which consolidation would be consistent with the statutory goals of fairness and economy of resources, as required by section 340B(d)(3)(B)(v) of the PHSA. In addition, while HHS is proposing, as required by the 340B statute, an ADR process that allows manufacturers to consolidate claims against a covered entity, we recognize the operational challenges presented by the statutory requirement for a manufacturer to first audit the covered entity. HHS is, therefore, seeking comment on how manufacturers requesting a consolidated claim against a covered entity can satisfy the audit requirement.
(d) Deadlines and procedures for filing a claim.
In subsection (d), HHS proposes that covered entities and manufacturers file a claim with HSB demonstrating that they satisfy the requirements described in subsection (b) and that the party filing a claim must send written notice to the opposing party regarding the claim within 3 business days of submitting the claim and the party must submit confirmation of the opposing party's receipt or acknowledgement of receipt within 3 business days. HHS also proposes that the written notice to the opposing party must include a summary of the documents submitted as part of the claim.
HHS proposes that HSB will review the information submitted as part of the claim to verify that the requirements for filing a claim have been met. HSB would contact the initiating party once the claim has been received and may request additional information before accepting a claim for review by the 340B ADR Panel. If additional information is requested, the party filing the claim will have 20 business days of receipt of the request to respond. Claims will not move forward for review by the 340B ADR Panel if the initiating party does not respond to the request for additional information or if a party files a claim for any purpose other than those specified in the statute (
HHS proposes that HSB will make a determination as to whether all requirements are met and provide written notice to all parties within 20 business days after receiving the claim and any subsequently requested information, which will be transmitted via both hard copy and email. If HSB determines the claim includes all necessary documentation and meets the requirements for filing a claim, the claim will be forwarded to the 340B ADR Panel for review. HSB would provide additional information on the 340B ADR process to all parties at that time, including contact information for requested follow-up communications and an approximate timeframe for the 340B ADR Panel's review.
HHS proposes that if the claim does not move forward for review by the ADR Panel, written notice will be sent by HSB to the parties involved that includes the basis for the decision and will advise the party that they may revise and refile the claim if the party has new information to support the alleged statutory violation.
(e) Responding to a submitted claim.
In subsection (e), HHS proposes that once the parties have been notified by HSB that the claim has met the requirements in subsection (b) and will move forward for review by the 340B ADR Panel, the opposing party will have 20 business days to submit a written response to the allegation to the 340B ADR Panel and the party who filed the claim. Subsequent requests for information regarding the claim would be made by the 340B ADR Panel as needed, and the 340B ADR Panel will consider any additional information that was provided by the parties involved. However, if an opposing party does not respond to a request for information from HSB or the 340B ADR Panel or otherwise elects not to participate in the 340B ADR process, the 340B ADR Panel will make a decision on the claim based on the information submitted in the claim.
Pursuant to section 340B(d)(3)(B)(iii) of the PHSA, regulations promulgated by the Secretary for the 340B ADR process will establish procedures by which a covered entity may discover or obtain information and documents from manufacturers and third parties relevant to a claim that the covered entity has been overcharged by the manufacturer. This NPRM proposes that such covered entity information requests be facilitated by the 340B ADR Panel. HHS proposes that a covered entity must submit a written request for information to the 340B ADR Panel no later than 20 business days after the entity was notified by HSB that the claim would move forward for the ADR Panel's review. The 340B ADR Panel will review the information/document request to ensure that it is reasonable and within the scope of the asserted claim. The 340B ADR Panel will notify the covered entity in writing if any request is deemed reasonable and within the scope of the asserted claim and permit the covered entity to submit a revised information/document request, if it is not.
In this section, HHS proposes that the 340B ADR Panel will consider relevant factors, such as the scope of the information/document request, whether there are consolidated claims, or the involvement of one or more third parties in distributing drugs on behalf of the manufacturer and that once reviewed, the 340B ADR Panel will submit the information/document request to the manufacturer, which must respond within 20 business days.
HHS also proposes that the manufacturer must fully respond in writing to the information request and submit its response to the 340B ADR Panel by the stated deadline and that the manufacturer is responsible for obtaining relevant information/documents from wholesalers or other third parties that may facilitate sales or distribution of its drugs to covered entities. HHS proposes that if a manufacturer anticipates it will not be able to fully respond by the deadline, the manufacturer may request one extension in writing within 15 business days. The extension request that is submitted to the 340B ADR Panel must include any available information, the reason why the deadline is not feasible, and outline a proposed timeline for fully responding to the information request. The 340B ADR Panel will review the extension request and notify both the manufacturer and the covered entity in writing as to whether the request for an extension is granted and the date of the new deadline. If a manufacturer does not respond to a request for information from HSB or the 340B ADR Panel, HHS proposes that the 340B ADR Panel will make a decision on the claim based on the information submitted in the claim package that moved forward for review.
In § 10.23, HHS proposes that the 340B ADR Panel review the documents submitted by the parties and determine if there is adequate support to conclude that a violation as described in subsection (a)(1) or (2) of § 10.21 has occurred. The 340B ADR Panel will prepare a draft agency decision letter, which includes the 340B ADR Panel's findings and conclusions regarding the alleged violation. HHS is proposing a process whereby the 340B ADR Panel's draft agency decision letter will be sent to all parties, and the parties involved will have 20 business days to respond to the 340 ADR Panel. HHS is seeking specific comments on this process and whether this proposed process will facilitate or hinder the fair, efficient, and timely resolution of claims.
HHS also proposes that once the parties have reviewed and submitted comments to the draft agency decision letter, the 340B ADR Panel will prepare and submit its final agency decision letter to all parties in the dispute, which may incorporate rebuttals from the parties that were considered by the 340B ADR Panel to help inform the final agency decision. The final agency decision made by 340B ADR Panel will conclude the administrative resolution process; however, HHS proposes that the final agency decision letter also be submitted to HSB to take enforcement action or apply sanctions, as appropriate. For example, if the 340B ADR Panel makes a decision that a covered entity has violated the prohibition against diversion, HSB may require, as a sanction, that the covered entity repay the affected manufacturer. If the 340B ADR Panel makes a decision that a manufacturer overcharged a covered entity, HSB may require, as a sanction, that the manufacturer refund or issue a credit to the affected covered entity. In both cases, HSB will work with the party in violation on any remedy and corrective action.
HHS proposes that the 340B ADR Panel's final agency decision letter will be binding upon the parties involved, unless invalidated by an order of a court of competent jurisdiction in accordance with section 340B(d)(3)(C) of the PHSA. HHS may, at its sole discretion, publish a summary of the claims that have gone through the 340B ADR process on the HRSA Web site, including the names of the parties and the nature of the 340B ADR Panel's findings (
HHS has examined the effects of this proposed rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 8, 2011), the Regulatory Flexibility Act (September 19, 1980, Pub. L. 96-354), the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).
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 is supplemental to and reaffirms the principles, structures, and definitions governing regulatory review as established in Executive Order 12866, emphasizing the importance of quantifying both costs and benefits, of reducing costs, harmonizing rules, and promoting flexibility. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) Having an annual effect on the economy of $100 million or more in any one year, or adversely and materially affecting a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities (also referred to as “economically significant”); (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. A regulatory impact analysis must be prepared for major rules with economically significant effects ($100 million or more in any one year), and a “significant” regulatory action is subject to review by the Office of Management and Budget (OMB).
This proposed rule is not likely to have economic impacts of $100 million or more in any one year; therefore, it has not been designated an “economically significant” rule under section 3(f)(1) of Executive Order 12866. This proposed rule creates a framework for the Department to resolve certain disputed claims regarding manufacturers overcharging covered entities and disputed claims of diversion and duplicate discounts by covered entities audited by manufacturers under the 340B Program. HHS does not anticipate the introduction of an administrative dispute resolution process to result in significant economic impacts.
The Regulatory Flexibility Act (5 U.S.C. 601
The proposed rule would affect drug manufacturers (North American Industry Classification System code 325412: Pharmaceutical Preparation Manufacturing). The small business size standard for drug manufacturers is 750 employees. Approximately 600 drug manufacturers participate in the 340B Program. While it is possible to estimate the impact of the proposed rule on the industry as a whole, the data necessary to project changes for specific manufacturers or groups of manufacturers is not available, as HRSA does not collect the information necessary to assess the size of an individual manufacturer that participates in the 340B Program. The proposed rule would also affect health care providers. For purposes of the RFA, HHS considers all health care providers to be small entities either by virtue of meeting the Small Business Administration (SBA) size standard for a small business, or for being a nonprofit organization that is not dominant in its market. The current SBA size standard for health care providers ranges from annual receipts of $7 million to $35.5 million. As of July 1, 2016, over 12,000 covered entities participate in the 340B Program, which represent safety-net healthcare providers across the country.
The proposed rule introduces an administrative mechanism to review claims by manufacturers that covered entities have violated certain statutory obligations and claims by covered entities that have been overcharged for
HHS believes the proposed administrative dispute resolution process will provide a cost-efficient option for resolving claims that would otherwise remain unresolved or require litigation. The proposed rule provides an option to consolidate claims by similar situated entities, and covered entities may have claims asserted on their behalf by associations or organizations which could reduce costs. HHS has determined, and the Secretary certifies that this final rule will not have a significant economic impact on a substantial number of small health care providers or a significant impact on the operations of a substantial number of small manufacturers; therefore we are not preparing an analysis of impact for the purposes of the RFA. HHS estimates that the economic impact on small entities and small manufacturers will be minimal and less than 3 percent. HHS welcomes comments concerning the impact of this proposed rule on small manufacturers and small health care providers.
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 million or more (adjusted annually for inflation) in any one year.” In 2014, that threshold level was approximately $155 million. HHS does not expect this proposed rule to exceed the threshold.
HHS has reviewed this proposed rule in accordance with Executive Order 13132 regarding federalism, and has determined that it does not have “federalism implications.” This proposed rule would not “have substantial direct effects on the States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” The proposals in this notice of proposed rulemaking, if implemented, would not adversely affect the following family elements: family safety, family stability, marital commitment; parental rights in the education, nurture, and supervision of their children; family functioning, disposable income, or poverty; or the behavior and personal responsibility of youth, as determined under section 654(c) of the Treasury and General Government Appropriations Act of 1999. HHS invites additional comments on the impact of this proposed rule from affected stakeholders.
The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that OMB approve all collections of information by a Federal agency from the public before they can be implemented. This proposed rule will not have a significant impact on the current reporting and recordkeeping burden for manufacturers or covered entities under the 340B Program. Based on current experience with the informal ADR process offered by the 340B Program, there have only been four requests for informal dispute resolution since the inception of the Program. Of the four dispute resolution requests, two were terminated by HRSA due to non-participation by one of the parties, another was dismissed due to lack of sufficient evidence, and the last was terminated because the parties disputed the existence of any attempt of good faith resolution. The relatively small number is attributed to the success of parties' attempts to resolve issues in good faith. Due to this very small number of informal dispute resolution requests, there has been very limited experience to date with dispute resolution record keeping. Changes proposed in this rulemaking would not result in significant reporting or recordkeeping burden. Comments are welcome on the accuracy of this statement.
Biologics, Business and industry, Diseases, Drugs, Health, Health care, Health facilities, Hospitals, 340B drug pricing program.
For the reasons set forth in the preamble, the Department of Health and Human Services proposes to amend 42 CFR part 10 as follows:
Sec. 340B of the Public Health Service Act (42 U.S.C. 256b), as amended.
The Secretary shall establish a decision-making body known as the Administrative Dispute Resolution Panel (340B ADR Panel) to review and make a binding final agency decision
(a)
(A) Select three voting members of the 340B ADR Panel from a roster of eligible individuals and one ex-officio, non-voting member from the staff of HRSA's Office of Pharmacy Affairs (OPA);
(B) Alternate the individuals on the 340B ADR Panel for each claim;
(C) Remove an individual from the 340B ADR Panel for cause; and
(D) Appoint replacement members should an individual be unable to complete his or her duties.
(2) No member of the 340B ADR Panel may have a conflict of interest, as defined in subsection (b) of this section.
(b)
(1) Financial interest in a party involved, a subsidiary of a party involved, or in the claim before the 340B ADR Panel;
(2) Family or close relation to a party involved; and
(3) Current or former business or employment relation to a party.
(c)
(1) Review and evaluate documents or information submitted by covered entities and manufacturers;
(2) Request additional information or clarification of an issue from any or all parties to make a final decision;
(3) Evaluate a claim in a separate session from the parties involved;
(4) Consult with OPA regarding any inquiries or concerns while reviewing a claim; and
(5) Make a final agency decision on each claim that will be communicated to HRSA for appropriate enforcement.
(a)
(1) Claims by a covered entity that it has been overcharged, as defined in § 10.11(b), by a manufacturer for a covered outpatient drug; and
(2) Claims by a manufacturer, after it has conducted an audit of a covered entity pursuant to section 340B(a)(5)(C) of the PHSA, that the covered entity has violated section 340B(a)(5)(A) of the PHSA, regarding the prohibition of duplicate discounts, or section 340B(a)(5)(B) of the PHSA, regarding the prohibition of the resale or transfer of covered outpatient drugs to a person who is not a patient of the covered entity.
(b)
(2) A covered entity filing a claim described in paragraph (a)(1) of this section must provide documents sufficient to demonstrate its claim that it has been overcharged by a manufacturer, along with any such other documentation as may be requested by HRSA.
(3) A manufacturer filing a claim under paragraph (a)(2) of this section must provide documents sufficient to demonstrate its claim that a covered entity has violated the prohibition on diversion and/or duplicate discount, along with any such documentation as may be requested by HRSA.
(c)
(2) An association or organization may file claims of overcharges by the same manufacturer for the same drug or drugs on behalf of multiple covered entities if each covered entity represented could file a claim against the manufacturer, is a member of the association or organization, meets the requirements described in paragraph (b) of this section, including submission of the required documentation, and each covered entity has agreed to representation by the association or organization on its behalf.
(3) A manufacturer or manufacturers may request to consolidate claims brought by more than one manufacturer against the same covered entity if each manufacturer could individually file a claim against the covered entity, consents to the jointly filed claim, meets the requirements described in paragraph (b) of this section for that claim, and the 340B ADR Panel determines that such consolidation is appropriate and consistent with the goals of fairness and economy of resources. The 340B ADR Panel will not permit joint claims filed on behalf of manufacturers by associations or organizations representing their interests.
(d)
(2) The party filing the claim must notify the opposing party in writing within 3 business days of the date the claim was filed and must provide documentation of such notification to HRSA. The written notice to the opposing party must include a summary of the documents submitted as part of the claim.
(3) HRSA will review all information submitted by the party filing the claim and will make a determination as to whether all requirements are met and provide written notice to all parties within 20 business days after receiving the claim and any subsequently requested information.
(A)
(B)
(e)
(a) A covered entity must submit a written request for additional information necessary to support its claim to the 340B ADR Panel within 20 business days of the claim acceptance date. The 340B ADR Panel will review the information request and notify the covered entity if the information request is beyond the scope of the claim and will permit the covered entity to resubmit a revised information request if necessary.
(b) The 340B ADR Panel will submit the covered entity's information request to the manufacturer who must respond to the request within 20 business days.
(c) The manufacturer must fully respond, in writing, to an information request from the 340B ADR Panel by the response deadline.
(1) A manufacturer is responsible for obtaining relevant information from any wholesaler or other third party that may facilitate the sale or distribution of its drugs to covered entities.
(2) If a manufacturer anticipates that it will not be able to respond to the information request by the deadline, it can request one extension by notifying the 340B ADR Panel in writing within 15 business days of receipt of the request.
(3) A request to extend the deadline must include the reason why the current deadline is not feasible and must outline the proposed timeline for fully responding to the information request.
(4) The 340B ADR Panel may approve or disapprove the request for an extension of time and will notify all parties in writing of its decision.
(a) The 340B ADR Panel will review documents submitted by the parties and determine if there is adequate support to conclude that a violation as described in paragraph (a)(1) or (2) of § 10.21 has occurred.
(1) The 340B ADR Panel will prepare a draft agency decision letter based on its review and evaluation of all documents submitted by the parties, including documents provided as required in paragraph (b) of § 10.21, information requests in support of a claim, and responses to a claim.
(2) The draft agency decision letter will be sent to all parties and will include the 340B ADR Panel's preliminary findings regarding the alleged violation.
(3) All parties will have 20 business days to respond to the 340B ADR Panel's draft agency decision letter.
(b) The 340B ADR Panel will review the responses of all parties in producing the final agency decision letter.
(1) The final agency decision letter will represent the decision of a majority of the 340B ADR Panel's findings regarding the claim and discuss the findings supporting the decision.
(2) The 340B ADR Panel will submit the binding final agency decision letter to all parties, and to HRSA, as necessary, for appropriate enforcement action.
Federal Communications Commission.
Proposed rule.
In this document, the Federal Communications Commission (Commission) seeks comment on proposed amendments regarding technical standards applicable to data communications that may be transmitted in the Amateur Radio Service. Specifically, we propose to remove limitations on the symbol rate (also known as the baud rate) applicable to data emissions in certain amateur bands. We believe that this rule change will allow amateur service licensees to use modern digital emissions, thereby better fulfilling the purposes of the amateur service and enhancing its usefulness.
Submit comments on or before October 11, 2016, and reply comments are due on or before November 10, 2016.
You may submit comments, identified by WT Docket No. 16-239, by any of the following methods:
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Scot Stone,
This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM), adopted July 27, 2016 and released July 28, 2016. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW., Room CY-A257, Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. This document will also be available via ECFS at
1. In the
2. The limitations on radioteletype (RTTY) and data transmissions below 450 MHz vary depending on the frequency band, and on whether the digital code used to encode the signal being transmitted is one of the codes specified in section 97.309(a) of the Commission's rules—Baudot, AMTOR, and ASCII (the “specified digital codes”). Section 97.307(f) limits the symbol rate for the specified digital codes, and the bandwidth for unspecified digital codes, as follows:
3.
4. Many commenters agree that the baud rate restriction should be eliminated, and we seek comment on the reasons supporting such a view. For example, one commenter states that “part of the purpose of the amateur radio service is the advancement of radio and communications technology. Denying the ability to research and implement higher symbol rates directly contradicts the very purpose for amateur radio.” Another commenter notes that “[t]he rest of the amateur radio operators in the world do not have this restrictive symbol rate requirement that is in the current part 97” and eliminating this restriction will allow the Emergency Communications Community to “benefit by being better able to meet its mission.” Many commenters cite permitting PACTOR 4 at HF as a reason for changing the rule, particularly to facilitate more efficient transmission of emergency communications. Other commenters, however, are concerned that facilitating faster data throughput will actually increase congestion by encouraging the transmission of larger amounts of data and new types of content.
5. We tentatively agree that a baud rate restriction has become unnecessary due to advances in modulation techniques, and no longer serves a useful purpose. Our rules do not impose a symbol rate limit on data emissions in any other amateur bands or in any other radio service. In addition, removing the baud rate restriction could encourage individuals to more fully utilize the amateur service in experimentation and could promote innovation, more efficient use of the radio spectrum currently allocated to the amateur service, and the ability of the amateur service to support public safety efforts in the event of an emergency. Facilitating the ability of the amateur service to transmit and experiment with technologies currently used in consumer and commercial products furthers this goal. Consequently, we propose to remove the baud rate limits in section 97.307(f). We seek comment on this proposal. In particular, we seek comment on whether eliminating the baud rate limits would improve amateur communications, or would instead increase congestion. Regarding the likelihood that eliminating the baud rate limitation would increase congestion, we seek comment on whether the costs of such an increase are outweighed by the benefits that are likely to flow from the elimination of the limits, and whether there are ways to mitigate these costs without losing the benefits of the proposed initiative. More generally, we seek comment on whether there are other costs and benefits to the proposal and, when weighing all the factors, whether the benefits of the proposal outweigh its costs. Commenters opposed to eliminating the baud rate limits should also explain whether their concerns relate to all of the bands at issue, or only certain spectrum.
6. We decline, however, to propose to add a 2.8 kilohertz bandwidth limitation for RTTY and data emissions in the MF/HF bands as requested by the ARRL Petition. ARRL cites the 60 meter band as precedent for imposing a 2.8 kilohertz bandwidth limitation on data emissions, which ARRL states “would accommodate the HF data emissions that are in common use today.” The commenters who support eliminating the baud rate restriction also generally agree with the ARRL's requested 2.8 kilohertz bandwidth limitation, but others who support eliminating the baud rate restriction favor a narrower bandwidth limitation in order to protect low-bandwidth modes of communication.
7. After reviewing the record, we tentatively conclude that a specific bandwidth limitation for RTTY and data emissions in the MF/HF bands is not necessary. We note that only the digital codes specified in section 97.309(a) may be used for MF/HF data emissions, and our rules do not impose any specific bandwidth limitation on use of the specified digital codes in any frequency band other than the 60 meter band. The 60 meter band cited by ARRL is a special case, however, given that amateur operators are permitted to operate only on specific frequencies rather than across the entire band, and are permitted to use only particular data and RTTY emission designators, in order to protect primary Federal voice operations in the band. Section 97.307(a) of the Commission's rules already provides that no amateur station transmission shall occupy more bandwidth than necessary for the information rate and emission type being transmitted, in accordance with good amateur practice, and section 97.307(c) already prohibits interference from spurious emissions (
8. We also observe that while a 2.8 kilohertz bandwidth limitation would accommodate HF data emissions that are in common use today, such a limitation could, at the same time, undermine the goal—fundamental to the amateur service—of encouraging advances in technology if amateur radio operators were thereby prevented from stepping beyond today's radio science. Imposing a maximum bandwidth would result in a loss of flexibility to develop
9. While we tentatively conclude that a specific bandwidth limitation for RTTY and data emissions in the MF/HF bands is not necessary, we nonetheless request comment on whether we should establish emission bandwidth standards for amateur service MF/HF RTTY and data emissions. Commenters favoring such action should address what the maximum bandwidth should be, the basis for the particular limitation the commenter proposes, and whether the limit should apply across the bands or only in particular subbands. Commenters should explain the grounds for departing from the generally applicable standards.
10. In summary, we believe that the public interest may be served by revising the amateur service rules to eliminate the current baud rate limitations for data emissions consistent with ARRL's Petition to allow amateur service licensees to use modern digital emissions, thereby furthering the purposes of the amateur service and enhancing the usefulness of the service. We do not, however, propose a bandwidth limitation for data emissions in the MF and HF bands to replace the baud rate limitations, because the rules' current approach for limiting bandwidth use by amateur stations using one of the specified digital codes to encode the signal being transmitted appears sufficient to ensure that general access to the band by licensees in the amateur service does not become unduly impaired.
11.
12. In the NPRM, we propose to amend the amateur service rules to change a technical rule applicable to data emissions that an amateur radio operator may use in his or her communications with other amateur radio operators. Because “small entities,” as defined in the Regulatory Flexibility Act, do not include a “person” as the term is used in this proceeding or an individual, the proposed rules do not apply to “small entities.” Rather, they apply exclusively to individuals who hold certain Commission authorizations. Therefore, we certify that the proposal in this NPRM, if adopted, will not have a significant economic impact on a substantial number of small entities.
13.
14.
15.
16.
Radio.
For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 97 as follows:
48 Stat. 1066, 1082, as amended; 47 U.S.C. 154, 303. Interpret or apply 48 Stat. 1064-1068, 1081-1105, as amended; 47 U.S.C. 151-155, 301-609, unless otherwise noted.
(c) * * *
(f) * * *
(3) Only an RTTY or data emission using a specified digital code listed in § 97.309(a) of this part may be transmitted.
(4) [Reserved]
(5) An RTTY, data or multiplexed emission using a specified digital code listed in § 97.309(a) of this part may be transmitted. An RTTY, data or multiplexed emission using an unspecified digital code under the limitations listed in § 97.309(b) of this part also may be transmitted, provided the bandwidth does not exceed 20 kHz.
(6) An RTTY, data or multiplexed emission using a specified digital code listed in § 97.309(a) of this part may be transmitted. An RTTY, data or multiplexed emission using an unspecified digital code under the limitations listed in § 97.309(b) of this part also may be transmitted, provided the bandwidth does not exceed 100 kHz.
Fish and Wildlife Service, Interior.
Proposed rule; supplemental.
We, the U.S. Fish and Wildlife Service (Service), proposed in an earlier document this year to establish annual hunting regulations for certain migratory game birds for the 2017-18 hunting season. This supplement to that proposed rule provides the regulatory alternatives for the 2017-18 duck hunting seasons, announces the Service Migratory Bird Regulations Committee (SRC) and Flyway Council meetings, and provides Flyway Council recommendations resulting from their March meetings.
You may submit comments on the proposals by one of the following methods:
•
•
We will not accept emailed or faxed comments. We will post all comments on
Ron W. Kokel at: Division of Migratory Bird Management, U.S. Fish and Wildlife Service, Department of the Interior, MS: MB, 5275 Leesburg Pike, Falls Church, VA 22041; (703) 358-1714.
As part of the Department of the Interior's retrospective regulatory review, we developed a schedule for migratory game bird hunting regulations that is more efficient and provides hunting season dates much earlier than was possible under the old process. The new process makes planning much easier for the States and all parties interested in migratory bird hunting. Beginning last year with the development of the 2016-17 hunting seasons, we are using a new schedule for establishing our annual migratory game bird hunting regulations. We combine the previously used early- and late-season regulatory processes into a single process, and make decisions for harvest management based on predictions derived from long-term biological information and established harvest strategies to establish migratory bird hunting seasons much earlier than the system we used for many years. Under the new process, we develop proposed hunting season frameworks for a given year in the fall of the prior year. We then finalize those frameworks a few months later, thereby enabling the State agencies to select and publish their season dates in early summer. We provided a detailed overview of the new process in the June 10, 2016,
The SRC will meet October 25-26, 2016, to review information on the current status of migratory game birds and develop 2017-18 migratory game bird regulations recommendations for these species. In accordance with Departmental policy, these meetings are open to public observation. You may submit written comments to the Service on the matters discussed.
Service representatives will be present at the individual meetings of the four Flyway Councils this August, September, and October. Although agendas are not yet available, these meetings usually commence at 8 a.m. on the days indicated.
On June 10, 2016, we published a proposal to amend title 50 of the Code of Federal Regulations (CFR) at part 20 (81 FR 38050). The proposal provided a background and overview of the migratory bird hunting regulations process, and addressed the establishment of seasons, limits, and other regulations for hunting migratory game birds under §§ 20.101 through 20.107, 20.109, and 20.110 of subpart K. This document is the second in a series
All sections of this and subsequent documents outlining hunting frameworks and guidelines are organized under the numbered headings set forth in the June 10, 2016, proposed rule (81 FR 38050). Later sections of this and subsequent documents will refer only to numbered items requiring your attention. Therefore, it is important to note that we will omit those items requiring no attention, and remaining numbered items will be discontinuous, thereby making the list appear incomplete.
The regulatory alternatives for the 2017-18 duck hunting seasons are contained at the end of this document. We plan to publish proposed season frameworks in mid-December 2016. We plan to publish final season frameworks in late February 2017.
This proposed rulemaking describes recommended changes or specific preliminary proposals that vary from the 2016-17 regulations and issues requiring discussion, action, or the attention of the States or tribes. We will publish responses to all proposals and written comments when we develop final frameworks for the 2017-18 season. We seek additional information and comments on this supplemental proposed rule.
New proposals and modifications to previously described proposals are discussed below. Wherever possible, they are discussed under headings corresponding to the numbered items identified in the June 10, 2016, proposed rule (81 FR 38050). Only those categories requiring your attention or for which we received Flyway Council recommendations are discussed below.
Duck harvest management categories are: (A) General Harvest Strategy; (B) Regulatory Alternatives, including specification of framework dates, season length, and bag limits; (C) Zones and Split Seasons; and (D) Special Seasons/Species Management.
Regarding the Mississippi Flyway Council recommendation to limit regulatory changes to one step per year, we recognize the longstanding interest by the Council to impose a one-step constraint on regulatory changes. We note that the Central and Mississippi Flyways have worked with Service staff over the past 2 years to re-visit the AHM protocol for managing harvest of mid-continent mallards (
Thus, the regulatory alternatives proposed in the June 10, 2016,
The Department of the Interior's policy is, whenever practicable, to afford the public an opportunity to participate in the rulemaking process. Accordingly, we invite interested persons to submit written comments, suggestions, or recommendations regarding the proposed regulations. Before promulgation of final migratory game bird hunting regulations, we will take into consideration all comments we receive. Such comments, and any additional information we receive, may lead to final regulations that differ from these proposals.
You may submit your comments and materials concerning the proposed rule by one of the methods listed in
We will consider, but possibly may not respond in detail to, each comment. As in the past, we will summarize all comments we receive during the comment period and respond to them after the closing date in any final rules.
Based on our most current data, we are affirming our required determinations made in the June 10, 2016, proposed rule (81 FR 38050); for descriptions of our actions to ensure compliance with the following statutes and Executive Orders, see that document:
• National Environmental Policy Act;
• Endangered Species Act;
• Regulatory Flexibility Act;
• Small Business Regulatory Enforcement Fairness Act;
• Paperwork Reduction Act;
• Unfunded Mandates Reform Act; and
• Executive Orders 12630, 12866, 12988, 13132, 13175, 13211, and 13563.
Exports, Hunting, Imports, Reporting and recordkeeping requirements, Transportation, Wildlife.
The rules that eventually will be promulgated for the 2017-18 hunting season are authorized under 16 U.S.C. 703-711, 16 U.S.C. 712, and 16 U.S.C. 742 a-j.
Office of the Secretary, USDA; Drug Enforcement Administration, DOJ; Food and Drug Administration, HHS.
Notice
The U.S. Department of Agriculture, in consultation with the U.S. Drug Enforcement Administration and the U.S. Food and Drug Administration, has developed a
This Statement of Principles is applicable August 12, 2016.
Michael Poe, Telephone Number:(202) 720-3257.
With publication of this notice, the U.S. Department of Agriculture (USDA) issues, with the concurrence of the U.S. Drug Enforcement Administration (DEA) and the U.S. Food and Drug Administration (FDA), the following Statement of Principles regarding the applicability of Federal laws to activities associated with growing and cultivating industrial hemp:
Section 7606 of the Agricultural Act of 2014 legalized the growing and cultivating of industrial hemp for research purposes in States where such growth and cultivation is legal under State law, notwithstanding existing Federal statutes that would otherwise criminalize such conduct. The statutorily sanctioned conduct, however, was limited to growth and cultivation by an institution of higher education or State department of agriculture for purposes of agricultural or other academic research or under the auspices of a State agricultural pilot program for the growth, cultivation, or marketing of industrial hemp.
Section 7606 authorized State departments of agriculture to promulgate regulations to carry out these pilot programs but did not provide a specific delegation to the U.S. Department of Agriculture (USDA) or any other agency to implement the program. As well, the statute left open many questions regarding the continuing application of Federal drug control statutes to the growth, cultivation, manufacture, and distribution of industrial hemp products, as well as the extent to which growth by private parties and sale of industrial hemp products are permissible. Section 7606 did not remove industrial hemp from the controlled substances list. Therefore, Federal law continues to restrict hemp-related activities, to the extent that those activities have not been legalized under section 7606.
USDA, having consulted with and received concurrence from the U.S. Drug Enforcement Administration (DEA) and the U.S. Food and Drug Administration (FDA), therefore, is issuing this statement of principles to inform the public regarding how Federal law applies to activities involving industrial hemp so that individuals, institutions, and States that wish to participate in industrial hemp agricultural pilot programs can do so in accordance with Federal law.
• The growth and cultivation of industrial hemp may only take place in accordance with an agricultural pilot program to study the growth, cultivation, or marketing of industrial hemp established by a State department of agriculture or State agency responsible for agriculture in a State where the production of industrial hemp is otherwise legal under State law.
• The State agricultural pilot program must provide for State registration and certification of sites used for growing or cultivating industrial hemp. Although registration and certification is not further defined, it is recommended that such registration should include the name of the authorized manufacturer, the period of licensure or other time period during which such person is authorized by the State to manufacture industrial hemp, and the location, including Global Positioning System coordinates, where such person is authorized to manufacture industrial hemp.
• Only State departments of agriculture, and persons licensed, registered, or otherwise authorized by them to conduct research under an agricultural pilot program in accordance with section 7606, and institutions of higher education (as defined in section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)), or persons employed by or under a production contract or lease with them to conduct such research, may grow or cultivate industrial hemp as part of the agricultural pilot program.
• The term “industrial hemp” includes the plant
• For purposes of marketing research by institutions of higher education or State departments of agriculture (including distribution of marketing materials), but not for the purpose of general commercial activity, industrial hemp products may be sold in a State with an agricultural pilot program or among States with agricultural pilot programs but may not be sold in States where such sale is prohibited. Industrial hemp plants and seeds may not be transported across State lines.
• Section 7606 specifically authorized certain entities to “grow or cultivate” industrial hemp but did not eliminate the requirement under the Controlled Substances Import and
• Section 7606 did not amend the Federal Food, Drug, and Cosmetic Act. For example, section 7606 did not alter the approval process for new drug applications, the requirements for the conduct of clinical or nonclinical research, the oversight of marketing claims, or any other authorities of the FDA as they are set forth in that Act.
• The Federal Government does not construe section 7606 to alter the requirements of the Controlled Substances Act (CSA) that apply to the manufacture, distribution, and dispensing of drug products containing controlled substances. Manufacturers, distributors, dispensers of drug products derived from cannabis plants, as well as those conducting research with such drug products, must continue to adhere to the CSA requirements.
• Institutions of higher education and other participants authorized to carry out agricultural pilot programs under section 7606 may be able to participate in USDA research or other programs to the extent otherwise eligible for participation in those programs.
This Statement of Principles does not establish any binding legal requirements. It is, therefore, exempt from notice and comment rulemaking requirements under the Administrative Procedure Act pursuant to 5 U.S.C. 553(b). 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). USDA has determined that this Statement of Principles does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act, 44 U.S.C. 3501,
Animal and Plant Health Inspection Service, USDA.
Notice.
We are advising the public that the Animal and Plant Health Inspection Service has reached a preliminary decision to extend our determination of nonregulated status of Okanagan Specialty Fruits' (OSF) GS784 and GD743 apples to OSF NF872 `Arctic® Fuji apple'. OSF's NF872 apple has been genetically engineered for enzymatic browning resistance using the same mode of action as GS784 and GD743 apples. We are making available for public comment our preliminary determination, preliminary plant pest risk similarity assessment, and preliminary finding of no significant impact for the proposed determination of nonregulated status.
We will consider all comments that we receive on or before September 12, 2016.
You may submit comments by either of the following methods:
•
•
The Okanagan Specialty Fruits extension request, our preliminary determination, preliminary plant pest risk similarity assessment, preliminary finding of no significant impact, and any comments we receive on this docket may be viewed at
Supporting documents and any comments we received regarding our determination of nonregulated status of the antecedent organisms (apple events GD743 and GS784), can be found at
Dr. John Turner, Director, Biotechnology Risk Analysis Programs, Biotechnology Regulatory Services, APHIS, 4700 River Road Unit 147, Riverdale, MD 20737-1236; (301) 851-3954, email:
Under the authority of the plant pest provisions of the Plant Protection Act (PPA) (7 U.S.C. 7701
The regulations in § 340.6(a) provide that any person may submit a petition to the Animal and Plant Health Inspection Service (APHIS) seeking a determination that an article should not be regulated under 7 CFR part 340. Further, the regulations in § 340.6(e)(2) provide that a person may request that APHIS extend a determination of nonregulated status to other organisms. Such a request must include information to establish the similarity of the antecedent organism and the regulated article in question.
In a notice
As described in the extension request, NF872 apple has been genetically engineered through the insertion of genetic elements from apples. APHIS has previously assessed the risks associated with the insertion of these same genetic elements into apples and concluded that the resulting organisms did not pose a plant pest risk. Based on the information in the request, we have concluded that NF872 apple is similar to the antecedent apples. NF872 apple is currently regulated under 7 CFR part 340.
As part of our decisionmaking process regarding a genetically engineered organism's regulatory status, APHIS evaluates the plant pest risk of the article. In section 403 of the PPA, “plant pest” is defined as any living stage of any of the following that can directly or indirectly injure, cause damage to, or cause disease in any plant product: A protozoan, a nonhuman animal, a parasitic plant, a bacterium, a fungus, a virus or viroid, an infectious agent or other pathogen, or any article similar to or allied with any of the foregoing.
APHIS completed a plant pest risk assessment (PPRA) for the antecedent organisms in which we concluded that the GD743 and GS784 apples are unlikely to present a plant pest risk. NF872 apple expresses the same resistance to enzymatic browning as the antecedent apples. Therefore, based on our PPRA for the antecedents and the similarity between NF872 apple and the antecedents, APHIS has concluded that NF872 apple is unlikely to pose a plant pest risk. APHIS also prepared a plant pest risk similarity assessment (PPRSA) to compare NF872 to the antecedents. As described in the PPRSA, the NF872 apple was obtained using a polyphenol oxidase (PPO) suppression construct designed to reduce the expression of four apple genes coding for PPO proteins. The PPO suppression construct used in the NF872 apple event is the same construct used in the antecedent apple events GD743 and GS784, and APHIS has concluded that the PPO suppression construct used in GD743 and GS784 is unlikely to affect the plant pest risk of NF872. Furthermore, APHIS has previously reviewed the potential impacts on non-target organisms beneficial to agriculture and concluded that it is unlikely that NF872 apple will have an adverse effect on nontarget organisms. Therefore, based on our PPRA for GD743 apple and GS784 apple and the similarity between GD743 apple, GS784 apple, and NF872 apple as described in the PPRSA, APHIS has concluded that the PPO suppression construct used to obtain the NF872 apple is unlikely to pose a plant pest risk and that NF872 apple is unlikely to pose a different plant pest risk than GD743 apple and GS784 apple.
The environmental assessment (EA) for the antecedent organisms was prepared using data submitted by OSF, a review of other scientific data, and field tests conducted under APHIS oversight. The EA was prepared to provide the APHIS decisionmaker with a review and analysis of any potential environmental impacts associated with the proposed determination of nonregulated status of the antecedent apples. The EA was prepared in accordance with (1) the National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321
Based on the similarity of NF872 apple to the antecedent apples, APHIS has prepared a preliminary finding of no significant impact (FONSI) on NF872 apple using the EA prepared for GD743 and GS784 apples. APHIS considered the following alternatives: (1) Take no action,
APHIS has carefully examined the existing NEPA documentation completed for GD743 and GS784 apples and has concluded that OSF's request to extend a determination of nonregulated status to NF872 apple encompasses the same scope of environmental analysis as the antecedent apples.
Based on APHIS' analysis of information submitted by OSF, references provided in the extension request, peer-reviewed publications, information analyzed in the EA, and the similarity of NF872 apple to the antecedent organisms, APHIS has determined that NF872 apple is unlikely to pose a plant pest risk. We have therefore reached a preliminary decision to approve the request to extend the determination of nonregulated status of GD743 and GS784 apples to NF872 apple, whereby NF872 apple would no longer be subject to our regulations governing the introduction of certain genetically engineered organisms.
Paragraph (e) of § 340.6 provides that APHIS will publish a notice in the
APHIS will accept written comments on the preliminary FONSI regarding a determination of nonregulated status of NF872 apple for a period of 30 days from the date this notice is published in the
After the comment period closes, APHIS will review all written comments received during the comment period and any other relevant information. All comments will be available for public review. After reviewing and evaluating
7 U.S.C. 7701-7772 and 7781-7786; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.3.
Animal and Plant Health Inspection Service, USDA.
Notice of intent to prepare an environmental impact statement.
We are advising the public that the Animal and Plant Health Inspection Service plans to prepare an updated environmental impact statement to analyze the effects of a program to eradicate exotic fruit fly species from wherever they might occur in the United States, including Hawaii, Guam, American Samoa, Puerto Rico, and the U.S. Virgin Islands. This notice identifies potential issues and alternatives that will be studied in the environmental impact statement, and requests public comments to further delineate the scope of the alternatives and environmental impacts and issues.
We will consider all comments that we receive on or before September 26, 2016.
You may submit comments by either of the following methods:
•
•
Supporting documents and any comments we receive on this docket may be viewed at
For questions related to the Fruit Fly Eradication Program, contact Mr. John C. Stewart, APHIS National Fruit Fly Eradication Program Manager, Center for Plant Health Science and Technology, PPQ, APHIS, 1730 Varsity Drive, Suite 400, Raleigh NC 27606,
Non-native (exotic) fruit flies in the family Tephritidae have a wide host range, including more than 400 species of fruit and vegetables. Introduction of these pest species into the United States causes economic losses from destruction and spoiling of host commodities by larvae, costs associated with implementing control measures, environmental impacts due to increased pesticide usage if fruit flies become established, and loss of market share due to restrictions on shipment of host commodities. Three species pose the greatest risk to United States agriculture: the Mediterranean fruit fly (Medfly),
Currently, Medfly is established in Hawaii where it was first detected in 1910. Although Medfly has been periodically introduced to the United States mainland since 1929, successful eradication programs have prevented it from becoming an established pest in the continental United States. OFF was introduced into Hawaii in the 1940s and has since became established there. Although OFF is not established in the continental United States, new infestations have been detected on an almost annual basis since it was first detected in California in 1960. The Mexfly has been introduced repeatedly to Texas and eradicated since its first introduction in 1927. The risk of introduction along the Mexican and U.S. border continues to increase as the rate of infestations in Mexico increases annually.
The regulations in “Subpart—Fruit Flies” (7 CFR 301.32 through 301.32-10, referred to below as the regulations), restrict the movement of certain regulated articles from quarantined areas in order to prevent the spread of fruit flies to noninfested areas of the United States. Within the quarantined areas, Animal and Plant Health Inspection Service (APHIS) works with State and local officials to eradicate fruit flies, after which the quarantine can be removed.
Current efforts to eradicate infestations include chemical and nonchemical control measures. Chemical options may include applications of insecticides and/or the use of detection and control attractants that can be applied using various methods. Nonchemical control methods include sterile insect technique (SIT) and host removal from areas in and around the detection sites.
Under the provisions of the National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C 4321
We are requesting public comment to help us identify or confirm potential alternatives and environmental issues that should be examined in the EIS, as well as comments that identify other
The EIS will be prepared in accordance with: (1) NEPA, (2) regulations of the Council on Environmental Quality for implementing the procedural provisions of NEPA (40 CFR parts 1500-1508), (3) USDA regulations implementing NEPA (7 CFR part 1b), and (4) APHIS' NEPA Implementing Procedures (7 CFR part 372).
We have identified four alternatives for further examination in the EIS:
Program eradication efforts may employ any or a combination of the following: No action, regulatory quarantine treatment and control of host materials and regulated articles, host survey for evidence of breeding fruit flies, host removal, eradication chemical applications, mass trapping to delimit the infestation and monitor posttreatment populations, and use of SIT.
We have identified the following potential environmental impacts or issues for further examination in the EIS:
• Effects on wildlife, including consideration of migratory bird species and changes in native wildlife habitat and populations, and federally listed endangered and threatened species;
• Effects on soil, air, and water quality;
• Effects on human health and safety;
• Effects on cultural and historic resources; and
• Effects on economic resources.
We welcome comments on the proposed action, and on other alternatives and environmental impacts, or issues that should be considered for further examination in the EIS.
All comments on this notice will be carefully considered in developing the final scope of the EIS. Upon completion of the draft EIS, a notice announcing its availability and an invitation to comment on it will be published in the
Forest Service, USDA.
Notice of meeting.
The Flathead Resource Advisory Committee (RAC) will meet in Kalispell, Montana. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held on September 12, 2016, at 6:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at Flathead National Forest Supervisor's Office, 650 Wolfpack Way, Kalispell, Montana.
Written comments may be submitted as described under
Janette Turk, Designated Federal Official by phone at 406-758-5252, or by email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to hear a presentation of project proposals for RAC consideration.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by September 7, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Janette Turk, Designated Federal Official, Flathead National Forest Supervisor's Office, 650 Wolfpack Way, Kalispell, Montana; or by email to
Forest Service, USDA.
Notice of meeting.
The Southwest Mississippi Resource Advisory Committee (RAC) will meet in Meadville, Mississippi. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held on September 15, 2016, at 6 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Franklin County Public Library, 106 First Street, Meadville, Mississippi.
Written comments may be submitted as described under
Bruce Prud'homme, Designated Federal Officer, by phone at 601-384-5876, ext.17 or via email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to:
1. Welcome new members,
2. Nominate new chairperson,
3. Provide updates on the RAC (Information Sharing),
4. Discuss funding availability for projects, and
5. Discuss and recommend new projects.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by September 7, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Bill Meriwether, RAC Coordinator, 1200 Highway 184 East, Meadville, Mississippi 39653; or by email to
Forest Service, USDA.
Notice of meeting.
The Flathead Resource Advisory Committee (RAC) will meet in Kalispell, Montana. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held on September 29, 2016, at 6:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Flathead National Forest Supervisor's Office, 650 Wolfpack Way, Kalispell, Montana.
Written comments may be submitted as described under
Janette Turk, Designated Federal Official by phone at 406-758-5252, or by email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to vote on funding project proposals.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by September 22, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Janette Turk, Designated Federal Official, Flathead National Forest Supervisor's Office, 650 Wolfpack Way, Kalispell, Montana 59901; or by email to
Forest Service, USDA.
Notice of meeting.
The Glenn and Colusa County Resource Advisory Committee (RAC) will meet in Willows, California. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held on August 29, 2016, from 1:00 p.m. to 4:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the USDA Mendocino National Forest, Snow Mountain Conference Room, 825 North Humboldt Avenue, Willows, California.
Written comments may be submitted as described under
Zachary Rich, Committee Coordinator by phone at 530-934-1259, or via email at
The purpose of the meeting is to discuss current or completed projects and present new projects for review. The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by August 22, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time for oral comments must be sent to Zachary Rich, Committee Coordinator, USDA Mendocino National Forest, Grindstone Ranger District, 825 North Humboldt Avenue, Willows, California 95988; or by email to
Forest Service, USDA.
Notice of meeting.
The Flathead Resource Advisory Committee (RAC) will meet in Kalispell, Montana. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with Title II of the Act. RAC information can be found at the following Web site:
The meeting will be held on September 20, 2016, at 6:00 p.m.
All RAC meetings are subject to cancellation. For status of meeting prior to attendance, please contact the person listed under
The meeting will be held at the Flathead National Forest Supervisor's Office, 650 Wolfpack Way, Kalispell, Montana.
Written comments may be submitted as described under
Janette Turk, Designated Federal Official by phone at 406-758-5252, or by email at
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
The purpose of the meeting is to:
1. Hear presentation of project proposals for RAC consideration, and
2. Begin vetting projects for quorum vote.
The meeting is open to the public. The agenda will include time for people to make oral statements of three minutes or less. Individuals wishing to make an oral statement should request in writing by September 13, 2016, to be scheduled on the agenda. Anyone who would like to bring related matters to the attention of the committee may file written statements with the committee staff before or after the meeting. Written comments and requests for time to make oral comments must be sent to Janette Turk, Designated Federal Official, Flathead National Forest Supervisor's Office, 650 Wolfpack Way, Kalispell, Montana 59901; or by email to
The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by September 12, 2016 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725—17th Street NW., Washington, DC 20503. Commenters are encouraged to submit their comments to OMB via email to:
An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.
United States Commission on Civil Rights.
Notice of Commission Business Meeting.
Friday, August 19, 2016, at 10:00 a.m. EST.
National Place Building, 1331 Pennsylvania Ave. NW., 11th Floor, Suite 1150, Washington, DC 20245 (Entrance on F Street NW.).
Brian Walch, Communications and Public Engagement Director. Telephone: (202) 376-8371; TTY: (202) 376-8116; Email:
This business meeting is open to the public. If you would like to listen to the business meeting, please contact the above for the call-in information.
Hearing-impaired persons who will attend the briefing and require the services of a sign language interpreter should contact Juanda Smith at (202) 376-8105 or at
First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce.
Announcement of availability of a draft programmatic environmental impact statement and of public meetings.
The First Responder Network Authority (“FirstNet”) announces the availability of the Draft Programmatic Environmental Impact Statement for the Central Region (“Draft PEIS”). FirstNet also announces a series of public meetings to be held throughout the Central Region to receive comments on the Draft PEIS. The Draft PEIS evaluates the potential environmental impacts of the proposed nationwide public safety broadband network in the Central Region, composed of Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, South Dakota, Utah, Wisconsin, and Wyoming.
Submit comments on the Draft PEIS for the Central Region on or before October 11, 2016. FirstNet will also hold public meetings in each of the 16 states. See
At any time during the public comment period, members of the public, public agencies, and other interested parties are encouraged to submit written comments, questions, and concerns about the project for FirstNet's consideration or to attend any of the public meetings. Written comments may be submitted electronically via
For more information on the Draft PEIS, contact Genevieve Walker, Director of Environmental Compliance, First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce, 12201 Sunrise Valley Drive, M/S 243, Reston, VA 20192.
Attendees can obtain information regarding the project and/or submit a comment in person during public meetings. The meeting details are as follows:
Attendees can obtain information regarding the project and/or submit a comment in person during public meetings. The meeting details are as follows:
• Des Moines, Iowa: September 7, 2016, from 4 p.m. to 8 p.m., Hyatt Place Des Moines/Downtown, 418 6th Avenue, Des Moines, IA 50309.
• St. Paul, Minnesota: September 7, 2016, from 4 p.m. to 8 p.m., The Saint Paul Hotel, 350 Market Street, St. Paul, MN 55102.
• Indianapolis, Indiana: September 13, 2016, from 4 p.m. to 8 p.m., JW Marriott Indianapolis, 10 S West Street, Indianapolis, IN 46204.
• Jefferson City, Missouri: September 13, 2016, from 4 p.m. to 8 p.m., DoubleTree by Hilton Hotel Jefferson City, 422 Monroe Street, Jefferson City, MO 65101.
• Columbus, Ohio: September 14, 2016, from 4 p.m. to 8 p.m., Residence Inn Columbus Downtown, 36 E. Gay Street, Columbus, OH 43215.
• Topeka, Kansas: September 14, 2016, from 4 p.m. to 8 p.m., Capitol Plaza Hotel & Convention Center Topeka, 1717 SW Topeka Boulevard, Topeka, KS 66612.
• Lincoln, Nebraska: September 15, 2016, from 4 p.m. to 8 p.m., The Lincoln Marriott Cornhusker Hotel, 333 South 13th Street, Lincoln, NE 68508.
• Denver, Colorado: September 20, 2016, from 4 p.m. to 8 p.m., Sheraton Denver West Hotel, 360 Union Boulevard, Lakewood, CO 80228.
• Bismarck, North Dakota: September 20, 2016, from 4 p.m. to 8 p.m., Best Western Plus Ramkota Hotel, 800 South 3rd Street, Bismarck, ND 58504.
• Cheyenne, Wyoming: September 21, 2016, from 4 p.m. to 8 p.m., Fairfield Inn & Suites Cheyenne Southwest/Downtown Area, 1820 West Lincolnway, Cheyenne, WY 82001.
• Pierre, South Dakota: September 21, 2016, from 4 p.m. to 8 p.m., Pierre ClubHouse Hotel & Suites, 808 West Sioux Avenue, Pierre, SD 57501.
• Salt Lake City, Utah: September 27, 2016, from 4 p.m. to 8 p.m., Salt Lake Marriott Downtown at City Creek, 75 South West Temple, Salt Lake City, UT 84101.
• Madison, Wisconsin: September 27, 2016, from 4 p.m. to 8 p.m., DoubleTree by Hilton Hotel Madison, 525 West Johnson Street, Madison, WI 53703.
• Helena, Montana: September 29, 2016, from 4 p.m. to 8 p.m., Lewis & Clark Library—Helena Branch, 120 S Last Chance Gulch, Helena, MT 59601.
• Springfield, Illinois: September 29, 2016, from 4 p.m. to 8 p.m., Wyndham Springfield City Centre, 700 East Adams Street, Springfield, IL 62701.
• Lansing, Michigan: October 6, 2016, from 4 p.m. to 8 p.m., East Lansing Marriott at University Place, 300 M.A.C. Avenue, East Lansing, MI 48823.
The Middle Class Tax Relief and Job Creation Act of 2012 (Pub. L. 112-96, Title VI, 126 Stat. 156 (codified at 47 U.S.C. 1401
The National Environmental Policy Act of 1969 (42 U.S.C. 4321-4347) (“NEPA”) requires federal agencies to undertake an assessment of environmental effects of their proposed actions prior to making a final decision and implementing the action. NEPA requirements apply to any federal project, decision, or action that may have a significant impact on the quality of the human environment. NEPA also establishes the Council on Environmental Quality (“CEQ”), which issued regulations implementing the procedural provisions of NEPA (see 40 CFR parts 1500-1508). Among other considerations, CEQ regulations at 40 CFR 1508.28 recommend the use of
Due to the geographic scope of FirstNet (all 50 states, the District of Columbia, and five territories) and the diversity of ecosystems potentially traversed by the project, FirstNet has elected to prepare five regional PEISs. The five PEISs were divided into the East, Central, West, South, and Non-Contiguous Regions. The Central Region consists of Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Montana, Nebraska, North Dakota, Ohio, South Dakota, Utah, Wisconsin, and Wyoming. The Draft PEIS analyzes potential impacts of the deployment and operation of the NPSBN on the natural and human environment in the Central Region, in accordance with FirstNet's responsibilities under NEPA.
All comments received by the public and any interested stakeholders will be evaluated and considered by FirstNet during the preparation of the Final PEIS. Once a PEIS is completed and a Record of Decision (ROD) is signed, FirstNet will evaluate site-specific documentation, as network design is developed, to determine if the proposed project has been adequately evaluated in the PEIS or warrants a Categorical Exclusion, an Environmental Assessment, or an Environmental Impact Statement.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
In response to requests from interested parties, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain pasta (pasta) from Italy, covering the period July 1, 2014, through June 30, 2015. The initiation of the instant review covered 31 companies, and we have partially rescinded the review with respect to nine companies, as discussed below. Thus, this review covers two mandatory respondents, Industria Alimentare Colavita S.p.A. (Indalco) and Liguori Pastificio Dal 1820 (Liguori), and 19 non-selected companies. We preliminarily determine that Indalco and Liguori made sales of subject merchandise at less than normal value during the period of review (POR). Interested parties are invited to comment on these preliminary results.
Effective August 12, 2016.
Joy Zhang or George McMahon, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1168 or (202) 482-1167, respectively.
On September 2, 2015, the Department published a notice of initiation of an administrative review of the antidumping order on pasta from Italy.
As explained in the memorandum from the Acting Assistant Secretary for Enforcement and Compliance, the Department exercised its discretion to toll all administrative deadlines due to a closure of the Federal Government. As a result, the revised deadline for the preliminary results of this review was April 7, 2016.
Imports covered by the order are shipments of certain non-egg dry pasta. The merchandise subject to review is currently classifiable under items 1901.90.90.95 and 1902.19.20 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to the order is dispositive.
The Department is conducting this review in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). Constructed export price or export price is calculated in accordance with section 772 of the Act. Normal value is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying our preliminary results,
As a result of this review, the Department calculated a weighted-average dumping margin of 2.14 percent for Indalco and 5.74 percent for Liguori for the period July 1, 2014, through June 30, 2015. Therefore, in accordance with section 735(c)(5)(A) of the Act, the Department assigned the weighted-average of these two calculated weighted-average dumping margins, 3.19 percent, to the 19 non-selected companies in these preliminary results, as referenced below.
Upon
In accordance with the Department's “automatic assessment” practice, for entries of subject merchandise during the POR produced by each respondent for which they did not know that their merchandise was destined for the United States, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.
We intend to issue instructions to CBP 15 days after publication of the final results of this review.
The following cash deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication of the final results of this administrative review, as provided by section 751(a)(2) of the Act: (1) The cash deposit rate for respondents noted above will be the rate established in the final results of this administrative review; (2) for merchandise exported by producers or exporters not covered in this administrative review but covered in a prior segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding; (3) if the exporter is not a firm covered in this review, a prior review, or the original investigation, but the producer is, the cash deposit rate
The Department will disclose to parties to this proceeding the calculations performed in reaching the preliminary results within five days of the date of publication of these preliminary results.
Interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce, using Enforcement and Compliance's ACCESS system within 30 days of publication of this notice.
Unless the deadline is extended pursuant to section 751(a)(2)(B)(iv) of the Act, the Department will issue the final results of this administrative review, including the results of our analysis of the issues raised by the parties in their case briefs, within 120 days after issuance of these preliminary results.
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and increase the subsequent assessment of the antidumping duties by the amount of antidumping duties reimbursed.
These preliminary results of review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce determines that certain hot-rolled steel flat products from Australia are being, or are likely to be, sold in the United States at less than fair value. The period of investigation is July 1, 2014, through June 30, 2015. The final estimated weighted-average dumping margins are listed below in the “Final Determination” section of this notice.
Effective August 12, 2016.
Frances Veith, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-4295.
The Department of Commerce (the “Department”) published the preliminary determination on March 22, 2016.
The products covered by this investigation are certain hot-rolled steel flat products (“hot-rolled steel”) from Australia. For a full description of the scope of this investigation,
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Tariff Act of 1930, as amended (“the Act”), in April and May 2016, the Department verified the sales and cost data reported by the mandatory respondents BlueScope Steel Ltd. (“BlueScope”). We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by BlueScope.
Based on our analysis of comments received and our findings at verification, we made certain changes to the margin calculations for BlueScope. For a discussion of these changes,
For the reasons set forth in the Preliminary Decision Memorandum and in accordance with 19 CFR 351.401(f) and the Department's practice, we are continuing to treat BlueScope Steel Ltd., BlueScope Steel (AIS) Pty Ltd., and BlueScope Steel Distribution Pty Ltd. as a single entity, BlueScope, for the purposes of this final determination.
Consistent with sections 735(c)(1)(B)(i)(II) and 735(c)(5) of the Act, the Department also calculated an estimated all-others rate. Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and
BlueScope is the only respondent for which the Department calculated a company-specific rate. Therefore, for purposes of determining the “all others” rate and pursuant to section 735(d)(5)(A) of the Act, we are using the dumping margin calculated for BlueScope, as referenced in the “Final Determination” section below.
The Department determines that the following weighted-average dumping margins exist:
We intend to disclose to parties in this proceeding the calculations performed for this final determination within five days of the date of public announcement of our final determination, in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, we are directing U.S. Customs and Border Protection (“CBP”) to continue to suspend liquidation of all entries of hot-rolled steel from Australia, as described in the Scope of the Investigation in Appendix II, entered, or withdrawn from warehouse, for consumption on or after March 22, 2016, the date of publication in the
In accordance with section 735(d) of the Act, we are notifying the ITC of our affirmative final determination of sales at less than fair value (“LTFV”). Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of hot-rolled steel from Australia no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.
This notice serves as a reminder to parties subject to APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a violation subject to sanction.
This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act, and 19 CFR 351.210(c).
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that certain hot-rolled steel flat products (hot-rolled steel) from Japan are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is July 1, 2014, through June 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.
Effective August 12, 2016.
Myrna Lobo or Jun Jack Zhao, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-2371 or (202) 482-1396, respectively.
On March 22, 2016, the Department published the
The products covered by this investigation are hot-rolled steel flat products from Japan. For a full description of the scope of this investigation,
In the Preliminary Scope Decision Memorandum,
In the
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Final Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in March, April, and May 2016, the Department verified the sales and cost data reported by the mandatory respondents and their affiliates Nippon Steel & Sumitomo Metal Corporation/Nippon Steel & Sumikin Bussan Corporation (collectively, the Nippon Group) and JFE Steel Corporation/JFE Shoji Trade Corporation (collectively, the JFE Group). We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by respondents.
Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for the Nippon Group and the JFE Group. For a discussion of these changes,
Consistent with sections 735(c)(1)(B)(i)(II) and 735(c)(5) of the Act, the Department also calculated an estimated all-others rate. Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and
The Department determines that the final weighted-average dumping margins are as follows:
Prior to the
We intend to disclose the calculations performed to interested parties within five days of the public announcement of this final determination in accordance with 19 CFR 351.224(b).
Pursuant to section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of hot-rolled steel from Japan, which were entered, or withdrawn from warehouse, for consumption on or after December 23, 2015 (for those entities for which we found critical circumstances exist) or on or after March 22, 2016, the date of publication in the
Further, pursuant to section 735(c)(1)(B)(ii) of the Act, CBP shall require a cash deposit equal to the estimated amount by which the normal value exceeds the U.S. price, as follows: (1) For the exporter/producer listed in the table above, the cash deposit rate will be equal to the weighted average dumping margin which the Department determined in this final determination; (2) if the exporter is not a firm identified in this investigation but the producer is, the rate will be the rate established for the producer of the subject merchandise; (3) the rate for all other producers or exporters will be 5.58 percent, as discussed in the “All-Others Rate” section, above. These instructions suspending liquidation will remain in effect until further notice.
In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of hot-rolled steel from Japan no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a violation subject to sanction.
This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing
(2) Where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs and Border Protection purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Effective August 12, 2016.
The Department of Commerce (“Department”) is conducting an administrative review of the antidumping duty order on certain cut-to-length carbon steel plate (“CTL plate”) from the People's Republic of China (“PRC”) covering the period of review (“POR”) November 1, 2014, through October 31, 2015. We preliminarily find that of the two companies under review, one made no shipments of subject merchandise during the POR and the other company has not demonstrated its eligibility for separate rate status, and, thus, is part of the PRC-wide entity. Interested parties are invited to comment on these preliminary results.
Jonathan Hill, AD/CVD Operations, Office IV, Enforcement & Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-3518.
After initiating this review,
The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (“ACCESS”). ACCESS is available to registered users at
The Department has exercised its discretion to toll all administrative deadlines due to the closure of the Federal Government because of Snowstorm “Jonas”. Thus, all of the deadlines in this segment of the proceeding have been extended by four business days. The revised deadline for the preliminary results of review is now August 5, 2016.
The product covered by the order is certain cut-to-length carbon steel plate from the PRC.
Pursuant to 19 CFR 351.213(d)(1), the Department will rescind an
The Department is conducting this review in accordance with section 751(a)(1)(B) of the Tariff Act of 1930, as amended (“the Act”). For a full discussion of the decisions taken in these preliminary results,
As noted above, Hunan Valin did not respond to the Department's antidumping duty questionnaire. Therefore, the Department preliminarily determines that Hunan Valin has not demonstrated its eligibility for separate rate status and is part of the PRC-wide entity.
Wuyang Steel submitted a timely-filed certification that it had no exports, sales, or entries of subject merchandise during the POR.
Consistent with its practice in NME cases, the Department is not rescinding this administrative review for Wuyang Steel, but intends to complete the review and issue appropriate instructions to CBP based on the final results of the review.
Interested parties are invited to comment on the preliminary results and may submit case briefs and/or written comments, filed electronically using ACCESS, within 30 days of the date of publication of this notice, pursuant to 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, limited to issues raised in the case briefs, will be due five days after the due date for case briefs, pursuant to 19 CFR 351.309(d). Parties who submit case or rebuttal briefs in this review are requested to submit with each argument a statement of the issue, a summary of the argument not to exceed five pages, and a table of statutes, regulations, and cases cited, in accordance with 19 CFR 351.309(c)(2).
Pursuant to 19 CFR 351.310(c), interested parties, who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce, filed electronically using ACCESS. Electronically filed case briefs/written comments and hearing requests must be received successfully in their entirety by the Department's electronic records system, ACCESS, by 5:00 p.m. Eastern Time, within 30 days after the date of publication of this notice.
Unless extended, the Department intends to issue the final results of this administrative review, including the results of its analysis of the issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act.
Upon issuance of the final results of this review, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries covered by this review.
For companies for which the review has been rescinded, the Department will instruct CBP to assess antidumping duties on entries of subject merchandise at rates equal to the cash deposit of estimated antidumping duties required at the time of entry, or withdrawal from
The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of review, as provided by section 751(a)(2)(C) of the Act: (1) For previously investigated or reviewed PRC and non-PRC exporters which are not under review in this segment of the proceeding but which have separate rates, the cash deposit rate will continue to be the exporter-specific rate published for the most recent period; (2) for all PRC exporters of subject merchandise that have not been granted a separate rate, including Hunan Valin, the cash deposit rate will be the PRC-wide rate of 128.59 percent; and (3) for all non-PRC exporters of subject merchandise which have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporter(s) that supplied that non-PRC exporter. These deposit requirements, when imposed, shall remain in effect until further notice.
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213(d)(4) and 351.221(b)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) is conducting an administrative review and new shipper review of the antidumping duty order on solid urea from the Russian Federation (Russia). The period of review (POR) is July 1, 2014, through June 30, 2015. The Department preliminarily finds that MCC EuroChem and Joint Stock Company PhosAgro-Cherepovets (PhosAgro) have not made sales of subject merchandise in the United States at prices below normal value. Interested parties are invited to comment on these preliminary results.
Effective August 12, 2016.
Michael Romani or Andre Gziryan, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-0198 or (202) 482-2201, respectively.
The merchandise subject to the order is solid urea, a high-nitrogen content fertilizer which is produced by reacting ammonia with carbon dioxide. The product is currently classified under the Harmonized Tariff Schedules of the United States (HTSUS) item number 3102.10.0010. Previously such merchandise was classified under item number 480.3000 and 3102.10.0000 of the HTSUS. Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the merchandise subject to the order is dispositive.
We are rescinding the administrative review in part with respect to PhosAgro.
The Department conducted these reviews in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). Export and constructed export price are calculated in accordance with section 772(a) and 772(b) of the Act respectively. Normal value is calculated in accordance with section 773(c) of the Act.
For a full description of the methodology underlying our conclusions,
As a result of this administrative review, we preliminarily determine that a weighted-average dumping margin of 0.00 percent exists for MCC EuroChem
As a result of this new shipper review, we preliminarily determine that a weighted-average dumping margin of 0.00 percent exists for merchandise produced and exported by Joint Stock Company PhosAgro-Cherepovets for the period July 1, 2014, through June 30, 2015.
We intend to disclose the calculations performed for these preliminary results to the parties within five days after the date of publication of this notice.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS. An electronically filed document must be received successfully in its entirety by the Department's electronic records system, ACCESS, by 5:00 p.m. Eastern Time within 30 days after the date of publication of this notice.
Unless the deadline is extended pursuant to section 751(a)(2)(B)(iv) of the Act, the Department will issue the final results of these reviews, including the results of its analysis of issues raised by parties in their comments, within 120 days after the publication of these preliminary results, pursuant to section 751(a)(3)(A) of the Act and 19 CFR 351.213(h).
If a respondent's weighted-average dumping margin is above
For entries of subject merchandise during the POR produced by MCC EuroChem or PhosAgro for which it did not know its merchandise was destined for the United States, we will instruct CBP to liquidate unreviewed entries at the all-others rate of 64.93 percent
We intend to issue instructions to CBP 15 days after publication of the final results of these reviews.
The following deposit requirements will be effective upon publication of the notice of final results of these reviews for all shipments of solid urea from Russia entered, or withdrawn from warehouse, for consumption on or after the date of publication as provided by section 751(a)(2) of the Act: (1) The cash deposit rate with respect to the adminstrative review respondent, MCC EuroChem, will be the rate established in the final results of this administrative review; (2) for merchandise exported by manufacturers or exporters not covered in these reviews but covered in a prior segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding; (3) if the exporter is not a firm covered in these reviews, a prior review, or the original investigation but the manufacturer is, the cash deposit rate will be the rate established for the manufacturer of the merchandise for the most recently completed segment of this proceeding; (4) the cash deposit rate for all other manufacturers or exporters will continue to be 64.93 percent.
With respect to PhosAgro, the new shipper respondent, the Department established a combination cash deposit rate for this company consistent with its practice as follows: (1) For subject merchandise produced and exported by PhosAgro, the cash deposit rate will be the rate established for PhosAgro in the final results of the new shipper review; (2) for subject merchandise exported by PhosAgro, but not produced by PhosAgro, the cash deposit rate will be the rate for the all-others established in the less-than-fair-value investigation; and (3) for subject merchandise produced by PhosAgro but not exported by PhosAgro, the cash deposit rate will be the rate applicable to the exporter.
These cash deposit requirements, when imposed, shall remain in effect until further notice.
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing the preliminary results of these reviews in accordance with sections 751(a)(1), 751(a)(2)(B) and 777(i) of the Act and 19 CFR 351.213, 351.214 and 351.221(b)(4).
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that countervailable subsidies are being provided to producers and exporters of certain hot-rolled steel flat products (hot-rolled steel, or HRS) from Brazil. For information on the estimated subsidy rates,
Effective August 12, 2016.
Sergio Balbontin, Nicholas Czajkowski, or Lana Nigro, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-6478, (202) 482-1395, and (202) 482-1779, respectively.
The Department published the
In accordance with the Preliminary Scope Determination,
In the
The products covered by this investigation are certain hot-rolled steel flat products from Brazil. For a complete description of the scope of this investigation,
The subsidy programs under investigation and the issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised, and to which we have responded in the Issues and Decision Memorandum, is attached to this notice at Appendix II.
In making this final determination, the Department relied, in part, on facts available and, because the Government of Brazil and the respondent companies did not act to the best of their abilities in responding to the Department's requests for information, we drew an adverse inference where appropriate in selecting from among the facts otherwise available.
Based on our analysis of the comments received from parties, and the minor corrections presented and additional items discovered at verification, we made certain changes to the respondents' subsidy rate calculations. For a discussion of these changes,
On October 23, 2015, the petitioner filed a timely critical circumstances allegation pursuant to section 703(e)(1) of the Act and 19 CFR 351.206(c)(1), alleging that critical circumstances exist with respect to imports of hot-rolled steel from Brazil.
In accordance with section 705(c)(1)(B)(i) of the Act, we calculated a rate for Usiminas and CSN, the exporters/producers of subject merchandise selected for individual examination in this investigation.
In accordance with sections 705(c)(1)(B)(i)(I) and 705(c)(5)(A) of the Act, for companies not individually investigated, we apply an “all others” rate, which is normally calculated by weighting the subsidy rates of the individual companies selected as mandatory respondents by those companies' exports of the subject merchandise to the United States. Under section 705(c)(5)(A)(i) of the Act, the all-others rate excludes zero and
As a result of our
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we will issue a CVD order and will reinstate the suspension of liquidation under section 706(a) of the Act and will require a cash deposit of estimated CVDs for such entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Enforcement and Compliance.
In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.201(c).
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) Where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Department) determines that certain hot-rolled steel flat products (hot-rolled steel) from the Republic of Korea (Korea) are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is July 1, 2014, through June 30, 2015. The final estimated weighted-average dumping margins are listed below in the “Final Determination” section of this notice.
Effective August 12, 2016.
Javier Barrientos or Matthew Renkey, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-2243 or (202) 482-2312, respectively.
The Department published the preliminary determination on March 22, 2016.
Also, as explained in the memorandum from the Acting Assistant Secretary for Enforcement and Compliance, the Department exercised its authority to toll all administrative deadlines due to the closure of the Federal Government.
The products covered by this investigation are certain hot-rolled steel flat products from Korea. For a complete description of the scope of this investigation,
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Final Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Act, in January, April, and June 2016, the Department verified the sales, cost, and further manufacturing data reported by the mandatory respondents Hyundai Steel Company and POSCO,
In making this final determination, the Department relied, in part, on facts available for both POSCO and Hyundai Steel Company. Furthermore, because Hyundai Steel Company did not act to the best of its ability in responding to certain of the Department's requests for information, we drew an adverse inference where appropriate in selecting from among the facts otherwise available.
Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for Hyundai Steel Company and POSCO. For a discussion of these changes,
Consistent with sections 735(c)(1)(B)(i)(II) and 735(c)(5) of the Act, the Department also calculated an estimated all-others rate. Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and
In this investigation, we calculated weighted-average dumping margins for Hyundai Steel Company and POSCO that are above
The Department determines that the following estimated weighted-average dumping margins exist:
We intend to disclose to parties in this proceeding the calculations performed for this final determination within five days of the date of public announcement of our final determination, in accordance with 19 CFR 351.224(b).
Pursuant to section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of hot-rolled steel from Korea, which were entered, or withdrawn from warehouse, for consumption on or after March 22, 2016 (the date of publication of the affirmative
Where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct CBP to require a cash deposit less the amount of the countervailing duty determined to constitute any export subsidies. Because of the affirmative final determination in the countervailing duty investigation, suspension of liquidation will be ordered in that investigation, and so long as suspension of liquidation continues under this antidumping duty investigation, the cash deposit rates for this antidumping duty investigation will be the rates identified in the cash deposit rate column in the rate chart, above. In the event that a countervailing duty order is issued and suspension of liquidation continues in the companion countervailing duty investigation on hot-rolled steel from the Korea, the Department will continue to instruct CBP to require cash deposits adjusted by the amount of export subsidies, as appropriate. These adjustments are reflected in the final column of the rate chart, above.
In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of hot-rolled steel from Korea no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.
This notice serves as a reminder to parties subject to APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a violation subject to sanction.
This determination and notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (width) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that imports of certain hot-rolled steel flat products (hot-rolled steel) from the Netherlands are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is July 1, 2014, through June 30, 2015. The final dumping margins of sales at LTFV are listed in the “Final Determination” section of this notice.
Effective August 12, 2016.
Dmitry Vladimirov, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-0665.
On March 22, 2016, the Department published the
The products covered by this investigation are certain hot-rolled steel flat products from the Netherlands. For a complete description of the scope of this investigation,
In the Preliminary Scope Decision Memorandum,
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in March and April 2016, the Department verified the sales and cost data reported by the mandatory respondent. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by TSIJ.
Based on our analysis of the comments received, pre-verification corrections, and our findings at verification, we made certain changes to the margin calculations for TSIJ. For a discussion of these changes,
Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted-average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding any zero or
The Department determines that the final weighted-average dumping margins are as follows:
On December 9, 2015, the Department preliminarily found that critical
We intend to disclose the calculations performed to interested parties within five days after the public announcement of this final determination in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of hot-rolled steel from the Netherlands, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after March 22, 2016, the date of publication of the
Further, pursuant to section 735(c)(1)(B)(ii) of the Act, CBP shall require a cash deposit equal to the estimated amount by which normal value exceeds U.S. price, as follows: (1) For the exporter/producer listed in the table above, the cash deposit rate will be equal to the weighted-average dumping margin which the Department determined in this final determination; the cash deposit rate for the mandatory respondent listed above will be equal to the estimated weighted-average dumping margin determined in this final determination; (2) if the exporter is not a firm identified in this investigation but the producer is, then the cash deposit rate will be equal to the estimated weighted-average dumping margin established for the producer of the subject merchandise; (3) the cash deposit rate for all other producers or exporters will be 3.73 percent, as discussed in the “All Others Rate” section, above. These instructions suspending liquidation will remain in effect until further notice.
In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of hot-rolled steel from the Netherlands no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded.
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of the destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is subject to sanction.
This determination is issued and published pursuant to sections 735(d) and 777(i)(l) of the Act.
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that certain hot-rolled steel flat products (hot-rolled steel) from Brazil are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is July 1, 2014, through June 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.
Effective August 12, 2016.
Peter Zukowski, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-0189.
On March 22, 2016, the Department published the
The products covered by this investigation are certain hot-rolled steel flat products from Brazil. For a complete description of the scope of this investigation,
In accordance with the Preliminary Scope Determination,
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in April and May 2016, the Department verified the sales and cost data reported by CSN, pursuant to section 782(i) of the Act. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by the respondent.
The Department found in the
The Department received no comments regarding its preliminary application of the adverse facts-available dumping margin to Usiminas. For the final determination, the Department has not altered its analysis or its decision to apply the adverse facts-available dumping margin to Usiminas.
Based on CSN's supplemental cost responses and revised sales and cost files, our findings at verification and our analysis of the comments received, we made certain changes to the margin calculations for CSN. For a discussion of these changes,
Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and
The Department determines that the final weighted-average dumping margins are as follows:
We intend to disclose the calculations performed to interested parties within five days of the public announcement of this final determination in accordance with 19 CFR 351.224(b).
On December 9, 2015, the Department found that critical circumstances existed for merchandise exported by CSN and Usiminas, but not for “all others.”
In accordance with section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all appropriate entries of hot-rolled steel from Brazil, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after March 22, 2016, the date of publication of the
Further, the Department will instruct CBP to require a cash deposit equal to the estimated amount by which the normal value exceeds the U.S. price as shown above, adjusted where appropriate for export subsidies found in the final determination of the companion countervailing duty investigation. Consistent with our longstanding practice, where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct CBP to require a cash deposit equal to the amount by which the NV exceeds the U.S. price, less the amount of the countervailing duty determined to constitute any export subsidies.
In accordance with section 735(d) of the Act, we will notify the International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with
This notice serves as a reminder to parties subject to an Administrative Protective Order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a violation subject to sanction.
This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090,
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that imports of certain hot-rolled steel flat products (hot-rolled steel) from the Republic of Turkey (Turkey) are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is July 1, 2014, through June 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.
Effective August 12, 2016.
Toni Page or Alexander Cipolla, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1398 or (202) 482-4956, respectively.
On March 22, 2016, the Department published the
The Department received case and rebuttal briefs from Petitioners, Erdemir, and Colakoglu between June 7 and June 20, 2016.
The products covered by this investigation are hot-rolled steel flat products from Turkey. For a full description of the scope of this investigation,
In the Preliminary Scope Decision Memorandum,
In the
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Final Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in March, April, and May 2016, the Department verified the sales and cost data reported by the mandatory respondents Colakoglu Metalurji A.S. (Colakoglu), Colakoglu Dis Ticaret A.S. (COTAS), and Medtrade Incorporated (Medtrade) (collectively, Colakoglu) and Eregli Demir ve Celik Fabrikalari T.A.S. (Erdemir) and Iskenderun Demir Ve Celik (Iskenderun) (collectively, Erdemir). We used standard verification procedures, including an examination of
Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for Colakoglu and Erdemir. For a discussion of these changes,
Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted-average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding any zero or
In this investigation, we calculated weighted-average dumping margins for Colakoglu and Erdemir, that are above
The Department determines that the final weighted-average dumping margins are as follows:
We intend to disclose the calculations performed to interested parties within five days of the public announcement of this final determination in accordance with 19 CFR 351.224(b).
Pursuant to section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of hot-rolled steel from Turkey, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after March 22, 2016, the date of publication of the
As noted above, where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct CBP to require a cash deposit less the amount of the countervailing duty determined to constitute any export subsidies. Therefore, in the event that a countervailing duty order is issued and suspension of liquidation is resumed in the companion countervailing duty investigation on hot-rolled steel from Turkey, the Department will instruct CBP to require cash deposits adjusted by the amount of export subsidies, as appropriate.
In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of hot-rolled steel from Turkey no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation as discussed in the “Continuation of Suspension of Liquidation” section.
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a violation subject to sanction.
This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs and Border Protection purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (“Department”) is conducting an administrative review of the antidumping duty order on lightweight thermal paper (“LWTP”) from the People's Republic of China (“PRC”). The period of review (“POR”) is November 1, 2014, through October 31, 2015. The review covers two exporters of subject merchandise: Jaan Huey Co. Ltd. (“Jaan Huey”) and Shanghai Hanhong Paper Co., Ltd. and Hanhong Paper Co. Ltd (together, “Hanhong”). Because neither respondent participated in this review, the Department preliminarily finds that Jaan Huey and Hanhong have not demonstrated eligibility for a separate rate in this segment of the proceeding, and therefore, for the preliminary results, we are treating both as part of the PRC-wide entity. Interested parties are invited to comment on these preliminary results.
Effective August 12, 2016.
Keith Haynes, AD/CVD Operations, Office III, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-5139.
On January 7, 2016, the Department initiated the seventh administrative review of the antidumping duty order on LWTP from the PRC.
The merchandise covered by this review includes certain lightweight thermal paper, which is thermal paper with a basis weight of 70 grams per square meter (g/m
The Department considers the PRC to be a nonmarket economy (“NME”) country.
In the
The Department is conducting this review in accordance with section 751 of the Act. Neither mandatory respondent cooperated to the best of its ability because neither provided a response to the Department's questionnaire. Further, neither respondent submitted a separate rate application or certification to demonstrate eligibility to receive a separate rate. Thus, the Department preliminarily determines that the application of adverse facts available (“AFA”) is warranted for these preliminary results, in accordance with section 776 of the Act and 19 CFR 351.308 and, because neither demonstrated eligibility for a separate rate, we are treating the mandatory respondents as part of the PRC-wide entity.
The Department's change in policy regarding conditional review of the PRC-wide entity applies to this administrative review.
The preliminary weighted-average antidumping duty margin percentage is as follows:
Interested parties may submit case briefs within 30 days after the date of publication of these preliminary results of review in the
Any interested party may request a hearing within 30 days of publication of this notice.
The Department intends to issue the final results of this administrative review, which will include the results of our analysis of all issues raised in the case briefs, within 120 days of publication of these preliminary results in the
Upon issuance of the final results, the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries covered by this review. The Department intends to issue assessment instructions to CBP 15 days after the publication date of the final results of this review.
The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(C) of the Act: (1) For previously investigated or reviewed PRC and non-PRC exporters who are not under review in this segment of the proceeding but who have separate rates, the cash deposit rate will continue to be the exporter-specific rate published for the most recent period; (2) for all PRC
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement off antidumping duties prior to liquidation of the relevant entries during this period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This administrative review and notice are in accordance with sections 751(a)(1) and 777(i) of the Act and 19 CFR 351.213.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On July 1, 2016, the Department of Commerce (the Department) initiated the second sunset review of the antidumping duty order on ammonium nitrate from the Russian Federation (Russia). Because no domestic interested party filed a notice of intent to participate in response to the notice of initiation, the Department is revoking the antidumping duty order on ammonium nitrate from Russia.
Effective August 20, 2016.
David Crespo at (202) 482-3693, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
On April 27, 2011, the Department terminated the agreement suspending the antidumping duty investigation and issued an antidumping duty order on ammonium nitrate from Russia.
The scope of this order includes solid, fertilizer grade ammonium nitrate products, whether prilled, granular, or in other solid form, with or without additives or coating, and with a bulk density equal to or greater than 53 pounds per cubic foot. Specifically excluded from this scope is solid ammonium nitrate with a bulk density less than 53 pounds per cubic foot (commonly referred to as industrial or explosive grade ammonium nitrate). The merchandise subject to this order is classified in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings 3102.30.00.00 and 3102.290000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise within the scope is dispositive.
Pursuant to section 751(c)(3)(A) of the Act and 19 CFR 351.218(d)(1)(iii)(B)(3), if no domestic interested party files a notice of intent to participate, the Department shall issue a final determination revoking the order within 90 days of the initiation of the review. Because no domestic interested party filed a notice of intent to participate in this sunset review, the Department finds that no domestic interested party is participating in this sunset review. Therefore, we are revoking the
Pursuant to section 751(c)(3)(A) of the Act and 19 CFR 351.222(i)(2)(i), the Department intends to issue instructions to U.S. Customs and Border Protection to terminate the suspension of liquidation of entries of the merchandise subject to the order which were entered, or withdrawn from warehouse, for consumption on or after August 20, 2016. Entries of subject merchandise prior to August 20, 2016, will continue to be subject to the suspension of liquidation and requirements for deposits of estimated antidumping duties. The Department will conduct administrative reviews of the order with respect to subject merchandise entered prior to the effective date of revocation in response to appropriately filed requests for review.
These final results of the five-year (sunset) review and notice of revocation of the antidumping duty order are published in accordance with sections 751(c) and 777(i)(1) of the Act.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that countervailable subsidies are being provided to producers and exporters of certain hot-rolled steel flat products (hot-rolled steel) from the Republic of Turkey (Turkey). For information on the estimated subsidy rates,
Effective August 12, 2016.
Emily Halle or Gene Calvert, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-0176 or (202) 482-3586, respectively.
The Department published the
In accordance with the Preliminary Scope Determination,
In the
The products covered by this investigation are hot-rolled steel from Turkey. For a complete description of the scope of this investigation,
The subsidy programs under investigation and the issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised, and to which we responded in the Issues and Decision Memorandum, is attached to this notice at Appendix II.
The Department, in making these findings, relied, in part, on facts available and, because one or more respondents failed to cooperate by not acting to the best of their ability, we made adverse inferences.
Based on our review and analysis of the comments received from parties, and minor corrections presented at verification, we made certain changes to the respondents' subsidy rate calculations set forth in the
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we determined a countervailable subsidy rate for each individually investigated exporters/producers of the subject merchandise (
We determine the estimated net countervailable subsidy rates are as follows.
We intend to disclose to parties in this proceeding the calculations performed for this final determination within five days of the date of public announcement of our final determination, in accordance with 19 CFR 351.224(b).
Because the
As our final determination is affirmative and our preliminary determination was negative, in accordance with section 705(b)(3) of the Act, the U.S. International Trade Commission (ITC) will determine within 75 days whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports or sales (or the likelihood of sales) for importation of the subject merchandise. We will issue a CVD order if the ITC issues a final affirmative injury determination. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Enforcement and Compliance.
In the event the ITC issues a final negative injury determination, this notice serves as the only reminder to parties subject to APO of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation that is subject to sanction.
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.210(c).
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs and Border Protection purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that imports of certain hot-rolled steel flat products (hot-rolled steel) from the United Kingdom are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is July 1, 2014, through June 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.
Effective August 12, 2016.
Catherine Cartsos, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1757.
On March 22, 2016, the Department published the
In March 2016, the Department received supplemental cost responses and revised sales files from Tata Steel UK Ltd. (TSUK), the sole mandatory respondent in this investigation.
In June 2016, AK Steel (one of the petitioners),
The products covered by this investigation are certain hot-rolled steel flat products from the United Kingdom. For a complete description of the scope of this investigation,
In the Preliminary Scope Decision Memorandum,
In the
All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Issues and Decision Memorandum, which is hereby adopted by this notice.
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in March and April 2016, the Department verified the sales and cost data reported by the mandatory respondent. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by the respondent.
Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for TSUK. For a discussion of these changes,
Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted-average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding any zero or
The Department determines that the final weighted-average dumping margins are as follows:
We intend to disclose the calculations performed to interested parties within five days of the public announcement of this final determination in accordance with 19 CFR 351.224(b).
In accordance with section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all appropriate entries of hot-rolled steel from the United Kingdom, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after March 22, 2016, the date of publication of the
Further, pursuant to section 735(c)(1)(B)(ii) of the Act, CBP shall require a cash deposit equal to the estimated amount by which the normal value exceeds the U.S. price, as follows: (1) For the exporter/producer listed in the table above, the cash deposit rate will be equal to the weighted average dumping margin which the Department determined in this final determination; (2) if the exporter is not a firm identified in this investigation but the producer is, the rate will be the rate established for the producer of the subject merchandise; (3) the rate for all other producers or exporters will be 33.06 percent, as discussed in the “All Others Rate” section, above. These instructions suspending liquidation will remain in effect until further notice.
In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of hot-rolled steel from the United Kingdom no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded.
This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the
This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of this investigation unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (the Department) determines that countervailable subsidies are being provided to producers/exporters of certain hot-rolled steel flat products (hot-rolled steel) from the Republic of Korea (Korea). For information on the subsidy rates,
Effective August 12, 2016.
Katie Marksberry, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-7906.
The Department published the
The products covered by this investigation are hot-rolled steel flat products from Korea. For a complete description of the scope of this investigation,
The subsidy programs under investigation and the issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised, and to which we responded in the Issues and Decision Memorandum, is attached to this notice as Appendix I.
In making this final determination, the Department relied, in part, on facts available and, because POSCO and Hyundai Steel Co., Ltd. (Hyundai Steel) did not act to the best of their ability in responding to the Department's requests for information, we drew an adverse inference where appropriate in selecting from among the facts otherwise available.
Based on our analysis of the comments received from parties and the minor corrections presented, and additional items discovered at verification, we made certain changes to the respondents' subsidy rate calculations. For a discussion of these changes,
In accordance with section 705(c)(1)(B)(i) of the Act, we calculated a rate for POSCO and Hyundai Steel, the two exporters/producers of subject merchandise selected for individual examination in this investigation.
In accordance with sections 705(c)(1)(B)(i)(I) and 705(c)(5)(A) of the Act, for companies not individually investigated, we apply an “all-others” rate, which is normally calculated by weighting the subsidy rates of the individual companies selected as respondents with those companies' export sales of the subject merchandise to the United States. Under section 705(c)(5)(A)(i) of the Act, the all-others rate should exclude zero and
We intend to disclose to parties in this proceeding the calculations performed for this final determination within five days of the date of public announcement of our final determination, in accordance with 19 CFR 351.224(b).
In the
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we will issue a CVD order and instruct CBP to require a cash deposit of estimated CVDs for such entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary of Enforcement and Compliance.
In the event the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation subject to sanction.
This determination and notice are issued and published pursuant to sections 705(d) and 777(i) of the Act and 19 CFR 351.210(c).
The products covered by this investigation are certain hot-rolled, flat-rolled steel products, with or without patterns in relief, and whether or not annealed, painted, varnished, or coated with plastics or other non-metallic substances. The products covered do not include those that are clad, plated, or coated with metal. The products covered include coils that have a width or other lateral measurement (“width”) of 12.7 mm or greater, regardless of thickness, and regardless of form of coil (
(1) Where the nominal and actual measurements vary, a product is within the scope if application of either the nominal or actual measurement would place it within the scope based on the definitions set forth above unless the resulting measurement makes the product covered by the existing antidumping
(2) where the width and thickness vary for a specific product (
Steel products included in the scope of this investigation are products in which: (1) Iron predominates, by weight, over each of the other contained elements; (2) the carbon content is 2 percent or less, by weight; and (3) none of the elements listed below exceeds the quantity, by weight, respectively indicated:
• 2.50 percent of manganese, or
• 3.30 percent of silicon, or
• 1.50 percent of copper, or
• 1.50 percent of aluminum, or
• 1.25 percent of chromium, or
• 0.30 percent of cobalt, or
• 0.40 percent of lead, or
• 2.00 percent of nickel, or
• 0.30 percent of tungsten, or
• 0.80 percent of molybdenum, or
• 0.10 percent of niobium, or
• 0.30 percent of vanadium, or
• 0.30 percent of zirconium.
Unless specifically excluded, products are included in this scope regardless of levels of boron and titanium.
For example, specifically included in this scope are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, the substrate for motor lamination steels, Advanced High Strength Steels (AHSS), and Ultra High Strength Steels (UHSS). IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium and/or niobium added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, titanium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum. AHSS and UHSS are considered high tensile strength and high elongation steels, although AHSS and UHSS are covered whether or not they are high tensile strength or high elongation steels.
Subject merchandise includes hot-rolled steel that has been further processed in a third country, including but not limited to pickling, oiling, levelling, annealing, tempering, temper rolling, skin passing, painting, varnishing, trimming, cutting, punching, and/or slitting, or any other processing that would not otherwise remove the merchandise from the scope of the investigations if performed in the country of manufacture of the hot-rolled steel.
All products that meet the written physical description, and in which the chemistry quantities do not exceed any one of the noted element levels listed above, are within the scope of these investigations unless specifically excluded. The following products are outside of and/or specifically excluded from the scope of this investigation:
• Universal mill plates (
• Products that have been cold-rolled (cold-reduced) after hot-rolling;
• Ball bearing steels;
• Tool steels;
• Silico-manganese steels;
The products subject to this investigation are currently classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) under item numbers: 7208.10.1500, 7208.10.3000, 7208.10.6000, 7208.25.3000, 7208.25.6000, 7208.26.0030, 7208.26.0060, 7208.27.0030, 7208.27.0060, 7208.36.0030, 7208.36.0060, 7208.37.0030, 7208.37.0060, 7208.38.0015, 7208.38.0030, 7208.38.0090, 7208.39.0015, 7208.39.0030, 7208.39.0090, 7208.40.6030, 7208.40.6060, 7208.53.0000, 7208.54.0000, 7208.90.0000, 7210.70.3000, 7211.14.0030, 7211.14.0090, 7211.19.1500, 7211.19.2000, 7211.19.3000, 7211.19.4500, 7211.19.6000, 7211.19.7530, 7211.19.7560, 7211.19.7590, 7225.11.0000, 7225.19.0000, 7225.30.3050, 7225.30.7000, 7225.40.7000, 7225.99.0090, 7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.19.1000, 7226.19.9000, 7226.91.5000, 7226.91.7000, and 7226.91.8000. The products subject to the investigation may also enter under the following HTSUS numbers: 7210.90.9000, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7214.91.0015, 7214.91.0060, 7214.91.0090, 7214.99.0060, 7214.99.0075, 7214.99.0090, 7215.90.5000, 7226.99.0180, and 7228.60.6000.
The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.
Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce.
The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on polyethylene terephthalate film, sheet, and strip (PET Film) from Taiwan. The period of review (POR) is July 1, 2014, through June 30, 2015. This review covers respondents Nan Ya Plastics Corporation (Nan Ya) and Shinkong Materials Technology Corporation (SMTC), producers and exporters of PET Film from Taiwan. The Department preliminarily determines that sales of subject merchandise have not been made below normal value (NV) by Nan Ya, and that SMTC had no shipments during the POR. Interested parties are invited to comment on these preliminary results.
Effective August 12, 2016.
Jacqueline Arrowsmith at (202) 482-5255; AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.
The merchandise subject to the order is PET Film. The PET Film subject to the order is currently classifiable under subheading 3920.62.00.90 of the Harmonized Tariff Schedule of the United States.
The Department is conducting this review in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). Export price is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act.
For a full description of the methodology underlying our conclusions,
Based on our analysis of U.S. Customs and Border Protection (CBP) information and information provided by SMTC,
As a result of this review, we preliminarily determine the following weighted-average dumping margin for the period July 1, 2014, through June 30, 2015.
The Department intends to disclose to interested parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS, within 30 days after the date of publication of this notice.
Unless extended, the Department intends to issue the final results of this administrative review, including the results of its analysis of the issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act and 19 CFR 351.213(h).
Upon completion of the administrative review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries in accordance with 19 CFR 351.212(b)(1). If Nan Ya's weighted-average dumping margin is not zero or
Consistent with the Department's “automatic assessment” regulation for entries this clarification will apply to entries of subject merchandise during the POR produced by Nan Ya for which it did not know that its merchandise was destined for the United States.
We intend to issue instructions to CBP 15 days after the date of publication of the final results of this review.
The following deposit requirements will be effective for all shipments of PET Film from Taiwan entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this administrative review, as provided for by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for the company under review will be the rate established in the final results of this
This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213(h)(1).
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.
Notice; issuance of an incidental harassment authorization.
In accordance with the regulations implementing the Marine Mammal Protection Act (MMPA) as amended, notification is hereby given that NMFS has issued an incidental harassment authorization (IHA) to Lamont-Doherty Earth Observatory (Lamont-Doherty) in collaboration with the National Science Foundation (NSF), to incidentally take, by level B harassment, 44 species of marine mammals, and to incidentally take, by Level A harassment, 26 species of marine mammals, during three marine geophysical (seismic) surveys in the southeast Pacific Ocean.
This Authorization is effective from August 1, 2016, through July 31, 2017.
Jordan Carduner, NMFS, Office of Protected Resources, NMFS (301) 427-8401.
Section 101(a)(5)(D) of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
An Authorization shall be granted for the incidental taking of small numbers of marine mammals if NMFS finds that the taking will have a negligible impact on the species or stock(s), and will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant). The Authorization must also set forth the permissible methods of taking; other means of effecting the least practicable adverse impact on the species or stock and its habitat (
Except with respect to certain activities not pertinent here, 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].
On January 19, 2016, NMFS received an application from Lamont-Doherty requesting that NMFS issue an Authorization for the take of marine mammals, incidental to Oregon State University (OSU) and University of Texas (UT) conducting seismic surveys in the southeast Pacific Ocean, in the latter half of 2016 and/or the first half of 2017. NMFS considered the application and supporting materials adequate and complete on March 21, 2016.
Lamont-Doherty plans to conduct three two-dimensional (2-D) surveys on the R/V
Increased underwater sound generated during the operation of the
Lamont-Doherty plans to use one source vessel, the
A detailed description of Lamont-Doherty's planned seismic surveys is provided in the
NMFS published a notice of receipt of Lamont-Doherty's application and proposed Authorization in the
NMFS addresses any comments specific to Lamont-Doherty's application related to the statutory and regulatory requirements or findings that NMFS must make under the MMPA in order to issue an Authorization. The following is a summary of the public comments and NMFS's responses.
Lamont-Doherty's application (LGL, 2016) and the NSF's draft environmental analysis (NSF, 2016) describe the approach to establishing mitigation exclusion and buffer zones. In summary, Lamont-Doherty acquired field measurements for several array configurations at shallow, intermediate, and deep-water depths during acoustic verification studies conducted in the northern Gulf of Mexico in 2007 and 2008 (Tolstoy
In 2015, Lamont-Doherty explored the question of whether the Gulf of Mexico calibration data adequately informs the model to predict exclusion isopleths in other areas by conducting a retrospective sound power analysis of one of the lines acquired during Lamont-Doherty's seismic survey offshore New Jersey in 2014 (Crone, 2015). NMFS presented a comparison of the predicted radii (
Briefly, Crone's (2015) analysis, specific to the survey site offshore New Jersey, confirmed that in-situ, site specific measurements and estimates of the 160- and 180-dB isopleths collected by the
In 2010, Lamont-Doherty assessed the accuracy of their modeling approach by comparing the sound levels of the field measurements acquired in the Gulf of Mexico study to their model predictions (Diebold
In 2012, Lamont-Doherty used a similar process to model exclusion and buffer zones for a shallow-water seismic survey in the northeast Pacific Ocean offshore Washington State in 2012. Lamont-Doherty conducted the shallow-water survey using the same airgun configuration planned for this seismic survey (
The model Lamont-Doherty currently uses does not allow for the consideration of environmental and site-specific parameters as requested by the Commission. NMFS continues to work with Lamont-Doherty and the NSF to address the issue of incorporating site-specific information to further inform the analysis and development of mitigation measures in oceanic and coastal areas for future seismic surveys with Lamont-Doherty. However, Lamont-Doherty's current modeling approach (supported by the three data points discussed previously) represents the best available information for NMFS to reach determinations for the Authorization. As described earlier, the comparisons of Lamont-Doherty's model results and the field data collected in the Gulf of Mexico, offshore Washington State, and offshore New Jersey illustrate a degree of conservativeness built into Lamont-Doherty's model for deep water, which NMFS expects to offset some of the limitations of the model to capture the variability resulting from site-specific factors. Based upon the best available information (
Lamont-Doherty has conveyed to NMFS that additional modeling efforts to refine the process and conduct comparative analysis may be possible with the availability of research funds and other resources. Obtaining research funds is typically accomplished through a competitive process, including those submitted to U.S. Federal agencies. The use of models for calculating buffer and exclusion zone radii and for developing take estimates is not a requirement of the MMPA incidental take authorization process. Furthermore, NMFS does not provide specific guidance on model parameters nor prescribe a specific model for applicants as part of the MMPA incidental take authorization process at this time. There is a level of variability not only with parameters in the models, but also the uncertainty associated with data used in models, and therefore, the quality of the model results submitted by applicants. NMFS considers this variability when evaluating applications and the take estimates and mitigation measures that the model informs. NMFS takes into consideration the model used, and its results, in determining the potential impacts to marine mammals; however, it is just one component of the analysis during the MMPA authorization process as NMFS also takes into consideration other factors associated with the activity (
The comment letter from the Marcus Langseth Science Oversight Committee affirmed that there is significant support from the Committee for the IHA to be issued for the proposed activity and for the survey to be conducted. NMFS received one additional comment from a private citizen that expressed concern that the project would result in the deaths of marine mammals and that the application should be denied on the grounds that it would cost taxpayers too much money; NMFS considered this comment, however, no deaths of marine mammals are anticipated as a result of the project as described below, and NMFS does not have the ability to deny applications for authorization to incidentally take marine mammals based on an applicant's funding sources.
Table 1 in this notice provides the following: All marine mammal species with possible or confirmed occurrence in the planned activity area; information on those species' regulatory status under the MMPA and the Endangered Species Act of 1973 (16 U.S.C. 1531
NMFS refers the public to Lamont-Doherty's application and NSF's environmental analysis (available online at:
Operating active acoustic sources, such as airgun arrays, has the potential for adverse effects on marine mammals. The
The primary potential impacts to marine mammal habitat and other marine species from Lamont-Doherty's planned activities are associated with elevated sound levels produced by airguns. The impacts of Lamont-Doherty's planned activities on fish and other marine life specifically related to acoustic activities are expected to be temporary in nature, negligible, and would not result in substantial impact to these species or to their role in the ecosystem. NMFS does not anticipate that the planned activity would have any habitat-related effects that could cause significant or long-term consequences for individual marine mammals or their populations. The potential effects of Lamont-Doherty's planned activities on marine mammal habitat and other marine species are discussed in detail in the
In order to issue an Incidental Harassment 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 on the availability of such species or stock for taking for certain subsistence uses (where relevant).
Lamont-Doherty has reviewed the following source documents and has incorporated a suite of mitigation measures into their project description:
(1) Protocols used during previous Lamont-Doherty and NSF-funded seismic research cruises as approved by us and detailed in the NSF's 2011 PEIS and 2016 draft environmental analysis;
(2) Previous IHA applications and authorizations that NMFS has approved and authorized; and
(3) Recommended best practices in Richardson
To reduce the potential for disturbance from acoustic stimuli associated with the activities, Lamont-Doherty, and/or its designees plan to implement the following mitigation measures for marine mammals:
(1) Vessel-based visual mitigation monitoring;
(2) Exclusion zones;
(3) Power down procedures;
(4) Shutdown procedures;
(5) Ramp-up procedures; and
(6) Speed and course alterations.
NMFS reviewed Lamont-Doherty's mitigation measures and developed the following additional mitigation measures to effect the least practicable adverse impact on marine mammals:
(1) Expanded power down procedures for concentrations of six or more whales that do not appear to be traveling (
Lamont-Doherty would position observers aboard the seismic source vessel to watch for marine mammals near the vessel during daytime airgun operations and during any start-ups at night. Observers would also watch for marine mammals near the seismic vessel for at least 30 minutes prior to the start of airgun operations after an extended shutdown (
During seismic operations, at least four protected species observers would be aboard the
Two observers on the
The
Lamont-Doherty would immediately power down or shutdown the airguns when observers see marine mammals within or about to enter the designated exclusion zone. The observer(s) would continue to maintain watch to determine when the animal(s) are outside the exclusion zone by visual confirmation. Airgun operations would not resume until the observer has confirmed that the animal has left the zone, or if not observed after 15 minutes for species with shorter dive durations (small odontocetes and pinnipeds) or 30 minutes for species with longer dive durations (mysticetes and large odontocetes, including sperm, pygmy sperm, dwarf sperm, killer, and beaked whales).
Lamont-Doherty would use safety radii to designate exclusion zones and to estimate take for marine mammals. Table 2 shows the distances at which one would expect to receive sound levels (160-, 180-, and 190-dB,) from the airgun array and a single airgun. If the protected species visual observer detects marine mammal(s) within or about to enter the appropriate exclusion zone, the
The 180- or 190-dB level shutdown criteria are applicable to cetaceans and pinnipeds, respectively, as specified by NMFS (2000). Lamont-Doherty used these levels to establish the exclusion zones as presented in their application.
Lamont-Doherty used a process to develop and confirm the conservativeness of the mitigation radii for a shallow-water seismic survey in the northeast Pacific Ocean offshore Washington in 2012. Crone
A power down involves decreasing the number of airguns in use such that the radius of the 180-dB or 190-dB exclusion zone is smaller to the extent that marine mammals are no longer within or about to enter the exclusion zone. A power down of the airgun array can also occur when the vessel is moving from one seismic line to another. During a power down for mitigation, the
If the observer detects a marine mammal outside the exclusion zone and the animal is likely to enter the zone, the crew would power down the airguns to reduce the size of the 180-dB or 190-dB exclusion zone before the animal enters that zone. Likewise, if a marine mammal is already within the zone after detection, the crew would power down the airguns immediately. During a power down of the airgun array, the crew would operate a single 40-in
Following a power-down, the
• The observer has visually observed the animal leave the exclusion zone; or
• An observer has not sighted the animal within the exclusion zone for 15 minutes for species with shorter dive durations (
The
NMFS estimates that the
The
(1) If an animal enters the exclusion zone of the single airgun after the crew has initiated a power down; or
(2) If an observer sees the animal is initially within the exclusion zone of the single airgun when more than one airgun (typically the full airgun array) is operating.
Following a shutdown in excess of eight minutes, the
During periods of active seismic operations, there are occasions when the
If the full exclusion zone is not visible to the observer for at least 30 minutes prior to the start of operations in either daylight or nighttime, the
If one airgun has operated during a power down period, ramp-up to full power would be permissible at night or in poor visibility, on the assumption that marine mammals would be alerted to the approaching seismic vessel by the sounds from the single airgun and could move away. The vessel's crew would not initiate a ramp-up of the airguns if an observer sees the marine mammal within or near the applicable exclusion zones during the day or close to the vessel at night.
Ramp-up of an airgun array provides a gradual increase in sound levels, and involves a step-wise increase in the number and total volume of airguns firing until the full volume of the airgun array is achieved. The purpose of a ramp-up is to “warn” marine mammals in the vicinity of the airguns, and to provide the time for them to leave the area and thus avoid any potential injury or impairment of their hearing abilities. Lamont-Doherty would follow a ramp-up procedure when the airgun array begins operating after an 8 minute period without airgun operations or when shut down has exceeded that period. Lamont-Doherty has used similar waiting periods (approximately eight to 10 minutes) during previous seismic surveys.
Ramp-up would begin with the smallest airgun in the array (40 in
If the complete exclusion zone has not been visible for at least 30 minutes prior to the start of operations in either daylight or nighttime, Lamont-Doherty would not commence the ramp-up unless at least one airgun (40 in
The
If, during seismic data collection, Lamont-Doherty detects a marine mammal outside the exclusion zone that appears likely to enter the exclusion zone based on the animal's position and direction of travel, the
NMFS has carefully evaluated Lamont-Doherty's 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 airgun operations that we expect to result in the take of marine mammals (this goal may contribute to 1, above, or to reducing harassment takes only).
3. A reduction in the number of times (total number or number at biologically important time or location) individuals would be exposed to airgun operations 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 airgun operations that we expect to result in the take of marine mammals (this goal may contribute to a, 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 the evaluation of Lamont-Doherty's planned measures, as well as other measures developed by NMFS (
In order to issue an Incidental Harassment Authorization 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 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 we expect to be present in the action area.
Monitoring measures prescribed by NMFS should accomplish one or more of the following general goals:
1. An increase in the probability of detecting marine mammals, both within the mitigation zone (thus allowing for more effective implementation of the mitigation) and during other times and locations, in order to generate more data to contribute to the analyses mentioned later;
2. An increase in our understanding of how many marine mammals would be affected by seismic airguns and other active acoustic sources and the likelihood of associating those exposures with specific adverse effects, such as behavioral harassment, temporary or permanent threshold shift;
3. An increase in our understanding of how marine mammals respond to stimuli that we expect to result in take and how those anticipated adverse effects on individuals (in different ways and to varying degrees) may impact the population, species, or stock (specifically through effects on annual rates of recruitment or survival) through any of the following methods:
a. Behavioral observations in the presence of stimuli compared to observations in the absence of stimuli (
b. Physiological measurements in the presence of stimuli compared to observations in the absence of stimuli (
c. 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; and
5. An increase in our understanding of the effectiveness of certain mitigation and monitoring measures.
Lamont-Doherty plans to conduct marine mammal monitoring during the planned project to supplement the mitigation measures that include real-time monitoring (see “Vessel-based Visual Mitigation Monitoring” above), and to satisfy the monitoring requirements of the Authorization.
Passive acoustic monitoring would complement the visual mitigation monitoring program, when practicable. Visual monitoring typically is not effective during periods of poor visibility or at night, and even with good visibility, is unable to detect marine mammals when they are below the surface or beyond visual range. Passive acoustic monitoring can improve detection, identification, and localization of cetaceans when used in conjunction with visual observations. The passive acoustic monitoring would serve to alert visual observers (if on duty) when vocalizing cetaceans are detected. It is only useful when marine mammals call, but it can be effective either by day or by night, and does not depend on good visibility. The acoustic observer would monitor the system in real time so that he/she can advise the visual observers if they acoustically detect cetaceans.
The passive acoustic monitoring system consists of hardware (
One acoustic observer, an expert bioacoustician with primary responsibility for the passive acoustic monitoring system would be aboard the
One acoustic observer would monitor the acoustic detection system by listening to the signals from two channels via headphones and/or speakers and watching the real-time spectrographic display for frequency ranges produced by cetaceans. The observer monitoring the acoustical data would be on shift for one to six hours at a time. The other observers would rotate as an acoustic observer, although the expert acoustician would be on passive acoustic monitoring duty more frequently.
When the acoustic observer detects a vocalization while visual observations are in progress, the acoustic observer on duty would contact the visual observer immediately, to alert him/her to the presence of cetaceans (if they have not already been seen), so that the vessel's crew can initiate a power down or shutdown, if required. The observer would enter the information regarding the call into a database. Data entry would include an acoustic encounter identification number, whether it was linked with a visual sighting, date, time when first and last heard and whenever any additional information was recorded, position and water depth when first detected, bearing if determinable, species or species group (
Observers would record data to estimate the numbers of marine mammals exposed to various received sound levels and to document apparent disturbance reactions or lack thereof. They would use the data to help better understand the impacts of the activity on marine mammals and to estimate numbers of animals potentially `taken' by harassment (as defined in the MMPA). They will also provide information needed to order a power down or shut down of the airguns when a marine mammal is within or near the exclusion zone.
When an observer makes a sighting, they will record the following information:
1. Species, group size, age/size/sex categories (if determinable), behavior when first sighted and after initial sighting, heading (if consistent), bearing and distance from seismic vessel, sighting cue, apparent reaction to the airguns or vessel (
2. Time, location, heading, speed, activity of the vessel, sea state, visibility, and sun glare.
3. The observer will record the data listed under (2) at the start and end of each observation watch, and during a watch whenever there is a change in one or more of the variables.
4. Observers will record all observations and power downs or shutdowns in a standardized format and will enter data into an electronic database. The observers will verify the accuracy of the data entry by computerized data validity checks during data entry and by subsequent manual checking of the database. These procedures will allow the preparation of initial summaries of data during and shortly after the field program, and will facilitate transfer of the data to statistical, graphical, and other programs for further processing and archiving.
Results from the vessel-based observations will provide:
1. The basis for real-time mitigation (airgun power down or shutdown).
2. Information needed to estimate the number of marine mammals potentially taken by harassment, which Lamont-Doherty must report to the Office of Protected Resources.
3. Data on the occurrence, distribution, and activities of marine mammals and turtles in the area where Lamont-Doherty would conduct the seismic study.
4. Information to compare the distance and distribution of marine mammals and turtles relative to the source vessel at times with and without seismic activity.
5. Data on the behavior and movement patterns of marine mammals detected during non-active and active seismic operations.
Lamont-Doherty will submit a report to NMFS and to NSF within 90 days after the end of the cruise. The report will describe the operations conducted and sightings of marine mammals near the operations. The report will provide full documentation of methods, results, and interpretation pertaining to all monitoring. The 90-day report will summarize the dates and locations of seismic operations, and all marine mammal sightings (dates, times, locations, activities, associated seismic survey activities).
The report will also include estimates of the number and nature of exposures that occurred above the harassment threshold based on the observations and in consideration of the detectability of the marine mammal species observed (
In the unanticipated event that the specified activity clearly causes the take of a marine mammal in a manner not permitted by the authorization (if issued), such as an injury, serious injury, or mortality (
• Time, date, and location (latitude/longitude) of the incident;
• Name and type of vessel involved;
• Vessel's speed during and leading up to the incident;
• Description of the incident;
• Status of all sound source use in the 24 hours preceding the incident;
• Water depth;
• 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).
Lamont-Doherty shall not resume its activities until NMFS is able to review the circumstances of the prohibited take. NMFS would work with Lamont-Doherty to determine what is necessary to minimize the likelihood of further prohibited take and ensure MMPA compliance. Lamont-Doherty may not resume their activities until notified by NMFS via letter, email, or telephone.
In the event that Lamont-Doherty discovers an injured or dead marine mammal, and the lead visual observer determines that the cause of the injury or death is unknown and the death is relatively recent (
In the event that Lamont-Doherty discovers an injured or dead marine mammal, and the lead visual observer determines that the injury or death is not associated with or related to the authorized activities (
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].
Acoustic stimuli (
NMFS's practice is to apply the 160 dB re: 1 µPa received level threshold for underwater impulse sound levels to predict whether behavioral disturbance that rises to the level of Level B harassment is likely to occur. NMFS's practice is to apply the 180 dB or 190 dB re: 1 µPa (for cetaceans and pinnipeds, respectively) received level threshold for underwater impulse sound levels to predict whether permanent threshold shift (auditory injury), which we consider as harassment (Level A), is likely to occur.
Given the many uncertainties in predicting the quantity and types of impacts of sound on marine mammals, it is common practice for us to estimate how many animals are likely to be present within a particular distance of a
The following sections describe Lamont-Doherty's and NMFS's methods to estimate take by incidental harassment. We base these estimates on the number of marine mammals that are estimated to be exposed to seismic airgun sound levels above the Level B harassment threshold of 160 dB during a total of approximately 9,633 km (5,986 mi) of transect lines in the southeast Pacific Ocean.
For blue whales in the southern survey area, NMFS used the density (9.56/km
There is some uncertainty about the representativeness of the estimated density data and the assumptions used in their calculations. Oceanographic conditions, including occasional El Niño and La Niña events, influence the distribution and numbers of marine mammals present in the eastern tropical Pacific Ocean, resulting in considerable year-to-year variation in the distribution and abundance of many marine mammal species. Thus, for some species, the densities derived from past surveys may not be representative of the densities that would be encountered during the planned seismic surveys. However, the approach used is based on the best available data.
In many cases, this estimate of instances of exposures is likely an overestimate of the number of individuals that are taken, because it assumes 100 percent turnover in the area every day, (
Lamont-Doherty did not estimate any additional take from sound sources other than airguns. NMFS does not expect the sound levels produced by the echosounder and sub-bottom profiler to exceed the sound levels produced by the airguns. During the estimated 10 nm of transit that is expected to occur between the three planned survey locations, the use of the MBES and SBP may occur independent of seismic airgun operation. This use of the MBES and SBP in the absence of airgun use was not explicitly described in the
As described above, NMFS considers the probability for entanglement of marine mammals to be so low as to be discountable, because of the vessel speed and the monitoring efforts onboard the survey vessel. Therefore, NMFS does not authorize additional takes for entanglement.
As described above, the
There is no evidence that the planned survey activities could result in serious injury or mortality within the specified geographic area for the requested Authorization. The required mitigation
Negligible impact is “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” (50 CFR 216.103). The lack of likely adverse effects on annual rates of recruitment or survival (
In making a negligible impact determination, NMFS considers:
• The number of anticipated injuries, serious injuries, or mortalities;
• The number, nature, and intensity, and duration of harassment; and
• 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 takes.
To avoid repetition, our analysis applies to all the species listed in Table 7, given that NMFS expects the anticipated effects of the seismic airguns to be similar in nature. Where there are meaningful differences between species or stocks, or groups of species, in anticipated individual responses to activities, impact of expected take on the population due to differences in population status, or impacts on habitat, NMFS has identified species-specific factors to inform the analysis.
Given the required mitigation and related monitoring, NMFS does not anticipate that serious injury or mortality would occur as a result of Lamont-Doherty's seismic survey in the southeast Pacific Ocean. Thus NMFS does not authorize any mortality. NMFS's predicted estimates for Level A harassment take for some species are likely overestimates of the injury that will occur, as NMFS expects that successful implementation of the 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, given sufficient notice of the
Of the marine mammal species under our jurisdiction that are known to occur or likely to occur in the study area, the following species are listed as endangered under the ESA: Blue, fin, humpback, sei, Southern right, and sperm whales. The other marine mammal species that may be taken by harassment during Lamont-Doherty's seismic survey program are not listed as threatened or endangered under the ESA.
Potential impacts to marine mammal habitat were discussed previously in this document (see the “Anticipated Effects on Habitat” section). Although some disturbance is possible to food sources of marine mammals, the impacts are anticipated to be minor enough as to not affect the feeding success of any individuals long-term. Regarding direct effects on cetacean feeding, based on the fact that the action footprint does not include any areas recognized specifically for higher value feeding habitat, the mobile and ephemeral nature of most prey sources, and the size of the southeast Pacific Ocean where feeding by marine mammals occurs versus the localized area of the marine survey activities, any missed feeding opportunities in the direct project area are expected to be minor based on the fact that other equally valuable feeding opportunities likely exist nearby.
Taking into account the planned mitigation measures, effects on cetaceans are generally expected to be restricted to avoidance of a limited area around the survey operation and short-term changes in behavior, falling within the MMPA definition of “Level B harassment.” Animals are not expected to permanently abandon any area that is surveyed, and based on the best available information, any behaviors that are interrupted during the activity are expected to resume once the activity ceases. For example, as described above, gray whales have continued to migrate annually along the west coast of North America with substantial increases in the population over recent years, despite intermittent seismic exploration in that area for decades (Appendix A in Malme
Many animals perform vital functions, such as feeding, resting, traveling, and socializing, on a diel cycle (
For reasons stated previously in this document and based on the following factors, Lamont-Doherty's planned activities are not likely to cause long-term behavioral disturbance, serious injury, or death, or other effects that would be expected to adversely affect reproduction or survival of any individuals. They include:
• The anticipated impacts of Lamont-Doherty's survey activities on marine mammals are temporary behavioral changes due, primarily, to avoidance of the area around the seismic vessel;
• The likelihood that, given the constant movement of boat and animals and the nature of the survey design (not concentrated in areas of high marine mammal concentration), any PTS that is incurred would be of a low level;
• The availability of alternate areas of similar habitat value for marine mammals to temporarily vacate the survey area during the operation of the airgun(s) to avoid acoustic harassment;
• The expectation that the seismic survey would have no more than a temporary and minimal adverse effect on any fish or invertebrate species that serve as prey species for marine mammals, and therefore consider the potential impacts to marine mammal habitat minimal.
Tables 4-7 in this document describe the number of Level A and Level B harassment takes that we anticipate as a result of the planned survey activities outside Chile's territorial sea (12 nm). Lamont-Doherty would conduct the planned seismic survey within the EEZ and territorial waters of Chile. The planned survey would occur primarily on the high seas, with a small portion occurring within Chile's territorial sea. As described above, NMFS does not have authority to authorize the incidental take of marine mammals in the territorial seas of foreign nations, because the MMPA does not apply in those waters. However, as part of the analysis supporting our determination under the MMPA that the activity would have a negligible impact on the affected species, we must consider the incidental take expected to occur as a result of the activity in the entire activity area, including both territorial seas and high seas.
Based on NMFS's analysis, the area within the planned northern survey predicted to be ensonified to the Level B harassment threshold (160 dB re: 1 μPa) within Chilean territorial seas accounts for approximately 19 percent of the total area (including high seas and Chilean territorial seas combined) predicted to be ensonified to the Level B harassment threshold; for the planned central survey, the area predicted to be ensonified to the Level B harassment threshold within territorial seas accounts for approximately three percent of the total area predicted to be ensonified to the Level B harassment threshold in that entire survey area; and for the planned southern survey, the area predicted to be ensonified to the Level B harassment threshold within territorial seas accounts for approximately 24 percent of the total area predicted to be ensonified to the Level B harassment threshold in that entire survey area (Table 8).
We expect the impacts of Lamont-Doherty's survey activities, including the impacts of takes that are expected to occur within the territorial sea, to include temporary behavioral changes due, primarily, to avoidance of the area around the seismic vessel, with the potential for a small degree of PTS in a limited number of animals. Effects on marine mammals are generally expected to be restricted to avoidance of a limited area around the survey operation and short-term changes in behavior, falling within the MMPA definition of “Level B harassment.” The slow speed of the
Marine mammals are not expected to permanently abandon any area that is surveyed, including areas within territorial seas, and based on the best available information, any behaviors that are interrupted during the activity are expected to resume once the activity ceases. Although some disturbance is possible to food sources of marine mammals within territorial seas, the impacts to those marine mammals are anticipated to be minor enough as to not affect the feeding success of any individuals long-term. Any missed feeding opportunities in the project area within territorial seas are expected to be minor based on the fact that other equally valuable feeding opportunities likely exist nearby. The portions of the seismic surveys that will occur within territorial seas would have no more than a temporary and minimal adverse effect on any fish or invertebrate species that serve as prey species for marine mammals, and therefore we believe the potential impacts to marine mammal habitat will be minimal.
As is the case for surveys outside territorial seas as described above, due to constant movement of the
For the reasons described above, the takes that would occur within the territorial sea, while not authorized by NMFS,do not alter our determinations above with respect to the relative likelihood of the activity to cause long-term behavioral disturbance, serious injury, or death, or other effects that would be expected to adversely affect reproduction or survival of any individual marine mammals.
Required mitigation measures, such as special shutdowns for large whales, vessel speed, course alteration, and visual monitoring would be implemented to help reduce impacts to marine mammals. Based on the analysis herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the monitoring and mitigation measures, NMFS finds that Lamont-Doherty's planned seismic survey would have a negligible impact on the affected marine mammal species or stocks.
As described previously, NMFS estimates that Lamont-Doherty's activities could potentially affect, by Level B harassment, 44 species of marine mammals under our jurisdiction. NMFS estimates that Lamont-Doherty's activities could potentially affect, by Level A harassment, up to 26 species of marine mammals under our jurisdiction.
For each species, the numbers of take authorized are small relative to the population sizes: Less than 18 percent for South American sea lion, less than 15 percent for the dusky dolphin, less than 11.5 percent for Chilean dolphin, and less than 5 percent for all other species (Table 7). As described above, NMFS cannot authorize the incidental take of marine mammals in the territorial seas of foreign nations, but must consider the level of incidental take as a result of the activity in the entire activity area (including both territorial seas and high seas) as part of the analysis supporting our determination under the MMPA that the activity would have a negligible impact on the affected species. We assume for the purposes of our analysis that the take predicted to occur within the Chilean territorial sea will account for approximately a 23 percent increase in the northern survey area; a 3 percent increase in the central survey area; and a 32 percent increase in the southern survey area, compared to the total number of incidental takes predicted to occur outside of the Chilean territorial sea (Table 7 and Table 8). Accounting for these additional takes, the total takes predicted to result from the planned survey (including both the takes authorized by NMFS and the takes not authorized by NMFS but predicted to occur within the Chilean territorial sea) are still small relative to the population sizes, with no more than 22 percent taken for any marine mammal species.
NMFS is not aware of reliable abundance estimates for four species of marine mammals (Burmeister's porpoise, Peale's dolphin, pygmy right whale, and southern right whale dolphin) for which incidental take is authorized. Therefore we rely on the best available information on these species to make determinations as to whether the authorized take numbers represent small numbers of the total populations of these species.
The Burmeister's porpoise is distributed from the Atlantic Ocean in southern Brazil to the Pacific Ocean in northern Peru (Reyes 2009). While there are no quantitative data on abundance, the best available information suggest the species is assumed to be numerous throughout South American coastal waters (Brownell Jr. and Clapham 1999), with groups estimated at approximately 150 individuals observed off of Peru (Van Waerebeek
Peale's dolphin is a coastal species that is known to inhabit waters very near to shore, commonly within or shoreward of kelp beds, while in the waters of southern Chile and Tierra del Fuego they appear to prefer channels, fjords and deep bays (Goodall 2009). Their apparent habitat preference for waters very near to shore suggests that the number of authorized takes is likely very conservative as the species is unlikely to be encountered throughout much of the survey area. While no abundance estimate exists for the species, Peale's dolphin is reportedly the most common cetacean found around the coast of the Falkland Islands and Chile
The full distribution of the southern right whale dolphin is not known, but the species appears to be circumpolar and fairly common throughout its range. Survey data and stranding and fishery interaction data in northern Chile suggest that the species may be one of the most common cetaceans in the region (Van Waerebeek et al. 1991). The species' apparent abundance and its broad distribution suggest the number of authorized takes represents a small number of individuals relative to the species' total abundance.
The pygmy right whale has a circumpolar distribution, between about 30° and 55°S, with records from southern South America as well as Africa, Australia and New Zealand (Kemper 2009). There are no estimates of abundance for the species, but judging by the number of strandings in Australia and New Zealand, it is likely to be reasonably common in that region (Kemper 2009), with aggregations of up to approximately 80 individuals reported (Matsuoka 1996). The species' apparent abundance and its broad distribution suggest the number of authorized takes would represent a small number of individuals relative to the species' total abundance.
NMFS finds that the incidental take associated with Lamont-Doherty's planned seismic survey would be limited to small numbers relative to the affected species or stocks.
There are no relevant subsistence uses of marine mammals implicated by this action.
There are six marine mammal species listed as endangered under the Endangered Species Act that may occur in the survey area. Under section 7 of the ESA, NSF initiated formal consultation with the NMFS Office of Protected Resources (OPR) Endangered Species Act Interagency Cooperation Division on the planned seismic survey. We (the NMFS Office of Protected Resources, Permits and Conservation Division) also consulted internally under section 7 of the ESA with the NMFS OPR Endangered Species Act Interagency Cooperation Division on the issuance of an Authorization under section 101(a)(5)(D) of the MMPA.
In July, 2016, the NMFS OPR Endangered Species Act Interagency Cooperation Division issued a Biological Opinion with an Incidental Take Statement to us and to the NSF, which concluded that the issuance of the Authorization and the conduct of the seismic survey were not likely to jeopardize the continued existence of blue, fin, humpback, sei, Southern right and sperm whales. The Biological Opinion also concluded that the issuance of the Authorization and the conduct of the seismic survey would not affect designated critical habitat for these species.
NSF prepared an environmental analysis titled, “
NMFS has issued an Authorization to Lamont-Doherty for the potential harassment of small numbers of 44 marine mammal species incidental to conducting a seismic survey in the Southeast Pacific Ocean, between August 1, 2016 and July 31, 2017, provided the previously mentioned mitigation, monitoring and reporting measures.
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 joint public meeting of its Monkfish Committee on Thursday, September 1, 2016 to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.
This meeting will be held on Thursday, September 1, 2016 at 9:30 a.m.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.
The Monkfish Committee will meet to receive a report on the 2016 operational assessment. The Committee will discuss the Scientific and Statistical Committee recommendations for Allowable Biological Catch (ABC) for FYs 2017-19, the potential range of alternatives for the specifications package, and priorities for 2017. There will be a closed session to review advisory panel applications. The Committee will discuss other business, as needed.
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at 978-465-0492, at least 5 days prior to the meeting date.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
NMFS announces a Western Pacific Stock Assessment Review of the report “Stock Assessment of the Coral Reef Fishes of Hawaii, 2016.” The report contains single-species stock assessments for 28 species of reef-associated fish stocks around the main Hawaiian islands. A panel of three independent experts will review the stock assessment and report their findings.
See the
The meeting will be held in Suite 1701, Finance Factors Building, 1164 Bishop St., Honolulu, HI 96813.
Matt Dunlap, NMFS Pacific Islands Regional Office, (808) 725-5177 or
The agenda order may change. The meeting will run as late as necessary to complete scheduled business. Although non-emergency issues that are not contained in this agenda may come up at the meeting for discussion, those issues may not be the subject of formal action during the meeting. Action will be restricted to those issues specifically listed in this notice, and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Make direct requests for sign language interpretation or other auxiliary aids to Matt Dunlap, (808) 725-5177 or
16 U.S.C. 1801
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 Groundfish Advisory Panel to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.
This meeting will be held on Tuesday, August 30, 2016 at 10 a.m.
The meeting will be held at the DoubleTree by Hilton, 50 Ferncroft Road, Danvers, MA 01950; phone: (978) 777-2500; fax: (978) 750-7911.
Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.
The Advisory Panel will review the draft alternatives for Framework Adjustment 56 (specifications and management measures) and make recommendations to the Groundfish Committee. They will discuss and summarize recent market and fishery information regarding groundfish stocks—focusing on those with assessments this year (
Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during these meetings. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465-0492, at least 5 days prior to the meeting date.
16 U.S.C. 1801
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).
A number of paperwork submissions are required by the Coastal Zone Management Act (CZMA) federal consistency provision, 16 U.S.C. 1456, and by NOAA to provide a reasonable, efficient and predictable means of complying with CZMA requirements. The requirements are detailed in 15 CFR part 930. The information will be used by coastal states with federally- approved Coastal Zone Management Programs to determine if Federal agency activities, Federal license or permit activities, and Federal assistance activities that affect a state's coastal zone are consistent with the states' programs. Information will also be used by NOAA and the Secretary of Commerce for appeals to the Secretary by non-federal applicants regarding State CZMA objections to federal license or permit activities.
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
National Telecommunications and Information Administration, U.S. Department of Commerce.
Notice of Open Meetings—Monthly Webinars.
The National Telecommunications and Information Administration (NTIA), as part of its BroadbandUSA program, will host a series of webinars on a monthly basis to engage the public and stakeholders with information to accelerate broadband access, improve digital inclusion, strengthen broadband policies, and support local community priorities. The webinar series will provide an ongoing source of information on the range of topics and issues being addressed by BroadbandUSA, including best practices for improving broadband deployment, digital literacy, and e-government.
The webinars will be held on the third Wednesday of every month, beginning August 17, 2016 and continuing through January 19, 2017. Details on specific webinar topics and webinar registration information will be posted on the BroadbandUSA Web site
BroadbandUSA will hold the webinars from 2:00 p.m. to 3:00 p.m. Eastern Time on the third Wednesday of every month, beginning August 17, 2016 and continuing through January 18, 2017.
This is a virtual meeting. NTIA will post the registration information on its BroadbandUSA Web site
Lynn Chadwick, National Telecommunications and Information Administration, U.S. Department of Commerce, Room 4627, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-8338; email:
NTIA's BroadbandUSA program provides expert advice and field-proven tools for assessing broadband adoption, planning new infrastructure, and engaging a wide
NTIA's BroadbandUSA team is developing tools to support communities working to expand broadband access, adoption, and use. These webinars are among the tools BroadbandUSA uses to provide broadband information to the public, stakeholders, tribal, local, and state governments, and federal programs. Other tools include publications, workshops, meetings and co-hosted events with stakeholder organizations and agencies.
Participants are welcome to view one or many webinars. General questions and comments are welcome at any time during webinars via email to
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed deletions from the Procurement List.
The Committee is proposing to delete products and services from the Procurement List that were previously furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Comments must be received on or before September 11, 2016.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia, 22202-4149.
Barry S. Lineback, Telephone: (703) 603-7740, Fax: (703) 603-0655, or email
This notice is published pursuant to 41 U.S.C. 8503 (a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
The following products and services are proposed for deletion from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Additions to and Deletions from the Procurement List.
This action adds products and services to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and deletes services from the Procurement List previously furnished by such agencies.
Effective on September 11, 2016.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S. Clark Street, Suite 715, Arlington, Virginia 22202-4149.
Barry S. Lineback, Telephone: (703) 603-7740, Fax: (703) 603-0655, or email
On 6/17/2016 (81 FR 39630) and 7/8/2016 (81 FR 44597), the Committee for Purchase From People Who Are Blind or Severely Disabled published notices of proposed additions to the Procurement List.
After consideration of the material presented to it concerning capability of qualified nonprofit agencies to provide the products and services and impact of the additions on the current or most recent contractors, the Committee has determined that the products and services listed below are suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organizations that will furnish the products and services to the Government.
2. The action will result in authorizing small entities to furnish the products and services to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the products and services proposed for addition to the Procurement List.
Accordingly, the following products and services are added to the Procurement List:
On 7/8/2016 (81 FR 44597), the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed deletions from the Procurement List.
After consideration of the relevant matter presented, the Committee has determined that the services listed below are no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in additional reporting, recordkeeping or other compliance requirements for small entities.
2. The action may result in authorizing small entities to furnish the services to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the services deleted from the Procurement List.
Accordingly, the following services are deleted from the Procurement List:
Commodity Futures Trading Commission.
Order.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is issuing an order to exempt Federal Reserve Banks that provide customer accounts and other services to registered derivatives clearing organizations that are designated financial market utilities from Sections 4d and 22 of the Commodity Exchange Act (“CEA”).
Eileen A. Donovan, Deputy Director, 202-418-5096,
On June 2, 2016, the Commission published in the
II. Background
Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) was enacted to mitigate risk in the financial system and promote financial stability.
On July 18, 2012, the Council designated eight FMUs as systemically important under Title VIII.
Section 806(a) of the Dodd-Frank Act permits the Board to authorize a Federal Reserve Bank to establish and maintain an account for a Designated FMU and provide to the Designated FMU the services listed in Section 11A(b) of the Federal Reserve Act, subject to any applicable rules, orders, standards, or guidelines prescribed by the Board.
The proposed Commission order would, subject to certain terms and conditions, exempt Federal Reserve Banks that provide customer accounts and other services to SIDCOs from Sections 4d and 22 of the CEA. In the Proposal, the Commission emphasized the importance of protecting customers and safeguarding customer funds, and highlighted the critical role that SIDCOs play in the financial markets. The Commission recognized that the failure of a SIDCO or a disruption to the operations of a SIDCO could threaten the stability of the U.S. financial system. As a result, the Commission determined that reducing SIDCOs' credit and liquidity risks would better protect market participants and the public, and would serve to promote the integrity of the financial markets. The Commission explained that because Federal Reserve Banks are the source of liquidity with regard to U.S. dollar deposits, a SIDCO would face much lower credit and liquidity risk with a deposit at a Federal Reserve Bank than it would with a deposit at a commercial bank.
With respect to protecting customers and safeguarding customer funds, the Commission explained that under Section 4d of the CEA, a depository will be held liable for an improper transfer of customer funds by an FCM or DCO if it knew or should have known that the transfer was improper.
The Commission noted its concern that exposing the Federal Reserve Banks to the standard of liability set forth in Section 4d of the CEA, as well as to potential third-party claims under Section 22 of the CEA,
However, the Commission reiterated the importance of the segregation requirements set forth in Section 4d of the CEA to make sure that customer funds are used only for the purpose of margining, securing, or guaranteeing their futures contracts and options on futures contracts, and cleared swaps. Therefore, as a condition to the proposed order, customer funds held at a Federal Reserve Bank would continue to be required to be segregated from the funds deposited in the SIDCO's proprietary account. In addition, Federal Reserve Banks would be required to reply promptly and directly to any request for confirmation of account balances or provision of any other information regarding or related to the customer account(s) of a SIDCO that are established pursuant to the CEA from the director of the Division of Clearing and Risk of the Commission, or any successor division, or such director's designees.
The Commission further noted that Title VIII of the Dodd-Frank Act permits a Federal Reserve Bank to have access to confidential supervisory information with respect to a SIDCO. The Commission recognized, however, that the fact that Board supervisory staff may have access to confidential supervisory information about a SIDCO could create the false perception that Federal Reserve Bank staff responsible for managing the SIDCO's account and financial services would gain special knowledge about the SIDCO. As a result, the Commission recognized that a Federal Reserve Bank acting as a depository for customer funds could face greater scrutiny than a commercial bank acting as such. Therefore, the proposed order included a statement recognizing that, pursuant to the Wall Policy,
In response to its request for public comment on the Proposal, the Commission received six comment letters.
Specifically, ICC agreed that holding SIDCO customer funds at a Federal Reserve Bank would decrease the SIDCO's credit, liquidity, and operational risks. ICC also agreed that “the existing limitations on how Federal Reserve Banks hold assets provide adequate protections to account holders,” and “such protections are consistent with the customer protection initiatives of the CEA.”
The Commission requested comments regarding whether the proposed exemption should be expanded to include not just SIDCOs but all Designated FMUs (in other words, all registered DCOs that have been designated as systemically important by the Council, regardless of whether the Commission is the DCO's Supervisory Agency). In response, OCC requested that the Commission expand the exemption.
Minneapolis Grain Exchange, Inc. (“MGEX”) requested that the Commission expand the exemption to include customer accounts held at Federal Reserve Banks by Subpart C DCOs.
CME supported the exemption, but noted that it would be inconsistent with Commission Regulation 1.20(g)(4)(ii), which requires that a DCO obtain from a Federal Reserve Bank acting as a depository for customer funds a written acknowledgment that the customer funds are being held in accordance with Section 4d of the CEA.
In addition, CME commented that, as a SIDCO account holder, it would need multiple Federal Reserve Bank accounts in order to comply with the segregation requirements set forth in the exemptive order.
CME also stated that account agreements between the Federal Reserve Banks and depository institution account holders typically include certain set-off rights and liens in favor of the Federal Reserve Banks. In this regard, CME commented that Federal Reserve Bank account agreements may need to be tailored in order to provide comfort to SIDCO clearing members, and customers of SIDCO clearing members, that their margin deposits are “bankruptcy remote” from the SIDCO under applicable bank capital requirements.
After careful review and consideration of the comments, and for the reasons cited herein and set forth in the Proposal, the Commission has determined that the requirements of Section 4(c) of the CEA have been met with respect to exempting Federal Reserve Banks that provide customer accounts and other services to Designated FMUs from Sections 4d and 22 of the CEA. The Commission is therefore issuing an order granting the exemption essentially as proposed. However, the Commission is making minor technical clarifications to the language of the order, and is expanding the exemption to include those customer accounts that are established pursuant to the CEA and that are held at Federal Reserve Banks by Designated FMUs. The Commission agrees with OCC and ISDA that Section 806(a) of the Dodd-Frank Act supports Federal
The Commission notes MGEX's request that the Commission expand the exemption to include customer accounts held at Federal Reserve Banks by any Subpart C DCO. However, the Commission further notes that Subpart C DCOs are not currently eligible for Federal Reserve Bank accounts.
In response to CME's comment that the exemption would be inconsistent with the acknowledgement letter requirements in Commission Regulation 1.20(g)(4)(ii),
In addition, CME commented that, as a SIDCO account holder, it would need multiple Federal Reserve Bank accounts in order to comply with the segregation requirements set forth in the exemptive order.
CME also noted that account agreements between the Federal Reserve Banks and depository institution account holders typically include certain set-off rights and liens in favor of the Federal Reserve Banks. CME argued that Federal Reserve Bank account agreements may need to be revised to make sure customer margin deposits are “bankruptcy remote” from the SIDCO under applicable bank capital requirements.
The exemptive order applies to all Federal Reserve Banks that provide customer accounts and other services to Designated FMUs. It requires that all money, securities, and property deposited into a customer account established pursuant to the CEA by a Designated FMU with a Federal Reserve Bank must be separately accounted for and not commingled with the money, securities, and property deposited into the account of any other person, including a proprietary account of the Designated FMU depositing such funds.
In light of the foregoing, the Commission believes the exemption would promote responsible economic and financial innovation and fair competition, and is consistent with the “public interest,” as that term is used in Section 4(c) of the CEA.
The Regulatory Flexibility Act (“RFA”)
Accordingly, the Commission does not expect the exemption to have a significant impact on a substantial number of small entities. Therefore, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the exemption would not have a significant economic impact on a substantial number of small entities.
The purposes of the Paperwork Reduction Act of 1995 (“PRA”)
The Commission requested comments on the costs and benefits associated with the proposed order. The Commission requested but received no comments providing data or other information to enable the Commission to better quantify the expected costs and benefits attributable to this exemption. In terms of qualitative cost and benefit comments, OCC stated that Section 806(a) of the Dodd-Frank Act supports Federal Reserve Banks acting as depositories for all Designated FMUs and not just SIDCOs. OCC commented that limiting the exemption to SIDCO customer accounts would place OCC at a competitive disadvantage because, although OCC is a Designated FMU, it is not a SIDCO. In addition, OCC argued that denying OCC the opportunity to deposit customer funds at a Federal Reserve Bank would undermine the purpose of Title VIII of the Dodd-Frank Act.
MGEX also supported the proposed exemption, but noted that DCOs that are not designated as systemically important would not have the same access to the credit and liquidity risk reducing opportunities afforded to SIDCOs with access to Federal Reserve Bank accounts. MGEX stated that limiting access to Federal Reserve Bank accounts to SIDCOs would create a competitive disadvantage to those DCOs that are not designated as systemically important, particularly Subpart C DCOs. MGEX recognized that the Commission cannot grant Subpart C DCOs permission to have accounts at a Federal Reserve Bank. However, MGEX argued that the Commission should expand the exemption to cover customer accounts maintained by Federal Reserve Banks for Subpart C DCOs in the event that Federal Reserve Banks are subsequently permitted to maintain accounts for Subpart C DCOs.
ICC commented that accounts at Federal Reserve Banks would reduce credit, operational, and liquidity risks that are associated with traditional deposit accounts. ISDA and ICC further noted that such accounts may reduce interconnectedness in the cleared derivatives market. CME commented that migrating a portion of the eligible assets it has on deposit from clearing members to a Federal Reserve Bank may have a number of positive effects on its clearing members and their customers. ACLI stated that the proposed order would reduce overall systemic risk that could arise from liquidity and other risks on commercial banks where SIDCOs currently deposit their customer funds.
In the discussion that follows, the Commission considers the costs and benefits of the exemptive order to the public and market participants. It also considers the costs and benefits of the exemption in light of the public interest factors enumerated in Section 15(a) of the CEA.
This order is exemptive and provides the Federal Reserve Banks relief from certain of the requirements in the CEA and attendant Commission regulations. As with any exemptive rule or order, the exemption in the order is permissive, meaning that the Federal Reserve Banks are not required to rely on it. In addition, Designated FMUs are not required to deposit customer funds with a Federal Reserve Bank. Accordingly, the Commission assumes that interested parties would rely on the exemption only if the anticipated benefits warrant the costs of the exemption.
The exemptive order would exempt the Federal Reserve Banks from Sections 4d and 22 of the CEA. All of the commenters generally supported issuing this exemption. However, two commenters raised the possibility that the proposed order could place them at a competitive disadvantage. First, as discussed above, OCC argued that, under Title VIII of the Dodd-Frank Act, a Federal Reserve Bank may be permitted to maintain an account for a Designated FMU. OCC argued that, as a result, it would be placed at a competitive disadvantage with respect to SIDCOs. The Commission agrees that Title VIII of the Dodd-Frank Act permits Federal Reserve Banks to maintain accounts for, and provide services to, Designated FMUs, and not just SIDCOs. Accordingly, and as discussed above, the Commission has determined to expand the exemption to include customer accounts held at Federal Reserve Banks by Designated FMUs generally, for purposes of consistency with Title VIII.
Second, MGEX argued that it would be placed at a competitive disadvantage with respect to SIDCOs because, as a Subpart C DCO, MGEX is held to the same standards as SIDCOs under the Commission's regulations, but is not afforded the same opportunity to hold customer accounts at a Federal Reserve Bank. The Commission has declined to expand the exemption to include customer accounts held at Federal Reserve Banks by Subpart C DCOs. Under Title VIII, the Board may authorize a Federal Reserve Bank to maintain accounts only for Designated FMUs. As MGEX recognizes, the Commission does not have the authority to authorize a Federal Reserve Bank to maintain accounts for Subpart C DCOs. Accordingly, the competitive disadvantage identified by MGEX cannot be remedied by the Commission by expanding the scope of the exemption. Moreover, the Commission does not believe it would be appropriate to expand the scope of the exemption based on the theoretical possibility that Federal Reserve Banks may one day be permitted to provide accounts to Subpart C DCOs. In the event that a Federal Reserve Bank is authorized to maintain an account for other registered DCOs, the Commission may reconsider the scope of the exemptive relief at that time.
The exemption will benefit market participants by facilitating Designated FMUs' use of Federal Reserve Banks as depositories for customer funds. Whereas commercial banks present credit and liquidity risks to a Designated FMU, its FCM clearing members, and the FCMs' customers, the Federal Reserve Banks are substantially insulated from such risks. As discussed in greater detail above, Title VIII of the Dodd-Frank Act was enacted to mitigate systemic risk in the financial system and to promote financial stability, in part, through an enhanced supervisory framework for Designated FMUs. In addition to this framework, Title VIII, and more specifically, Section 806(a) of the Dodd-Frank Act, permits the Board to authorize a Federal Reserve Bank to establish and maintain an account for a
Moreover, the Federal Reserve Banks' standard of liability, as set forth in the Federal Reserve Bank Governing Documents, is better suited for the Federal Reserve Banks than Section 4d of the CEA, which was designed to govern customer funds deposited with a commercial bank, trust company, or DCO. Unlike commercial banks, Federal Reserve Banks do not operate for profit and serve only account holders authorized by statute, such as depository institutions and the U.S. government. Indeed, each year they return to the U.S. Department of Treasury all earnings in excess of Federal Reserve Bank operating and other expenses, such as litigation expenses. By exempting the Federal Reserve Banks from certain potential enforcement actions and private suits, the exemption would reduce the Federal Reserve Banks' exposure to litigation. Because the Federal Reserve Banks return their earnings to the U.S. Department of Treasury's general fund, U.S. taxpayers could benefit from the exemption. Therefore, the Commission believes that it is appropriate to apply the Federal Reserve Banks' standard of liability in order to facilitate the use of these accounts.
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its action before issuing an order under the CEA.
Section 15(a) of the CEA further specifies that costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission may in its discretion give greater weight to any one of the five enumerated areas and could in its discretion determine that, notwithstanding its costs, a particular order is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the CEA.
The exemption would serve to facilitate Designated FMUs' use of Federal Reserve Banks as depositories for customer funds. Because the Federal Reserve System is the nation's central bank, such accounts would provide Designated FMUs with the lowest possible credit risk in the event of a market disruption. Moreover, as Federal Reserve Banks are the source of liquidity with regard to U.S. dollar deposits, Designated FMUs with access to a deposit account at a Federal Reserve Bank would also be better equipped to handle a liquidity event. Since Designated FMUs have been so designated because of their importance to the broader financial system, reducing these risks would protect market participants and the public.
A temporary or permanent disruption to the operations of a Designated FMU could cause widespread and significant damage to the financial integrity of derivatives markets as a whole. Therefore, by facilitating a Designated FMU's use of Federal Reserve Banks as depositories for customer funds, the exemption would reduce liquidity and credit risk to the Designated FMU, which would, in turn, promote the financial integrity of the derivatives markets.
As noted above, two commenters raised concerns that the exemptive order may result in a competitive disadvantage. The Commission has addressed the concern of one commenter (OCC) by expanding the exemption to include customer accounts held at Federal Reserve Banks by Designated FMUs generally. On the other hand, the Commission does not have the authority to take action to address the concerns of the other commenter (MGEX).
The Commission does not anticipate the exemption will have a significant impact on the efficiency of the derivatives markets.
The Commission does not anticipate the exemption will have an impact on the price discovery process.
The Commission believes that establishing segregated customer accounts for Designated FMUs and enabling Designated FMUs to access related services at a Federal Reserve Bank would improve a Designated FMU's ability to manage liquidity risk and protect customer funds. Additionally, the Commission believes that the availability of a Federal Reserve Bank account could allow a Designated FMU to reduce its concentration risk by adding an additional creditworthy depository in which to diversify funds. Accordingly, the exemption promotes sound risk management practices.
The Commission further notes that, notwithstanding the exemption from Section 4d of the CEA, the Federal Reserve Banks are still required to segregate customer funds deposited by a Designated FMU from the proprietary funds deposited by a Designated FMU and to adhere to the longstanding standards of liability that govern the Federal Reserve Banks.
The Commission believes that facilitating a Designated FMU's access to Federal Reserve Bank accounts will promote the public interest by bolstering a Designated FMU's ability to conduct settlements with a high degree of confidence under a wide range of stress scenarios, thereby increasing the likelihood of the Designated FMU being able to provide its customers with access to their funds in times of market distress.
After considering the above factors and the comment letters received in response to the request for comments, the Commission has determined to issue the following:
Pursuant to Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Financial Stability Oversight Council (“Council”) is required to designate those financial market utilities (“FMUs”) that the Council determines are, or are likely to become, systemically important. A derivatives clearing organization registered with the Commodity Futures Trading Commission (“Commission”) and designated by the Council as systemically important is referred to herein as a “Designated FMU”. Under Section 806(a) of the Dodd-Frank Act, the Board of Governors (“Board”) of the Federal Reserve System is permitted to authorize a Federal Reserve Bank to establish and maintain a deposit account for, among others, a Designated FMU and provide certain services to the Designated FMU, subject to any applicable rules, orders, standards, or guidelines prescribed by the Board.
Designated FMUs are required to hold funds belonging to customers of their clearing members in accounts subject to Section 4d of the Commodity Exchange Act (“CEA”). In addition, Section 22 of the CEA would provide for private rights of action for damages against persons who violate Section 4d, or persons who willfully aid, abet, counsel, induce, or procure the commission of a violation of Section 4d. However, the Commission understands that deposit accounts maintained by any Federal Reserve Bank would be governed by applicable account agreements, operating circulars issued by Federal Reserve Banks for each service, the Federal Reserve Act, and Federal Reserve regulations and policies, and, with respect to book-entry securities services, the regulations of the domestic issuer of the securities or the issuer's regulator (“Federal Reserve Bank Governing Documents”). The Federal Reserve Bank Governing Documents, as may be amended from time to time, include, but are not limited to, Federal Reserve Bank Operating Circular No. 6 (governing funds transfers through the Fedwire Funds Service); Federal Reserve Bank Operating Circular No. 7 (governing the maintenance of and transfer services for book-entry securities accounts); 12 CFR part 210, subpart B (governing funds transfers through the Fedwire Funds Service); and 31 CFR part 357, subpart B (setting forth the U.S. Department of the Treasury's regulations governing book-entry treasury bonds, notes, and bills).
The Commission understands that under the Federal Reserve Bank Governing Documents, a Federal Reserve Bank has no requirement or obligation to inquire as to the legitimacy or accuracy of the instructions, or the transactions related to those instructions, or compliance by the Designated FMU with its obligations under the CEA. To the extent that liability may accrue under the Federal Reserve Bank Governing Documents, the Commission understands that the Federal Reserve Bank may be held liable only for actual damages that are (i) incurred solely by the Designated FMU account holder, and (ii) proximately caused by the Federal Reserve Bank's failure to exercise ordinary care or act in good faith in accordance with the Federal Reserve Bank Governing Documents. The Commission is issuing an exemption to the Federal Reserve Banks in order to facilitate Federal Reserve Banks' ability to establish customer accounts for Designated FMUs.
Therefore,
1. Segregation. Money, securities, and property deposited into a customer account established pursuant to the CEA by a Designated FMU with a Federal Reserve Bank shall be separately accounted for and not commingled with the money, securities, and property deposited into the account of any other person, including a proprietary account of the Designated FMU depositing such funds.
2. Information Requests. Federal Reserve Banks must reply promptly and directly to any request for confirmation of account balances or provision of any other information regarding or related to the customer account(s) of a Designated FMU that are established pursuant to the CEA from the director of the Division of Clearing and Risk of the Commission, or any successor division, or such director's designees.
3. Applicability to Federal Reserve Banks. Subject to the conditions contained herein, the order applies to all Federal Reserve Banks that provide customer accounts and other services to Designated FMUs. In addition, pursuant to the Federal Reserve's Key Policies for the Provision of Financial Services: Standards Related to Priced-Service Activities of the Federal Reserve Banks, information obtained by the Board of Governors of the Federal Reserve System or its designees during the course of supervising Designated FMUs, pursuant to Title VIII of the Dodd-Frank Act, or any counterparty to a Designated FMU under any authority, shall not be attributed by the Commission to any Federal Reserve Bank providing accounts and financial services to Designated FMU account holders.
4. Reservation of Rights. This order is based upon the analysis set forth above. Any material change in law or circumstances pursuant to which this order is granted might require the Commission to reconsider its finding that the exemption contained herein is appropriate and/or consistent with the public interest and purposes of the CEA. Further, the Commission reserves the right, in its discretion, to revisit any of the terms and conditions of the relief provided herein, including but not limited to, making a determination that certain entities described herein should be subject to the Commission's full jurisdiction, and to condition, suspend, terminate, or otherwise modify or restrict the exemption granted in this order, as appropriate, upon its own motion.
On this matter, Chairman Massad and Commissioners Bowen and Giancarlo voted in the affirmative. No Commissioner voted in the negative.
Today, the Commission continues its work to ensure the resiliency of clearinghouses and protect customers in our markets. To provide the necessary context for these efforts, it is useful to look back at recent history.
Most participants in our markets will recall what happened at the beginning of the financial crisis in September 2008, when the Reserve Fund—a money market fund—“broke the buck” following the bankruptcy of Lehman Brothers. Redemptions were suspended and investors were not able to make withdrawals. As a result, many futures commission merchants (FCMs) were not able to access customer funds invested in the Reserve Fund. Absent relief by the CFTC, many would have been undercapitalized,
As a result of the crisis, as well as the collapse of MF Global, the CFTC and our self-regulatory organizations took a number of actions to better protect customer funds. We required customer funds to be strictly segregated and limited the ways they can be invested. We enhanced accounting and auditing procedures at FCMs, including by requiring daily verification from depositories of the amounts deposited by FCMs.
Today, CFTC rules require that customer funds be invested in highly liquid assets and be convertible into cash within one business day without a material discount in value. Our rules also require that clearinghouses invest initial margin deposits in a manner that allows them to promptly liquidate any such investment.
Over the last few years, the Securities and Exchange Commission (SEC) has also taken action in response to the lessons of the financial crisis, by adopting a number of measures to address the potential vulnerabilities of money market funds. One such recent reform, which takes effect in October of this year, sets forth the circumstances where prime money market funds are permitted, or in some circumstances required, to suspend redemptions in order to prevent the risk of investor runs.
While we recognize the benefit of the SEC's new rule in preventing investor runs, a suspension of redemptions by a money market fund would mean investments in such funds are not accessible and cannot be promptly liquidated. Such an event could result in customers, FCMs, and clearinghouses being unable to access the funds necessary to satisfy margin obligations.
Therefore, CFTC staff is today providing guidance making clear that Commission rules prohibit a clearing member from investing customer funds, or a clearinghouse from investing amounts deposited as initial margin, in such money market funds.
Some industry participants have suggested we should interpret or revise our rules to permit investments of at least some customer monies in such money market funds unless and until redemptions are suspended. We have declined to do so, as it would be too late to protect customers at that point. Moreover, there are alternatives to prime funds, including certain government money markets funds or Treasury securities. In fact, investments in prime money market funds represent a relatively small portion of the total customer funds on deposit and the total initial margin deposits at clearinghouses. Some of our clearinghouses and FCMs do not have any investments in prime funds.
Staff has been careful not to be overly restrictive, and therefore has issued no-action relief to allow FCMs to invest certain “excess” proprietary funds held in customer accounts in these money market funds. That is, our existing rules require FCMs to deposit their own funds (
Finally, the Commission is taking action today that will further ensure the safety of customer funds. We are issuing an order that will help make it possible for systemically important clearinghouses to deposit customer funds at Federal Reserve Banks. Our order makes clear that a Federal Reserve Bank that opens such an account would be subject to the same standards of liability that generally apply to it as a depository, rather than any potentially conflicting standard under the commodity laws.
Although Federal Reserve accounts for customer funds held by systemically important clearinghouses do not exist today, they are allowed under the Dodd-Frank Act, and we have been working with the Board of Governors to facilitate them. The two clearinghouses designated as systemically important in our markets have been approved to open Federal Reserve Bank accounts for their proprietary funds. We hope that with today's action, accounts for customer funds can be opened soon. Doing so will help protect customer funds and enhance the resiliency of clearinghouses.
I thank the dedicated CFTC staff and my fellow Commissioners for their work on these matters.
I am pleased to concur with the two Commission actions: The “Order Exempting the Federal Reserve Banks from Sections 4d and 22 of the Commodity Exchange Act” and “Written Acknowledgment of Customer Funds from Federal Reserve Banks.” I have long believed that, in order to protect customer funds, we need to keep that money at our central bank. In the event of a major market event, I, and I believe the rest of the American people, would feel much better knowing that investors' money is at the Federal Reserve instead of at multiple central counterparties. I am glad that our agency and the Federal Reserve have come to an agreement on an effective way to accomplish this.
I am similarly pleased with the Division of Clearing and Risk's (DCR) “Staff Interpretation Regarding CFTC Part 39 In Light Of Revised SEC Rule 2a-7,” which clearly outlines the staff's understanding that, given the limitations that the Securities and Exchange Commission (SEC) has imposed on redemptions for prime money market funds, that they are no longer considered Rule 1.25 assets. This is the correct interpretation. The key feature in a Rule 1.25 asset is that it must be available quickly in times of crisis or illiquidity. And we know that funds are more likely to close the gates on redemptions when market dislocation happens. That is just the time when futures commission merchants (FCMs) and customers would need access to their money, and a multi-day delay can mean catastrophe for some businesses.
For that very reason, I have concerns about the Division of Swap Dealer and Intermediary Oversight's (DSIO) “No-Action Relief With Respect to CFTC Regulation 1.25 Regarding Money Market Funds.” While the 4(c) exemption and the DCR interpretation are clearly customer protection initiatives, the DSIO no action letter is not. This no action letter would allow FCMs to keep money in segregated customer accounts that actually would not be readily available in a crisis. Thus, while it may appear that an FCM had considerable funds available to settle customer accounts during a market dislocation, in fact that would be only be an illusion; a portion of those funds could be locked down behind the prime money market funds' gates and therefore not actually be available when needed.
I do not think that the staff of the Commission should be supporting this kind of “window dressing”—giving the impression of greater security than there actually is. If the funds are not suitable investments for customer funds, then they are not suitable for the additional capital that the FCMs put in those accounts to protect against potential shortfalls. Having lived through bankruptcies, such as MF Global and Peregrine, I have a healthy respect for the importance of having strong clearing members with a large cushion of funds that can be accessed when needed. This no action letter undermines that effort. Given the importance of this topic to the general public, we should at least have asked for comments or even held a roundtable before making this change. I therefore hope to reexamine this subject in the near future.
Office of Special Education and Rehabilitative Services, Department of Education.
Notice; correction.
On July 25, 2016, we published in the
Kristen Rhinehart-Fernandez, U.S. Department of Education, 400 Maryland Avenue SW., Room 5062, Potomac Center Plaza, Washington, DC 20202-2800. Telephone: (202) 245-6103 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.
This document corrects the percentage of the required cost match. All other requirements and conditions stated in the NIA remain the same.
In the
You may also access documents of the Department published in the
Office of Special Education and Rehabilitative Services, Department of Education.
Notice.
Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program Notice inviting applications for new awards for fiscal year (FY) 2016.
This priority is:
The regulations in 34 CFR part 79 apply to all applicants except federally recognized American Indian tribes.
The regulations in 34 CFR part 86 apply to institutions of higher education only.
Contingent upon availability of funds and the quality of applications, we may make additional awards in FY 2017 and FY 2018 from the list of unfunded applications from this competition.
The Department is not bound by any estimates in this notice.
Under 34 CFR 75.562(c), an indirect cost reimbursement on a training grant is limited to the recipient's actual indirect costs, as determined by its negotiated indirect cost rate agreement, or eight percent of a modified total direct cost base, whichever amount is less. Indirect costs in excess of the limit may not be charged directly, used to satisfy matching or cost-sharing requirements, or charged to another Federal award.
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You can contact ED Pubs at its Web site, also:
If you request an application package from ED Pubs, be sure to identify this program or competition as follows: CFDA number 84.160D.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
2.
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
• Use a font that is either 12 point or larger or no smaller than 10 pitch (characters per inch).
• Use one of the following fonts: Times New Roman, Courier, Courier New, or Arial. An application submitted in any other font (including Times Roman or Arial Narrow) will not be accepted.
In addition to the page-limit guidance on the application narrative section, we recommend that you adhere to the following page limits, using the standards listed above: (1) The abstract should be no more than one page, (2) the resumes of key personnel should be no more than two pages per person, and (3) a bibliography should be no more than three pages. Appendix A must include: (1) A logic model; and (2) person-loading charts and timelines. There are no page limits or standards for materials in Appendix A. The only optional materials that will be accepted are letters of support. Please note that our reviewers are not required to read optional materials.
Please note that any funded applicant's application abstract will be made available to the public.
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Applications for grants under this competition must be submitted electronically using the
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
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a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet at the following Web site:
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow two to five weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data you enter into the SAM database. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, it may be 24 to 48 hours before you can access the information in, and submit an application through,
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via
7.
Applications for grants under the Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program must be submitted electronically using the Governmentwide
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for the Training of Interpreters for Individuals Who Are Deaf or Hard of Hearing and Individuals Who Are Deaf-Blind Program at
Please note the following:
• When you enter the
• Applications received by
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through
• You should review and follow the Education Submission Procedures for submitting an application through
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere in this section, and submit your application in paper format.
• You must submit all documents electronically, including all information you typically provide on the following forms: The Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a read-only, non-modifiable Portable Document Format (PDF). Do not upload an interactive or fillable PDF file. If you upload a file type other than a read-only, non-modifiable PDF (
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from
Once your application is successfully validated by
These emails do not mean that your application is without any disqualifying errors. While your application may have been successfully validated by
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal holiday), you mail or fax a written statement to the Department, explaining which of the two grounds for an exception prevents you from using the Internet to submit your application.
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Your paper application must be submitted in accordance with the mail or hand-delivery instructions described in this notice.
If you qualify for an exception to the electronic submission requirement, you may mail (through the U.S. Postal Service or a commercial carrier) your application to the Department. You must mail the original and two copies of your application, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.160D), LBJ Basement Level 1, 400 Maryland Avenue SW., Washington, DC 20202-4260.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
We will not consider applications postmarked after the application deadline date.
If you qualify for an exception to the electronic submission requirement, you (or a courier service) may deliver your paper application to the Department by hand. You must deliver the original and two copies of your application by hand, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.160D), 550 12th
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245-6288.
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In addition, in making a competitive grant award, the Secretary requires various assurances including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
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Please note that, if the total value of your currently active grants, cooperative agreements, and procurement contracts from the Federal government exceeds $10,000,000, the reporting requirements in 2 CFR part 200, Appendix XII, require you to report certain integrity information to FAPIIS semiannually. Please review the requirements in 2 CFR part 200, Appendix XII, if this grant plus all the other Federal funds you receive exceed $10,000,000.
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If your application is not evaluated or not selected for funding, we notify you.
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We reference the regulations outlining the terms and conditions of an award in the
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(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
(c) Under 34 CFR 75.250(b), the Secretary may provide a grantee with additional funding for data collection analysis and reporting. In this case, the Secretary establishes a data collection period.
4.
The performance measures for this program are as follows:
(1) The number of working interpreters enrolled in specialized training.
(2) The number and percentage of working interpreters who successfully complete specialized training.
(3) The number and percentage of working interpreters who successfully completed specialized training who subsequently obtained employment in the area(s) for which they were prepared.
(4) The number and percentage of working interpreters who successfully completed specialized training who subsequently advanced in employment in the areas(s) for which they were prepared.
5.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
Kristen Rhinehart-Fernandez, U.S. Department of Education, 400 Maryland Avenue SW., Room 5062, Potomac Center Plaza, Washington, DC 20202-2800. Telephone: (202) 245-6103 or by email:
If you use a TDD or a TTY, call the Federal Relay Service, toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
Office of Elementary and Secondary Education, Department of Education.
Notice.
On June 23, 2016, we published in the
Deadline for Transmittal of Applications: August 19, 2016.
We are reopening this competition in order to allow applicants more time to prepare and submit their applications.
All information in the NIA for this competition remains the same, except for the deadline for the transmittal of applications.
20 U.S.C. 7131, and Title III of Division H of the Consolidated Appropriations Act, 2016 (Pub. L. 114-113).
Deirdra Hilliard, U.S. Department of Education, 400 Maryland Avenue SW., Room 3E-249, Washington, DC 20202-6450. Telephone: (202) 453-6726 or by email:
If you use a telecommunications device for the deaf or a text telephone, call the Federal Relay Service, toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
Federal Energy Management Program, Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of availability and request for information.
The Federal Energy Management Program Office (FEMP), within the U.S. Department of Energy (DOE), published a notice, “Request for Comments on the Tax Treatment of an Energy Savings Performance Contract Energy Sales Agreement,” on its Web site to gather information on specific concerns related to the Federal Investment Tax Credit eligibility of a renewable energy project structured as an Energy Savings Performance Contract (ESPC) Energy Sales Agreement (ESA) that could benefit from clarification in the form of guidance issued by the Internal Revenue Service and the U.S. Department of the Treasury.
Written comments and information are requested on or before September 3, 2016.
Interested parties are to submit comments electronically to:
Tracy Niro, U.S. Department of Energy, Federal Energy Management Program (EE-2L), 1000 Independence Avenue SW., Washington, DC 20585; email:
FEMP published a request for comment (RFC)
FEMP invites all interested parties to submit in writing by September 3, 2016, comments and information on matters addressed in the notice.
Farm Credit Administration.
Policy statement.
The Farm Credit Administration (FCA) Board recently updated its Policy Statement on Equal Employment Opportunity and Diversity.
Thais Burlew, Director of Equal Employment Opportunity and Inclusion, Farm Credit Administration, 1501 Farm Credit Drive, McLean Virginia 22102-5090, (703) 883-4290, TTY (703) 883-4352.
While not required by law, the Equal Employment Opportunity Commission (EEOC) has determined that reissuance of an agency's EEO policy statement each fiscal year is a symbol of the agency leadership's commitment to EEO and Diversity principles. The FCA conducted its annual review of Policy Statement FCA-PS-62 on Equal Employment Opportunity (EEO) and Diversity. The policy has been slightly edited at EEOC's recommendation to indicate that FCA begins prompt, thorough, and impartial investigations within 10 days of receiving notice of harassment allegations.
The text of the updated Policy Statement is set forth below in its entirety. All FCA Board policy statements may be viewed on FCA's Web site. From
The Farm Credit Administration (FCA or Agency) Board reaffirms its commitment to Equal Employment Opportunity (EEO) and Diversity (EEOD) and its belief that all FCA employees should be treated with dignity and respect. The Board also provides guidance to Agency management and staff for deciding and taking action in these critical areas.
Unquestionably, the employees who comprise the FCA are its most important resource. The Board fully recognizes that the Agency draws its strength from the dedication, experience, and diversity of its employees. The Board is firmly committed to taking whatever steps are needed to protect the rights of its staff and to carrying out programs that foster the development of each employee's potential. We believe an investment in efforts that strongly promote EEOD will prevent the conflict and the high costs of correction for taking no, or inadequate, action in these areas.
• Ensure equal employment opportunity based on merit and qualification, without discrimination because of race, color, religion, sex (including sexual orientation), age (40 or older), national origin, disability, status as a parent, genetic information, or filing of a complaint, participation in discrimination or harassment complaint proceedings, or other opposition to discrimination;
• Provide for the prompt and fair consideration of complaints of discrimination;
• Make reasonable accommodations for qualified applicants for employment and employees with physical or mental disabilities under law;
• Make reasonable accommodations based on applicants' and employees' religious beliefs or practices, consistent with Title VII;
• Provide an environment free from harassment to all employees;
• Create and maintain an organizational culture that recognizes, values, and supports employee and public diversity and inclusion;
• Develop objectives within the Agency's operation and strategic planning process to meet the goals of EEOD and this policy;
• Implement affirmative programs to carry out this policy within the Agency; and
• To the extent practicable, seek to encourage the Farm Credit System to continue its efforts to promote and increase diversity.
The FCA intends to be a model employer. That is, as far as possible, FCA will build and maintain a workforce that reflects the rich diversity of individual differences evident throughout this Nation. The Board views individual differences as complementary and believes these differences enrich our organization. When individual differences are respected, recognized, and valued, diversity becomes a powerful force that can contribute to achieving superior results. Therefore, we will create, maintain, and continuously improve on an organizational culture that fully recognizes, values, and supports employee diversity. The Board is committed to promoting and supporting an inclusive environment that provides to all employees, individually and collectively, the chance to work to their full potential in the pursuit of the Agency's mission. We will provide everyone the opportunity to develop to his or her fullest potential. When a barrier to someone achieving this goal exists, we will strive to remove this barrier.
The Board reaffirms its commitment to ensuring FCA conducts all of its employment practices in a nondiscriminatory manner. The Board expects full cooperation and support from everyone associated with recruitment, selection, development, and promotion to ensure such actions are free of discrimination. All employees will be evaluated on their EEOD achievements as part of their overall job performance. Though staff commitment is important, the role of supervisors is paramount to success. Agency supervisors must be coaches and are responsible for helping all employees develop their talents and give their best efforts in contributing to the mission of the FCA.
It is the policy of the FCA to provide a work environment free from unlawful discrimination in any form, and to protect all employees from any form of harassment, either physical or verbal. The FCA will not tolerate harassment in the workplace for any reason. The FCA also will not tolerate retaliation against any employee for reporting harassment or for aiding in any inquiry about reporting harassment. FCA begins prompt, thorough, and impartial investigations within 10 days of receiving notice of harassment allegations.
A disabled veteran is defined as someone who is entitled to compensation under the laws administered by the Veterans Administration or someone who was discharged or released from active duty because of a service-connected disability. The FCA is committed to increasing the representation of disabled veterans within its organization. Our Nation owes a debt to those veterans who served their country, especially those who were disabled because of service. To honor these disabled veterans, the FCA shall place emphasis on making vacancies known to and providing opportunities for employing disabled veterans.
Dated this 8th day of August 2016 by order of the Board.
Based upon the foregoing, the Receiver has determined that the continued existence of the receivership will serve no useful purpose. Consequently, notice is given that the receivership shall be terminated, to be effective no sooner than thirty days after the date of this Notice. If any person wishes to comment concerning the termination of the receivership, such comment must be made in writing and sent within thirty days of the date of this Notice to: Federal Deposit Insurance Corporation, Division of Resolutions and Receiverships, Attention: Receivership Oversight Department 34.6, 1601 Bryan Street, Dallas, TX 75201.
No comments concerning the termination of this receivership will be considered which are not sent within this time frame.
Federal Election Commission.
Tuesday, August 16, 2016 at 10:00 a.m.
999 E Street NW., Washington, DC (Ninth Floor).
This meeting will be open to the public.
Individuals who plan to attend and require special assistance, such as sign language interpretation or other reasonable accommodations, should contact Shawn Woodhead Werth, Secretary and Clerk, at (202) 694-1040, at least 72 hours prior to the meeting date.
Judith Ingram, Press Officer, Telephone: (202) 694-1220.
Federal Election Commission.
Notice of filing dates for special election.
Hawaii has scheduled a special general election on November 8, 2016, to fill the U.S. House of Representatives seat in the 1st Congressional District of the late Representative Mark Takai.
Committees required to file reports in connection with the Special General Election on November 8, 2016, shall file a 12-day Pre-General Report, and a 30-day Post-General Report.
Ms. Elizabeth S. Kurland, Information Division, 999 E Street NW., Washington, DC 20463; Telephone: (202) 694-1100; Toll Free (800) 424-9530.
All principal campaign committees of candidates who participate in the Hawaii Special General Election shall file a 12-day Pre-General Report on October 27, 2016; and a Post-General Report on December 8, 2016. (See chart below for the closing date for each report.)
Note that these reports are in addition to the campaign committee's regular quarterly filings. (See chart below for the closing date for each report).
Political committees filing on a quarterly basis in 2016 are subject to special election reporting if they make previously undisclosed contributions or expenditures in connection with the Hawaii Special General Election by the close of books for the applicable report(s). (See chart below for the closing date for each report.)
Committees filing monthly that make contributions or expenditures in connection with the Hawaii Special General Election will continue to file according to the monthly reporting schedule.
Additional disclosure information in connection with the Hawaii Special General Election may be found on the FEC Web site at
Principal campaign committees, party committees and Leadership PACs that are otherwise required to file reports in connection with the special general election must simultaneously file FEC Form 3L if they receive two or more bundled contributions from lobbyists/registrants or lobbyist/registrant PACs that aggregate in excess of the $17,600 during the special election reporting periods. (See chart below for closing date of each period.) 11 CFR 104.22(a)(5)(v), (b).
On behalf of the Commission,
Federal Trade Commission (“Commission” or “FTC”).
Notice.
The information collection requirements described below will be submitted to the Office of Management and Budget (“OMB”) for review, as required by the Paperwork Reduction Act (“PRA”). The FTC is seeking public comments on its proposal to extend for an additional three years the current PRA clearance for information collection requirements in its Antitrust Improvements Act Rules (“HSR Rules”) and corresponding Notification and Report Form for Certain Mergers and Acquisitions (“Notification and Report
Comments must be filed by October 11, 2016.
Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the
Robert L. Jones, Assistant Director, Premerger Notification Office, Bureau of Competition, Federal Trade Commission, Room CC-5301, 600 Pennsylvania Ave. NW., Washington, DC 20580, or by telephone to (202) 326-2740.
Under the PRA, 44 U.S.C. 3501-3521, federal agencies must obtain approval from OMB for each collection of information they conduct or sponsor. “Collection of information” means agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. 44 U.S.C. 3502(3); 5 CFR 1320.3(c). As required by section 3506(c)(2)(A) of the PRA, the FTC is providing this opportunity for public comment before requesting that OMB extend the existing PRA clearance for the HSR Rules and Notification and Report Form, 16 CFR part 801—803 (OMB Control Number 3084-0005).
Pursuant to Section 3506(c)(2)(A), the FTC invites comments on: (1) Whether the disclosure requirements are necessary, including whether the information will be practically useful; (2) the accuracy of our burden estimates, including whether the methodology and assumptions used are valid; (3) how to improve the quality, utility, and clarity of the disclosure requirements; and (4) how to minimize the burden of providing the required information to consumers.
Pursuant to that section, the Commission, with the concurrence of the Assistant Attorney General, developed the HSR Rules and the corresponding Notification and Report Form. The following discussion presents the FTC's PRA burden analysis regarding completion of the Notification and Report Form.
In fiscal year 2015, there were 3,585 non-index filings and just one index filing.
Calculating the burden for auto-withdrawal of filings pursuant to § 803.12(b) of the HSR Rules requires an analysis of two potential scenarios. In one scenario, a filing is automatically withdrawn and the acquiring person utilizes the two-day resubmission process under § 803.12(c). In that case, no additional transaction is generated as the acquiring person simply restarts the waiting period on the same transaction. In the second scenario, the parties to a terminated transaction for which the filing is automatically withdrawn do not utilize the two-day resubmission process under § 803.12(c) but later decide to move forward with the transaction. In that case, a new filing is required. Both of these scenarios are rare, as it is very unlikely that a transaction for which the HSR filing is automatically withdrawn during the merger review process (due to the parties' SEC filing indicating that the transaction has been terminated) would be subsequently restarted. Based on experience to date, this would occur approximately once every fifteen years,
Thus, the total estimated hours burden before adjustments is 168,484 hours [(4,553 non-index filings × 37 hours/each) + (10 index filings × 2 hours/each) + (1 withdrawn transaction later restarted × 3 hours))].
Using the burden hours (168,484) estimated above and applying an estimated average of $460/hour for executive and/or attorney compensation, staff estimates that the total labor cost associated with the HSR Rules and the Notification and Report Form is approximately $77,502,640.
The applicable requirements impose minimal start-up costs, as businesses subject to the HSR Rules generally have or obtain necessary equipment for other
Request for Comment: Pursuant to Section 3506(c)(2)(A), the FTC invites comments on: (1) Whether the disclosure requirements are necessary, including whether the information will be practically useful; (2) the accuracy of our burden estimates, including whether the methodology and assumptions used are valid; (3) how to improve the quality, utility, and clarity of the disclosure requirements; and (4) how to minimize the burden of providing the required information to consumers.
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before October 11, 2016. Write “HSR PRA Clearance Extension, P169300” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including to the extent practicable, on the public Commission Web site, at
Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which is . . . privileged or confidential” as provided in Section 6(f) of the FTC Act 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns devices, manufacturing processes, or customer names.
If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c).
Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at your comment and file your comment online at
If you file your comment on paper, write “HSR PRA Clearance Extension, P169300” on your comment and on the envelope, mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite CC-5610 (Annex J), Washington, DC 20580, or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex J), Washington, DC 20024. If possible, submit your paper comment to the Commission by courier or overnight service.
The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before October 11, 2016. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or we) is announcing the issuance of a revised draft guidance for industry entitled “Dietary Supplements: New Dietary Ingredient Notifications and Related Issues.” The revised draft guidance supersedes FDA's July 2011 draft guidance on the same topic. The revised draft guidance, when finalized, will help industry in evaluating whether to submit a premarket safety notification for a new dietary ingredient (NDI), or for a dietary supplement containing an NDI, and in preparing such premarket safety notifications (also referred to as NDI notifications).
Although you may comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that FDA considers your comment on the draft guidance before we begin work on the final version of the guidance, submit either electronic or written comments on the draft guidance by October 11, 2016.
You may submit comments as follows:
Submit electronic comments in the following way:
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• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
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• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• 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 Dietary Supplement Programs, Center for Food Safety and Applied Nutrition (HFS-810), Food and Drug Administration, 5001 Campus Drive, College Park, MD 20740. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Ali Abdel-Rahman, Center for Food Safety and Applied Nutrition (HFS-810), Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-1853.
We are announcing the availability of a revised draft guidance for industry entitled “Dietary Supplements: New Dietary Ingredient Notifications and Related Issues.” This draft guidance supersedes the July 2011 draft guidance on this topic (76 FR 39111; July 5, 2011) and is being issued consistent with our good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent our current thinking on this topic. It will not create or confer any rights for or on any person and will not operate to bind FDA or the public. An alternative approach may be used if such approach satisfies the requirements of the applicable statutes and regulations.
On October 25, 1994, the Dietary Supplement Health and Education Act of 1994 (DSHEA) (Pub. L. 103-417) was signed into law. DSHEA amended the Federal Food, Drug, and Cosmetic Act (the FD&C Act) by adding, among other provisions: (1) Section 201(ff) (21 U.S.C. 321(ff)), which defines the term “dietary supplement” and (2) section 413 (21 U.S.C. 350b), which describes requirements for NDIs. Among other things, section 413 of the FD&C Act requires the manufacturer or distributor of an NDI, or of a dietary supplement containing the NDI, to submit a premarket notification to FDA (as delegate for the Secretary of Health and Human Services) at least 75 days before introducing the NDI or dietary supplement into interstate commerce, unless the NDI and any other ingredients in the dietary supplement have been present in the food supply as an article used for food in a form in which the food has not been chemically altered (21 U.S.C. 350b(a)(1)). The notification must contain the information, including any citation to published articles, which is the manufacturer or distributor's basis for concluding that a dietary supplement containing the NDI will reasonably be expected to be safe.
This draft guidance has several purposes. First, it is intended to help dietary supplement manufacturers and distributors decide whether to submit an NDI notification. In addition, the draft guidance is intended to provide recommendations on how to conduct a safety assessment for an NDI notification and what to include in the notification. In question and answer form, the draft guidance presents FDA's views on what qualifies as an NDI; when an NDI notification is required; the procedures for submitting an NDI notification; the types of data and information that manufacturers and distributors should consider when evaluating the safety of a dietary supplement containing an NDI; and what should be included in an NDI notification. In addition, the draft guidance contains questions and answers about parts of the dietary supplement definition (section 201(ff) of the FD&C Act) that can affect whether a particular substance may be marketed as a dietary ingredient in a dietary supplement.
We issued the original version of this draft guidance in the
Based on those comments and on meetings with industry and other stakeholders, we realized that the 2011 draft guidance contained gaps and unclear statements that were subject to confusion and misinterpretation. Therefore, we decided to clarify and better explain our thinking on some critical issues, in addition to explaining their public health significance, and to
The major topics on which we have revised or added questions and answers are as follows:
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We also revised several questions and answers in section IV.A to clarify various matters regarding FDA's interpretation of the terms “marketed” and “dietary ingredient” in section 413(d) of the FD&C Act, which defines an NDI as a dietary ingredient that was not marketed in the United States before October 15, 1994, and we added more examples of documentation that can be used to show that a dietary ingredient was marketed prior to October 15, 1994.
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Under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This draft guidance contains proposed collections of information. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to publish a 60-day notice in the
This draft guidance also refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by OMB under the PRA. The collections of information in 21 CFR part 111 have been approved under OMB control number 0901-0606, and the collections of information in § 190.6 have been approved under OMB control number 0910-0330.
Although FDA welcomes comments on any aspect of this draft guidance, we particularly invite comment on the following:
• What processes alter the identity of an ingredient marketed prior to October 15, 1994, and thus create an NDI? We are especially interested in recommendations for clearer examples or criteria to differentiate changes in manufacturing methods and starting materials that alter the identity of the ingredient from changes that do not.
• What processes “chemically alter” an ingredient within the meaning of section 413(a)(1) of the FD&C Act, and why? Conversely, what processes do not cause chemical alteration, and why? Are there certain processes, such as tinctures, that sometimes result in chemical alteration and sometimes do not? What criteria should be used to evaluate whether an ingredient has been chemically altered? We are especially interested in receiving scientific information that shows whether a particular process actually results in chemical alteration.
• What method of compiling independent and verifiable data on the marketing of dietary ingredients before October 15, 1994, would be most effective? How should an authoritative list of “grandfathered” ingredients based on such data be developed and implemented?
As FDA considers the development of final guidance, we will review comments received on this revised version, as well as comments on the 2011 draft guidance that are still relevant.
Persons with access to the Internet may obtain the guidance at either
The following references are on display in the Division of Dockets Management (see
Health Resources and Services Administration, HHS.
Notice.
In compliance with Section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the Health Resources and Services Administration (HRSA) has submitted an Information Collection Request (ICR) to the Office of Management and Budget (OMB) for review and approval. Comments submitted during the first public review of this ICR will be provided to OMB. OMB will accept further comments from the public during the review and approval period.
Comments on this ICR should be received no later than September 12, 2016.
Submit your comments, including the ICR Title, to the desk officer for HRSA, either by email to
To request a copy of the clearance requests submitted to OMB for review, email the HRSA Information Collection Clearance Officer at
The Health Center Program is administered by HRSA's Bureau of Primary Health Care (BPHC). BPHC uses multiple Health Center Program-specific forms (see table below) to oversee the Health Center Program.
Most of the Health Center Program-specific forms do not require any significant changes with this revision. HRSA intends to revise some of the forms to streamline and clarify data already being requested (Form 1A, 1B, 2, 3, 5A, 5B, 6A, 8, Performance Measures, Project Work Plan, Outreach and Enrollment Progress Report) and change several form names (changing Form 3A to Look-Alike Budget Information, Form 10 to Emergency Preparedness Report, and Increased Demand for Services to Expanded Services). HRSA also intends to add seven new forms. The Supplemental Information form and Summary Page will consolidate important application information that is usually found distributed throughout the application, including eligibility criteria and projected goals. These forms will require applicant confirmation that the information provided is accurate. Two of these new forms will include the Program Narrative Update, used to report progress for renewal of Health Center Program awards, and the Substance Abuse Progress Report, used to report quarterly progress for award recipients of Substance Abuse Expansion supplemental funding. Two other forms, the Health Center Controlled Networks Work Plan and Progress Report, are forms that have been used in the past (under another OMB control number) to collect application baseline data and progress metrics for grantees. An additional new form, Zika Progress Report, will collect quarterly progress on Zika-related projects.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the National Arthritis and Musculoskeletal and Skin Diseases Advisory Council.
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 sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
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,
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of a meeting of the National Advisory Council on Minority Health and Health Disparities.
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 sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications and/or contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any member of the public interested in presenting oral comments to the committee may notify the Contact Person listed on this notice at least 10 days in advance of the meeting. Interested individuals and representatives of organizations may submit a letter of intent, a brief description of the organization represented, and a short description of the oral presentation. Only one representative of an organization may be allowed to present oral comments and if accepted by the committee, presentations may be limited to five minutes. Both printed and electronic copies are requested for the record. In addition, any interested person may file written comments with the committee by forwarding their 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 taxis, 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.
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 grant applications and the discussions could disclose
Substance Abuse and Mental Health Services Administration (SAMHSA), Department of Health and Human Services (HHS).
Request for comment.
Substance Abuse and Mental Health Services Administration (SAMHSA), Center for Substance Abuse Treatment, in the Department of Health and Human Services (HHS) announces the opening of a docket to obtain public comment on a report entitled: Advancing the Care of Pregnant and Parenting Women with Opioid Use Disorder and their Infants: A Foundation for Clinical Guidance. The report is available at:
This report describes the formal process agreed on and followed under the guidance of the federal steering committee (FSC). It explains the RAND Corporation (RAND)/University of California Los Angeles (UCLA) Appropriateness Method (RAM), justifies its adoption, and reports the outcomes of its application that will form the basis for the development of clinical guidance. This report will serve as the foundation for the development of clinical guidance to be used by providers caring for women with opioid use disorder and their infants.
You may submit comments identified by Docket No. [SAMHSA-2016-0002] by any of the following methods:
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Melinda Campopiano, MD, Medical Officer, Substance Abuse and Mental Health Services Administration, Center for Substance Abuse Treatment, Division of Pharmacologic Therapies, 5600 Fishers Lane, 13E24, Rockville, MD 20852, Email:
The purpose of this effort is to produce a patient-centered guide to be used in a range of clinical settings. SAMHSA plans to organize the results described in this report around clinical scenarios and interventions consistent
Public comment is sought in two general areas: The outcomes of the RAM process and the strategy to translate these findings into a clinical guide. Relevant public comment will inform the development and final appearance of the guide. Members of the expert panel, FSC, and a variety of professional societies will be asked to provide input into the guide outline and drafting of the guide which will then be subject to a formal federal clearance process including scientific review.
(1) The REPORT
(2) Supporting appendices: Appendix A: RAM Process Participants; Appendix B: Literature Review Methods; Appendix C: RAM Reference List and Appendices D-E7: Rated Indications
In compliance with Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 concerning opportunity for public comment on proposed collections of information, the Substance Abuse and Mental Health Services Administration (SAMHSA) will publish periodic summaries of proposed projects. To request more information on the proposed projects or to obtain a copy of the information collection plans, call the SAMHSA Reports Clearance Officer at 240-276-1243.
Comments are invited on: (a) Whether the proposed collections of information are 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) 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.
The Substance Abuse and Mental Health Services Administration (SAMHSA) is requesting approval for a revision to the data collection associated with the SAMHSA Disaster Technical Assistance Center (DTAC) Disaster Behavioral Health Needs Assessment and Customer Satisfaction Surveys (OMB No. 0930-0325), which expire on May 31, 2017. Specifically, SAMHSA DTAC plans to consolidate the Needs Assessment Survey and Customer Satisfaction Surveys into a single instrument. The new revised instrument, entitled SAMHSA DTAC Customer Feedback Survey (CFS), under this effort will also include a change in administration to make it appropriate for a single, streamlined survey.
The proposed data collection effort will provide feedback on the overall effectiveness of SAMHSA DTAC's services, ongoing needs at the national level, and areas that require enhanced technical assistance (TA) services.
SAMHSA DTAC will be responsible for administering the data collection instrument and analyzing the data. SAMHSA DTAC will use data from the instrument to inform current and future TA activities and to ensure these activities continue to align with state and local needs.
A three-year clearance is being requested. The SAMHSA DTAC CFS is designed to allow the agency to collect feedback on the overall effectiveness of the services provided by SAMHSA DTAC, as well as ongoing data regarding disaster behavioral health (mental health and substance use-related) needs at the national level and areas that require enhanced training and technical assistance (TA) services. This is the information that was previously collected as part of the SAMHSA DTAC Needs Assessment Survey (NAS) and Customer Satisfaction Survey (CSS). Data from this effort will continue to be used to improve services to jurisdictions, which will lead to (1) better integration of disaster behavioral health (DBH) needs with all-hazards disaster preparedness and response, and (2) improved outcomes at the state, territory, tribal, and local levels with less burden on participants. The new Customer Feedback Survey integrates and consolidates questions from the previously utilized NAS and CSS, which will reduce burden associated with the number of instruments and survey questions. SAMHSA DTAC will continue to be responsible for survey administration and analysis of the data collected, which SAMHSA will use to inform current and future training and TA activities. Table 1 shows the estimated burden associated with CFS data collection activities and the associated costs. It is anticipated that the survey will be administered once each year.
Participation in the Customer Feedback Survey will be solicited from all 50 states, the U.S. territories, and the District of Columbia. The survey will be administered to individuals who have requested TA within the six months prior to administration and those who are subscribed to DTAC's e-communications,
Send comments to Summer King, SAMHSA Reports Clearance Officer, 5600 Fishers Lane, 15E57-B, Rockville, MD 20857
Periodically, the Substance Abuse and Mental Health Services Administration (SAMHSA) will publish a summary of information collection requests under OMB review, in compliance with the Paperwork Reduction Act (44 U.S.C. chapter 35). To request a copy of these documents, call the SAMHSA Reports Clearance Officer on (240) 276-1243.
SAMHSA is requesting Office of Management and Budget (OMB) approval to conduct in-person Site Visit Interviews with Minority AIDS Initiative—Continuum of Care (MAI-CoC) Grantees Integrating Behavioral Health Treatment, Prevention, and HIV Medical Care Services. This reinstatement request utilizes revised versions of the site visit interview guide approved under the Minority AIDS Initiative—Targeted Capacity Expansion (MAI-TCE) Grantees Integrating HIV Primary Care, Substance Abuse, and Behavioral Health Services (OMB NO. 0930-0336). The two rounds of interviews (baseline and follow-up) target the collection of programmatic-level data (
The goal of the MAI-CoC project is to integrate behavioral health treatment, prevention, and HIV and Hepatitis medical care services for racial/ethnic minority populations at high risk for behavioral health disorders who are also at high risk for or living with HIV and Hepatitis. The program also supports other priority populations including men who have sex with men (MSM) and bisexual men, transgender persons, and people with substance use disorder. The program is primarily intended for substance use disorder treatment and community mental health providers to provide coordinated and integrated services through the collocation and/or integration of behavioral health treatment and HIV and Hepatitis medical care. Interviews conducted with MAI-CoC grantees during the two rounds of site visits are an integral part of evaluation efforts to: (1) Assess the impact of the SAMHSA-funded HIV and Hepatitis programs in: Reducing behavioral health disorders and HIV and Hepatitis infections; increasing access to substance use disorder and mental disorder treatment and care; improving behavioral and mental health outcomes; and reducing HIV and Hepatitis-related disparities; (2) Describe the different integrated behavioral health and medical program models; and (3) Determine which program types or models are most effective in improving behavioral health and clinical outcomes.
Over the four-year project, SAMHSA will conduct two rounds of these in-person site visits (baseline and follow-up) with each of the 34 MAI-CoC program grantees.
SAMHSA will conduct one-on-one and group interviews with MAI-CoC grantee staff who will provide information on their program's integration of HIV and Hepatitis prevention, medical care, and primary care into behavioral health services. While participating in the evaluation is a condition of the grantees' funding, participating in the interview process is voluntary. The instruments are designed to collect information about: (1) The development and changes in MAI-CoC program operations, staffing, training and programming; (2) the grantee organization, the MAI-CoC program and its structure, the community context surrounding program efforts, and changes that result from MAI-CoC activities; and, (3) the changes in the number or nature of partnerships and collaborations both internal and external to the MAI-CoC program grantee.
Below is the table of the estimated total burden hours:
Written comments and recommendations concerning the proposed information collection should be sent by September 12, 2016 to the SAMHSA Desk Officer at the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB). To ensure timely receipt of comments, and to avoid potential delays
U.S. Customs and Border Protection, Department of Homeland Security.
General notice.
This notice advises the public that the quarterly Internal Revenue Service interest rates used to calculate interest on overdue accounts (underpayments) and refunds (overpayments) of customs duties will remain the same from the previous quarter. For the calendar quarter beginning July 1, 2016, the interest rates for overpayments will be 3 percent for corporations and 4 percent for non-corporations, and the interest rate for underpayments will be 4 percent for both corporations and non-corporations. This notice is published for the convenience of the importing public and U.S. Customs and Border Protection personnel.
Kara N. Welty, Revenue Division, Collection and Refunds Branch, 6650 Telecom Drive, Suite #100, Indianapolis, Indiana 46278; telephone (317) 614-4614.
Pursuant to 19 U.S.C. 1505 and Treasury Decision 85-93, published in the
The interest rates are based on the Federal short-term rate and determined by the Internal Revenue Service (IRS) on behalf of the Secretary of the Treasury on a quarterly basis. The rates effective for a quarter are determined during the first-month period of the previous quarter.
In Revenue Ruling 2016-12, the IRS determined the rates of interest for the calendar quarter beginning July 1, 2016, and ending on September 30, 2016. The interest rate paid to the Treasury for underpayments will be the Federal short-term rate (1%) plus three percentage points (3%) for a total of four percent (4%) for both corporations and non-corporations. For corporate overpayments, the rate is the Federal short-term rate (1%) plus two percentage points (2%) for a total of three percent (3%). For overpayments made by non-corporations, the rate is the Federal short-term rate (1%) plus three percentage points (3%) for a total of four percent (4%). These interest rates are subject to change for the calendar quarter beginning October 1, 2016, and ending December 31, 2016.
For the convenience of the importing public and U.S. Customs and Border Protection personnel the following list of IRS interest rates used, covering the period from before July of 1974 to date, to calculate interest on overdue accounts and refunds of customs duties, is published in summary format.
U.S. Customs and Border Protection, Department of Homeland Security.
General notice.
This document announces U.S. Customs and Border Protection's (CBP's) plan to conduct a National Customs Automation Program (NCAP) test to assess new functionalities related to the electronic filing and processing of protests and new notification procedures for protests filed electronically in the Automated Commercial Environment (ACE). During the test, participants will be able to submit additional arguments and supporting information electronically, with their electronic protest in ACE. In addition, participants will be able to submit requests for further review, requests for accelerated disposition, requests to set aside denial of further review, and requests to void denial of a protest electronically in ACE. This notice also announces the testing of electronic protest status notifications from CBP. The test will be known as the ACE Protest Test.
The ACE Protest Test will commence on August 29, 2016, and will continue until concluded by a notice published in the
Comments concerning this notice and any aspect of the ACE Protest Test may be submitted at any time during the testing period via email to Josephine Baiamonte, ACE Business Office (ABO), Office of Trade at
For technical questions related to the application or requests for an ACE Portal Account, including ACE Protest Filer Accounts, contact the ACE Account Service Desk by calling 1-866-530-4172, selecting option 1, then option 2, or by emailing
The National Customs Automation Program (NCAP) was established by Subtitle B of Title VI—Customs Modernization in the North American Free Trade Agreement Implementation Act (Customs Modernization Act) (Pub. L. 103-182, 107 Stat. 2057, 2170, December 8, 1993) (19 U.S.C. 1411). Through NCAP, the thrust of customs modernization was on trade compliance and the development of the Automated Commercial Environment (ACE), the planned successor to the Automated Commercial System (ACS). ACE is an automated and electronic system for commercial trade processing which is intended to streamline business processes, facilitate growth in trade, ensure cargo security, and foster participation in global commerce, while ensuring compliance with U.S. laws and regulations and reducing costs for U.S. Customs and Border Protection (CBP) and all of its communities of interest. The ability to meet these objectives depends on successfully modernizing CBP's business functions and the information technology that supports those functions. CBP's modernization efforts are accomplished through phased
Sections 514 and 515 of the Tariff Act of 1930, as amended (19 U.S.C. 1514 and 1515), provide procedures for protesting certain decisions made by CBP. Section 645 of the Customs Modernization Act amended section 514(c)(1) of the Tariff Act of 1930 (19 U.S.C. 1514(c)(1)) to permit the transmission of such protests to CBP electronically. The CBP regulations governing protests are found in part 174 of Title 19 of the Code of Federal Regulations (19 CFR part 174).
The Customs Modernization Act authorizes the Commissioner of CBP to conduct limited test programs or procedures designed to evaluate planned components of the NCAP. The ACE Protest Test is authorized pursuant to 19 CFR 101.9(b) which provides for the testing of NCAP programs or procedures.
The electronic filing and status of protests is a planned component of the NCAP, authorized by section 411 of the Tariff Act of 1930, as amended by section 631 of the Customs Modernization Act.
On January 14, 2011, CBP published a Final Rule in the
CBP has developed the ACE Protest Module to replace electronic protest filing in ACS. The ACE Protest Module is an internet-based processing module, which allows any person with a Protest Filer Account in the ACE Portal to file a protest and supporting documentation electronically, monitor the status of the filer's electronic protest, and receive CBP notifications and messages regarding the protest. CBP has modified the ACE Portal Account Test to establish the Protest Filer Account.
In addition, on July 28, 2016, CBP published a notice in the
CBP is conducting a test of the ACE Protest Module, to assess new functionalities related to the electronic filing and processing of protests and new notification procedures for protests filed electronically in ACE. Any party who wishes to participate in this test may do so as long as it has a Protest Filer Account. Participation in this test is not confidential information and CBP may disclose the name(s) of participants. When a participant in the ACE Protest Test files a protest in ACE, the entire protest process will be fully automated and must be completed in ACE, with the exception of a request for accelerated disposition, which must be sent by registered or certified mail as required under 19 U.S.C. 1515(b). Once a test participant files a protest as part of this test, the protest filer agrees to the test procedures below for all subsequent actions regarding the protest. For test participants, CBP will waive certain regulations pertaining to protest filing, as described below. Except where otherwise specified by this notice, the CBP regulations concerning the filing of a protest remain the same.
The regulations governing the ability to file a protest on behalf of another person are codified at 19 CFR 174.3. For participants in the ACE Protest Test, rather than submitting a power of attorney, the protest filer will be required to check a box affirming the following statement:
I certify that I am authorized to file this protest, that such authority has been granted by a duly and properly executed Power of Attorney where one is required, that all the information, statements and assertions herein are true and correct to the best of my knowledge and belief, and that this protest complies with all applicable regulations.
A protest filer will not be able to submit a protest electronically unless the box next to the certification statement is checked. The protest filer must maintain a copy of the power of attorney to provide to CBP upon request.
The CBP regulations require that a protest include the name of the person filing the protest, or his agent or attorney.
The CBP regulations require a protest to be filed with the port director whose decision is being protested.
The CBP regulations state that the date of filing of a protest is the date on which the protest is received by the Customs officer with whom it is required to be filed.
The Protest Filer may amend an electronic protest according to the requirements set forth in section 174.14. As required under 19 CFR 174.14(b), when a Protest Filer files a protest electronically, any amendment to such protest must be made electronically through the ACE Protest Module. As a result, for participants in the ACE Protest Test, the place of filing of an amendment to a protest filed in ACE will be the ACE Protest Module, rather than the port director with whom the protest was filed.
Under 19 U.S.C. 1515(b), a request for accelerated disposition must be sent by registered or certified mail. If the Protest Filer intends to request accelerated disposition for a protest, the request must be sent by registered or certified mail to the port director or other CBP officer whose decision is protested.
I certify that I have sent a request for Accelerated Disposition by Certified or Registered United States Mail, and I understand that by requesting accelerated disposition this protest will be deemed denied within 30 days of the request if it is not decided by CBP before the end of the 30 day period, and that any lawsuit filed in the United States Court of International Trade contesting the deemed denial of this protest is barred unless commenced within 180 days of the date of the deemed denial.
The date of the request for accelerated disposition will be based on the date of the mailing. The Protest Filer may electronically withdraw a request for accelerated disposition of a protest filed through the ACE Protest Module any time prior to the 30 days after the date of the request or the CBP decision on the protest, whichever comes first.
In lieu of filing an application for further review (AFR) on Customs Form 19, pursuant to 19 CFR 174.25, test participants may submit an AFR concurrently with the protest in the ACE Protest Module. When a protest is filed through the ACE Protest Module, the Protest Filer must use the module to submit the AFR. When a Protest Filer applies for further review, the filer must check a box to answer “yes” or “no” to the following questions:
Have you made prior request of a port director for a further review of the same claim with respect to the same or substantially similar merchandise?
Have you received a final adverse decision from the U.S. Court of International Trade on the same claim with respect to the same category of merchandise or do you have an action involving such a claim pending before the U.S. Court of International Trade?
Have you previously received an adverse administrative decision from the Commissioner of CBP or his designee or have you presently pending an application for an administrative decision on the same claim with respect to the same category of merchandise?
The ACE Protest Module will not accept a protest with an AFR unless the Protest Filer answers these three questions and provides a written justification. The written justification must be entered in the text box provided or uploaded separately.
A reviewing officer may consider alternative claims and additional grounds or arguments submitted by the protesting party.
When a protest is filed through the ACE Protest Module, the Protest Filer must use the module to submit additional information requested by CBP unless such information is incapable of electronic submission,
A Protest Filer seeking to file a request to set aside CBP's denial of further review under 19 U.S.C. 1515(c) must use the ACE Protest Module when the underlying protest was filed through the ACE Protest Module. A request will be considered filed with the appropriate CBP officer if it is filed in the ACE Protest Module within 60 days after the date of the protest denial. As noted above, the date of filing in the ACE Protest Module will be determined by the time of receipt of the request for setting aside of the denial of further review in ACE based on midnight Eastern Standard Time. If CBP fails to act on the request to set aside the denial of further review within 60 days from the time of filing, the request will be considered denied and the Protest Filer will receive a courtesy electronic notification.
A Protest Filer seeking to file a request to void the denial of a protest under 19 U.S.C. 1515(d) must use the ACE Protest Module when the underlying protest was filed through the ACE Protest Module. A request will be considered filed with the appropriate CBP office if it is filed in the ACE Protest Module within 90 days after the date of the protest denial. The date of filing of a request will be the date on which the request is received by the ACE Protest Module. As noted above, the date of filing in the ACE Protest Module will be determined by the time of receipt of the request in ACE based on midnight Eastern Standard Time.
ACE will generate and send automated messages to notify the Protest Filer and any other designated parties of changes in the status of the protest and decisions made by CBP regarding the protest. These messages will advise the parties when CBP has received the: Protest; request for accelerated disposition; additional arguments; application for further review; protest
All interested parties are invited to comment on any aspect of this ACE Protest Test for the duration of the test. CBP requests comments and feedback on all aspects of this test in order to determine whether to modify, alter, expand, limit, continue, end, or fully implement this test.
A chronological listing of
• ACE Portal Accounts and Subsequent Revision Notices: 67 FR 21800 (May 1, 2002); 69 FR 5360 and 69 FR 5362 (February 4, 2004); 69 FR 54302 (September 8, 2004); 70 FR 5199 (February 1, 2005).
• ACE System of Records Notice: 71 FR 3109 (January 19, 2006).
• Terms/Conditions for Access to the ACE Portal and Subsequent Revisions: 72 FR 27632 (May 16, 2007); 73 FR 38464 (July 7, 2008).
• ACE Non-Portal Accounts and Related Notice: 70 FR 61466 (October 24, 2005); 71 FR 15756 (March 29, 2006).
• ACE Entry Summary, Accounts and Revenue (ESAR I) Capabilities: 72 FR 59105 (October 18, 2007).
• ACE Entry Summary, Accounts and Revenue (ESAR II) Capabilities: 73 FR 50337 (August 26, 2008); 74 FR 9826 (March 6, 2009).
• ACE Entry Summary, Accounts and Revenue (ESAR III) Capabilities: 74 FR 69129 (December 30, 2009).
• ACE Entry Summary, Accounts and Revenue (ESAR IV) Capabilities: 76 FR 37136 (June 24, 2011).
• Post-Entry Amendment (PEA) Processing Test: 76 FR 37136 (June 24, 2011).
• ACE Announcement of a New Start Date for the National Customs Automation Program Test of Automated Manifest Capabilities for Ocean and Rail Carriers: 76 FR 42721 (July 19, 2011).
• ACE Simplified Entry: 76 FR 69755 (November 9, 2011).
• National Customs Automation Program (NCAP) Tests Concerning Automated Commercial Environment (ACE) Document Image System (DIS): 77 FR 20835 (April 6, 2012).
• National Customs Automation Program (NCAP) Tests Concerning Automated Commercial Environment (ACE) Simplified Entry: Modification of Participant Selection Criteria and Application Process: 77 FR 48527 (August 14, 2012).
• Modification of NCAP Test Regarding Reconciliation for Filing Certain Post-Importation Preferential Tariff Treatment Claims under Certain FTAs: 78 FR 27984 (May 13, 2013).
• Modification of Two National Customs Automation Program (NCAP) Tests Concerning Automated Commercial Environment (ACE) Document Image System (DIS) and Simplified Entry (SE): 78 FR 44142 (July 23, 2013).
• Modification of Two National Customs Automation Program (NCAP) Tests Concerning Automated Commercial Environment (ACE) Document Image System (DIS) and Simplified Entry (SE); Correction: 78 FR 53466 (August 29, 2013).
• Modification of NCAP Test Concerning Automated Commercial Environment (ACE) Cargo Release (formerly known as Simplified Entry): 78 FR 66039 (November 4, 2013).
• Post-Summary Corrections to Entry Summaries Filed in ACE Pursuant to the ESAR IV Test: Modifications and Clarifications: 78 FR 69434 (November 19, 2013).
• National Customs Automation Program (NCAP) Test Concerning the Submission of Certain Data Required by the Environmental Protection Agency and the Food Safety and Inspection Service Using the Partner Government Agency Message Set Through the Automated Commercial Environment (ACE): 78 FR 75931 (December 13, 2013).
• Modification of National Customs Automation Program (NCAP) Test Concerning Automated Commercial Environment (ACE) Cargo Release for Ocean and Rail Carriers: 79 FR 6210 (February 3, 2014).
• Modification of National Customs Automation Program (NCAP) Test Concerning Automated Commercial Environment (ACE) Cargo Release to Allow Importers and Brokers to Certify From ACE Entry Summary: 79 FR 24744 (May 1, 2014).
• Modification of National Customs Automation Program (NCAP) Test Concerning Automated Commercial Environment (ACE) Cargo Release for Truck Carriers: 79 FR 25142 (May 2, 2014).
• Modification of National Customs Automation Program (NCAP) Test Concerning Automated Commercial Environment (ACE) Document Image System: 79 FR 36083 (June 25, 2014).
• Announcement of eBond Test: 79 FR 70881 (November 28, 2014).
• eBond Test Modifications and Clarifications: Continuous Bond Executed Prior to or Outside the eBond Test May Be Converted to an eBond by the Surety and Principal, Termination of an eBond by Filing Identification Number, and Email Address Correction: 80 FR 899 (January 7, 2015).
• Modification of National Customs Automation Program (NCAP) Test Concerning Automated Commercial Environment (ACE) Document Image System Relating to Animal and Plant Health Inspection Service (APHIS) Document Submissions: 80 FR 5126 (January 30, 2015).
• Modification of National Customs Automation Program (NCAP) Test Concerning the use of Partner Government Agency Message Set through the Automated Commercial Environment (ACE) for the Submission of Certain Data Required by the Environmental Protection Agency (EPA): 80 FR 6098 (February 4, 2015).
• Announcement of Modification of ACE Cargo Release Test to Permit the Combined Filing of Cargo Release and Importer Security Filing (ISF) Data: 80 FR 7487 (February 10, 2015).
• Modification of NCAP Test Concerning ACE Cargo Release for Type 03 Entries and Advanced Capabilities for Truck Carriers: 80 FR 16414 (March 27, 2015).
• Automated Commercial Environment (ACE) Export Manifest for Air Cargo Test: 80 FR 39790 (July 10, 2015).
• National Customs Automation Program (NCAP) Concerning Remote Location Filing Entry Procedures in the Automated Commercial Environment (ACE) and the Use of the Document Image System for the Submission of Invoices and the Use of eBonds for the Transmission of Single Transaction Bonds: 80 FR 40079 (July 13, 2015).
• Modification of National Customs Automation Program (NCAP) Test Concerning the Automated Commercial Environment (ACE) Partner Government Agency (PGA) Message Set Regarding Types of Transportation Modes and Certain Data Required by the National Highway Traffic Safety Administration (NHTSA): 80 FR 47938 (August 10, 2015).
• Automated Commercial Environment (ACE) Export Manifest for Vessel Cargo Test: 80 FR 50644 (August 20, 2015).
• Modification of National Customs Automation Program (NCAP) Test Concerning the Submission of Certain
• Automated Commercial Environment (ACE) Export Manifest for Rail Cargo Test: 80 FR 54305 (September 9, 2015).
• Modification of the National Customs Automation Program (NCAP) Test Concerning the Automated Commercial Environment (ACE) Document Image System (DIS) Regarding Future Updates and New Method of Submission of Accepted Documents: 80 FR 62082 (October 15, 2015).
• Modification of the National Customs Automation Program (NCAP) Test Concerning the Automated Commercial Environment (ACE) Cargo Release for Entry Type 52 and Certain Other Modes of Transportation: 80 FR 63576 (October 20, 2015).
• Modification of the National Customs Automation Program (NCAP) Test Concerning the Automated Commercial Environment (ACE) Entry Summary, Accounts and Revenue (ESAR) Test of Automated Entry Summary Types 51 and 52 and Certain Modes of Transportation: 80 FR 63815 (October 21, 2015).
• Modification of the National Customs Automation Program Test Concerning the Automated Commercial Environment Portal Account to Establish the Exporter Portal Account: 80 FR 63817 (October 21, 2015).
• Modification of National Customs Automation Program Test Concerning the Automated Commercial Environment Partner Government Agency Message Set Regarding the Toxic Substances Control Act Certification Required by the Environmental Protection Agency: 81 FR 7133 (February 10, 2016).
• Notice Announcing the Automated Commercial Environment (ACE) as the Sole CBP-Authorized Electronic Data Interchange (EDI) System for Processing Certain Electronic Entry and Entry Summary Filings: 81 FR 10264 (February 29, 2016).
• Modification of the National Customs Automation Program (NCAP) Tests Concerning the Partner Government Agency Message Set for Certain Data Required by the Environmental Protection Agency (EPA): 81 FR 13399 (March 14, 2016).
• Cessation of National Customs Automation Program (NCAP) Test Concerning the Submission of Certain Data Required by the Food and Drug Administration (FDA) Using the Partner Government Agency (PGA) Message Set Through the Automated Commercial Environment (ACE): 81 FR 18634 (March 31, 2016).
• Automated Commercial Environment (ACE); Announcement of National Customs Automation Program Test of the In-Transit Manifest Pilot Program: 81 FR 24837 (April 27, 2016).
• Announcement of National Customs Automation Program (NCAP) Test Concerning the Submission Through the Automated Commercial Environment (ACE) of Certain Import Data and Documents Required by the U.S. Fish and Wildlife Service: 81 FR 27149 (May 5, 2015).
• Notice Announcing the Automated Commercial Environment (ACE) as the Sole CBP-Authorized Electronic Data Interchange (EDI) System for Processing Certain Electronic Entry and Entry Summary Filings Accompanied by Food and Drug Administration (FDA) Data: 81 FR 30320 (May 16, 2016).
• Notice Announcing the Automated Commercial Environment (ACE) as the Sole CBP-Authorized Electronic Data Interchange (EDI) System for Processing Electronic Entry and Entry Summary Filings: 81 FR 32339 (May 23, 2016).
• Notice Announcing the Automated Commercial Environment (ACE) Protest Module as the Sole CBP-Authorized Method for Filing Electronic Protests: 81 FR 49685 (July 28, 2016).
• Modification of the National Customs Automation Program (NCAP) Test Concerning the Automated Commercial Environment (ACE) Portal Accounts to Establish the Protest Filer Account and Clarification that the Terms and Conditions for Account Access Apply to All ACE Portal Accounts: 81 FR 52453 (August 8, 2016).
Office of the Assistant Secretary for Community Planning and Development, HUD.
Notice.
This Notice identifies unutilized, underutilized, excess, and surplus Federal property reviewed by HUD for suitability for use to assist the homeless.
Juanita Perry, Department of Housing and Urban Development, 451 Seventh Street SW., Room 7266, Washington, DC 20410; telephone (202) 402-3970; TTY number for the hearing- and speech-impaired (202) 708-2565 (these telephone numbers are not toll-free), call the toll-free Title V information line at 800-927-7588 or send an email to
In accordance with 24 CFR part 581 and section 501 of the Stewart B. McKinney Homeless Assistance Act (42 U.S.C. 11411), as amended, HUD is publishing this Notice to identify Federal buildings and other real property that HUD has reviewed for suitability for use to assist the homeless. The properties were reviewed using information provided to HUD by Federal landholding agencies regarding unutilized and underutilized buildings and real property controlled by such agencies or by GSA regarding its inventory of excess or surplus Federal property. This Notice is also published in order to comply with the December 12, 1988 Court Order in
Properties reviewed are listed in this Notice according to the following categories: Suitable/available, suitable/unavailable, and suitable/to be excess, and unsuitable. The properties listed in the three suitable categories have been reviewed by the landholding agencies, and each agency has transmitted to HUD: (1) Its intention to make the property available for use to assist the homeless, (2) its intention to declare the property excess to the agency's needs, or (3) a statement of the reasons that the property cannot be declared excess or made available for use as facilities to assist the homeless.
Properties listed as suitable/available will be available exclusively for homeless use for a period of 60 days from the date of this Notice. Where property is described as for “off-site use only” recipients of the property will be required to relocate the building to their own site at their own expense. Homeless assistance providers interested in any such property should send a written expression of interest to HHS, addressed to: Ms. Theresa M. Ritta, Chief Real Property Branch, the Department of Health and Human Services, Room 12-07, Parklawn Building, 5600 Fishers Lane, Rockville, MD 20857, (301)-443-2265 (This is not
For properties listed as suitable/to be excess, that property may, if subsequently accepted as excess by GSA, be made available for use by the homeless in accordance with applicable law, subject to screening for other Federal use. At the appropriate time, HUD will publish the property in a Notice showing it as either suitable/available or suitable/unavailable.
For properties listed as suitable/unavailable, the landholding agency has decided that the property cannot be declared excess or made available for use to assist the homeless, and the property will not be available.
Properties listed as unsuitable will not be made available for any other purpose for 20 days from the date of this Notice. Homeless assistance providers interested in a review by HUD of the determination of unsuitability should call the toll free information line at 1-800-927-7588 or send an email to
For more information regarding particular properties identified in this Notice (
Bureau of Land Management, Interior.
Notice.
In accordance with the National Environmental Policy Act of 1969, as amended (NEPA), and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) has prepared a Gunnison Sage-Grouse (GUSG) Rangewide Draft Resource Management Plan (RMP) Amendment and Draft Environmental Impact Statement (EIS) for the BLM field offices in southwest Colorado and southeast Utah, and by this notice is announcing the opening of the comment period.
To ensure that comments will be considered, the BLM must receive written comments on the Draft RMP Amendment/Draft EIS within 90 days of the date the Environmental Protection Agency publishes notice of the Draft RMP Amendment/Draft EIS in the
You may submit comments related to the GUSG Rangewide Draft RMP Amendment/Draft EIS by any of the following methods:
•
•
•
•
Documents pertinent to this proposal may also be viewed at BLM offices in Colorado and Utah. For a list of the offices and their addresses, please see the
Roger Sayre, Project Manager, via telephone: 303-239-3709; at the BLM Colorado Southwest District Office (see address above); or via email:
The BLM prepared the GUSG Rangewide Draft RMP Amendment/Draft EIS to address a range of alternatives focused on specific conservation measures across the range of the GUSG in southwest Colorado and southeast Utah. The Draft RMP Amendment/Draft EIS proposes to amend the current management decisions for resources as described in the following RMPs:
The planning area includes approximately 2.1 million acres of BLM, National Park Service, U.S. Forest Service, State, local and private lands located in southwestern Colorado and southeastern Utah within 12 counties (Chaffee, Delta, Dolores, Gunnison, Hinsdale, Mesa, Montrose, Ouray, Saguache and San Miguel counties in Colorado; and Grand and San Juan counties in Utah). Within the decision area, the BLM administers approximately 740,000 surface acres and approximately 1.3 million acres of Federal sub-surface mineral estate. Within the decision area, the BLM manages 623,000 acres of GUSG habitat, representing 37 percent of the habitat across the species range. Surface and subsurface management decisions made as a result of this Draft RMP Amendment/Draft EIS will apply only to the BLM-administered lands and minerals in the decision area.
The Draft RMP Amendment/Draft EIS analyzes management actions applicable to three categories of BLM-administered lands and Federal subsurface: Occupied Habitat, Unoccupied Habitat, and Non-Habitat.
• Occupied critical habitat as designated by the Fish and Wildlife Service (FWS);
• Vacant/unknown habitat delineated by Colorado Parks and Wildlife that FWS did not designate as occupied critical habitat;
• Habitat within the Poncha Pass area; and
• Specific areas the FWS excluded from the critical habitat designation coinciding with Federal subsurface estate.
The formal public scoping process for the RMP Amendment/EIS began on July 18, 2014, with the publication of a Notice of Intent in the
Major issues the Draft RMP Amendment/Draft EIS considers include special status species management (specifically for the GUSG), energy and mineral development, lands and realty, travel and transportation, recreation, fire management and range management.
The Draft RMP Amendment/Draft EIS evaluates four alternatives in detail, including the No Action Alternative (Alternative A) and three action alternatives (Alternatives B, C and D). All action alternatives require compliance with the mitigation hierarchy of first, avoiding impacts to the maximum extent compatible with the goals of the alternative; second, minimizing any impacts that are not avoided; and third, providing compensatory mitigation to offset unavoidable impacts. All mitigation requires a net conservation gain. Alternative A, the No Action Alternative, would continue management of public lands and resources under current BLM RMPs, as previously amended. Alternative B primarily focuses on habitat protection and avoiding impacts to GUSG and GUSG habitat whenever and wherever possible. Alternative C focuses on minimizing and mitigating impacts to GUSG habitat. Alternative D, the Preferred Alternative, includes two sub-alternatives. Sub-alternative D
Please note that public comments and information submitted including names, street addresses and email addresses of persons who submit comments will be available for public review and disclosure at the above addresses during regular business hours (8 a.m. to 4 p.m.), Monday through Friday, except holidays.
In addition to the Web site listed above, documents pertinent to this proposal may be examined at:
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
40 CFR 1506.6, 40 CFR 1506.10, 43 CFR 1610.2
United States International Trade Commission.
August 17, 2016 at 11:00 a.m.
Room 101, 500 E Street SW., Washington, DC 20436, Telephone: (202) 205-2000.
Open to the public.
1. Agendas for future meetings: None.
2. Minutes.
3. Ratification List.
4. Vote in Inv. Nos. 701-TA-539 and 731-TA-1280-1282 (Final)(Heavy Walled Rectangular Welded Carbon Steel Pipes and Tubes from Korea, Mexico, and Turkey). The Commission is currently scheduled to complete and file its determinations and views of the Commission on September 6, 2016.
5. Outstanding action jackets: None.
In accordance with Commission policy, subject matter listed above, not disposed of at the scheduled meeting, may be carried over to the agenda of the following meeting.
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined not to review the presiding administrative law judge's (“ALJ”) initial determination (“ID”) (Order No. 7) finding all respondents in default. The Commission requests written submissions, under the schedule set forth below, on remedy, public interest, and bonding.
Amanda Pitcher Fisherow, Esq., Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205-2737. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205-2000. General information concerning the Commission may also be obtained by accessing its Internet server at
The Commission instituted this investigation on December 17, 2015, based on a complaint filed on behalf of Belkin International, Inc. of Playa Vista, California (“Complainant”). 80
On June 6, 2016, Complainant moved to find Respondents in default. The Commission investigative attorney filed a response in support of Complainant's motion. On June 21, 2016, the ALJ issued Order No. 6 ordering Respondents to show cause why they should not be found in default for failing to file a response to the complaint and notice of investigation.
On July 12, 2016, the ALJ issued the subject ID finding Respondents in default.
The Commission has determined not to review the subject ID.
Section 337(g)(1) and Commission Rule 210.16(c) authorize the Commission to order relief against a respondent found in default, unless, after considering the public interest, it finds that such relief should not issue. Complainant seeks a limited exclusion order and a cease and desist order.
In connection with the final disposition of this investigation, the Commission may: (1) Issue an order that could result in the exclusion of articles manufactured or imported by the defaulting respondent; and/or (2) issue a cease and desist order that could result in the defaulting respondent being required to cease and desist from engaging in unfair acts in the importation and sale of such articles. Accordingly, the Commission is interested in receiving written submissions that address the form of remedy, if any, that should be ordered. If a party seeks exclusion of an article from entry into the United States for purposes other than entry for consumption, the party should so indicate and provide information establishing that activities involving other types of entry either are adversely affecting it or likely to do so. For background, see
If the Commission contemplates some form of remedy, it must consider the effects of that remedy upon the public interest. The factors that the Commission will consider include the effect that the exclusion order and/or cease and desists orders would have on (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) U.S. production of articles that are like or directly competitive with those that are subject to investigation, and (4) U.S. consumers. The Commission is therefore interested in receiving written submissions that address the aforementioned public interest factors in the context of this investigation.
If the Commission orders some form of remedy, the U.S. Trade Representative, as delegated by the President, has 60 days to approve or disapprove the Commission's action.
The written submissions and proposed remedial orders must be filed no later than close of business on August 18, 2016. Reply submissions must be filed no later than the close of business on August 25, 2016. No further submissions on these issues will be permitted unless otherwise ordered by the Commission.
Persons filing written submissions must file the original document electronically on or before the deadlines stated above and submit 8 true paper copies to the Office of the Secretary by noon the next day pursuant to section 210.4(f) of the Commission's Rules of Practice and Procedure (19 CFR 210.4(f)). Submissions should refer to the investigation number (“Inv. No. 337-TA-975”) in a prominent place on the cover page and/or the first page. (
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in Part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
National Endowment for the Humanities, National Foundation on the Arts and the Humanities.
Notice of meetings.
The National Endowment for the Humanities will hold nine meetings of the Humanities Panel, a federal advisory committee, during September, 2016. The purpose of the meetings is for panel review, discussion, evaluation, and recommendation of applications for financial assistance under the National Foundation on the Arts and Humanities Act of 1965.
See
The meetings will be held at the National Endowment for the Humanities at Constitution Center at 400 7th Street SW., Washington, DC 20506.
Elizabeth Voyatzis, Committee Management Officer, 400 7th Street SW., Room 4060, Washington, DC 20506; (202)606-8322;
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (5 U.S.C. App.), notice is hereby given of the following meetings:
1.
This meeting will discuss applications on the subject of International Topics for Digital Projects for the Public: Discovery Grants, submitted to the Division of Public Programs.
2.
This meeting will discuss applications on the subjects of Arts and Culture for Digital Projects for the Public: Discovery Grants, submitted to the Division of Public Programs.
3.
This meeting will discuss applications on the subjects of Arts and Culture for Digital Projects for the Public: Production Grants, submitted to the Division of Public Programs.
4.
This meeting will discuss applications on the subject of U.S. History for Digital Projects for the Public: Production Grants, submitted to the Division of Public Programs.
5.
This meeting will discuss applications for the Humanities Initiatives at Hispanic-Serving Institutions grant program, submitted to the Division of Education Programs.
6.
This meeting will discuss applications for the Humanities Initiatives at Historically Black Colleges and Universities grant program, submitted to the Division of Education Programs.
7.
This meeting will discuss applications on the subjects of World History and Culture for Digital Projects for the Public: Production Grants, submitted to the Division of Public Programs.
8.
This meeting will discuss applications on the subject of U.S. History for Digital Projects for the Public: Production Grants, submitted to the Division of Public Programs.
9.
This meeting will discuss applications for the Humanities Initiatives at Tribal Colleges and Universities grant program, submitted to the Division of Education Programs.
Because these meetings will include review of personal and/or proprietary financial and commercial information given in confidence to the agency by grant applicants, the meetings will be closed to the public pursuant to sections 552b(c)(4) and 552b(c)(6) of Title 5, U.S.C., as amended. The Committee Management Officer, Elizabeth Voyatzis, has made this determination pursuant to the authority granted her by the Chairman's Delegation of Authority to Close Advisory Committee Meetings dated April 15, 2016.
Nuclear Regulatory Commission.
Regulatory guide; withdrawal.
The U.S. Nuclear Regulatory Commission (NRC) is withdrawing Regulatory Guide (RG) 1.86, “Termination of Operating Licenses for Nuclear Reactors.” This RG is being withdrawn because there is more up-to-date guidance in other NRC regulatory documents, making RG 1.86 obsolete.
The effective date of the withdrawal of RG 1.86 is August 12, 2016.
Please refer to Docket ID NRC-2016-0160 when contacting the, NRC about the availability of information regarding this document. You may obtain publically-available information related to this document, using the following methods:
•
•
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Regulatory guides are not copyrighted, and NRC approval is not required to reproduce them.
Zahira Cruz, Office of Nuclear Materials Safety and Safeguards, telephone: 301-415-3808; email:
The NRC staff issued RG 1.86 in June 1974, to provide guidance for termination of licenses for nuclear power plants, including the decommissioning of reactors. In addition, RG 1.86 includes information in Table 1, “Acceptable Surface Contamination Levels,” regarding acceptable average and maximum surface contamination criteria.
The guidance in RG 1.86 is no longer needed because it has been updated and replaced by NRC's regulations and other regulatory guidance. This guidance can be found in RG 1.179, “Standard Formant and Content of License Termination Plans for Nuclear Power Reactors” (ADAMS Accession No. ML110490419); RG 1.184, “Decommissioning of Nuclear Power Reactors” (ADAMS Accession No. ML13144A840); and RG 1.185, “Standard Format and Content for Post-Shutdown Decommissioning Activities Report” (ADAMS Accession No. ML13140A038), which provide the NRC staff guidance on implementing the NRC's regulations related to decommissioning and license termination requirements as amended in 1996 and 1997, respectively.
In addition, various NUREGs, including NUREG-1700, “Standard Review Plan for Evaluating Nuclear Power Reactor License Termination Plans” (ADAMS Accession No. ML003713038; and Volume 2, “Characterization, Survey, and Determination of Radiological Criteria” (ADAMS Accession No. ML032530405), of NUREG-1757, “Consolidated Decommissioning Guidance,” provide up-to-date information that aligns with RGs 1.179, 1.184, and 1.185. Specifically, NUREG 1757, Volume 2, Revision 1, includes: (1) Tables of screening criteria (concentrations) applicable to surface contamination of buildings and to surface soils (Tables H.1 and H.2); and (2) guidance on determining site-specific criteria for buildings and soils remaining onsite at license termination (Chapter 5 and Appendix I).
Also, RG 8.21, “Health Physics Surveys for Byproduct Material at NRC-Licensed Processing and Manufacturing Plants” (ADAMS Accession No. ML003739577); RG 8.23, “Radiation Safety Surveys at Medical Institutions” (ADAMS Accession No. ML003739603); and RG 8.30, “Health Physics Surveys in Uranium Recovery Facilities” (ADAMS Accession No. ML021260524), provide information similar to that included in Table 1 of RG 1.86. Specifically, Table 1 in RG 1.86 is now included in RG 8.23 and is titled, “Table 3 Acceptable Surface Contamination Levels for Uncontrolled Release of Equipment.”
Because RG 1.86 is no longer needed, the NRC is withdrawing RG 1.86. Withdrawal of a RG means that the guide no longer provides useful information or has been superseded by other guidance, technological innovations, congressional actions, or other events. The withdrawal of RG 1.86 does not alter any prior or existing NRC licensing approval or the acceptability of licensee commitments to RG 1.86.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Regulatory issue summary; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing Regulatory Issue Summary (RIS) 2016-10, “License Amendment Requests for Changes to Emergency Response Organizations Staffing and Augmentation.” This RIS clarifies the application of guidance documents that support license amendment requests that would change augmenting emergency response arrival times for holders of nuclear power reactor operating licenses, construction permits, combined licenses, and early site permits.
The RIS is available as of August 12, 2016.
Please refer to Docket ID NRC-2016-0054 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
•
•
•
• This RIS is also available on the NRC's public Web site at
Brian K. Harris, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-2277, email:
The NRC published a notice of opportunity for public comment on a draft version of this RIS in the
For the Nuclear Regulatory Commission.
The Presidio Trust.
Notice of public meeting of Presidio Institute Advisory Council.
Pursuant to the Federal Advisory Committee Act, as amended (5 U.S.C. Appendix 2), notice is hereby given that a public meeting of the Presidio Institute Advisory Council (Council) will be held from 10:00 a.m. to 11:30 a.m. on Monday, September 12, 2016. The meeting is open to the public, and oral public comment will be received at the meeting. The Council was formed to advise the Executive Director of the Presidio Trust (Trust) on matters pertaining to the rehabilitation and reuse of Fort Winfield Scott as a new national center focused on service and leadership development.
The Trust's Executive Director, in consultation with the Chair of the Board of Directors, has determined that the Council is in the public interest and supports the Trust in performing its duties and responsibilities under the Presidio Trust Act, 16 U.S.C. 460bb appendix.
The Council will advise on the establishment of a new national center (Presidio Institute) focused on service and leadership development, with specific emphasis on: (a) Assessing the role and key opportunities of a national center dedicated to service and leadership at Fort Scott in the Presidio of San Francisco; (b) providing recommendations related to the Presidio Institute's programmatic goals, target audiences, content, implementation and evaluation; (c) providing guidance on a phased development approach that leverages a combination of funding sources including philanthropy; and (d) making recommendations on how to structure the Presidio Institute's business model to best achieve the Presidio Institute's mission and ensure long-term financial self-sufficiency.
Additional information is available online at
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Form D (17 CFR 239.500) is a notice of sales filed by issuers making an offering of securities in reliance on an exemption under Regulation D (17 CFR 230.501
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
Pursuant to Section 19(b)(1)
Pursuant to the provisions of Section 19(b)(1) under the Securities Exchange Act of 1934 (“Act”) [sic],
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statement [sic] may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
IEX Rule 9.216(b) provides procedures for disposition of certain rule violations designated as minor rule violations pursuant to a plan declared effective by the Commission in accordance with Section 19(d)(1) of the Act and Rule 19d-1(c)(2) thereunder. IEX's MRVP allows IEX, or FINRA on its behalf, to impose a fine of up to $2,500 on any Member or associated person of a Member for a minor violation of an eligible rule. As proposed, IEX Rule 9.218 sets forth the rules eligible for disposition pursuant to IEX's MRVP as well as the recommended fine schedule for such dispositions. While IEX considers compliance with all of its rules to be important, inclusion of more technical rule violations in the MRVP is designed to provide for a risk-based allocation of FINRA and IEX resources to more high-risk matters because MRVP settlements are typically handled more efficiently and expeditiously.
The purpose of the MRVP is to provide reasonable but meaningful sanctions for minor or technical violations of rules when the conduct at issue does not warrant stronger, reportable disciplinary sanctions. The inclusion of a rule in IEX's MRVP does not minimize the importance of compliance with such rule, nor does it preclude IEX, or FINRA on its behalf, from choosing to pursue violations of eligible rules through an Acceptance, Waiver and Consent (“AWC”) or Complaint if the nature of the violations or prior disciplinary history warrants more significant sanctions. Rather, the option to impose an MRVP sanction gives IEX, and FINRA on its behalf, additional flexibility to administer its enforcement program in the most effective and efficient manner, while still fully meeting IEX's remedial objectives in addressing violative conduct. FINRA, on behalf of IEX, and subject to IEX oversight, will examine and surveil for compliance with MRVP eligible rules in a manner consistent with the IEX regulatory program and will determine on a case-by-case basis whether disposition pursuant to the MRVP is appropriate.
In addition, Members and their associated persons may decline to accept a Minor Rule Violation, in which case FINRA, on behalf of IEX, may proceed in accordance with the Exchange's disciplinary rules, which include hearing rights for formal disciplinary proceedings.
IEX conducted a comprehensive review of its rules to determine the rules that are appropriate to add to the MRVP. As proposed, the rules included in the MRVP are as follows:
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In addition, as proposed, Rule 9.218 includes the following recommended fine schedule for minor rule violation dispositions of the rules included therein:
The recommended fine schedule is based on BZX Rule 8.15, Interpretations and Policies .01. The recommended fine schedule is intended to provide transparency to IEX Members and associated persons with respect to administration of the Exchange's MRVP.
IEX believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The Exchange believes that the proposal is consistent with Section 6(b)(5) of the Act
In addition, the Exchange believes that the proposal is consistent with Section 6(b)(7) of the Act
The Exchange also believes that the proposed rule change does not unfairly discriminate between customers, issuers, brokers and dealers in that it will be applicable to all Members.
IEX 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 proposed rule change will allow for a quicker, more efficient means to resolve minor violations of eligible rules, potentially lessening the burden on firms in those circumstances where, absent the rule's inclusion in the MRVP, a more resource-intense formal process might ensue.
Written comments were neither solicited nor received.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. As noted above, the IEX MRVP, including the proposed violations, was declared effective by the Commission on August 3, 2016.
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
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 Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission”).
Notice of an application for an order pursuant to: (a) Section 6(c) of the Investment Company Act of 1940 (“Act”) granting an exemption from sections 18(f) and 21(b) of the Act; (b) section 12(d)(1)(J) of the Act granting an exemption from section 12(d)(1) of the Act; (c) sections 6(c) and 17(b) of the Act granting an exemption from sections 17(a)(1), 17(a)(2) and 17(a)(3) of the Act; and (d) section 17(d) of the Act and rule 17d-1 under the Act to permit certain joint arrangements and transactions.
The application was filed on June 26, 2015, and amended on November 20, 2015, May 13, 2016 and August 5, 2016.
Secretary, U.S. Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090; Applicants: Benjamin Archibald, Esq., BlackRock Advisors, LLC, 55 East 52 Street, New York, NY 10055 and John A. MacKinnon, Esq., Sidley Austin LLP,
Laura L. Solomon, Senior Counsel, at (202) 551-6915 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. Each Company is organized as a Massachusetts business trust, a Delaware statutory trust, a Delaware limited liability company, or a Maryland corporation and is registered under the Act as an open-end management investment company. Each Company has issued shares of one or more series, each series of shares with its own distinct investment objectives, policies and restrictions. Certain of the Funds
2. The Funds may lend cash to banks or other entities by entering into repurchase agreements or purchasing other short-term money market instruments. Certain of the Funds are parties to an unsecured revolving credit agreement with a group of lenders (“Credit Agreement”). The Funds may borrow under the Credit Agreement to meet shareholder redemptions and for other lawful purposes.
3. If Funds that experience a cash shortfall were to borrow under the Credit Agreement (or another credit facility), they would pay interest at a rate that is likely to be higher than the rate that could be earned by non-borrowing Funds on investments in repurchase agreements and other short-term money market instruments. Applicants assert the difference between the higher rate paid on a borrowing and what a bank pays to borrow under repurchase agreements or other arrangements represents the bank's profit for serving as the middleperson between a borrower and lender and is not attributable to any material difference in the credit quality or risk of such transactions.
4. The requested relief would permit the applicants to participate in an interfund lending facility (“InterFund Program”) that would permit each Fund to lend money directly to and borrow money directly from other Funds for temporary purposes (each, an “InterFund Loan”). The Money Market Funds typically will not participate as borrowers under the InterFund Program. Applicants state that the requested relief will enable the Funds to access an available source of money and reduce costs incurred by the Funds that need to obtain loans for temporary purposes and permit those Funds that have uninvested cash available: (i) To earn a return on the money that they might not otherwise be able to invest; or (ii) to earn a higher rate of interest on investment of their short-term balances.
5. Applicants anticipate that the proposed InterFund Program would provide a borrowing Fund with a source of liquidity at a rate lower than the bank borrowing rate at times when the cash position of the Fund is insufficient to meet temporary cash requirements. This situation could arise when shareholder redemptions exceed anticipated volumes and certain Funds have insufficient cash on hand to satisfy such redemptions. When the Funds liquidate portfolio securities to meet redemption requests, they often do not receive payment in settlement for up to three days (or longer for certain foreign transactions). However, redemption requests normally are effected on the day following the trade date. The proposed InterFund Program would provide a source of immediate, short-term liquidity pending settlement of the sale of portfolio securities.
6. Applicants also anticipate that a Fund could use the InterFund Program when a sale of securities “fails” due to circumstances beyond the Fund's control, such as a delay in the delivery of cash to the Fund's custodian or improper delivery instructions by the broker effecting the transaction. “Sales fails” may present a cash shortfall if the Fund has undertaken to purchase a security using the proceeds from securities sold. Alternatively, the Fund could: (i) “Fail” on its intended purchase due to lack of funds from the previous sale, resulting in additional cost to the Fund; or (ii) sell a security on a same-day settlement basis, earning a lower return on the investment. Use of the InterFund Program under these circumstances would enable the Fund to have access to immediate short-term liquidity.
7. While bank borrowings and/or custodian overdrafts generally could supply Funds with a portion of the needed cash to cover unanticipated redemptions and sales fails, under the proposed InterFund Program, a borrowing Fund would pay lower interest rates than those that would be payable under short-term loans offered by banks or custodian overdrafts. In addition, Funds making short-term cash loans directly to other Funds would earn interest at a rate higher than they otherwise could obtain from investing their cash in repurchase agreements or certain other short term money market instruments. Thus, applicants assert that the proposed InterFund Program would benefit both borrowing and lending Funds.
8. The interest rate to be charged to the Funds on any Interfund Loan (the “InterFund Loan Rate”) would be the average of the “Repo Rate” and the “Bank Loan Rate,” both as defined below. The Repo Rate would be the highest current overnight repurchase agreement rate available to a lending Fund. The Bank Loan Rate for any day would be calculated by the InterFund Program Team, as defined below, on each day an InterFund Loan is made according to a formula established by each Fund's Board of Trustees, Board of Directors or Board of Managers, as applicable (each a “Board,” and collectively the “Boards”) intended to approximate the lowest interest rate at which a bank short-term loan would be available to the Fund. The formula would be based upon a publicly available rate (
9. Certain members of the Adviser's and/or their affiliates' administrative and other personnel (the “InterFund Program Team”), which may include one or more investment professionals, including individuals involved in making investment decisions regarding short-term investments in the Money Market Funds (“Money Market portfolio managers”), would administer the InterFund Program. No portfolio manager of any Fund, (other than Money Market portfolio managers) would serve as a member of the InterFund Program Team. Under the proposed InterFund Program, the portfolio managers for each participating Fund could provide standing instructions to participate daily as a borrower or lender. The InterFund Program Team on each business day would collect data on the uninvested cash and borrowing requirements of all participating Funds. Once the InterFund Program Team has determined the aggregate amount of cash available for loans and borrowing demand, the InterFund Program Team would allocate loans among borrowing Funds without any further communication from the portfolio managers of the Funds. All allocations made by the InterFund Program Team will require the approval by at least one member of the InterFund Program Team who is a high level employee, other than a Money Market portfolio manager. Applicants anticipate that there typically will be more available uninvested cash each day than borrowing demand. Therefore, after the InterFund Program Team has allocated cash for Interfund Loans, the InterFund Program Team will invest any remaining cash in accordance with the standing instructions of the relevant portfolio manager or such remaining amounts will be invested directly by the portfolio managers of the Funds.
10. The InterFund Program Team would allocate borrowing demand and cash available for lending among the Funds on what the InterFund Program Team believes to be an equitable basis, subject to certain administrative procedures applicable to all Funds, such as the time of filing requests to participate, minimum loan lot sizes, and the need to minimize the number of transactions and associated administrative costs. To reduce transaction costs, each InterFund Loan normally would be allocated in a manner intended to minimize the number of participants necessary to complete the loan transaction. The method of allocation and related administrative procedures would be approved by the Boards of the Funds, including a majority of the Board members who are not “interested persons,” as defined in section 2(a)(19) of the Act (“Independent Board Members”), to ensure that both borrowing and lending Funds participate on an equitable basis.
11. The InterFund Program Team, on behalf of the Advisers, would: (a) Monitor the InterFund Loan Rate and the other terms and conditions of the InterFund Loans; (b) limit the borrowings and loans entered into by each Fund to ensure that they comply with the Fund's investment policies and limitations; (c) implement and follow procedures designed to ensure equitable treatment of each Fund; and (d) make quarterly reports to the Board of each Fund concerning any transactions by the applicable Fund under the InterFund Program and the InterFund Loan Rate charged.
12. The Advisers, through the InterFund Program Team, would administer the InterFund Program as disinterested fiduciaries as part of their duties under the investment management and administrative agreements with each Fund and would receive no additional fee as compensation for their services in connection with the administration of the InterFund Program. The Funds will bear transaction costs, including, without limitation, transaction, wire and other fees in connection with the facility, none of which would be paid to an Adviser. Such costs and fees would be no higher than those applicable for comparable bank loan transactions.
13. No Fund may participate in the InterFund Program unless: (a) The Fund has obtained shareholder approval for its participation, if such approval is required by law; (b) the Fund has fully disclosed all material information concerning the InterFund Program in its prospectus and/or statement of additional information; and (c) the Fund's participation in the InterFund Program is consistent with its investment objectives, investment restrictions, policies, limitations and organizational documents.
14. As part of the Board's review of the continuing appropriateness of a Fund's participation in the proposed InterFund Program as required by condition 14, the Board of the Fund, including a majority of the Independent Board Members, also will review the process in place to appropriately assess: (i) If the Fund participates as a lender, any effect its participation may have on the Fund's liquidity risk; and (ii) if the Fund participates as a borrower, whether the Fund's portfolio liquidity is sufficient to satisfy its obligations under the facility along with its other liquidity needs.
15. In connection with the InterFund Program, applicants request an order under section 6(c) of the Act exempting them from the provisions of sections 18(f) and 21(b) of the Act; under section 12(d)(1)(J) of the Act exempting them from section 12(d)(1) of the Act; under sections 6(c) and 17(b) of the Act exempting them from sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Act; and under section 17(d) of the Act and rule 17d-1 under the Act to permit certain joint arrangements and transactions.
1. Section 17(a)(3) of the Act generally prohibits any affiliated person of a registered investment company, or affiliated person of an affiliated person, from borrowing money or other property from the registered investment company. Section 21(b) of the Act generally prohibits any registered management company from lending money or other property to any person, directly or indirectly, if that person controls or is under common control with that company. Section 2(a)(3)(C) of the Act defines an “affiliated person” of another person, in part, to be any person directly or indirectly controlling, controlled by, or under common control with, such other person. Section 2(a)(9) of the Act defines “control” as the “power to exercise a controlling influence over the management or policies of a company,” but excludes circumstances in which “such power is solely the result of an official position with such company.” Applicants state that the Funds may be under common control by virtue of having common investment advisers and/or by having common trustees, directors, managers and/or officers.
2. Section 6(c) of the Act provides that an exemptive order may be granted where an 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. Section 17(b) of the Act authorizes the Commission to exempt a proposed transaction from section 17(a) provided that the terms of the transaction, including the consideration to be paid or received, are fair and reasonable and do not involve overreaching on the part of any person
3. Applicants assert that sections 17(a)(3) and 21(b) of the Act were intended to prevent a party with strong potential adverse interests to, and some influence over the investment decisions of, a registered investment company from causing or inducing the investment company to engage in lending transactions that unfairly inure to the benefit of such party and that are detrimental to the best interests of the investment company and its shareholders. Applicants assert that the proposed transactions do not raise these concerns because: (a) The Advisers, through the InterFund Program Team members, would administer the InterFund Program as disinterested fiduciaries as part of their duties under the investment management and administrative agreements with each Fund; (b) all InterFund Loans would consist only of uninvested cash reserves that the Fund otherwise would invest in short-term repurchase agreements or other short-term investments; (c) the InterFund Loans would not involve a greater risk than such other investments; (d) the lending Fund would receive interest at a rate higher than it could otherwise obtain through short-term repurchase agreements or certain other short-term investments; and (e) the borrowing Fund would pay interest at a rate lower than otherwise available to it under its bank loan agreements. Moreover, applicants assert that the other terms and conditions that applicants propose also would effectively preclude the possibility of any Fund obtaining an undue advantage over any other Fund.
4. Section 17(a)(1) of the Act generally prohibits an affiliated person of a registered investment company, or any affiliated person of such a person, from selling securities or other property to the investment company. Section 17(a)(2) of the Act generally prohibits an affiliated person of a registered investment company, or any affiliated person of such a person, from purchasing securities or other property from the investment company. Section 12(d)(1) of the Act generally prohibits a registered investment company from purchasing or otherwise acquiring any security issued by any other investment company except in accordance with the limitations set forth in that section.
5. Applicants state that the obligation of a borrowing Fund to repay an InterFund Loan could be deemed to constitute a security for the purposes of sections 17(a)(1) and 12(d)(1). Applicants also state that any pledge of securities to secure an InterFund Loan by the borrowing Fund to the lending Fund could constitute a purchase of securities for purposes of section 17(a)(2) of the Act. Section 12(d)(1)(J) of the Act provides that the Commission may exempt persons or transactions from any provision of section 12(d)(1) if and to the extent that such exemption is consistent with the public interest and the protection of investors. Applicants submit that the requested exemptions meet the standards set forth in sections 6(c), 12(d)(1)(J) and 17(b) of the Act and rule 17d-1 under the Act. Applicants also state that the requested relief from section 17(a)(2) of the Act meets the standards of section 6(c) and 17(b) because any collateral pledged to secure an InterFund Loan would be subject to the same conditions imposed by any other lender to a Fund that imposes conditions on the quality of or access to collateral for a borrowing (if the lender is another Fund) or the same or better conditions (in any other circumstance).
6. Applicants state that section 12(d)(1) was intended to prevent the pyramiding of investment companies in order to avoid imposing on investors additional and duplicative costs and fees attendant upon multiple layers of investment companies. Applicants submit that the proposed InterFund Program does not involve these abuses. Applicants note that there will be no duplicative costs or fees to the Funds or their shareholders, and that each Adviser will receive no additional compensation for its services in administering the InterFund Program. Applicants also note that the purpose of the proposed InterFund Program is to provide economic benefits for all the participating Funds and their shareholders. Section 18(f)(1) of the Act prohibits open-end investment companies from issuing any senior security except that a company is permitted to borrow from any bank, provided, that immediately after the borrowing, there is asset coverage of at least 300 per centum for all borrowings of the company. Under section 18(g) of the Act, the term “senior security” generally includes any bond, debenture, note or similar obligation or instrument constituting a security and evidencing indebtedness. Applicants request exemptive relief under section 6(c) from section 18(f)(1) to the limited extent necessary to implement the InterFund Program (because the lending Funds are not banks).
7. Applicants believe that granting relief under section 6(c) is appropriate because the Funds would remain subject to the requirement of section 18(f)(1) that all borrowings of a Fund, including combined InterFund Loans and bank borrowings, have at least 300% asset coverage. Based on the conditions and safeguards described in the application, applicants also submit that to allow the Funds to borrow from other Funds pursuant to the proposed InterFund Program is consistent with the purposes and policies of section 18(f)(1).
8. Section 17(d) of the Act and rule 17d-1 under the Act generally prohibit an affiliated person of a registered investment company, or any affiliated person of such a person, when acting as principal, from effecting any joint transaction in which the investment company participates, unless, upon application, the transaction has been approved by the Commission. Rule 17d-1(b) under the Act provides that in passing upon an application filed under the rule, the Commission will consider whether the participation of the registered investment company in a joint enterprise, joint arrangement or profit sharing plan on the basis proposed is consistent with the provisions, policies and purposes of the Act and the extent to which such participation is on a basis different from or less advantageous than that of the other participants.
9. Applicants assert that the purpose of section 17(d) is to avoid overreaching by and unfair advantage to insiders. Applicants assert that the InterFund Program is consistent with the provisions, policies and purposes of the Act in that it offers both reduced borrowing costs and enhanced returns on loaned funds to all participating Funds and their shareholders. Applicants note that each Fund would have an equal opportunity to borrow and lend on equal terms consistent with its investment policies and fundamental investment limitations. Applicants assert that each Fund's participation in the proposed InterFund Program would be on terms that are no different from or less advantageous than that of other participating Funds.
Applicants agree that any order granting the requested relief will be subject to the following conditions:
1. The InterFund Loan Rate will be the average of the Repo Rate and the Bank Loan Rate.
2. On each business day when an interfund loan is to be made, the InterFund Program Team will compare the Bank Loan Rate with the Repo Rate and will make cash available for InterFund Loans only if the InterFund Loan Rate is: (a) More favorable to the lending Fund than the Repo Rate; and (b) more favorable to the borrowing Fund than the Bank Loan Rate.
3. If a Fund has outstanding bank borrowings, any InterFund Loan to the Fund will: (a) Be at an interest rate equal to or lower than the interest rate of any outstanding bank borrowing; (b) be secured at least on an equal priority basis with at least an equivalent percentage of collateral to loan value as any outstanding bank loan that requires collateral; (c) have a maturity no longer than any outstanding bank loan (and in any event not over seven days); and (d) provide that, if an event of default occurs under any agreement evidencing an outstanding bank loan to the Fund, that event of default by the Fund, will automatically (without need for action or notice by the lending Fund) constitute an immediate event of default under the interfund lending agreement which both (i) entitles the lending Fund to call the InterFund Loan immediately and exercise all rights with respect to any collateral and (ii) causes the call to be made if the lending bank exercises its right to call its loan under its agreement with the borrowing Fund.
4. A Fund may borrow on an unsecured basis through the InterFund Program only if the relevant borrowing Fund's outstanding borrowings from all sources immediately after the interfund borrowing total 10% or less of its total assets, provided that if the borrowing Fund has a secured loan outstanding from any other lender, including but not limited to another Fund, the lending Fund's InterFund Loan will be secured on at least an equal priority basis with at least an equivalent percentage of collateral to loan value as any outstanding loan that requires collateral. If a borrowing Fund's total outstanding borrowings immediately after an InterFund Loan would be greater than 10% of its total assets, the Fund may borrow through the InterFund Program only on a secured basis. A Fund may not borrow through the InterFund Program or from any other source if its total outstanding borrowings immediately after the borrowing would be more than 33
5. Before any Fund that has outstanding interfund borrowings may, through additional borrowings, cause its outstanding borrowings from all sources to exceed 10% of its total assets, it must first secure each outstanding InterFund Loan by the pledge of segregated collateral with a market value at least equal to 102% of the outstanding principal value of the loan. If the total outstanding borrowings of a Fund with outstanding InterFund Loans exceed 10% of its total assets for any other reason (such as a decline in net asset value or because of shareholder redemptions), the Fund will within one business day thereafter either: (a) Repay all its outstanding InterFund Loans; (b) reduce its outstanding indebtedness to 10% or less of its total assets; or (c) secure each outstanding InterFund Loan by the pledge of segregated collateral with a market value at least equal to 102% of the outstanding principal value of the loan until the Fund's total outstanding borrowings cease to exceed 10% of its total assets, at which time the collateral called for by this condition 5 shall no longer be required. Until each InterFund Loan that is outstanding at any time that a Fund's total outstanding borrowings exceed 10% of its total assets is repaid or the Fund's total outstanding borrowings cease to exceed 10% of its total assets, the Fund will mark the value of the collateral to market each day and will pledge such additional collateral as is necessary to maintain the market value of the collateral that secures each outstanding InterFund Loan at least equal to 102% of the outstanding principal value of the InterFund Loans.
6. No Fund may lend to another Fund through the InterFund Program if the loan would cause the lending Fund's aggregate outstanding loans through the InterFund Program to exceed 15% of its current net assets at the time of the loan.
7. A Fund's InterFund Loans to any one Fund shall not exceed 5% of the lending Fund's net assets.
8. The duration of InterFund Loans will be limited to the time required to receive payment for securities sold, but in no event more than seven days. Loans effected within seven days of each other will be treated as separate loan transactions for purposes of this condition.
9. A Fund's borrowings through the InterFund Program, as measured on the day when the most recent loan was made, will not exceed the greater of 125% of the Fund's total net cash redemptions for the preceding seven calendar days or 102% of the Fund's sales fails for the preceding seven calendar days.
10. Each InterFund Loan may be called on one business day's notice by a lending Fund and may be repaid on any day by a borrowing Fund.
11. A Fund's participation in the InterFund Program must be consistent with its investment restrictions, policies, limitations and organizational documents.
12. The InterFund Program Team will calculate total Fund borrowing and lending demand through the InterFund Program, and allocate InterFund Loans on an equitable basis among the Funds, without the intervention of any portfolio manager (other than a Money Market portfolio manager acting in his or her capacity as a member of the InterFund Program Team). All allocations will require the approval of at least one member of the InterFund Program Team who is high level employee and is not a Money Market portfolio manager. The InterFund Program Team will not solicit cash for the InterFund Program from any Fund or prospectively publish or disseminate loan demand data to portfolio managers (except to the extent that a Money Market portfolio manager has access to loan demand data). After the InterFund Program Team has allocated cash for InterFund Loans, any remaining cash will be invested in accordance with the standing instructions of the relevant portfolio manager or such remaining amounts will be invested directly by the portfolio managers of the Funds.
13. The InterFund Program Team will monitor the InterFund Loan Rate charged and the other terms and conditions of the InterFund Loans and will make a quarterly report to the Boards concerning the participation of the Funds in the InterFund Program and the terms and other conditions of any extensions of credit under the InterFund Program.
14. Each Board, including a majority of the Independent Board Members, will:
(a) Review, no less frequently than quarterly, the participation of each Fund it oversees in the InterFund Program during the preceding quarter for compliance with the conditions of any order permitting such participation;
(b) establish the Bank Loan Rate formula used to determine the interest rate on InterFund Loans;
(c) review, no less frequently than annually, the continuing appropriateness of the Bank Loan Rate formula; and
(d) review, no less frequently than annually, the continuing appropriateness of the participation in the InterFund Program by each Fund it oversees.
15. Each Fund will maintain and preserve for a period of not less than six
16. In the event an InterFund Loan is not paid according to its terms and the default is not cured within two business days from its maturity or from the time the lending Fund makes a demand for payment under the provisions of the interfund lending agreement, the Adviser to the lending Fund promptly will refer the loan for arbitration to an independent arbitrator selected by the Board of any Fund involved in the loan who will serve as arbitrator of disputes concerning InterFund Loans.
17. The Advisers will prepare and submit to the Board for review an initial report describing the operations of the InterFund Program and the procedures to be implemented to ensure that all Funds are treated fairly. After the commencement of the InterFund Program, the Advisers will report on the operations of the InterFund Program at each Board's quarterly meetings. Each Fund's chief compliance officer, as defined in rule 38a-1(a)(4) under the Act, shall prepare an annual report for its Board each year that the Fund participates in the InterFund Program, that evaluates the Fund's compliance with the terms and conditions of the application and the procedures established to achieve such compliance. Each Fund's chief compliance officer will also annually file a certification pursuant to Item 77Q3 of Form N-SAR as such Form may be revised, amended or superseded from time to time, for each year that the Fund participates in the InterFund Program, that certifies that the Fund and its Adviser have implemented procedures reasonably designed to achieve compliance with the terms and conditions of the order. In particular, such certification will address procedures designed to achieve the following objectives:
(a) That the InterFund Loan Rate will be higher than the Repo Rate but lower than the Bank Loan Rate;
(b) compliance with the collateral requirements as set forth in the application;
(c) compliance with the percentage limitations on interfund borrowing and lending;
(d) allocation of interfund borrowing and lending demand in an equitable manner and in accordance with procedures established by the Board; and
(e) that the InterFund Loan Rate does not exceed the interest rate on any third party borrowings of a borrowing Fund at the time of the InterFund Loan.
Additionally, each Fund's independent registered public accountants, in connection with their audit examination of the Fund, will review the operation of the InterFund Program for compliance with the conditions of the application and their review will form the basis, in part, of the auditor's report on internal accounting controls in Form N-SAR.
18. No Fund will participate in the InterFund Program, upon receipt of requisite regulatory approval, unless it has fully disclosed in its prospectus and/or statement of additional information all material facts about its intended participation.
For the Commission, by the Division of Investment Management, under delegated authority.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rules 7a-15 through 7a-37 (17 CFR 260.7a-15—260.7a-37) under the Trust Indenture Act of 1939 (15 U.S.C. 77aaa
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
Pursuant to Section 19(b)(1)
The Exchange proposes to specify in Exchange rules the Exchange's use of data feeds from Investors' Exchange, LLC for order handling and execution, order routing, and regulatory compliance. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend NYSE Arca Equities Rule 7.37 (“Rule 7.37”) and NYSE Arca Equities Rule 7.37P (“Rule 7.37P”) to specify in Exchange rules which data feeds from Investors' Exchange, LLC (“IEX”) that the Exchange would use for order handling and execution, order routing, and regulatory compliance.
On July 18, 2014, the Exchange filed a proposed rule change that clarified the Exchange's use of certain data feeds for order handling and execution, order routing, and regulatory compliance.
To reflect that IEX's application to register as a national securities exchange has been approved by the Commission
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not designed to address any competitive issue but rather would provide the public and investors with information about which data feeds the Exchange uses for execution and routing decisions.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under 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 change 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”),
CHX proposes to amend its Schedule of Fees and Assessments (the “Fee Schedule”) to update or adopt various fees for services provided by the Financial Industry Regulatory Authority (“FINRA”). The text of this proposed rule change is available on the Exchange's Web site at (
In its filing with the Commission, the CHX included statements concerning the purpose of and basis for the proposed rule changes 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 CHX 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 Section J.5 of the Fee Schedule to (1) update various current fees for examinations administered by FINRA and (2) adopt the Series 57 Securities Trader Examination fee,
• Amend the Series 7 Examination fee from $290 to $305.
• Amend the Series 14 Examination fee from $335 to $350.
• Amend the Series 27 Examination fee from $115 to $120.
• Replace reference to the “Series 56 Examination” with the “Series 57 Examination” and adopt a corresponding fee of $120.
Moreover, given that the Proprietary Trader Continuing Education program is no longer available,
The Exchange further proposes to add “Member Regulation” to the title of Section J of the CHX Fee Schedule, as the Exchange's Member Regulation department is responsible for ensuring that Participants comply with the relevant WebCRD fees, and “WebCRD” to the title of Section J.5 of the CHX Fee Schedule, as all fees under Section J.5 are paid directly to FINRA through the WebCRD, as noted above.
The Exchange believes that its proposal to amend its fee schedule is consistent with Section 6(b) of the Act
Moreover, the Exchange believes that harmonizing the FINRA administered examination fees with those of FINRA and the other national securities exchanges would further the objectives of Section 6(b)(5) of the Act
In addition, the Exchange believes that amending the title to Section J of the Fee Schedule to add the term “Member Regulation” would provide a complete description of the Exchange departments that are responsible for ensuring compliance with the fees set forth thereunder and amending the title to Section J.5 of the Fee Schedule clarifies that the fees set forth thereunder are paid directly to FINRA, which further the objectives of Section 6(b)(1) of the Act
The Exchange 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. Given that the proposed fee change applies to all Participants and harmonizes the CHX Fee Schedule with corresponding fees charged by FINRA pursuant to Section 4(c) of the Schedule A of the FINRA By-Laws, the proposal has no effect on competition.
No written comments were either solicited or received.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)(ii) 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.
All submissions should refer to File No. SR-CHX-2016-13. This file number should be included on the subject line if email is used. To help the Commission process and review your
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
The title for the collection of information is “Form N-2 (17 CFR 239.14 and 274.11a-1) under the Securities Act of 1933 and under the Investment Company Act of 1940, Registration Statement of Closed-End Management Investment Companies.” Form N-2 is the form used by closed-end management investment companies (“closed-end funds”) to register as investment companies under the Investment Company Act of 1940 (15 U.S.C. 80a-1
The Commission estimates that there are 136 initial registration statements and 30 post-effective amendments to initial registration statements filed on Form N-2 annually and that the average number of portfolios referenced in each initial filing and post-effective amendment is 1. The Commission further estimates that the hour burden for preparing and filing an initial registration statement on Form N-2 is 515 hours per portfolio, and the hour burden for preparing and filing a post-effective amendment on Form N-2 is 107 hours per portfolio. The estimated annual hour burden for preparing and filing initial registration statements is 70,040 hours (136 initial registration statements × 1 portfolio × 515 hours per portfolio). The estimated annual hour burden for preparing and filing post-effective amendments is 3,210 hours (30 post-effective amendments × 1 portfolio × 107 hours per portfolio). The estimated total annual hour burden for Form N-2, therefore, is estimated to be 73,250 hours (70,040 hours + 3,210 hours).
The information collection requirements imposed by Form N-2 are mandatory. Responses to the collection of information will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
Pursuant to Section 19(b)(1)
The Exchange proposes to amend NYSE MKT Rule 19—Equities to specify in Exchange rules the Exchange's use of data feeds from Investors' Exchange, LLC for order handling and execution, order routing, and regulatory compliance. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend NYSE MKT Rule 19—Equities (“Rule 19”) to specify in Exchange rules which data feeds from Investors' Exchange, LLC (“IEX”) that the Exchange would use for order handling and execution, order routing, and regulatory compliance.
On July 18, 2014, the Exchange filed a proposed rule change that clarified the Exchange's use of certain data feeds for order handling and execution, order routing, and regulatory compliance.
To reflect that IEX's application to register as a national securities exchange has been approved by the Commission
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not designed to address any competitive issue but rather would provide the public and investors with information about which data feeds the Exchange uses for execution and routing decisions.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under 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 change 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”),
CHX proposes to amend its Schedule of Fees and Assessments (the “Fee Schedule”) to amend the Exchange's Continuing Education fees. The text of this proposed rule change is available on the Exchange's Web site at (
In its filing with the Commission, the CHX included statements concerning the purpose of and basis for the proposed rule changes 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 CHX has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements.
On August 8, 2015, the Commission approved SR-FINRA-2015-015 relating to proposed changes to FINRA Rule 1250 to provide for Web-based delivery for completing the Regulatory Element of the Continuing Education requirements (“CE Online Program”).
The Exchange currently utilizes the S101 General Program and S201 Supervisor Program that are part of the Securities Industry Continuing Education Program.
Consistent with Section 4(f) of the Schedule A of the FINRA By-Laws, the Exchange now proposes to amend Section J.5 of the CHX Fee Schedule to provide that the Continuing Education Regulatory Element fee for the S101 and S201 programs will be $55.
The Exchange believes that its proposal to amend its fee schedule is consistent with Section 6(b) of the Act
Moreover, the Exchange believes that harmonizing the Continuing Education fee with those of FINRA and the other national securities exchanges would further the objectives of Section 6(b)(5) of the Act
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Since the proposed rule change applies to all persons associated with Participants who are required to fulfill Continuing Education requirements, the proposal has no effect on competition. Moreover, the Exchange believes that the harmonization of the Continuing Education fee across the various markets will reduce burdens on competition by removing impediments to participation in the national market system.
No written comments were either solicited or received.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)(ii) 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)
The Exchange proposes to amend Section 3 of NYSE Arca Equities Rule 8 (Trading of Certain Equity Derivatives) to extend the effectiveness of the Exchange Traded Product (“ETP”) Incentive Program until July 31, 2017. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Section 3 of NYSE Arca Equities Rule 8 (Trading of Certain Equity Derivatives) to extend the effectiveness of the ETP Incentive Program
The ETP Incentive Program is a pilot program designed to incentivize quoting and trading in ETPs and to add competition among existing qualified Market Makers.
The Exchange proposes to extend the current operation of the ETP Incentive Program until July 31, 2017 to allow the Commission, the Exchange, LMMs, and issuers to further assess the impact of such program before proposing to make it available to other securities and implementing the program on a permanent basis.
In accordance with the 2015 Extension Notice, the Exchange, on April 4, 2016, posted on its Web site an “Assessment Report” regarding the ETP
Prior to the end of the pilot period ending July 31, 2017, the Exchange will post a report relating to the ETP Incentive Program (the “Assessment Report”) on its Web site three months before the end of the pilot period or at the time it files to terminate the pilot, whichever comes first. The proposed Assessment Report would list the program objectives that are the focus of the pilot and, for each, provide (a) a statistical analysis that includes evidence that is sufficient to inform a reader about whether the program has met those objectives during the pilot period, along with (b) a narrative explanation of whether and how the evidence indicates the pilot has met the objective, including both strengths and weaknesses of the evidence in this regard. The Assessment Report also would include a discussion of (a) the procedures used in selecting any samples that are used in constructing tables or statistics for inclusion in the Assessment Report, (b) the definitions of any variables and statistics reported in the tables, including test statistics, (c) the statistical significance levels of any test statistics and (d) other statistical or qualitative information that may enhance the usefulness of the Assessment Report as a basis for evaluating the performance of the program. The Assessment Report would present statistics on product performance relative to the performance of comparable or other suitable benchmark products (including test statistics that permit the reader to evaluate the statistical significance of any differences reported or discussed in the report), along with information on the procedures that were used to identify those comparable or benchmark products, the characteristics of each comparable or benchmark products, the characteristics of each product that is the focus of the pilot, the procedures used in selecting the time horizon of the sample and the sensitivity of reported statistics to changes in the time horizon of the sample.
This filing is not otherwise intended to address any other issues and the Exchange is not aware of any problems that Equity Trading Permit Holders or issuers would have in complying with the monthly selection provision or the proposed extension of the pilot program.
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the ETP Incentive Program is designed to enhance the market quality for ETPs by incentivizing Market Makers to take LMM assignments in certain lower volume ETPs by offering an alternative fee structure for such LMMs that would be funded from the Exchange's general revenues. The ETP Incentive Program is designed to improve the quality of market for lower-volume ETPs, thereby incentivizing them to list on the Exchange. Moreover, as described in the ETP Incentive Program Release, the Exchange believes that the ETP Incentive Program, which is entirely voluntary, encourages competition among markets for issuers' listings and among Market Makers for LMM assignments.
The Exchange believes that, by providing additional time for issuers to participate in the ETP Incentive Program, through an extension of the pilot period until July 31, 2017, the ETP Incentive Program would continue to provide an opportunity for rewarding competitive liquidity-providing LMMs, with associated requirements for quoting by LMMs at the National Best Bid or National Best Offer. The ETP Incentive Program, therefore, has the potential to enhance competition among liquidity providers and thereby improve execution quality on the Exchange. An extension of such pilot period will permit additional time to collect data on the ETP Incentive Program so that the Commission, the Exchange, LMMs, and issuers may assess the impact of the ETP Incentive Program before making it available to other securities. The Exchange will continue to monitor the efficacy of the ETP Incentive Program during the extended pilot period. Prior to the end of the pilot period ending July 31, 2017, the Exchange proposes to post an Assessment Report on its Web site three months before the end of the pilot period or at the time it files to terminate the pilot, whichever comes first. The proposed Assessment Report would list the program objectives that are the focus of the pilot as well as additional information described above.
The Exchange 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.
The proposed extension to the pilot period for the ETP Incentive Program is not designed to address any competitive issues but rather to program additional time for the Commission, the Exchange, LMMs and issuers to assess the impact of such program.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
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 Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
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 (“Fee Schedule”) to eliminate certain Web CRD Fees in order to address the transition of the Regulatory Element of Continuing Education (“CE”) to the FINRA CE Online System®.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to amend Section 2(c) of the Regulatory Fees section of the Fee Schedule, Web CRD Fees, to (1) delete the $100 Continuing Education Fee for All Registrations, which relates to test center delivery of the Regulatory Element of CE, and (2) clarify that the $55 Continuing Education Fee for All Registrations if Web-based shall apply to all registrations without regard to mode of session delivery.
Specifically, the Exchange proposes to (1) delete the $100 CE Fee in its entirety, and (2) with respect to the $55 CE Fee, delete reference to Web-based delivery and specify that it is a “session” fee.
MIAX is proposing such Fee Schedule amendments in conjunction with FINRA's transition to CE Online and its phase out of test center delivery of the CE Regulatory Element.
On July 31, 2015, the Commission approved [sic] SR-FINRA-2015-015 relating to proposed changes to FINRA Rules to provide for Web-based delivery completion of the Regulatory Element of CE requirements. Pursuant to the rule change, the Regulatory Element of CE programs is administered through Web-based delivery via the FINRA CE Online System as of January 4, 2016. Pursuant to the rule change, the Regulatory Element of CE programs also continued to be offered at test centers until no later than six months after January 4, 2016. Test-center delivery of the Regulatory Element has been phased out effective July 1, 2016.
In January 2016 the Exchange amended its Rules,
The Exchange now proposes to amend its Fee Schedule to delete the $100 CE Fee for All Registrations since the test center delivery option for the Regulatory Element will no longer be offered
The Exchange further proposes to clarify that the $55 CE Fee will now generally apply to all CE sessions without further specifying the Web-based delivery mode since there will no longer be more than one mode of CE delivery.
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
The Exchange believes that the proposal is fair, equitable and not unreasonably discriminatory because the fee change applies equally to all Members and persons associated with Members. The Exchange believes that the proposal is reasonable because FINRA will administer the CE program only through the FINRA CE Online System and will no longer offer a testing center CE delivery option, except as specifically noted above in which case FINRA has aligned its $55 session fee for all participants.
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 Exchange further believes that the proposal does not impose any burden on competition because FINRA has made, and the Exchange believes that the other exchanges will make, similar changes to their fee schedules.
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 to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 0-4 (17 CFR 275.0-4) under the Investment Advisers Act of 1940 (“Act” or “Advisers Act”) (15 U.S.C. 80b-1
The requirements of rule 0-4 are designed to provide Commission staff with the necessary information to assess whether granting the orders of exemption are necessary and appropriate in the public interest and consistent with the protection of investors and the intended purposes of the Act.
Applicants for orders under the Advisers Act can include registered investment advisers, affiliated persons of registered investment advisers, and entities seeking to avoid investment adviser status, among others. Commission staff estimates that it receives up to 3 applications per year submitted under rule 0-4 of the Act seeking relief from various provisions of the Advisers Act and, in addition, up to 9 applications per year submitted under Advisers Act rule 206(4)-5, which addresses certain “pay to play” practices and also provides the Commission the authority to grant applications seeking relief from certain of the rule's restrictions. Although each application typically is submitted on behalf of multiple applicants, the applicants in the vast majority of cases are related entities and are treated as a single respondent for purposes of this analysis. Most of the work of preparing an application is performed by outside counsel and, therefore, imposes no hourly burden on respondents. The cost outside counsel charges applicants depends on the complexity of the issues covered by the application and the time required. Based on conversations with applicants and attorneys, the cost for applications ranges from approximately $12,800 for preparing a well-precedent, routine (or otherwise less involved)
The requirements of this collection of information are required to obtain or retain benefits. Responses will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number.
Written 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 will have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information 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 in writing within 60 days of this publication.
Please direct your written comments to Pamela Dyson, Chief Information Officer, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549; or send an email to:
On April 22, 2016, ICE Clear Credit LLC (“ICC”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act (“Act”)
The principal purpose of the proposed rule change is to revise the EOD Policy to change the calculation of single name firm trade (“Firm Trade”) notional limits to be at a Clearing Participant (“CP”) affiliate group level.
As part of ICC's end-of-day price discovery process, ICC CPs are required to submit end-of-day prices for specific instruments related to their open interest at ICC. ICC determines end-of-day levels directly from these CP price submissions using a proprietary algorithm. To encourage CPs to provide high quality end-of-day submissions, on random days, ICC selects a subset of instruments which are eligible for Firm Trades. In order to determine Firm Trade requirements, the algorithm sorts and ranks all CP submissions and identifies “crossed and/or locked markets.” Crossed markets are pairs of CP submitted prices generated by the sorting and ranking process for which the bid price of one CP is above the offer price of the matched CP. The algorithm identifies locked markets, where the bid and the offer are equal, in a similar fashion.
ICC designates certain crossed and/or locked markets as Firm Trades and CPs are entered into cleared transactions. ICC establishes pre-defined notional amounts for Firm Trades. According to ICC, no single Firm Trade can have a larger notional amount than specified by the pre-defined notional amount for the relevant instrument. On a given Firm Trade day, all potential-trades resulting from the cross-and-lock algorithm in any Firm Trade eligible instrument are designated Firm Trades, unless they breach a CP's notional limits.
Currently single name Firm Trade notional limits are set at the CP level. According to ICC, it designed the Firm Trade system to incentivize trading desks to provide quality end-of-day price submissions for use in its end-of-day price discovery process, while limiting the total overnight risk that a given institution may be required to manage in case of submission errors or outlying pricing submissions which may lead to Firm Trades. One mechanism introduced to provide these protections was single name Firm Trade notional limits per CP. ICC believes that at the time of its introduction, this mechanism achieved its goal of limiting overnight risk limits per institution. However, with the increase in client clearing and in multiple CP memberships per holding company, ICC asserts that the limit provided to a given institution is multiples of that originally contemplated.
In addition, because of recent changes to the EOD Policy to extend the process for determining Firm Trades to include all submissions, including those classified as outlying pricing submissions (or “obvious errors”),
In order to maintain the original intent of the end-of-day price discovery process, ICC has proposed changes to its EOD Policy to implement single name Firm Trade notional limits at the CP affiliate group level, as opposed to the
A “CP affiliate group” will be defined as the set of all affiliated CPs (
ICC states that the proposal returns single name Firm Trade notional limits to the original design while maintaining the system's price submission incentives. ICC represents that all CPs within an affiliate group will still be subject to potential Firm Trades for any given submission, on a randomized basis. ICC also asserts that though Firm Trade notional limits will be implemented at the CP affiliate group level, the potential implication for a given trading desk of providing an off-market submission for a given instrument remains the same. ICC believes there will be no change in price submission behavior as a result of the changes, and the Firm Trade process will remain an effective tool for ensuring quality price submissions.
Section 19(b)(2)(C) of the Act
The proposed application of the Firm Trade notional limit to CP affiliate groups is intended to manage what is, in ICC's view, an inappropriate overnight risk to its members without negatively impacting the integrity of its price discovery process. Moreover, the proposed rule change is intended to apply the EOD Policy fairly to participants, and ICC has represented that the proposed rule change is consistent with price submission practices where end-of-day submissions from multiple affiliated entities often reflect the institution's overall view on the market. As such, the Commission believes that the proposed rule change is designed to promote the prompt and accurate clearance and settlement of securities transactions, derivatives agreements, contracts, and transactions within the meaning of Section 17A(b)(3)(F)
On the basis of the foregoing, the Commission finds that the proposal is consistent with the requirements of the Act and in particular with the requirements of Section 17A of the Act
IT IS THEREFORE ORDERED, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 19 to specify in Exchange rules the Exchange's use of data feeds from Investors' Exchange, LLC for order handling and execution, order routing, and regulatory compliance. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Rule 19 to specify in Exchange rules which data feeds from Investors' Exchange, LLC (“IEX”) that the Exchange would use for order handling and execution, order routing, and regulatory compliance.
On July 18, 2014, the Exchange filed a proposed rule change that clarified the Exchange's use of certain data feeds for order handling and execution, order routing, and regulatory compliance.
To reflect that IEX's application to register as a national securities exchange has been approved by the Commission
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not designed to address any competitive issue but rather would provide the public and investors with information about which data feeds the Exchange uses for execution and routing decisions.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under 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 change 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.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501
Section 31 of the Exchange Act requires the Commission to collect fees and assessments from national securities exchanges and national securities associations (collectively, “self-regulatory organizations” or “SROs”) based on the volume of their securities transactions. To collect the proper amounts, the Commission adopted Rule 31 and Form R31 under the Exchange Act whereby the SROs must report to the Commission the volume of their securities transactions and the Commission, based on those data, calculates the amount of fees and assessments that the SROs owe pursuant to Section 31. Rule 31 and Form R31 require the SROs to provide this data on a monthly basis.
Currently, there are 23 respondents under Rule 31: 19 national securities exchanges, one security futures exchange, and one national securities association subject to the collection of information requirements of Rule 31; there are additionally two registered clearing agencies that are required to provide certain data in their possession needed by the SROs to complete Form R31, although these two entities are not themselves required to complete and submit Form R31. The Commission estimates that the total burden for all 23 respondents is 390 hours per year. The Commission notes that, based on previous and current experience, it estimates an additional three new national securities exchanges will become registered and subject to the reporting requirements of Rule 31 over the course of the authorization period and incur a burden of 18 hours per year. Thus, the Commission estimates the total burden for the existing and expected new respondents to be 408 hours per year.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
The public may view background documentation for this information collection at the following Web site:
U.S. Small Business Administration.
Amendment 4.
This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-4272-DR), dated 06/11/2016.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
The notice of the President's major disaster declaration for the State of Texas, dated 06/11/2016 is hereby amended to re-establish the incident period for this disaster as beginning 05/22/2016 and continuing through 06/24/2016.
All other information in the original declaration remains unchanged.
U.S. Small Business Administration.
Amendment 2.
This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of Texas (FEMA-4272-DR), dated 07/08/2016.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
The notice of the President's major disaster declaration for Private Non-Profit organizations in the State of Texas, dated 07/08/2016, is hereby amended to re-establish the incident period for this disaster as beginning 05/22/2016 and continuing through 06/24/2016.
All other information in the original declaration remains unchanged.
U.S. Small Business Administration.
Amendment 3.
This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of Texas (FEMA-4272-DR), dated 07/08/2016.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
The notice of the President's major disaster declaration for Private Non-Profit organizations in the State of TEXAS, dated 07/08/2016, is hereby amended to include the following areas as adversely affected by the disaster.
All other information in the original declaration remains unchanged.
U.S. Small Business Administration.
Notice.
This is a notice of an Administrative declaration of a disaster for the State of Tennessee dated 08/02/2016.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 14793 B and for economic injury is 14794 0.
The States which received an EIDL Declaration # are Tennessee, Kentucky.
Pacific Harbor Line, Inc. (PHL), a Class III rail carrier, has filed a verified notice of exemption under 49 CFR pt. 1152 subpart F—
PHL has certified that: (1) No local traffic has moved over the Line for at least two years; (2) overhead traffic on the Line, if any, can be rerouted over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line either is pending before the Surface Transportation Board or any U.S. District Court or has been decided in favor of a complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication), and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will become effective on September 13, 2016 (50 days after the filing of the exemption), unless stayed pending reconsideration. Petitions to stay that do not involve environmental issues and formal expressions of intent to file an OFA to subsidize continued rail service under 49 CFR 1152.27(c)(2)
A copy of any petition filed with the Board should be sent to PHL's representative: Rose-Michele Nardi, 1701 Pennsylvania Ave. NW., Suite 300, Washington, DC 20006.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available on our Web site at “
By the Board, Joseph H. Dettmar, Acting Director, Office of Proceedings.
Southwestern Railroad, Inc. (SWRR), a Class III rail carrier, has filed a verified notice of exemption under 49 CFR 1150.41 to continue to lease and operate approximately 227.6 miles of rail line, located in New Mexico, from BNSF Railway Company (BNSF), as follows: (1) The Carlsbad Subdivision between milepost 0.5 at Clovis and milepost 183.0 at Carlsbad; (2) the Carlsbad Yard;
SWRR and BNSF entered into a lease agreement in 2004,
SWRR has certified that its projected annual revenues as a result of this transaction will not exceed those that would qualify it as a Class III rail carrier. SWRR anticipates that its projected annual revenues will exceed $5 million. Therefore, SWRR is required, at least 60 days before this exemption is to become effective, to send notice of the transaction to the national offices of the labor unions with employees on the affected line, to post a copy of the notice at the workplace of the employees on the affected line, and to certify to the Board that it has done so. 49 CFR 1150.42(e). On June 28, 2016, and again in its verified notice of exemption, SWRR certified that on or before June 28, 2016, SWRR complied with the requirements of 49 CFR 1150.42(e) by posting a notice of its intent to undertake the proposed transaction at the workplace of the employees on the affected line. SWRR did not serve a copy of the notice of intent on any labor unions because it asserts the line does not have any unionized labor.
SWRR states that this transaction does not include any interchange commitment that prohibits SWRR from interchanging traffic with a third party or limits SWRR's ability to interchange with a third party.
SWRR states that it expects to consummate the transaction on or after August 28, 2016, the effective date of the exemption (30 days after the verified notice was filed).
If the notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than August 19, 2016 (at least seven days before the exemption becomes effective).
An original and 10 copies of all pleadings, referring to Docket No. FD 34533 (Sub-No. 1), must be filed with the Surface Transportation Board, 395 E Street SW., Washington, DC 20423-0001. In addition, one copy of each pleading must be served on William A. Mullins, Baker & Miller PLLC, 2401 Pennsylvania Ave. NW., Suite 300, Washington, DC 20037.
Board decisions and notices are available on our Web site at “
By the Board, Rachel D. Campbell, Director, Office of Proceedings.
Union Pacific Railroad Company (UP) has filed a verified notice of exemption
UP has certified that: (1) No local or overhead traffic has moved over the Line for at least two years; (2) there is no need to reroute any traffic over other lines; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line is pending either with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication) and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance of service shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA) to subsidize continued rail service has been received, this exemption will be effective on September 13, 2016, unless stayed pending reconsideration.
A copy of any petition filed with the Board should be sent to UP's representative: Mack H. Shumate, Jr., Union Pacific Railroad Company, 101 North Wacker Drive, Room 1920, Chicago, IL 60606.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available on our Web site at “
By the Board, Joseph H. Dettmar, Acting Director, Office of Proceedings.
Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14 of the Code of Federal Regulations. The purpose of this notice is to improve the public's awareness of, and participation in, the FAA's exemption process. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before September 1, 2016.
Send comments identified by docket number FAA-2015-6560 using any of the following methods:
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For technical questions concerning this action, contact Nia Daniels, (202-267-9677), 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14 of the Code of Federal Regulations. The purpose of this notice is to improve the public's awareness of, and participation in, the FAA's exemption process. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before September 1, 2016.
Send comments identified by docket number FAA-2016-8561 using any of the following methods:
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Alphonso W. Pendergrass II (202) 267-4713, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Section(s) of 14 CFR Affected: 91.527(a).
Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14 of the Code of Federal Regulations. The purpose of this notice is to improve the public's awareness of, and participation in, the FAA's exemption process. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before September 1, 2016.
Send comments identified by docket number {FAA-2016-7131} using any of the following methods:
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Alphonso W. Pendergrass (202) 267-4713, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Aviation Administration (FAA), DOT.
Notice.
This notice contains a summary of a petition seeking relief from specified requirements of Title 14 of the Code of Federal Regulations. The purpose of this notice is to improve the public's awareness of, and participation in, the FAA's exemption process. Neither publication of this notice nor the inclusion or omission of information in the summary is intended to affect the legal status of the petition or its final disposition.
Comments on this petition must identify the petition docket number and must be received on or before September 1, 2016.
Send comments identified by docket number FAA-2016-8171 using any of the following methods:
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Alphonso W. Pendergrass II (202) 267-4713, Office of Rulemaking, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591.
This notice is published pursuant to 14 CFR 11.85.
Federal Highway Administration (FHWA), DOT.
Notice to rescind Notice of Intent to prepare an Environmental Impact Statement/Draft Section 4(f) Evaluation.
The Federal Highway Administration is issuing this notice to advise the public that FHWA is rescinding its Notice of Intent to prepare an Environmental Impact Statement/Draft Section 4(f) Evaluation for a proposed roadway improvement project in Montgomery and Prince George's Counties, Maryland (
Jeanette Mar, Environmental Program Manager, Federal Highway Administration, Maryland Division, 10 South Howard Street, Suite 2450, Baltimore, Maryland 21201, (410) 779-7152, or email:
The Federal Highway Administration (FHWA), in cooperation with the Maryland State Highway Administration (SHA), is advising the general public that SHA conducted studies of the potential environmental impacts associated with the proposed roadway improvement project in Montgomery and Prince George's Counties, Maryland along the MD 28/MD 198 Corridor between MD 97
The purpose of the MD 28/MD 198 Corridor Improvement Study is to improve local traffic safety and operations for motorists, bicyclists, and pedestrians traveling along the MD 28/MD 198 corridor and across intersecting roads, while managing access; and, preserve the rural and suburban quality of life by addressing localized traffic issues, while considering local planning visions and state growth policies for communities along the corridor. MD 28 and MD 198 is experiencing peak hour congestion in areas along portions of the corridor between I-95 and MD 97, particularly east of MD 97, in the vicinity of US 29 and Burtonsville commercial area, and near Sweitzer Lane. Local operational and capacity deficiencies are projected to result from planned and future development in and around the study area. The resulting congestion is expected to cause stop-and-go conditions along the roadways, especially at study-area intersections projected to experience failing conditions by 2040. The roadway segments between the intersections will experience peak-hour capacity constraints imposed by: Projected traffic volumes; the absence of mid-block through lanes on two-lane roadways; the absence of storage lanes for left turns; and the absence of deceleration lanes for right turns. Local area master plans describe objectives for the corridor roadway that include retaining the rural character of adjacent communities and protecting sensitive environmental areas. Recommended features in these plans include the construction of hiker-biker trails and sidewalks and the addition of landscaping.
Alternatives under consideration include taking no action, installing on-road bicycle provisions, a shared use path and segments of sidewalk, and widening existing MD 28/MD 198 to a four- or six-lane roadway in some sections, with various options for access management via frontage roads or median treatments, and intersection improvements including additional turn lanes or installing roundabouts. The EA will be available for public and agency review and comment prior to a Public Hearing. Public notice will be given of the availability of the EA for review and of the time and place of this hearing. Public Informational Workshops were held in June 2014 and March 2015 to solicit opinions and ideas on proposed improvements from local citizens.
To ensure that the full range of issues related to this proposed action are addressed and all significant issues identified, comments and suggestions are invited from all interested parties. Comments or questions concerning this proposed action and the determination that an EA is the proper environmental document should be directed to FHWA at the address provided above.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request (ICR) described below to the Office of Management and Budget (OMB) for review and approval and invites public comment. The FMCSA requests approval to renew an ICR titled, “Licensing Applications for Motor Carrier Operating Authority,” that is used by for-hire motor carriers of regulated commodities, motor passenger carriers, freight forwarders, property brokers, and certain Mexico-domiciled motor carriers to register their operations with the FMCSA.
We must receive your comments on or before October 11, 2016.
You may submit comments identified by Federal Docket Management System (FDMS) Docket Number FMCSA-2016-0194 using any of the following methods:
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Mr. Jeff Secrist, Office of Registration and Safety Information, Department of Transportation, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590-0001. Telephone Number: (202) 385-2367; Email Address:
On March 19, 2002, the FMCSA published an interim final rule (IFR) at 67 FR 12702 which proposed to amend 49 CFR part 365 and revise Form OP-1(MX). Under the amended regulations, Mexico-domiciled long-haul motor carriers seeking to operate within the United States beyond the commercial border zones, including carriers that previously filed pending Form OP-1(MX) applications, would be required to submit the revised Form OP-1(MX). Under the revised Form OP-1(MX), the FMCSA would collect more detailed information on an applicant motor carrier's size, operations and history than could be collected previously by using the existing form.
The Final Rule titled, “Unified Registration System,” (78 FR 52608) dated August 23, 2013, implemented statutory provisions for an on-line registration system in the ICCTA and the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, 2005 (SAFETEA-LU). The URS would streamline the registration process and serve as a clearinghouse and repository of information on, and identification of, motor carriers, brokers, freight forwarders, intermodal equipment providers (IEPs), hazardous materials safety permit (HMSP) applicants, and cargo tank facilities required to register with FMCSA. This ICR previously covered registration requirements for non-exempt for-hire carriers, freight forwarders, and property brokers. Under the URS, all forms, except the OP-1(MX), in this ICR were folded into the Form MCSA-1 in the OMB Control Number 2126-0051 titled, “FMCSA Registration/Updates,” ICR on October 23, 2015. The Form OP-1(MX) would be retained for the small number of Mexico-domiciled carriers that seek authority to operate beyond the United States municipalities on the United States-Mexico border and their commercial zones because they are not included within the scope of the URS rule.
The Final Rule titled, “Unified Registration System,” (80 FR 63695) dated October 21, 2015, changed the effective and compliance dates of the 2013 URS Final Rule from October 23, 2015, to September 30, 2016, in order to allow FMCSA additional time to complete the information technology (IT) systems work required to fully implement that rule. An additional delay was published on July 28, 2016 (81 FR 49553), stating the URS Final Rule will come into effect on January 14, 2017. This ICR revision will restore the Forms OP-1, OP-1(P), OP-1(FF), and OP-1(NNA) under control number 2126-0016, until January 14, 2017, because these forms are still needed to support registration processes for entities subject to FMCSA's regulations. After January 14, 2017, all forms in this ICR, except the OP-1 (MX), will be folded into the online Form MCSA-1 under the OMB Control Number 2126-0051 titled, “FMCSA Registration/Updates,” ICR.
Maritime Administration, DOT.
Notice and request for comments.
The Maritime Administration (MARAD) invites public comments about our intention to request the Office of Management and Budget (OMB) approval to renew an information collection. The information collected will be used by MARAD personnel to process and verify requests for service awards. We are required to publish this notice in the
Written comments should be submitted by October 11, 2016.
You may submit comments [identified by Docket No. DOT-MARAD-2016-0076] through one of the following methods:
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•
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Deveeda Midgette, 202-366-2354, Maritime Administration, Office of Sealift Support, 1200 New Jersey Avenue SE., Washington, DC 20590.
The Paperwork Reduction Act of 1995; 44 U.S.C. Chapter 35, as amended; and 49 CFR 1:93.
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before September 12, 2016.
Comments should refer to docket number MARAD-2016-0081. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel TENACITY is:
The complete application is given in DOT docket MARAD-2016-0081 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before September 12, 2016.
Comments should refer to docket number MARAD-2016-0080. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel SURGE is:
The complete application is given in DOT docket MARAD-2016-0080 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before September 12, 2016.
Comments should refer to docket number MARAD-2016-0079. Written comments may be submitted by hand or by mail to the Docket Clerk, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. You may also send comments electronically via the Internet at
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel MATTARAY is:
The complete application is given in DOT docket MARAD-2016-0079 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
Maritime Administration, Department of Transportation.
Notice.
As authorized by 46 U.S.C. 12121, the Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirement of the coastwise laws under certain circumstances. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before September 12, 2016.
Comments should refer to docket number MARAD-2016-0078. Written comments may be submitted by hand or by mail to the Docket Clerk,
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE., Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel PWD #315 is:
The complete application is given in DOT docket MARAD-2016-0078 at
Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
By Order of the Maritime Administrator.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Notice.
The NHTSA announces meeting of NEMSAC to be held in the Metropolitan Washington, DC, area. This notice announces the date, time, and location of the meetings, which will be open to the public, as well as opportunities for public input to the NEMSAC. The purpose of NEMSAC, a nationally recognized council of emergency medical services representatives and consumers, is to advise and consult with DOT and the Federal Interagency Committee on Emergency Medical Services (FICEMS) on matters relating to emergency medical services (EMS).
The NEMSAC meeting will be held on September 7, 2016 from 8:30 a.m. to 12:30 p.m. EDT, and on September 8, 2016 from 8:30 a.m. to 12 p.m. EDT. A public comment period will take place on September 7, 2016 between 12 p.m. and 12:30 p.m. EDT and on September 8, 2016 between 10:45 a.m. and 11 a.m. EDT. NEMSAC committees will meet in the same location on Wednesday, September 7, 2016 from 2 p.m. to 5 p.m. EDT. Written comments for the NEMSAC from the public must be received no later than September 1, 2016.
The meetings will be held at the FHI 360 Conference Center, 8th Floor, 1825 Connecticut Avenue NW., Washington, DC 20009. Attendees should plan to arrive 20 minutes early to check in for the meeting.
Susan McHenry, U.S. Department of Transportation, Office of Emergency Medical Services, 1200 New Jersey Avenue SE., NTI-140, Washington, DC 20590,
Notice of these meetings is given under the Federal Advisory Committee Act, Public Law 92-463, as amended (5 U.S.C. App.). The NEMSAC is authorized under Section 31108 of the Moving Ahead with Progress in the 21st Century Act of 2012.
The tentative NEMSAC agenda includes the following:
Overview of NEMSAC Committees:
For assistance with registration, please contact Susan McHenry at
A final agenda as well as meeting materials will be available to the public online through
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. Currently, the IRS is soliciting comments concerning Form 8911, Alternative Fuel Vehicle Refueling Property Credit.
Written comments should be received on or before October 11, 2016 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the form and instructions should be directed to Sara Covington, at 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.
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission (“SEC” or “Commission”) is adopting certain amendments to Regulation SBSR—Reporting and Dissemination of Security-Based Swap Information (“Regulation SBSR”). Specifically, new Rule 901(a)(1) of Regulation SBSR requires a platform (
Michael Gaw, Assistant Director, at (202) 551-5602; Sarah Albertson, Special Counsel, at (202) 551-5647; Yvonne Fraticelli, Special Counsel, at (202) 551-5654; Kathleen Gross, Special Counsel, at (202) 551-5305; David Michehl, Special Counsel, at (202) 551-5627; or Geoffrey Pemble, Special Counsel, at (202) 551-5628; all of the Division of Trading and Markets, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-7010.
Section 13A(a)(1) of the Exchange Act
In February 2015, the Commission adopted Regulation SBSR,
The Commission received 18 comments on the Regulation SBSR Proposed Amendments Release
To provide context for understanding the rules being adopted today and the related economic analysis that follows, this section describes the current state of the security-based swap market and the existing regulatory framework; it also identifies broad economic considerations that underlie the likely economic effects of these rules.
To assess the economic impact of the final rules described in this release, the Commission employs as a baseline the security-based swap market as it exists at the time of this release, including applicable rules that the Commission already has adopted but excluding rules that the Commission has proposed but not yet finalized.
The following sections provide an overview of aspects of the security-based swap market that are likely to be most affected by the amendments and guidance being adopted today, as well as elements of the current market structure, such as central clearing and platform trading, that are likely to determine the scope of transactions that will be covered by them.
The Commission's understanding of the market is informed in part by available data on security-based swap transactions, though the Commission acknowledges that limitations in the data prevent the Commission from quantitatively characterizing certain aspects of the market.
Specifically, the Commission's analysis of the state of the current security-based swap market is based on data obtained from the DTCC Derivatives Repository Limited Trade Information Warehouse (“TIW”), especially data regarding the activity of market participants in the single-name CDS market during the period from 2008 to 2015. According to data published by the Bank for International Settlements (“BIS”), the global notional amount outstanding in single-name CDS was approximately $7.18 trillion,
The Commission notes that the data available to it from TIW do not encompass those CDS transactions that both: (1) Do not involve U.S. counterparties;
One commenter recommended that the Commission collect a more complete set of data to more precisely estimate the number of non-U.S. persons that would be affected by the proposed rules.
Currently, there is no regulatory requirement in the United States to clear security-based swaps. Clearing for certain single-name CDS products occurs on a voluntary basis. Voluntary clearing activity in single-name CDS has steadily increased in recent years. As of the end of 2015, ICE Clear Credit accepted for clearing security-based swap products based on a total of 232 North American corporate reference entities, 174 European corporate reference entities, and 21 individual sovereign reference entities.
Figure 1, below, shows characteristics of new trades in single-name CDS that reference North American standard corporate ISDA documentation. In particular, the figure documents that about half of all clearable transactions are cleared. Analysis of trade activity from January 2011 to December 2015 indicates that, out of $3,460 billion of notional amount traded in North American corporate single-name CDS products that are accepted for clearing during the 60 months ending December 2015, approximately 70%, or $2,422 billion, had characteristics making them suitable for clearing by ICE Clear Credit and represented trades between two ICE Clear Credit clearing members. Approximately 80% of this notional value, or $1,938 billion, was cleared through ICE Clear Credit, or 56% of the total volume of new trade activity. As of the end of 2015, ICE Clear Europe
The rules and amendments adopted herein address how transactions conducted on platforms (
The market for clearing services in the security-based swap market is currently concentrated among a handful of firms. Table 1 lists the firms that currently clear index and single-name CDS and identifies the segments of the market each firm serves. While there may be several choices available to participants interested in cleared index CDS
The rules adopted today will, among other things, assign regulatory reporting duties for clearing transactions (
The
There are currently no SDRs registered with the Commission.
It is reasonable to estimate that a similar number of persons provisionally registered with the CFTC to service the equity and credit swap markets might seek to register with the Commission as SDRs, and that other persons could seek to register with both the CFTC and the Commission as swap data repositories and SDRs, respectively. There are economic incentives for the dual registration attributed to the fact that many of the market participants in the security-based swap market also participate in the swap market. Moreover, once a swap data repository is registered with the CFTC and the required infrastructure for regulatory reporting and public dissemination is in place, the marginal costs for a swap data repository to also register with the Commission as an SDR, adding products and databases and implementing modifications to account for differences between Commission and CFTC rules, will likely be lower than the initial cost of registration with the CFTC.
The Commission has already observed vertical integration of swap market infrastructure: Clearing agencies have entered the market for record keeping services for swaps by provisionally registering themselves, or their affiliates, as swap data repositories with the CFTC. Under the CFTC swap reporting regime, two provisionally registered swap data repositories are, or are affiliated with, clearing agencies that clear swaps. These clearing agencies have adopted rules providing that they will satisfy their CFTC swap reporting obligations by reporting to their own, or their affiliated, swap data repository.
Financial groups engaged in security-based swap dealing activity operate in multiple market centers and carry out such activity with counterparties
Consistent with these operational concerns and the global nature of the security-based swap market, the available data appear to confirm that participants in this market are in fact active in market centers around the globe. Although, as noted above, the available data do not permit the Commission to identify the location of personnel in a transaction, TIW transaction records indicate that firms that are likely to be security-based swap dealers operate out of branch locations in key market centers around the world, including New York, London, Tokyo, Hong Kong, Chicago, Sydney, Toronto, Frankfurt, Singapore and the Cayman Islands.
Given these market characteristics and practices, participants in the security-based swap market may bear the financial risk of a security-based swap transaction in a location different from the location where the transaction is arranged, negotiated, or executed, or where economic decisions are made by managers on behalf of beneficial owners. And market activity may occur in a jurisdiction other than where the market participant or its counterparty books the transaction. Similarly, a participant in the security-based swap market may be exposed to counterparty risk from a counterparty located in a jurisdiction that is different from the market center or centers in which it participates.
A financial group that engages in a global security-based swap dealing business in multiple market centers may choose to structure its dealing business in a number of different ways. This structure, including where it books the transactions that constitute that business and how it carries out market-facing activities that generate those transactions, reflects a range of business and regulatory considerations, which each financial group may weigh differently.
A financial group may choose to book all of its security-based swap transactions, regardless of where the transaction originated, in a single, central booking entity. That entity generally retains the risk associated with that transaction, but it also may lay off that risk to another affiliate via a back-to-back transaction or an assignment of the security-based swap.
Regardless of where a financial group determines to book its security-based swaps arising out of its dealing activity, it is likely to operate offices that perform sales or trading functions in one or more market centers in other jurisdictions. Maintaining sales and trading desks in global market centers permits the financial group to deal with counterparties in that jurisdiction or in a specific geographic region, or to ensure that it is able to provide liquidity to counterparties in other jurisdictions, for example, when a counterparty's home financial markets are closed.
The financial group affiliate that books these transactions may carry out related market-facing activities, whether in its home jurisdiction or in a foreign jurisdiction, using either its own personnel or the personnel of an affiliated or unaffiliated agent. For example, the financial group may determine that another affiliate in the financial group employs personnel who possess expertise in relevant products or who have established sales relationships with key counterparties in a foreign jurisdiction, making it more efficient to use the personnel of the affiliate to engage in security-based swap dealing activity on its behalf in that jurisdiction.
Alternatively, the financial group affiliate that books these transactions may in some circumstances determine to engage the services of an unaffiliated agent through which it can engage in dealing activity. For example, a financial group may determine that using an interdealer broker may provide an efficient means of participating in the interdealer market in its own, or in another, jurisdiction, particularly if it is seeking to do so anonymously or to take a position in products that trade relatively infrequently.
The Commission understands that financial group affiliates (whether affiliated with U.S.-based financial groups or not) that are established in foreign jurisdictions may use any of these structures to engage in dealing activity in the United States, and that they may seek to engage in dealing activity in the United States to transact with both U.S.-person and non-U.S.-person counterparties. In transactions with non-U.S.-person counterparties, these foreign affiliates may affirmatively seek to engage in dealing activity in the United States because the sales personnel of the non-U.S.-person dealer (or of its agent) in the United States have existing relationships with counterparties in other locations (such as Canada or Latin America) or because the trading personnel of the non-U.S. person dealer (or of its agent) in the United States have the expertise to manage the trading books for security-based swaps on U.S. reference securities or entities. The Commission understands that some of these foreign affiliates engage in dealing activity in the United States through their personnel (or personnel of their affiliates) in part to ensure that they are able to provide their own counterparties, or those of financial group affiliates in other jurisdictions, with access to liquidity (often in non-U.S. reference entities) during U.S. business hours, permitting them to meet client demand even when the home markets are closed. In some cases, such as when seeking to transact with other dealers through an interdealer broker, these foreign affiliates may act, in a dealing capacity, in the United States through an unaffiliated, third-party agent.
Security-based swap activity is concentrated in a relatively small number of dealers, which already represent a small percentage of all market participants active in the security-based swap market.
Many of these dealers are already subject to other regulatory frameworks under U.S. law based on their role as intermediaries or on the volume of their positions in other products, such as swaps. Available data support the Commission's prior estimates, based on the Commission's experience and understanding of the swap and security-based swap market, that, of the 55 firms that might register as security-based swap dealers or major security-based swap participants, approximately 35 would also be registered with the CFTC as swap dealers or major swap participants.
Finally, the Commission also notes that it has adopted rules for the registration of security-based swap dealers and major security-based swap participants, although market participants are not yet required to comply with those rules.
Under rules recently adopted by the Commission as part of the U.S. Activity Adopting Release, non-U.S. persons will be required to apply transactions with other non-U.S. persons in connection with their dealing activity towards their
To estimate the number of unregistered foreign entities that arrange, negotiate, or execute security-based swap transactions using U.S. personnel in connection with their dealing activity for the purpose of this rulemaking, Commission staff used 2015 TIW single-name CDS transaction data to identify foreign entities that have three or more counterparties that are not recognized as dealers by ISDA and that traded less than $3 billion in notional volume and identified four entities that
These smaller foreign dealing entities were counterparties to a very small number of security-based swaps involving foreign dealing entities engaging in U.S. activity. Using 2015 TIW data, the Commission estimates that foreign dealing entities that likely would register with Commission as security-based swap dealers based on their transaction activity in 2015, were counterparties to nearly all security-based swaps involving foreign dealing entities engaging in U.S. activity.
As already noted, firms that act as dealers play a central role in the security-based swap market. Based on an analysis of 2015 single-name CDS data in TIW, accounts of those firms that are likely to exceed the security-based swap dealer
These dealers transact with hundreds or thousands of counterparties. Approximately 24% of accounts of firms expected to register as security-based dealers and observable in TIW have entered into security-based swaps with over 1,000 unique counterparty accounts as of year-end 2015.
Figure 2 below describes the percentage of global, notional transaction volume in North American corporate single-name CDS reported to TIW between January 2008 and December 2015, separated by whether transactions are between two ISDA-recognized dealers (interdealer transactions) or whether a transaction has at least one non-dealer counterparty.
Figure 2 also shows that the portion of the notional volume of North American corporate single-name CDS represented by interdealer transactions has remained fairly constant and that interdealer transactions continue to represent a significant majority of trading activity, even as notional volume has declined over the past seven years,
The high level of interdealer trading activity reflects the central position of a small number of dealers, each of which intermediates trades with many hundreds of counterparties. While the Commission is unable to quantify the current level of trading costs for single-name CDS, those dealers appear to enjoy market power as a result of their small number and the large proportion of order flow that they privately observe.
Against this backdrop of declining North American corporate single-name CDS activity, about half of the trading activity in North American corporate single-name CDS reflected in the set of data that the Commission analyzed was between counterparties domiciled in the United States and counterparties domiciled abroad, as shown in Figure 3 below. Using the self-reported registered office location of the TIW accounts as a proxy for domicile, the Commission estimates that only 12% of the global transaction volume by notional volume between 2008 and 2015 was between two U.S.-domiciled counterparties, compared to 48% entered into between one U.S.-domiciled counterparty and a foreign-domiciled counterparty and 40% entered into between two foreign-domiciled counterparties.
If the Commission considers the number of cross-border transactions instead from the perspective of the domicile of the corporate group (
Financial groups based in the United States are also involved in a majority of interdealer transactions in North American corporate single-name CDS. Of transactions on North American corporate single-name CDS between two ISDA-recognized dealers and their branches or affiliates, 93% of transaction notional volume involved at least one account of an entity with a U.S. parent.
The Commission notes, in addition, that a significant majority of North American corporate single-name CDS transactions occur in the interdealer market or between dealers and foreign non-dealers, with the remaining (and much smaller) portion of the market consisting of transactions between dealers and U.S.-person non-dealers. Specifically, 74% of North American corporate single-name CDS transactions involved either two ISDA-recognized dealers or an ISDA-recognized dealer
In 2009, the G20 Leaders—whose membership includes the United States, 18 other countries, and the European Union—addressed global improvements in the OTC derivatives markets. They expressed their view on a variety of issues relating to OTC derivatives contracts. In subsequent summits, the G20 Leaders have returned to OTC derivatives regulatory reform and encouraged international consultation in developing standards for these markets.
Foreign legislative and regulatory efforts have focused on five general areas: moving OTC derivatives onto organized trading platforms, requiring central clearing of OTC derivatives, requiring post-trade reporting of transaction data for regulatory purposes and public dissemination of anonymized versions of such data, establishing or enhancing capital requirements for non-centrally cleared OTC derivatives transactions, and establishing or enhancing margin and other risk mitigation requirements for non-centrally cleared OTC derivatives transactions. The rules being adopted in this release will affect a person's obligations with respect to post-trade reporting of transaction data for public dissemination and regulatory purposes under Regulation SBSR.
Foreign jurisdictions have been actively implementing regulations of the OTC derivatives markets. Regulatory transaction reporting requirements are in force in a number of jurisdictions, including the European Union, Hong Kong SAR, Japan, Australia, Brazil, Canada, China, India, Indonesia, South Korea, Mexico, Russia, Saudi Arabia, and Singapore; other jurisdictions are in the process of proposing legislation and rules to implement these requirements.
In the Regulation SBSR Adopting Release, the Commission highlighted certain overarching effects on the security-based swap market that it believes will result from the adoption of Regulation SBSR. These benefits could include, generally, improved market quality, improved risk management, greater efficiency, and improved oversight by the Commission and other relevant authorities.
The amendments to Regulation SBSR being adopted today will, among other things, impose certain requirements on the platforms,
In addition, the Commission is adopting regulatory reporting and public dissemination requirements under Regulation SBSR for certain types of cross-border security-based swaps not currently addressed in Regulation SBSR. Subjecting additional types of security-based swaps to regulatory reporting and public dissemination will affect the overall costs and benefits associated with Regulation SBSR and have implications for transparency, competition, and liquidity provision in the security-based swap market.
Title VII requires the Commission to create a new regulatory regime for the security-based swap market that, among other things, includes trade execution, central clearing, and reporting requirements aimed at increasing transparency and customer protection as well as mitigating the risk of financial contagion.
As a general matter, rules that require regulated parties to obtain services can have a material impact on the prices of those services in the absence of a competitive market for those services. In particular, if service providers are monopolists or otherwise have market power, requiring market participants to obtain their services can potentially allow the service providers to increase the profits that they earn from providing the required services.
As discussed in Section XIII,
As noted above, the Commission recognizes how regulatory requirements may affect the demand for services provided by platforms, registered clearing agencies, and SDRs, and, in turn, the ability of these entities to exercise their market power. The Commission's economic analysis of the amendments adopted today considers how the competitive landscape for platforms, registered clearing agencies, and registered SDRs might affect the market power of these entities and hence the level and allocation of costs related to regulatory requirements. Some of the factors that may influence this competitive landscape have to do with the nature of trade reporting and are unrelated to regulation, while others
As a general matter, trade execution, clearing, and reporting services are likely to be concentrated among a small number of providers. For example, SDRs and clearing agencies must make significant infrastructure and human capital investments to enter their respective markets, but once these start-up costs are incurred, the addition of data management by SDRs or transaction clearing services by clearing agencies is likely to occur at low marginal costs. As a result, the per-transaction cost to provide infrastructure services quickly falls for SDRs and clearing agencies as their customer base grows, because they are able to amortize the fixed costs associated with serving counterparties over a larger number of transactions. These economies of scale would be expected to favor incumbent service providers who can leverage their market position to discourage entry by potential new competitors that face significant fixed costs to enter the market. As a result, the markets for clearing services and SDR services are likely to be dominated by a small number of firms that each have large market share, which is borne out in the current security-based swap market.
Competition among registered clearing agencies and registered SDRs could also be influenced by the fact that security-based swap market participants incur up-front costs for each connection that they establish with an SDR or clearing agency. If these costs are sufficiently high, an SDR or clearing agency could establish itself as an industry leader by “locking-in” customers who are unwilling or unable to make a similar investment for establishing a connection with a competitor.
The rules adopted today might also influence the competitive landscape for firms that provide security-based swap market infrastructure. Fundamentally, requiring the reporting of security-based swap transactions to SDRs creates an inelastic demand for reporting services that would not be present if not for regulation. This necessarily reduces a counterparty's ability to bargain with infrastructure service providers over price or service because the option of not reporting is unavailable. Moreover, infrastructure requirements imposed by Title VII regulation will increase the fixed costs of an SDR operating in the security-based swap market and increase the barriers to entry into the market, potentially discouraging firms from entering the market for SDR services. For example, under Rule 907, as adopted, registered SDRs are required to establish and maintain certain written policies and procedures. The Commission estimated that this requirement will impose initial costs on each registered SDR of approximately $12,250,000.
The rules adopted today might also affect the competitive landscape by increasing the incentives for security-based swap infrastructure service providers to integrate horizontally or vertically. As a general matter, firms engage in horizontal integration when they expand their product offerings to include similar goods and services or to acquire competitors. For example, swap data repositories that presently serve the swap market might horizontally integrate by offering similar services in the security-based swap market. Firms vertically integrate by entering into businesses that supply the market that they occupy (“backward vertical integration”) or by entering into businesses that they supply (“forward vertical integration”).
As discussed in more detail in Section XIII(A),
Entry into the SDR market by registered clearing agencies could potentially lower the cost of SDR services if clearing agencies are able to transmit data to an affiliated SDR at a lower cost relative to transmitting the same data to an independent SDR. The Commission believes that this is likely to be true for clearing transactions, given that the clearing agency and the affiliated SDR would have greater control over the reporting process relative to sending clearing transaction data to an independent SDR. Even if registered clearing agencies did not enter the market for SDR services, their ability to pursue a vertical integration strategy could motivate incumbent SDRs to offer competitive service models.
However, the Commission recognizes that the entry of clearing-agency-affiliated SDRs might not necessarily result in increased competition among SDRs or result in lower costs for SDR services. In an environment where registered clearing agencies with affiliated SDRs have discretion to send their clearing transaction data to their
Several broad economic considerations have informed the Commission's approach to identifying transactions between two non-U.S. persons that should be subject to certain Title VII requirements. The Commission has taken into account the potential impact that rules already adopted as part of the Regulation SBSR Adopting Release might have on competition between U.S. persons and non-U.S. persons when they engage in security-based swap transactions with non-U.S. persons, along with the implications of these competitive frictions for the ability of market participants to obtain liquidity in a market that is predominantly over-the-counter. In particular, competitive disparities could arise between U.S. dealing entities and foreign dealing entities
Competitive disparities could also arise between U.S. persons and non-U.S. persons that trade with foreign dealing entities that use U.S. personnel to arrange, negotiate, or execute security-based swap transactions.
The Commission acknowledges, however, that applying Title VII rules based on the location of personnel who engage in relevant conduct could provide incentives for these foreign dealing entities to restructure their operations to avoid triggering requirements under Regulation SBSR. For example, a foreign dealing entity could restrict its U.S. personnel from intermediating transactions with non-U.S. persons or use agents who are located outside the United States when engaging in security-based swap transactions with non-U.S. persons.
In addition, disparate treatment of transactions depending on whether they are arranged, negotiated, or executed by personnel located in a U.S. branch or office could create fragmentation among agents that may seek to provide services to foreign dealing entities. To the extent that using agents with personnel located in a U.S. branch or office might result in regulatory costs being imposed on foreign dealing entities, such entities might prefer and primarily use agents located outside the United States, while U.S. dealers might continue to use agents located in the United States.
Section 13(m)(1)(F) of the Exchange Act
As discussed in the Regulation SBSR Adopting Release and the Regulation SBSR Proposed Amendments Release, two models of clearing—an agency model and a principal model—are currently used in the swap markets.
In the Regulation SBSR Proposed Amendments Release, the Commission proposed a new paragraph (a)(2)(i) of existing
The Commission also proposed certain rules that would specify the reporting requirements for life cycle events attendant to the clearing process. The determination by a registered clearing agency of whether or not to accept an alpha for clearing is a life cycle event of the alpha.
If the registered clearing agency does not know the identity of the alpha SDR, the registered clearing agency would be unable to report to the alpha SDR whether or not it accepted the alpha transaction for clearing, as required by proposed Rule 901(e)(1)(ii). Therefore, the Commission proposed a new paragraph (3) of Rule 901(a), which would require the platform or reporting side for a security-based swap that has been submitted to clearing to promptly provide the relevant registered clearing agency with the identity of the alpha SDR and the transaction ID of the alpha transaction that will be or has been submitted to clearing.
The Commission requested and received comment on a wide range of issues related to these proposed amendments. Four commenters generally supported the Commission's proposal to require the registered clearing agency to report clearing transactions and to allow it to select the SDR to which it reports.
However, one commenter opposed assigning the reporting duty to the registered clearing agency, arguing instead that the reporting side for the alpha transaction should be the reporting side for any subsequent clearing transactions.
After careful consideration of the comments, the Commission is adopting paragraph (2)(i) of Rule 901(a) as proposed. As a result, a registered clearing agency is the reporting side for all clearing transactions to which it is a counterparty.
The Commission believes that, because a registered clearing agency creates the clearing transactions to which it is a counterparty, the registered clearing agency is in the best position to provide complete and accurate information to a registered SDR about the clearing transactions resulting from the security-based swaps that it clears. Two commenters noted that swap clearing agencies currently report clearing transactions to CFTC-registered swap data repositories, thus evidencing their ability to report clearing transactions.
In the Regulation SBSR Proposed Amendments Release, the Commission considered three alternatives to requiring the clearing agency to report clearing transactions: (1) Utilize the reporting hierarchy in existing Rule 901(a)(2)(ii); (2) modify that reporting hierarchy to place registered clearing agencies above other non-registered persons, but below registered security-based swap dealers and major security-based swap participants; and (3) require the reporting side of the alpha to report both the beta and the gamma.
One commenter urged the Commission to adopt Alternative 3—
Finally, the commenter suggested a fourth alternative to address the concern of an alpha counterparty having to report a clearing transaction to which it is not a counterparty. The commenter suggested that “the platform would remain the reporting side for all platform-executed trades while for bilateral or off platform cleared transactions, the reporting side would be the clearing agency. However, the clearing agency would be required to submit beta and gamma trade records to the alpha SDR (which would be determined by the alpha trade reporting side and not the clearing agency).”
The Commission believes that assigning reporting duties for clearing transactions to registered clearing agencies will be more efficient and reliable than any of the alternatives discussed in the Regulation SBSR Proposed Amendments Release or
• Alternative 1 would be to utilize the existing reporting hierarchy in Regulation SBSR. Since a registered clearing agency is not a registered security-based swap dealer or registered major security-based swap participant, it would occupy the lowest rung in the hierarchy. Therefore, in any clearing transaction between a registered clearing agency and a registered security-based swap dealer or registered major security-based swap participant, the registered security-based swap dealer or registered major security-based swap participant would incur the reporting duty. However, the registered security-based swap dealer or registered major security-based swap participant would be dependent on the registered clearing agency to supply the information that must be reported.
• Alternative 2 is similar to Alternative 1 in that the registered security-based swap dealer or registered major security-based swap participant with the reporting duty would be dependent on the registered clearing agency to supply the information that would be reported.
• Alternative 3 would designate the reporting side for the alpha as the reporting side for the beta and gamma. Under this alternative, the alpha reporting side would need to obtain information from the clearing agency to report its own clearing transaction. The alpha reporting side also would need to obtain, either from the non-reporting side or from the registered clearing agency, information about the clearing transaction of the alpha's non-reporting side. The Commission believes that Alternative 3 would be difficult to implement operationally and could create confidentiality concerns, because it does not offer a mechanism for reporting of subsequent clearing positions created by the registered clearing agency in the account of the non-reporting side of the alpha.
• Under the fourth alternative,
In general, the Commission believes that Regulation SBSR should not assign reporting obligations to persons who lack direct access to the information necessary to make the report. With respect to clearing transactions, a person who lacked direct access to the necessary information would be obligated to obtain the information from the clearing agency or another party who has access to that information to discharge its reporting duties. Placing the reporting duty on the non-clearing-agency side would create additional reporting steps and each extra reporting step could introduce some possibility for discrepancy, error, or delay. The Commission believes that discrepancies, errors, and delays are less likely to occur if the duty to report clearing transactions is assigned to registered clearing agencies directly, because there would be no intermediate steps where data would have to be transferred between parties before it is sent to a registered SDR. Therefore, the Commission is adopting Rule 901(a)(2)(i) as proposed. A registered clearing agency has complete information about all clearing transactions to which it is a counterparty. This includes not only betas and gammas that arise from clearing alphas, but also security-based swaps that result from the clearing agency netting together betas and gammas of the same person in the same product to create new open positions in successive netting cycles. Under the alternatives discussed above, a person other than the registered clearing agency would have to obtain information from the clearing agency to report the clearing transactions—not just once, to report the initial beta and gamma, but potentially with every netting cycle of the registered clearing agency. This further increases the risks that there could be discrepancies, errors, or delays in reporting new clearing transactions as they are created.
The commenter who endorsed Alternative 3 also argued that “[t]he Proposal's failure to acknowledge the efficiency benefits and reduced costs that result from the presence of middleware reporting agents is a serious defect.”
In the Regulation SBSR Proposed Amendments Release, the Commission considered whether, if a registered clearing agency is assigned the duty to report clearing transactions, the clearing agency should be permitted to choose the registered SDR to which it reports or whether it should be required to report them to the alpha SDR.
Some commenters supported the Commission's proposal to allow the registered clearing agency to select the registered SDR to which it reports.
One commenter endorsed the view that clearing should be considered a life cycle event of the alpha transaction, and that the clearing agency should be required to report the termination of the alpha, as well as the beta and gamma, to the alpha SDR.
Another commenter noted that, in its experience with CFTC swap data reporting rules, clearing agencies “generally send beta and gamma records to an affiliated SDR” even though other market participants generally prefer using an SDR not affiliated with the clearing agency.
Regulation SBSR generally allows the person with a duty to report to choose the registered SDR to which it reports.
One commenter expressed the view that requiring the beta and gamma to be reported to the alpha SDR would help to ensure that regulators are able to efficiently access and analyze all reports related to a security-based swap.
The Commission has considered the commenter's arguments but continues to believe that it is appropriate to allow a registered clearing agency to choose the registered SDR to which it reports. Although the commenter is correct that Regulation SBSR will require a
The Commission shares the commenter's concern about ensuring that a termination reported by a registered clearing agency to an alpha SDR includes a valid transaction ID of an alpha held by that SDR and acknowledges the commenter's observation that this might not always occur in the CFTC's swap reporting regime. Because Rule 901(g) requires a registered SDR to assign a transaction ID to each security-based swap (or establish or endorse a methodology for transaction IDs to be assigned by third parties), the registered SDR should know the transaction ID of every security-based swap reported to it on a mandatory basis. If a registered clearing agency submits a termination report with a transaction ID that the registered SDR cannot match to an alpha transaction report, the registered SDR's policies and procedures must specify how this situation will be addressed.
The Commission also believes that the adopted approach of allowing a registered clearing agency to choose the registered SDR to which it reports clearing transactions is, unlike any alternatives considered,
• On Day 1, Party A executes three alpha transactions (T1, T2, and T3) in Product XYZ.
• T1 is reported to SDR1. T2 is reported to SDR2. T3 is reported to SDR3.
• All three alpha transactions are submitted to Clearing Agency K and accepted for clearing.
• Clearing Agency K creates Beta1 and Gamma1 after terminating T1, Beta2 and Gamma2 after terminating T2, and Beta3 and Gamma3 after terminating T3.
• Assume that Party A is the direct counterparty to Beta1, Beta2, and Beta3.
If, as suggested by some commenters, the Commission required Beta1 and Gamma1 to be reported to SDR1, Beta2 and Gamma2 to be reported to SDR2, and Beta3 and Gamma3 to be reported to SDR3, operational difficulties would result when Clearing Agency K nets Beta1, Beta2, and Beta3 as part of its settlement cycle because each of the Betas has been reported to a different SDR.
• At the end of Day 1, Clearing Agency K nets Beta1, Beta2, and Beta3 together to create a net open position (NOP) of Party A in Product XYZ.
• As part of the netting process, Clearing Agency K terminates Beta1, Beta2, and Beta 3. Under new Rule 901(e)(1)(ii), Clearing Agency K would have to report the termination of Beta1 to SDR1, the termination of Beta2 to SDR2, and the termination of Beta3 to SDR3.
• NOP is a new security-based swap and must be reported to a registered SDR.
Under the commenters' alternate approach, it is not apparent which registered SDR should receive the report of NOP, because NOP incorporates transactions that were originally reported to three different registered SDRs. Reporting NOP to each of SDR1, SDR2, and SDR3 serves no purpose because the same position would be reflected in three separate SDRs and could lead to confusion about the true size of the security-based swap market.
The Commission also disagrees with the commenter's view that the Commission's ability to understand or analyze reported data would be impaired by permitting registered clearing agencies to select the registered SDR for reporting clearing transactions.
The Commission acknowledges that permitting a registered clearing agency to report clearing transactions to a registered SDR other than the alpha SDR also could increase complexity for market participants who would prefer to have reports of all of their security-based swaps in a single SDR.
The Commission does not agree with the assertion made by one commenter that permitting a registered clearing agency to report clearing transactions to a registered SDR of its choice necessarily results in the tying of clearing services to SDR services.
Because Regulation SBSR does not require an alpha counterparty to have ongoing obligations to report subsequent information about the clearing transaction, such as life cycle events or daily marks, to the registered SDR that is selected by the clearing agency, alpha counterparties will not be required to establish connections to multiple SDRs and to incur fees for reporting information to those SDRs.
Proposed Rule 901(a)(2)(ii) would assign clearing agencies a duty to report under Regulation SBSR based on their registration status, not on their principal place of business. Thus, a foreign clearing agency, like a U.S. clearing agency, would be required to report all security-based swaps of which it is a counterparty if it is registered with the Commission. Commenters had differing recommendations with respect to the scope of clearing agencies that should be covered by proposed Rule 901(a)(2)(ii). Two commenters expressed the view that the rule should apply to all registered clearing agencies, regardless of their principal place of business.
Final Rule 901(a)(2)(i) assigns the reporting obligation for a clearing transaction to a
A fourth commenter requested the Commission to clarify whether clearing agencies that are “deemed registered” under the Exchange Act are “registered clearing agencies” for purposes of Regulation SBSR, which would trigger the duty to report clearing transactions even before they complete a full registration process with the Commission.
Two commenters acknowledged that the agency model of clearing predominates in the United States but requested that the Commission clarify the application of Rule 901(a)(2)(ii) to security-based swaps cleared under the principal model of clearing.
The Commission concurs with the latter commenter: Regulation SBSR requires reporting of clearing transactions in accordance with the actual clearing model. Under the rules adopted today, any security-based swap that is a clearing transaction—
Rules 901(c) and 901(d), respectively, require the person with the duty to report to report all of the primary trade information and secondary trade information for each security-based swap to which it is a counterparty. Noting that existing Rule 901(d)(2) requires the reporting side to report, as applicable, the branch ID, broker ID, execution agent ID, trader ID, and trading desk ID of the direct counterparty on the reporting side, the Commission in the Regulation SBSR Proposed Amendments Release asked whether these types of unique identification codes (“UICs”)
The Commission agrees. In its capacity as a central counterparty for security-based swaps, a registered clearing agency does not engage in market-facing activity and thus would not utilize a branch, broker, execution agent, trader, or trading desk to effect security-based swap transactions. Therefore, these UICs are not applicable to clearing transactions, and a registered clearing agency need not report any UICs pursuant to Rule 901(d)(2).
Existing Rule 901(e)(1)(i) addresses the reporting requirements for most life cycle events and assigns the reporting duty for reporting those life cycle events to the reporting side of the original transaction. However, Rule 901(e)(1)(i) specifically provides that “the reporting side shall not report whether or not a security-based swap has been accepted for clearing.” In the Regulation SBSR Proposed Amendments Release, the Commission proposed a new paragraph (ii) to Rule 901(e)(1) that would require a registered clearing agency that receives an alpha to report to the alpha SDR whether or not it has accepted the alpha for clearing.
Two commenters expressed support for proposed Rule 901(e)(1)(ii), noting that clearing agencies would be well-positioned to issue a termination report for the alpha and subsequently to report the beta and gamma to a registered SDR.
After carefully considering the comments received, the Commission is adopting paragraph (ii) of Rule 901(e)(1) as proposed. Final Rule 901(e)(1)(ii) is consistent with the Commission's general approach of assigning the reporting obligation for a security-based swap transaction to the person with the most complete and efficient access to the required information at the point of creation. Because a registered clearing agency determines whether to accept an alpha for clearing and controls the precise moment when the transaction is cleared, the Commission believes that the clearing agency is best placed to report the result of its decision.
One commenter argued that requiring a registered clearing agency to report to an SDR not of its choosing whether it accepts an alpha for clearing “is in contradiction with the Commission's reasons for permitting a registered clearing agency to decide which registered SDR to use for reporting of beta and gamma trades.”
The Commission considered, but determined not to adopt, the alternative recommended by certain commenters of assigning to the person who has the duty to report the initial alpha (and thus can choose the alpha SDR) the duty of also reporting to the alpha SDR whether or not the registered clearing agency has accepted the alpha for clearing. The Commission acknowledges, as one commenter pointed out, that counterparties to security-based swaps that are submitted to clearing would in the normal course learn from the clearing agency whether or not a security-based swap has been accepted for clearing. The Commission believes, however, that requiring a registered clearing agency to report the termination of the alpha will increase the likelihood that the alpha termination will be reported accurately and without delay, thereby helping to minimize the problem of orphan alphas and helping to promote the integrity of reported security-based swap information. The adopted approach centralizes the function of reporting alpha dispositions in self-regulatory organizations that operate under rules approved by the Commission. Centralizing this reporting function into registered clearing agencies, rather than relying on a potentially large number of platforms and reporting sides to report alpha clearing dispositions, should help minimize the potential for data discrepancies and delays.
The Commission believes that the approach suggested by commenters to require the person who had the duty to report the alpha transaction also to report whether or not a clearing agency accepts an alpha for clearing is particularly unsuitable for situations where the alpha was executed on a platform and the platform incurs the duty to report that alpha under new Rule 901(a)(1).
The Commission believes that it is more efficient to require a registered clearing agency to report all alpha dispositions, rather than having one rule for reporting the disposition of alphas that are executed on-platform and a different rule for reporting the disposition of alphas that are executed off-platform. The potential candidates for reporting the disposition of on-platform alphas include the platform, one of the sides of the alpha, and the clearing agency. As noted above, a platform is not well-positioned to perform this function. Furthermore, because neither side has the duty to report an on-platform alpha (because the platform has the duty), difficulty could arise from attempting to assign to one of the sides the duty to report the alpha disposition, particularly if the sides traded anonymously on the platform. Given the alternatives and for the reasons noted above, the Commission believes that the clearing agency is in the best position to report whether or not it has accepted a transaction for clearing, with respect to both on- and off-platform alphas. In this regard, the Commission notes that, once a clearing agency has established a mechanism for reporting to an SDR whether or not it has accepted on-platform alphas for
As noted above, one commenter questioned why the Commission's approach to the reporting of whether or not an alpha is accepted for clearing differs from its approach to the reporting of life cycle events stemming from the acceptance or rejection by a prime broker of the initial leg of a prime brokerage transaction.
Although prime brokerage and clearing arrangements are similar in some ways, there also are differences that, the Commission believes, warrant different approaches to the reporting of a termination of the first leg of the overall transaction. A prime broker, like a registered clearing agency, has the most direct access to information about whether a transaction has been accepted. However, because a prime broker might not be subject to Rule 908(b) and thus might not be eligible to incur any duties under Regulation SBSR, there could be uncertainty as to who would be required to report the disposition of the first transaction. By contrast, a clearing transaction by definition includes a registered entity: The registered clearing agency. Therefore, there is no uncertainty as to whether the registered clearing agency could have the duty to report the disposition of the alpha.
Finally, two commenters expressed concern about the costs associated with requiring registered clearing agencies to report whether or not they accept alphas for clearing.
With respect to whether a registered SDR may impose a fee on a registered clearing agency for reporting to the SDR whether or not an alpha transaction has been accepted for clearing, neither the statute nor the applicable rules prohibit such a fee. The Commission notes, however, that existing Rule 13n-4(c)(1)(i) under the Exchange Act
With respect to the wider costs associated with clearing agencies' reporting of alpha clearing dispositions to registered SDRs, the Commission notes that Rule 901(e)(1)(ii), by its terms, requires registered clearing agencies to report only a limited amount of information (
Accordingly, for similar reasons that the Commission is assigning to registered clearing agencies the duty to report all clearing transactions, the Commission also believes that it is appropriate to assign to the registered clearing agency—rather than to the person who had the initial duty to report the alpha (
Existing Rule 901(e)(2) requires the person who has the duty to report a life cycle event to include in the report of the life cycle event the transaction ID of the original transaction. Under new Rule 901(e)(1)(ii), a registered clearing agency that accepts or rejects an alpha transaction from clearing incurs this duty. The transaction ID of the alpha transaction is information that the registered clearing agency might not have, because the registered clearing agency is not involved in the execution or reporting of the alpha. Therefore, the Commission proposed a new paragraph (a)(3) of Rule 901(a), which would require the person who has the duty to report the alpha security-based swap to provide the registered clearing agency with the transaction ID of the alpha and the identity of the alpha SDR.
One commenter “acknowledged the value” of the proposed rule and noted that in other jurisdictions the data flows to clearing agencies already include identification information for alpha transactions, so these data flows should be extensible to the security-based swap market.
After carefully considering the comments received, the Commission is adopting Rule 901(a)(3) as proposed. Although Rule 901(a)(3) adds an additional step to the reporting framework, the Commission believes that this additional step is necessary to facilitate the linking of related transactions. Under new Rule 901(e)(1)(ii), a registered clearing agency must report to the entity to which the original security-based swap was reported whether or not it accepts the alpha for clearing. For the alpha SDR to link the registered clearing agency's report of acceptance or rejection to the appropriate transaction, the registered clearing agency must be able to include the transaction ID of the alpha transaction in its report to the alpha SDR. The Commission further believes that the person having the duty to report the alpha is best situated to also report the transaction ID of the alpha and the identity of the alpha SDR to the registered clearing agency. While it is true, as the commenter asserts, that the person having the duty to report the alpha might provide an inaccurate transaction ID to the registered clearing agency, the same could be said about any reporting requirement imposed by Regulation SBSR. This situation should be addressed, at least in part, by Rule 13n-5(b)(1)(i) under the Exchange Act,
Two commenters sought guidance regarding the means by which persons with the duty to report the alpha transaction could provide the transaction ID of the alpha and the identity of the alpha SDR to the registered clearing agency.
Final Rule 901(a)(3) does not prescribe a specific means by which the person with the duty to report an alpha must inform the registered clearing agency of the alpha's transaction ID and the identity of the alpha SDR. There is no prohibition on utilizing existing infrastructure. Thus, market participants may determine the most efficient way of communicating this information. The Commission notes, however, that Rule 901(a)(3) applies on a transaction-by-transaction basis. Thus, while it might be possible for a registered clearing agency to obtain and store static data regarding a reporting person's SDR preferences, Rule 901(a)(3) requires the person having the duty to report a particular alpha transaction to ensure that the registered clearing agency learns the identity of the SDR that holds the record of the
In the Regulation SBSR Adopting Release, the Commission described the interim phase for regulatory reporting and public dissemination,
To account for this possibility, the Commission proposed to amend existing Rule 901(e)(2) to require a life cycle event (which would include a notification by a registered clearing agency whether or not it has accepted an alpha for clearing) to be reported “to the entity to which the original security-based swap transaction
The Commission received two comments on this proposed amendment, discussed below.
One commenter stated that, “[i]n the situation where a termination message to an alpha swap is not found, the SDR should queue this message and attempt to reapply the termination message to newly submitted SBSs. This process should continue until the end of the current business day at which time an error message should be reported back to the clearing agency since the termination message could not be applied to a corresponding alpha.”
The second commenter argued that Regulation SBSR should “prohibit [the alpha SDR] from publicly disseminating the rejection or acceptance report from the clearing agency ahead of the point at which the SDR receives and has publicly disseminated the report for the alpha.”
Two commenters raised issues relating to the reporting of an alpha that is rejected from clearing.
In some cases, depending on the contractual arrangement between the alpha counterparties, a registered clearing agency's rejection of an alpha will result in the immediate termination of the transaction.
As noted in Section III(I),
In this limited case, the Commission believes that no transaction report should be disseminated, and it is adopting a minor revision to existing Rule 902(c) to accomplish that end. Rule 902(c) lists the types of reported information and the types of security-based swap transactions that a registered SDR shall not publicly disseminate. The Commission is adding a new paragraph (c)(8) to Rule 902(c) to prohibit a registered SDR from disseminating “[a]ny information regarding a security-based swap that has been rejected from clearing or rejected by a prime broker
New Rule 902(c)(8) applies only in cases of rejection prior to public dissemination of the original transaction report of the alpha. When the action of a registered clearing agency results in a termination of an alpha—whether because it was accepted by the clearing agency and replaced by the beta and gamma, or because it was rejected by the clearing agency—the termination of the alpha is a life cycle event of the alpha. If the registered SDR already has publicly disseminated the primary trade information of the alpha, the termination life cycle event also must be publicly disseminated. Rule 907(a)(3) requires a registered SDR to have policies and procedures for flagging the report to indicate that the report is a life cycle event to ensure that market observers can understand that the report represents a revision to a previous transaction.
Rule 907(a)(4) requires the policies and procedures of a registered SDR, in relevant part, to identify characteristics of a security-based swap that could, in the fair and reasonable estimation of the registered SDR, cause a person without knowledge of those characteristics to receive a distorted view of the market and to apply condition flags to help prevent a distorted view of the market. The Commission believes that it would be difficult to comply with Rule 907(a)(4) if the condition flags do not provide sufficient information about the specific characteristics to prevent the report from distorting observers' view of the market, including by distinguishing between a termination that results from successful clearing and a termination that results from rejection from clearing. If market observers are not given the ability to distinguish between alphas that terminate because they are successfully cleared and alphas that terminate because they are rejected from clearing, there would be no means for market observers to avoid developing a distorted view of the market.
One commenter expressed the view that the proposed rule does not address the reporting of trades that are part of a registered clearing agency's end-of-day pricing process.
One commenter requested that the Commission clarify that a registered clearing agency “is solely responsible for reporting historical SBS that are clearing transactions.”
This commenter also stated that “a clearing agency should not be expected to report the transaction ID of the alpha for an historical clearing transaction since such value may not be readily available.”
In the Regulation SBSR Proposed Amendments Release, the Commission proposed a new paragraph (1) of Rule 901(a) providing that, if a security-based swap is executed on a platform and will be submitted to clearing (a “platform-executed alpha”), the platform would incur the duty to report. In proposing Rule 901(a)(1), the Commission carefully assessed the transaction information that the platform might not have or might not be able to obtain easily, and proposed to require the platform to report only the information set forth in Rules 901(c) (the primary trade information), 901(d)(1) (the participant ID or execution agent ID for each counterparty, as applicable), 901(d)(9) (the platform ID), and 901(d)(10) (the transaction ID of any related transaction).
Five commenters generally supported proposed Rule 901(a)(1).
After carefully considering all the comments, the Commission has determined to adopt Rule 901(a)(1) largely as proposed, but with minor revisions. The revisions, discussed further below, reduce the scope of information that platforms are required to report by eliminating the need for platforms to identify the participation of indirect counterparties. New Rule 901(a)(1) is intended to promote the accuracy and completeness of security-based swap transaction data, while aligning the reporting duty with persons that are best able to carry it out. As the person with the duty to report the transaction, the platform would be able to select the registered SDR to which it reports.
If a platform-executed security-based swap will not be submitted to clearing, the platform would have no reporting duty under Regulation SBSR, and the reporting hierarchy in existing Rule 901(a)(2)(ii) would determine which side is the reporting side for the transaction.
One commenter argued that “a platform should report all trades executed on a SB SEF regardless of whether an SB swap will be submitted to clearing.”
The commenter expressed concern that this approach could lead to confusion over reporting obligations when “it is uncertain whether the transaction will be cleared upon execution.”
Furthermore, the Commission believes that another alternate approach—of requiring all platform-executed transactions, even those that will be submitted to clearing, to be reported by one of the sides and not imposing any reporting duties on platforms—is impractical. As the Commission has noted, platform-executed alphas can be executed anonymously.
The Commission continues to believe that platforms should not be required to report information that they do not have or that it would be impractical for them to obtain. In the Regulation SBSR Proposed Amendments Release, the Commission carefully reviewed each data element contemplated by Rules 901(c) and 901(d) and proposed to require platforms to report only those data elements that it believed that would be readily obtainable and germane to the transaction.
The Commission continues to believe that platforms will have or can readily obtain the primary trade information contemplated by Rules 901(c)(1)-(4). For example, the platform will have information that identifies the products that it offers for trading.
The platform will know the direct counterparty on each side of the transaction—or if one side will be allocated among a group of funds or accounts, the execution agent of that side. Therefore, final Rule 901(a)(1) requires the platform to report the counterparty ID or the execution agent ID, as applicable, of each direct counterparty.
The platform also can readily provide its own platform ID, as required by Rule 901(d)(9).
Rule 901(d)(10) applies only if the security-based swap being reported arises from the allocation, termination, novation, or assignment of one or more existing security-based swaps. To the extent that a platform facilitates allocations, terminations, novations, or assignments of existing security-based swaps, the platform would be in a position to require its participants that engage in such exercises to provide the platform with the transaction IDs of the relevant existing security-based swaps, which the platform would report—along with the transaction information about any newly created transaction(s)—pursuant to Rule 901(d)(10).
As noted above, two commenters noted that it would be impractical for platforms to learn the identity of indirect counterparties to transactions effected on their facilities.
Existing Rule 901(c)(5) requires reporting of whether both sides of a security-based swap include a registered security-based swap dealer. One of the commenters who argued for the removal of the requirement for platforms to report indirect counterparties also noted that it would be difficult for platforms to comply with Rule 901(c)(5) if a registered security-based swap dealer was an indirect counterparty.
Final Rule 901(a)(1) makes clear that the only secondary trade information that a platform must report is the counterparty ID of each direct counterparty (or execution agent, if applicable);
One commenter expressed concern about a platform having to report other secondary trade information, such as the title and date of any agreements incorporated by reference into the security-based swap contract.
One commenter argued that platforms should have no duty to report life cycle event information because platforms have no involvement in a security-based swap after execution and would not have access to such information.
Existing Rule 901(e)(1)(i) provides that most life cycle events (and
One commenter encouraged the Commission “to allow the use of existing reporting technology and reporting architecture to reduce the amount of additional technology investment required to comply” with any reporting obligations.
The Commission acknowledges that Rule 901(a)(1) will require platforms to develop, test, implement, and maintain technology to ensure connectivity to at least one registered SDR.
Finally, this commenter also urged the Commission to “clearly outline the specific data fields, and permissible formats for reporting those data fields, required for post-trade reporting.”
New Rule 901(a)(1) imposes a reporting duty on any “platform” if a security-based swap that will be submitted to clearing is executed on the platform. One commenter requested the Commission to clarify “whether an alpha SBS entered into via an execution venue in advance of its registration or exemption as a national securities exchange or security-based swap execution facility is required to be reported to one of the sides.”
In the Regulation SBSR Adopting Release, the Commission explained that there are certain entities that currently meet the definition of “security-based swap execution facility” but that are not yet registered with the Commission and will not have a mechanism for registering as SB SEFs until the Commission adopts final rules governing the registration and core principles of SB SEFs. These entities currently operate pursuant to an exemption from certain provisions of the Exchange Act.
Existing Rule 901(h) requires “a reporting side” to electronically transmit the information required by Rule 901 in a format required by the registered SDR. In the Regulation SBSR Proposed Amendments Release, the Commission proposed to replace the term “reporting side” in Rule 901(h) with the phrase “person having a duty to report.” Under Rule 901(a), as amended by this release, a platform or registered clearing agency might incur a reporting duty even if it is not one of the sides to the transaction.
Under existing Rule 900(u), platforms and registered clearing agencies would not be participants of registered SDRs solely as a result of having a duty to report security-based swap transaction information pursuant to Rule 901(a)(1) or 901(e)(1)(ii), respectively.
One commenter expressed general support for requiring platforms and clearing agencies to become participants of the registered SDRs to which they report.
After carefully considering the comments, the Commission is adopting the amendment to Rule 900(u) as proposed. Conferring “participant” status on these additional entities subjects them to the requirement in Rule 906(c), as amended herein,
A registered clearing agency that clears security-based swaps or a platform that executes security-based swaps that will be submitted to clearing incurs reporting duties under Regulation SBSR, which requires the platform or registered clearing agency, among other things, to submit transaction information to one or more registered SDRs. As a result of the amendment to Rule 900(u) being adopted today, the platform or registered clearing agency automatically becomes a “participant”—under Regulation SBSR—of any SDR to which it submits transaction information on a mandatory basis. The Commission notes, however, that “participant” status under Rule 900(u) does not require a platform or registered clearing agency to sign a formal participant agreement with a registered SDR or to establish connectivity sufficient to report all of the primary and secondary trade information of a security-based swap.
The following examples illustrate the reporting process for alpha, beta, and gamma security-based swaps, assuming an agency model of clearing under which a counterparty to an alpha security-based swap becomes a direct counterparty to a subsequent clearing transaction:
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○ The registered security-based swap dealer is the reporting side under existing Rule 901(a)(2)(ii) and must report this alpha transaction to a registered SDR (and may choose the registered SDR).
○ New Rule 901(a)(3) requires the registered security-based swap dealer, as the reporting side of the alpha transaction, to promptly provide to the registered clearing agency the transaction ID of the alpha and the identity of the alpha SDR.
○ If the registered clearing agency accepts the alpha for clearing and terminates the alpha, two clearing transactions—a beta (between the registered security-based swap dealer and the registered clearing agency) and a gamma (between the registered clearing agency and the private fund)—take its place.
○ New Rule 901(e)(1)(ii) requires the registered clearing agency to report to the alpha SDR that it accepted the transaction for clearing.
○ Under new Rule 901(a)(2)(i), the registered clearing agency is the reporting side for each of the beta and the gamma. Therefore, the registered clearing agency must report the beta and gamma to a registered SDR (and the clearing agency may select the registered SDR). The report for each of the beta and the gamma must include the transaction ID of the alpha, as required by existing Rule 901(d)(10).
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○ New Rule 901(a)(1) requires the SB SEF to report the alpha transaction (and allows the SB SEF to choose the registered SDR).
○ After the alpha has been submitted to clearing, new Rule 901(a)(3) requires the SB SEF to promptly report to the registered clearing agency the transaction ID of the alpha and the identity of the alpha SDR.
○ Once the alpha is submitted to clearing, the reporting workflows are the same as in Example 1.
Existing Rule 905(a) provides a mechanism for reporting corrections of previously submitted security-based swap transaction information.
In the Regulation SBSR Proposed Amendments Release, the Commission proposed—and today is adopting—amendments to Rule 901(a) that require platforms and registered clearing agencies to report certain transaction information. To preserve the principle in existing Rule 905(a) that the person responsible for reporting information also should have responsibilities for correcting errors, the Commission proposed to replace the term “reporting side” in existing Rules 905(a)(1) and 905(a)(2) with the phrase “person having a duty to report.” This amendment was necessitated by the fact that a platform—and a registered clearing agency, when it has the duty to report whether or not it has accepted a security-based swap for clearing—is not a side to the transaction, and thus is not covered by existing Rule 905(a).
Under the proposed amendment to Rule 905(a)(1), a person that is not the reporting side who discovers an error in a previously submitted security-based swap would be required to promptly notify “the person having the duty to report” of the error. Under the proposed amendment to Rule 905(a)(2), “the person having the duty to report” a security-based swap would be required to correct previously reported erroneous information with respect to that security-based swap if it discovers an error or if it receives notification of an error from a counterparty. Four commenters expressed general support for the proposed amendments to Rule 905(a).
After carefully considering the comments received, the Commission is adopting the amendments to Rule 905(a) as proposed. The Commission believes that, in light of the amendments to Rule 901(a) that also are being adopted today,
One commenter, discussing general difficulties in making non-reporting sides become “onboarded users” of registered SDRs, stated that only reporting sides—who presumably would be onboarded users—should be responsible for amending errors and omissions associated with previously submitted security-based swaps.
A second commenter expressed the view that “[w]hen a correction is made to a trade which has already been accepted by a registered clearing agency or prime broker, then that party must also notify the registered clearing agency or prime broker of the correction.”
As described in Section V(A),
Three commenters expressed support for the Commission's proposal to exempt platforms and registered clearing agencies from the obligations of Rule 906(b).
The Commission also proposed to make a similar amendment to existing Rule 907(a)(6), which requires a registered SDR to have policies and procedures “[f]or periodically obtaining from each participant information that identifies the participant's ultimate parent(s) and any participant(s) with which the participant is affiliated, using ultimate parent IDs and counterparty IDs.” The Commission proposed to amend Rule 907(a)(6) to require registered SDRs to have policies and procedures to obtain this information from each participant “other than a platform or a registered clearing agency.” One commenter supported the Commission's proposal.
One commenter asked the Commission to exclude from Rule 906(b) transactions that include an execution agent ID.
Rule 906(b) is designed to facilitate the Commission's ability to measure security-based swap exposure within the same ownership group. The Commission believes that requiring the funds and accounts described in the commenter's letter to report parent and
The Commission declines to grant the commenter's request to exclude accounts from Rule 906(b). Although, as the commenter indicates, the parent(s) or affiliate(s) of a separate account client may not be responsible for losses incurred in the account, the security-based swap exposure in multiple accounts of a parent would be relevant to understanding the total exposure within the same ownership group. Thus, an account's reporting of its parent and affiliate information will serve the purposes of Rule 906(b) by assisting the Commission in monitoring enterprise-wide risks related to security-based swaps.
Existing Rule 906(c) requires each participant of a registered SDR that is a registered security-based swap dealer or registered major security-based swap participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure that the participant complies with any obligations to report information to a registered SDR in a manner consistent with Regulation SBSR. Rule 906(c) also requires each registered security-based swap dealer and registered major security-based swap participant to review and update its policies and procedures at least annually.
In the Regulation SBSR Proposed Amendments Release, the Commission proposed to extend the requirements of Rule 906(c) to registered clearing agencies and platforms that are participants of a registered SDR.
In the U.S. Activity Proposal, the Commission proposed to extend the requirements of Rule 906(c) to any registered broker-dealer that incurs reporting obligations solely because it effects transactions between two unregistered non-U.S. persons that do not fall within proposed Rule 908(b)(5). The Commission received no comments regarding the proposed amendment to Rule 906(c) for registered broker-dealers. The Commission continues to believe that this amendment is appropriate and is adopting the amendment as proposed.
One commenter stated that the Commission should expand Rule 906(c) “to include all parties with reporting obligations under Regulation SBSR, including platforms and registered clearing agencies.”
The Regulation SBSR Adopting Release provides guidance for the reporting of certain security-based swaps executed by an asset manager on behalf of multiple clients—transactions involving what are sometimes referred to as “bunched orders.”
As described in the Regulation SBSR Adopting Release, to execute a bunched order, an asset manager negotiates and executes a security-based swap with a counterparty, typically a security-based swap dealer, on behalf of multiple clients. The bunched order can be executed on- or off-platform. After execution of the bunched order, the asset manager allocates a fractional amount of the aggregate notional amount of the transaction to each of several clients, thereby creating several new security-based swaps and terminating the bunched order execution.
In the Regulation SBSR Adopting Release, the Commission explained that Rule 901 requires a bunched order execution and the security-based swaps resulting from the allocation of the bunched order execution, if they are not cleared, to be reported like other security-based swaps.
In the Regulation SBSR Proposed Amendments Release, the Commission provided guidance explaining how Regulation SBSR would apply to a bunched order that is executed on a platform and will be submitted to clearing, and— if the bunched order execution is accepted for clearing—the security-based swaps that result.
Assume that an asset manager, acting on behalf of several advised accounts, executes a bunched order alpha with a registered security-based swap dealer. The execution does not occur on a platform, and there are no indirect counterparties on either side of the bunched order alpha. The transaction is submitted to a registered clearing agency.
The reporting hierarchy of existing Rule 901(a)(2)(ii) applies to the bunched order alpha because the execution does not occur on a platform and the bunched order alpha is not a clearing transaction. Under existing Rule 901(a)(2)(ii)(B), the registered security-based swap dealer is the reporting side for the bunched order alpha because its side includes the only registered security-based swap dealer. As the reporting side, the registered security-based swap dealer must report the primary and secondary trade information for the bunched order alpha to a registered SDR (the “alpha SDR”) of its choice within 24 hours after the time of execution. Rule 902(a) requires the alpha SDR to publicly disseminate a transaction report of the bunched order alpha immediately upon receiving the report from the registered security-based swap dealer.
When the registered security-based swap dealer submits the bunched order alpha to a registered clearing agency for clearing, Rule 901(a)(3), as adopted today, requires the registered security-based swap dealer promptly to provide the registered clearing agency with the transaction ID of the bunched order alpha and the identity of the alpha SDR. This requirement facilitates the registered clearing agency's ability to report whether or not it has accepted the bunched order alpha for clearing, as required by Rule 901(e)(1)(ii), which also is being adopted today.
New Rule 901(a)(2)(i) requires the registered clearing agency to report all clearing transactions that arise as a result of clearing the bunched order alpha, regardless of the workflows used to clear the bunched order alpha.
If the asset manager provides allocation instructions prior to or contemporaneous with the clearing of the bunched order alpha, clearing could result in the creation of a beta (
If the asset manager does not provide allocation instructions until after the bunched order alpha is cleared, clearing could result in the creation of a beta (
Assume the same facts as Example 1, except that the registered security-based swap dealer and asset manager execute the bunched order alpha on a SB SEF.
Because the initial transaction is executed on a platform and will be submitted to clearing, the platform would have the duty under Rule 901(a)(1), as adopted today, to report the bunched order alpha to a registered SDR. To satisfy this reporting obligation, the platform must provide the information required by Rule 901(a)(1). Even if the platform does not know and thus cannot report the counterparty IDs of each account that will receive an allocation, the platform would know the identity of the execution agent who executed the bunched order alpha on behalf of its advised accounts. The platform, therefore, would report the execution agent ID of the execution agent, even though it might not know the intended counterparties of the security-based swaps that will result from the allocation.
If the asset manager provides allocation instructions prior to or contemporaneous with the clearing of the bunched order alpha, clearing would (under the agency model of clearing) result in the creation of a beta (
If the asset manager does not provide allocation instructions until after the bunched order alpha is cleared, clearing (under the agency model) would result in the creation of a beta (between the registered clearing agency and the security-based swap dealer) and an intermediate gamma (between the registered clearing agency and the side representing the clients of the asset manager). The registered clearing agency would then be required to report the termination of the bunched order alpha and the creation of the beta and intermediate gamma, pursuant to Rules 901(e)(1)(ii) and 901(a)(2)(i), as adopted today. From this point on, the beta would be treated the same as any other clearing transaction, while the intermediate gamma would be decremented and replaced by the gamma series, as described in Example 1.
The Commission received two comments that generally supported the guidance on the proposed rules for the reporting and public dissemination of a bunched order execution that is executed on a platform and will be submitted to clearing, and the security-based swap clearing transactions that result from the allocation.
One of these commenters raised concerns, however, about the application of the guidance to cross-border situations where the identity of the asset manager's clients (
In the U.S. Activity Proposal, the Commission proposed a new paragraph (a)(1)(v) to existing Rule 908(a)(1) that would subject to regulatory reporting and public dissemination any transaction in connection with a non-U.S. person's security-based swap dealing activity that is arranged, negotiated, or executed by personnel of such non-U.S. person located in a U.S. branch or office, or by personnel of an agent of such non-U.S. person located in a U.S. branch or office (an “ANE transaction”). New Rule 908(a)(1)(v)—which is being adopted today
• If the dealing entity who executes the bunched order with the asset manager/execution agent is a U.S. person, whether registered or unregistered, the bunched order execution is subject to both regulatory reporting and public dissemination because of the U.S.-person status of the dealing entity, regardless of the U.S.-person status of the asset manager/execution agent or of the funds/accounts that later receive allocations.
• If the dealing entity who executes the bunched order with the asset manager is a non-U.S. person but the bunched order execution is an ANE transaction, the bunched order execution is again subject to both regulatory reporting and public dissemination, regardless of the U.S.-person status of the asset manager/execution agent or of the funds/accounts that later receive allocations.
• If all of the funds/accounts that could be eligible to receive allocations are U.S. persons, the bunched order execution is subject to both regulatory reporting and public dissemination because of the U.S.-person status of the funds/accounts, regardless of the U.S.-person status of the dealing entity or the location of the personnel (or agent) of the dealing entity. In other words, however the asset manager/execution agent allocates the bunched order execution in this example, there is no scenario where any part of the bunched order execution could be viewed as involving a non-U.S. person. Therefore, the initial bunched order execution involving the dealing entity on one side necessarily has a U.S. person on the other side, and the initial bunched order execution is subject to both regulatory reporting and public dissemination.
The Commission acknowledges that a more complex situation arises if the bunched order execution is between an unregistered non-U.S. person who is
Existing Rule 901(d)(4) requires the reporting side to report, as applicable, the branch ID, broker ID, execution agent ID, trader ID, and trading desk ID of the direct counterparty on the reporting side. One commenter requested that, for bunched order executions, the reporting side be
The Commission agrees and has decided to amend Rule 901(d)(4) so that it does not apply to the initial bunched order execution, and instead applies only to the security-based swaps that result from the allocation of that bunched order execution. The relevant agreements that are to be reported pursuant to Rule 901(d)(4) are between the clients of the execution agent—
In the Regulation SBSR Proposed Amendments Release, the Commission discussed how Regulation SBSR would apply to security-based swap transactions arising out of prime brokerage arrangements.
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The Commission received three comments regarding this proposed interpretation. One commenter disagreed with the Commission's view that a typical prime brokerage transaction comprises three legs, arguing that the negotiation of terms between the executing dealer and the client does not result in a transaction between the executing dealer and the client.
After considering these comments, the Commission is supplementing its views regarding the application of Regulation SBSR to prime brokerage arrangements. The Commission understands that the documentation used to structure a prime brokerage arrangement may vary. As described more fully below, the documentation may provide that the client acts as agent for the prime broker when negotiating the first leg with the executing dealer, resulting in a prime brokerage structure comprised of two legs (the prime broker/executing dealer transaction and the prime broker/client transaction). Alternatively, the documentation could provide that the negotiation between the client and the executing dealer results in a transaction between those two parties,
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In cases where the documentation provides for a three-legged structure, the Commission is making a minor modification to Rule 902(c) to account for the situation where a registered SDR receives notice that the prime broker has rejected the transaction before the SDR has received the initial transaction report.
In the Regulation SBSR Proposed Amendments Release, the Commission stated its understanding that prime brokerage arrangements involve credit intermediation offered by the prime broker, rather than a registered clearing agency; thus, prime brokerage transactions are not cleared.
In the Regulation SBSR Proposed Amendments Release, the Commission set forth its proposed interpretation of the application of Regulation SBSR to the three-legged prime brokerage structure.
Because Transaction 1 (
Transactions 2 and 3 (
The Commission is providing the following interpretation of the application of the reporting requirements of Regulation SBSR in cases where the documentation provides for a two-legged structure.
Existing Rule 901(a)(2)(ii) assigns the reporting duty for Transaction A (
If the prime broker accepts the transaction, the prime broker would initiate Transaction B between itself and the client. The reporting side for Transaction B also would be determined pursuant to Rule 901(a)(2)(ii). The reporting side would have up to 24 hours after the time of execution to report the applicable primary and secondary trade information of Transaction B.
Existing Rule 902(a) requires public dissemination of each security-based swap, unless it falls within a category enumerated in Rule 902(c). If the documentation of the prime brokerage agreement is such that there are three security-based swaps, then each of the three is subject to public dissemination; if the documentation of the prime brokerage agreement is such that there are only two security-based swaps, both are subject to public dissemination.
If a prime broker rejects either Transaction 1 or Transaction A, the registered SDR would handle dissemination of information regarding the termination of the first transaction in the same manner as an alpha that has been rejected from clearing.
One commenter reiterated an earlier request that the Commission exempt the prime broker/client leg of a prime broker transaction from public dissemination, arguing that dissemination of this transaction would provide misleading price data without providing any further transparency on costs related to prime brokerage.
In response, the commenter noted that prime brokers might not in all cases include their fees in transaction prices and stated that, if the fees charged for prime brokerage services were useful to market observers, then such information could be more “reliably and accurately
In this regard, the Commission notes that Rule 907(a)(4) requires the policies and procedures of a registered SDR, in relevant part, to identify characteristics of a security-based swap that could, in the fair and reasonable estimation of the registered SDR, cause a person without knowledge of those characteristics to receive a distorted view of the market. The Commission believes that it would be difficult to comply with that requirements of the rule if a registered SDR did not identify whether individual security-based swaps are related legs of a prime brokerage transaction. If market observers are not given the ability to identify the two or three legs of a prime brokerage transaction as related, it would be difficult for market observers to avoid developing a distorted view of the market.
One commenter acknowledged that a prime brokerage flag had “potential value” for regulatory reporting but strongly disagreed with the Commission's view that a prime brokerage flag should be publicly disseminated.
Finally, one commenter noted that a prime broker/client leg might be a bunched order execution where the allocations “are provided upfront,” and argued that the dissemination of these multiple transactions would not enhance price discovery.
Under either the two-leg or three-leg prime brokerage arrangements described above, the prime broker could reject the initial transaction negotiated between the client and the executing dealer. The Commission is providing guidance regarding how Regulation SBSR applies to this possibility.
The effect of the rejection by the prime broker would depend on what, if any, contractual agreement exists between the executing dealer and its client. In some cases, the client and the executing dealer could have a pre-existing agreement that would allow them to revise the security-based swap with new terms if the prime broker rejects a transaction that they have negotiated.
If rejection by the prime broker results in a termination, one of two things must occur next. If the registered SDR that received the report of the initial leg has already disseminated it, the SDR must then disseminate a follow-up report indicating that the initial security-based swap has been terminated.
Existing Rule 902(a) requires a registered SDR to publicly disseminate a transaction report of a security-based swap, or a life cycle event or adjustment due to a life cycle event, immediately upon receipt of information about the security-based swap, with certain exceptions noted in existing Rule 902(c). Existing Rule 900(cc) defines “publicly disseminate” to mean “to make available through the Internet or other electronic data feed that is widely accessible and in machine-readable electronic format.” In the Regulation SBSR Proposed Amendments Release, the Commission stated its preliminary belief that a registered SDR should not be permitted to charge fees for the security-based swap transaction data that it is required to publicly disseminate pursuant to Regulation SBSR.
In proposing this requirement, the Commission considered the statutory requirements to establish post-trade transparency in the security-based swap market, the CFTC's rules for public dissemination, and comments received in response to Regulation SBSR, as originally proposed and as re-proposed. Title VII contains numerous provisions directing the Commission to establish a regime for post-trade transparency in the security-based swap market, which are designed to give the public pricing, volume, and other relevant information about all executed security-based swap transactions.
The Commission also expressed the preliminary belief that it is necessary to prohibit a registered SDR from charging users of regulatorily mandated security-based swap transaction data for public dissemination of the data to reinforce existing Rule 903(b).
The CFTC, in adopting its own rules for public dissemination of swap transactions, addressed the issue of whether a swap data repository could be allowed to charge for its publicly disseminated data. In Section 43.2 of its rules,
The Commission received six comments on whether registered SDRs should be permitted to charge fees or impose usage restrictions on publicly disseminated data.
The Commission stated in the Regulation SBSR Proposed Amendments Release that the requirement that information be “widely available to users of the information on a non-fee basis” necessarily implies that a registered SDR would not be permitted to impose—or allow to be imposed—any usage restrictions on the security-based swap transaction information that it is required to publicly disseminate, including restrictions on access to or further distribution of the regulatorily mandated public security-based swap data.
The Commission continues to believe that public dissemination would not satisfy the “widely available” standard in Rule 900(tt) if a registered SDR could deny access to users who do not agree to limit their use of the data in a manner directed by the registered SDR. Here, the Commission notes the asymmetric bargaining strength of the parties: A registered SDR has a monopoly position over the security-based swap transaction data that it is required to publicly disseminate, because the public has no access to that information until it is publicly disseminated. If a registered SDR could impose usage restrictions with which a user does not wish to comply, there would be no other source from which the user could freely obtain this transaction information.
The prohibition on usage restrictions would also prohibit an SDR-imposed restriction on bulk redistribution by third parties of the regulatorily mandated transaction data that the registered SDR publicly disseminates. Despite the objections of one commenter,
The Commission acknowledges the concern of the commenter who stated that “SB SDRs must be able to protect themselves from claims related to data sourced or scraped from the trade repository and redistributed by others where there are quality issues with respect to data redistributed.”
The Commission recognizes that establishing and operating a registered SDR entails various costs. The Commission does not believe, however, that prohibiting a registered SDR from charging for data that it is required to publicly disseminate will impede its ability to carry out these functions because other viable sources of revenue are available to registered SDRs. One such source may be fees imposed on persons who are required to report transactions to the SDR. Thus, the Commission believes that, with the adopted definition of “widely accessible,” a registered SDR will have adequate sources of funding even if it is prohibited from charging users fees for receiving the security-based swap
Two commenters advocated that a registered SDR be permitted to offer value-added services related to publicly disseminated data.
This approach is consistent with parallel CFTC rules that require regulatorily mandated data to be freely available to the public but do not prohibit a CFTC-registered swap data repository from making commercial use of such data subsequent to its public dissemination.
A final commenter “ask[ed] the Commission to clarify that the restrictions on user fees and usage in Proposed Rule 900(tt) extends only to data that is disseminated by SDRs in a post-trade context.”
The Commission declines to make the clarification requested by the commenter. In fact, it is the Commission's intention to eliminate all fees and usage restrictions on the information that a registered SDR is required to publicly disseminate. In the Commission's view, the commenter's distinction between “post-trade contexts”—where fees and usage restrictions could not be imposed—and “pre-trade contexts”—where, according to the commenter, they could be imposed—would be unworkable. The Commission intends for market observers to be able to take in the security-based swap transaction data that are publicly disseminated by registered SDRs on a mandatory basis and scrub, reconfigure, aggregate, analyze, repurpose, or otherwise add value to that publicly disseminated data in any manner that they see fit, without fear that doing so might subject them to liability to a third party for violating a license agreement.
In November 2010,
The Commission received 16 comments regarding the U.S. Activity Proposal, of which seven discussed the proposed amendments to Regulation SBSR. In February 2016, the Commission adopted rules that require a foreign dealing entity to count against its
Existing Rule 908(a)(1) requires regulatory reporting and public dissemination of any security-based swap transaction that (1) has a direct or indirect counterparty that is a U.S. person on either or both sides of the transaction, or (2) is accepted for clearing by a clearing agency having its principal place of business in the United States. Existing Rule 908(a)(2) requires regulatory reporting but not public dissemination of a transaction that has a direct or indirect counterparty that is a registered security-based swap dealer or registered major security-based swap participant on either or both sides of the transaction but does not otherwise fall within Rule 908(a)(1). In other words, Rule 908(a)(2) applies to uncleared security-based swaps of registered non-U.S. persons when there is no U.S. person on the other side.
Rule 908(b) is designed to specify the types of persons that will incur duties under Regulation SBSR. If a person does not come within any of the categories enumerated by Rule 908(b), it does not incur any duties under Regulation SBSR.
Under Rule 908(a), as re-proposed in the Cross-Border Proposing Release, security-based swaps that would have fallen within the proposed definition of “transaction conducted within the United States” would have been among the security-based swaps subjected to both regulatory reporting and public dissemination.
While Rule 908(a) specifies what types of security-based swap transactions are subject to regulatory reporting and/or public dissemination and Rule 908(b) specifies the types of persons that will incur duties under Regulation SBSR, Rule 901(a) assigns the duty to report each individual transaction. Rule 901(a), as adopted in the Regulation SBSR Adopting Release, did not address the reporting of many types of cross-border transactions, and the Commission noted that it anticipated soliciting additional comment about how to apply Regulation SBSR, including which side should incur the reporting duty, in a security-based swap transaction between two unregistered non-U.S. persons and in a transaction between an unregistered
In the U.S. Activity Proposal, the Commission proposed to add a new paragraph (a)(1)(v) to Rule 908(a)(1). Proposed Rule 908(a)(1)(v) would require any security-based swap transaction connected with a non-U.S. person's security-based swap dealing activity that is arranged, negotiated, or executed by personnel of such non-U.S. person located in a U.S. branch or office—or by personnel of its agent located in a U.S. branch or office—to be reported and publicly disseminated. This amendment would expand the scope of Regulation SBSR in two ways. First, it would require that a transaction of a foreign dealing entity be subject to both regulatory reporting and public dissemination if the non-U.S. person would be required to include the transaction in its
As discussed in more detail in Section X,
Several commenters opposed extending Regulation SBSR's regulatory reporting and public dissemination requirements to ANE transactions.
After carefully considering these comments, the Commission is adopting Rule 908(a)(1)(v) as proposed. Consistent with its territorial
The Commission notes that all security-based swaps of registered security-based swap dealers, whether U.S. or foreign, are subject to regulatory reporting under existing Rule 908(a)(2). For transactions involving foreign dealing entities that register with the Commission as security-based swap dealers, the regulatory reporting requirement stems from the involvement of the registered person, not from the presence of any ANE activity. Therefore, new Rule 908(a)(1)(v) does not subject any additional transactions involving registered security-based swap dealers to Regulation SBSR's regulatory reporting requirements.
New Rule 908(a)(1)(v) extends the regulatory reporting requirements only to transactions involving an unregistered foreign dealing entity (when it engages in ANE activity) when no other condition is present that would trigger regulatory reporting (
As noted in Section II(A)(4)(d),
As noted above,
The Commission believes that certain unregistered foreign dealing entities generally will already be assessing whether they utilize U.S. personnel and, if so, whether such personnel are involved in arranging, negotiating, or executing particular security-based swaps, so that they can count such transactions against their
The Commission acknowledges that subjecting ANE transactions between unregistered non-U.S. persons to regulatory reporting requirements under new Rule 908(a)(1)(v) also will result in
While Rule 908(a)(1)(v) will extend Regulation SBSR's regulatory reporting requirements to additional cross-border security-based swaps—those involving unregistered foreign dealing entities when they engage in ANE transactions with other unregistered foreign persons—Rule 908(a)(1)(v) will extend Regulation SBSR's public dissemination requirements to a potentially larger number of cross-border transactions that are, under existing Regulation SBSR, subject to regulatory reporting but not public dissemination. Under existing Rule 908(a)(2), a security-based swap that does not otherwise fall within Rule 908(a)(1) shall be subject to regulatory reporting but not public dissemination if there is a registered security-based swap dealer or registered major security-based swap participant on either or both sides of the transaction. Under existing Rule 908(a)(1), a security-based swap is subject to both regulatory reporting and public dissemination only if there is a direct or indirect counterparty that is a U.S. person on either or both sides of the transaction or if the security-based swap is accepted for clearing by a clearing agency having its principal place of business in the United States. Nothing in existing Rule 908(a)(1) extends the public dissemination requirements to transactions of registered security-based swap dealers and registered major security-based swap participants based on the location of personnel who engage in relevant conduct. Thus, under existing Rule 908(a), a transaction involving only non-U.S. persons on both sides, even if one or both sides include a registered foreign security-based swap dealer, would not be subject to public dissemination. Under new Rule 908(a)(1)(v), however, the location of the personnel who engage in relevant activity on behalf of a foreign dealing entity becomes a dispositive factor for determining whether the transaction is subject to public dissemination. The Commission anticipates that a significant number of transactions between foreign registered security-based swap dealers will be with other non-U.S. persons (including other foreign registered security-based swap dealers). Under existing Rule 908(a), the overwhelming majority of these transactions would have been subject only to regulatory reporting. However, with the adoption of Rule 908(a)(1)(v), many of these transactions also will be subject to public dissemination, if there is a foreign dealing entity on either side that is engaging in ANE activity.
The Commission believes that it is appropriate to apply the public dissemination requirements to all ANE transactions, even those between two foreign counterparties where only one side is engaging in ANE activity. Transactions that are arranged, negotiated, or executed by U.S. personnel of a foreign dealing entity exist at least in part within the United States. Subjecting such transactions to public dissemination is consistent with the Commission's territorial application of Title VII requirements.
Thus, the Commission disagrees with the commenter who did “not believe the public dissemination of SBS between non-US Persons increases transparency to the public”
Another commenter questioned the transparency benefits of publicly disseminating uncleared bilateral trades that may include bespoke terms.
Another commenter expressed concerns about the market possibly front-running the hedges of a foreign dealing entity if all ANE transactions were subject to public dissemination. The Commission does not find this a persuasive argument against imposing the public dissemination requirements on all ANE transactions. The concern about public dissemination triggering adverse market impact, such as higher prices to hedge, is common to all security-based swap transactions, regardless of whether a transaction is subject to public dissemination because it involves a U.S. counterparty or because it is an ANE transaction. Therefore, as the Commission decided in the Regulation SBSR Adopting Release, all transactions will during the first phase of Regulation SBSR have up to 24 hours from the time of execution to be reported (and then immediately disseminated by a registered SDR).
One commenter argued that the proposed rule would not enhance transparency in the U.S. security-based swap market because it would create incentives for non-U.S. counterparties to avoid interactions with U.S. personnel.
The Commission acknowledges, as this commenter suggests, that to avoid public dissemination some foreign dealing entities might prevent their U.S. personnel from interacting with non-U.S. counterparties, and some non-U.S. counterparties might avoid interactions with U.S. personnel. The Commission believes, nevertheless, that public dissemination of all ANE transactions is necessary to advance the Title VII objectives of enhancing transparency in the security-based swap market. The Commission notes that new Rule 908(a)(1)(v) extends the public dissemination requirements only to ANE transactions of foreign dealing entities with non-U.S. persons; transactions of foreign dealing entities with U.S. persons—regardless of whether they are arranged, negotiated, or executed by U.S. personnel—are already subject to existing Rule 908(a)(1)(i) by virtue of a U.S. person's involvement in the transaction. The Commission believes, therefore, that extending the public dissemination requirements to ANE transactions involving non-U.S. persons will promote a level playing field. Without Rule 908(a)(1)(v), the U.S. personnel of a foreign dealing entity might be able to offer liquidity to non-U.S. persons at lower prices than to U.S. persons, because the foreign dealing entity would not have to embed the potential costs of public dissemination into the prices offered to non-U.S. persons. By contrast, the prices offered by the foreign dealing entity to U.S. persons would likely reflect any such additional costs, to the extent that public dissemination of a particular transaction imposes costs on the counterparties.
The commenter also argued that it would be problematic for foreign dealing entities to assess for ANE activity, which would trigger the public dissemination requirement.
Commenters also stated that the proposed rule could result in duplicative reporting because transactions covered by the proposed rule also would likely be reported in
The Commission acknowledges that some ANE transactions of foreign dealing entities could be subject to reporting and/or public dissemination requirements in other jurisdictions. Substituted compliance could mitigate the concerns of these commenters if the Commission issues a substituted compliance order for regulatory reporting and public dissemination of security-based swaps with respect to a particular foreign jurisdiction. In such case, a cross-border transaction involving that jurisdiction would not be subject to any direct reporting and public dissemination requirements under Regulation SBSR. A substituted compliance order would eliminate duplication with the comparable reporting and public dissemination requirements of the other jurisdiction, and concerns regarding overstated trading volumes and distortions of the market would thus not arise.
The Commission recognizes that, in practice, there will be limits to the availability of substituted compliance. For example, if the Commission were unable to make a favorable comparability determination with respect to one or more foreign jurisdiction's security-based swap reporting and dissemination requirements because they do not achieve a comparable regulatory outcome, or because the foreign trade repository or foreign authority that receives and maintains transaction reports is not subject to requirements comparable to those imposed on SDRs, the Commission would not issue a substituted compliance order with respect to that jurisdiction. The availability of substituted compliance also will depend upon the availability of supervisory and enforcement arrangements among the Commission and relevant foreign financial regulatory authorities. Although comparability assessments will focus on regulatory outcomes rather than rule-by-rule comparisons, the assessments will require inquiry regarding whether foreign regulatory requirements adequately reflect the interests and protections associated with the particular Title VII requirement. Further, only transactions in which at least one of the direct counterparties to the security-based swap is a non-U.S. person or a foreign branch are eligible for substituted compliance.
Finally, one commenter asserted that, “[w]ith respect to Non-U.S. SBS cleared outside the United States, foreign regulators have a relatively greater interest than the Commission in establishing applicable transparency requirements.”
In the U.S. Activity Proposal, the Commission proposed a new paragraph (a)(1)(iii) to Rule 908(a)(1) that would have subjected any security-based swap transaction that is executed on a platform having its principal place of business in the United States to regulatory reporting and public dissemination. The Commission also proposed a new paragraph (a)(1)(iv) to Rule 908(a)(1) that would subject any security-based swap transaction that is effected by or through a registered broker-dealer (including a registered SB SEF) to regulatory reporting and public dissemination. The Commission notes that many types of security-based swap transactions that are executed on a platform or effected by or through a registered broker-dealer are already subject to Regulation SBSR—for example, if either side includes a U.S. person
Two commenters generally opposed these amendments.
The Commission continues to believe that any transaction executed on a platform that has its principal place of business in the United States should be subject to regulatory reporting and public dissemination, even when the transaction involves two non-U.S. persons that are not engaged in dealing activity in connection with the transaction.
As the Commission previously noted in the U.S. Activity Proposal,
The Commission agrees that there is some possibility that requiring the regulatory reporting and public dissemination of security-based swaps between unregistered non-U.S. persons that are intermediated by registered broker-dealers could create an incentive for those non-U.S. persons to avoid transacting through a registered broker-dealer. However, a rule that failed to capture these transactions could provide unregistered non-U.S. persons a competitive advantage over unregistered U.S. persons. The security-based swap transactions of U.S. persons effected by or through a registered broker-dealer are subject to Regulation SBSR, while the transactions between unregistered non-U.S. persons effected by or through a registered broker-dealer would not be subject to Regulation SBSR. Absent Rules 908(a)(1)(iii) and (iv), a registered broker-dealer (or platform) might be able offer its services at a lower price to non-U.S. persons than to U.S. persons, because the platform or registered broker-dealer would not have to embed the potential costs of regulatory reporting and public dissemination when pricing services offered to non-U.S. persons. By contrast, the price offered by the platform or registered broker-dealer to U.S. persons would likely reflect these additional costs. The Commission does not see a basis for permitting non-U.S. persons to enjoy this competitive advantage over U.S. persons when engaging in security-based swap transactions that, due to the involvement of a U.S. platform or registered broker-dealer, exist at least in part within the United States. Accordingly, the Commission declines to adopt the commenters' recommendation that the Commission exclude from Regulation SBSR the transactions of unregistered non-U.S. persons that are effected by or through a registered broker-dealer.
Existing Rule 908(a)(1)(i) requires regulatory reporting and public dissemination of a security-based swap if there is a direct or indirect counterparty that is a U.S. person on either or both sides of the transaction. This would include, for example, a security-based swap having, on one side, a direct counterparty who is not a U.S. person but has a U.S. guarantor, and the other side includes no counterparty that is a U.S. person, registered security-based swap dealer, or registered major security-based swap participant (a “covered cross-border transaction”).
In the U.S. Activity Proposal, the Commission expressed its preliminary view that—in light of its determination to require all security-based swap transactions of U.S. persons, including all transactions conducted through a foreign branch, to be publicly disseminated—it did not think that it would be appropriate to exempt covered cross-border transactions from the public dissemination requirement.
Two commenters disagreed with the Commission's proposed treatment of covered cross-border transactions.
The Commission disagrees with the commenter's assertions that the financial risks of covered cross-border transactions lie outside the United States and that there is insufficient U.S. jurisdictional nexus to justify the public dissemination of these transactions in the United States. As the Commission noted in the Regulation SBSR Adopting Release, a security-based swap having an indirect counterparty that is a U.S. person is economically equivalent to a security-based swap with a U.S.-person direct counterparty, and both kinds of security-based swaps exist, at least in part, within the United States.
With respect to the commenter's view that covered cross-border transactions lack sufficient jurisdictional nexus to justify their public dissemination in the United States, the Commission takes the position that, under the territorial approach to Title VII described in the Regulation SBSR Adopting Release,
Existing Rule 908(b) provides that, notwithstanding any other provision of Regulation SBSR, a person shall not incur any obligation under Regulation SBSR unless it is a U.S. person, a registered security-based swap dealer, or a registered major security-based swap participant. Rule 908(b) is designed to clarify the cross-border application of Regulation SBSR by specifying the types of counterparties that would and would not be subject to any duties under Regulation SBSR; if a person does not fall within any of the categories enumerated by Rule 908(b), it would not incur any duties under Regulation
In the Regulation SBSR Proposed Amendments Release, the Commission expressed the preliminary view that all platforms and registered clearing agencies should incur the reporting duties specified in the proposed amendments to Rule 901(a),
Three commenters generally supported expanding Rule 908(b) to include all platforms and registered clearing agencies.
The Commission is adopting the amendments to Rule 908(b) as proposed. For the reasons explained above, the Commission continues to believe that all platforms and registered clearing agencies should incur the duties specified in the amendments to Rule 901(a), even if they are not U.S. persons. Without this amendment, U.S.-person platforms and registered clearing agencies would be subject to regulatory obligations from which non-U.S.-person platforms and registered clearing agencies would be free.
In the U.S. Activity Proposal, the Commission proposed to add a new paragraph (b)(5) to Rule 908(b) to include any non-U.S. person that, in connection with such person's security-based swap dealing activity, arranges, negotiates, or executes a security-based swap using its personnel located in a U.S. branch or office, or using personnel of its agent located in a U.S. branch or office. Consistent with the proposed amendments to Rule 901(a)(2)(ii)(E) that would bring foreign dealing entities engaging in ANE transactions into the reporting hierarchy,
The Commission received no comments that specifically addressed this proposed amendment
Existing Rule 901(a)(2)(ii) sets forth a reporting hierarchy that specifies the side that has the duty to report a security-based swap, taking into account the types of entities present on each side. Existing Rule 901(a)(2)(ii) does not assign reporting obligations for transactions involving unregistered non-U.S. persons. In the Regulation SBSR Adopting Release, the Commission stated that it anticipated soliciting further comment regarding the duty to report a security-based swap where neither side includes a registered security-based swap dealer or a registered major security-based swap participant and neither side includes a U.S. person or only one side includes a U.S. person.
As discussed in the U.S. Activity Proposal and in the Regulation SBSR Adopting Release, one commenter raised concerns about burdens that the previously re-proposed reporting hierarchy might place on U.S. persons in transactions with certain non-U.S.-person counterparties.
The U.S. Activity Proposal included proposed Rule 901(a)(2)(ii)(E)(
Proposed Rule 901(a)(2)(ii)(E)(
Proposed Rule 901(a)(2)(ii)(E)(
After careful consideration of all the comments, to which the Commission responds below, the Commission is adopting Rules 901(a)(2)(ii)(E)(
Two commenters expressed concerns about the expense and difficulty of determining which of these two rules to apply when one side is an unregistered foreign dealing entity who might or might not be utilizing U.S. personnel in a particular transaction.
As discussed in Section X,
The Commission recognizes that, even after security-based swap dealer registration occurs, there likely will be a small number of foreign dealing entities that remain below the
Requiring additional ANE transactions of these foreign dealing entities to be reported—and requiring the foreign dealing entity and the other side to select the reporting side in a tie situation under Rule 901(a)(2)(ii)(E)(
One commenter recommended that, in a transaction between an unregistered U.S. person and an unregistered non-U.S. person engaged in ANE activity, the Commission should not require the sides to select the reporting side, but should instead place the reporting obligation on the non-U.S. person, because it is engaged in dealing activity.
The Commission does not believe that it is appropriate to modify Rule 901(a)(2)(ii)(E)(
Two commenters disagreed with proposed Rule 901(a)(2)(ii)(E)(
The Commission continues to believe that, to improve the integrity and transparency of the U.S. financial markets, the Commission and other relevant authorities should have ready access to transaction reports of security-based swap transactions that registered broker-dealers intermediate.
The Commission further acknowledges that life cycle events for the transactions covered by Rule 901(a)(2)(ii)(E)(
Finally, the Commission is modifying Rule 901(a)(2)(ii)(E)(
Rule 900(u), as adopted in the Regulation SBSR Adopting Release, defined a “participant” of a registered SDR as “a counterparty, that meets the criteria of [Rule 908(b) of Regulation SBSR], of a security-based swap that is reported to that [registered SDR] to satisfy an obligation under [Rule 901(a) of Regulation SBSR].” In the Regulation SBSR Proposed Amendments Release, the Commission proposed an amendment to expand the definition of “participant” to include registered clearing agencies and platforms
The Commission received no comments regarding the proposed amendment to Rule 900(u) to include these registered broker-dealers and is adopting this amendment as proposed. The Commission continues to believe, as it stated in the U.S. Activity Proposal, that these registered broker-dealers should be participants of any registered SDR to which they are required to report security-based swap transaction information because, as SDR participants, they become subject to the requirement in Rule 901(h) to report security-based swap transaction information to a registered SDR in a format required by the registered SDR.
Existing Rule 901(d)(9) requires the reporting, if applicable, of the platform ID of the platform on which a security-based swap is executed. In the Regulation SBSR Adopting Release, the Commission recognized the importance of identifying the venue on which a security-based swap is executed because this information should enhance the ability of relevant authorities to conduct surveillance in the security-based swap market and understand developments in the security-based swap market generally.
The Commission received no comments regarding the proposed amendment to Rule 901(d)(9) and is adopting this amendment as proposed. The Commission continues to believe, as discussed in the U.S. Activity Proposal,
As discussed above, Rule 900(u), as amended herein, expands the definition of “participant” to include a registered broker-dealer that incurs the reporting obligation if it effects a transaction between two unregistered non-U.S. persons that do not fall within Rule 908(b)(5). Existing Rule 906(b) generally requires a participant of a registered SDR to provide the identity of any ultimate parent and any of its affiliates that also are participants of that registered SDR. In the Regulation SBSR Proposed Amendments Release, the Commission proposed to except platforms and registered clearing agencies from Rule 906(b)
The Commission received no comments regarding the amendment to Rule 906(b) proposed in the U.S. Activity Proposal and is adopting this amendment as proposed. The Commission continues to believe, as it stated in the U.S. Activity Proposal,
The Commission proposed to make a conforming amendment to Rule 907(a)(6). In the Regulation SBSR Proposed Amendments Release, the Commission proposed, and today is adopting,
Existing Rule 908(c)(1) describes the possibility of substituted compliance with respect to regulatory reporting and public dissemination of security-based swap transactions. Substituted compliance could be available for transactions that will become subject to Regulation SBSR because of the amendments to Rule 908 being adopted today. Under Rule 908(c)(1), a security-based swap is eligible for substituted compliance with respect to regulatory reporting and public dissemination if at least one of the direct counterparties to the security-based swap is either a non-U.S. person or a foreign branch. As discussed in the U.S. Activity Proposal, existing Rule 908(c) does not condition substituted compliance eligibility on where a particular transaction was arranged, negotiated, or executed.
The rules adopted today, among other things, subject to regulatory reporting and public dissemination both ANE transactions and security-based swaps executed on a U.S. platform or effected by a registered broker-dealer. The Commission did not propose, and is not adopting, any amendment to Rule 908(c) that would limit the availability of substituted compliance for such transactions based on the location of the relevant activity. Thus, a transaction that is required to be reported and publicly disseminated because it is an ANE transaction, or because it is executed on a U.S. platform or effected by or through a registered broker-dealer, could be eligible for substituted compliance if the Commission issues a substituted compliance order with respect to regulatory reporting and public dissemination of security-based swaps applying to that jurisdiction. This approach is consistent with the Commission's decision when adopting Rule 908(c) that certain transactions involving U.S.-person counterparties could be eligible for substituted compliance (
Finally, several commenters expressed the view that reporting pursuant to Regulation SBSR should not begin until the Commission has made substituted compliance determinations.
In the Regulation SBSR Adopting Release, the Commission established a compliance date only for Rules 900, 907, and 909 of Regulation SBSR.
The Commission proposed the following phased-in compliance schedule for Rules 901, 902, 903, 904, 905, 906, and 908 of Regulation SBSR.
The proposed compliance schedule with respect to security-based swaps in a particular asset class was tied to the commencement of operations of a registered SDR that can accept reports of security-based swaps in that asset class. In the Regulation SBSR Proposed Amendments Release, the Commission noted that both registered SDRs and persons with a duty to report would need time to make preparations related to the reporting of security-based swaps.
Commenters expressed a variety of concerns with the proposed compliance schedule. Most of the comments that addressed the proposed compliance schedule urged the Commission to delay implementation of Regulation SBSR until after security-based swap dealers are registered as such with the Commission.
Some commenters expressed concerns about basing the compliance schedule for an asset class on the registration of the first SDR that can accept security-based swaps in that asset class, which, they argued, could confer an unfair “first mover” advantage.
Other commenters expressed concern about how the reporting requirements contained in Regulation SBSR could be implemented before the Commission finalizes its rules regarding SB SEFs.
These comments and the Commission's responses thereto are discussed in more detail below. The Commission is adopting the primary features of the proposed compliance schedule but is making several revisions in response to comments. Most notably, as described below, the Commission had decided to align the compliance dates for Regulation SBSR with the SBS entities registration compliance date.
Under the compliance schedule adopted today, with respect to newly executed security-based swaps in a particular asset class, Compliance Date 1 for Rule 901 of Regulation SBSR is the first Monday that is the later of: (1) Six months after the date on which the first SDR that can accept transaction reports in that asset class registers with the Commission; or (2) one month after the SBS entities registration compliance date. Every security-based swap in that asset class that is executed on or after Compliance Date 1 must be reported in accordance with Rule 901.
Furthermore, Rule 901—which imposes reporting duties on specified persons beginning on Compliance Date 1—must be read in connection with Rules 908(a) and 908(b) on Compliance Date 1. Thus, for example, a non-U.S. person who falls within one of the categories set forth in Rule 908(b) could, under Rule 901(a), be required on Compliance Date 1 to report a cross-border security-based swap if the security-based swap falls within one of the categories set forth in Rule 908(a). Also, when persons with reporting duties begin mandatory reporting on Compliance Date 1, they must do so in a manner consistent with Rule 903, which addresses the use of coded information in the reporting of security-based swaps.
Beginning on Compliance Date 1, registered SDRs must comply with Rule 904, which addresses the operating hours of registered SDRs, except for Rule 904(d).
Also beginning on Compliance Date 1, counterparties and registered SDRs must comply with Rule 905 regarding the correction of errors in previously reported information about security-based swaps in that asset class, except that the registered SDR will not yet be subject to the requirement in Rule 905(b)(2) to publicly disseminate any corrected transaction reports (because it will not yet be required to publicly disseminate a report of the initial transaction). Furthermore, beginning on Compliance Date 1, each registered SDR must comply with the requirement in Rule 906(a) to provide to each participant of that SDR a report of any missing UICs, and any participant receiving such a report must comply with the requirement in Rule 906(a) to provide the missing UICs to the registered SDR. By Compliance Date 1, participants enumerated in Rule 906(c) must establish the policies and procedures required by Rule 906(c).
Several commenters strongly urged the Commission to defer Compliance Date 1 until security-based swap dealers must register with the Commission.
The Commission acknowledges the commenters' concerns that requiring compliance with Regulation SBSR before the SBS entities registration compliance date would have raised numerous challenges, and that addressing these challenges would have necessitated time and investment to create interim solutions that might not be useful after the SBS entities registration compliance date. Therefore, the Commission has determined that market participants will not be required to comply with Regulation SBSR until after the SBS entities registration compliance date. As noted above, the second prong of Compliance Date 1 is one month after the SBS entities
One commenter who urged that the Commission defer compliance with Regulation SBSR until after security-based swap dealers register also recommended that, “[i]f the Commission decides to require regulatory reporting of ANE transactions despite [comments] to the contrary, reporting should be required only with respect to those ANE transactions that are relevant for SBSD registration (
Final Compliance Date 1 retains a prong that generally follows the principle in proposed Compliance Date 1 of allowing six months between the registration of the first SDR that can accept transaction reports of security-based swaps in an asset class. The Commission continues to believe that it is appropriate to give market participants at least six months after the registration of the first SDR that can accept transaction reports of security-based swaps in an asset class before they are required to report transactions in that asset class. This period will enable market participants to prepare their systems for reporting to that SDR and to fully familiarize themselves with the SDR's policies and procedures. However, as discussed below, final Compliance Date 1 eliminates the proposed reference to the date on which such SDR “commences operations” as a registered SDR.
One commenter expressed the view that the proposed compliance timeline would give reporting sides and SDRs adequate time to implement Regulation SBSR.
The Commission believes that six months is an appropriate minimum period between registration of the first SDR in an asset class and Compliance Date 1 with respect to that asset class, particularly in view of the Commission's decision not to require compliance with Regulation SBSR until after the SBS entities registration compliance date. The Commission further notes that, before the Commission grants registration to any SDR, the application would be published for comment.
Certain commenters suggested establishing dates certain for compliance with Regulation SBSR.
Finally, two commenters noted that, although proposed Compliance Date 1 would have been tied to the commencement of operations of a registered SDR in an asset class, “commencement of operations” is not defined and it was not clear to the commenters how this date would be determined or how market participants would be made aware of that date.
Finally, the Commission notes that it is setting Compliance Date 1 as
The Commission is adopting the proposed approach that the compliance dates are specific to a security-based swap asset class. One commenter expressed concern that the potential for varying compliance dates for different asset classes “would inject unnecessary complexity into the implementation process and potentially cause confusion
Several commenters expressed concerns about triggering compliance based on the first SDR in an asset class to register with the Commission.
With respect to commenters' concerns about multiple SDR applications for registration, the Commission previously stated in the SDR Adopting Release that it “intends to process such applications . . . within the same period of time so as to address competition concerns that could arise if such SDRs were granted registration at different times.”
The Commission acknowledges that, by requiring compliance based on the first SDR in an asset class to register with the Commission, a participant might not be able to report security-based swaps to its preferred SDR. However, this situation implies that the participant's preferred SDR for reporting security-based swap transactions has not yet met the criteria for registration under Rule 13n-1(c)(3). The Commission believes that commencing reporting with only a single registered SDR in an asset class, should this prove necessary, would be preferable to any alternative. When the Commission grants the first SDR registration, delaying compliance with Regulation SBSR until additional registrations are granted would not further the objectives of Title VII.
Finally, the Commission notes that, even if there is only one registered SDR for some period of time, other Commission rules are designed to minimize any undue advantage that the first SDR might otherwise enjoy. For example, every SDR, even the first and only registered SDR in a particular asset class, must offer fair, open, and not unreasonably discriminatory access to users of its services.
Three commenters urged the Commission to defer compliance with Regulation SBSR until the Commission has made substituted compliance determinations with respect to regulatory reporting and public dissemination of security-based swap transactions for certain foreign jurisdictions.
The Commission declines to accept this suggestion and does not believe that compliance with Title VII's regulatory reporting and public dissemination requirements, as implemented by Regulation SBSR, should be delayed until the Commission has made any substituted compliance determinations. The Commission has not yet received any substituted compliance applications
Two commenters urged the Commission to delay Compliance Date 1 until the Commission adopts final rules relating to SB SEFs and provides sufficient time for entities to register with the Commission as SB SEFs.
The Commission declines to act on the commenters' suggestion. Delaying compliance with Regulation SBSR until final rules relating to SB SEFs are adopted would result in the Commission and other relevant authorities continuing to lack complete records of all security-based swap transactions, which will facilitate market and systemic risk oversight. The Commission believes that Regulation SBSR can be successfully implemented even before the adoption of final SB SEF rules and the registration of SB SEFs with the Commission. The Commission understands that, currently, many security-based swaps trade off-platform and it is likely that a sizeable portion of the security-based swap market will continue to trade off-platform, even after SB SEFs have the opportunity to register with the Commission. The Commission believes that delaying Compliance Date 1 until SB SEFs have registered would unnecessarily delay the reporting of security-based swaps that trade off-platform.
The Commission understands that there are a small number of existing entities that likely meet the definition of “security-based swap execution facility” at present but are not yet registered with the Commission as such. However, Rule 901(a)(1) applies to all platforms, including unregistered SB SEF. Moreover, the Commission does not believe that the finalization of its SB SEF rules would affect their capability to report such transactions to a registered SDR because the Commission understands that such entities are likely to be swap execution facilities that already have incurred swap reporting duties under CFTC rules.
Several commenters urged the Commission to defer compliance with Regulation SBSR's UIC requirements until international standards for these UICs are developed and can be used across multiple SDRs and multiple jurisdictions.
After carefully considering the issues raised by commenters, the Commission believes, for the reasons described below, that use of the various UICs must commence on Compliance Date 1:
For any UIC that can be represented with a Legal Entity Identifier (“LEI”), compliance is required on Compliance Date 1. In the Regulation SBSR Adopting Release, the Commission recognized the Global Legal Entity Identifier System (“GLEIS”) as an internationally recognized standards-setting system (“IRSS”) that satisfies the requirements of Rule 903.
Regulation SBSR also requires UICs for three types of “sub-legal entities”: Branches, trading desks, and individual traders. As commenters note, neither the GLEIS nor any other potential IRSS assigns identifiers to any sub-legal entities at this time.
The Commission recognizes that this approach raises the possibility that different SDRs could, in theory, assign different UICs to the same person, unit of a person, or product. If this were to occur, the Commission could have to map the UICs assigned by one registered SDR to the corresponding UICs assigned by one or more other SDRs to maintain a complete picture of the market activity pertaining to a particular person or sub-legal entity. The Commission specifically addressed this issue in the Regulation SBSR Adopting Release.
Also beginning on Compliance Date 1, each registered SDR must comply with Rule 901(g), which requires the SDR to assign a transaction ID to each security-based swap, or establish or endorse a methodology for transaction IDs to be assigned by third parties. Because of the potential importance of identifying individual transactions for systemic risk and market oversight purposes, the Commission believes that it is essential for registered SDRs to comply with Rule 901(g) from the moment that they begin receiving mandatory transaction reports.
One commenter expressed the belief that SDRs will be able to assign transaction IDs to pre-enactment and transitional security-based swaps by the date that the Commission had proposed in the Regulation SBSR Proposed Amendments Release.
A second commenter urged the Commission to “recognize the `first touch principle' as an acceptable standard for SB SDRs to meet their 901(g) obligations.”
One commenter argued that, before requiring compliance with the product ID requirement, the Commission should “consult and agree with market participants on a standard to be applied. An agreed upon public standard would provide greater certainty to reporting sides and SB SDRs to build to one uniform standard as opposed to bespoke models for each SDR.”
One commenter's analysis of the problems that could result from a Commission determination to require reporting compliance ahead of the SBS entities registration compliance date was premised on the assumption that a U.S. non-dealing entity that was the reporting side for a security-based swap executed during the Interim Period would remain the reporting side for the life of the security-based swap.
Rule 901(a)(2)(ii) sets forth a reporting hierarchy that has two possible outcomes for any transaction pair: (1) One side occupies a higher rung in the hierarchy than the other side, in which case the side that occupies the higher rung “shall be the reporting side”; or (2) the outcome is a tie, and “the sides shall select the reporting side.” Sides in a tie situation, after having made an initial selection of the reporting side, can select a new reporting side later in the life of the contract.
Over the life of a security-based swap, a registered SDR needs to know the reporting side of a security-based swap so that it knows whether it is receiving a report of a life cycle event or an error report from the entity that is obligated to report that information. A registered SDR should consider incorporating into its policies and procedures how it would accommodate any change to the reporting side designation. A registered SDR may, for example, seek to obtain, in the case of an elective switch, information from one or both sides that confirms the switch.
Compliance Date 2 is the date on which all registered SDRs that can accept security-based swaps in a particular asset class must begin public dissemination, pursuant to Rule 902, of transactions in that asset class. On Compliance Date 2, each such SDR will be required to comply with Rules 902 (regarding public dissemination generally), 904(d) (requiring dissemination of transaction reports held in queue during normal or special closing hours), and 905(b)(2) (with respect to public dissemination of corrected transaction reports) for all security-based swaps in that asset class, except as provided by Rule 902(c). As discussed further below, Compliance Date 2 is the first Monday that is three months after Compliance Date 1.
One commenter expressed the view that commencing the requirement for public dissemination nine months after SDR registration would be sufficient, provided that other compliance issues arising earlier in the compliance schedule are resolved.
The Commission has revised its proposed approach to Compliance Date 2 as it relates to the handling of covered cross-border transactions. In the Regulation SBSR Proposed Amendments Release, the Commission proposed that the public dissemination requirements associated with Compliance Date 2 would not have applied to covered cross-border transactions.
The Commission proposed and is now adopting a three-month period between Compliance Date 1 and Compliance Date 2. This three-month period is designed to give registered SDRs and persons having a duty to report an opportunity to identify and resolve any issues related to trade-by-trade reporting by participants and further test their data dissemination systems. The Commission staff intends to monitor the implementation of Regulation SBSR between Compliance Dates 1 and 2.
Also, similar to the approach taken for Compliance Date 1, the Commission believes that it will be helpful to the industry to begin public dissemination on a Monday, which ensures that registered SDRs have at least the immediately preceding weekend to conduct any final systems changes or testing before public dissemination begins. Therefore, Compliance Date 2 is the first Monday that is three months after Compliance Date 1.
Finally, Compliance Date 2 is the date by which participants of registered SDRs that are subject to Rule 906(b) must comply with that rule.
In light of this concern, the Commission now believes that it is appropriate to delay compliance with Rule 906(b) for an additional three months to avoid triggering a large number of new filings and amendments that likely would have been required if the Commission had required compliance with Rule 906(b) on Compliance Date 1. Accordingly, the Commission is not requiring compliance with Rule 906(b) until Compliance Date 2. This will allow for a number of security-based swaps to be reported over the three-month period between Compliance Dates 1 and 2 that will create a critical mass of participants, thereby permitting the filing of initial reports under Rule 906(b) that are less likely to require repeated updating because of the addition of new participants that are affiliated with existing participants.
In the Regulation SBSR Proposed Amendments Release, the Commission proposed that persons with a duty to report historical security-based swaps in the relevant asset class would have been required to report these transactions to a registered SDR that accepts transactions in that asset class, in accordance with Rule 901(i), by Compliance Date 1. As discussed further below, the Commission is adopting a new Compliance Date 3 for the reporting of historical security-based swaps. Compliance Date 3 is two months after Compliance Date 2.
One commenter expressed the view that requiring reporting of historical security-based swaps in advance of the SBS entities registration compliance date would place the bulk of the reporting burden on U.S. persons, including buy-side U.S. persons, because U.S. persons would be the reporting side for all historical security-based swaps entered into with a foreign dealing entity that did not involve ANE activity.
These commenters also argued that “[d]ealer registration will greatly expand the scope of SBS subject to reporting at a later date, essentially creating additional individual compliance dates for registrants and their counterparties to report additional SBS activity and historic SBS,” which “will also trigger the question as to who has the reporting obligation for
In light of these considerations, the Commission is adopting a new Compliance Date 3, which is designed to minimize the concerns raised by the commenters. Persons with a duty to report historical security-based swaps in an asset class must do so by the date that is two months after Compliance Date 2. To the extent that historical transactions involve a non-U.S. counterparty that is likely to register as a security-based swap dealer, deferring compliance with the requirement to report historical transactions until security-based swap dealers are registered will significantly reduce undue burdens on non-dealing persons who are their counterparties. After the SBS entities registration compliance date, registered security-based swap dealers will be clearly identifiable as such and will bear the responsibility for reporting any historical transactions with unregistered persons to the extent that information about such transactions is available. The two-month gap between Compliance Date 2 and Compliance Date 3 is designed to avoid problems that could arise if registered SDRs and their participants had been required to achieve major compliance milestones on the same day or in close proximity.
The Commission notes that the relevant transactions need not be reported
The Commission believes that a new Compliance Date 3, occurring after the SBS entities registration compliance date, for reporting of historical transactions represents an appropriate consideration of the benefits of mandatory reporting in light of the likely costs. Before security-based swap dealers register as such with the Commission, the only way a foreign dealing entity could incur any duty under Regulation SBSR is if it were engaging in ANE activity with respect to a particular transaction. The Commission is persuaded by commenters who argued that it could be difficult or impossible to ascertain whether historical transactions of foreign dealing entities involved ANE activity, as information about the involvement of U.S. personnel in particular transactions might not exist or might be difficult to reconstruct for transactions that were executed, in some cases, many years ago.
A registered SDR that accepts reports of transactions in the relevant asset class may allow persons with a duty to report historical transactions in that asset class on a rolling basis at any time after Compliance Date 1. When it begins accepting reports of historical security-based swaps submitted on a mandatory basis, a registered SDR must comply with Rule 901(f) and time-stamp, to the second, any security-based swap data that it receives pursuant to Rule 901(i). The registered SDR also must comply with Rule 901(g) with respect to transaction IDs for each historical security-based swap that it receives.
As participants begin reporting historical security-based swaps to a registered SDR, participants and registered SDRs also must comply with Rules 901(e) and 905 regarding any historical security-based swaps that are so reported. A report of a life cycle event of a historical transaction that relates to information required by Rule 901(c) would trigger public dissemination of the life cycle event if the report is submitted on or after Compliance Date 2.
The Commission notes that registered SDRs and their participants need not comply with Rule 906(a) with respect to historical security-based swaps. Rule 906(a) requires a registered SDR to identify security-based swaps for which the SDR lacks counterparty ID and (if applicable) broker ID, branch ID, execution agent ID, trading desk ID, and trader ID. Regulation SBSR requires reporting of historical security-based swaps only “to the extent that information about such transactions is available”—including information pertaining to the remaining UICs. Because broker IDs, branch IDs, execution agent IDs, trading desk IDs, and trader IDs will not be assigned by registered SDRs until they become operational, these UICs likely will not have existed or been recorded in connection with any historical security-based swaps. Therefore, because these UICs are not applicable to historical security-based swaps, a registered SDR is not required by Rule 906(a) to query non-reporting sides for those UICs with respect to any historical transactions, and non-reporting sides are not required by Rule 906(a) to provide any UICs with respect to historical transactions.
Compliance Dates 1, 2, and 3 apply equally to all security-based swaps that fall within Rule 908(a), as amended herein, and all security-based swap counterparties that fall within Rule 908(b), as amended herein. Compliance Dates 1, 2, and 3 apply to all transactions contemplated by the reporting hierarchy in Rule 901(a)(2), as amended herein, including the cross-border provisions of new Rule 901(a)(2)(ii)(E). Thus, U.S.-to-U.S. transactions do not have different compliance dates than the cross-border transactions that fall within Rule 908(a).
One commenter, responding to the proposed compliance schedule in the Regulation SBSR Proposed Amendments Release, warned that, if the Commission required regulatory reporting before security-based swap dealer registration, U.S. non-dealing entities would incur the reporting duty when they traded against large foreign dealing entities
As noted in Section IX,
In June 2011, the Commission exercised its authority under Section 36 of the Exchange Act
The Commission received one comment on this aspect of its proposed exemption. The commenter agreed that the exemption for the reporting of pre-enactment security-based swaps should be extended to and terminate on Compliance Date 1.
As discussed above, the Commission is adopting new Compliance Date 3 relating to the reporting of historical security-based swaps, which includes pre-enactment security-based swaps. To harmonize the existing exemption with the compliance date for reporting of pre-enactment security-based swaps, the Commission is exercising its authority under Section 36 of the Exchange Act to exempt any person from having to report any pre-enactment security-based swaps, as required by Section 3C(e)(1) of the Exchange Act, in a particular asset class until Compliance Date 3. The Commission finds that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors, because such action prevents the existing exemption from expiring before persons with a duty to report pre-enactment security-based swaps are able and are required to report them to a registered SDR.
In conjunction with the proposed extension of the Section 3C(e)(1) exemption included in the Regulation SBSR Proposed Amendments Release, the Commission also proposed that, with respect to security-based swaps in a particular asset class, the exemption from Section 29(b) of the Exchange Act,
The Commission confirms that the existing exemption from Section 29(b) set forth in the Effective Date Release applies only to security-based swaps entered into on or after July 16, 2011.
Rule 908(c) permits a person that potentially would become subject to Regulation SBSR or a foreign financial regulatory authority to submit a substituted compliance request with respect to the rules of a foreign jurisdiction pertaining to regulatory reporting and public dissemination of security-based swap transactions. The submission of a substituted compliance request is elective; therefore, the Commission is not establishing a “compliance date” for Rule 908(c). Nevertheless, such persons may begin submitting substituted compliance requests pursuant to the requirements of Rule 908(c) upon the effective date of this release.
Certain amendments to Regulation SBSR that the Commission is adopting today contain “collection of information requirements” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The Commission is adopting the amendments to Regulation SBSR largely as proposed, with certain revisions. These amendments impact Rules 900, 901, 902, 905, 906, 907, and 908 of Regulation SBSR.
The hours and costs associated with complying with Regulation SBSR constitute reporting and cost burdens imposed by each collection of information. Certain estimates (
The Commission requested comment on the collection of information requirements associated with the amendments to Regulation SBSR proposed in the Regulation SBSR Proposed Amendments Release and the U.S. Activity Proposal. As noted above, the Commission received 25 comment letters on the Regulation SBSR Proposed Amendments Release and the U.S. Activity Proposal that specifically address Regulation SBSR. Any comments related to the collection of information burdens potentially arising from the proposed amendments are addressed below.
Rule 900 sets forth definitions of various terms used in Regulation SBSR. In this release, the Commission is adopting certain amendments to Rule 900, including amendments to the definition of “participant” in existing Rule 900(u)
Existing Rule 901 specifies, with respect to initial security-based swap transactions and life cycle events (and adjustments due to life cycle events), who is required to report, what data must be reported, when it must be reported, where it must be reported, and how it must be reported. Existing Rule 901(a) sets forth a “reporting hierarchy” that specifies the side that has the duty to report a security-based swap. Existing Rule 901(b) states that if there is no registered SDR that will accept the report required by Rule 901(a), the person required to make the report must report the transaction to the Commission. Existing Rule 901(c) sets forth the primary trade information and Rule 901(d) sets forth the secondary trade information that must be reported. Existing Rule 901(e) requires the reporting of life cycle events and adjustments due to life cycle events. Existing Rule 901(f) requires a registered SDR to timestamp, to the second, any information submitted to it pursuant to Rule 901, and existing Rule 901(g) requires a registered SDR to assign a transaction ID to each security-based swap, or establish or endorse a methodology for transaction IDs to be assigned by third parties. Existing Rule 901(h) requires reporting sides to electronically transmit the information required by Rule 901 in a format required by the registered SDR. Existing Rule 901(i) requires reporting of pre-enactment security-based swaps and transitional security-based swaps to the extent that information about such transactions is available. Existing Rule 901(j) generally provides the person with the duty to report 24 hours from the time of execution to report the required information.
The amendments to Rule 901, as adopted herein, establish certain additional requirements relating to the reporting of security-based swap transactions. These amendments contain additional “collection of information requirements” within the meaning of the PRA. The amendments to Rule 901 are contained in three collections: (a) “Rule 901—Reporting Obligations—For New Broker-Dealer Respondents”; (b) “Rule 901—Reporting Obligations—For Platforms”; and (c) “Rule 901—Reporting Obligations—For Registered Clearing Agencies.” The following discussion sets forth the additional burdens resulting from the amendments to Rule 901 adopted in this release.
In the U.S. Activity Proposal, the Commission proposed certain amendments to Rule 901 to assign the duty to report security-based swaps in certain cross-border situations. In this release, the Commission is adopting those amendments as proposed. Under new Rule 901(a)(2)(ii)(E)(
In the Regulation SBSR Proposed Amendments Release, the Commission estimated that there will be 300 reporting side respondents and that, among the 300 reporting sides,
One commenter to the U.S. Activity Proposal recommended that the Commission collect a more complete set of data to more precisely estimate the number of non-U.S. persons that would be affected by the proposed rules.
The Commission believes that the amendments to Rule 901(a)(2)(ii)(E), as adopted herein, will result in an additional 20 respondents that will be required to report transactions under the amendments to Regulation SBSR.
Pursuant to Rule 901, all security-based swap transactions must be reported to a registered SDR or to the Commission. Together, paragraphs (a), (b), (c), (d), (e), (h), and (j) of Rule 901 set forth the parameters that govern how covered transactions are reported. These reporting requirements impose initial and ongoing burdens on respondents. The Commission believes that these burdens will be a function of, among other things, the number of reportable events and the data elements required to be reported for each such event.
Respondents that fall under the reporting hierarchy in Rule 901(a)(2)(ii) incur certain burdens as a result thereof with respect to their reporting of covered transactions. As stated above, the Commission believes that an estimate of 20 additional respondents will incur the duty to report under Regulation SBSR. This estimate includes all persons that will incur a reporting duty under the amendments to Regulation SBSR that are not already subject to burdens under existing Rule 901, as adopted in the Regulation SBSR Adopting Release.
In the Regulation SBSR Adopting Release, the Commission estimated that there will likely be approximately 3 million reportable events per year under Rule 901.
Based on the Commission's assessment of the effect of the amendments to Rule 901(a)(2)(ii)(E) adopted herein, the Commission believes that there will be approximately 2,700 additional reportable events per year under Rule 901.
Based on these estimates, the Commission believes that Rule 901(a) will result in the additional new respondents resulting from amendments to Rule 901(a)(2)(ii)(E), having a total burden of 7.6 hours attributable to the initial reporting of security-based swaps by respondents to registered SDRs under Rules 901(c) and 901(d) over the course of a year.
Based on the foregoing and applying the same calculation methods used in the Regulation SBSR Adopting Release, the Commission estimates that the amendments to Rule 901 proposed in the U.S. Activity Proposal and adopted herein will impose an estimated total first-year burden of approximately 1,362 hours per respondent
In addition to amendments to Rule 901 to assign the duty to report security-based swaps in certain cross-border situations proposed in the U.S. Activity Proposal, in this release the Commission also is assigning the duty to report security-based swaps that are clearing transactions or are executed on a platform and will be submitted to clearing. To facilitate such reporting, the Commission is adopting amendments to Rules 901(a)(1), (a)(2)(i), and (a)(3). Specifically, under new Rule 901(a)(1), if a security-based swap is executed on a platform and will be submitted to clearing, the platform on which the transaction was executed shall have the duty to report the transaction to a registered SDR. New Rule 901(a)(2)(i) assigns the reporting duty for a clearing transaction to the registered clearing agency that is a counterparty to the security-based swap. New Rule 901(a)(3) requires any person that has a duty to report a security-based swap that is submitted to clearing—which would be a platform or a reporting side—to provide the registered clearing agency with the transaction ID of the alpha and the identity of the registered SDR to which the alpha will be reported or has been reported.
The amendments to Rules 901(a)(1) and (a)(2)(i) adopted herein assign reporting duties for security-based swap transactions, in certain enumerated cases set forth in these rules, to platforms and registered clearing agencies, respectively. The Commission estimates that these amendments to Rule 901(a) will result in 14 additional respondents incurring the duty to report under Regulation SBSR: Ten platforms and four registered clearing agencies.
Pursuant to Rule 901, all security-based swap transactions must be reported to a registered SDR or to the Commission. Together, paragraphs (a), (b), (c), (d), (e), (h), and (j) of Rule 901 set forth the parameters that reporting entities must follow to report security-based swap transactions. Because platforms and registered clearing agencies now have the duty to report, initial and ongoing burdens will be placed on these entities. The Commission continues to believe that these burdens will be a function of, among other things, the number of reportable events and the data elements required to be reported for each such event.
In the Regulation SBSR Adopting Release, the Commission estimated that respondents will face three categories of burdens to comply with Rule 901.
In the Regulation SBSR Adopting Release, the Commission estimated that the total burden placed upon reporting sides as a result of existing Rule 901 will be approximately 1,361 hours
In the Regulation SBSR Adopting Release, the Commission estimated that there will be approximately 3 million reportable events per year under Rule 901, of which approximately 2 million will consist of uncleared transactions (
In this release, the Commission is adopting amendments to Rule 901 that assign the reporting duty for these 1 million reportable events to platforms and registered clearing agencies. The Commission estimates that, of the 1 million reportable events, approximately 370,000 will be new security-based swap transactions.
The Commission estimates that registered clearing agencies will be responsible for reporting 880,000 reportable events.
The Commission estimates that the amendments to Rule 901 will impose ongoing annualized aggregate burdens of approximately 714 hours per platform
The Commission estimates that the amendments to Rule 901 will impose ongoing annualized aggregate burdens of approximately 1,754 hours per registered clearing agency
The Commission recognizes that some entities that will qualify as platforms or registered clearing agencies may have already spent time and resources building the infrastructure that will support their eventual reporting of security-based swaps. The Commission notes that, as a result, the burdens and costs estimated herein could be greater than those actually incurred by affected parties as a result of compliance with the amendments to Rule 901(a). Nonetheless, the Commission believes that its estimates represent a reasonable approach to estimating the paperwork burdens associated with the amendments to Rule 901(a).
Rule 901(a)(3), as adopted herein, requires a person who has the duty to report an alpha security-based swap to promptly provide the registered clearing agency to which the alpha has been submitted the transaction ID of the submitted security-based swap and the identity of the registered SDR to which the transaction will be or has been
Bunched order executions and the security-based swaps that result from their allocation are types of security-based swaps that must be reported pursuant to Rule 901(a). In the Regulation SBSR Adopting Release, the Commission provided guidance regarding how Regulation SBSR applies to uncleared bunched order executions and the security-based swaps that result from their allocation.
This guidance does not increase the number of respondents under Regulation SBSR or increase the burdens for any respondent.
In the Regulation SBSR Proposed Amendments Release, the Commission set forth the application of Regulation SBSR to a prime brokerage transaction involving three security-based swap legs. In Section VII(B)(2),
Based on the foregoing, the Commission estimates the following aggregate total PRA burdens and costs, by category of entity, resulting from Rule 901, as contained in the Regulation SBSR Adopting Release and as amended in this release.
As discussed in Section XI(B)(2)(b)(iii)(a),
As discussed in Section XI(B)(2)(b)(iii)(a),
The Commission believes that, as a result of amendments to Rule 901(a)(2)(ii)(E) adopted herein, there will be 20 new broker-dealer respondents who will incur reporting responsibilities, and that they will incur first-year burdens of 1,362 hours. The Commission further believes that these new respondents will incur annual burdens of 655 hours each year thereafter. In addition, the Commission believes that these new respondents will incur annual costs of $201,000.
In the Regulation SBSR Adopting Release, the Commission estimated that reporting sides will incur a first-year burden of 1,394 hours per reporting side and an hourly burden of 687 hours annually thereafter.
Existing Rule 905 sets out a process for correcting errors in reported and disseminated security-based swap information. Under Rule 905(a)(1), where a counterparty that was not on the reporting side for a security-based swap transaction discovers an error in the information reported with respect to such security-based swap, that counterparty must promptly notify the reporting side of the error. Under existing Rule 905(a)(2), where a reporting side for a security-based swap transaction discovers an error in the information reported with respect to a security-based swap, or receives notification from its counterparty of an error, the reporting side must promptly submit to the entity to which the security-based swap was originally reported an amended report pertaining to the original transaction. An amended report must be submitted to a registered SDR in a manner consistent with the policies and procedures of the registered SDR required pursuant to Rule 907(a)(3).
Existing Rule 905(b) sets forth the duties of a registered SDR relating to corrections. If the registered SDR either discovers an error in a transaction on its system or receives notice of an error from a reporting side, the registered SDR must verify the accuracy of the terms of the security-based swap and, following such verification, promptly correct the erroneous information contained in its system. Rule 905(b)(2) further requires that, if such erroneous information relates to a security-based swap that the registered SDR previously disseminated and falls into any of the categories of information enumerated in Rule 901(c), the registered SDR must publicly disseminate a corrected transaction report of the security-based swap promptly following verification of the trade by the counterparties, with an indication that the report relates to a previously disseminated transaction.
In the Regulation SBSR Adopting Release, the Commission estimated that Rule 905(a) will impose an initial, one-time burden associated with designing and building a reporting side's reporting system to be capable of submitting amended security-based swap transactions to a registered SDR. The Commission further estimated that Rule 905(a) will impose on all reporting sides an initial (first-year) aggregate burden of 15,015 hours, which is 50.0 burden hours per reporting side,
With regard to non-reporting-side participants, the Commission estimated in the Regulation SBSR Adopting Release that Rule 905(a) will impose an initial and ongoing burden associated with promptly notifying the reporting side after discovery of an error as required under Rule 905(a)(1).
Existing Rule 905(b) requires a registered SDR to develop protocols regarding the reporting and correction of erroneous information. In the Regulation SBSR Adopting Release, the Commission noted that the rules adopted in the SDR Adopting Release generally require a registered SDR to have the ability to collect and maintain security-based swap transaction reports and update relevant records and, in light of these broader duties, that the burdens imposed by Rule 905(b) on a registered SDR will represent only a minor extension of these main duties.
The Commission estimated in the Regulation SBSR Adopting Release that the initial (first-year) aggregate annualized burden on registered SDRs under Rule 905 will be 21,900 burden hours, which corresponds to 2,190 burden hours for each registered SDR.
In this release, the Commission is adopting amendments to Rule 905 that broaden the scope and increase the number of respondents that will incur duties under the rule. These amendments will not increase the number of registered SDRs that are respondents to the rule or increase the burdens on SDRs.
Certain provisions of Rule 905 of Regulation SBSR contain “collection of information requirements” within the meaning of the PRA. The title of these collections are: (a) “Rule 905—Correction of Errors in Security-Based Swap Information—For New Broker-Dealer Respondents”; (b) “Rule 901— Correction of Errors in Security-Based Swap Information—For Platforms”; and (c) “Rule 901— Correction of Errors in Security-Based Swap Information—For Registered Clearing Agencies.”
Rule 905, as adopted in the Regulation SBSR Adopting Release, imposes duties on: (1) Non-reporting sides, to inform the reporting side if the non-reporting side discovers an error; (2) reporting sides, to correct the original transaction report if the reporting side discovers an error or is notified of an error by the non-reporting side; and (3) registered SDRs, upon discovery of an error or receipt of a notice of an error, to verify the accuracy of the terms of the security-based swap and, following such verification, correcting the record and, if necessary, publicly disseminating a corrected transaction report. The amendments to Rule 905, as adopted herein, do not alter the basic duties under Rule 905 but instead are designed to account for the fact that a person other than a side might, under other amendments adopted herein, have the duty to report the initial transaction. Thus, Rule 905, as amended herein, requires non-reporting sides to notify “the person having the duty to report the security-based swap” of the error (not “the reporting side”), and “the person having the duty to report the security-based swap” (not “the reporting side”) must correct the original transaction report if such person discovers an error or is notified of an error by a non-reporting side.
The amendments to Rule 905 adopted herein do not alter the nature of the duties incurred by registered SDRs. However, amendments to other parts of Regulation SBSR adopted herein will increase the number of security-based swap transactions that must be reported to a registered SDR. Because the Commission assumes that some number of those transactions will be reported with errors and will have to be corrected pursuant to Rule 905, these other amendments will indirectly increase the burdens imposed on registered SDRs by Rule 905(b), because registered SDRs will have to correct the records for more transactions (and, in appropriate cases, disseminate more corrected transaction reports). These amendments also will increase the number of non-reporting sides and “persons having the duty to report the security-based swap” who will incur duties under Rule 905(a).
The Commission previously estimated that Rule 905, as adopted in the Regulation SBSR Adopting Release, will have the following respondents: 300 reporting sides that incur the duty to report security-based swap transactions pursuant to existing Rule 901 and thus might incur duties to submit error corrections to registered SDRs under Rule 905(a)(2); up to 4,800 participants of one or more SDRs (or non-reporting sides) that might incur duties under Rule 905(a)(1); and ten registered SDRs that might incur duties under Rule 905(b).
As a result of various amendments being adopted today, the Commission estimates that ten platforms, four registered clearing agencies, and 20 new broker-dealers respondents (exclusive of SB SEFs) also will incur duties under Rule 905(a)(2), because these entities will incur the duty to report initial transactions and thus will likely have to report some error corrections. The Commission's estimates of the number of reporting sides (300), non-reporting sides (4,800), and registered SDRs (10) that will be respondents of Rule 905 remain unchanged. However, the Commission now believes that four registered clearing agencies, ten platforms, and 20 new broker-dealer respondents will also like have to report some error corrections.
In the U.S. Activity Proposal, the Commission preliminarily estimated that the incremental burden imposed on registered broker-dealers to comply with the error reporting requirements of Rule 905 would be equal to 5% of the one-time and annual burdens associated with designing and building the reporting infrastructure necessary for reporting transactions under Rule 901, plus 10% of the corresponding one-time and annual burdens associated with developing the reporting side's overall compliance program required under Rule 901.
The Commission is applying the same methodology for calculating the burdens of error reporting by reporting sides to calculating the burdens of error reporting by platforms, under the amendments to Rule 905(a). However, the Commission believes that, on average, a platform will be reporting a greater number of reportable events than, on average, a reporting side. As a result, the Commission believes that a platform will likely be required to report more error corrections than an average reporting side, so the burdens imposed
The Commission also believes that this methodology is applicable to the error reporting that will be done by registered clearing agencies as a result of the amendments to Rule 905(a).
For non-reporting sides, the Commission estimated in the Regulation SBSR Adopting Release that the annual burden (first-year and each subsequent year) will be 998,640 hours, which corresponds to 208.05 burden hours per non-reporting-side participant.
Rule 905(b) requires a registered SDR to undertake certain actions if it discovers or receives notice of an error in a transaction report. The Commission stated in the Regulation SBSR Adopting Release that it believes that this duty will represent only a minor extension of other duties of registered SDRs for which the Commission is estimating burdens.
As discussed above, the Commission estimated in the Regulation SBSR Adopting Release that the initial (first-year) aggregate annualized burden on registered SDRs under Rule 905 will be 21,900 burden hours, which corresponds to 2,190 burden hours for each registered SDR.
The amendments adopted herein do not increase the number of registered SDRs that are respondents to Rule 905(b), but they do increase the number of error reports that will have to be processed by each registered SDR. The Commission notes, however, consistent with its analysis in the Regulation SBSR Adopting Release, that any burdens associated with Rule 905 for registered SDRs are a result of systems development, support, and maintenance and are not dependent on the number of error reports received or processed. Consequently, for registered SDRs, the Commission estimates that the initial (first-year) aggregate annualized burden on registered SDRs under Rule 905, as previously adopted and as amended herein, will be 21,900 burden hours, which corresponds to 2,190 burden hours for each registered SDR.
As discussed above, the Commission estimates that Rule 905(a) will impose an initial (first-year) burden on each reporting side of 50 hours for a total aggregate first-year burden on all reporting sides of 15,000 hours
Furthermore, for platforms, the Commission estimates that the amendments to Rule 905(a) will impose an initial (first-year) burden of 51.4 hours per platform for a total aggregate first-year burden on all platforms of 514 hours,
The Commission estimates that the annual burden on non-reporting sides will remain unchanged at 208.1 burden hours per non-reporting-side participant, for a total aggregate annual burden (first-year and each subsequent year) of 998,640 hours for all non-reporting-side participants.
The Commission estimates that the initial (first-year) aggregate annualized burden on registered SDRs will be 2,190 burden hours for each registered SDR, for a total aggregate first-year burden of 21,900 hours on all registered SDRs.
In summary, the Commission estimates that the aggregate first-year burden of Rule 905 for all entities will be 1,037,635 hours.
Existing Rule 906(a) sets forth a procedure designed to ensure that a registered SDR obtains relevant UICs for both sides of a security-based swap, not just of the reporting side. Rule 906(a) requires a registered SDR to identify any security-based swap reported to it for which the registered SDR does not have a counterparty ID and (if applicable) broker ID, trading desk ID, and trader ID of each direct counterparty. Rule 906(a) further requires the registered SDR, once a day, to send a report to each participant identifying, for each security-based swap to which that participant is a counterparty, the security-based swap(s) for which the registered SDR lacks counterparty ID and (if applicable) broker ID, trading desk ID, and trader ID. Finally, Rule 906(a) requires a participant that receives such a report to provide the missing ID information to the registered SDR within 24 hours.
Existing Rule 906(b) requires each participant of a registered SDR to provide the registered SDR with information sufficient to identify the participant's ultimate parent(s) and any
Existing Rule 906(c) requires each participant that is a registered security-based swap dealer or registered major security-based swap participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with any security-based swap transaction reporting obligations in a manner consistent with Regulation SBSR. In addition, Rule 906(c) requires each such participant to review and update its policies and procedures at least annually.
Accordingly, in the Regulation SBSR Adopting Release, the Commission estimated that the initial aggregate annualized burden for registered SDRs under Rule 906(a) will be 4,200 burden hours for all SDR respondents, which corresponds to 420 burden hours per registered SDR.
Existing Rule 906(b) requires every participant of a registered SDR to provide that SDR an initial ultimate parent/affiliate report and updates as needed. In the Regulation SBSR Adopting Release, the Commission estimated that there will be 4,800 participants, that each participant will connect to two registered SDRs on average, and that each participant will submit two Rule 906(b) reports each year.
Existing Rule 906(c) requires each participant that is a registered security-based swap dealer or registered major security-based swap participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with applicable security-based swap reporting obligations, and to review and update such policies and procedures at least annually. In the Regulation SBSR Adopting Release, the Commission estimated that the one-time, initial burden for each covered participant
In sum, the Commission in the Regulation SBSR Adopting Release estimated that the total initial aggregate annualized burden associated with Rule 906 will be 230,370 burden hours, and that the total ongoing aggregate annualized burden will be 217,370 burden hours for all participants.
In this release, the Commission is making only a minor amendment to Rule 906(a)
However, because of the amendments to Rule 901(a) adopted herein, the scope of transactions covered by Regulation SBSR is increasing. As a result, a registered SDR will have to review a larger number of transactions to assess whether there is missing UIC information. The Commission believes that the process whereby a registered SDR reviews transactions and generates the associated reports will be automated, and that the costs of performing this automated review will be approximately the same even if the review covers a larger set of transactions. Furthermore, although Rule 906(a) notices sent by a registered SDR could in some cases be longer because they cover more transactions, the amendments to Rule 901(a) will not increase the number of participants (4,800) to which the registered SDR will likely have to send such notices. Therefore, the Commission does not believe that the larger number of transactions will result in any burdens on registered SDRs under Rule 906(a) that were not already accounted for in the Regulation SBSR Adopting Release.
With respect to the 4,800 participants that will likely be required to provide missing UIC information to a registered SDR for at least some transactions, the Commission is revising its original estimate of the burdens imposed by Rule 906(a) because participants will have to provide missing UIC information for a larger number of transactions. Although a registered SDR's process for generating a Rule 906(a) notice is likely to be automated, at least some participants might rely on manual procedures to reply. In the Regulation SBSR Adopting Release, the Commission estimated that the initial and ongoing annualized burden under Rule 906(a) for all participants will be 199,728 burden hours, which corresponds to 41.6 burden hours per participant.
The Commission continues to believe that there will be approximately one million additional reportable events under Regulation SBSR.
Existing Rule 906(b) requires each participant of a registered SDR to provide the registered SDR information sufficient to identify its ultimate parent(s) and any affiliate(s) of the participant that also are participants of the registered SDR, using ultimate parent IDs and participant IDs. In this release, the Commission is adopting amendments to Rule 906(b) to
Platforms and registered clearing agencies were not covered respondents to Rule 906(b) when the Commission estimated the burdens of Rule 906(b), as adopted in the Regulation SBSR Adopting Release. Therefore, the amendment to Rule 906(b) adopted today that specifically excludes them does not affect the Commission's estimate in the Regulation SBSR Adopting Release of the burdens associated with Rule 906(b).
However, externally managed investment vehicles
Persons that are subject to Rule 906(c) must establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with applicable security-based swap transaction reporting obligations. Respondents also must review and update their policies and procedures at least annually.
The amendments to Rule 906(c) adopted today will extend the requirements of existing Rule 906(c) to registered clearing agencies, platforms, and registered broker-dealers that incur duties to report security-based swaps pursuant to Rule 901(a)(2)(ii)(E)(
In the U.S. Activity Proposal, the Commission preliminarily estimated that the one-time, initial burden for each respondent broker-dealer to adopt written policies and procedures as required under the amendment to Rule 906(c) would be similar to the Rule 906(c) burdens for existing covered participants.
Based on the foregoing, the Commission estimates the following aggregate total PRA burdens and costs, by category of entity, resulting from Rule 906. These figures add the burdens and costs estimated in the Regulation SBSR Adopting Release for the existing covered participants with the burdens and costs estimated for the additional covered participants resulting from the amendments to Rule 906(c) adopted herein.
The Commission estimates that the one-time, initial burden for each registered clearing agency or platform to adopt written policies and procedures as required under the amendments to Rule 906(c) will be similar to the Rule 906(c) burdens discussed in the Regulation SBSR Adopting Release for covered participants, and will be approximately 216 burden hours per registered clearing agency or platform.
As a result of changes in other rules, registered SDRs will have to identify missing UIC information from a larger number of transactions and send more requests to non-reporting sides seeking such missing UIC information.
In the Regulation SBSR Adopting Release, the Commission estimated that there will be a one-time, initial burden of 112 burden hours for each registered SDR to create a report template and develop the necessary systems and processes to produce a daily report
In the Regulation SBSR Adopting Release, the Commission estimated that there will be an ongoing annualized burden of 308 burden hours for each registered SDR to generate and issue the daily reports, and to enter into its systems the UIC information supplied by participants in response to the daily reports, or 3,308 burden hours for all SDRs.
The Commission estimates that, as a result of the amendments adopted herein, the initial and ongoing annualized burden under Rule 906(a) for all participants will be 222,504 burden hours, which corresponds to 46.4 burden hours per participant.
In the Regulation SBSR Adopting Release, the Commission estimated that the initial and ongoing aggregate annualized burden associated with Rule 906(b) will be 9,600 burden hours, which corresponds to 2 burden hours per participant.
In this release, the Commission is adopting an amendment to Rule 906(c) that extends the requirement to establish policies and procedures for carrying out reporting duties under Regulation SBSR to platforms, registered clearing agencies, and registered broker-dealers that incur a duty to report security-based swaps under new Rule 901(a)(2)(ii)(E)(
In sum, Rule 906(a) will place a total first-year burden on registered SDRs of 1,120 hours.
Existing Rule 907(a) requires a registered SDR to establish and maintain written policies and procedures with respect to the receipt, reporting, and public dissemination of security-based swap transaction information. Existing Rule 907(c) requires a registered SDR to make its policies and procedures available on its Web site. Existing Rule 907(d) requires a registered SDR to review, and update as necessary, the policies and procedures that it is required to have by Regulation SBSR at least annually. Existing Rule 907(e) requires a registered SDR to provide to the Commission, upon request, information or reports related to the timeliness, accuracy, and completeness of data reported to it pursuant to Regulation SBSR and the registered SDR's policies and procedures established thereunder.
In this release, the Commission is making only one amendment to Rule 907: The Commission is revising Rule 907(a)(6) to carve out platforms, registered clearing agencies, externally managed investment vehicles, and registered broker-dealers (including SB SEFs) that become a participant of a registered SDR solely as a result of making a report to satisfy an obligation under Rule 901(a)(2)(ii)(E)(
However, amendments to other rules in Regulation SBSR will have the effect of requiring a registered SDR to expand its policies and procedures to cover additional types of reporting persons and additional types of reporting scenarios. For example, platforms and registered broker-dealers may now incur duties to report certain security-based swaps and are required to become participants of registered SDRs to which they report. In addition, a registered clearing agency also incurs the duty to report to the alpha SDR whether the clearing agency has accepted an alpha for clearing. Registered SDRs that record alpha transactions will have to expand their policies and procedures to be able to link the report of the original alpha transaction (which would be reported either by a reporting side or, if the alpha was platform-executed and will be submitted to clearing, by the platform) to the report of the clearing disposition, which would be submitted by the registered clearing agency.
In the Regulation SBSR Adopting Release, the Commission estimated that the one-time, initial burden for a registered SDR to adopt written policies and procedures as required under existing Rule 907 will be approximately 15,000 hours. In addition, the Commission estimated the annual burden of maintaining such policies and procedures, including a full review at least annually, making available its policies and procedures on the registered SDR's Web site, and information or reports on non-compliance (as required under Rule 907(e)) will be approximately 30,000 hours for each registered SDR. The Commission estimated that the total initial annualized burden associated with Rule 907 will be approximately 45,000 hours per registered SDR, which corresponds to an initial annualized aggregate burden of approximately 450,000 hours.
As a result of amendments made to various provisions of Regulation SBSR in this release, registered SDRs will need to broaden the scope of the written policies and procedures that Rule 907 requires them to have.
Accordingly, the Commission believes that the one-time, initial burden for a registered SDR to adopt written policies and procedures as required under Rule 907 will be approximately 16,500 hours.
Rule 908(a) defines when certain cross-border security-based swap transactions are subject to regulatory reporting and/or public dissemination. Rule 908(a), as adopted in the Regulation SBSR Adopting Release, covered security-based swaps consisting of only certain counterparty pairs. Existing Rule 908(a)(1)(i) provides that a security-based swap shall be subject to regulatory reporting and public dissemination if “[t]here is a direct or indirect counterparty that is a U.S. person on either or both sides of the transaction,” and existing Rule 908(a)(1)(ii) provides that a security-based swap shall be subject to regulatory reporting and public dissemination if “[t]he security-based swap is submitted to a clearing agency having its principal place of business in the United States.” Existing Rule 908(a)(2) provides that a security-based swap not included within Rule 908(a)(1) would be subject to regulatory reporting but not public dissemination “if there is a direct or indirect counterparty on either or both sides of the transaction that is a registered security-based swap dealer or a registered major security-based swap participant.” Rule 908(a), as adopted in the Regulation SBSR Adopting Release, did not otherwise address when an uncleared security-based swap involving only unregistered non-U.S. persons would be subject to regulatory reporting and/or public dissemination.
Rule 908(b) defines when a person might incur obligations under Regulation SBSR. Existing Rule 908(b) provides that, notwithstanding any other provision of Regulation SBSR, a person shall not incur any obligation under Regulation SBSR unless it is a U.S. person, a registered security-based swap dealer, or a registered major security-based swap participant.
The Commission stated in the Regulation SBSR Adopting Release that Rules 908(a) and 908(b) do not impose any collection of information requirements and that, to the extent that a security-based swap transaction or a person is subject to Rule 908(a) or (b), respectively, the collection of information burdens are calculated as part of the underlying rule (
Existing Rule 908(c) sets forth the requirements for a substituted compliance request relating to regulatory reporting and public dissemination of security-based swaps in a particular foreign jurisdiction, and is the only part of Rule 908 to impose paperwork burdens. Rule 908(c) is not being amended by this release. In the Regulation SBSR Adopting Release, the Commission estimated that it will receive approximately ten substituted compliance requests in the first year and two requests each subsequent year.
The Commission today is adopting amendments to Rule 908(a) to subject additional types of security-based swap transactions to regulatory reporting and public dissemination under Regulation SBSR, and amendments to Rule 908(b) to clarify that additional types of persons may incur duties under Regulation SBSR. However, these amendments do not themselves impose any paperwork burdens. Additional paperwork burdens caused by increasing the number of respondents or by increasing the burdens imposed on respondents are considered under the rule that imposes the substantive duties. The Commission is not amending Rule 908(c) herein.
Because the only part of Rule 908 that imposes any paperwork burdens is paragraph (c), the Commission's estimate from the Regulation SBSR Adopting Release of the total paperwork burden associated with Rule 908(c) remains approximately 1,120 hours, plus $1,120,000 for 14 substituted compliance requests.
The security-based swap transaction information that is required by the amendments to Regulation SBSR adopted herein will be used by registered SDRs, market participants, the Commission, and other relevant authorities. The information reported by respondents pursuant to the amendments to Regulation SBSR adopted herein will be used by registered SDRs to publicly disseminate reports of security-based swap transactions, as well as to offer a resource for the Commission and other relevant authorities to obtain detailed information about the security-based swap market. Market participants also will use the information about these transactions that is publicly disseminated, among other things, to assess the current market for security-based swaps and any underlying and related securities, and to assist in the valuation of their own positions. The Commission and other relevant authorities will use information about security-based swap transactions reported to and held by registered SDRs to monitor and assess systemic risks, as well as to examine for and consider whether to take enforcement action against potentially abusive trading behavior, as appropriate.
The policies and procedures required under the amendments to Regulation SBSR will be used by participants to aid in their compliance with Regulation SBSR, and also used by the Commission as part of its ongoing efforts to monitor and enforce compliance with the federal securities laws, including Regulation SBSR, through, among other things, examinations and inspections.
Apart from the duty to report certain transaction information, Regulation SBSR does not impose any recordkeeping requirement on reporting sides.
Security-based swap transaction information received by a registered SDR pursuant to Regulation SBSR is subject to Rule 13n-5(b)(4) under the Exchange Act,
The Commission has proposed recordkeeping requirements for registered clearing agencies
Each collection of information discussed above is mandatory.
An SDR, pursuant to Section 13(n)(5)(F) of the Exchange Act
The Dodd-Frank Act amended the Exchange Act, among other things, to require regulatory reporting and public dissemination of security-based swap transactions. Regulation SBSR, which the Commission adopted in February 2015, implements this mandate. At the same time that it adopted Regulation SBSR, the Commission proposed additional rules and guidance to address issues that were not resolved in the Regulation SBSR Adopting Release.
The Commission is sensitive to the economic consequences and effects, including costs and benefits, of its rules. Some of these costs and benefits stem from statutory mandates, while others are affected by the discretion exercised in implementing these mandates. The following economic analysis identifies and considers the benefits and costs that could result from the amendments adopted herein. The Commission also discusses the potential economic effects of certain alternatives to the approach taken by these amendments. To the extent applicable, the views of commenters relevant to the Commission's analysis of the economic effects, costs, and benefits of these amendments are included in the discussion below.
In this section, the Commission discusses the programmatic costs and benefits associated with the amendments to Regulation SBSR adopted in this release. This discussion includes a summary of and response to comments relating to the Commission's initial analysis of the costs and benefits associated with these amendments.
New Rule 901(a)(2)(i) provides that the reporting side for a clearing transaction is the registered clearing agency that is a direct counterparty to the clearing transaction, and allows the registered clearing agency to select the SDR. New Rule 901(a)(3) requires any person that has a duty to report a security-based swap that has been submitted to clearing at a registered clearing agency to promptly provide that registered clearing agency with the transaction ID of the submitted security-based swap and the identity of the registered SDR to which the transaction will be reported or has been reported. These amendments to Rule 901 will impose initial and ongoing costs on platforms, registered clearing agencies, and reporting entities. These costs will be a function of the number of additional events reportable as a result of these amendments and the number of data elements required to be submitted for each additional reportable event.
The Commission believes that platforms and registered clearing agencies, when carrying out duties to report security-based swaps, will generally incur the same infrastructure costs that reporting sides face. Like a reporting side, a platform or registered clearing agency must: (1) Develop a transaction processing system; (2) implement a reporting mechanism; and (3) establish an appropriate compliance program and support for the operation of the transaction processing system.
For platforms, the costs of reporting infrastructure consist of start-up costs in the first year and ongoing costs each year thereafter. For each platform, the estimated start-up costs include: (1) $102,000 for the initial set-up of the reporting infrastructure to carry out duties under Rule 901;
The Commission estimates that the amendments to Rule 901 being adopted today also will require each platform to incur the following ongoing costs: (1) $200,000 for maintaining connectivity to a registered SDR;
The Commission estimates that a registered clearing agency will have the same reporting infrastructure cost components as a platform, except that the costs to a registered clearing agency will be marginally higher because Rule 901(e)(1)(ii), as adopted herein, imposes a burden on registered clearing agencies that does not apply to platforms.
For each registered clearing agency, the estimated start-up costs consist of: (1) $102,000 for the initial setting-up of the reporting infrastructure to carry out duties under Rule 901; (2) $400,000 for establishing connectivity to a registered SDR;
For each registered clearing agency, the ongoing estimated annual costs consist of: (1) $400,000 for maintaining connectivity to a registered SDR;
The Commission previously estimated, using available transaction data from TIW, that there will be approximately 3 million transaction events per year related to security-based swaps, including the execution of new transactions and various types of life cycle events.
The Commission estimates that platforms will be responsible for reporting approximately 120,000 security-based swaps per year, at an annual cost of approximately $45,300 or $4,530 per platform,
In the Regulation SBSR Adopting Release, the Commission stated that, to the extent that security-based swaps become more standardized and trade more frequently on electronic platforms (rather than manually), the act of reporting transactions to a registered SDR should become less costly.
One commenter argued that the incremental costs of assigning the reporting obligation to the alpha reporting side would be small compared to the costs associated with registered clearing agencies incurring the reporting duty and having to establish connectivity to alpha SDRs.
The Commission recognizes that its estimate of the costs that an alpha reporting side would incur to report whether a security-based swap was accepted for clearing are lower than its estimate of the cost that a registered clearing agency would incur in order to establish connectivity to alpha SDRs to meet the same regulatory obligation under Rule 901(e)(1)(ii). Nevertheless, the Commission is adopting Rule 901(e)(1)(ii) as proposed because, as explained above, this approach is likely to efficiently support data quality at registered SDRs. Accordingly, the Commission believes that the approach reflected in newly adopted Rule 901(e)(1)(ii) is appropriate even in light of the costs. The Commission notes that existing Rule 901(c)(6) requires reporting of an indication whether the direct counterparties intend that a security-based swap will be submitted to clearing so that this information will appear in the transaction records of the alpha SDR. The Commission believes that requiring reporting to the alpha SDR of whether or not a registered clearing agency accepts the alpha for clearing will facilitate the Commission's ability to measure outstanding bilateral exposures, including exposures to registered clearing agencies.
Moreover, the Commission's determination that the clearing agency to which the security-based swap is submitted for clearing should be required to report the disposition of the alpha rather than the alpha reporting side (or a platform, in the case of a platform-executed alpha) is designed to improve the integrity of information about cleared security-based swaps. The Commission believes that centralizing responsibility for reporting this information in a small number of registered clearing agencies rather than a larger number of alpha reporting sides and platforms minimizes the likelihood of orphan alphas. The adopted approach should facilitate the ability of alpha SDRs to match clearing disposition reports with the original alpha transaction reports and help the Commission to obtain a more accurate view of the exposures of counterparties that intended to clear transactions. A
Furthermore, Rule 901(e)(1)(ii) is consistent with the Commission's approach of assigning the reporting obligation for a transaction to the person with the most complete and efficient access to the required information at the point of creation. The registered clearing agency determines whether to accept an alpha for clearing and controls the precise moment when the transaction is cleared; the Commission believes, therefore, that the clearing agency is best placed to report the result of its decision. If the alpha reporting side were required to report whether or not the alpha has been accepted for clearing, it would first need to learn this information from the registered clearing agency.
Under new Rule 901(a)(3), a person who has a duty to report an alpha transaction also is required to promptly provide the registered clearing agency with the transaction ID of the alpha transaction and the identity of the registered SDR to which the transaction will be or has been reported.
Reporting sides and platforms are likely already to have in place the infrastructure needed to report security-based swaps to a registered clearing agency, as voluntary clearing of standardized single-name CDS has become a significant feature of the existing security-based swap market in the United States. Furthermore, as additional platforms enter the security-based swap market, it is likely that they also will seek to establish connectivity to one or more registered clearing agencies, as there are market incentives to clear platform-executed security-based swaps and platforms will likely seek to offer their participants the ability to transmit information about platform-executed transactions directly to a clearing agency. Thus, the Commission does not believe that new Rule 901(a)(3) will require additional infrastructure or connectivity that otherwise would not exist.
However, Rule 901(a)(3) will require persons with the duty to report alphas to provide two additional data elements—the transaction ID of the alpha and the name of the alpha SDR—to the registered clearing agency. The Commission believes that persons who submit security-based swap transactions to registered clearing agencies will comply with Rule 901(a)(3) by including these two data elements along with all of the other transaction data submitted to the clearing agency. The Commission estimates that the one-time cost for developing the ability to report these two data elements will be $2,815 per reporting person, and the additional one-time burden related to the implementation of a reporting mechanism for these two data elements will be $1,689 per reporting person.
Summing these costs,
For registered clearing agencies, the Commission estimates that the initial, first-year costs of complying with the amendments to Rule 901 (including the initial reporting and the reporting of any life cycle events) will be $3,172,900, which corresponds to $793,225 per registered clearing agency.
For compliance with new Rule 901(a)(3), the Commission estimates that the initial, first-year costs of complying will be $1,396,240, which corresponds to $4,504 per respondent.
As noted in Section IX(G),
Under newly adopted Rule 901(a)(2)(ii)(E)(
Newly adopted Rule 901(a)(2)(ii)(E)(
In the Regulation SBSR Adopting Release,
Under new Rule 901(a)(2)(ii)(E)(
The Commission estimated the costs of reporting on a per-entity basis in the Regulation SBSR Adopting Release and has no reason to believe that these per-entity costs are substantially different
For a registered broker-dealer, the cost of reporting infrastructure consists of start-up cost in the first year and, thereafter, ongoing annual costs. For each registered broker-dealer, the start-up cost is broken down into: (1) $102,000 for the initial set-up of the reporting infrastructure to carry out duties under Rule 901; (2) $200,000 for establishing connectivity to a registered SDR; (3) $49,000 for developing, testing, and supporting a reporting mechanism for security-based swap transactions; (4) $77,000 for order management costs; (5) $1,000 for data storage costs; (6) $54,000 for designing and implementing an appropriate compliance and support program; and (7) $38,500 for maintaining the compliance and support program.
For each registered broker-dealer, the ongoing annual cost consists of: (1) $200,000 for maintaining connectivity to a registered SDR;
The amendments to Rule 905(a) adopted herein provide that any counterparty or other person having a duty to report a security-based swap that discovers an error in information previously reported pursuant to Regulation SBSR must correct such error in accordance with the procedures laid out in Rule 905(a). As the Commission noted in the Regulation SBSR Adopting Release, requiring participants to promptly correct erroneous transaction information should help ensure that the Commission and other relevant authorities have an accurate view of the risks in the security-based swap market.
In the Regulation SBSR Adopting Release, the Commission estimated that Rule 905(a) will impose an initial, one-time burden associated with designing and building a reporting side's reporting system to be capable of submitting amended security-based swap transaction information to a registered SDR.
The Commission continues to believe that the above methodology is applicable to error reporting by platforms and registered clearing agencies under the amendment to Rule 905(a). Thus, for these new respondents, the Commission estimates that Rule 905(a) will impose an initial (first-year) aggregate cost of $165,550, or $11,825 per respondent,
The Commission estimates that four unregistered foreign dealing entities will engage in ANE activity and incur a duty to report as a result of new Rules 901(a)(2)(ii)(E)(
The Commission estimates that 20 registered broker-dealers, excluding SB SEFs, will incur a duty to report security-based swap transactions because of new Rule
The Commission continues to believe that the cost estimation methodology previously applied in the Regulation SBSR Adopting Release is applicable to error reporting by registered broker-dealers.
Rule 905(a)(1) as amended herein states that, if a person that was not the reporting side for a security-based swap transaction discovers an error in the information reported with respect to such security-based swap, that person shall promptly notify the person having the duty to report the security-based swap of the error. Clients of registered broker-dealers likely will incur costs, because Rule 905(a)(1) requires them to notify registered broker-dealers of errors in transaction reports made by the registered broker-dealers pursuant to Rule 901(a)(2)(ii)(E)(
Existing Rule 906(c) requires each participant of a registered SDR that is a registered security-based swap dealer or registered major security-based swap participant to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure compliance with any security-based swap transaction reporting obligations in a manner consistent with Regulation SBSR. Rule 906(c) also requires each such participant to review and update the required policies and procedures at least annually. The amendment to Rule 906(c) adopted herein extends these same requirements to participants of a registered SDR that are platforms, registered clearing agencies, and registered broker-dealers.
The Commission continues to believe that the cost estimation methodology previously applied in the Regulation SBSR Adopting Release is applicable to the adoption and maintenance of policies and procedures.
New Rule 908(a)(1)(v) provides that any security-based swap transaction connected with a non-U.S. person's security-based swap dealing activity that is arranged, negotiated, or executed by U.S. personnel is subject to regulatory reporting and public dissemination under Regulation SBSR.
Several commenters expressed concern about the complexities and expense of implementing the adopted rules.
The Commission agrees that market participants will incur costs to comply with the reporting requirements of Rule 908(a)(1)(v). However, the Commission notes that all ANE transactions where a U.S. person is on one side as either a direct or indirect counterparty are already subject to regulatory reporting under the rules adopted in the Regulation SBSR Adopting Release. Thus, only a small number of ANE transactions—which the Commission estimates will result in at most 1,080 reportable events per year—will be subject to regulatory reporting as a result of new Rule 908(a)(1)(v); accordingly, the attendant costs of complying with Rule 908(a)(1)(v) will also be relatively small. The Commission understands that market participants may have to incur costs to modify their existing reporting systems to comply with the Commission's rules.
The Commission believes that the reporting and public dissemination of all ANE transactions will provide benefits to the Commission and relevant authorities and to market participants. The Commission also believes that requiring the public dissemination of these transactions could help to increase price competition and price efficiency in the security-based swap market and enable all market participants to have more comprehensive information with which to make trading and valuation determinations. Publicly disseminating these transactions also could reduce implicit transaction costs.
New Rule 908(a)(1)(iii) requires any security-based swap transaction that is executed on a platform having its principal place of business in the United States both to be reported to a registered SDR and to be publicly disseminated pursuant to Regulation SBSR. New Rule 908(a)(1)(iv) requires the reporting and public dissemination of any security-based swap transaction that is effected by or through a registered broker-dealer (including a registered SB SEF). The Commission notes that many security-based swaps that are executed on platforms or by or through a registered broker-dealer are already subject to Regulation SBSR because they meet one or both prongs of existing Rule 908(a)(1)—
One commenter suggested that new Rule 908(a)(1)(iv) could provide incentives for non-U.S. counterparties to avoid transacting through registered broker-dealers, resulting in market fragmentation that would lead to adverse effects on risk management, market liquidity, and U.S. jobs.
Rule 908(b) clarifies the types of persons that can incur duties under Regulation SBSR. In the Regulation SBSR Proposed Amendments Release, the Commission proposed to amend Rule 908(b) by adding platforms and registered clearing agencies to the list of persons that might incur obligations under Regulation SBSR.
The Commission also is adopting new Rule 908(b)(5) to include a non-U.S. person that, in connection with such person's security-based swap dealing activity, arranged, negotiated, or executed a security-based swap using U.S. personnel. Because existing Rule 908(b)(2) covers a non-U.S. person that is registered as a security-based swap dealer, the effect of new Rule 908(b)(5) is to cover a foreign dealing entity that engages in ANE activity but that does not meet the
The costs incurred by an unregistered non-U.S. person that falls under Rule 908(b)(5) include the costs of setting up reporting infrastructure and compliance systems, which have been discussed in connection with the adoption of new Rules 901(a)(2)(ii)(E)(
As discussed in Section V(A),
Existing Rule 906(b) generally requires a participant of a registered SDR to provide the identity of its ultimate parent and any affiliates that also are participants of that registered SDR. In the Regulation SBSR Proposed Amendments Release, the Commission proposed to amend Rule 906(b) to except platforms and registered clearing agencies from this requirement. In the U.S. Activity Proposal, the Commission further proposed to amend Rule 906(b) to except from this requirement a registered broker-dealer that becomes a participant solely as a result of making a report to satisfy an obligation under Rule 901(a)(2)(ii)(E)(
Existing Rule 906(c) requires certain participants of a registered SDR to establish, maintain, and enforce written policies and procedures that are reasonably designed to ensure that the participant complies with any obligations to report information to a registered SDR in a manner consistent with Regulation SBSR. Rule 906(c) also requires participants covered by the rule to review and update their policies and procedures at least annually. In the Regulation SBSR Proposed Amendments Release, the Commission proposed to amend Rule 906(c) by extending this requirement to platforms and registered clearing agencies. In the U.S. Activity Proposal, the Commission proposed to amend Rule 906(c) by extending this requirement to a registered broker-dealer that incurs reporting obligations solely because it effects transactions between two unregistered non-U.S. persons that do not fall within proposed Rule 908(b)(5). In this release, the Commission is adopting the amendments to Rule 906(c) as proposed.
The Commission continues to estimate that the cost associated with establishing such policies and procedures, for each covered participant, will be approximately $58,000 and the cost associated with annual updates will be approximately $34,000.
Finally, existing Rule 901(d)(9) requires the reporting, if applicable, of the platform ID for a platform on which a security-based swap was executed. In the U.S. Activity Proposal, the Commission proposed to amend Rule 901(d)(9) to require the reporting, if applicable, of the broker ID of a registered broker-dealer (including a registered SB SEF) that is required by Rule 901(a)(2)(ii)(E)(
As discussed in Section XII(A)(1)(d),
The Commission received a number of comments relating to its analysis of the programmatic costs and benefits associated with the amendments described above.
One commenter stated that the Commission lacks complete data to estimate the number of non-U.S. persons that engage in ANE transactions or the number of registered broker-dealers that intermediate security-based swap transactions, and recommended that the Commission collect a more complete set of data to more precisely estimate the number of non-U.S. persons that would be affected by the proposed rules. The commenter further argued that the lack of complete data made it difficult for the Commission to estimate the market impact, costs, and benefits associated with amendments that apply Regulation SBSR to ANE transactions and transactions intermediated by registered broker-dealers.
The Commission acknowledges that there are limitations in the TIW data but believes that the data do allow the Commission to arrive at a reasonable estimate of the number of non-U.S. persons affected by the newly adopted rules. In Section II(A)(4)(d),
New Rule 908(b)(5) provides that an unregistered foreign dealing entity that engages in ANE transactions may incur reporting duties under Regulation SBSR, and the amendments to Rule 901(a)(2)(ii)(E) adopted herein provide that such foreign dealing entities will be the reporting side in certain cases. Thus, unregistered foreign dealing entities will incur costs to assess whether they engage in ANE transactions and, if so, whether they will incur reporting duties under Rule 901(a)(2)(ii)(E). The Commission estimates that four unregistered foreign dealing entities will incur such assessment costs. The four unregistered foreign dealing entities are in addition to the 20 additional non-U.S. persons that the Commission estimated would incur assessment costs as a result of the rules finalized in the U.S. Activity Adopting Release.
In the U.S. Activity Adopting Release, the Commission discussed the approaches that market participants may use to determine which transactions involve relevant activity involving U.S. personnel and thus would apply toward dealer
If, based on the review described above, the foreign dealing entity determines that it has U.S. personnel that could be used to arrange, negotiate, or execute security-based swaps, then the foreign dealing entity could choose between a number of alternative means of compliance.
Finally, a foreign dealing entity could avoid assessing transactions on a per-transaction basis by choosing to report all transactions to a registered SDR, regardless of the location of personnel engaged in ANE activity. Such an alternative may be reasonable for foreign dealing entities that expect few transactions involving foreign counterparties to be arranged, negotiated, or executed by personnel located outside the United States, such as foreign dealing entities that primarily transact in security-based swaps on U.S. reference entities or securities, and generally rely on personnel located in the United States to perform market-facing activities.
The Commission believes that the same principles apply to foreign dealing entities that rely on agents to arrange, negotiate, or execute security-based swaps on their behalf. The Commission anticipates that foreign dealing entities may employ any of the strategies above to comply with the final rules through the choice of their agents. For example, a foreign dealing entity may choose an agent that does not use U.S.-based personnel for arranging, negotiating, or executing security-based swap transactions with non-U.S. counterparties to avoid assessment costs. The Commission also anticipates that a foreign dealing entity might rely on representations from its agents about whether transactions conducted on its behalf involved relevant dealing activity by personnel from a location in the United States. This could occur on a transaction-by-transaction basis, or, if the agent uses personnel located in the United States in all or none of its transactions, it could choose to make a representation about the entirety of the agent's business.
As in the U.S. Activity Adopting Release, the Commission believes that a foreign dealing entity will inform its choice between the alternative compliance strategies with a one-time review of its security-based swap business lines. This review likely will encompass both employees of the foreign dealing entity as well as employees of agents used by the foreign dealing entity, and identify whether these personnel are involved in arranging, negotiating, or executing security-based swaps. The information gathered as a result of this review will allow the foreign dealing entity to assess the revenues that it expects to flow from transaction activity performed by U.S. personnel. This information also will help these market participants form preliminary estimates about the costs associated with various alternative compliance strategies, including the trade-by-trade analysis outlined above. This initial review may be followed with reassessment at regular intervals or subsequent to major changes in the market participant's security-based swap business, such as acquisition or divestiture of business units. The Commission estimates that the per-entity initial costs of a review of business lines will be approximately $104,000. Further, the Commission believes that periodic reassessment of business lines will cost, on average, $52,000 per year, per entity.
New Rules 901(a)(2)(ii)(E)(
The Commission believes that unregistered U.S. persons likely will seek to avoid the costs of assessing whether a foreign counterparty is engaging in ANE activity by choosing to transact only with registered entities for which assessment is not required.
Under new Rule 901(a)(2)(ii)(E)(
The Commission received a number of comments relating to its analysis of the assessment costs associated with the proposed amendments to Rules 901 and 908 included in the U.S. Activity Proposal. One commenter pointed out that the Commission's analysis of assessment costs was incomplete because the analysis did not account for the additional work that market participants might undertake to meet reporting requirements during the Interim Period (
As discussed in Section X(C),
Section 3(f) of the Exchange Act
The Commission believes that the amendments to Regulation SBSR adopted herein will result in further progress towards providing a means for the Commission and other relevant authorities to gain a better understanding of the aggregate risk exposures and trading behaviors of participants in the security-based swap market; facilitate public dissemination of security-based swap transaction information, thus promoting price discovery and competition by improving the level of information to all market participants; and improve risk management by security-based swap counterparties.
The economic effects of these amendments on firms that provide infrastructure services to security-based swap counterparties and the security-based swap market generally are discussed in detail below. The Commission also considered the effects that these amendments might have on efficiency, competition, and capital formation. The Commission believes that its action today is likely to affect competition among firms that provide security-based swap infrastructure services to market participants and affect efficiency as a result of the way that these amendments allocate regulatory burdens. The effects of these amendments on capital formation are likely to be indirect and will result from the way in which these amendments affect the behavior of registered clearing agencies, counterparties to security-based swaps, and registered SDRs. To the extent that these amendments promote more efficient provision of security-based swap market infrastructure services, there would be lower transactions costs,
This analysis has been informed by the relationships among regulation, competition, and market power discussed in Section II(B),
However, there could be some offsetting benefit to limited competition in the market for SDR services for both regulatory authorities and the public. A small set of registered SDRs could make it simpler for the Commission and other relevant authorities to build a complete picture of transaction activity and outstanding risk exposures in the security-based swap market, and could limit the need for market observers to aggregate the security-based swap transaction data disseminated by
The Commission also considered the effects on efficiency, competition, and capital formation stemming from the amendments to Rules 901 and 908 that will subject additional cross-border security-based swaps to regulatory reporting and public dissemination, and assign the duty to report those cross-border transactions. The adopted amendments might affect the security-based swap market in a number of ways, many of which are difficult to quantify. In particular, a number of the potential effects that the Commission discusses below are related to price efficiency, liquidity, and risk sharing. These effects are difficult to quantity for a number of reasons. First, in many cases the effects are contingent upon strategic responses of market participants. For instance, the Commission notes in Section XIII(H)(2),
Not only can some of these effects be difficult to quantify, but there are many cases where a rule could have two opposing effects, making it difficult to estimate a net impact on efficiency, competition, or capital formation. For example, in the discussion of the net effect of certain amendments to Regulation SBSR on efficiency, the Commission expects that post-trade transparency may have a positive effect on price efficiency, while it could negatively affect liquidity by providing incentives for non-U.S. persons to avoid contact with U.S. persons. The magnitude of these two opposing effects will depend on factors such as the sensitivity of traders to information about order flow, the impact of public dissemination of transaction information on the execution costs of large orders, and the ease with which non-U.S. persons can find substitutes that avoid contact with U.S. personnel. Each of these factors is difficult to quantify individually, which makes the net impact on efficiency equally difficult to quantify.
New Rule 901(a)(2)(i) assigns the duty to report a security-based swap that has a registered clearing agency as a direct counterparty to that registered clearing agency. Existing Rule 901(a) does not assign reporting obligations for any clearing transactions; thus, in the absence of Rule 901(a)(2)(i), clearing transactions would not be subject to any regulatory reporting requirement. Without a requirement for clearing transactions to be reported to a registered SDR, the Commission and other relevant authorities would have only limited ability to carry out market oversight functions. For example, while the Commission could access transaction reports of alphas and uncleared transactions, the Commission would not be able to obtain from registered SDRs information about the open security-based swap positions of the relevant counterparties after alpha transactions are cleared. Requiring that clearing transactions be reported to registered SDRs and delineating reporting responsibilities for these transactions are particularly important given the level of voluntary clearing activity in the market as well as the mandatory clearing determinations that will be required under Title VII.
The Commission believes that, because a registered clearing agency creates the clearing transactions to which it is a counterparty, the registered clearing agency is in the best position to provide complete and accurate information for the clearing transactions resulting from the security-based swaps that it clears.
New Rule 901(a)(2)(i) also allows the registered clearing agency that is required to report all clearing transactions to which it is a counterparty to select the registered SDR to which to report. As noted in Section II(B),
Vertical integration of security-based swap clearing and SDR services could be beneficial to other market participants if they ultimately share in these efficiency gains. For example, efficiency gains due to straight-through processing from execution to reporting could lower transactions costs for market participants and reduce the likelihood of data discrepancies and delays. Even if registered clearing agencies do not enter the market for SDR services, the potential for them to pursue a vertical integration strategy could motivate independent SDRs to offer more competitive service models.
The Commission is aware of the potential costs of allowing registered
The potential for efficiency gains through vertical integration of clearing agencies and SDRs could foreclose entry into the market for SDR services except by firms that are already present in the market for clearing agency services. Registered clearing agencies are more likely to benefit from efficiencies in shared infrastructure than independent SDRs, given that it is more difficult for an SDR to enter the market for clearing services than for a clearing agency to enter the market for SDR services.
As a result of new Rule 901(a)(2)(i), clearing members might find that the records of their security-based swap transactions are fragmented across multiple registered SDRs (
As discussed in Section XII(B)(1)(a),
As part of the economic analysis of the amendments adopted herein, the Commission has considered the market power that providers of security-based swap market infrastructure might be able to exercise in pricing the services that they offer and the possibility that these infrastructures could shift the costs created by regulatory burdens onto their customers. The Commission included these economic considerations in its evaluation of alternative approaches to assigning reporting obligations for clearing transactions. As outlined above, the Commission considered four alternatives for assigning these reporting obligations as well as comments received related to these alternatives. The following section discusses the likely economic effects of these alternatives, including their likely impacts on efficiency, competition, and, indirectly, capital formation.
The first alternative would be to apply the reporting hierarchy in existing Rule 901(a)(2)(ii) to clearing transactions. Under Alternative 1, a counterparty to a clearing transaction other than the clearing agency, such as a registered security-based swap dealer, would have the duty to report the clearing transaction. As discussed above, assigning reporting obligations to the non-clearing-agency side could increase the number of reporting steps, thereby increasing the possibility of
The Commission continues to believe that it is unlikely that non-clearing-agency counterparties would be subject to significant additional costs associated with building infrastructure to support regulatory reporting for clearing transactions under this alternative, for two reasons.
Second, non-clearing agency counterparties, particularly those who engage solely in cleared trades or who are not high in the reporting hierarchy, could enter into an agreement under which the registered clearing agency would submit the information to a registered SDR on their behalf. This service could be bundled as part of the other clearing services purchased, and would result in an outcome substantially similar to giving the registered clearing agency the duty to report. One difference, however, is that the customer of the registered clearing agency could, under this alternative, request that the information be submitted to a registered SDR unaffiliated with the registered clearing agency, a choice that, under the adopted approach, is at the discretion of the registered clearing agency. Nevertheless, the Commission believes that, to the extent that it is economically efficient for the registered clearing agency to report the details of cleared transactions on behalf of its counterparties, Alternative 1 would likely result in ongoing costs of data transmission for market participants and infrastructure providers that are, in the aggregate, similar to the Commission's approach in Rule 901(a)(2)(i).
If registered clearing agencies reporting to registered SDRs on behalf of counterparties is not available under Alternative 1, then some counterparties would be required to build infrastructure to support regulatory reporting for clearing transactions. Analysis of single-name CDS transactions in 2015 in which a clearing agency was a direct counterparty shows approximately 54 market participants that are not likely to register as security-based swap dealers or major security-based swap participants, and therefore might be required to build infrastructure to support regulatory reporting for clearing transactions in order to maintain current trading practices in the security-based swap market.
Under Alternative 1, non-clearing-agency counterparties would have the ability to choose which registered SDR receives their reports. Because non-clearing-agency counterparties would have this choice, registered SDRs under the alternative approach might have additional incentive to provide high levels of service to attract this reporting business by, for example, providing such counterparties with convenient access to reports submitted to the registered SDR or by supporting the counterparties' efforts at data validation and error correction. Additionally, ensuring that these counterparties have discretion over which registered SDR receives the transaction data could allow these counterparties to consolidate their security-based swap transactions into a single SDR for record-keeping purposes or for operational reasons, though only to the extent that they can identify a registered SDR that accepts reports for all relevant asset classes.
In assessing Alternative 1, the Commission recognizes that registered clearing agencies have a comparative advantage in processing and preparing data for reporting cleared transactions to a registered SDR. Registered clearing agencies terminate alpha transactions, as well as create beta and gamma transactions and all subsequent netting transactions, and so already possess all of the relevant information to report these transaction events to a registered SDR. Moreover, the volume of transactions at registered clearing agencies means that they can amortize the fixed costs of establishing and maintaining connections to a registered SDR over a large quantity of reportable activity, potentially allowing them to report transactions at a lower average cost per transaction than many other market participants, particularly non-registered persons.
The Commission believes that, given this comparative advantage, applying to clearing transactions the same reporting hierarchy that it has adopted for uncleared transactions would result in a registered clearing agency reporting the transaction data to a registered SDR of a non-clearing-agency counterparty's choice as a service to the non-clearing-agency counterparties to its clearing transactions. In this respect, the entity that performs the actual reporting of clearing transactions would likely be the same as with adopted Rule 901(a)(2)(i), which would assign this duty to the registered clearing agency. The key difference under Alternative 1 is that the non-clearing-agency counterparty would generate this responsibility through private contract and could terminate the agreement and assume the reporting responsibility, should it perceive the fee or service terms as unreasonable. Such an agreement also could specify the registered SDR to which the clearing agency should send transaction data on behalf of the non-clearing-agency counterparty. The ability to terminate such an agreement could diminish the potential bargaining power that the registered clearing agency would otherwise have if the registered clearing agency were assigned the duty to report. Further, by allowing
However, because the non-clearing-agency counterparty might still have to rely on assistance from the clearing agency to satisfy the reporting obligations—particularly for any subsequent clearing transactions resulting from netting and compression of multiple betas and gammas—the reduction in clearing agency bargaining power might not be substantial. A registered clearing agency that supplies this information and converts it into the format prescribed by a non-clearing-agency counterparty's chosen SDR so that the counterparty can fulfill its reporting duty by submitting transaction data to a registered SDR of its choice could still have significant bargaining power with respect to providing that information.
The Commission believes that the adopted rules are generally consistent with the outcome under Alternative 1 in a number of key respects. First, under both approaches to reporting—one in which the Commission assigns the reporting responsibility for clearing transactions to registered clearing agencies, and the other in which the market allocates the reporting responsibility in the same way—it is likely that registered clearing agencies will report clearing transactions to their affiliated SDRs.
In light of comments received on its proposal, the Commission acknowledges caveats to this analysis.
Second, under Alternative 1 and under the adopted approach, efficiency gains stemming from consolidation of the reporting function within registered clearing agencies would be split between such clearing agencies and security-based swap counterparties. The difference between these two regulatory approaches turn on how these gains are split.
The Commission believes that Alternative 1 would not necessarily restrict the ability of registered clearing agencies to exercise market power in ways that may allow them to capture the bulk of any efficiency gains.
Second, in an environment where reporting obligations for clearing transactions rest with counterparties and there is limited competition among registered clearing agencies, registered clearing agencies might be able to charge high fees to counterparties who must rely on them to provide information necessary to make required reports to registered SDRs. A registered clearing agency could otherwise impair the ability of its counterparties to perform their own reporting if the clearing agency does not provide sufficient support or access to clearing transaction data. In particular, the clearing agency might have incentives to underinvest in the infrastructure necessary to provide clearing transaction data to its counterparties unless the Commission, by rule, were to establish minimum standards for communication of clearing transaction data from registered clearing agencies to their counterparties. As a result, counterparties could face greater difficulties in reporting data and an increased likelihood of incomplete, inaccurate, or untimely data being submitted to registered SDRs.
Third, under this alternative the registered clearing agency that is party to the transaction potentially has weaker incentives to provide high-quality regulatory data to the counterparty with a duty to report, which could reduce the quality of regulatory data collected by registered SDRs. The person with the duty to report a transaction has strong incentives to ensure that the transaction details are transmitted in a well-structured format with data fields clearly defined, and that contain data elements that are validated and free of errors because, pursuant to Regulation SBSR, this person is responsible for making accurate reports and, if necessary, making corrections to previously submitted data. Not only would the registered clearing agency have no duty under Regulation SBSR to provide information to its counterparty, but additionally, market forces might not provide sufficient motivation to the registered clearing agency to provide data to the counterparty in a manner that would minimize the counterparty's reporting burden. If registered clearing agencies exercise their market power against counterparties, the counterparties might have limited ability to demand high-quality data reporting services from registered clearing agencies and may require the services of agents that clean and validate transaction data that they receive.
The Commission believes, however, that despite a similarity in ultimate outcomes, and any benefits that might flow from enabling registered SDRs to compete for clearing transaction business, this alternative does not compare favorably to the adopted approach. As discussed above, assigning reporting obligations to the non-clearing-agency side could increase the number of reporting steps, thereby increasing the possibility of discrepancy, error, or delay in the reporting process. Placing the reporting duty on the non-clearing-agency side also could reduce data reliability if the data has to be reconfigured to be acceptable by the SDR. The Commission believes that discrepancies, errors, and delays are less likely to occur if the duty to report clearing transactions is assigned to registered clearing agencies directly, because there would be no additional or intermediate steps where data would have to be transferred or reconfigured.
A second, closely related alternative would involve placing registered clearing agencies within the Regulation SBSR reporting hierarchy, below registered security-based swap dealers and registered major security-based swap participants but above counterparties that are not registered with the Commission. Alternative 2 would assign the reporting obligation to a registered security-based swap dealer or registered major security-based swap participant when it is a counterparty to a registered clearing agency, while avoiding the need for non-registered persons to negotiate reporting obligations with registered clearing agencies.
As with Alternative 1, Alternative 2 potentially results in additional reporting steps and could marginally reduce the quality of regulatory data relative to the adopted approach. A key difference, however, is that Alternative 2 would reduce the likelihood of reporting obligations falling on unregistered persons, who would likely have less market power in negotiations with registered clearing agencies over the terms of reporting to a registered SDR. Larger counterparties,
In its discussion of Alternative 1, the Commission noted three particular ways in which limited competition among registered clearing agencies could result in poorer outcomes for non-clearing-agency counterparties. First, when these counterparties obtain clearing data from a registered clearing agency, they would likely incur any costs related to reformatting the data for submission to a registered SDR, including the costs of outsourcing these activities to an agent. Second, registered clearing agencies might charge these counterparties high fees for access to regulatory data that counterparties are required to submit to registered SDRs. Third, registered clearing agencies might have weak incentives to ensure that the data that they supply to non-clearing-agency counterparties are of high quality, since the non-clearing-agency counterparties would bear the costs of error correction.
Limiting the extent to which registered clearing agencies can exercise the market power resulting from limited competition over their counterparties could reduce some of the drawbacks to the Alternative 1. In particular, registered clearing agencies may be less likely to exercise market power in negotiations with larger market participants, particularly when these market participants are also clearing members. Clearing members play key roles in the governance and operation of registered clearing agencies, often contributing members of the board of directors. Moreover, clearing members contribute to risk management at registered clearing agencies by, for example, contributing to clearing funds that mutualize counterparty risk.
The Commission considered a third alternative that would make the reporting side for the alpha responsible for reporting both the beta and gamma.
In addition, Alternative 3 could result in incomplete regulatory data because it could raise questions about who would report clearing transactions associated with the compression and netting of beta or gamma transactions. For example, suppose a non-dealer clears two standard contracts on the same reference entity using a single registered clearing agency, each contract having a different registered security-based swap dealer as counterparty. Under this alternative to the adopted approach, each dealer would be responsible for reporting a gamma security-based swap between the non-dealer and the registered clearing agency. However, this alternative does not specify which of four potential persons (the non-dealer, one or the two registered security-based swap dealers, or the clearing agency) would be required to report the contract that results from the netting of the two gamma security-based swaps between the non-dealer and the registered clearing agency.
One commenter proposed a fourth alternative to assigning reporting duties for cleared transactions.
The same commenter stated that requiring registered clearing agencies to report their clearing transactions “is not supported by an adequate consideration of factors contained in Section 3(f) of [the Exchange Act]” and provided comments that focused on the proposed rule's “considerations of efficiency and competition.”
Pursuant to new Rule 901(a)(1), a platform is required to report a security-based swap transaction executed on that platform that will be submitted to clearing.
Furthermore, the platform is the only entity at the time of execution—
While the level of security-based swap activity that currently takes place on platforms and is subsequently submitted for clearing is low, future rulemaking under Title VII could cause security-based swap trading volume on platforms to increase.
As discussed above in the context of reporting obligations for registered clearing agencies, the Commission believes that the reporting infrastructure costs associated with required reporting pursuant to the adopted amendments could represent a barrier to entry for new, smaller platforms that do not yet have the ability to report transactions to a registered SDR. To the extent that the adopted rules and amendments might deter new trading platforms from entering the security-based swap market, this could negatively impact competition.
For platform-executed transactions that are submitted to clearing but are not anonymous, an alternative would be to use the reporting hierarchy in existing Rule 901(a)(2)(ii) to assign the reporting duty. Under such an alternative, a platform would have to determine which of the trades that it executes are anonymous and which are not, which would impose additional costs on platforms.
A second alternative would be to assign the reporting duty for all platform-executed alphas to the registered clearing agency to which the alphas are submitted. While the registered clearing agency would likely have the information necessary for reporting—because the clearing agency will need much of the same information about the alpha to clear it—the Commission believes that it would be more appropriate to assign the reporting duty to the platform. This approach creates a more direct flow of information from the point of execution on the platform to the registered SDR, thus minimizing opportunities for data discrepancies or delays. This approach also avoids the need for the registered clearing agency to invest resources in systems to receive data elements from platforms beyond what is already required for clearing, and to report transactions to which it is not a counterparty.
In the Regulation SBSR Adopting Release, the Commission explained the application of Regulation SBSR to bunched order executions that are not submitted to clearing.
In Section VII,
A prime brokerage arrangement involves a reallocation of counterparty risk, as the prime broker interposes itself between its client and a third-party executing dealer. Regulatory reporting of each security-based swap leg will allow the Commission and other relevant authorities to more accurately conduct market surveillance and monitor counterparty risk. As a result of public dissemination of all security-based swaps arising from a prime brokerage arrangement, market observers will have access to information regarding each leg. This could help market observers infer from these disseminated reports the fees that the prime broker charges for its credit intermediation service and separate these fees from the transaction price of the security-based swap.
New Rule 900(tt), as adopted herein, defines the term “widely accessible”—
Allowing free and unrestricted access to the security-based swap data that registered SDRs are required to publicly disseminate is designed to reinforce the economic effects of public dissemination generally, because market observers will be able to enjoy the benefits of public dissemination without cost and without any restriction on how they use the disseminated data. Furthermore, new Rule 900(tt) reinforces the benefits of existing Rule 903(b), which provides that a registered SDR may utilize codes in the reported or disseminated data only if the information necessary to understand the codes is free and not subject to any usage restrictions. As the Commission pointed out in the Regulation SBSR Adopting Release, Rule 903(b) could improve the efficiency of data intake by registered SDRs and data analysis by relevant authorities and other users of security-based swap data; improve efficiency by minimizing operational risks arising from inconsistent identification of persons, units of persons, products, or transactions by counterparties; and promote competition by prohibiting fee-based licensing of reference information that could create barriers to entry into the security-based swap market.
The adopted prohibition on a registered SDR charging fees for public dissemination of the regulatorily mandated security-based swap transaction data also is consistent with the CFTC's current prohibition on CFTC-registered swap data repositories charging for public dissemination of regulatorily mandated swap transaction data. Such consistency lessens the incentives for swap data repositories registered with the CFTC to enter the security-based swap market and also register with the Commission as SDRs and charge for public dissemination of security-based swap market data.
The Commission recognizes that, because registered SDRs are prohibited from charging for the security-based swap data that Regulation SBSR requires them to publicly disseminate, they must obtain funds for their operating expenses through other means.
The Commission notes that new Rule 900(tt) does not prohibit a registered SDR from offering value-added security-based swap market products for sale, provided that the SDR does not make transaction information available through the value-added product sooner than it publicly disseminates each individual transaction. This requirement is designed to prevent a registered SDR from obtaining an unfair competitive advantage over other firms that might wish to sell value-added market data products. Any such products could allow market observers to enjoy the positive impacts of Regulation SBSR on efficiency, competition, and capital formation more directly, by making it easier for market observers to understand the publicly disseminated data. Even if the SDR does not make transaction information available through the value-added product sooner than it publicly disseminates each individual transaction, the SDR retains a time advantage over a competing provider of value-added data products. This time advantage is the time taken for the SDR to electronically disseminate transaction information to the public. While the SDR has such a time advantage, the competitive effect of this advantage depends in part on the nature of the value-added data product. For value-added data products whose usefulness is not highly sensitive to data transmission time, such as a summary of monthly security-based swap trading activity, the SDR's time advantage would not exert a significant negative effect on other competitors. On the other hand, for value-added products whose usefulness decreases with data
The compliance schedule adopted in this release is designed to provide affected persons, especially registered SDRs and persons with a duty to report security-based swap transactions, with time to develop, test, and implement systems for carrying out their respective duties under Regulation SBSR. The new compliance schedule takes into consideration the fact that the CFTC's regulatory reporting and public dissemination rules are already in effect. As a result, several SDRs have provisionally registered and are operating in the swap market under CFTC rules, and swap market participants have developed substantial infrastructure to support swap transaction reporting. It is likely that participants in both the swap and security-based swap markets will seek to repurpose much of the infrastructure implemented in the swap market to support activities in the security-based swap market, which would enable more efficient implementation of the Commission's regime for security-based swap reporting.
Also, as discussed in Section X(C),
The proposed compliance schedule would have required affected persons to begin complying with Regulation SBSR before security-based swap dealers register with the Commission. A number of comments urged the Commission to delay Regulation SBSR compliance until after security-based swap dealers register.
The Commission agrees with commenters that it would be more efficient for affected persons to focus on developing compliance procedures only for the period after security-based swap dealer registration, rather than require affected persons to expend resources to develop procedures for both the period after registration as well as for the Interim Period, because Interim Period procedures might be inapplicable to the period after registration. The Commission believes that, by eliminating the Interim Period and thus the need to expend resources for developing interim procedures, the adopted compliance schedule will promote efficiency. The adopted compliance schedule should also promote capital formation to the extent that persons that would have incurred reporting obligations during the Interim Period could invest the resources that would otherwise be expended in developing Interim Period procedures into productive assets.
Furthermore, the Commission acknowledges the commenters' concern that the Interim Period could create competitive disparities between U.S. and foreign dealing entities if buy-side U.S. persons were less willing to transact with foreign dealing entities if certain foreign dealing entities could not assume the liability for reporting. The adopted compliance schedule avoids the need for the Interim Period and thus eliminates any potential competitive disadvantage for foreign dealing entities described by the commenters. Thus, relative to the proposed compliance schedule, the adopted compliance schedule should promote competition among U.S. and foreign dealing entities that supply liquidity to the security-based swap market.
In summary, the Commission now believes, in light of the comments received on its proposal, that it would better promote efficiency, competition, and capital formation to delay compliance with the reporting obligations of Regulation SBSR until after the SBS entities registration compliance date.
The compliance schedule adopted herein also is based on the first SDR in an asset class to register with the Commission, which could confer a “first-mover advantage.”
The Commission acknowledges that a first mover could emerge. Nevertheless, the Commission believes that, if one SDR application satisfies the criteria of Rule 13n-1(c)(3) under the Exchange Act before any others, it would not be appropriate for the Commission to delay
Even if a first mover emerges, other Commission rules are designed to minimize any potential of a monopoly advantage that the first SDR might otherwise enjoy. All SDRs, even the first or only registered SDR in a particular asset class, must offer fair, open, and not unreasonably discriminatory access to users of its services.
The newly adopted compliance schedule could give added incentive to avoid delaying the submission of an application for registration as an SDR and to commence operation as an SEC-registered SDR as quickly as possible. This result would help the Commission and other relevant authorities obtain information about the security-based swap market for oversight purposes as quickly as possible, and also allow the public to obtain price, volume, and transaction information about all security-based swaps as quickly as possible.
As proposed in the Regulation SBSR Proposed Amendments Release, all historical security-based swaps in a particular asset class would have had to be reported to a registered SDR by proposed Compliance Date 1. As discussed in Section X(E),
Several commenters were concerned that requiring reporting pursuant to Regulation SBSR to begin before the Commission has made substituted compliance determinations “would impose significant and unnecessary burdens” on non-U.S. registered persons. Changes made by non-U.S. persons to their reporting infrastructure to comply with Regulation SBSR may not be necessary, in the commenters' views, if the Commission subsequently grants substituted compliance to these non-U.S. persons.
The amendments to Rules 901 and 908 adopted today will, among other things, apply Regulation SBSR's regulatory reporting and public dissemination requirements to all security-based swap transactions of a foreign dealing entity that are arranged, negotiated, or executed by U.S. personnel. Such ANE transactions are already subject to regulatory reporting and public dissemination if the other side includes a U.S. person. The amendments adopted today extend the regulatory reporting and public dissemination requirement to all ANE transactions, even if the other side is non-U.S. and not engaging in ANE activity. These amendments also for the first time assign the duty to report transactions between unregistered U.S. persons and unregistered non-U.S. persons. These amendments will have several effects on efficiency, competition, and capital formation in the U.S. financial market.
These amendments to Rules 901 and 908 will have implications for competition among market participants that intermediate transactions in security-based swaps as well as counterparties to security-based swaps. These amendments are designed to promote competition among liquidity providers in the security-based swap market by imposing consistent reporting and public dissemination requirements on both U.S. and foreign dealing entities, when the latter are engaging in ANE activity. If only U.S. dealing entities were subject to regulatory reporting and public dissemination requirements, the costs of these requirements would primarily affect U.S. dealing entities, their agents, and their counterparties. In contrast, foreign dealing entities and their agents, who might not be subject to comparable requirements in their home jurisdictions, could have a competitive advantage over U.S. dealing entities in serving unregistered non-U.S. counterparties using personnel located in a U.S. branch or office, were their activities not subject to the same requirements.
These amendments to Rules 901 and 908 also are designed to promote competition between U.S. persons and non-U.S. persons that trade with foreign dealing entities, when a foreign dealing entity is utilizing U.S. personnel. A transaction between an unregistered foreign dealing entity engaging in ANE activity and a U.S. counterparty already is subject to regulatory reporting and public dissemination under existing Rule 908(a)(1)(i). In the absence of
The amendments to Rules 901 and 908 adopted herein also apply consistent regulatory reporting and public dissemination requirements to transactions between unregistered non-U.S. persons that are platform-executed or effected by or through registered broker-dealers. Because there will be very few such transactions, the Commission believes that the application of regulatory requirements is unlikely to generate competitive frictions between these different types of providers of intermediation services.
As discussed in Section XII(B)(1)(2),
The Regulation SBSR Adopting Release did not address when an uncleared security-based swap involving only unregistered non-U.S. persons would be subject to regulatory reporting and/or public dissemination. The amendments to Rules 901 and 908 adopted herein, by requiring the public dissemination of ANE transactions, including those that are uncleared security-based swaps involving only unregistered non-U.S. persons, will increase price competition and price efficiency in the security-based swap market generally,
The Commission acknowledges the risk that, in response to the adopted amendments, foreign dealing entities, trading platforms, and/or registered broker-dealers could restructure their operations to avoid triggering requirements under Regulation SBSR. For example, a foreign dealing entity could restrict its U.S. personnel from intermediating transactions with non-U.S. persons, a trading platform might choose to move its principal place of business offshore, or a registered broker-dealer might cease to effect transactions in security-based swaps between unregistered non-U.S. persons. Such restructurings, if they occurred, could have an adverse effect on the efficiency of the security-based swap market by fragmenting liquidity between a U.S. security-based swap market—occupied by U.S. persons and non-U.S. persons willing to participate within the Title VII regulatory framework, with intermediation services provided by registered broker-dealers and U.S.-based trading platforms—and an offshore market in which participants seek to avoid any activity that could trigger application of Title VII to their security-based swap activity.
The Commission has already considered the likelihood that foreign dealing entities will cease using U.S. personnel to avoid Title VII requirements (such as security-based swap dealer registration).
The amendments adopted herein could affect capital formation by affecting the transparency, liquidity, and stability of the market in which issuers seek capital. In the Regulation SBSR Adopting Release, the Commission identified benefits associated with the regulatory reporting and public dissemination of security-based swaps, such as increased transparency, improved liquidity, and greater market stability.
The Commission recognizes that the amendments to Rules 901 and 908 adopted herein could impede capital formation by fragmenting the security-based swap market. As discussed in Section XIII(H)(2),
However, as the Commission noted in Section XIII(H)(2),
The Regulatory Flexibility Act (“RFA”) requires federal agencies, in promulgating rules, to consider the impact of those rules on small entities. Section 603(a) of the Administrative Procedure Act,
In developing the final rules contained in Regulation SBSR, the Commission has considered their potential impact on small entities. For purposes of Commission rulemaking in connection with the RFA, a small entity includes: (1) When used with reference to an “issuer” or a “person,” other than an investment company, an “issuer” or “person” that, on the last day of its most recent fiscal year, had total assets of $5 million or less;
In the U.S. Activity Proposal, the Commission stated its belief that the majority of the amendments to Regulation SBSR proposed in that release would not have a significant economic impact on a substantial number of small entities for the purposes of the RFA.
In the Regulation SBSR Proposed Amendments Release, the Commission certified that the amendments proposed in that release would not have a significant economic impact on a substantial number of small entities for purposes of the RFA.
In addition, the Commission believes that persons that are likely to register as SDRs would not be small entities. Based on input from security-based swap market participants and its own information, the Commission continues to believe that most if not all registered SDRs will be part of large business entities, and that all registered SDRs will have assets in excess of the thresholds discussed above. Therefore, the Commission continues to believe that no registered SDRs will be small entities.
The Commission received no comments on the certification in the Regulation SBSR Proposed Amendments Release or, as indicated above, the Initial Regulatory Flexibility Analysis in the U.S. Activity Proposal. Accordingly, the Commission hereby certifies that the final rules adopted in this release will not have a significant impact on a substantial number of small entities for the purposes of the RFA.
Pursuant to the Exchange Act, 15 U.S.C. 78a
Brokers, Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, the Commission amends 17 CFR part 242 as follows:
15 U.S.C. 77g, 77q(a), 77s(a), 78b, 78c, 78g(c)(2), 78i(a), 78j, 78k-l(c), 78
(u)
(1) A counterparty, that meets the criteria of § 242.908(b), of a security-based swap that is reported to that registered security-based swap data repository to satisfy an obligation under § 242.901(a);
(2) A platform that reports a security-based swap to that registered security-based swap data repository to satisfy an obligation under § 242.901(a);
(3) A registered clearing agency that is required to report to that registered security-based swap data repository whether or not it has accepted a security-based swap for clearing pursuant to § 242.901(e)(1)(ii); or
(4) A registered broker-dealer (including a registered security-based swap execution facility) that is required to report a security-based swap to that registered security-based swap data repository by § 242.901(a).
(tt)
(a) * * *
(1)
(2) * * *
(i)
(ii) * * *
(E) * * *
(
(
(
(3)
(d) * * *
(4) For a security-based swap that is not a clearing transaction and that will not be allocated after execution, the title and date of any master agreement, collateral agreement, margin agreement, or any other agreement incorporated by reference into the security-based swap contract;
(8) To the extent not provided pursuant to the other provisions of this paragraph (d), if the direct counterparties do not submit the security-based swap to clearing, a description of the settlement terms, including whether the security-based swap is cash-settled or physically settled, and the method for determining the settlement value;
(9) The platform ID, if applicable, or if a registered broker-dealer (including a registered security-based swap execution facility) is required to report the security-based swap by § 242.901(a)(2)(ii)(E)(
(e) * * *
(1) * * *
(ii)
(2) All reports of life cycle events and adjustments due to life cycle events shall, within the timeframe specified in paragraph (j) of this section, be reported to the entity to which the original security-based swap transaction will be reported or has been reported and shall include the transaction ID of the original transaction.
(h)
(c) * * *
(6) Any information regarding a clearing transaction that arises from the acceptance of a security-based swap for clearing by a registered clearing agency or that results from netting other clearing transactions;
(7) Any information regarding the allocation of a security-based swap; or
(8) Any information regarding a security-based swap that has been rejected from clearing or rejected by a prime broker if the original transaction report has not yet been publicly disseminated.
(a)
(1) If a person that was not the reporting side for a security-based swap transaction discovers an error in the information reported with respect to such security-based swap, that person shall promptly notify the person having the duty to report the security-based swap of the error; and
(2) If the person having the duty to report a security-based swap transaction discovers an error in the information reported with respect to a security-based swap, or receives notification from a counterparty of an error, such person shall promptly submit to the entity to which the security-based swap was originally reported an amended report pertaining to the original transaction report. If the person having the duty to report reported the initial transaction to a registered security-based swap data repository, such person shall submit an amended report to the registered security-based swap data repository in a manner consistent with the policies and procedures contemplated by § 242.907(a)(3).
(a)
(b)
(c)
(a) * * *
(6) For periodically obtaining from each participant other than a platform, registered clearing agency, externally managed investment vehicle, or registered broker-dealer (including a registered security-based swap execution facility) that becomes a participant solely as a result of making a report to satisfy an obligation under § 242.901(a)(2)(ii)(E)(
The revisions and additions read as follows:
(a) * * *
(1) * * *
(iii) The security-based swap is executed on a platform having its principal place of business in the United States;
(iv) The security-based swap is effected by or through a registered broker-dealer (including a registered security-based swap execution facility); or
(v) The transaction is connected with a non-U.S. person's security-based swap dealing activity and is arranged, negotiated, or executed by personnel of such non-U.S. person located in a U.S. branch or office, or by personnel of an agent of such non-U.S. person located in a U.S. branch or office.
(b) * * *
(1) A U.S. person;
(2) A registered security-based swap dealer or registered major security-based swap participant;
(3) A platform;
(4) A registered clearing agency; or
(5) A non-U.S. person that, in connection with such person's security-based swap dealing activity, arranged, negotiated, or executed the security-based swap using its personnel located in a U.S. branch or office, or using personnel of an agent located in a U.S. branch or office.
By the Commission.
Federal Crop Insurance Corporation, USDA.
Final rule.
The Federal Crop Insurance Corporation (FCIC) finalizes the General Administrative Regulation—Subpart V—Submission of Policies, Provisions of Policies, Rates of Premium, and Non-Reinsured Supplemental Policies. The intended effect of this action is to incorporate legislative changes to the Federal Crop Insurance Act (Act) stemming from the Agricultural Act of 2014, clarify existing regulations, lessen the burden on submitters of crop insurance policies, provisions of policies, or rates of premium under section 508(h) of the Act, provide guidance on the submission and payment for concept proposals under section 522 of the Act, provide provisions for submission and approval of index-based weather plans of insurance as authorized by section 523(i) of the Act, and to incorporate changes that are consistent with those made in the Common Crop Insurance Policy Basic Provisions (Basic Provisions).
This rule is effective September 12, 2016.
Tim Hoffmann, Product Administration and Standards Division, Risk Management Agency, United States Department of Agriculture, Beacon Facility, Stop 0812, Room 421, P.O. Box 419205, Kansas City, MO 64141-6205, telephone (816) 926-7730.
This rule finalizes changes to the General Administrative Regulation—Subpart V—Submission of Policies, Provisions of Policies, Rates of Premium, and Non-Reinsured Supplemental Policies (7 CFR part 400, subpart V), that were published by FCIC on February 25, 2015, as a notice of proposed rulemaking in the
A total of 80 comments were received from 10 commenters. The commenters were insurance providers, insurance organizations, grower organizations, crop insurance product developers, and a business council.
The public comments received regarding the proposed rule and FCIC's responses to the comments are as follows:
Given the inaccuracy of the estimates received by the Board, FCIC is revising the provisions to require that submitters provide more accurate estimates of costs, and since this is a consideration of viability, reimbursement may be limited to the estimated amount unless the submitter can justify the additional costs.
Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” 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 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.
The Office of Management and Budget (OMB) designated this rule as not significant under Executive Order 12866, “Regulatory Planning and Review,” and therefore, OMB has not reviewed this rule.
Pursuant to the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the collections of information in this rule have been approved by the Office of Management and Budget (OMB) under control number 0563-0064.
FCIC is committed to complying with the E-Government Act of 2002, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4) requires Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, or the private sector. Agencies generally need to prepare a written statement, including a cost-benefit analysis, for proposed and final rules with Federal mandates that may result in expenditures of $100 million or more in any year for State, local, or Tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates, as defined in Title II of UMRA, for State, local, and Tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
It has been determined under section 1(a) of Executive Order 13132, Federalism, that this rule does not have sufficient implications to warrant consultation with the States. The provisions contained in this rule will not have a substantial direct effect on States, or on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, except as required by law.
This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes. FCIC has assessed the impact of this rule on Indian tribes and determined that this rule does not, to our knowledge, have tribal implications that require tribal consultation under Executive Order 13175. If a Tribe requests consultation, FCIC will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified in this rule are not expressly mandated by law.
The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA, Pub. L. 104-121), generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to the notice and comment rulemaking requirements under the Administrative Procedure Act or any other law, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. FCIC certifies that this regulation will not have a significant economic impact on a substantial number of small entities. The regulation does not require any more action on the part of the small entities than is required on the part of large entities. No matter the size of the submitter, all submitters are required to perform the same tasks and those tasks are necessary to ensure that the concept proposal can be made into a viable and marketable 508(h) submission and any 508(h) submission can be made into viable and marketable, actuarially sound insurance product. A Regulatory Flexibility Analysis has not been prepared since this regulation does not have an impact on small entities, and, therefore, this regulation is exempt from the provisions of the Regulatory Flexibility Act.
This program is listed in the Catalog of Federal Domestic Assistance under No. 10.450.
This program is not subject to the provisions of Executive Order 12372, which require intergovernmental consultation with State and local officials. See the Notice related to 7 CFR part 3015, subpart V, published at 48 FR 29115, June 24, 1983.
This rule has been reviewed in accordance with Executive Order 12988 on civil justice reform. The provisions of this rule will not have a retroactive effect. The provisions of this rule will preempt State and local laws to the extent such State and local laws are inconsistent herewith. With respect to any direct action taken by FCIC or to require the insurance provider to take specific action under the terms of the crop insurance policy, the administrative appeal provisions published at 7 CFR part 11 must be exhausted before any action against FCIC for judicial review may be brought.
This action is not expected to have a significant economic impact on the quality of the human environment, health, or safety. Therefore, neither an Environmental Assessment nor an Environmental Impact Statement is needed.
Administrative practice and procedure, Crop insurance.
Accordingly, as set forth in the preamble, FCIC amends 7 CFR part 400 as follows:
7 U.S.C. 1506(l), 1506(o), 1508(h), 1522(b), 1523(i).
This subpart establishes guidelines, the approval process, and responsibilities of FCIC and the applicant for policies, provisions of policies, and rates of premium submitted to the Board as authorized under section 508(h) of the Act. It also provides procedures for reimbursement of research and development costs and maintenance costs for concept proposals and approved 508(h) submissions. Guidelines for submitting concept proposals and the standards for approval and advance payments are provided in this subpart. This subpart also provides guidelines and reference to procedures for submitting index-based weather plans of insurance as authorized under section 523(i) of the Act. The procedures for submitting non-reinsured supplemental policies in accordance with the Standard Reinsurance Agreement (SRA) are also contained within.
(1) The concept proposal will provide coverage for a region or crop that is underserved, including specialty crops; and
(2) The submitter is making satisfactory progress towards developing a viable and marketable 508(h) submission.
(a) Pursuant to section 508(h)(4)(A) of the Act, prior to approval by the Board, any 508(h) submission submitted to the Board under section 508(h) of the Act, concept proposal submitted under section 522 of the Act, or index-based weather plan of insurance submitted under section 523(i) of the Act, including any information generated from the 508(h) submission, concept proposal, or index-based weather plan of insurance, will be considered confidential commercial or financial information for purposes of 5 U.S.C. 552(b)(4) and will not be released by FCIC to the public, unless the applicant authorizes such release in writing.
(b) Once the Board approves a 508(h) submission or an index-based weather plan of insurance, information provided with the 508(h) submission (including information from the concept proposal) or the index-based weather plan of insurance, or generated in the approval process, may be released to the public, as applicable, including any mathematical modeling and data, unless it remains confidential business information under 5 U.S.C. 552(b)(4). While the expert reviews are releasable once the 508(h) submission or an index-based weather plan of insurance has been approved, the names of the expert reviewers may be redacted to prevent any undue pressure on the expert reviewers.
(c) Any 508(h) submission, concept proposal, or index-based weather plan of insurance disapproved by the Board will remain confidential commercial or financial information in accordance with 5 U.S.C. 552(b)(4) (no information related to such 508(h) submission, concept proposal, or index-based weather plan of insurance will be released by FCIC unless authorized in writing by the applicant).
(d) All 508(h) submissions, concept proposals, and index-based weather plans of insurance, will be kept confidential until approved by the Board and will be given an identification number for tracking purposes, unless the applicant advises otherwise.
(a) A 508(h) submission, concept proposal, or index-based weather plan of insurance may only be provided to FCIC during the first five business days in January, April, July, and October.
(b) A 508(h) submission, concept proposal, or index-based weather plan of insurance must be provided as an electronic file to FCIC in Microsoft Office compatible format, sent to either the address in paragraph (d)(1) or (d)(2) of this section by the due date in paragraph (a) of this section. The electronic file must contain a document with a detailed index that, in sequential order, references the location of the required information that may either be contained within the document or in a separate file. The detailed index must clearly identify each required section and include the page number if the information is contained in the document or file name if the information is contained in a separate file; and
(c) Any 508(h) submission, concept proposal, or index-based weather plan of insurance not provided within the first 5 business days of a month stated in paragraph (a) of this section will be considered to have been provided in the next month stated in paragraph (a). For example, if an applicant provides a 508(h) submission on January 10, it will be considered to have been received on April 1.
(d) Any 508(h) submission, concept proposal, or index-based weather plan of insurance must be provided to one of the following addresses, but not both:
(1) By email to the Deputy Administrator for Product Management (or successor) at
(2) By mail on a removable storage device such as a compact disk or
(e) In addition to the requirements in paragraph (a) of this section, a 508(h) submission must be received not later than 240 days prior to the earliest proposed sales closing date to be considered for sale in the requested crop year.
(f) To be offered for sale in a crop year, there must be at least sixty days between the date the policy is ready to be made available for sale and the earliest sales closing date, unless this requirement is expressly waived by the Board.
(g) Notwithstanding, paragraph (f) of this section, the Board, or RMA if authorized by the Board, shall determine when sales can begin for a 508(h) submission approved by the Board after consideration of the analysis provided by the applicant AIP of the impact of the proposed implementation date on the delivery system.
(a) An applicant may submit to the Board, in accordance with § 400.705, a 508(h) submission that is:
(1) A policy or plan of insurance not currently reinsured by FCIC;
(2) One or more proposed revisions to a policy or plan of insurance authorized under the Act; or
(3) Rates of premium for any policy or plan of insurance authorized under the Act.
(b) An applicant must submit to the Board, any significant change to a previously approved 508(h) submission, including requests for expansion, prior to making the change in accordance with § 400.705.
(c) An applicant may submit a concept proposal to the Board prior to developing a full 508(h) submission, in accordance with this subpart and the Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Costs, which can be found on the RMA Web site at
(d) An applicant who is an approved insurance provider may submit an index-based weather plan of insurance for consideration as a pilot program in accordance with this subpart and the Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance, which can be found on the RMA Web site at
(e) An applicant must submit a non-reinsured supplemental policy or endorsement to RMA in accordance with § 400.713.
(a) A complete 508(h) submission must contain the following material, as applicable, submitted in accordance with § 400.703(b). A complete 508(h) submission must be a viable and marketable insurance product that protects the interests of producers, is actuarially appropriate and ensures program integrity. The material must contain adequate information as required in this section, that is presented clearly to ensure the Board and RMA can determine whether RMA and the delivery system have the resources to implement, administer, and deliver the 508(h) submission effectively and efficiently. Calculations, procedures and methodologies must be consistent throughout the submission and appropriate for the commodity and the risks covered.
(b) The first section will contain general information numbered as follows (1, 2, 3, etc.), including, as applicable:
(1) The applicant's name(s), address or primary business location, phone number, and email address;
(2) The type of 508(h) submission (see § 400.704) and a notation of whether or not the 508(h) submission was approved by the Board as a concept proposal;
(3) A statement of whether the applicant is requesting:
(i) Reinsurance;
(ii) Risk subsidy;
(iii) A&O subsidy;
(iv) Reimbursement for research and development costs, as applicable and, if the 508(h) submission was previously submitted as a concept proposal, the amount of the advance payment for expected research and development costs; or
(v) Reimbursement for expected maintenance costs, if applicable;
(4) The proposed agricultural commodities to be covered, including types, varieties, and practices covered by the 508(h) submission;
(5) The crop or insurance year and reinsurance year in which the 508(h) submission is proposed to be available for purchase by producers;
(6) The proposed sales closing date, if applicable, or the sales window or the earliest date the applicant expects to release the product to the public;
(7) The proposed states and counties where the plan of insurance is proposed to be offered;
(8) Any known or anticipated future expansion plans;
(9) Identification, including names, addresses, telephone numbers, and email addresses, of the person(s) responsible for:
(i) Addressing questions regarding the policy, underwriting rules, loss adjustment procedures, rate and price methodologies, data processing and record-keeping requirements, and any other questions that may arise in implementing or administering the program if it is approved; and
(ii) Annual reviews to ensure compliance with all requirements of the Act, this subpart, and any agreements executed between the applicant and FCIC;
(10) A statement of whether the 508(h) submission will be filed with the applicable office responsible for regulating insurance in each state proposed for insurance coverage, and if not, reasons why the 508(h) submission will not be filed for review; and
(11) A statement of whether the submitter wants the 508(h) submission to remain confidential.
(c) The second section must contain the benefits of the plan, including, as applicable, a summary that includes:
(1) How the 508(h) submission offers coverage or other benefits not currently available from existing public or private programs;
(2) How the 508(h) submission meets public policy goals and objectives consistent with the Act and other laws, as well as policy goals supported by USDA and the Federal Government; and
(3) A detailed description of the coverage provided by the 508(h) submission and its applicability to all producers, including targeted producers.
(d) Except as provided in this section, the third section must contain the policy, that is clearly written in plain language in accordance with the Plain Writing Act of 2010 (5 U.S.C. 301) such that producers will be able to understand the coverage being offered. The policy language permits actuaries to form a clear understanding of the payment contingencies for which they will set rates. The policy language does not encourage an excessive number of disputes or legal actions because of misinterpretations.
(1) If the 508(h) submission involves a new insurance policy or plan of insurance:
(i) All applicable policy provisions; and
(ii) A list of any additional coverage that may be elected by the insured in conjunction with the 508(h) submission such as applicable endorsements
(2) If the 508(h) submission involves a change to a previously approved policy, plan of insurance, or rates of premium, the proposed revisions, rationale for each change, data and analysis supporting each change, the impact of each change, and the impact of all changes in aggregate.
(e) The fourth section must contain the following:
(1) Potential impacts the 508(h) submission may have on producers both where the new plan will and will not be available (include both positive and negative impacts) and if applicable, the reasons why the 508(h) submission is not being proposed for other areas producing the commodity;
(2) The amount of commodity (acres, head, board feet, etc.), the amount of production, and the value of each agricultural commodity proposed to be covered in each proposed county and state;
(3) A reasonable estimate of the expected number of potential buyers, liability and premium for each proposed county and state, total expected liability and premium by crop year based on the detailed assessment of producer interest, including a description of the number of producers involved in the development of the product, their level of participation, their type of participation, how many producers have provided data to assist the submitter in the development of the product, and a comparison with other similar products, including differences between the 508(h) submission and the similar products that may make participation different;
(4) If available, any insurance experience for each year and in each proposed county and state in which the policy has been previously offered for sale including an evaluation of the policy's performance and, if data are available, a comparison with other similar insurance policies reinsured under the Act;
(5) Market research studies; “market research” is the systematic gathering and interpretation of information about individuals or organizations using statistical and analytical methods and techniques of the applied social sciences to gain insight or support decision making, and that must include:
(i) Focus group results (both positive and negative reactions) where a discussion is facilitated amongst a group of stakeholders in order to gain insight into their perceptions, opinions, beliefs, and attitudes towards a product, which must include the number of focus group sessions held, where they were held, when they were held, the number of attendees at each session, the attendees affiliation (producer, agent or other), and specific feedback from the attendees regarding levels of coverage the product should include to cover anticipated risks or perils encountered, the range of costs the producer is willing to pay, what coverages the producers are specifically looking for and an assessment of whether that coverage can be provided at the price the producers are willing to pay, what shortfall or gap in risk protection the product may address, tolerance of risk, perceptions of other similar products, policy features producers may desire, and quality issues;
(ii) Other evidence the proposed 508(h) submission will be positively received by producers, agents, lending institutions, and other interested parties, including correspondence from producers, agents, grower organizations, or other stakeholders expressing the need for a certain risk management strategy, desired coverage for perils faced, and willingness to provide critical information for developing a product;
(iii) An assessment of factors that could negatively or adversely affect the market and responses from a reasonable representative cross-section of producers or significant market segment to be affected by the policy or plan of insurance; and
(iv) For 508(h) submissions proposing products for specialty crops a consultation report must be provided that includes a summary and analysis of discussions with groups representing producers of those agricultural commodities in all major producing areas for commodities to be served or potentially impacted, either directly or indirectly, and the expected impact of the proposed 508(h) submission on the general marketing and production of the crop from both a regional and national perspective including evidence that the 508(h) submission will not create adverse market distortions; and
(6) A marketability assessment from the applicant AIP who is part of the applicant and from at least one other AIP. If a marketability assessment is not provided by a separate AIP who is not part of the applicant, the applicant must provide information regarding the names of the persons and AIPs contacted and the basis for their refusal to provide the marketability assessment. The marketability assessment will include:
(i) An assessment of whether producers will buy the proposed 508(h) submission;
(ii) An assessment of whether AIPs and their agents will want to sell and service the proposed 508(h) submission;
(iii) An assessment of the risks associated with the proposed 508(h) submission and its likely effect under the SRA;
(iv) Estimated computer system impacts and costs;
(v) Estimated administrative and training requirement and costs;
(vi) An analysis of the complexity of the product; and
(vii) What, if any, efficiency will be gained or potential effects on the workload of AIPs or others participating in the program.
(f) The fifth section must contain the information related to the underwriting and loss adjustment of the 508(h) submission, prepared in accordance with the RMA-14050 Risk Management Agency External Standards Handbook located at
(1) An underwriting guide that includes:
(i) A table of contents and introduction;
(ii) A section containing abbreviations, acronyms, and definitions;
(iii) Relevant dates, including as applicable, sales closing, cancellation, termination, earliest planting, final planting, acreage reporting, premium billing, and end of insurance;
(iv) A section containing insurance contract information (insurability requirements; producer elections, Crop Provisions not applicable to Catastrophic Risk Protection, specific unit division guidelines, etc.);
(v) Detailed rules for determining insurance eligibility, including all producer reporting requirements;
(vi) All form standards needed for inspections and producer certifications, plus detailed instructions for their use and completion;
(vii) Step-by-step examples of the data and calculations needed to establish the insurance guarantee (liability) and premium per acre or other unit of measure, including worksheets that provide the calculations in sufficient detail and in the same order as presented in the policy to allow verification that the premiums charged for the coverage are consistent with policy provisions;
(viii) A section containing any special coverage information (
(ix) A section containing all applicable reference material (
(2) Any statements to be included in the actuarial documents including any intended Special Provisions statements that may change any underlying policy terms or conditions; and
(3) The loss adjustment standards handbook for the policy or plan of insurance that includes:
(i) A table of contents and introduction;
(ii) A section containing abbreviations, acronyms, and definitions;
(iii) A section containing insurance contract information (insurability requirements; Crop Provisions not applicable to catastrophic risk protection; specific unit division guidelines, if applicable; notice of damage or loss provisions; quality adjustment provisions; etc.);
(iv) A detailed description of the causes of loss covered by the policy or plan of insurance and any causes of loss excluded;
(v) A section that thoroughly explains appraisal methods, if applicable;
(vi) Illustrative samples of all the applicable forms needed for insuring and adjusting losses in regards to the 508(h) submission in a format compatible with the Document and Supplemental Standards Handbook (FCIC 24040) located at
(vii) Instructions, step-by-step examples of calculations used to determine indemnity payments for all probable situations where a partial or total loss may occur, and loss adjustment procedures that are necessary to establish the amounts of coverage and loss;
(viii) A section containing any special coverage information (
(ix) A section containing all applicable reference material (
(g) The sixth section must contain information related to prices and rates of premium, including, as applicable:
(1) A detailed description of the premium rating methodology proposed to be used and the basis for selection of the rating methodology;
(2) A list of all assumptions made in the premium rating and commodity pricing methodologies, and the basis for these assumptions;
(3) A detailed description of the pricing and rating methodologies, including:
(i) Supporting documentation needed for the rate methodology;
(ii) All mathematical formulas and equations;
(iii) Data and data sources used in determining rates and prices and a detailed assessment of the data (including availability, access, long term reliability, and the percentage of the total commercial production that the available data represents) and how it supports the proposed rates and prices;
(iv) A detailed explanation of how the rates account for each of the risks covered by the policy; and
(v) A detailed explanation of how the prices are applicable to the policy;
(4) An example of both a rate calculation and a price calculation;
(5) A discussion of the applicant's objective evaluation of the accuracy of the data, the short and long term availability of the data, and how the data will be obtained (if the data source is confidential or proprietary explain the cost of obtaining the data); and
(6) An analysis of the results of simulations or modeling showing the performance of proposed rates and commodity prices, as applicable, based on one or more of the following (Such simulations must use all years of experience available to the applicant and must reflect both partial losses and total losses):
(i) A recalculation of total premium and losses compared to a similar or comparable insurance plan offered under the authority of the Act with modifications, as needed, to represent the components of the 508(h) submission;
(ii) A simulation that shows liability, premium, indemnity, and loss ratios for the proposed insurance product based on the probability distributions used to develop the rates and commodity prices, as applicable, including sensitivity tests that demonstrate price or yield extremes, and the impact of inappropriate assumptions; or
(iii) Any other comparable simulation that provides results indicating both aggregate and individual performance of the 508(h) submission including expected liability, premium, indemnity, and loss ratios for the proposed insurance product, under various scenarios depicting good and poor actuarial experience.
(h) The seventh section must contain the following:
(1) A statement certifying that the submitter and any approved insurance provider or its affiliates will not solicit or market the 508(h) submission until after all policy materials are released to the public by RMA, unless otherwise specified by the Board;
(2) An explanation of any provision of the policy not authorized under the Act and identification of the portion of the rate of premium due to these provisions; and
(3) Agent and loss adjuster training plans, except for 508(h) submissions proposing only changes to rates of premium to an existing policy.
(i) The eighth section must contain a statement from the submitter that, if the 508(h) submission is approved, the submitter will work with RMA and its computer programmers as needed to assure an effective and efficient implementation process. This section must also contain a description of any expected implementation or administration issues. The applicant must consult with RMA prior to providing the 508(h) submission to determine whether or not the 508(h) submission can be effectively and efficiently implemented and administered through the current information technology systems and that all reporting requirements, terminology, and dates conform to USDA standards and initiatives.
(1) If FCIC approves the 508(h) submission and determines that its information technology systems have the capacity to implement and administer the 508(h) submission, the applicant must provide a document detailing acceptable computer processing requirements consistent with those used by RMA as shown on the RMA Web site in the Appendix III/M-13 Handbook. This information details the acceptable computer processing requirements in a manner consistent with that used by RMA to facilitate the acceptance of producer applications and related data.
(2) Any computer systems, requirements, code and software must be consistent with that used by RMA and comply with the standards established in Appendix III/M-13 Handbook, or any successor document, of the SRA or other reinsurance agreement as specified by FCIC.
(3) These requirements are available from the USDA/Risk Management Agency, 2312 East Bannister Road, Kansas City, MO 64131-3011, or on RMA's Web site at
(j) The ninth section submitted on separate pages and in accordance with § 400.712 and any applicable Board procedures must specify:
(1) The following amounts, which may be limited to the amount originally
(i) For new products, the amount received for an advance payment, and a detailed estimate of the total amount of reimbursement for research and development costs; or
(ii) For products that are within the maintenance period, an estimate for maintenance costs for the year that the 508(h) submission will be effective; and
(2) A detailed estimate of maintenance costs for future years of the maintenance period and the basis that such maintenance costs will be incurred, including, but not limited to:
(i) Any anticipated expansion;
(ii) Anticipated changes or updates to policy materials;
(iii) The generation of premium rates;
(iv) The determination of prices; and
(v) Any other costs that the applicant anticipates will be requested for reimbursement of maintenance costs or expenses;
(k) The tenth section must contain executed (signed) certification statements in accordance with the following:
(1) “{Applicant's Name} hereby claim that the basis and amounts set forth in this section and § 400.712 are correct and due and owing to {Applicant's Name} by FCIC under the Federal Crop Insurance Act”; and
(2) “{Applicant Name} understands that, in addition to criminal fines and imprisonment, the 508(h) submission of false or fraudulent statements or claims may result in civil and administrative sanctions.”
(l) The contents required for concept proposals are found in the Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Costs. In addition, the proposal must provide a detailed description of why the concept provides insurance:
(1) In a significantly improved form;
(2) To a crop or region not traditionally served by the Federal crop insurance program; or
(3) In a form that addresses a recognized flaw or problem in the program;
(m) The contents required for index-based weather plans of insurance are found in the Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance. In accordance with the Board approved procedures, the approved insurance provider that submits the index-based weather plan of insurance must provide evidence they have:
(1) Adequate experience in underwriting and administering policies or plans of insurance that are comparable to the proposed policy of plan of insurance;
(2) Sufficient assets or reinsurance to satisfy the underwriting obligations of the approved insurance provider, and a sufficient insurance credit rating from an appropriate credit rating bureau; and
(3) Applicable authority and approval from each State in which the approved insurance provider intends to sell the insurance product.
(a) Prior to providing a 508(h) submission, concept proposal, or index-based weather plan of insurance to the Board, RMA will:
(1) Review the 508(h) submission, concept proposal, or index-based weather plan of insurance to determine if all required documentation is included in accordance with § 400.705;
(2) Review the 508(h) submission, concept proposal, or index-based weather plan of insurance to determine whether it is of sufficient quality to conduct a meaningful review such that the Board will be able to make an informed decision regarding approval or disapproval;
(3) In accordance with section 508(h)(1)(B) of the Act, at its sole discretion, determine if the policy or plan of insurance:
(i) Will likely result in a viable and marketable policy;
(ii) Will provide crop insurance coverage in a significantly improved form; and
(iii) Adequately protect the interests of producers.
(4) RMA may reject and return any 508(h) submission, concept proposal, or index based weather plan of insurance that:
(i) Is not complete;
(ii) Is unlikely to result in a viable and marketable policy;
(iii) Will not provide crop insurance coverage in a significantly improved form; and
(iv) Will not adequately protect the interests of producers.
(5) Except as provided in paragraph (a)(4) of this section, forward the 508(h) submission, concept proposal, or index-based weather plan of insurance, and the results of RMA's initial review, to the Board for its determination of completeness and quality.
(b) Upon the Board's receipt of a 508(h) submission, the Board will:
(1) Determine if the 508(h) submission is complete (the date the Board votes to contract with expert reviewers is the date the 508(h) submission is deemed to be complete for the start of the 120 day time-period for approval);
(2) Unless the 508(h) submission makes non-significant changes to a policy or plan of insurance, or involves policy provisions that have already undergone expert review, forward the complete 508(h) submission to at least five expert reviewers to review the 508(h) submission:
(i) Of the five expert reviewers, no more than one will be employed by the Federal Government, and none may be employed by any approved insurance provider or their representative; and
(ii) The expert reviewers will each provide their individual assessment of whether the 508(h) submission:
(A) Protects the interests of agricultural producers and taxpayers;
(B) Is actuarially appropriate;
(C) Follows recognized insurance principles;
(D) Meets the requirements of the Act;
(E) Does not contain excessive risks (risks may be considered excessive if they encourage adverse selection, moral hazard, or if premium rates cannot be adequately or appropriately determined);
(F) Follows sound, reasonable, and appropriate underwriting principles;
(G) Will provide a new kind of coverage that is likely to be viable and marketable;
(H) Will provide crop insurance coverage in a manner that addresses a clear and identifiable flaw or problem in an existing policy;
(I) Will provide a new or improved coverage for a commodity that previously had no available crop insurance, or has demonstrated a low level of participation or coverage level under existing coverage;
(J) May have a significant adverse impact on the crop insurance delivery system;
(K) The marketability assessment reasonably demonstrates the product would be viable and marketable (if the applicant cannot obtain a marketability assessment by another AIP, the Board shall presume that the submission is unmarketable);
(L) If applicable, contains a consultation report that provides evidence the 508(h) submission will not create adverse market distortions; and
(M) Meets any other criteria the Board may deem necessary;
(3) Return to the applicant any 508(h) submission the Board determines is not complete, along with an explanation of the reason for the determination and:
(i) With respect to 508(h) submissions developed from approved concept proposals, the provisions in § 400.712(c)(1) shall apply; and
(ii) Except for 508(h) submissions developed from concept proposals, if the 508(h) submission is resubmitted at a later date, it will be considered a new 508(h) submission solely for the purpose of determining the amount of time that the Board must take action; and
(4) For complete 508(h) submissions:
(i) Request review by RMA to provide its assessment of whether the 508(h) submission:
(A) Meets the criteria listed in subsections (b)(2)(ii)(A) through (M);
(B) Is consistent with USDA's public policy goals;
(C) Does not increase or shift risk to any other FCIC reinsured policy;
(D) Can be implemented, administered, and delivered effectively and efficiently using RMA's information technology and delivery systems; and
(E) Contains requested amounts of government reinsurance, risk subsidy, and administrative and operating subsidies that are reasonable and appropriate for the type of coverage provided by the policy; and
(ii) Seek review from the Office of the General Counsel (OGC) to determine if the 508(h) submission conforms to the requirements of the Act and all applicable Federal statutes and regulations.
(c) Upon the Board's receipt of a concept proposal, the Board will:
(1) Determine whether the concept proposal is complete (the date the Board votes to contract with expert reviewers is the date the concept proposal is deemed to be a complete concept proposal for the start of the 120 day time-period for approval);
(2) If complete, forward the concept proposal to at least two expert reviewers with underwriting or actuarial experience to review the concept in accordance with section 522(b)(2) of the Act, this subpart, and Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Costs;
(3) Return to the applicant any concept proposal the Board determines is not complete, along with an explanation of the reason for the determination (If the concept proposal is resubmitted at a later date, it will be considered a new concept proposal solely for the purposes of determining the amount of time that the Board must take action);
(4) Determine whether the concept proposal, if developed into a policy or plan of insurance would, in good faith, would meet the requirement of being likely to result in a viable and marketable policy consistent with section 508(h) (if the applicant cannot obtain a marketability assessment by another AIP, the Board shall presume that the submission is unmarketable);
(5) At its sole discretion, determine whether the concept proposal, if developed into a policy or plan of insurance would meet the requirement of providing coverage:
(i) In a significantly improved form;
(ii) To a crop or region not traditionally served by the Federal crop insurance program; or
(iii) In a form that addresses a recognized flaw or problem in the program;
(6) Determine whether the proposed budget and timetable are reasonable;
(7) Determine whether the concept proposal meets all other requirements imposed by the Board or as otherwise specified in Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Costs; and
(8) Provide a date by which the 508(h) submission must be provided in consultation with the applicant.
(d) Upon the Board's receipt of an index-based weather plan of insurance, the Board will:
(1) Determine whether the index-based weather plan of insurance is complete (the date the Board votes to contract with expert reviewers is the date the index-based weather plan of insurance is deemed to be complete for the start of the 120-day time-period for approval);
(2) If determined to be complete, contract with five expert reviewers and review the index-based weather plan of insurance in accordance with section 523(i) of the Act, this subpart, and Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance;
(3) Return to the applicant any index-based weather plan of insurance the Board determines is not complete, along with an explanation of the reason for the determination (if the index-based weather plan of insurance is resubmitted at a later date, it will be considered a new index-based weather plan of insurance solely for the purposes of determining the amount of time that the Board must take action); and
(4) Give the highest priority for approval of index-based weather plans of insurance that provide a new kind of coverage for specialty crops and livestock commodities that previously had no available crop insurance, or have demonstrated a low level of participation under existing coverage.
(e) All comments and evaluations will be provided to the Board by a date determined by the Board to allow the Board adequate time for review.
(f) The Board will consider all comments, evaluations, and recommendations in its review process. Prior to making a decision, the Board may request additional information from RMA, OGC, the expert reviewers, or the applicant.
(g) In considering whether to approve policies or plans of insurance and when such policies or plans of insurance will be offered for sale, the Board will:
(1) First, consider policies or plans of insurance that address underserved commodities, including commodities for which there is no insurance;
(2) Second, consider existing policies or plans of insurance for which there is inadequate coverage or there exists low levels of participation; and
(3) Last, consider all policies or plans of insurance submitted to the Board that do not meet the criteria described in paragraph (g)(1) or (2) of this section.
(h) At any time an applicant may request a time delay after the 508(h) submission, concept proposal, or index-based weather plan of insurance has been placed on the Board meeting agenda. The Board is not required to agree to such an extension.
(1) With respect to 508(h) submissions from concept proposals approved by the Board for advanced payment, the applicant must provide good cause why consideration should be delayed.
(2) Any requested time delay is not limited in the length of time unless a date is set by the Board by which all revisions to the 508(h) submission, concept proposal or index-based weather plan of insurance must be made. However, delays may make implementation of the 508(h) submission for the targeted crop year impractical or impossible as determined by the Board.
(3) The time period during which the Board will make a decision to approve or disapprove the 508(h) submission, concept proposal or index-based weather plan of insurance shall be extended commensurately with any time delay requested by the applicant.
(i) The applicant may withdraw a 508(h) submission, concept proposal, index-based weather plan of insurance, or a portion of a 508(h) submission or concept proposal, at any time by presenting a request to the Board. A withdrawn 508(h) submission, concept proposal or index-based weather plan of insurance that is resubmitted will be deemed a new 508(h) submission, concept proposal, or index-based weather plan of insurance solely for the
(j) The Board will render a decision on a 508(h) submission or index-based weather plan of insurance, with or without revision or give notice of intent to disapprove within 90 days after the date the 508(h) submission or index-based weather plan of insurance is considered complete by the Board, unless the Board agrees to a time delay in accordance with paragraph (h) of this section.
(k) The Board may provide a notice of intent to disapprove a 508(h) submission if it determines:
(1) The interests of producers and taxpayers are not protected, including but not limited to:
(i) The 508(h) submission does not provide adequate coverage or treats producers disparately;
(ii) The applicant has not presented sufficient documentation that the 508(h) submission will provide a new kind of coverage that is likely to be viable and marketable (if the applicant cannot obtain a marketability assessment by another AIP, the Board shall presume that the submission is unmarketable);
(iii) Coverage would be similar to another policy or plan of insurance that has not demonstrated a low level of participation or does not contain a clear and identifiable flaw, and the producer would not significantly benefit from the 508(h) submission;
(iv) The 508(h) submission may create adverse market distortions or adversely impact other crops or agricultural commodities if marketed;
(v) The 508(h) submission will have a significant adverse impact on the private delivery system;
(vi) The 508(h) submission cannot be implemented, administered, and delivered effectively and efficiently using RMA's information technology and delivery systems;
(vii) The 508(h) submission contains flaws that may encourage adverse selection or moral hazard; or
(viii) The 508(h) submission contains vulnerabilities that allow indemnities to exceed the value of the crop;
(2) The premium rates are not actuarially appropriate;
(3) The 508(h) submission does not conform to sound insurance and underwriting principles;
(4) The risks associated with the 508(h) submission are excessive or it increases or shifts risk to another reinsured policy;
(5) The 508(h) submission does not meet the requirements of the Act; or
(6) The 90-day deadline under subsection (j) will expire before the Board has time to make an informed decision to approve or disapprove the 508(h) submission.
(l) The Board may disapprove a concept proposal if it determines:
(1) The concept, in good faith, will not likely result in a viable and marketable policy consistent with section 508(h);
(2) At the sole discretion of the Board, the concept, if developed into a policy and approved by the Board, would not provide crop insurance coverage:
(i) In a significantly improved form;
(ii) To a crop or region not traditionally served by the Federal crop insurance program; or
(iii) In a form that addresses a recognized flaw or problem in the program;
(3) The proposed budget and timetable are not reasonable, as determined by the Board; or
(4) The concept proposal fails to meet one or more requirements established by the Board.
(m) The Board shall provide a notice of intent to disapprove an index-based weather plan of insurance if it determines there is not:
(1) Adequate experience in underwriting and administering policies or plans of insurance that are comparable to the proposed policy or plan of insurance;
(2) Sufficient assets or reinsurance to satisfy the underwriting obligations of the approved insurance provider, and possess a sufficient insurance credit rating from an appropriate credit rating bureau, in accordance with Board procedures; and
(3) Applicable authority and approval from each State in which the approved insurance provider intends to sell the insurance product.
(n) Unless otherwise provided for in this section:
(1) If the Board intends to disapprove a 508(h) submission or index-based weather plan of insurance, the Board will provide the applicant with a written explanation outlining the basis for the intent to disapprove; and
(2) Any approval or disapproval of a 508(h) submission, concept proposal, or index-based weather plan of insurance must be made by the Board in writing not later than 120 days after the Board has determined it to be complete.
(o) If a notice of intent to disapprove all or part of a 508(h) submission or index-based weather plan of insurance has been provided by the Board, the applicant must provide written notice to the Board not later than 30 days after the Board provides such notice if the 508(h) submission or index-based weather plan of insurance will be modified. If the applicant does not respond within the 30-day period, the Board will send the applicant a letter stating the 508(h) submission or index-based weather plan of insurance is disapproved.
(p) If the applicant elects to modify the 508(h) submission or index-based weather plan of insurance:
(1) The applicant must advise the Board of a date by which the modified 508(h) submission or index-based weather plan of insurance will be presented to the Board; and
(2) The remainder of the time left between the Board's notice of intent to disapprove and the expiration of the 120-day deadline is paused until the modified 508(h) submission or index-based weather plan of insurance is received by the Board.
(3) The Board will disapprove a modified 508(h) submission or index-based weather plan of insurance if the:
(i) Causes for disapproval stated by the Board in its notification of intent to disapprove the 508(h) submission or index-based weather plan of insurance are not satisfactorily addressed;
(ii) Board determines there is insufficient time for the Board to finish its review before the expiration of the 120-day deadline for disapproval of a 508(h) submission or index-based weather plan of insurance, unless the applicant grants the Board an extension of time to adequately consider the modified 508(h) submission or index-based weather plan of insurance (If an extension of time is agreed upon, the time period during which the Board must act on the modified 508(h) submission or index-based weather plan of insurance will paused during the extension); or
(iii) Applicant does not present a modification of the 508(h) submission or index-based weather plan of insurance to the Board on the date the applicant specified and the applicant does not request an additional time delay.
(q) If the Board fails to render a decision on a new 508(h) submission or index-based weather plan of insurance within the time periods specified in paragraph (j) or (n) of this section, such 508(h) submission or index-based weather plan of insurance will be deemed approved by the Board for the initial reinsurance year designated for the 508(h) submission or index-based weather plan of insurance. The Board must approve the 508(h) submission or index-based weather plan of insurance for it to be available for any subsequent reinsurance year.
(a) The Board will inform the applicant of the date, time, and place of the Board meeting.
(b) The applicant will be given the opportunity and is encouraged to present the 508(h) submission, concept proposal, or index-based weather plan of insurance to the Board in person. The applicant must confirm in writing, email or fax whether the applicant will present in person to the Board.
(c) If the applicant elects not to present the 508(h) submission, concept proposal, or index-based weather plan of insurance to the Board, the Board will make its decision based on the information provided in accordance with § 400.705 and § 400.706.
(a) After a 508(h) submission is approved by the Board, and prior to it being made available for sale to producers:
(1) The following must be executed, as applicable:
(i) If required by FCIC, an agreement between the applicant and FCIC that specifies:
(A) In addition to the requirements in § 400.709, responsibilities of each with respect to the implementation, delivery and maintenance of the 508(h) submission; and
(B) The required timeframes for submitting any information and documentation needed to administer the approved 508(h) submission;
(ii) A reinsurance agreement if the approved submission does not meet, or is not expected to perform in a financial manner consistent with the terms and conditions of the Standard Reinsurance Agreement or any other existing reinsurance agreement offered by FCIC in effect for the crop year, and that considers the interests of all participating AIPs; and
(iii) A training package to facilitate implementation of the approved 508(h) submission;
(2) The Board may limit the availability of coverage, for any policy or plan of insurance developed under the authority of the Act and this regulation, on any farm or in any county or area;
(3) A 508(h) submission approved by the Board under this subpart will be made available to all approved insurance providers under the same reinsurance, subsidy, and terms and conditions as received by the applicant;
(4) Any solicitation, sales, marketing, or advertising of the approved 508(h) submission by the applicant before FCIC has made the policy materials available to all interested parties through its official issuance system will result in the denial of reinsurance, risk subsidy, and A&O subsidy for those policies affected; and
(5) The property rights to the 508(h) submission will automatically transfer to FCIC if the applicant elects not to maintain the 508(h) submission under § 400.712(a)(3) or fails to notify FCIC of its decision to elect or not elect maintenance of the program under § 400.712(l).
(b) Requirements and procedures for approved index-based weather plans of insurance are contained in Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance. In accordance with the Board approved procedures, index-based weather plans of insurance are not eligible for federal reinsurance, but may be approved for risk subsidy and A&O subsidy.
(a) With respect to the applicant:
(1) The applicant is responsible for:
(i) Preparing and ensuring that all policy documents, rates of premium, prices, and supporting materials, including actuarial documents, are submitted by the deadline specified by FCIC, in the form approved by the Board, and are in compliance with section 508 of the Rehabilitation Act;
(ii) Annually updating and providing maintenance changes no later than 180 days prior to the earliest contract change date for the commodity in all counties or states in which the policy or plan of insurance is sold;
(iii) Timely addressing questions, problems or clarifications in regard to a policy or plan of insurance (all such resolutions for approved 508(h) submissions will be communicated to all approved insurance providers through FCIC's official issuance system); and
(iv) If requested by the Board, providing an annual review of the policy's performance, in writing to the Board, 180 days prior to the contract change date for the plan of insurance (The first annual report will be submitted one full year after implementation of an approved policy or plan of insurance, as agreed to by the submitter and RMA);
(2) Only the applicant may make changes to the policy, plan of insurance, or rates of premium approved by the Board:
(i) Any changes to approved 508(h) submissions, both non-significant and significant, must be submitted to FCIC in the form of a 508(h) submission for review in accordance with this subpart no later than 180 days prior to the earliest contract change date for the commodity in all counties or states in which the policy or plan of insurance is sold; and
(ii) Significant changes will be considered a new 508(h) submission;
(3) Except as provided in paragraph (a)(4) of this section, the applicant is solely liable for any mistakes, errors, or flaws in the submitted policy, plan of insurance, their related materials, or the rates of premium that have been approved by the Board unless, or until, the policy or plan of insurance is transferred to FCIC in accordance with § 400.712(l) (the applicant remains liable for any mistakes, errors, or flaws that occurred prior to transfer of the policy or plan of insurance to FCIC);
(4) If the mistake, error, or flaw in the policy, plan of insurance, their related materials, or the rates of premium is discovered more than 45 days prior to the cancellation or termination date for the policy or plan of insurance, the applicant may request in writing that FCIC withdraw the approved policy, plan of insurance, or rates of premium:
(i) Such request must state the discovered mistake, error, or flaw in the policy, plan of insurance, or rates of premium, and the expected impact on the program; and
(ii) For all timely received requests for withdrawal, no liability will attach to such policies, plans of insurance, or rates of premium that have been withdrawn and no producer, approved insurance provider, or any other person will have a right of action against the applicant;
(5) Notwithstanding the policy provisions regarding cancellation, any policy, plan of insurance, or rates of premium that have been withdrawn by the applicant, in accordance with paragraph (a)(4) of this section is deemed canceled and applications are deemed not accepted as of the date that FCIC publishes the notice of withdrawal on its Web site at
(i) Approved insurance providers will be notified in writing by FCIC that the policy, plan of insurance, or premium rates have been withdrawn; and
(ii) Producers will have the option of selecting any other policy or plan of insurance authorized under the Act that is available in the area by the sales closing date for such policy or plan of insurance; and
(6) Failure of the applicant to perform all of the applicant's responsibilities may result in the withdrawal of approval for the policy or plan of insurance.
(b) With respect to FCIC:
(1) FCIC is responsible for:
(i) Conducting a review in accordance with § 400.706 and providing its recommendations to the Board;
(ii) With respect to 508(h) submissions:
(A) Ensuring that all approved insurance providers receive the approved policy or plan of insurance, and related material, for sale to producers in a timely manner (All such information shall be communicated to all approved insurance providers through FCIC's official issuance system);
(B) As applicable, ensuring that approved insurance providers receive reinsurance under the same terms and conditions as the applicant (Approved insurance providers should contact FCIC to obtain and execute a copy of the reinsurance agreement) if required; and
(C) Reviewing the activities of approved insurance providers, agents, loss adjusters, and producers to ensure that they are in accordance with the terms of the policy or plan of insurance, the reinsurance agreement, and all applicable procedures;
(2) FCIC will not be liable for any mistakes, errors, or flaws in the policy, plan of insurance, their related materials, or the rates of premium and no cause of action may be taken against FCIC as a result of such mistake, error, or flaw in a 508(h) submission or index-based weather plan of insurance submitted under this subpart;
(3) If at any time prior to the cancellation date, FCIC discovers there is a mistake, error, or flaw in the policy, plan of insurance, their related materials, or the rates of premium, or any other reason for withdrawal of approval contained in § 400.706(k) exists, FCIC will withdraw reinsurance for such policy or plan of insurance to all AIPs for the subsequent crop year (If reinsurance is denied, a written notice will be provided on RMA's Web site at
(4) If maintenance of the policy or plan of insurance is transferred to FCIC in accordance with § 400.712(l), FCIC will assume liability for the policy or plan of insurance for any mistake, error, or flaw that occur after the date the policy is transferred.
(c) If approval by the Board is withdrawn or reinsurance is denied for any 508(h) submission, RMA will provide such notice on its Web site and the approved insurance provider must cancel the policy or plan of insurance in accordance with its terms.
A policy or plan of insurance that is approved by the Board for FCIC reinsurance is preempted from state and local taxation. This preemption does not apply to index-based weather plans of insurance approved for premium subsidy or A&O subsidy under this part.
(a) At any time after approval, the Board may review any policy, plan of insurance, related material, or rates of premium approved under this subpart, including index-based weather plans of insurance and request additional information to determine whether the policy, plan of insurance, related material, or rates of premium comply with the requirements of this subpart.
(b) The Board will notify the applicant of any problem or issue that may arise and allow the applicant an opportunity to make any needed change. If the contract change date has passed, the applicant will be liable for such problems or issues for the crop year in accordance with § 400.709 until the policy may be changed.
(c) The Board may withdraw approval for the applicable policy, plan of insurance or rate of premium, including index-based weather plans of insurance, as applicable, if:
(1) The applicant fails to perform the responsibilities stated under § 400.709(a);
(2) The applicant does not timely and satisfactorily provide materials or resolve any issue to the Board's satisfaction so that necessary changes can be made prior to the earliest contract change date;
(3) The Board determines the applicable policy, plan of insurance or rate of premium, including index-based weather plans of insurance is not in conformance with the Act, these regulations or the applicable procedures;
(4) The policy, plan of insurance, or rates of premium are not sufficiently marketable according to the applicant's estimate or fails to perform sufficiently as determined by the Board; or
(5) The interest of producers or tax payers is not protected or the continuation of the program raises questions or issues of program integrity.
(a) For 508(h) submissions approved by the Board for reinsurance under section 508(h) of the Act:
(1) The 508(h) submission may be eligible for a one-time payment of research and development costs and reimbursement of maintenance costs for up to four reinsurance years, as determined by the Board;
(2) Reimbursement of research and development costs or maintenance costs will be considered as payment in full by FCIC for the 508(h) submission, and no additional amounts will be owed to the applicant if the 508(h) submission is transferred to FCIC in accordance with paragraph (l) of this section; and
(3) If the applicant elects at any time not to continue to maintain the 508(h) submission, it will automatically become the property of FCIC and the applicant will no longer have any property rights to the 508(h) submission and will not receive any user fees for the plan of insurance;
(b) The Board approved procedures and time-frames must be followed, or research and development costs and maintenance costs may not be reimbursed.
(1) After a 508(h) submission has been approved by the Board for reinsurance, to be considered for reimbursement of:
(i) Research and development costs, the applicant must submit the total amount requested and all supporting documentation to FCIC by electronic method or by hard copy and such information must be received by FCIC on or before August 1 immediately following the date the 508(h) submission was released to approved insurance providers through FCIC's issuance system; or
(ii) Maintenance costs, the applicant must submit the total amount requested and all supporting documentation to FCIC by electronic method or by hard copy and such information must be received by FCIC on or before August 1 of each year of the maintenance period.
(2) Given the limitation on funds, regardless of when the request is received, no payment will be made prior to September 15 of the applicable fiscal year.
(c) Applicants submitting a concept proposal may request an advance payment of up to 50 percent of the projected total research and development costs, and after the applicant has begun research and development activities, the Board may, at its sole discretion, provide up to an additional 25 percent advance payment of the estimated research and development costs, if the requirements in the definition of advance payment are met and the additional advance payment is requested in accordance with Procedures Handbook 17030—Approved Procedures for Submission of Concept Proposals Seeking Advance Payment of Research and Development Costs.
(1) If a concept proposal is approved by the Board for advance payment, the applicant is responsible for
(i) If an applicant fails to fulfill the obligation to provide a 508(h) submission that is complete by the deadline set by the Board, the Board shall provide a notice of non-compliance to the applicant and allow not less than 30 days for the applicant to respond;
(ii) If the applicant fails to respond, to the satisfaction of the Board, with just cause as to why a 508(h) submission that is complete was not provided by the deadline set by the Board, the applicant shall return the amount of the advance payment plus interest at the rate of 1.25 percent simple interest per calendar month;
(iii) If the applicant responds, to the satisfaction of the Board, with just cause as to why a 508(h) submission that is complete was not provided by the deadline set by the Board, the applicant will be given a new deadline by which to provide a 508(h) submission that is complete; and
(iv) If the applicant fails to provide a 508(h) submission that is complete by the deadline, no additional extensions will be approved by the Board and the applicant shall return the amount of the advance payment plus interest at the rate of 1.25 percent simple interest per calendar month.
(2) If an applicant receives an advance payment for a portion of the expected research and development costs for a concept proposal that is developed into a 508(h) submission and determined by the Board to be complete, but the 508(h) submission is not approved by the Board following expert review, the Board will not:
(i) Seek a refund of any advance payments for research and development costs; and
(ii) Make any further research and development cost reimbursements associated with the 508(h) submission.
(d) Under section 522 of the Act, there are limited funds available on an annual fiscal year basis to pay for reimbursements of research and development costs (including advance payments for concept proposals) and maintenance costs. Consistent with paragraphs (e) through (j) of this section if all applicants' requests for reimbursement of research and development costs (including advance payments for concept proposals) and maintenance costs in any fiscal year:
(1) Do not exceed the maximum amount authorized by law, the applicants may receive the full amount of reimbursement determined reasonable by the Board; or
(2) Exceed the amount authorized by law, each applicant's reimbursement determined reasonable by the Board will be determined by dividing the total amount of each individual applicant's reimbursable costs authorized in paragraphs (e) through (j) of this section by the total amount of the aggregate of all applicants' reimbursable costs authorized in paragraphs (e) through (j) for the year and multiplying the result by the amount of reimbursement authorized under the Act.
(e) The amount of reimbursement for research and development costs and maintenance costs requested by the applicant may be reduced as necessary when the requested amount is not commensurate with the complexity or the size of the area proposed to be covered.
(f) Research and development costs and maintenance costs must be supported by itemized statements and supporting documentation (copies of contracts, billing statements, time sheets, travel vouchers, accounting ledgers, etc.).
(1) Actual costs submitted will be examined for reasonableness and may be adjusted at the sole discretion of the Board.
(2) Allowable research and development costs and maintenance costs (directly related to research and development or maintenance of the 508(h) submission only) may include the following:
(i) Wages and benefits, exclusive of bonuses, overtime pay, or shift differentials;
(A) One line per employee or contractor, include job title, total hours, and total dollars;
(B) The rates charged must be commensurate with the tasks performed (For example, a person performing the task of data entry should not be paid at the rate for performing data analysis);
(C) The wage rate and benefits shall not exceed two times the hourly wage rate plus benefits provided by the Bureau of Labor Statistics; and
(D) The applicant must report any familial or business relationship that exists between the applicant and the contractor or employee (Reimbursement may be limited or denied if the contractor or employee is associated to the applicant and they may be considered as one and the same. This includes a separate entity being created by the applicant to conduct research and development. Reimbursement may be limited or denied if the contractor is paid a salary or other compensation);
(ii) Travel and transportation (One line per event, include the job title, destination, purpose of travel, lodging cost, mileage, air or other identified transportation costs, food and miscellaneous expenses, other costs, and the total cost);
(iii) Software and computer programming developed specifically to determine appropriate rates, prices, or coverage amounts (Identify the item, include the purpose, and provide receipts or contract or straight-time hourly wage, hours, and total cost. Software developed to send or receive data between the producer, agent, approved insurance provider or RMA or such other similar software may not be included as an allowable cost);
(iv) Miscellaneous expenses such as postage, telephone, express mail, and printing (Identify the item, cost per unit, number of items, and total dollars); and
(v) Training costs expended to facilitate implementation of a new approved 508(h) submission (Include instructor(s) hourly rate, hours, and cost of materials and travel) conducted at a national level, directed to all approved insurance providers interested in selling the 508(h) submission, and approved prior to the training by RMA).
(3) The following expenses are specifically not eligible for research and development and maintenance cost reimbursement:
(i) Copyright fees, patent fees, or any other charges, costs or expenses related to the use of intellectual property;
(ii) Training costs, excluding training costs to facilitate implementation of the approved 508(h) submission in accordance with subsection (f)(2)(v);
(iii) State filing fees and expenses;
(iv) Normal ongoing administrative expenses or indirect overhead costs (for example, costs associated with the management or general functions of an organization, such as costs for internet service, telephone, utilities, and office supplies);
(v) Paid or incurred losses;
(vi) Loss adjustment expenses;
(vii) Sales commission;
(viii) Marketing costs;
(ix) Lobbying costs;
(x) Product or applicant liability resulting from the research, development, preparation or marketing of the policy;
(xi) Copyright infringement claims resulting from the research, development, preparation or marketing of the policy;
(xii) Costs of making program changes as a result of any mistakes, errors or flaws in the policy or plan of insurance;
(xiii) Costs associated with building rents or space allocation;
(xiv) Costs in paragraphs (i) and (j) of this section determined by the Board to be ineligible for reimbursement; and
(xv) Local, State, or Federal taxes.
(g) Requests for reimbursement of maintenance costs must be supported by itemized statements and supporting documentary evidence for each reinsurance year in the maintenance period.
(1) Actual costs submitted will be examined for reasonableness and may be adjusted at the sole discretion of the Board.
(2) Maintenance costs for the following activities may be reimbursed:
(i) Expansion of the original 508(h) submission into additional crops, counties or states;
(ii) Non-significant changes to the policy and any related material;
(iii) Non-significant or significant changes to the policy as necessary to protect program integrity or as required by Congress; and
(iv) Any other activity that qualifies as maintenance.
(h) Projected costs for research and development for concept proposals shall be based on a detailed estimate of the costs allowed in paragraph (f) of this section. Since costs are one measurement of the viability to develop an efficient policy, the Board may limit reimbursements for research and development to the estimated costs contained in the concept proposal, unless the submitter can justify a higher reimbursement in accordance with Board procedures.
(i) If a 508(h) submission is determined to be incomplete and is subsequently resubmitted and approved, the costs to perfect the 508(h) submission may not be considered reimbursable costs depending on the level of insufficiency or incompleteness of the 508(h) submission, as determined at the sole discretion of the Board.
(j) Reimbursement of costs associated with addressing issues raised by the Board, expert reviewers and RMA will be evaluated based on the substance of the issue and the amount of time reasonably necessary to address the specific issue. Delays and additional costs caused by the inability or refusal to adequately address issues may not be considered reimbursable, as determined at the sole discretion of the Board.
(k) If the Board withdraws its approval for reinsurance at any time during the period that reimbursement for maintenance is being made or user fees are being collected, no maintenance reimbursement shall be made nor any user fee be owed after the date of such withdrawal.
(l) Not later than 180 days prior to the end of the last reinsurance year in which a maintenance reimbursement will be paid for the approved 508(h) submission, the applicant must notify FCIC in writing regarding its decision on future ownership and maintenance of the policy or plan of insurance.
(1) The applicant must notify FCIC in writing whether it intends to:
(i) Continue to maintain the policy or plan of insurance and charge approved insurance providers a user fee to cover maintenance expenses for all policies earning premium; or
(ii) Transfer responsibility for maintenance to FCIC.
(2) If the applicant fails to notify FCIC in writing by the deadline, the policy or plan of insurance will automatically transfer to FCIC beginning with the next reinsurance year.
(3) If the applicant elects to:
(i) Continue to maintain the policy or plan of insurance, the applicant must submit a request for approval of the user fee by the Board at the time of the election; or
(ii) Transfer the policy or plan of insurance to FCIC, FCIC may at its sole discretion, continue to maintain the policy or plan of insurance or elect to withdraw the availability of the policy or plan of insurance.
(4) Requests for approval of the user fee must be accompanied by written documentation to support the amount requested will only cover direct costs to maintain the plan of insurance. Costs that are not eligible for research and development and maintenance reimbursements under this section are not eligible to be considered for determining the user fee.
(5) The Board will approve the amount of user fee, including the maximum amount of total maintenance that may be collected per year, that is payable to the applicant by approved insurance providers unless the Board determines that the user fee charged:
(i) Is unreasonable in relation to the maintenance costs associated with the policy or plan of insurance; or
(ii) Unnecessarily inhibits the use of the policy or plan of insurance by approved insurance providers.
(6) If the total user fee exceeds the maximum amount determined by the Board, the maximum amount determined by the Board will be divided by the number of policies earning premium to determine the amount to be paid by each approved insurance provider.
(7) Reasonableness of the initial request to charge a user fee will be determined by the Board based on a comparison of the amount of reimbursement for maintenance previously received, the number of policies, the number of approved insurance providers, and the expected total amount of user fees to be received in any reinsurance year.
(8) A user fee unnecessarily inhibits the use of a policy or plan of insurance if it is so high that approved insurance providers will not sell the policy, or the user fee represents an unreasonable portion of the A&O subsidy paid to the AIP such that it prevents the AIP from meeting its other obligations under the SRA.
(9) The user fee charged to each approved insurance provider will be considered payment in full for the use of such policy, plan of insurance or rate of premium for the reinsurance year in which payment is made.
(10) It is the sole responsibility of the applicant to collect such fees from an approved insurance provider and any indebtedness for such fees must be resolved by the applicant and approved insurance provider.
(i) Applicants may request that FCIC provide the number of policies sold by each approved insurance provider.
(ii) Such information will be provided not later than 90 days after such request is made or not later than 90 days after the requisite information has been provided to FCIC by the approved insurance provider, whichever is later.
(11) Every two years after approval of a user fee, or if the applicant has made a significant change to the approved 508(h) submission, applicants must submit documentation to the Board for review in determining if the user fee should be revised.
(12) The Board may review the amount of the user fee at any time at its sole discretion.
(m) The Board may consider information from the Equal Access to Justice Act, 5 U.S.C. 504, the Bureau of Labor Statistic's Occupational Employment Statistics Survey, the Bureau of Labor Statistic's Employment Cost Index, and any other information determined applicable by the Board, in making a determination whether to approve a 508(h) submission for reimbursement of research and development costs, maintenance costs, or user fees.
(n) For purposes of this section, rights to, or obligations of, research and development cost reimbursement, maintenance cost reimbursement, or user fees cannot be transferred from any individual or entity unless specifically approved in writing by the Board.
(o) Applicants requesting reimbursement for research and development costs, maintenance costs,
(p) Index-based weather plans of insurance are not eligible for reimbursement from FCIC for maintenance costs or research and development costs. Submitters of approved index-based weather plans of insurance may collect user fees from other approved insurance providers in accordance with Procedures Handbook 17050—Approved Procedures for Submission of Index-based Weather Plans of Insurance.
(a) Unless otherwise specified by FCIC, any NRS policy that covers the same agricultural commodity as any policy reinsured by FCIC under the Act must be provided to RMA to ensure it does not shift any loss or risk that does not exist under the FCIC reinsured policy. Failure to provide such NRS policy or endorsement to RMA prior to its issuance shall result in the denial of reinsurance, A&O subsidy, and risk subsidy on all underlying FCIC reinsured policies unless the underlying FCIC policy was sold by another AIP. If the underlying FCIC reinsured policy is sold by another AIP, the AIP that sold the NRS may be required to pay FCIC an amount equal to the reinsurance, A&O subsidy, and risk subsidy on the underlying FCIC policy.
(b) An electronic copy in Microsoft Office compatible format, of the new or revised NRS policy and related materials must be submitted at least 150 days prior to the first sales closing date applicable to the NRS policy. At a minimum, examples that demonstrate how liability and indemnities are calculated under differing scenarios must be included. Electronic copies of the NRS must be sent to the Deputy Administrator for Product Management (or successor) at
(c) RMA will review the NRS policy. If any of the conditions found in paragraphs (c)(1) through (5) of this section are found to occur, FCIC will notify the AIP that submitted the NRS policy that if they sell the NRS policy, it will result in denial of reinsurance, A&O subsidy, and risk subsidy on all underlying FCIC reinsured policies, unless the underlying FCIC policy was sold by another AIP. If the underlying FCIC reinsured policy is sold by another AIP, the AIP that sold the NRS may be required to pay FCIC an amount equal to the reinsurance, A&O subsidy, and risk subsidy on the underlying FCIC policy.
(1) If the NRS policy materially increases or shifts risk to the underlying policy or plan of insurance reinsured by FCIC.
(i) An NRS policy will be considered to materially increase or shift risk to the underlying policy or plan of insurance reinsured by FCIC if RMA determines it:
(A) Creates a moral hazard, such as a financial incentive for the policyholder to behave in a way that increases the number or size of losses;
(B) Results in the underlying FCIC policy either triggering a loss sooner, or paying a larger indemnity than would otherwise be allowed by the terms and conditions of the underlying reinsured policy; or
(C) Allows for combined indemnities between the underlying FCIC reinsured policy and the NRS that are in excess of the value a producer would reasonably expect to receive for the insured commodity if a normal crop was produced and sold at a reasonable market price.
(ii) The NRS must include language that clearly states no indemnity will be paid in excess of the initial value of the insured commodity.
(2) The NRS reduces or limits the rights of the insured with respect to the underlying policy or plan of insurance reinsured by FCIC. An NRS policy will be considered to reduce or limit the rights of the insured with respect to the underlying policy or plan of insurance if RMA determines it affects, alters, preempts, or undermines the terms or conditions of the underlying policy or procedures issued by FCIC.
(3) The NRS disrupts the marketplace. An NRS policy will be considered to disrupt the marketplace if RMA determines it encourages planting more acres of the insured commodity in excess of normal market demand, adversely affects the sales or administration of reinsured policies, undermines producers' confidence in the Federal crop insurance program, or harms public perception of the Federal crop insurance program.
(4) The NRS is an impermissible rebate. An NRS may be considered to be an impermissible rebate if RMA determines that the premium rates charged are insufficient to cover the expected losses and a reasonable reserve or it offers other benefits that are generally provided at a cost.
(5) The NRS policy is conditioned upon or provides incentive for the purchase of the underlying policy or plan of insurance reinsured by FCIC with a specific agent or approved insurance provider.
(d) RMA will respond not less than 75 days before the first sales closing date or provide notice why RMA is unable to respond within the time frame allotted.
(e) NRS policies reviewed by RMA will need to be submitted once every five years unless a change is made to the NRS or the underlying policy. Once any changes are made to either policy, or the five year period has concluded, the NRS must be resubmitted for review.
Drug Enforcement Administration, Department of Justice.
Denial of petition to initiate proceedings to reschedule marijuana.
By letter dated July 19, 2016 the Drug Enforcement Administration (DEA) denied a petition to initiate rulemaking proceedings to reschedule marijuana. Because the DEA believes that this matter is of particular interest to members of the public, the agency is publishing below the letter sent to the petitioner which denied the petition, along with the supporting documentation that was attached to the letter.
August 12, 2016.
Michael J. Lewis, Office of Diversion Control, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-6812.
Dear Ms. Raimondo and Mr. Inslee:
On November 30, 2011, your predecessors, The Honorable Lincoln D. Chafee and The Honorable Christine O. Gregoire, petitioned the Drug Enforcement Administration (DEA) to initiate rulemaking proceedings under the rescheduling provisions of the Controlled Substances Act (CSA). Specifically, your predecessors petitioned the DEA to have marijuana and “related items” removed from Schedule I of the CSA and rescheduled as medical cannabis in Schedule II.
Your predecessors requested that the DEA remove marijuana and related items from Schedule I based on their assertion that:
(1) Cannabis has accepted medical use in the United States;
(2) Cannabis is safe for use under medical supervision;
(3) Cannabis for medical purposes has a relatively low potential for abuse, especially in comparison with other Schedule II drugs.
In accordance with the CSA rescheduling provisions, after gathering the necessary data, the DEA requested a scientific and medical evaluation and scheduling recommendation from the Department of Health and Human Services (HHS). The HHS concluded that marijuana has a high potential for abuse, has no accepted medical use in the United States, and lacks an acceptable level of safety for use even under medical supervision. Therefore, the HHS recommended that marijuana remain in Schedule I. The scientific and medical evaluation and scheduling recommendation that the HHS submitted to the DEA is enclosed with this letter.
Based on the HHS evaluation and all other relevant data, the DEA has concluded that there is no substantial evidence that marijuana should be removed from Schedule I. A document prepared by the DEA addressing these materials in detail also is enclosed. In short, marijuana continues to meet the criteria for Schedule I control under the CSA because:
(1)
(2)
(3)
The statutory mandate of Title 21 United States Code, Section 812(b) (21 U.S.C. 812(b)) is dispositive. Congress established only one schedule, Schedule I, for drugs of abuse with “no currently accepted medical use in treatment in the United States” and “lack of accepted safety for use . . . under medical supervision.” 21 U.S.C. 812(b).
Although the HHS evaluation and all other relevant data lead to the conclusion that marijuana must remain in schedule I, it should also be noted that, in view of United States obligations under international drug control treaties, marijuana cannot be placed in a schedule less restrictive than schedule II. This is explained in detail in accompanying document titled “Preliminary Note Regarding Treaty Considerations.”
Accordingly, and as set forth in detail in the accompanying HHS and DEA documents, there is no statutory basis under the CSA for the DEA to grant your predecessors' petition to initiate rulemaking proceedings to reschedule marijuana. The petition is, therefore, hereby denied.
Cover Letter from HHS to DEA Summarizing the Scientific and Medical Evaluation and Scheduling Recommendation for Marijuana.
U.S. Department of Health and Human Services (HHS)—Basis for the Recommendation for Maintaining Marijuana in Schedule I of the Controlled Substances Act
U.S. Department of Justice—Drug Enforcement Administration (DEA), Schedule of Controlled Substances: Maintaining Marijuana in Schedule I of the Controlled Substances Act, Background, Data, and Analysis: Eight Factors Determinative of Control and Findings Pursuant to 21 U.S.C. 812(b)
As the Controlled Substances Act (CSA) recognizes, the United States is a party to the Single Convention on Narcotic Drugs, 1961 (referred to here as the Single Convention or the treaty). 21 U.S.C. 801(7). Parties to the Single Convention are obligated to maintain various control provisions related to the drugs that are covered by the treaty. Many of the provisions of the CSA were enacted by Congress for the specific purpose of ensuring U.S. compliance with the treaty. Among these is a scheduling provision, 21 U.S.C. 811(d)(1). Section 811(d)(1) provides that, where a drug is subject to control under the Single Convention, the DEA Administrator (by delegation from the Attorney General) must “issue an order controlling such drug under the schedule he deems most appropriate to carry out such [treaty] obligations, without regard to the findings required by [21 U.S.C. 811(a) or 812(b)] and without regard to the procedures prescribed by [21 U.S.C. 811(a) and (b)].”
Marijuana is a drug listed in the Single Convention. The Single Convention uses the term “cannabis” to refer to marijuana.
Because schedules I and II are the only possible schedules in which marijuana may be placed, for purposes of evaluating this scheduling petition, it is essential to understand the differences between the criteria for placement of a substance in schedule I and those for placement in schedule II. These criteria are set forth in 21 U.S.C. 812(b)(1) and (b)(2), respectively. As indicated therein, substances in both schedule I and schedule II share the characteristic of “a high potential for abuse.” Where the distinction lies is that schedule I drugs have “no currently accepted medical use in treatment in the United States” and “a lack of accepted safety for use of the drug . . . under medical supervision,” while schedule II drugs do have “a currently accepted medical use in treatment in the United States.”
Accordingly, in view of section 811(d)(1), this scheduling petition turns on whether marijuana has a currently accepted medical use in treatment in the United States. If it does not, DEA must, pursuant to section 811(d), deny the petition and keep marijuana in schedule I.
As indicated, where section 811(d)(1) applies to a drug that is the subject of a rescheduling petition, the DEA Administrator must issue an order controlling the drug under the schedule he deems most appropriate to carry out United States obligations under the Single Convention, without regard to the findings required by sections 811(a) or 812(b) and without regard to the procedures prescribed by sections 811(a) and (b). Thus, since the only determinative issue in evaluating the present scheduling petition is whether marijuana has a currently accepted medical use in treatment in the United States, DEA need not consider the findings of sections 811(a) or 812(b) that have no bearing on that determination, and DEA likewise need not follow the procedures prescribed by sections 811(a) and (b) with respect to such irrelevant findings. Specifically, DEA need not evaluate the relative abuse potential of marijuana or the relative extent to which abuse of marijuana may lead to physical or psychological dependence.
As explained below, the medical and scientific evaluation and scheduling recommendation issued by the Secretary of Health and Human Services concludes that marijuana has no currently accepted medical use in treatment in the United States, and the DEA Administrator likewise so concludes. For the reasons just indicated, no further analysis beyond this consideration is required. Nonetheless, because of the widespread public interest in understanding all the facts relating to the harms associated with marijuana, DEA is publishing here the entire medical and scientific analysis and scheduling evaluation issued by the Secretary, as well as DEA's additional analysis.
Dear Mr. Rosenberg:
Pursuant to the Controlled Substances Act (CSA, 21 U.S.C. § 811(b), (c), and (f)), the Department of Health and Human Services (HHS) is recommending that marijuana continue to be maintained in Schedule I of the CSA.
The Food and Drug Administration (FDA) has considered the abuse potential and dependence-producing characteristics of marijuana.
Marijuana meets the three criteria for placing a substance in Schedule I of the CSA under 21 U.S.C. 812(b)(1). As discussed in the enclosed analyses, marijuana has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. Accordingly, HHS recommends that marijuana be maintained in Schedule I of the CSA. Enclosed are two documents prepared by FDA's Controlled Substance Staff (in response to petitions filed in 2009 by Mr. Bryan Krumm and in 2011 by Governors Lincoln D. Chafee and Christine O. Gregoire) that form the basis for the recommendation. Pursuant to the requests in the petitions, FDA broadly evaluated marijuana, and did not focus its evaluation on particular strains of marijuana or components or derivatives of marijuana.
FDA's Center for Drug Evaluation and Research's current review of the available evidence and the published clinical studies on marijuana demonstrated that since our 2006 scientific and medical evaluation and scheduling recommendation responding to a previous DEA petition, research with marijuana has progressed. However, the available evidence is not sufficient to determine that marijuana has an accepted medical use. Therefore, more research is needed into marijuana's effects, including potential medical uses for marijuana and its derivatives. Based on the current review, we identified several methodological challenges in the marijuana studies published in the literature. We recommend they be addressed in future clinical studies with marijuana to ensure that valid scientific data are generated in studies evaluating marijuana's safety and efficacy for therapeutic use. For example, we recommend that studies need to focus on consistent administration and reproducible dosing of marijuana, potentially through the use of administration methods other than smoking. A summary of our review of the published literature on the clinical uses of marijuana, including recommendations for future studies, is attached to this document.
FDA and the National Institutes of Health's National Institute on Drug Abuse (NIDA) also believe that work continues to be needed to ensure support by the federal government for the efficient conduct of clinical research using marijuana. Concerns have been raised about whether the existing federal regulatory system is flexible enough to respond to increased interest in research into the potential therapeutic uses of marijuana and marijuana-derived drugs. HHS welcomes an opportunity to continue to explore these concerns with DEA.
Should you have any questions regarding theses recommendations, please contact Corinne P. Moody, Science Policy Analyst, Controlled Substances Staff, Center for Drug Evaluation and Research, FDA, at (301) 796-3152.
On November 30, 2011, Governors Lincoln D. Chafee of Rhode Island and Christine O. Gregoire of Washington submitted a petition to the Drug Enforcement Administration (DEA) requesting that proceeding be initiated to repeal the rules and regulations that place marijuana
In accordance with 21 U.S.C. 811(b), DEA has gathered information related to the control of marijuana (
All parts of the plant Cannabis Sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination (21 U.S.C. 802(16)).
Administrative responsibilities for evaluating a substance for control under the CSA are performed by the Food and Drug Administration (FDA), with the concurrence of the National Institute on Drug Abuse (NIDA), as described in the Memorandum of Understanding (MOU) of March 8, 1985 (50 FR 9518-20).
In this document, FDA recommends the continued control of marijuana in Schedule I of the CSA. Pursuant to 21 U.S.C. 811(c), the eight factors pertaining to the scheduling of marijuana are considered below.
Under the first factor the Secretary must consider marijuana's actual or relative potential for abuse. The CSA does not define the term “abuse.” However, the CSA's legislative history suggests the following in determining whether a particular drug or substance has a potential for abuse:
a. There is evidence that individuals are taking the drug or drugs containing such a substance in amounts sufficient to create a hazard to their health or to the safety of other individuals or to the community.
b. There is a significant diversion of the drug or drugs containing such a substance from legitimate drug channels.
c. Individuals are taking the drug or drugs containing such a substance on their own initiative rather than on the basis of medical advice from a practitioner licensed by law to administer such drugs in the course of his professional practice.
d. The drug or drugs containing such a substance are new drugs so related in their action to a drug or drugs already listed as having a potential for abuse to make it likely that the drug will have the same potentiality for abuse as such drugs, thus making it reasonable to assume that there may be significant diversions from legitimate channels, significant use contrary to or without medical advice, or that it has a substantial capability of creating hazards to the health of the user or to the safety of the community.
In the development of this scientific and medical evaluation for the purpose of scheduling, the Secretary analyzed considerable data related to the substance's abuse potential. The data include a discussion of the prevalence and frequency of use, the amount of the substance available for illicit use, the ease of obtaining or manufacturing the substance, the reputation or status of the substance “on the street,” and evidence relevant to at-risk populations. Importantly, the petitioners define marijuana as including all
Determining the abuse potential of a substance is complex with many dimensions, and no single test or assessment provides a complete characterization. Thus, no single measure of abuse potential is ideal. Scientifically, a comprehensive evaluation of the relative abuse potential of a substance can include consideration of the following elements: Receptor binding affinity, preclinical pharmacology, reinforcing effects, discriminative stimulus effects, dependence producing potential, pharmacokinetics, route of administration, toxicity, data on actual abuse, clinical abuse potential studies, and public health risks. Importantly, abuse can exist independently from tolerance or physical dependence because individuals may abuse drugs in doses or patterns that do not induce these phenomena. Additionally evidence of clandestine population and illicit trafficking of a substance can shed light on both the demand for a substance as well as the ease of obtaining a substance. Animal and human laboratory data and epidemiological data are all used in determining a substance's abuse potential. Moreover, epidemiological data can indicate actual abuse.
The petitioners compare the effects of marijuana to currently controlled Schedule II substances and make repeated claims about their comparative effects. Comparisons between marijuana and the diverse array of Schedule II substances is difficult, because of the pharmacologically dissimilar actions of substances of Schedule II of the CSA. For example, Schedule II substances include stimulant-like drugs (
In addition, many substances scheduled under the CSA are reviewed and evaluated within the context of commercial drug development, using data submitted in the form of a new drug application (NDA). A new analgesic drug might be compared to a currently scheduled analgesic drug as part of the assessment of its relative abuse potential. However, because the petitioners have not identified a specific indication for the use of marijuana, identifying an appropriate comparator based on indication cannot be done.
a. There is evidence that individuals are taking the substance in amounts sufficient to create a hazard to their health or to the safety of other individuals or to the community.
Evidence shows that some individuals are taking marijuana in amounts sufficient to create a hazard to their health and to the safety of other individuals and the community. A large number of individuals use marijuana. HHS provides data on the extent of marijuana abuse through NIDA and the Substance Abuse and Mental Health Services Administration (SAMHSA). According to the most recent data from SAMHSA's 2012 National Survey on Drug Use and Health (NSDUH), which estimates the number of individuals who have used a substance within a month prior to the study (described as “current use”), marijuana is the most commonly used illicit drug among Americans aged 12 years and older, with an estimated 18.9 million Americans having used marijuana within the month prior to the 2012 NSDUH. Compared to 2004, when an estimated 14.6 million individuals reported using marijuana within the month prior to the study, the estimated rates in 2012 show an increase of approximately 4.3 million individuals. The 2013 Monitoring the Future (MTF) survey of 8th, 10th, and 12th grade students also indicates that marijuana is the most widely used illicit substance in this age group. Specifically, current month use was at 7.0 percent of 8th graders, 18.0 percent of 10th, graders and 22.7 percent of 12th graders. Additionally, the 2011 Treatment Episode Data Set (TEDS) reported that primary marijuana abuse accounted for 18.1 percent of non-private substance-abuse treatment facility admissions, with 24.3 percent of those admitted reporting daily use. However, of these admissions for primary marijuana abuse, the criminal justice system referred 51.6 percent to treatment. SAMHSA's Drug Abuse Warning Network (DAWN) was a national probability survey of U.S. hospitals with emergency departments (EDs) and was designed to obtain information on ED visits in which marijuana was mentioned, accounting for 36.4 percent of illicit drug related ED visits. There are some limitations related to DAWN data on ED visits, which are discussed in detail in Factor 4, “Its History and Current Pattern of Abuse;” Factor 5, “The Scope, Duration, and Significance of Abuse;” and Factor 6, “What, if any, Risk There is to the Public Health.” These factors contain detailed discussions of these data.
A number of risks can occur with both acute and chronic use of marijuana. Detailed discussions of the risks are addressed in Factor 2, “Scientific Evidence of its Pharmacological Effect, if Known,” and Factor 6, “What, if any, Risk There is to the Public Health.”
b. There is significant diversion of the substance from legitimate drug channels.
There is a lack of evidence of significant diversion of marijuana from legitimate drug channels, but this is likely due to the fact that marijuana is more widely available from illicit sources rather than through legitimate channels. Marijuana is not an FDA-approved drug product, as an NDA or biologics license application (BLA) has not been approved for marketing in the United States. Numerous states and the District of Columbia have state-level medical marijuana laws that allow for marijuana use within that state. These state-level drug channels do not have sufficient collection of data related to medical treatment, including efficacy and safety.
Marijuana is used by researchers for nonclinical research as well as clinical research under investigational new drug (IND) applications; this represents the only legitimate drug channel in the United States. However, marijuana used for research represents a very small contribution of the total amount of marijuana available in the United States, and thus provides limited information about diversion. In addition, the lack of significant diversion of investigation supplies is likely because of the widespread availability of illicit marijuana of equal or greater amounts of delta
c. Individuals are taking the substance on their own initiative rather than on the basis of medical advice from a practitioner licensed by law to administer such substances.
Because the FDA has not approved an NDA or BLA for a marijuana drug product for any therapeutic indication, the only way an individual can take marijuana on the basis of medical advice through legitimate channels at the federal level is by participating in research under an IND application. That said, numerous states and the District of Columbia have passed state-level medical marijuana laws allowing for individuals to use marijuana under certain circumstances. However, data are not yet available to determine the number of individuals using marijuana under these state-level medical marijuana laws. Regardless, according to the 2012 NSDUH data, 18.9 million American adults currently use marijuana (SAMHSA, 2013). Based on the large number of individuals reporting current use of marijuana and the lack of an FDA-approved drug product in the United States, one can assume that it is likely that the majority of individuals using marijuana do so on their own initiative rather than on the basis of medical advice from a licensed practitioner.
d. The substance is so related in its action to a substance already listed as having a potential for abuse to make it likely that it will have the same potential for abuse as such substance, thus making it reasonable to assume that there may be significant diversions from legitimate channels, significant use contrary to or without medical advice, or that it has a substantial capability of creating hazards to the health of the user or to the safety of the community.
FDA has approved two drug products containing cannabinoid compounds that are structurally related to the active components in marijuana. These two marketed products are controlled under the CSA. Once a specific drug product containing cannabinoids becomes approved, that specific drug product may be moved from Schedule I to a different Schedule (II-V) under the CSA. Firstly, Marinol—generically known as dronabinol—is a Schedule III drug product containing synthetic delta
Under the second factor, the Secretary must consider the scientific evidence of marijuana's pharmacological effects. Abundant scientific data are available on the neurochemistry, toxicology, and pharmacology of marijuana. This section includes a scientific evaluation of marijuana's neurochemistry; pharmacology; and human and animal behavioral, central nervous system, cognitive, cardiovascular, autonomic, endocrinological, and immunological system effects. The overview presented below relies upon the most current research literature on cannabinoids.
Marijuana is a plant that contains numerous natural constituents, such as cannabinoids, that have a variety of pharmacological actions. The petition defines marijuana as including all
According to ElSohly and Slade (2005) and Appendino et al. (2011), marijuana contains approximately 525 identified natural constituents, including approximately 100 compounds classified as cannabinoids. Cannabinoids primarily exist in
The site of cannabinoid action is at the cannabinoid receptors. Cloning of cannabinoid receptors, first from rat brain tissue (Matsuda et al., 1990) and then from human brain tissue (Gerard et al., 1991), has verified the site of action. Two cannabinoid receptors, CB
The cannabinoid receptors, CB
Cannabinoid receptor activation inhibits N- and P/Q-type calcium channels and activates inwardly rectifying potassium channels (Mackie et al., 1995; Twitchell et al., 1997). N-type calcium channel inhibition decreases neurotransmitter release from several tissues. Thus, calcium channel inhibition may be the mechanism by which cannabinoids inhibit acetylcholine, norepinephrine, and glutamate release from specific areas of the brain. These effects may represent a potential cellular mechanism underlying cannabinoids' antinociceptive and psychoactive effects (Ameri, 1999).
CB
CB
Cannabinoid receptors have endogenous ligands. In 1992 and 1995, two endogenous cannabinoid receptor agonists, anandamide and arachidonyl glycerol (2-AG), respectively, were identified (Di Marzo, 2006). Anandamide is a low efficacy agonist (Breivogel and Childers, 2000) and 2-AG is a high efficacy agonist (Gonsiorek et al., 2000). Cannabinoid endogenous ligands are present in central as well as peripheral tissues. A combination of uptake and hydrolysis terminate the action of the endogenous ligands. The endogenous cannabinoid system is a locally active signaling system that, to help restore homeostasis, is activated “on demand” in response to changes to the local homeostasis (Petrocellis and Di Marzo, 2009). The endogenous cannabinoid system, including the endogenous cannabinoids and the cannabinoid receptors, demonstrate substantial plasticity in response to several physiological and pathological stimuli (Petrocellis and Di Marzo, 2009). This plasticity is particularly evident in the central nervous system.
Delta
Delta
Self-administration is a method that assesses the ability of a drug to produce rewarding effects. The presence of rewarding effects increases the likelihood of behavioral responses to obtain additional drug. Animal self-administration of a drug is often useful in predicting rewarding effects in humans, and is indicative of abuse liability. A good correlation is often observed between those drugs that rhesus monkeys self-administer and those drugs that humans abuse (Balster and Bigelow, 2003). Initially, researchers could not establish self-administration of cannabinoids, including delta
Squirrel monkeys, with and without prior exposure to other drugs of abuse, self-administer delta
Additionally, data demonstrate that under specific conditions, rodents self-administer cannabinoids. Rats will self-administer delta
Aversive effects, rather than reinforcing effects, occur in rats that received high doses of WIN 55212 (Chaperon et al., 1998) or delta
Conditioned place preference (CPP) is a less rigorous method than self-administration for determining whether or not a drug has rewarding properties. In this behavioral test, animals spend time in two distinct environments: one where they previously received a drug and one where they received a placebo. If the drug is reinforcing, animals will choose to spend more time in the environment paired with the drug, rather than with the placebo, when presented with both options s.imultaneously.
Animals show CPP to delta
Drug discrimination is a method where animals indicate whether a test drug produces physical or psychic perceptions similar to those produced by a known drug of abuse. In this test, an animal learns to press one bar when it receives the known drug of abuse and another bar when it receives placebo. To determine whether the test drug is like the known drug of abuse, a challenge session with the test drug demonstrates which of the two bars the animal presses more often.
In addition to humans (Lile et al., 2009; Lile et al., 2011), it has been noted that animals, including monkeys (McMahon, 2009), mice (McMahon et al., 2008), and rats (Gold et al., 1992), are able to discriminate cannabinoids from other drugs or placebo. Moreover, the major active metabolite of delta
Discriminative stimulus effects of delta
Below is a list of the common subjective responses to cannabinoids (Adams and Martin, 1996; Gonzalez, 2007; Hollister 1986, 1988; Institute of Medicine, 1982). According to Maldonado (2002), these responses to marijuana are pleasurable to many humans and are often associated with drug-seeking and drug-taking. High levels of positive psychoactive effects are associated with increased marijuana use, abuse, and dependence (Scherrer et al., 2009; Zeiger et al., 2010).
(1) Disinhibition, relaxation, increased sociability, and talkativeness.
(2) Increased merriment and appetite, and even exhilaration at high doses.
(3) Enhanced sensory perception, which can generate an increased appreciation of music, art, and touch.
(4) Heightened imagination, which can lead to a subjective sense of increased creativity.
(5) Initial dizziness, nausea, tachycardia, facial flushing, dry mouth, and tremor.
(6) Disorganized thinking, inability to converse logically, time distortions, and short-term memory impairment.
(7) Ataxia and impaired judgment, which can impede driving ability or
(8) Illusions, delusions, and hallucinations that intensify with higher doses.
(9) Emotional lability, incongruity of affect, dysphoria, agitation, paranoia, confusion, drowsiness, and panic attacks, which are more common in inexperienced or high-dosed users.
As with many psychoactive drugs, a person's medical, psychiatric, and drug-taking history can influence the individual's response to marijuana. Dose preferences to marijuana occur in that marijuana users prefer higher concentrations of the principal psychoactive substance (1.95 percent delta
The petitioners contend that many of marijuana's naturally occurring cannabinoids mitigate the psychoactive effects of delta
DEA's final published rule entitled “Rescheduling of the Food and Drug Administration Approved Product Containing Synthetic Dronabinol [(-)-delta
Hollister and Gillespie (1973) estimated that delta
The formulation of Marinol is a factor that contributes to differential scheduling of Marinol and marijuana. For example, extraction and purification of dronabinol from the encapsulated sesame oil mixture of Marinol is highly complex and difficult. Additionally, the presence of sesame oil mixture in the formulation may preclude the smoking of Marinol-laced cigarettes.
Additionally, there is a dramatic difference between actual abuse and illicit trafficking of Marinol and marijuana. Despite Marinol's availability in the United States, there have been no significant reports of abuse, diversion, or public health problems due to Marinol. By comparison, 18.9 million American adults report currently using marijuana (SAMHSA, 2013).
In addition, FDA's approval of an NDA for Marinol allowed for Marinol to be rescheduled to Schedule II, and subsequently to Schedule III of the CSA. In conclusion, marijuana and Marinol differ on a wide variety of factors that contribute to each substance's abuse potential. These differences are major reasons distinguishing the higher abuse potential for marijuana and the different scheduling determinations of marijuana and Marinol.
In terms of the petitioners' claim that different cannabinoids present in marijuana mitigate the psychoactive effects of delta
The oral administration of a combination of either 15, 30, or 60 mg CBD with 30 mg delta
Even though some studies suggest that CBD may decrease some of delta
Marijuana induces various psychoactive effects that can lead to behavioral impairment. Marijuana's acute effects can significantly interfere with a person's ability to learn in the classroom or to operate motor vehicles. Acute administration of smoked marijuana impairs performance on learning, associative processes, and psychomotor behavioral tests (Block et al., 1992). Ramaekers et al. (2006a) showed that acute administration of 250 μg/kg and 500 μg/kg of delta
In addition to measuring the acute effects immediately following marijuana administration, researchers have conducted studies to determine how long behavioral impairments last after abstinence. Some of marijuana's acute effects may not fully resolve until at least one day after the acute psychoactive effects have subsided. Heishman et al. (1990) showed that impairment on memory tasks persists for 24 hours after smoking marijuana cigarettes containing 2.57 percent delta
A number of factors may influence marijuana's behavioral effects including the duration of use (chronic or short term), frequency of use (daily, weekly, or occasionally), and amount of use (heavy or moderate). Researchers also have examined how long behavioral impairments last following chronic marijuana use. These studies used self-reported histories of past duration, frequency, and amount of past marijuana use, and administered a variety of performance and cognitive measures at different time points following marijuana abstinence. In chronic marijuana users, behavioral impairments may persist for up to 28 days of abstinence. Solowij et al. (2002) demonstrated that after 17 hours of abstinence, 51 adult heavy chronic marijuana users performed worse on memory and attention tasks than 33 non-using controls or 51 heavy, short-term users. Another study noted that heavy, frequent marijuana users, abstinent for at least 24 hours, performed significantly worse than the controls on verbal memory and psychomotor speed tests (Messinis et al., 2006). Additionally, after at least 1 week of abstinence, young adult frequent marijuana users, aged 18-28, showed deficits in psychomotor speed, sustained attention, and cognitive inhibition (Lisdahl and Price, 2012). Adult heavy, chronic marijuana users showed deficits on memory tests after 7 days of supervised abstinence (Pope et al., 2002). However, when these same individuals were again tested after 28 days of abstinence, they did not show significant memory deficits. The authors concluded, “cannabis-associated cognitive deficits are reversible and related to recent cannabis exposure, rather than irreversible and related to cumulative lifetime use.”
The effects of chronic marijuana use do not seem to persist after more than 1 to 3 months of abstinence. After 3 months of abstinence, any deficits observed in IQ, immediate memory, delayed memory, and information-processing speeds following heavy marijuana use compared to pre-drug use scores were no longer apparent (Fried et al., 2005). Marijuana did not appear to have lasting effects on performance of a comprehensive neuropsychological battery when 54 monozygotic male twins (one of whom used marijuana, one of whom did not) were compared 1-20 years after cessation of marijuana use (Lyons et al., 2004). Similarly, following abstinence for a year or more, both light and heavy adult marijuana users did not show deficits on scores of verbal memory compared to non-using controls (Tait et al., 2011). According to a recent meta-analysis looking at non-acute and long-lasting effects of marijuana use on neurocognitive performance, any deficits seen within the first month following abstinence are generally not present after about 1 month of abstinence (Schreiner and Dunn, 2012).
Another aspect that may be a critical factor in the intensity and persistence of impairment resulting from chronic marijuana use is the age of first use. Individuals with a diagnosis of marijuana misuse or dependence who were seeking treatment for substance use, who initiated marijuana use before the age of 15 years, showed deficits in performance on tasks assessing sustained attention, impulse control, and general executive functioning compared to non-using controls. These deficits were not seen in individuals who initiated marijuana use after the age of 15 years (Fontes et al., 2011). Similarly, heavy, chronic marijuana users who began using marijuana before the age of 16 years had greater decrements in executive functioning tasks than heavy, chronic marijuana users who started using after the age of 16 years and non-using controls (Gruber et al., 2012). Additionally, in a prospective longitudinal birth cohort study of 1,037 individuals, marijuana dependence or chronic marijuana use was associated with a decrease in IQ and general neuropsychological performance compared to pre-marijuana exposure levels in adolescent onset users (Meier et al., 2012). The decline in adolescent-onset user's IQ persisted even after reduction or abstinence of marijuana use for at least 1 year. In contrast, the adult-onset chronic marijuana users showed no significant changes in IQ compared to pre-exposure
In addition to the age of onset of use, some evidence suggests that the amount of marijuana used may relate to the intensity of impairments. In the above study by Gruber et al. (2012), where early-onset users had greater deficits than late-onset users, the early-onset users reported using marijuana twice as often and using three times as much marijuana per week than the late-onset users. Meier et al. (2012) showed that the deficits in IQ seen in adolescent-onset users increased with the amount of marijuana used. Moreover, when comparing scores for measures of IQ, immediate memory, delayed memory, and information-processing speeds to pre-drug-use levels, the current, heavy, chronic marijuana users showed deficits in all three measures while current, occasional marijuana users did not (Fried et al., 2005).
Studies with children at different stages of development are used to examine the impact of prenatal marijuana exposure on performance in a series of cognitive tasks. However, many pregnant women who reported marijuana use were more likely to also report use of alcohol, tobacco, and cocaine (Goldschmidt et al., 2008). Thus, with potential exposure to multiple drugs, it is difficult to determine the specific impact of prenatal marijuana exposure.
Most studies assessing the behavioral effects of prenatal marijuana exposure included women who, in addition to using marijuana, also reported using alcohol and tobacco. However, some evidence suggests an association between heavy prenatal marijuana exposure and deficits in some cognitive domains. In both 4-year-old and 6-year-old children, heavy prenatal marijuana use is negatively associated with performance on tasks assessing memory, verbal reasoning, and quantitative reasoning (Fried and Watkinson, 1987; Goldschmidt et al., 2008). Additionally, heavy prenatal marijuana use is associated with deficits in measures of sustained attention in children at the ages of 6 years and 13-16 years (Fried et al., 1992; Fried, 2002). In 9- to 12-year-old children, prenatal marijuana exposure is negatively associated with executive functioning tasks that require impulse control, visual analysis, and hypothesis (Fried et al., 1998).
This analysis evaluates only the evidence for a direct link between prior marijuana use and the subsequent development of psychosis. Thus, this discussion does not consider issues such as whether marijuana's transient effects are similar to psychotic symptoms in healthy individuals or exacerbate psychotic symptoms in individuals already diagnosed with schizophrenia.
Extensive research has been conducted to investigate whether exposure to marijuana is associated with the development of schizophrenia or other psychoses. Although many studies are small and inferential, other studies in the literature use hundreds to thousands of subjects. At present, the available data do not suggest a causative link between marijuana use and the development of psychosis (Minozzi et al., 2010). Numerous large, longitudinal studies show that subjects who used marijuana do not have a greater incidence of psychotic diagnoses compared to those who do not use marijuana (Fergusson et al., 2005; Kuepper et al., 2011; Van Os et al., 2002).
When analyzing the available evidence of the connection between psychosis and marijuana, it is critical to determine whether the subjects in the studies are patients who are already diagnosed with psychosis or individuals who demonstrate a limited number of symptoms associated with psychosis without qualifying for a diagnosis of the disorder. For example, instead of using a diagnosis of psychosis, some researchers relied on non-standard methods of representing symptoms of psychosis including “schizophrenic cluster” (Maremmani et al., 2004), “subclinical psychotic symptoms” (Van Gastel et al., 2012), “pre-psychotic clinical high risk” (Van der Meer et al., 2012), and symptoms related to “psychosis vulnerability” (Griffith-Lendering et al., 2012). These groupings do not conform to the criteria in the Diagnostic and Statistical Manual (DSM-5) or the International Classification of Diseases (ICD-10) for a diagnosis of psychosis. Thus, these groupings are not appropriate for use in evaluating marijuana's impact on the development of actual psychosis. Accordingly, this analysis includes only those studies that use subjects diagnosed with a psychotic disorder.
In the largest study evaluating the link between psychosis and drug use, 274 of the approximately 45,500 Swedish conscripts in the study population (<0.01 percent) received a diagnosis of schizophrenia within the 14-year period following military induction from 1969 to 1983 (Andreasson et al., 1987). Of the conscripts diagnosed with psychosis, 7.7 percent (21 of the 274 conscripts with psychosis) had used marijuana more than 50 times at induction, while 72 percent (197 of the 274 conscripts with psychosis) had never used marijuana. Although high marijuana use increased the relative risk for schizophrenia to 6.0, the authors note that substantial marijuana use history “accounts for only a minority of all cases” of psychosis (Andreasson et al., 1987). Instead, the best predictor for whether a conscript would develop psychosis was a non-psychotic psychiatric diagnosis upon induction. The authors concluded that marijuana use increased the risk for psychosis only among individuals predisposed to develop the disorder. In addition, a 35-year follow up to this study reported very similar results (Manrique-Garcia et al., 2012). In this follow up study, 354 conscripts developed schizophrenia; of these 354 conscripts, 32 used marijuana more than 50 times at induction (9 percent, an odds ratio of 6.3), while 255 had never used marijuana (72 percent).
Additionally, the conclusion that the impact of marijuana may manifest only in individuals likely to develop psychotic disorders has been shown in many other types of studies. For example, although evidence shows that marijuana use may precede the presentation of symptoms in individuals later diagnosed with psychosis (Schimmelmann et al., 2011), most reports conclude that prodromal symptoms of schizophrenia appear prior to marijuana use (Schiffman et al., 2005). Similarly, a review of the gene-environment interaction model for marijuana and psychosis concluded that some evidence supports marijuana use as a factor that may influence the development of psychosis, but only in those individuals with psychotic liability (Pelayo-Teran et al., 2012).
A similar conclusion was drawn when the prevalence of schizophrenia was modeled against marijuana use across eight birth cohorts in Australia in individuals born between the years 1940 to 1979 (Degenhardt et al., 2003). Although marijuana use increased over time in adults born during the four-decade period, there was not a corresponding increase in diagnoses for psychosis in these individuals. The authors conclude that marijuana may precipitate schizophrenic disorders only in those individuals who are vulnerable to developing psychosis. Thus, marijuana
Single smoked or oral doses of delta
However, prolonged delta
Marijuana smoking by individuals, particularly those with some degree of coronary artery or cerebrovascular disease, poses risks such as increased cardiac work, catecholamines and carboxyhemoglobin, myocardial infarction, and postural hypotension (Benowitz and Jones, 1981; Hollister, 1988; Mittleman et al., 2001; Malinowska et al., 2012).
After acute exposure to marijuana, transient bronchodilation is the most typical respiratory effect (Gong et al., 1984). A recent 20-year longitudinal study with over 5,000 individuals collected information on the amount of marijuana use and pulmonary function data at years 0, 2, 5, 10, and 20 (Pletcher et al., 2012). Among the more than 5,000 individuals who participated in the study, almost 800 of them reported current marijuana use but not tobacco use at the time of assessment. Pletcher et al. (2012) found that the occasional use of marijuana is not associated with decreased pulmonary function. However, some preliminary evidence suggests that heavy marijuana use may be associated with negative pulmonary effects (Pletcher et al., 2012). Long-term use of marijuana can lead to chronic cough and increased sputum, as well as an increased frequency of chronic bronchitis and pharyngitis. In addition, pulmonary function tests reveal that large-airway obstruction can occur with chronic marijuana smoking, as can cellular inflammatory histopathological abnormalities in bronchial epithelium (Adams and Martin 1996; Hollister 1986).
Evidence regarding marijuana smoking leading to cancer is inconsistent, as some studies suggest a positive correlation while others do not (Lee and Hancox, 2011; Tashkin, 2005). Several lung cancer cases have been reported in young marijuana users with no tobacco smoking history or other significant risk factors (Fung et al., 1999). Marijuana use may dose-dependently interact with mutagenic sensitivity, cigarette smoking, and alcohol use to increase the risk of head and neck cancer (Zhang et al., 1999). However, in a large study with 1,650 subjects, a positive association was not found between marijuana and lung cancer (Tashkin et al., 2006). This finding remained true, regardless of the extent of marijuana use, when controlling for tobacco use and other potential confounding variables. Overall, new evidence suggests that the effects of marijuana smoking on respiratory function and carcinogenicity differ from those of tobacco smoking (Lee and Hancox, 2011).
Experimental marijuana administration to humans does not consistently alter many endocrine parameters. In an early study, male subjects who experimentally received smoked marijuana showed a significant depression in luteinizing hormone and a significant increase in cortisol (Cone et al., 1986). However, two later studies showed no changes in hormones. Male subjects experimentally exposed to smoked delta
The effects of marijuana on female reproductive system functionality differ between humans and animals. In monkeys, delta
The presence of
Some studies support a possible association between frequent, long-term marijuana use and increased risk of testicular germ cell tumors (Trabert et al., 2011). On the other hand, recent data suggest that cannabinoid agonists may have therapeutic value in the treatment of prostate cancer, a type of carcinoma in which growth is stimulated by androgens. Research with prostate cancer cells shows that the mixed CB
Cannabinoids affect the immune system in many different ways. Synthetic, natural, and endogenous cannabinoids often cause different effects in a dose-dependent biphasic manner (Croxford and Yamamura, 2005; Tanasescu and Constantinescu, 2010).
Studies in humans and animals give conflicting results about cannabinoid
Under the third factor, the Secretary must consider the state of current scientific knowledge regarding marijuana. Thus, this section discusses the chemistry, human pharmacokinetics, and medical uses of marijuana.
Marijuana is one of the common names of
The petition defines marijuana as including all
Marijuana contains numerous naturally occurring constituents including cannabinoids. Overall, various
Cannabinoids primarily exist in
Among the cannabinoids found in marijuana, delta
Other cannabinoids present in marijuana include CBD, CBC, and CBN. CBD, a major cannabinoid of marijuana, is insoluble in water and lipid-soluble. Chemically, CBD is 2-[(1R,6R)-3-methyl-6-prop-1-en-2-ylcyclohex-2-en-1-yl]-5-pentylbenzene-1,3-diol. CBD does not have cannabinol-like psychoactivity (Adams and Martin, 1996; Agurell et al., 1984, 1986; Hollister, 1986). CBC is another major cannabinoid in marijuana. Chemically, CBC is 2-methyl-2-(4-methylpent-3-enyl)-7-pentyl-5-chromenol. CBN, a major metabolite of delta
Different marijuana samples derived from various cultivated strains may differ in chemical constituents including delta
Overall, these variations in the concentrations of cannabinoids and other chemical constituents in marijuana complicate the interpretation of clinical data using marijuana. The lack of consistent concentrations of delta
The term marijuana is often used to refer to a mixture of the dried flowering tops and leaves from
Marijuana can vary in cannabinoid content and potency (Agurell et al., 1984, 1986; Mechoulam 1973, Cascini et al., 2012). In the usual mixture of leaves and stems distributed as marijuana, the concentration of delta
Hashish consists of the dried and compressed cannabinoid-rich resinous material of
Hash oil is produced by solvent extraction of the cannabinoids from plant material. The extract's color and odor vary, depending on the solvent type used. Hash oil is a viscous brown- or amber-colored liquid containing approximately 50 percent cannabinoids. One or two drops of the liquid placed on a cigarette purportedly produce the equivalent of a single marijuana cigarette (DEA, 2005).
In conclusion, marijuana has hundreds of cultivars containing variable concentrations of delta
Marijuana can be taken in a variety of formulations by multiple routes of administration. Individuals smoke marijuana as a cigarette, weighing between 0.5 and 1.0 gram, or in a pipe. Additionally, individuals take marijuana orally in foods or as an extract in ethanol or other solvents. More recently, access to vaporizers provides another means for abusers to inhale marijuana,
The absorption, metabolism, and pharmacokinetic profile of delta
Characterization of the pharmacokinetics of delta
Smoked marijuana results in absorption of delta
The bioavailability of the delta
After oral administration of delta
Cannabinoid metabolism is complex. Delta
Plasma clearance of delta
The majority of the absorbed delta
State-level public initiatives, including laws and referenda in support of the medical use of marijuana, have generated interest in the medical community and the need for high quality clinical investigation as well as comprehensive safety and effectiveness data. In order to address the need for high quality clinical investigations, the state of California established the Center for Medicinal Cannabis Research (CMCR,
FDA approves medical use of a drug following a submission and review of an NDA or BLA. The FDA has not approved any drug product containing marijuana for marketing. Even so, results of small clinical exploratory studies have been published in the current medical literature. Many studies describe human research with marijuana in the United States under FDA-regulated IND applications.
However, FDA approval of an NDA is not the only means through which a drug can have a currently accepted medical use in treatment in the United States. In general, a drug may have a “currently accepted medical use” in treatment in the United States if the drug meets a five-part test. Established case law (Alliance for Cannabis Therapeutics v. DEA, 15 F.3d 1131, 1135 (D.C. Cir. 1994)) upheld the Administrator of DEA's application of the five-part test to determine whether a drug has a “currently accepted medical use.” The following describes the five elements that characterize “currently accepted medical use” for a drug:
i. the drug's chemistry must be known and reproducible.
“The substance's chemistry must be scientifically established to permit it to be reproduced into dosages which can be standardized. The listing of the substance in a current edition of one of the official compendia, as defined by section 201 G) of the Food, Drug and Cosmetic Act, 21 U.S.C. 321G), is sufficient to meet this requirement.”
ii. there must be adequate safety studies.
“There must be adequate pharmacological and toxicological studies, done by all methods reasonably applicable, on the basis of which it could fairly and responsibly be concluded, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, that the substance is safe for treating a specific, recognized disorder.”
iii. there must be adequate and well-controlled studies proving efficacy.
“There must be adequate, well-controlled, well-designed, well-conducted, and well-documented studies, including clinical investigations, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, on the basis of which it could be fairly and responsibly concluded by such experts that the substance will have the intended effect in treating a specific, recognized disorder.”
iv. the drug must be accepted by qualified experts.
“The drug has a New Drug Application (NDA) approved by the Food and Drug Administration, pursuant to the Food, Drug and Cosmetic Act, 21 U.S.C. 355. Or, a consensus of the national community of experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, accepts the safety and effectiveness of the substance for use in treating a specific, recognized disorder. A material conflict of opinion among experts precludes a finding of consensus.” and
v. the scientific evidence must be widely available.
“In the absence of NDA approval, information concerning the chemistry, pharmacology, toxicology, and effectiveness of the substance must be reported, published, or otherwise widely available, in sufficient detail to permit experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, to fairly and responsibly conclude the substance is safe and effective for use in treating a specific, recognized disorder.”
Marijuana does not meet any of the five elements necessary for a drug to have a “currently accepted medical use.”
Firstly, the chemistry of marijuana, as defined in the petition, is not reproducible in terms of creating a standardized dose. The petition defines marijuana as including all
As to the second and third criteria; there are neither adequate safety studies nor adequate and well-controlled studies proving marijuana's efficacy. To support the petitioners' assertion that marijuana has accepted medical use, the petitioners cite the American Medical Association's (AMA) 2009 report entitled “Use of Cannabis for Medicinal Purposes.” The petitioners claim the AMA report is evidence the AMA accepts marijuana's safety and efficacy. However, the 2009 AMA report clarifies that the report “should not be viewed as an endorsement of state-based medical cannabis programs, the legalization of marijuana, or that scientific evidence on the therapeutic use of cannabis meets the same and current standards for a prescription drug product.”
Currently, no published studies conducted with marijuana meet the criteria of an adequate and well-controlled efficacy study. The criteria for an adequate and well-controlled study for purposes of determining the safety and efficacy of a human drug are defined under the Code of Federal Regulations (CFR) in 21 CFR 314.126. In order to assess this element, FDA conducted a review of clinical studies published and available in the public domain before February, 2013. Studies were identified through a search of PubMed
The PubMed search yielded a total of 566 abstracts of scientific articles. Of these abstracts, a full-text review was conducted with 85 papers to assess eligibility. Of the studies identified through the search of the references and the 566 abstracts from the PubMed search, only 11 studies met all the criteria for selection (Abrams et al., 2007; Corey-Bloom et al., 2012; Crawford and Merritt, 1979; Ellis et al., 2009; Haney et al., 2005; Haney et al., 2007; Merritt et al., 1980; Tashkin et al., 1974; Ware et al., 2010; Wilsey et al., 2008; Wilsey et al., 2013). These 11 studies were published between 1974 and 2013. Ten of these studies were conducted in the United States and one study was conducted in Canada. The identified studies examine the effects of smoked and vaporized marijuana for the indications of chronic neuropathic pain, spasticity related to Multiple Sclerosis (MS), appetite stimulation in human immunodeficiency virus (HIV) patients, glaucoma, and asthma. All studies used adult subjects.
The 11 identified studies were individually evaluated to determine if they successfully meet accepted scientific standards. Specifically, they were evaluated on study design including subject selection criteria, sample size, blinding techniques, dosing paradigms, outcome measures, and the statistical analysis of the results. The analysis relied on published studies, thus information available about protocols, procedures, and results were limited to documents published and widely available in the public domain. The review found that all 11 studies that examined effects of inhaled marijuana do not currently prove efficacy of marijuana in any therapeutic indication based on a number of limitations in their study design; however, they may be considered proof of concept studies. Proof of concept studies provide preliminary evidence on a proposed hypothesis involving a drug's effect. For drugs under development, the effect often relates to a short-term clinical outcome being investigated. Proof of concept studies often serve as the link between preclinical studies and dose ranging clinical studies. Thus, proof of concept studies generally are not sufficient to prove efficacy of a drug because they provide only preliminary information about the effects of a drug.
In addition to the lack of published adequate and well-controlled efficacy studies proving efficacy, the criteria for adequate safety studies has also not been met. Importantly, in its discussion of the five-part test used to determine whether a drug has a “currently accepted medical use,” DEA said, “No drug can be considered safe in the abstract. Safety has meaning only when judged against the intended use of the drug, its known effectiveness, its known and potential risks, the severity of the illness to be treated, and the availability of alternative remedies” (57 FR 10504). When determining whether a drug product is safe and effective for any indication, FDA performs an extensive risk-benefit analysis to determine whether the risks posed by the drug product's side effects are outweighed by the drug product's potential benefits for a particular indication. Thus, contrary to the petitioner's assertion that marijuana has accepted safety, in the absence of an accepted therapeutic indication which can be weighed against marijuana's risks, marijuana does not satisfy the element for having adequate safety studies such that experts may conclude that it is safe for treating a specific, recognized disorder.
The fourth of the five elements for determining “currently accepted medical use” requires that the national community of experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, accepts the safety and effectiveness of the substance for use in treating a specific, recognized disorder. A material conflict of opinion among experts precludes a finding of consensus. Medical practitioners who are not experts in evaluating drugs are not qualified to determine whether a drug is generally recognized as safe and effective or meets NDA requirements (57 FR 10499-10505).
There is no evidence that there is a consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognized disorder. As discussed above, there are not adequate scientific studies that show marijuana is safe and effective in treating a specific, recognized disorder. In addition, there is no evidence that a consensus of qualified experts have accepted the safety and effectiveness of marijuana for use in treating a specific, recognized disorder. Although medical practitioners are not qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, we also note that the AMA's report, entitled “Use of Cannabis for Medicinal Purposes,” does not accept that marijuana currently has accepted medical use. Furthermore, based on the above definition of a “qualified expert”, who is an individual qualified by scientific training and experience to evaluate the safety and effectiveness of a drug, state-level medical marijuana laws do not provide evidence of a consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognized disorder.
As to the fifth part of the test, which requires that information concerning the chemistry, pharmacology, toxicology, and effectiveness of marijuana to be reported in sufficient detail, the scientific evidence regarding all of these aspects is not available in sufficient detail to allow adequate scientific scrutiny. Specifically, the scientific evidence regarding marijuana's chemistry in terms of a specific
Alternately, a drug can be considered to have a “currently accepted medical use with severe restrictions” (21 U.S.C. 812(b)(2)(B)), as allowed under the stipulations for a Schedule II drug. Yet, as stated above, currently marijuana does not have any accepted medical use, even under conditions where its use is severely restricted.
In conclusion, to date, research on marijuana's medical use has not progressed to the point where marijuana is considered to have a “currently accepted medical use” or a “currently accepted medical use with severe restrictions.”
Under the fourth factor, the Secretary must consider the history and current pattern of marijuana abuse. A variety of sources provide data necessary to assess abuse patterns and trends of marijuana. The data indicators of marijuana use include the NSDUH, MTF, DAWN, and TEDS. The following briefly describes each data source, and summarizes the data from each source.
According to 2012 NSDUH
The majority of individuals who try marijuana at least once in their lifetime do not currently use marijuana. The 2012 NSDUH estimates that 111.2 million individuals (42.8 percent of the U.S. population) have used marijuana at least once in their lifetime. Based on this estimate and the estimate for the number of individuals currently using marijuana, approximately 16.9 percent of those who have tried marijuana at least once in their lifetime currently use marijuana; conversely, 83.1 percent do not currently use marijuana. In terms of the frequency of marijuana use, an estimated 40.3 percent of individuals who used marijuana in the past month used marijuana on 20 or more days within the past month. This amount corresponds to an estimated 7.6 million individuals who used marijuana on a daily or almost daily basis.
Some characteristics of marijuana users are related to age, gender, and criminal justice system involvement. In observing use among different age cohorts, the majority of individuals who currently use marijuana are shown to be between the ages of 18-25, with 18.7 percent of this age group currently using marijuana. In the 26 and older age group, 5.3 percent of individuals currently use marijuana. Additionally, in individuals aged 12 years and older, males reported more current marijuana use than females.
NSDUH includes a series of questions aimed at assessing the prevalence of dependence and abuse of different substances in the past 12 months.
According to MTF,
Importantly, many factors can influence the estimates of ED visits, including trends in overall use of a substance as well as trends in the reasons for ED usage. For instance, some drug users may visit EDs for life-threatening issues while others may visit to seek care for detoxification because they needed certification before entering treatment. Additionally, DAWN data do not distinguish the drug responsible for the ED visit from other drugs that may have been used concomitantly. As stated in a DAWN report, “Since marijuana/hashish is frequently present in combination with other drugs, the reason for the ED visit may be more relevant to the other drug(s) involved in the episode.”
For 2011, DAWN
During the same period, DAWN estimates that 1,252,500 (CI: 976,169 to 1,528,831) drug related ED visits involved illicit drugs. Thus, over half of all drug-related ED visits associated with drug misuse or abuse involved an illicit drug. For ED visits involving illicit drugs, 56.3 percent involved multiple drugs while 43.7 percent involved a single drug.
Marijuana was involved in 455,668 ED visits (CI: 370,995 to 540,340), while cocaine was involved in 505,224 (CI: 324,262 to 686, 185) ED visits, heroin was involved in 258,482 (CI: 205,046 to 311,918) ED visits and stimulants including amphetamine and methamphetamine were involved in 159,840 (CI: 100,199 to 219,481) ED visits. Other illicit drugs, such as PCP, MDMA, GHB and LSD were much less frequently associated with ED visits. The number of ED visits involving marijuana has increased by 62 percent since 2004.
Marijuana-related ED visits were most frequent among young adults and minors. Individuals under the age of 18 accounted for 13.2 percent of these marijuana-related visits, whereas this age group accounted for approximately 1.2 percent of ED visits involving cocaine, and less than 1 percent of ED visits involving heroin. However, the age group with the most marijuana-related ED visits was between 25 and 29 years old. Yet, because populations differ between age groups, a standardized measure for population size is useful to make comparisons. For marijuana, the rates of ED visits per 100,000 population were highest for patients aged 18 to 20 (443.8 ED visits per 100,000) and for patients aged 21 to 24 (446.9 ED visits per 100,000).
While DAWN provides estimates for ED visits associated with the use of medical marijuana for 2009-2011, the validity of these estimates is questionable. Because the drug is not approved by the FDA, reporting medical marijuana may be inconsistent and reliant on a number of factors including whether the patient self-reports the marijuana use as medicinal, how the treating health care provider records the marijuana use, and lastly how the SAMHSA coder interprets the report. All of these aspects will vary greatly between states with medical marijuana laws and states without medical marijuana laws. Thus, even though estimates are reported for medical marijuana related ED visits, medical marijuana estimates cannot be assessed with any acceptable accuracy at this time, as FDA has not approved marijuana treatment of any medical condition. These data show the difficulty in evaluating abuse of a product that is not currently approved by FDA, but authorized for medical use, albeit inconsistently, at the state level. Thus, we believe the likelihood of the treating health care provider or SAMHSA coder attributing the ED visit to “medical marijuana” versus “marijuana” to be very low. Overall, the available data are inadequate to characterize its abuse at the community level.
Primary marijuana abuse accounted for 18.1 percent of all 2011 TEDS
An important aspect of TEDS admission data for marijuana is of the referral source for treatment. Specifically, primary marijuana admissions were less likely than all other admissions to either be self-referred or referred by an individual for treatment. Instead, the criminal justice system referred more than half (51.6 percent) of primary marijuana admissions.
Since 2003, the percent of admissions for primary marijuana abuse increased from 15.5 percent of all admissions in 2003 to 18.1 percent in 2011. This increase is less than the increase seen for admissions for primary opioids other than heroin, which increased from 2.8 percent in 2003 to 7.3 percent in 2011. In contrast, the admissions for primary cocaine abuse declined from 9.8 percent in 2003 to 2.0 percent in 2011.
Under the fifth factor, the Secretary must consider the scope, duration, and significance of marijuana abuse. According to 2012 data from NSDUH and 2013 data from MTF, marijuana remains the most extensively used illegal drug in the United States, with 42.8 percent of U.S. individuals over age 12 (111.2 million) and 45.5 percent of 12th graders having used marijuana at least once in their lifetime. Although the majority of individuals over age 12 (83.1 percent) who have ever used marijuana in their lifetime do not use the drug monthly, 18.9 million individuals (7.3 percent of the U.S. population) report that they used marijuana within the past 30 days. An examination of use among various age cohorts through NSDUH demonstrates that monthly use occurs primarily among college-aged individuals, with use dropping off sharply after age 25. Additionally, NSDUH data show the number of individuals reporting past-month use of marijuana has increased by 4.3 million individuals since 2004. Data from MTF shows that annual prevalence of marijuana use declined for all three grades from 2005 through 2007, then began to rise through 2013. Additionally, in 2013, 1.1 percent of 8th graders, 4.0 percent of 10th graders, and 6.5 percent of 12th graders reported daily use of marijuana, defined as use on 20 or more days within the past 30 days.
The 2011 DAWN data show that marijuana use was mentioned in 455,668 ED visits, which amounts to approximately 36.4 percent of all illicit drug-related ED visits.
TEDS data for 2011 show that 18.1 percent of all admissions were for primary marijuana abuse.
Under the sixth factor, the Secretary must consider the risks posed to the public health by marijuana. Factors 1, 4, and 5 include a. discussion of the risk to the public health as measured by emergency room episodes and drug treatment admissions. Additionally, Factor 2 includes a discussion of marijuana's central nervous system, cognitive, cardiovascular, autonomic, respiratory, and immune system effects. Factor 6 focuses on the health risks to the individual user in terms of the risks from acute and chronic use of marijuana, as well as the “gateway hypothesis.”
Acute use of marijuana impairs psychomotor performance, including complex task performance, which makes operating motor vehicles or heavy equipment after using marijuana inadvisable (Ramaekers et al., 2004; Ramaekers et al., 2006a). A meta-analysis conducted by Li et al. (2011) showed an association between marijuana use by the driver and a significantly increased risk of involvement in a car accident. Additionally, in a minority of individuals who use marijuana, some potential responses include dysphoria and psychological distress, including prolonged anxiety reactions (Haney et al., 1999).
A distinctive marijuana withdrawal syndrome following long term or chronic use has been identified. The withdrawal syndrome indicates that marijuana produces physical dependence that is mild, short-lived, and comparable to tobacco withdrawal (Budney et al., 2008). Marijuana withdrawal syndrome is described in detail below under Factor 7.
The following states how the DSM-V (2013) of the American Psychiatric Association describes the consequences of
Individuals with cannabis use disorder may use cannabis throughout the day over a period of months or years, and thus may spend many hours a day under the influence. Others may use less frequently, but their use causes recurrent problems related to family,
Kandel (1975) proposed nearly 40 years ago the hypothesis that marijuana is a “gateway drug” that leads to the use or abuse of other illicit drugs. Since that time, epidemiological research explored this premise. Overall, research does not support a direct causal relationship between regular marijuana use and other illicit drug use. The studies examining the gateway hypothesis are limited. First, in general, studies recruit individuals influenced by a myriad of social, biological, and economic factors that contribute to extensive drug abuse (Hall & Lynskey, 2005). Second, most studies that test the hypothesis that marijuana use causes abuse of illicit drugs use the determinative measure
Little evidence supports the hypothesis that initiation of marijuana use leads to an abuse disorder with other illicit substances. For example, one longitudinal study of 708 adolescents demonstrated that early onset marijuana use did not lead to problematic drug use (Kandel & Chen, 2000). Similarly, Nace et al. (1975) examined Vietnam-era soldiers who extensively abused marijuana and heroin while they were in the military, and found a lack of correlation of a causal relationship demonstrating marijuana use leading to heroin addiction. Additionally, in another longitudinal study of 2,446 adolescents, marijuana dependence was uncommon but when it did occur, the common predictors of marijuana dependence were the following: Parental death, deprived socio-economic status, and baseline illicit drug use other than marijuana (von Sydow et al., 2002).
When examining the association between marijuana and illicit drugs, focusing on drug use versus abuse or dependence, different patterns emerge. For example, a study examining the possible causal relationship of the gateway hypothesis found a correlation between marijuana use in adolescents and other illicit drug use in early adulthood and, adjusting for age-linked experiences, did not effect this correlation (Van Gundy and Rebellon, 2010). However, when examining the association in terms of development of drug abuse; age-linked stressors and social roles moderated the correlation between marijuana use in adolescents and other illicit drug abuse. Similarly, Degenhardt et al. (2009) examined the development of drug dependence and found an association that did not support the gateway hypothesis. Specifically, drug dependence was significantly associated with the use of other illicit drugs prior to marijuana use.
Interestingly, the order of initiation of drug use seems to depend on the prevalence of use of each drug, which varies by country. Based on the World Health Organization (WHO) World Mental Health Survey that includes data from 17 different countries, the order of drug use initiation varies by country and relates to prevalence of drug use in each country (Degenhardt et al., 2010). Specifically, in the countries with the lowest prevalence of marijuana use, use of other illicit drugs before marijuana was common. This sequence of initiation is less common in countries with higher prevalence of marijuana use. A study of 9,282 households in the United States found that marijuana use often preceded the use of other illicit drugs; however, prior non-marijuana drug dependence was also frequently correlated with higher levels of illicit drug abuse (Degenhardt et al., 2009). Additionally, in a large 25-year longitudinal study of 1,256 New Zealand children, the author concluded that marijuana use correlated to an increased risk of abuse of other drugs, including cocaine and heroin (Fergusson et al., 2005).
Although many individuals with a drug abuse disorder may have used marijuana as one of their first illicit drugs, this fact does not correctly lead to the reverse inference that most individuals who used marijuana will inherently go on to try or become regular users of other illicit drugs. Specifically, data from the 2011 NSDUH survey illustrates this issue (SAMHSA, 2012). NSDUH data estimates 107.8 million individuals have a lifetime history of marijuana use, which indicates use on at least one occasion, compared to approximately 36 million individuals having a lifetime history of cocaine use and approximately 4 million individuals having a lifetime history of heroin use. NSDUH data do not provide information about each individual's specific drug history. However, even if one posits that every cocaine and heroin user previously used marijuana, the NSDUH data show that marijuana use at least once in a lifetime does not predict that an individual will also use another illicit drug at least once.
Finally, a review of the gateway hypothesis by Vanyukov et al. (2012) notes that because the gateway hypothesis only addresses the order of drug use initiation, the gateway hypothesis does not specify any mechanistic connections between drug “stages” following exposure to marijuana and does not extend to the risks for addiction. This concept contrasts with the concept of a common liability to addiction that involves mechanisms and biobehavioral characteristics pertaining to the entire course of drug abuse risk and disorders.
Under the seventh factor, the Secretary must consider marijuana's psychic or physiological dependence liability.
Psychic or psychological dependence has been shown in response to marijuana's psychoactive effects. Psychoactive responses to marijuana are pleasurable to many humans and are associated with drug-seeking and drug-taking (Maldonado, 2002). Moreover, high levels of psychoactive effects, notably positive reinforcement, are associated with increased marijuana use, abuse, and dependence (Scherrer et al., 2009; Zeiger et al., 2010). Epidemiological data support these findings through 2012 NSDUH statistics that show that of individuals years 12 or older who used marijuana in the past month, an estimated 40.3 percent used marijuana on 20 or more days within the past month. This equates to approximately 7.6 million individuals aged 12 or older who used marijuana on a daily or almost daily basis.
Tolerance is a state of adaptation where exposure to a drug induces changes that result in a diminution of one or more of the drug's effects over time (American Academy of Pain Medicine, American Pain Society and American Society of Addiction Medicine consensus document, 2001). Tolerance can develop to some, but not all, of marijuana's effects. Specifically, tolerance does not seem to develop in response to many of marijuana's psychoactive effects. This lack of tolerance may relate to electrophysiological data demonstrating that chronic delta
However, humans can develop tolerance to marijuana's cardiovascular, autonomic, and behavioral effects (Jones et al., 1981). Tolerance to some of marijuana's behavioral effects seems to develop after heavy marijuana use, but not after occasional marijuana use. For instance, following acute administration of marijuana, heavy marijuana users did not exhibit impairments in tracking and attention tasks, as were seen in occasional marijuana users (Ramaekers et al., 2009). Furthermore, a neurophysiological assessment administered through an electroencephalograph (EEG) which measures event-related potentials (ERP) conducted in the same subjects as the previous study, found a corresponding effect in the P100
Importantly, pharmacological tolerance alone does not indicate a drug's physical dependence liability. In order for physical dependence to exist, evidence of a withdrawal syndrome is needed. Physical dependence is a state of adaptation, manifested by a drug-class specific withdrawal syndrome produced by abrupt cessation, rapid dose reduction, decreasing blood level of the drug, and/or administration of an antagonist (
Discontinuation of heavy, chronic marijuana use has been shown to lead to physical dependence and withdrawal symptoms (American Psychiatric Association DSM-V, 2013; Budney and Hughes, 2006; Haney et al., 1999). In heavy, chronic marijuana users, the most commonly reported withdrawal symptoms are sleep difficulties, decreased appetite or weight loss, irritability, anger, anxiety or nervousness, and restlessness. Some less commonly reported withdrawal symptoms are depressed mood, sweating, shakiness, physical discomfort, and chills (Budney and Hughes, 2006; Haney et al., 1999). The occurrence of marijuana withdrawal symptoms in light or non-daily marijuana users has not been established. The American Psychiatric Association's DSM-V (2013) includes a list of symptoms of “cannabis withdrawal.” Most marijuana withdrawal symptoms begin within 24-48 hours of discontinuation, peak within 4-6 days, and last for 1-3 weeks. Marijuana withdrawal syndrome has been reported in adolescents and adults admitted for substance abuse treatment.
Based on clinical descriptions, this syndrome appears to be mild compared to classical alcohol and barbiturate withdrawal syndromes, which can include more serious symptoms such as agitation, paranoia, and seizures. Multiple studies comparing marijuana and tobacco withdrawal symptoms in humans demonstrate that the magnitude and time course of the two withdrawal syndromes are similar (Budney et al., 2008; Vandrey et al., 2005, 2008).
Under the eight factor analysis, the Secretary must consider whether marijuana is an immediate precursor of a controlled substance. Marijuana is not an immediate precursor of another controlled substance.
After consideration of the eight factors discussed above, FDA recommends that marijuana remain in Schedule I of the CSA. NIDA concurs with this scheduling recommendation. Marijuana meets the three criteria for placing a substance in Schedule I of the CSA under 21 U.S.C. 812(b)(l):
(1) Marijuana has a high potential for abuse:
A number of factors indicate marijuana's high abuse potential, including the large number of individuals regularly using marijuana, marijuana's widespread use, and the vast amount of marijuana available for illicit use. Approximately 18.9 million individuals in the United States (7.3 percent of the U.S. population) used marijuana monthly in 2012. Additionally, approximately 4.3 million individuals met diagnostic criteria for marijuana dependence or abuse in the year prior to the 2012 NSDUH survey. A 2013 survey indicates that by 12th grade, 36.4 percent of students report using marijuana within the past year, and 22.7 percent report using marijuana monthly. In 2011, 455,668 ED visits were marijuana-related, representing 36.4 percent of all illicit drug-related episodes. Primary marijuana use accounted for 18.1 percent of admissions to drug treatment programs in 2011. Additionally, marijuana has dose-dependent reinforcing effects, as demonstrated by data showing that humans prefer relatively higher doses to lower doses. Furthermore, marijuana use can result in psychological dependence.
(2) Marijuana has no currently accepted medical use in treatment in the United States:
FDA has not approved a marketing application for a marijuana drug product for any indication. The opportunity for scientists to conduct clinical research with marijuana exists, and there are active INDs for marijuana; however, marijuana does not have a currently accepted medical use for treatment in the United States, nor does marijuana have an accepted medical use with severe restrictions.
A drug has a “currently accepted medical use” if all of the following five elements have been satisfied:
a. the drug's chemistry is known and reproducible;
b. there are adequate safety studies;
c. there are adequate and well-controlled studies proving efficacy;
d. the drug is accepted by qualified experts; and
e. the scientific evidence is widely available.
Marijuana does not meet any of the elements for having a “currently accepted medical use.”
First, FDA broadly evaluated marijuana, and did not focus its evaluation on particular strains of marijuana or components or derivatives of marijuana. Since different strains may have different chemical constituents, marijuana, as identified in this petition, does not have a known and reproducible chemistry, which would be needed to provide standardized doses.
Second, there are not adequate safety studies on marijuana in the medical literature in relation to a specific, recognized disorder. Third, there are no published adequate and well controlled studies proving efficacy of marijuana. Fourth, there is no evidence that qualified experts accept marijuana for use in treating a specific, recognized disorder. Lastly, the scientific evidence regarding marijuana's chemistry in terms of a specific
Alternately, a Schedule II drug can be considered to have a “currently accepted medical use with severe restrictions” (21 U.S.C. 812(b)(2)(B)). Yet as stated above, the lack of accepted medical use for a specific, recognized disorder precludes the use of marijuana even under conditions where its use is severely restricted.
In conclusion, to date, research on marijuana's medical use has not developed to the point where marijuana is considered to have a “currently accepted medical use” or a “currently accepted medical use with severe restrictions.”
(3) There is a lack of accepted safety for use of marijuana under medical supervision:
There are currently no FDA-approved marijuana drug products. Marijuana does not have a currently accepted medical use in treatment in the United States or a currently accepted medical use with severe restrictions. Thus, FDA has not determined that marijuana is safe for use under medical supervision.
In addition, FDA cannot conclude that marijuana has an acceptable level of safety relative to its effectiveness in treating a specific, recognized disorder without evidence that the substance is contamination free, and assurance of a consistent and predictable dose. Investigations into the medical use of marijuana should include information and data regarding the chemistry, manufacturing, and specifications of marijuana. Additionally, a procedure for delivering a consistent dose of marijuana should also be developed. Therefore, FDA concludes marijuana does not currently have an accepted level of safety for use under medical supervision.
Marijuana is a Schedule I substance under the Controlled Substances Act (CSA). Schedule I indicates a high potential for abuse, no currently accepted medical use in the United States, and a lack of accepted safety for use under medical supervision. To date, marijuana has not been subject to an approved new drug application (NDA) that demonstrates its safety and efficacy for a specific indication under the Food Drug and Cosmetic Act (FDCA).
Nevertheless, as of October 2014, twenty-three states and the District of Columbia have passed state-level medical marijuana laws that allow for marijuana use within that state; similar bills are pending in other states.
The present review was undertaken by the Food and Drug Administration (FDA) to analyze the clinical studies published in the medical literature investigating the use of marijuana in any therapeutic areas. First, we discuss the context for this scientific review. Next, we describe the methods used in this review to identify adequate and well-controlled studies evaluating the safety and efficacy of marijuana for particular therapeutic uses.
The FDA conducted a systematic search for published studies in the medical literature that meet the described criteria for study design and outcome measures prior to February 2013. While not part of our systematic review, we have continued to routinely follow the literature beyond that date for subsequent studies. Studies were considered to be relevant to this review if the investigators administered marijuana to patients with a diagnosed medical condition in a well-controlled, double-blind, placebo-controlled clinical trial. Of the eleven studies that met the criteria for review, five different therapeutic areas were investigated:
For each of these eleven clinical studies, information is provided regarding the subjects studied, the drug conditions tested (including dose and method of administration), other drugs used by subjects during the study, the physiological and subjective measures collected, the outcome of these measures comparing treatment with marijuana to placebo, and the reported and observed adverse events. The conclusions drawn by the investigators are then described, along with potential limitations of these conclusions based on the study design. A brief summary of each study's findings and limitations is provided at the end of the section.
The eleven clinical studies that met the criteria and were evaluated in this review showed positive signals that marijuana may produce a desirable therapeutic outcome, under the specific experimental conditions tested. Notably, it is beyond the scope of this review to determine whether these data demonstrate that marijuana has a currently accepted medical use in the United States. However, this review concludes that these eleven clinical studies serve as proof-of-concept studies, based on the limitations of their study designs, as described in the study summaries. Proof-of-concept studies provide preliminary evidence on a proposed hypothesis regarding a drug's effect. For drugs under development, the effect often relates to a short-term clinical outcome being investigated. Proof-of-concept studies serve as the link between preclinical studies and dose ranging clinical studies. Therefore, proof-of-concept studies are not sufficient to demonstrate efficacy of a drug because they provide only preliminary information about the effects of a drug. However, the studies reviewed produced positive results, suggesting marijuana should be further evaluated as an adjunct treatment for neuropathic pain, appetite stimulation in HIV patients, and spasticity in MS patients.
The main limitations identified in the eleven studies testing the medical applications of marijuana are listed below:
• The small numbers of subjects enrolled in the studies, which limits the statistical analyses of safety and efficacy.
• The evaluation of marijuana only after acute administration in the studies, which limits the ability to determine efficacy following chronic administration.
• The administration of marijuana typically through smoking, which exposes ill patients to combusted material and introduces problems with determining the doses delivered.
• The potential for subjects to identify whether they received marijuana or placebo, which breaks the blind of the studies.
• The small number of cannabinoid naïve subjects, which limits the ability to determine safety and tolerability in these subjects.
• The low number of female subjects, which makes it difficult to generalize the study findings to subjects of both genders.
Thus, this review discusses the following methodological changes that may be made in order to resolve these limitations and improve the design of future studies which examine the safety and efficacy of marijuana for specific therapeutic indications:
• Determine the appropriate number of subjects studied based on recommendations in various FDA
• Administer consistent and reproducible doses of marijuana based on recommendations in the FDA
• Evaluate the effects of marijuana under therapeutic conditions following both acute and chronic administration.
• Consider alternatives to smoked marijuana (
• Address and improve whenever possible the difficulty in blinding of marijuana and placebo treatments in clinical studies.
• Evaluate the effect of prior experience with marijuana with regard to the safety and tolerability of marijuana.
• Strive for gender balance in the subjects used in studies.
In conclusion, the eleven clinical studies conducted to date do not meet the criteria required by the FDA to determine if marijuana is safe and effective in specific therapeutic areas. However, the studies can serve as proof-of-concept studies and support further research into the use of marijuana in these therapeutic indications. Additionally, the clinical outcome data and adverse event profiles reported in these published studies can beneficially inform how future research in this area is conducted. Finally, application of the recommendations listed above by investigators when designing future studies could greatly improve the available clinical data that can be used to determine if marijuana has validated and reliable medical applications.
In response to citizen petitions submitted to the Drug Enforcement Administration (DEA) requesting DEA to reschedule marijuana, the DEA Administrator requested that the U.S. Department of Health and Human
Under Section 202 of the CSA, marijuana is currently controlled as a Schedule I substance (21 U.S.C. 812). Schedule I includes those substances that have a high potential for abuse, have no currently accepted medical use in treatment in the United States, and lack accepted safety for use under medical supervision (21 U.S.C. § 812(b)(1)(A)-(C)).
A drug product which has been approved by FDA for marketing in the United States is considered to have a “currently accepted medical use.” Marijuana is not an FDA-approved drug product, as a New Drug Application (NDA) or Biologics License application (BLA) for marijuana has not been approved by FDA. However, FDA approval of an NDA is not the only means through which a drug can have a currently accepted medical use in the United States.
In general, a drug may have a “currently accepted medical use” in the United States if the drug meets a five-part test. Established case law (
i. the drug's chemistry must be known and reproducible.
“The substance's chemistry must be scientifically established to permit it to be reproduced into dosages which can be standardized. The listing of the substance in a current edition of one of the official compendia, as defined by section 201(j) of the Food, Drug and Cosmetic Act, 21 U.S.C. 321(j), is sufficient to meet this requirement.”
ii. there must be adequate safety studies.
“There must be adequate pharmacological and toxicological studies, done by all methods reasonably applicable, on the basis of which it could fairly and responsibly be concluded, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, that the substance is safe for treating a specific, recognized disorder.”
iii. there must be adequate and well-controlled studies proving efficacy.
“There must be adequate, well-controlled, well-designed, well-conducted, and well-documented studies, including clinical investigations, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, on the basis of which it could be fairly and responsibly concluded by such experts that the substance will have the intended effect in treating a specific, recognized disorder.”
iv. the drug must be accepted by qualified experts.
“The drug has a New Drug Application (NDA) approved by the Food and Drug Administration, pursuant to the Food, Drug and Cosmetic Act, 21 U.S.C. 355. Or, a consensus of the national community of experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, accepts the safety and effectiveness of the substance for use in treating a specific, recognized disorder. A material conflict of opinion among experts precludes a finding of consensus.” and
v. the scientific evidence must be widely available.
“In the absence of NDA approval, information concerning the chemistry, pharmacology, toxicology, and effectiveness of the substance must be reported, published, or otherwise widely available, in sufficient detail to permit experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, to fairly and responsibly conclude the substance is safe and effective for use in treating a specific, recognized disorder.”
One way to pass the five-part test for having “currently accepted medical use” is through submission of an NDA or BLA which is approved by FDA. However, FDA approval of an NDA or BLA is not required for a drug to pass the five-part test.
This review focuses on FDA's analysis of one element of the five-part test for determining whether a drug has “currently accepted medical use”. Specifically, the present review assesses the 3rd criterion that addresses whether marijuana has “adequate and well-controlled studies proving efficacy”. Thus, this review evaluates published clinical studies that have been conducted using marijuana in subjects who have a variety of medical conditions by assessing the adequacy of the summarized study designs and the study data. The methodology for selecting the studies that were evaluated is delineated below.
FDA's evaluation and conclusions regarding the remaining four criteria for whether marijuana has a “currently accepted medical use,” as well as the eight factors pertaining to the scheduling of marijuana, are outside the scope of this review. A detailed discussion of these factors is contained in FDA's scientific and medical evaluation of marijuana.
The methods for selecting the studies to include in this review involved the following steps, which are described in detail in the subsections below:
1. Define the objective of the review.
2. Define “marijuana” in order to facilitate the medical literature search for studies that administered the substance,
3. Define “adequate and well-controlled studies” in order to facilitate the search for relevant data and literature,
4. Search medical literature databases and identify relevant adequate and well-controlled studies, and
5. Review and analyze the adequate and well-controlled clinical studies to determine if they demonstrate efficacy of marijuana for any therapeutic indication.
The objective of this review is to assess the study designs and resulting data from clinical studies published in the medical literature that were conducted with marijuana (as defined below) as a treatment for any therapeutic indication, in order to determine if they meet the criteria of “adequate and well-controlled studies proving efficacy”.
In this review, the term “marijuana” refers to the flowering tops or leaves of the
Studies which administered individual cannabinoids (whether
The criteria for an “adequate and well-controlled study” for purposes of determining the safety and efficacy of a human drug is defined under the Code of Federal Regulations (CFR) in 21 CFR 314.126. The elements of an adequate and well-controlled study as described in 21 CFR 314.126 can be summarized as follows:
1. The main objective must be to assess a therapeutically relevant outcome.
2. The study must be placebo-controlled.
3. The subjects must qualify as having the medical condition being studied.
4. The study design permits a valid comparison with an appropriate control condition.
5. The assignment of subjects to treatment and control groups must be randomized.
6. There is minimization of bias through the use of a double-blind study design.
7. The study report contains a full protocol and primary data.
8. Analysis of the study data is appropriately conducted.
As noted above, the current review examines only those data available in the public domain and thus relies on clinical studies published in the medical literature. Published studies by their nature are summaries that do not include the level of detail required by studies submitted to FDA in an NDA.
While the majority of the elements defining an adequate and well-controlled study can be satisfied through a published paper (elements #1-6), there are two elements that cannot be met by a study published in the medical literature: element #7 (availability of a study report with full protocol and primary data) and element #8 (a determination of whether the data analysis was appropriate). Thus, for purposes of this review, only elements #1-6 will be used to qualify a study as being adequate and well-controlled.
We identified randomized, double-blind, placebo-controlled clinical studies conducted with marijuana to assess marijuana's efficacy in any therapeutic indication. Two primary medical literature databases were searched for all studies posted to the databases prior to February 2013:
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Figure 1 (below) provides an overview of the process used to identify studies from the PubMed search. The eleven studies reviewed were published between 1974 and 2013. Ten of these studies were conducted in the United States and one study was conducted in Canada. These eleven studies examined the effects of smoked and vaporized marijuana for the indications of chronic neuropathic pain, spasticity related to multiple sclerosis (MS), appetite stimulation in patients with human immunodeficiency virus (HIV), glaucoma, and asthma. All included studies used adult patients as subjects. All studies conducted in the United States were conducted under an IND as Phase 2 investigations.
Two qualifying studies, which assessed marijuana for glaucoma, were previously reviewed in the 1999 Institute of Medicine (IOM) report entitled “Marijuana and Medicine: Assessing the Science Base”.
Based on the selection criteria for relevant studies described in Section 2.3 (Define Adequate and Well-Controlled Clinical Studies), a number of clinical studies that investigated marijuana, as defined in this review, were excluded from this review. Studies that examined the effects of marijuana in healthy subjects were excluded because they did not test a patient population with a medical condition (Flom et al., 1975; Foltin et al., 1986; Foltin et al., 1988; Hill et al., 1974; Milstein et al., 1974; Milstein et al., 1975; Soderpalm et al., 2001; Wallace et al., 2007; Greenwald and Stitzer, 2000). A 1975 study by Tashkin et al. was excluded because it had a single-blind, rather than double-blind, study design. Two other studies were excluded because the primary outcome measure assessed safety rather than a therapeutic outcome (Greenberg et al., 1994; Abrams et al., 2003).
Qualified clinical studies that evaluated marijuana for therapeutic purposes were examined in terms of adequacy of study design including method of drug administration, study size, and subject inclusion and exclusion criteria. Additionally, the measures and methods of analysis used in the studies to assess the treatment effect were examined.
The eleven qualifying studies in this review assessed a variety of therapeutic indications. In order to better facilitate analysis and discussion of the studies, the following sections group the studies by therapeutic area. Within each section, each individual study is summarized in terms of its design, outcome data and important limitations. This information is also provided in the Appendix in tabular form for each study.
Five randomized, double-blind, placebo-controlled Phase 2 clinical studies have been conducted to examine the effects of inhaled marijuana smoke on neuropathic pain associated with HIV-sensory neuropathy (Abrams et al., 2007; Ellis et al., 2009) and chronic neuropathic pain from multiple causes (Wilsey et al., 2008; Ware et al., 2010; Wilsey et al., 2013). Table 1 of the Appendix summarizes these studies.
Two studies examined the effect of marijuana to reduce the pain induced by HIV-sensory neuropathy.
Abrams et al. (2007) conducted the first study entitled, “Cannabis in painful HIV-associated sensory neuropathy: A randomized placebo-controlled trial”. The subjects were 50 adult patients with uncontrolled HIV-associated sensory neuropathy, who had at least 6 experiences with smoking marijuana. The subjects were split into two parallel groups of 25 subjects each. More than 68% of subjects were current marijuana users, but all individuals were required to discontinue using marijuana prior to the study. Most subjects were taking medication for pain during the study, with the most common medications being opioids and gabapentin. Upon entry into the study, subjects had an average daily pain score of at least 30 on a 0-100 visual analog scale (VAS).
Subjects were randomized to receive either smoked marijuana (3.56% THC
Primary outcome measures included daily VAS ratings of chronic pain and the percentage of subjects who reported a result of more than 30% reduction in pain intensity. The ability of smoked marijuana to induce acute analgesia was assessed using both thermal heat model and capsaicin sensitization model, while anti-hyperalgesia was assessed with brush and von Frey hair stimuli. The immediate analgesic effects of smoked marijuana was assessed using a 0-100 point VAS at 40-minute intervals three times before and three times after the first and last smoking sessions, which was done to correspond to the time of peak plasma cannabinoid levels. Notably, not all subjects completed the induced pain portion of the study (n = 11 in marijuana group, 9 in placebo group) because of their inability to tolerate the stimuli. Throughout the study, subjects also completed the Profile of Mood States (POMS) questionnaire, as well as subjective VAS measures of anxiety, sedation, disorientation, paranoia, confusion, dizziness, and nausea.
As a result, the median daily pain was reduced 34% by smoked marijuana compared to 17% by placebo (
There were no serious AEs and no episodes of hypertension, hypotension, or tachycardia requiring medical intervention. No subjects withdrew from the study for drug related reasons. Subjects in the marijuana group reported higher ratings on the subjective measures of anxiety, sedation, disorientation, confusion, and dizziness compared to the placebo group. There was one case of severe dizziness in a marijuana-treated subject. By the end of the study, subjects treated with marijuana and placebo reported a reduction in total mood disturbance as measured by POMS.
The authors conclude that smoked marijuana effectively reduced chronic neuropathic pain from HIV-associated sensory neuropathy with tolerable side effects. However, limitations of this study include: maintenance of subjects on other analgesic medication while being tested with marijuana and a lack of information about the number of puffs during each inhalation of smoke. These limitations make it difficult to conclude that marijuana has analgesic properties on its own and that the actual AEs experienced during the study in response to marijuana are tolerable. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled HIV-associated sensory neuropathy.
Ellis et al. (2009) conducted a more recent study entitled “Smoked medicinal cannabis for neuropathic pain in HIV: A randomized, crossover clinical trial”. The subjects were 28 HIV-positive adult male patients with intractable neuropathic pain that was refractory to the effects of at least two drugs taken for analgesic purposes. Upon entry into the study, subjects had a mean score of >5 on the Pain Intensity subscale of the Descriptor Differential Scale (DDS). Subjects were allowed to continue taking their current routine of pain medications, which included opioids, non-narcotic analgesics, antidepressants, and anticonvulsants. Previous experience with marijuana was not required for participation in the study, but 27 of 28 subjects (96%) reported previous experience with marijuana. However, of these 27 experienced subjects, 63% (n = 18) reported no marijuana use within the past year.
The study procedures compared the effects of the target dose of marijuana and placebo during two treatment periods lasting 5 days, with 2 weeks washout periods. The marijuana strengths available were 1%, 2%, 4%, 6%, or 8% THC concentration by weight. Subjects smoked marijuana or placebo cigarettes four times per day, approximately 90-120 minutes apart, using a standardized cued smoking procedure: (1) 5 second smoke inhalation, (2) 10 second hold of smoke in lungs, (3) 40 second exhale and normal breathing between puffs. The investigators did not provide a description of the number of puffs taken at any smoking session. All subjects practiced the smoking procedures using placebo marijuana prior to test sessions.
On the first day of each test period, dose titration occurred throughout the four smoking sessions scheduled for that day, with a starting strength of 4% THC concentration. Subjects were allowed to titrate to a personalized “target dose”, which was defined as the dose that provided the best pain relief without intolerable adverse effects. This dose titration was accomplished by allowing subjects to either increase the dose incrementally (to 6% or 8% THC) to improve analgesia, or to decrease the dose incrementally (to 1% or 2% THC) if AEs were intolerable. For the next 4 days of each test period, the subjects smoked their target dose during each of the four daily smoking sessions. To maintain the blind, placebo marijuana was represented as containing 1%-8% THC, even though it did not contain any cannabinoids.
The primary outcome measure was the change in pain magnitude on the DDS at the end of each test period compared to baseline, with a clinically significant level of analgesia considered to be a reduction in pain of at least 30%. Additional measures included the POMS, the Sickness Impact Profile (SIP), the Brief Symptom Inventory (BSI) and the UKU Side Effect Rating Scale and a subjective highness/sedation VAS.
During the marijuana treatment week, 19 subjects titrated to the 2%-4% THC dose while the 6%-8% dose was preferred by 8 subjects and 1 subject chose the 1% dose. In contrast, during the placebo treatment week, all 28 subjects titrated to the highest possible
The degree of pain reduction was significantly greater after administration of marijuana compared to placebo (median change of 3.3 points on DDS,
In terms of safety, there were no alterations in HIV disease parameters in response to marijuana or placebo. The authors report that marijuana led to a greater degree of UKU responses as well as AEs such as difficulty in concentration, fatigue, sleepiness or sedation, increased duration of sleep, reduced salivation and thirst compared to placebo (data not provided in paper). Two subjects withdrew from the study because of marijuana-related AEs: one subject developed an intractable smoking-related cough during marijuana administration and the sole marijuana-naïve subject in the study experienced an incident of acute cannabis-induced psychosis.
The authors conclude that smoked marijuana effectively reduced chronic neuropathic pain from HIV-associated sensory neuropathy. The limitations of this study include: a lack of information about the number of puffs during each inhalation of smoke; a lack of information about the specific timing of the subjective assessments and collection of AEs relative to initiation of the smoking sessions; and the inclusion of only one marijuana-naïve subject. These limitations make it difficult to conclude that the actual AEs experienced during the study in response to marijuana are tolerable. It is especially concerning that the only marijuana-naïve subject left the study because of serious psychiatric responses to marijuana exposure at analgesic doses. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled HIV-associated sensory neuropathy.
Three studies examined the effect of marijuana on chronic neuropathic pain.
Wilsey et al. (2008) examined chronic neuropathic pain from multiple causes in the study entitled, “A Randomized, Placebo-Controlled, Crossover Trial of Cannabis Cigarettes in Neuropathic Pain”. The subjects were 32 patients with a variety of neuropathic pain conditions, including 22 with complex regional pain syndrome, 6 with spinal cord injury, 4 with multiple sclerosis, 3 with diabetic neuropathy, 2 with ilioinguinal neuralgia, and 1with lumbosacral plexopathy. All subjects reported a pain intensity of at least 30 on a 0-100 VAS and were allowed to continue taking their regular medications during the study period, which included opioids, antidepressants, anticonvulsants, and NSAIDs. All subjects were required to have experience with marijuana but could not use any cannabinoids for 30 days before study sessions.
The study consisted of three test sessions with an interval of 3-21 days between sessions. Treatment conditions were high-strength marijuana (7% delta-9-THC), low-strength marijuana (3.5% delta-9-THC), and placebo cigarettes, administered through a standardized cued-puff procedure: (1) “light the cigarette” (30 seconds), (2) “get ready” (5 seconds), (3) “inhale” (5 seconds), (4) “hold smoke in lungs” (10 seconds), (5) “exhale,” and (6) wait before repeating the puff cycle (40 seconds). Participants took 2 puffs after baseline measurements, 3 puffs an hour later, and 4 puffs an hour after that, for a cumulative dose of 9 puffs per test session.
Hourly assessment periods were scheduled before and after each set of puffs and for 2 additional hours during the recovery period. Plasma cannabinoids were measured at baseline, 5 minutes after the first puff and again at 3 hours after the last puff cycle.
The primary outcome measure was spontaneous pain relief, as measured by a 0-100 point VAS for current pain. Pain unpleasantness was measured on a 0-100 point VAS, and degree of pain relief was measured on a 7-point Patient Global Impression of Change (PGIC) scale. Secondary measures included the Neuropathic Pain Scale (NPS), a 0-100 point VAS for allodynia, and changes in thermal pain threshold. Subjective measures were also evaluated with unipolar 0-100 point VAS for any drug effect, good drug effect, bad drug effect, high, drunk, impaired, stoned, like the drug effect, sedated, confused, nauseated, desire more of the drug, anxious, down, hungry, and bipolar 0-100 point VAS for sad/happy, anxious/relaxed, jittery/calm, bad/good, paranoid/self-assured, fearful/unafraid. Neurocognitive assessments measured attention and concentration, learning and memory, and fine motor speed.
Marijuana produced a reduction in pain compared to placebo, as measured by the pain VAS, the PGIC and on pain descriptors in the NPS, including sharp (
Marijuana at both strengths produced increases on measures of any drug effect, good drug effect, high, stoned, impairment, sedation, confusion, and hunger. The 7% THC marijuana increased anxiety scores and bad drug effect (later in session) compared to placebo. Neither strength of marijuana affected the measures of mood. On neurocognitive measures, both the 3.5% THC and 7% THC marijuana produced impairment in learning and memory, while only the 7% THC marijuana impaired attention and psychomotor speed, compared to placebo. There were no adverse cardiovascular side effects and no subjects dropped out because of an adverse event related to marijuana.
The authors conclude that marijuana may be effective at ameliorating neuropathic pain at doses that induce mild cognitive effects, but that smoking is not an optimum route of administration. The limitations of this study include: inclusion of subjects with many forms of neuropathic pain and maintenance of subjects on other analgesic medication while being tested with marijuana. These limitations make it difficult to conclude that marijuana has analgesic properties on its own and that the actual AEs experienced during the study in response to marijuana are tolerable. The authors compared pain score results by the type of pain condition, with no significant differences found; however, the sample size of this study was small thus a type II error may have been present. Thus, it
The second study, conducted by Ware et al. (2010) in Canada is entitled, “Smoked cannabis for chronic neuropathic pain: a randomized controlled trial”. The subjects were 21 adult patients with neuropathic pain caused by trauma or surgery compounded with allodynia or hyperalgesia, and a pain intensity score greater than 4 on a 10 point VAS. All subjects maintained their current analgesic medication and they were allowed to use acetaminophen for breakthrough pain. Eighteen subjects had previous experience with marijuana but none of them had used marijuana within a year before the study.
The study design used a four-period crossover design, testing marijuana (2.5%, 6.0% and 9.4% THC) and placebo marijuana. The 2.5% and 6.0% doses of marijuana were included to increase successful blinding. Each period was 14 days in duration, beginning with 5 days on the study drug followed by a 9-day washout period. Doses were delivered as 25 mg of marijuana that was smoked in a single inhalation using a titanium pipe. The first dose of each period was self-administered using a standardized puff procedure: (1) Inhale for 5 seconds, (2) hold the smoke in their lungs for 10 seconds, and (3) exhale. Subsequent doses were self-administered in the same manner for a total of three times daily at home on an outpatient basis for the first five days of each period.
The primary measure was an 11-point pain intensity scale, averaged over the 5 day treatment period, which was administered once daily for present, worst, least and average pain intensity during the previous 24 hours. Secondary measures included an acute pain 0-100 point VAS, pain quality assessed with the McGill Pain Questionnaire, sleep assessed with the Leeds Sleep Evaluation Questionnaire, mood assessed with the POMS, quality of life assessed using the EQ-5D health outcome instrument. Subjective measures included 0-100 point VAS scales for high, relaxed, stressed and happy.
Over the first three hours after smoking marijuana, ratings of pain, high, relaxation, stress, happiness and heart rate were recorded. During the five days of each study period, participants were contacted daily to administer questionnaires on pain intensity, sleep, medication and AEs. Subjects returned on the fifth day to complete questionnaires on pain quality, mood, quality of life and assessments of potency. At the end of the study, participants completed final adverse event reports and potency assessments.
The average daily pain intensity was significantly lower on 9.4% THC marijuana (5.4) than on placebo marijuana (6.1) (
The most frequent drug-related adverse events reported in the group receiving 9.4% THC marijuana were headache, dry eyes, burning sensation, dizziness, numbness and cough. Reports of high and euphoria occurred on only three occasions, once in each dose of THC. There were no significant changes in vital signs, heart-rate variability, or renal function. One subject withdrew from the study due to increased pain during administration of 6% THC marijuana.
The authors conclude that smoked marijuana reduces neuropathic pain, improves mood and aids in sleep, but that smoking marijuana is not a preferable route of administration. The limitations of this study include: The lack of information on timing of assessments during the outpatient portion of the study and maintenance of subjects on other analgesic medication while being tested with marijuana. These limitations make it difficult to conclude that marijuana has analgesic properties on its own and that the actual AEs experienced during the study in response to marijuana are tolerable. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled neuropathic pain.
Wilsey et al. (2013) conducted the most recent study entitled, “Low-Dose Vaporized Cannabis Significantly Improves Neuropathic Pain”. This study is the only one in this review that utilized vaporization as a method of marijuana administration. The subjects were 36 patients with a neuropathic pain disorder (CRPS, thalamic pain, spinal cord injury, peripheral neuropathy, radiculopathy, or nerve injury) who were maintained on their current medications (opioids, anticonvulsants, antidepressants, and NSAIDs). Although subjects were required to have a history of marijuana use, they refrained from use of cannabinoids for 30 days before study sessions.
Subjects participated in three sessions in which they received 1.29% or 3.53% THC marijuana or placebo marijuana. The marijuana was vaporized using the Volcano vaporizer and a standardized cued-puff procedure: (1) “hold the vaporizer bag with one hand and put the vaporizer mouthpiece in their mouth” (30 seconds), (2) “get ready” (5 seconds), (3) “inhale” (5 seconds), (4) “hold vapor in lungs” (10 seconds), (5) “exhale and wait” before repeating puff cycle (40 seconds). Subjects inhaled 4 puffs at 60 minutes. At 180 minutes, the vaporizer was refilled with marijuana vapor and subjects were allowed to inhale 4 to 8 puffs using the cued procedure. Thus, cumulative dosing allowed for a range of 8 to12 puffs in total for each session, depending on the subjects desired response and tolerance. The washout time between each session ranged from 3-14 days.
The primary outcome variable was spontaneous pain relief, as assessed using a 0-100 point VAS for current pain. Secondary measures included the Patient Global Impression of Change (PGIC), the Neuropathic Pain Scale (NPS), a 0-100 point VAS for allodynia. Acute pain threshold was measured with a thermal pain model. Subjective measures included 0-100 point unipolar VAS for any drug effect, good drug effect, bad drug effect, high, drunk, impaired, stoned, drug liking, sedated, confused, nauseated, desire more drug, anxious, down and hungry. Bipolar 0-100 point VAS included sad/happy, anxious/relaxed, jittery/calm, bad/good, paranoid/self-assured, and fearful/unafraid. Neurocognitive assessments assessed attention and concentration, learning and memory, and fine motor speed.
A 30% reduction in pain was achieved in 61% of subjects who received the 3.53% THC marijuana, in 57% of subjects who received the 1.29% THC marijuana and in 26% of subjects who received the placebo marijuana (
On subjective measures, marijuana produced dose-dependent increases compared to placebo on ratings for: any drug effect, good drug effect, drug liking, high, stoned, sedated, confused, and hungry. Both strengths of marijuana produced similar increases in drunk or impaired compared to placebo. In contrast, desire for drug was rated as higher for the 1.29% THC marijuana compared to the 3.53% THC marijuana. There were no changes compared to placebo for bad effect, nauseous, anxiety, feeling down or any of the bipolar mood assessments. There was dose-dependent impairment on learning and memory from marijuana compared to placebo, but similar effects between the two strengths of marijuana on attention.
The authors conclude that vaporization of relatively low doses of marijuana can produce improvements in analgesia in neuropathic pain patients, especially when patients are allowed to titrate their exposure. However, this individualization of doses may account for the general lack of difference between the two strengths of marijuana. No data were presented regarding the total amount of THC consumed by each subject, so it is difficult to determine a proper dose-response evaluation. Additional limitations of this study are the inclusion of subjects with many forms of neuropathic pain and maintenance of subjects on other analgesic medication while being tested with marijuana. These limitations make it difficult to conclude that marijuana has analgesic properties on its own. It is also difficult to determine if any particular subset of neuropathic pain conditions would benefit specifically from marijuana administration. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled neuropathic pain.
Two randomized, double-blind, placebo-controlled Phase 2 studies examined the effects of smoked marijuana on appetite in HIV-positive subjects (Haney et al., 2005; Haney et al., 2007). Table 2 of the Appendix summarizes both studies.
The first study, conducted by Haney et al. (2005) is entitled, “Dronabinol and marijuana in HIV+ marijuana smokers: acute effects on caloric intake and mood”. The subjects were 30 HIV-positive patients who were maintained on two antiretroviral medications and either had clinically significant decreases in lean muscle mass
Subjects participated in 8 sessions that tested the acute effects of 0, 10, 20, and 30 mg dronabinol oral capsules and marijuana cigarettes with 0%, 1.8%, 2.8%, and 3.9% THC concentration by weight, using a double-dummy design (with only one active drug per session). The doses of dronabinol are higher than those doses typically prescribed for appetite stimulation in order to help preserve the blinding. There was a one-day washout period between test sessions.
Marijuana was administered using a standardized cued procedure: (1) “light the cigarette” (30 seconds), (2) “prepare” (5 seconds), (3) “inhale” (5 seconds), (4) “hold smoke in lungs” (10 seconds), and (5) “exhale.” Each subject smoked three puffs in this manner, with a 40-second interval between each puff.
Caloric intake was used as a surrogate measure for weight gain. Subjects received a box containing a variety of food and beverage items and were told to record consumption of these items following that day's administration of the test drug. Subjective measures included 0-100 point VAS for feel drug effect, good effect, bad effect, take drug again, drug liking, hungry, full, nauseated, thirsty, desire to eat. Neurocognitive measures and vital signs were monitored.
The low BIA group consumed significantly more calories in the 1.8% and 3.9% THC marijuana conditions (
Ratings of high and good drug effect were increased by all drug treatments in both the low-BIA and normal-BIA groups, except in response to the 10 mg dose of dronabinol. The 3.9% THC marijuana increased ratings of good drug effect, drug liking and desire to smoke again compared with placebo. Ratings of sedation were increased in both groups by 10 and 30 mg dronabinol, and in the normal BIA group by the 2.8% THC marijuana. Ratings of stimulation were increased in the normal BIA group by 2.8% and 3.9% THC marijuana and by 20 mg dronabinol. Increases in ratings of forgetfulness, withdrawn, dreaming, clumsy, heavy limbs, heart pounding, jittery, and decreases in ratings of energetic, social, and talkative were reported in the normal BIA group with 30 mg dronabinol. There were no significant changes in vital signs or performance on neurocognitive measures in response to marijuana. Notably, the time course of subjective effects peaked quickly and declined thereafter for smoked marijuana, while oral dronabinol responses took longer to peak and persisted longer. Additionally, marijuana but not dronabinol produced dry mouth and thirst.
In general, AEs reported in this study were low in both drug conditions for both subject groups. In the low BIA group, nausea was reported by one subject in both the 10 and 20 mg dronabinol conditions, while an uncomfortable level of intoxication was produced by the 30 mg dose in two subjects. There were no AEs reported in this group following marijuana at any dose. In the normal BIA group, the 30 mg dose of dronabinol produced an uncomfortable level of intoxication in three subjects and headache in one subject, while the 3.9% marijuana produced diarrhea in one subject.
The authors conclude that smoked marijuana can acutely increase caloric intake in low BIA subjects without significant cognitive impairment. However, it is possible that the low degree of cognitive impairment reported in this study may reflect the development of tolerance to cannabinoids in this patient population, since all individuals had current histories of chronic marijuana use. Additional limitations in this study include not utilizing actual weight gain as a primary measure. However, the study produced positive results suggesting that marijuana should be studied further as a treatment for appetite stimulation in HIV patients.
A second study conducted by Haney et al. (2007) is entitled, “Dronabinol and marijuana in HIV-positive marijuana smokers: Caloric intake, mood, and sleep”. The design of this study was nearly identical to the one conducted by this laboratory in 2005 (see above), but
Subjects participated in 8 sessions that tested the acute effects of 0, 5 and 10 mg dronabinol oral capsules and marijuana cigarettes with 0, 2.0% and 3.9% THC concentration by weight, using a double-dummy design (with 4 sessions involving only one active drug and 4 interspersed placebo sessions). Both drug and placebo sessions lasted for 4 days each, with active drug administration occurring 4 times per day (every 4 hours). Testing occurred in two 16-day inpatient stays. In the intervening outpatient period, subjects were allowed to smoke marijuana prior to re-entry to the study unit for the second inpatient stay.
Marijuana was administered using a standardized cued procedure: (1) “light the cigarette” (30 seconds), (2) “prepare” (5 seconds), (3) “inhale” (5 seconds), (4) “hold smoke in lungs” (10 seconds), and (5) “exhale.” Each subject smoked three puffs in this manner, with a 40-second interval between each puff.
Caloric intake was used as a surrogate measure for weight gain, but subjects were also weighed throughout the study (a measure which was not collected in the 2005 study by this group). Subjects received a box containing a variety of food and beverage items and were told to record consumption of these items following that day's administration of the test drug. Subjective measures included 0-100 point VAS for drug effect, good effect, bad effect, take drug again, drug liking, hungry, full, nauseated, thirsty, desire to eat. Neurocognitive measures and vital signs were monitored. Sleep was assessed using both the Nightcap sleep monitoring system and selected VAS measures related to sleep.
Both 5 and 10 mg dronabinol (
Ratings of good drug effect, high, drug liking, and desire to smoke again were significantly increased by 10 mg dronabinol and 2.0% and 3.9% THC marijuana doses compared to placebo. Both marijuana doses increased ratings of stimulated, friendly, and self-confident. The 10 mg dose of dronabinol increased ratings of concentration impairment, and the 2.0% THC marijuana dose increased ratings of anxious. Dry mouth was induced by 10 mg dronabinol (10 mg) and 2.0% THC marijuana. There were no changes in neurocognitive performance or objective sleep measures from administration of either cannabinoid. However, 3.9% THC marijuana increased subjective ratings of sleep.
The authors conclude that both dronabinol and smoked marijuana increase caloric intake and produce weight gain in HIV-positive patients. However, it is possible that the low degree of cognitive impairment reported in this study may reflect the development of tolerance to cannabinoids in this subject population, since all individuals had current histories of chronic marijuana use. This study produced positive results suggesting that marijuana should be studied further as a treatment for appetite stimulation in HIV patients.
Only one randomized, double-blind, placebo-controlled Phase 2 study examined the effects of smoked marijuana on spasticity in MS.
This study was conducted by Corey-Bloom et al. (2012) and is entitled, “Smoked cannabis for spasticity in multiple sclerosis: A randomized, placebo-controlled trial”. The subjects were 30 patients with MS-associated spasticity and had moderate increase in tone (score ≥ 3 points on the modified Ashworth scale). Participants were allowed to continue other MS medications, with the exception of benzodiazepines. Eighty percent of subjects had a history of marijuana use and 33% had used marijuana within the previous year.
Subjects participated in two 3-day test sessions, with an 11 day washout period. During each test session they smoked a 4.0% THC marijuana cigarette once per day or a placebo cigarette once per day. Smoking occurred through a standardized cued-puff procedure: (1) Inhalation for 5 seconds, (2) breath-hold and exhalation for 10 seconds, (3) pause between puffs for 45 seconds. Subjects completed an average of four puffs per cigarette.
The primary outcome measure was change in spasticity on the modified Ashworth scale. Additionally, subjects were assessed using a VAS for pain, a timed walk, and cognitive tests (Paced Auditory Serial Addition Test) and AEs.
Treatment with 4.0% THC marijuana reduced subject scores on the modified Ashworth scale by an average of 2.74 points more than placebo (
7 subjects did not complete the study due to adverse events (two subjects felt uncomfortably “high”, two had dizziness and one had fatigue). Of those 7 subjects who withdrew, 5 had little or no previous experience with marijuana. When the data were re-analyzed to include these drop-out subjects, with the presumption they did not have a positive response to treatment, the effect of marijuana was still significant on spasticity.
The authors conclude that smoked marijuana had usefulness in reducing pain and spasticity associated with MS. It is concerning that marijuana-naïve subjects dropped out of the study because they were unable to tolerate the psychiatric AEs induced by marijuana. The authors suggest that future studies should examine whether different doses can result in similar beneficial effects with less cognitive impact. However, the current study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for spasticity in MS patients.
Tashkin et al. (1974) examined bronchodilation in 10 subjects with bronchial asthma in the study entitled, “Acute Effects of Smoked Marijuana and Oral Δ
The study consisted of four test sessions with an interval of at least 48 hours between sessions. On two test sessions subjects smoked 7 mg/kg of body weight of either marijuana, with 2% THC concentration by weight, or placebo marijuana. During the other two test sessions, subjects ingested capsules with either 15mg of synthetic THC or placebo. Marijuana was administered using a uniform smoking technique: subjects inhaled deeply for 2-4 seconds, held smoke in lungs for 15 seconds, and resumed normal breathing for approximately 5 seconds. The author did not provide a description of the number of puffs taken at any smoking session. The authors state that the smoking procedure was repeated until the cigarette was consumed, which took approximately 10 minutes.
The outcome measure used was specific airway conductance (SGaw), as calculated using measurements of thoracic gas volume (TGV) and airway resistance (Raw) using a variable-pressure body plethysmograph. Additionally, an assessment of degree of intoxication was administered only to those subjects reporting previous marijuana use. This assessment consisted of subjects rating “how `high' they felt” on a scale of 0-7, 7 representing “the `highest' they had ever felt after smoking marijuana”.
Marijuana produced a significant increase of 33-48% in average SGaw compared to both baseline and placebo (P < 0.05). This significant increase in SGaw lasted for at least 2 hours after administration. The average TGV significantly decreased by 4-13% compared to baseline and placebo (P < 0.05). The author stated that all subjects reported feelings of intoxication after marijuana administration.
The authors conclude that marijuana produced bronchodilation in clinically stable asthmatic subjects with minimal to moderate bronchospasms. Study limitations include: inclusion of subjects with varying severity of asthmatic symptoms, use of SGaw to measure lung responses to marijuana administration, and administration of smoke to asthmatic subjects. Smoke delivers a number of harmful substances and is not an optimal delivery symptom, especially for asthmatic patients. FEV1 via spirometry is the gold standard to assess changes in lung function, pre and post asthma treatment, by pharmacotherapy. SGaw has been shown to be a valid tool in bronchoconstriction lung assessment; however, since the FEV1 method was not utilized, it is unclear whether these results would correlate if the FEV1 method had been employed.
Two randomized, double-blind, placebo-controlled Phase 2 clinical studies examined smoked marijuana in glaucoma (Crawford and Merritt, 1979; Merritt et al., 1980). In both studies, intraocular pressure (IOP) was significantly reduced 30 minutes after smoking marijuana. Maximal effects occurred 60-90 minutes after smoking, with IOP returning to baseline within 3-4 hours. These two studies were included in the 1999 IOM report on the medical uses of marijuana. Because our independent analysis of these studies concurred with the conclusions from the 1999 IOM report, these studies will not be discussed in further detail in this review. No recent studies have been conducted examining the effect of inhaled marijuana on IOP in glaucoma patients. This lack of recent studies may be attributed to the conclusions made in the 1999 IOM report that while cannabinoids can reduce intraocular pressure (IOP), the therapeutic effects require high doses that produce short-lasting responses, with a high degree of AEs. This high degree of AEs means that the potential harmful effects of chronic marijuana smoking may outweigh its modest benefits in the treatment of glaucoma.
Of the eleven randomized, double-blind, placebo-controlled Phase 2 clinical studies that met the criteria for review (see Sections 2.2 and 2.3), ten studies administered marijuana through smoking, while one study utilized marijuana vaporization. In these eleven studies, there were five different therapeutic indications: Five examined chronic neuropathic pain, two examined appetite stimulation in HIV patients, two examined glaucoma, one examined spasticity in MS, and one examined asthma.
There are limited conclusions that can be drawn from the data in these published studies evaluating marijuana for the treatment of different therapeutic indications. The analysis relied on published studies, thus information available about protocols, procedures, and results were limited to documents published and widely available in the public domain. The published studies on medical marijuana are effectively proof-of-concept studies. Proof-of-concept studies provide preliminary evidence on a proposed hypothesis regarding a drug's effect. For drugs under development, the effect often relates to a short-term clinical outcome being investigated. Proof-of-concept studies serve as the link between preclinical studies and dose ranging clinical studies. Therefore, proof-of-concept studies are not sufficient to demonstrate efficacy of a drug because they provide only preliminary information about the effects of a drug. Although these studies do not provide evidence that marijuana is effective in treating a specific, recognized disorder, these studies do support future larger well-controlled studies to assess the safety and efficacy of marijuana for a specific medical indication. Overall, the conclusions below are preliminary, based on very limited evidence.
In subjects with chronic neuropathic pain who are refractory to other pain treatments, five proof-of-concept studies produced positive results regarding the use of smoked marijuana for analgesia. However, the subjects in these studies continued to use their current analgesic drug regime, and thus no conclusions can be made regarding the potential efficacy of marijuana for neuropathic pain in patients not taking other analgesic drugs. Subjects also had numerous forms of neuropathic pain, making it difficult to identify whether a specific set of symptoms might be more responsive to the effects of marijuana. It is especially concerning that some marijuana-naïve subjects had intolerable psychiatric responses to marijuana exposure at analgesic doses.
In subjects who were HIV-positive, two proof-of-concept studies produced positive results with the use of both dronabinol and smoked marijuana to increase caloric intake and produce weight gain in HIV-positive patients. However, the amount of THC in the marijuana tested in these studies is four times greater than the dose of dronabinol typically tested for appetite stimulation (10 mg vs. 2.5 mg; Haney et al., 2005). Thus, it is possible that the low degree of AEs reported in this study may reflect the development of tolerance to cannabinoids in this patient population, since all individuals had current histories of chronic marijuana use. Thus, individuals with little prior exposure to marijuana may not respond similarly and may not be able to tolerate sufficient marijuana to produce appetite stimulation.
In subjects with MS, a proof of concept study produced positive results using smoked marijuana as a treatment for pain and symptoms associated with treatment-resistant spasticity. The subjects in this study continued to take their current medication regiment, and thus no conclusions can be made regarding the potential efficacy of marijuana when taken on its own. It is also concerning that marijuana-naïve subjects dropped out of the study because they were unable to tolerate the psychiatric AEs induced by marijuana. The authors suggest that future studies should examine whether different doses can result in similar beneficial effects with less cognitive impact.
In subjects with clinically stable asthma, a proof of concept study produced positive results of smoked marijuana producing bronchodilation. However, in this study marijuana was administered at rest and not while experiencing bronchospasms. Additionally, the administration of marijuana through smoking introduces harmful and irritating substances to the subject, which is undesirable especially in asthmatic patients. Thus the results suggest marijuana may have bronchodilator effects, but it may also have undesirable adverse effects in subjects with asthma.
As noted in Sections 3.5, the two studies that evaluated smoked marijuana for glaucoma were conducted decades ago, and they have been thoroughly evaluated in the 1999 IOM report. The 1999 IOM report concludes that while the studies with marijuana showed positive results for reduction in IOP, the effect is short-lasting, requires a high dose, and is associated with many AEs. Thus, the potential harmful effects may outweigh any modest benefit of marijuana for this condition. We agree with the conclusions drawn in the 1999 IOM report.
The positive results reported by the studies discussed in this review support the conduct of more rigorous studies in the future. This section discusses methodological challenges that have occurred in clinical studies with smoked marijuana. These design issues should be addressed when larger-scale clinical studies are conducted to ensure that valid scientific data are generated in studies evaluating marijuana's safety and efficacy for a particular therapeutic use.
The ability for results from a clinical study to be generalized to a broader population is reliant on having a sufficiently large study sample size. However, as noted above, all of the 11 studies reviewed in this document were early Phase 2 proof of concept studies for efficacy and safety. Thus, the sample sizes used in these studies were inherently small, ranging from 10 subjects per treatment group (Tashkin et al., 1974; Haney et al., 2007) to 25 subjects per treatment group (Abrams et al., 2007). These sample sizes are statistically inadequate to support a showing of safety or efficacy. FDA's recommendations about sample sizes for clinical trials can be found in the
Dose standardization is critical for any clinical study in order to ensure that each subject receives a consistent exposure to the test drug. The
In most marijuana studies discussed in this review, investigators use a standardized cued smoking procedure. In this procedure, a subject is instructed to inhale marijuana smoke for 5 seconds, hold the smoke in the lungs for 10 seconds, exhale and breathe normally for 40 seconds. This process is repeated to obtain the desired dose of the drug. However, this procedure may not lead to equivalent exposure to marijuana and its constituent cannabinoids, based on several factors:
• Intentional or unintentional differences in the depth of inhalation may change the amount of smoke in the subject's lungs.
• Smoking results in loss from side stream smoke, such that the entire dose is not delivered to the subject.
• There may be differences in THC concentration along the length of a marijuana cigarette. According to Tashkin et al. (1991), the area of the cigarette closest to the mouth tends to accumulate a higher concentration of THC, but this section of the cigarette is not smoked during a study.
For example, Wilsey et al. (2008) used this standardized smoking procedure. The reported mean (range) of marijuana cigarettes consumed was 550 mg (200-830mg) for the low strength marijuana (3.5% THC) and 490 mg (270-870mg) for the high strength marijuana (7% THC). This wide range of amounts of marijuana cigarette smoked by the individual subjects, even with standardized smoking procedure and controlled number of puffs, supports the issues with delivering consistent doses with smoke marijuana.
In other marijuana studies that do not use a cued smoking procedure, subjects are simply told to smoke the marijuana cigarette over a specific amount of time (usually 10 minutes) without further instruction (Crawford and Merritt, 1979; Merritt et al., 1980; Ellis et al., 2009). The use of a nonstandardized procedure may lead to non-equivalent exposures to marijuana and its constituent cannabinoids between subjects because of additional factors that are not listed above, such as:
• Differences in absorption and drug response if subjects (especially marijuana-naïve ones) are not instructed to hold marijuana smoke in their lungs for a certain period of time.
• Prolonged periods between puffs may increase loss to side stream smoke.
• Subjects may attempt to smoke the marijuana cigarette in the way they would smoke a tobacco cigarette, which relies primarily on short, shallow puffs.
In both standardized and non-standardized smoking procedures, subjects may seek to control the dose of THC through self-titration (Crawford and Merritt, 1979; Merritt et al., 1980; Tashkin et al., 1974; Abrams et al., 2007; Ellis et al., 2009). Self-titration involves an individual moderating the amount of marijuana smoke inhaled over time in order to obtain a preferred level of psychoactive or clinical response. The ability of an individual to self-titrate by smoking is one reason given by advocates of “medical marijuana” in support of smoking of marijuana rather than through its ingestion via edibles. However, for research purposes, self-titration interferes with the ability to maintain consistent dosing levels between subjects, and thus, valid comparisons between study groups.
All of these factors can make the exact dose of cannabinoids received by a subject in a marijuana study difficult to determine with accuracy. Testing whether plasma levels of THC or other cannabinoids are similar between subjects following the smoking procedure would establish whether the procedure is producing appropriate results. Additionally, studies could be conducted to determine if vaporization can be used to deliver consistent doses of cannabinoids from marijuana plant material. Specifically, vaporization devices that involve the collection of vapors in an enclosed bag or chamber may help with delivery of consistent doses of marijuana. Thus, more information could be collected on whether vaporization is comparable to or different than smoking in terms of producing similar plasma levels of THC in subjects using identical marijuana plant material.
The studies that were reviewed administered the drug for short durations lasting no longer than 5 days (Abrams et al., 2007; Ellis et al., 2009; Ware et al., 2010). Thus all studies examined the short-term effect of marijuana administration for therapeutic purposes. However, many of the medical conditions that have been studied are persistent or expected to last the rest of a patient's life. Therefore, data on chronic exposure to smoked marijuana in clinical studies is needed. In this way, more information will be available regarding whether tolerance, physical dependence, or specific adverse events develop over the course of time with continuing use of therapeutic marijuana.
As has been pointed out by the IOM and other groups, smoking is not an optimum route of administration for marijuana-derived therapeutic drug products, primarily because introducing the smoke from a burnt botanical substance into the lungs of individuals with a disease state is not recommended when their bodies may be physically compromised. The 1999 IOM report on medicinal uses of marijuana noted that alternative delivery methods offering the same ability of dose titration as smoking marijuana will be beneficial and may limit some of the possible long-term health consequences of smoking marijuana. The primary alternative to smoked marijuana is vaporization, which can reduce exposure to combusted plant material containing cannabinoids. The only study to use vaporization as the delivery method was Wilsey et al. (2013). The results from Wilsey et al. (2013) showed a similar effect of decreased pain as seen in the other studies using smoking as the delivery method (Ware et al., 2010; Wilsey et al., 2008). This similar effect of decrease pain supports vaporization as a possibly viable route to administer marijuana in research, while potentially limiting the risks associated with smoking.
An adequate and well-controlled clinical study involves double-blinding, where both the subjects and the investigators are unable to tell the difference between the test treatments (typically consisting of at least a test drug and placebo) when they are administered. All of the studies reviewed in this document administered study treatments under double-blind conditions and thus were considered to have an appropriate study design.
However, even under the most rigorous experimental conditions, blinding can be difficult in studies with smoked marijuana because the rapid onset of psychoactive effects readily distinguishes active from placebo marijuana. The presence of psychoactive effects also occurs with other drugs. However, most other drugs have a similar psychoactive effect with substances with similar mechanisms of actions. These substances can be used as positive controls to help maintain blinding to the active drug being tested. Marijuana on the other hand, has a unique set of psychoactive effects which makes the use of appropriate positive controls difficult (Barrett et al., 1995). However, two studies did use Dronabinol as a positive control drug to help maintain blinding (Haney et al., 2005; Haney et al., 2007).
When blinding is done using only placebo marijuana, the ability to distinguish active from placebo marijuana may lead to expectation bias and an alteration in perceived responsivity to the therapeutic outcome measures. With marijuana-experienced subjects, for example, there may be an early recognition of the more subtle cannabinoid effects that can serve as a harbinger of stronger effects, which is less likely to occur with marijuana-naïve subjects. To reduce this possibility, investigators have tested doses of marijuana other than the one they were interested in experimentally to maintain the blind (Ware et al., 2010).
Blinding can also be compromised by differences in the appearance of marijuana plant material based on THC concentration. Marijuana with higher concentrations of THC tends to be heavier and seemingly darker, with more “tar-like” substance. Subjects who have experience with marijuana have reported being able to identify marijuana from placebo cigarettes by sight alone when the plant material in a cigarette was visible (Tashkin et al., 1974; Ware et al., 2010). Thus, to maintain a double-blind design, many studies obscure the appearance of plant material by closing both ends of the marijuana cigarette and placing it in in an opaque plastic tube.
While none of these methods to secure blinding may be completely effective, it is important to reduce bias as much as possible to produce consistent results between subjects under the same experimental conditions.
Marijuana use histories in test subjects may influence outcomes, related to both therapeutic responsivity and psychiatric AEs. Marijuana-naïve subjects may also experience a marijuana drug product as so aversive that they would not want to use the drug product. Thus, subjects' prior experience with marijuana may affect the conduct and results of studies.
Most of the studies reviewed in this document required that subjects have a history of marijuana use (see tables in Appendix that describe specific requirements for each study). However, in studies published in the scientific literature, the full inclusion criteria with
The varying histories of use might affect everything from scores on adverse event measures, safety measures, or efficacy measures. Additionally, varying amounts of experience can impact cognitive effect measures assessed during acute administration studies. For instance, Schreiner and Dunn (2012) contend cognitive deficits in heavy marijuana users continue for approximately 28 days after cessation of smoking. Studies requiring less than a month of abstinence prior to the study may still see residual effects of heavy use at baseline and after placebo marijuana administration, thus showing no significant effects on cognitive measures. However, these same measurements in occasional or naïve marijuana users may demonstrate a significant effect after acute marijuana administration. Therefore, the amount of experience and the duration of abstinence of marijuana use are important to keep in mind when analyzing results for cognitive and other adverse event measures. Lastly, a study population with previous experience with marijuana may underreport the incidence and severity of adverse events. Because most studies used subjects with prior marijuana experience, we are limited in our ability to generalize the results, especially for safety measures, to marijuana naïve populations.
Five of 11 studies reviewed in this document included both marijuana-naïve and marijuana-experienced subjects (Corey-Bloom et al., 2012; Ellis et al., 2009; Ware et al., 2010; Merritt et al., 1980; Tashkin et al., 1974). Since the number of marijuana-naïve subjects in these studies was low, it was not possible to conduct a separate analysis compared to experienced users. However, systematically evaluating the effect of marijuana experience on study outcomes is important, since many patients who might use a marijuana product for a therapeutic use will be marijuana-naïve.
Research shows that marijuana-experienced subjects have a higher ability to tolerate stronger doses of oral dronabinol than marijuana-naïve subjects (Haney et al., 2005). Possibly, this increased tolerance is also the case when subjects smoke or vaporize marijuana. Thus, studies could be conducted that investigate the role of marijuana experience in determining tolerability of and responses to a variety of THC concentrations in marijuana.
For safety reasons, all clinical studies have inclusion and exclusion criteria that restrict the participation of individuals with certain medical conditions. For studies that test marijuana, these criteria may be based on risks associated with exposure to smoked material and the effects of THC. Thus, most studies investigating marijuana require that subjects qualify for the study based on restrictive symptom criteria such that individuals do not have other symptoms that may be known to interact poorly with cannabinoids.
Similarly, clinical studies with marijuana typically exclude individuals with cardiac or pulmonary problems, as well as psychiatric disorders. These exclusion criteria are based on the well-known effects of marijuana smoke to produce increases in heart rate and blood pressure, lung irritation, and the exacerbation of psychiatric disturbances in vulnerable individuals. Although these criteria are medically reasonable for research protocols, it is likely that future marijuana products will be used in patients who have cardiac, pulmonary or psychiatric conditions. Thus, individuals with these conditions should be evaluated, whenever possible.
Additionally, all studies reviewed in this document allowed the subjects to continue taking their current regimen of medications. Thus all results evaluated marijuana as an adjunct treatment for each therapeutic indication.
A common problem in clinical research is the limited number of females who participate in the studies. This problem is present in the 11 studies reviewed in this document, in which one study did not include any female subjects (Ellis et al., 2009), and three studies had a low percentage of female subjects (Abrams et al., 2007; Haney et al., 2005; Haney et al., 2007). However, each of these four studies investigated an HIV-positive patient population, where there may have been a larger male population pool from which to recruit compared to females.
Since there is some evidence that the density of CB1 receptors in the brain may vary between males and females (Crane et al., 2012), there may be differing therapeutic or subjective responsivity to marijuana. Studies using a study population that is equal parts male and female may show whether and how the effects of marijuana differ between male and female subjects.
On November 30, 2011, Governors Lincoln D. Chafee of Rhode Island and Christine O. Gregoire of Washington submitted a petition to the Drug Enforcement Administration (DEA) to initiate proceedings for a repeal of the rules or regulations that place marijuana
1. Cannabis has accepted medical use in the United States;
2. Cannabis is safe for use under medical supervision;
3. Cannabis for medical purposes has a relatively low potential for abuse, especially in comparison with other schedule II drugs.
The DEA accepted this petition for filing on January 30, 2012.
The Attorney General may by rule transfer a drug or other substance between schedules of the CSA if she finds that such drug or other substance has a potential for abuse, and makes the findings prescribed by 21 U.S.C. 812(b) for the schedule in which such drug is to be placed. 21 U.S.C. 811(a)(1). The Attorney General has delegated this responsibility to the Acting Administrator of the DEA. 28 CFR 0.100(b).
In accordance with 21 U.S.C. 811(b), after gathering the necessary data, the DEA submitted the petition and necessary data to the Department of Health and Human Services (HHS) on June 11, 2013, and requested that HHS provide a scientific and medical evaluation and scheduling recommendation for marijuana. In documents dated June 3 and June 25, 2015, the acting Assistant Secretary for Health of the HHS
Before initiating proceedings to reschedule a substance, the CSA requires the Acting Administrator to determine whether the HHS scheduling recommendation, scientific and medical evaluation, and “all other relevant data” constitute substantial evidence that the drug should be rescheduled as proposed. 21 U.S.C. 811(b). The Acting Administrator must determine whether there is substantial evidence to conclude that the drug meets the criteria for placement in another schedule based on the criteria set forth in 21 U.S.C. 812(b). The CSA requires that both the DEA and the HHS consider the eight factors specified by Congress in 21 U.S.C. 811(c). This document lays out those considerations and is organized according to the eight factors. As DEA sets forth in detail below, the evidence shows:
1.
2.
3.
4.
5.
6.
7.
8.
As specified in 21 U.S.C. 812(b)(1), in order for a substance to be placed in schedule I, the Acting Administrator must find that:
A. The drug or other substance has a high potential for abuse.
B. The drug or other substance has no currently accepted medical use in treatment in the United States.
C. There is a lack of accepted safety for use of the drug or other substance under medical supervision.
To be classified in another schedule under the CSA (
A drug that is the subject of an approved new drug application (NDA) or abbreviated new drug application (ANDA) under Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355), is considered to have a currently accepted medical use in treatment in the United States for purposes of the CSA. The HHS stated in its review, however, that FDA has not approved any NDA for marijuana for any indication.
In the absence of NDA or ANDA approval, DEA has established a five-element test for determining whether the drug has a currently accepted medical use in treatment in the United States. Under this test, a drug will be considered to have a currently accepted medical use only if the following five elements are satisfied:
1. The drug's chemistry is known and reproducible;
2. There are adequate safety studies;
3. There are adequate and well-controlled studies proving efficacy;
4. The drug is accepted by qualified experts; and
5. The scientific evidence is widely available.
As discussed in Factor 3, below, HHS concluded, and DEA agrees, that the scientific evidence is insufficient to demonstrate that marijuana has a currently accepted medical use under the five-element test. The evidence was insufficient in this regard also when the DEA considered petitions to reschedule marijuana in 1992 (57 FR 10499),
The limited existing clinical evidence is not adequate to warrant rescheduling of marijuana under the CSA. To the contrary, the data in this scheduling review document show that marijuana continues to meet the criteria for schedule I control under the CSA for the following reasons:
1. Marijuana has a high potential for abuse.
2. Marijuana has no currently accepted medical use in treatment in the United States.
3. Marijuana lacks accepted safety for use under medical supervision.
Marijuana is the most commonly abused illegal drug in the United States. It is also the most commonly used illicit drug by high school students in the United States. Further, marijuana is the most frequently identified drug by state, local and federal forensic laboratories. Marijuana's main psychoactive ingredient, Δ
The HHS has concluded in its document, “Basis for the Recommendation for Maintaining Marijuana in Schedule I of the Controlled Substances Act,” that marijuana has a high potential for abuse. The finding of “abuse potential” is critical for control under the Controlled Substances Act (CSA). Although the term is not defined in the CSA, guidance in determining abuse potential is provided in the legislative history of the Act (Comprehensive Drug Abuse Prevention and Control Act of 1970, H.R. Rep. No. 91-1444, 91st Cong., Sess. 2 (1970), reprinted in 1970 U.S.C.C.A.N. 4566, 4603). Accordingly, the following items are indicators that a drug or other substance has potential for abuse:
•
•
•
•
Of course, evidence of actual abuse of a substance is indicative that a drug has a potential for abuse.
In its recommendation, the HHS analyzed and evaluated data on marijuana as applied to each of the above four criteria. The analysis presented in the recommendation (HHS, 2015) is discussed below:
The HHS stated that some individuals are taking marijuana in amounts sufficient to create a hazard to their health and to the safety of other individuals and the community. Data from national databases on actual abuse of marijuana support the idea that a large number of individuals use marijuana. In its recommendation (HHS, 2015), the HHS presented data from the National Survey on Drug and Health (NSDUH) of the Substance Abuse and Mental Health Services Administration (SAMHSA) and the Monitoring the Future (MTF) survey of the National Institute on Drug Abuse (NIDA), and the DEA has since updated this information. The most recent data from SAMHSA's NSDUH in 2014 reported that marijuana was the most used illicit drug. Among Americans aged 12 years and older, an estimated 22.2 million Americans used marijuana within the past month according to the 2014 NSDUH. In 2004, an estimated 14.6 million individuals reported using marijuana within the month prior to the study. The estimated rates in 2014 thus reflect an increase of approximately 7.6 million individuals over a 10-year period. According to the 2013 NSDUH report, an estimated 19.8 million individuals reported using marijuana. Thus, over a period of one year (2013 NSDUH-2014 NSDUH), there was an estimated increase of 2.4 million individuals in the United States using marijuana.
The results from the 2015 Monitoring the Future survey of 8th, 10th, and 12th grade students indicate that marijuana was the most widely used illicit drug in these age groups. Current monthly use was 6.5% of 8th graders, 14.8% of 10th graders, and 21.3% of 12th graders. The Treatment Episode Data Set (TEDS) in 2013 reported that marijuana abuse was the primary factor in 16.8 percent of non-private substance-abuse treatment facility admissions. In 2011, SAMHSA's Drug Abuse Warning Network (DAWN) reported that marijuana was mentioned in 36.4% (455,668 out of approximately 1.25 million) of illicit drug-related Emergency Department (ED) visits.
Data on the extent and scope of marijuana abuse are presented under Factors 4 and 5 of this analysis. Discussion of the health effects of marijuana is presented under Factor 2, and the assessment of risk to the public health posed by acute and chronic marijuana abuse is presented under Factor 6 of this analysis.
In accordance with the CSA, the only lawful source of marijuana in the United States is that produced and distributed for research purposes under the oversight of NIDA and in conformity with United States obligations under the Single Convention on Narcotic Drugs.
The DEA notes that the magnitude of the demand for illicit marijuana is evidenced by information from a number of databases presented under Factor 4. Briefly, marijuana is the most commonly used illegal drug in the United States. It is also the most commonly used illicit drug by American high schoolers. Marijuana is the most frequently identified drug in state, local, and federal forensic laboratories, with increasing amounts of both domestically grown and of illicitly smuggled marijuana.
Given that marijuana has long been the most widely trafficked and abused controlled substance in the United States, and that all aspects of such illicit activity are entirely outside of the closed system of distribution mandated by the CSA, it may well be the case that there is little thought given to diverting marijuana from the small supplies produced for legitimate research purposes. Thus, the lack of data indicating diversion of marijuana from legitimate channels to the illicit market is not indicative of a lack of potential for abuse of the drug.
The HHS stated that the FDA has not evaluated or approved an NDA or BLA for marijuana for any therapeutic indication. Consistent with federal law, therefore, an individual legitimately can take marijuana based on medical advice from a practitioner only by participating in research that is being conducted under an Investigational New Drug (IND) application. The HHS noted that there are several states as well as the District of Columbia which have passed laws allowing for individuals to use marijuana for purported “medical” use under certain circumstances, but data are not available yet to determine the number of individuals using marijuana under these state laws. Nonetheless, according to 2014 NSDUH data, 22.2 million American adults currently use marijuana (SAMHSA, 2015a). Based on the large number of individuals who use marijuana and the lack of an FDA-approved drug product, the HHS concluded that the majority of individuals using marijuana do so on their own initiative rather than by following medical advice from a licensed practitioner.
Marijuana and its primary psychoactive ingredient, Δ
The HHS stated that one approved, marketed drug product contains synthetic Δ
Marinol is a schedule III drug product containing synthetic Δ
Cesamet is a drug product containing the schedule II substance nabilone, a synthetic substance structurally related to Δ
In addition to the indicators suggested by the CSA's legislative history, data as to preclinical and clinical abuse liability studies, as well as actual abuse, including clandestine manufacture, trafficking, and diversion from legitimate sources, are considered in this factor.
Abuse liability evaluations are obtained from studies in the scientific and medical literature. There are many preclinical measures of a drug's effects that when taken together provide an accurate prediction of the human abuse liability. Clinical studies of the subjective and reinforcing effects in humans and epidemiological studies provide quantitative data on abuse liability in humans and some indication of actual abuse trends. Both preclinical and clinical studies have clearly demonstrated that marijuana and Δ
Preclinical and most clinical abuse liability studies have been conducted with the psychoactive constituents of marijuana, primarily Δ
Δ
The drug discrimination paradigm is used as an animal model of human subjective effects (Solinas et al., 2006) and is a method where animals are able to indicate whether a test drug is able to produce physical or psychological changes similar to a known drug of abuse. Animals are trained to press one bar (in an operant chamber) when they receive a known drug of abuse and another bar when they receive a placebo. When a trained animal receives a test drug, if the drug is similar to the known drug of abuse, it will press the bar associated with the drug.
Discriminative stimulus effects of Δ
Laboratory animals including monkeys (McMahon et al., 2009), mice (McMahon et al., 2008), and rats (Gold et al., 1992) are able to discriminate cannabinoids from other drugs and placebo. The major active metabolite of Δ
Animal self-administration behavior associated with a drug is a commonly used method for evaluating if the drug produces rewarding effects and for predicting abuse potential (Balster, 1991; Balster and Bigelow, 2003). Drugs that are self-administered by animals are likely to produce rewarding effects in humans. As mentioned in the HHS review document, earlier attempts to demonstrate self-administration of Δ
Justinova et al. (2003) were able to demonstrate self-administration of Δ
Self-administration behavior with Δ
Conditioned place preference (CPP) is a behavioral assay where animals are given the opportunity to spend time in two distinct environments: one where they previously received a drug and one where they received a placebo. If the drug is reinforcing, animals in a drug-free state will choose to spend more time in the environment paired with the drug when both environments are presented simultaneously.
CPP has been demonstrated with Δ
In its scientific review (HHS, 2015), the HHS provided a list of common subjective psychoactive responses to cannabinoids based on information from several references (Adams and Martin, 1996; Gonzalez, 2007; Hollister, 1986;
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
The HHS mentioned that marijuana users prefer higher concentrations of the principal psychoactive component (Δ
Marijuana has also been recognized by scientific experts to have withdrawal symptoms (negative reinforcement) following moderate and heavy use. As discussed further in Factor 7, the DEA notes that the American Psychiatric Association's (APA) Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5) included a list of withdrawal symptoms following marijuana [cannabis] use (DSM-5, 2013).
Marijuana continues to be the most widely used illicit drug. Evidence of actual abuse can be defined by episodes/mentions in databases indicative of abuse/dependence. The HHS provided in its recommendation (HHS, 2015) information relevant to actual abuse of marijuana including data results from the National Survey on Drug Use and Health (NSDUH), a Monitoring the Future (MTF) survey, the Drug Abuse Warning Network (DAWN), and the Treatment Episode Data Set (TEDS). These data sources provide quantitative information on many factors related to abuse of a particular substance, including incidence and patterns of use, and profile of the abuser of specific substances. The DEA is providing updated information from these databases in this discussion. The DEA also includes data on trafficking and illicit availability of marijuana from DEA databases including the National Forensic Laboratory Information System (NFLIS) and the National Seizure System (NSS), formerly the Federal-wide Drug Seizure System (FDSS), as well as other sources of data specific to marijuana, including the Potency Monitoring Project and the Domestic Cannabis Eradication and Suppression Program (DCE/SP).
The National Survey on Drug Use and Health (NSDUH) is conducted annually by the Department of Health and Human Service's Substance Abuse and Mental Health Services Administration (SAMHSA). SAMHSA is the primary source of estimates of the prevalence and incidence of pharmaceutical drugs, illicit drugs, alcohol, and tobacco use in the United States. The survey is based on a nationally representative sample of the civilian, non-institutionalized population 12 years of age and older. The survey excludes homeless people who do not use shelters, active military personnel, and residents of institutional group quarters such as jails and hospitals.
According to the 2014 NSDUH report, marijuana was the most commonly used and abused illicit drug. That data showed that there were 22.2 million people who were past month users (8.4%) among those aged 12 and older in the United States. (Note: NSDUH figures on marijuana use include hashish use; the relative proportion of hashish use to marijuana use is very low.) Marijuana had the highest rate of past-year dependence or abuse in 2014. The NSDUH report estimates that 3.0 million people aged 12 or older used an illicit drug for the first time in 2014; a majority (70.3%) of these past year initiates reported that their first drug used was marijuana. Among those who began using illicit drugs in the past year, 65.6%, 70.3%, and 67.6% reported marijuana as the first illicit drug initiated in 2012, 2013, and 2014 respectively. In 2014, the average age of marijuana initiates among 12- to 49-year-olds was 18.5 years. These usage rates and demographics are relevant in light of the risks presented.
Marijuana had the highest rate of past year dependence or abuse of any illicit drug in 2014. The 2014 NSDUH report stated that 4.2 million persons were classified with substance dependence or abuse of marijuana in the past year (representing 1.6% of the total population aged 12 or older, and 59.0% of those classified with illicit drug dependence or abuse) based on criteria specified in the Diagnostic and Statistical Manual of Mental Disorders, 4th edition (DSM-IV).
Among past year marijuana users age 12 or older, 18.5% used marijuana on 300 or more days within the previous 12 months in 2014. This translates into 6.5 million people using marijuana on a daily or almost daily basis over a 12-month period, significantly more than the estimated 5.7 million daily or almost daily users in just the year before. Among past month marijuana users, 41.6% (9.2 million) used the drug on 20 or more days in the past month, a significant increase from the 8.1 million who used marijuana 20 days or more in 2013.
Monitoring the Future (MTF) is an ongoing study which is funded under a series of investigator-initiated competing research grants from the National Institute on Drug Abuse (NIDA). MTF tracks drug use trends among American adolescents in the 8th, 10th, and 12th grades. According to its 2015 survey results, marijuana was the most commonly used illicit drug, as was the case in previous years. Approximately 6.5% of 8th graders,
The Drug Abuse Warning Network (DAWN) is a public health surveillance system that monitors drug-related hospital emergency department (ED) visits to track the impact of drug use, misuse, and abuse in the United States. For the purposes of DAWN, the term “drug abuse” applies if the following conditions are met: (1) The case involved at least one of the following: use of an illegal drug, use of a legal drug contrary to directions, or inhalation of a non-pharmaceutical substance; and (2) the substance was used for one of the following reasons: Because of drug dependence, to commit suicide (or attempt to commit suicide), for recreational purposes, or to achieve other psychic effects. Importantly, many factors can influence the estimates of ED visits, including trends in overall use of a substance as well as trends in the reasons for ED usage. For instance, some drug users may visit EDs for life-threatening issues while others may visit to seek care for detoxification because they needed certification before entering treatment. Additionally, DAWN data do not distinguish the drug responsible for the ED visit from other drugs that may have been used concomitantly. As stated in a DAWN report, “Since marijuana/hashish is frequently present in combination with other drugs, the reason for the ED visit may be more relevant to the other drug(s) involved in the episode.”
In 2011, marijuana was involved in 455,668 ED visits out of 2,462,948 total ED visits involving all abuse or misuse in the United States and out of 1.25 million visits involving abuse or misuse of illicit drugs (excluding alcohol-related visits), as estimated by DAWN. This is lower than the number of ED visits involving cocaine (505,224) and higher than the number of ED visits involving heroin (258,482) and stimulants (
In young patients, marijuana is the illicit drug most frequently involved in ED visits, according to DAWN estimates, with 240.2 marijuana-related ED visits per 100,000 population ages 12 to 17, 443.8 per 100,000 population ages 18 to 20, and 446.9 per 100,000 population ages 21 to 24.
The Treatment Episode Data Set (TEDS) system is part of the SAMHSA Drug and Alcohol Services Information System and is a national census of annual admissions to state licensed or certified, or administratively tracked, substance abuse treatment facilities. The TEDS system contains information on patient demographics and substance abuse problems of admissions to treatment for abuse of alcohol and/or drugs in facilities that report to state administrative data systems. For this database, the primary substance of abuse is defined as the main substance of abuse reported at the time of admission. TEDS also allows for the recording of two other substances of abuse (secondary and tertiary).
In 2011, the TEDS system included 1,928,792 admissions to substance abuse treatment; in 2012 there were 1,801,385 admissions; and in 2013 there were 1,683,451 admissions. Marijuana/hashish was the primary substance of abuse for 18.3% (352,397) of admissions in 2011; 17.5% (315,200) in 2012; and 16.8% (281,991) in 2013. Of the 281,991 admissions for marijuana/hashish treatment in 2013, 24.3% used marijuana/hashish daily. Among those treated for marijuana/hashish as the primary substance in 2013, 27.4% were ages 12 to 17 years and 29.7% were ages 18 to 24 years. Those admitted for marijuana/hashish were mostly male (72.6%) and non-Hispanic (82.2%). Non-hispanic whites (43.2%) represented the largest ethnic group of marijuana admissions.
Data on marijuana seizures from federal, state, and local forensic laboratories have indicated that there is significant trafficking of marijuana. The National Forensic Laboratory System (NFLIS) is a program sponsored by the Drug Enforcement Administration's Office of Diversion Control. NFLIS systematically collects drug identification results and associated information from drug exhibits encountered by law enforcement and analyzed in federal, state, and local forensic laboratories. NFLIS is a comprehensive information system that includes data from 278 individual forensic laboratories that report more than 91% of the drug caseload in the U.S. NFLIS captures data for all drugs and chemicals identified and reported by forensic laboratories. More than 1,700 unique substances are represented in the NFLIS database.
Data from NFLIS showed that marijuana was the most frequently identified drug in federal, state, and local laboratories from January 2004 through December 2014. Marijuana accounted for between 29.47% and 34.84% of all drug exhibits analyzed annually during that time frame (Table 1).
Since 2004, the total number of reports of marijuana and the amount of marijuana encountered federally has remained high (see data from Federal-wide Drug Seizure System and Domestic Cannabis Eradication and Suppression Program below).
The Federal-wide Drug Seizure System (FDSS) contains information about drug seizures made within the jurisdiction of the United States by the Drug Enforcement Administration, the Federal Bureau of Investigation, United States Customs and Border Protection, and United States Immigration and Customs Enforcement. It also records maritime seizures made by the United States Coast Guard. Drug seizures made by other Federal agencies are included in the FDSS database when drug evidence custody is transferred to one of the agencies identified above. FDSS is now incorporated into the National Seizure System (NSS), which is a repository for information on clandestine laboratory and contraband (chemicals and precursors, currency, drugs, equipment and weapons). FDSS reports total federal drug seizures [in kilograms (kg)] of substances such as cocaine, heroin, MDMA, methamphetamine, and cannabis (marijuana and hashish). The yearly volume of cannabis seized (Table 2), consistently exceeding a thousand metric tons per year, shows that cannabis is very widely trafficked in the United States.
The University of Mississippi's Potency Monitoring Project (PMP), through a contract with the National Institute on Drug Abuse (NIDA), analyzes and compiles data on the Δ
The Domestic Cannabis Eradication and Suppression Program (DCE/SP) was established in 1979 to reduce the supply of domestically cultivated marijuana in the United States. The program was designed to serve as a partnership between federal, state, and local agencies. Only California and Hawaii were active participants in the program at its inception. However, by 1982 the program had expanded to 25 states and by 1985 all 50 states were participants. Cannabis is cultivated in remote locations and frequently on public lands and illicitly grown in all states. Data provided by the DCE/SP (Table 3) show that in the United States in 2014, there were 3,904,213 plants eradicated in outdoor cannabis cultivation areas compared to 2,597,798 plants in 2000. Significant quantities of marijuana were also eradicated from indoor cultivation operations. There were 396,620 indoor plants eradicated in 2014 compared to 217,105 eradicated in 2000.
The recent statistics from these various surveys and databases show that marijuana continues to be the most commonly used illicit drug, with considerable rates of heavy abuse and dependence. They also show that marijuana is the most readily available illicit drug in the United States.
(1) In Exhibit B, the petitioners compared the effects of marijuana to currently controlled schedule II substances and made repeated claims about the comparative effects.
The HHS noted that comparisons between marijuana and schedule II substances are difficult because of differences in the actions of different pharmacological classes of schedule II drugs in the CSA. The HHS notes that schedule II substances include stimulant-like drugs (
Furthermore, as noted by the HHS, many substances scheduled under the CSA are evaluated within the context of drug development using data submitted under a New Drug Application (NDA). However, the petitioners have not identified a specific indication for use of marijuana and therefore the HHS notes that an appropriate comparator based on indication cannot be identified.
(2) The petitioners indicated that the actual or relative potential of abuse of marijuana is low. The petitioners state, “
Under the CSA, for a substance to be placed in schedule II, III, IV, or V, it must have a currently accepted medical use in treatment in the United States.
Moreover, the petitioners failed to review the indicators of abuse potential, as discussed in the legislative history of the CSA. The petitioners did not use data on marijuana usage, diversion, psychoactive properties, and dependence in their evaluation of marijuana abuse potential. The HHS and the DEA discuss those indicators above in this factor. HHS's evaluation of the full range of data led HHS and DEA to conclude that marijuana has a high potential for abuse.
The petitioners, based on their review of a survey by Gore and Earleywine (2007), concluded that marijuana has a low abuse potential. Gore and Earleywine surveyed 746 mental health professionals and asked them to rate the addictiveness (based on a seven-point scale) of several drugs (heroin, nicotine, cocaine/crack, oxycodone, methamphetamine, amphetamine, caffeine, alcohol, and marijuana). The petitioners stated that the health professionals rated marijuana as least addictive of the drugs surveyed. The DEA notes that the survey cited by the petitioners is based on subjective opinions from health professionals.
(3) The petitioners mentioned that many of the cannabinoids in marijuana decrease the psychoactive effects of Δ
The HHS addressed this issue by indicating that the modulating effects of the other cannabinoids in marijuana on Δ
Marinol (dronabinol in sesame oil) was rescheduled from schedule II to schedule III on July 2, 1999 (64 FR 35928, DEA 1999). In assessing Marinol, HHS compared Marinol to marijuana on several aspects of abuse potential and found that major differences between the two, such as formulation, availability, and usage, contribute to differences in abuse potential. The psychoactive effects from smoking are generally more rapid and intense than those that occur through oral administration (HHS, 2015; Wesson and Washburn, 1990; Hollister and Gillespie, 1973). Therefore, as concluded by both the HHS and the DEA, the delayed onset of action and longer duration of action from an oral dose of Marinol may contribute in limiting the abuse potential of Marinol relative to marijuana, which is most often smoked. The HHS also stated that the extraction and purification of dronabinol from the encapsulated sesame oil mixture of Marinol is highly complex and difficult, and that the presence of sesame oil mixture may preclude the smoking of Marinol-laced cigarettes.
Furthermore, marijuana and Marinol show significant differences in actual abuse and illicit trafficking. There have been no reports of abuse, diversion, or public health risks due to Marinol. In contrast, 22.2 million American adults report currently using marijuana (SAMHSA, 2015a). The DEA database, NFLIS, showed that marijuana was the most frequently identified drug in state and local forensic laboratories from January 2001 to December 2014 and indicates the high availability of marijuana. The differences in composition, actual abuse, and diversion contribute to the differences in scheduling between marijuana and Marinol.
Additionally, the FDA approved a New Drug Application (NDA) for Marinol, indicating a legitimate medical use for Marinol in the United States and allowing for Marinol to be rescheduled into schedule II and subsequently into schedule III of the CSA. The HHS mentioned that marijuana and Marinol differ on a wide variety of factors and these differences are major reasons for differential scheduling of marijuana and Marinol. Marijuana, as discussed more fully in Factors 3 and 6, does not have a currently accepted medical use in the United States, is highly abused, and has a lack of accepted safety.
The HHS stated that there are large amounts of scientific data on the neurochemistry, mechanistic effects, toxicology, and pharmacology of marijuana. A scientific evaluation, as conducted by the HHS and the DEA, of marijuana's neurochemistry, human and animal behavioral pharmacology, central nervous system effects, and other pharmacological effects (
Marijuana contains numerous constituents such as cannabinoids that have a variety of pharmacological actions. The petition defined marijuana as including all cannabis cultivated strains. The HHS stated that different marijuana samples derived from various cultivated strains may differ in their chemical constituents including Δ
The primary site of action for cannabinoids such as Δ
CB1 receptors are primarily found in the central nervous system and are located mainly in the basal ganglia, hippocampus and cerebellum of the brain (Howlett et al., 2004). CB1 receptors are also located in peripheral tissues such as the immune system (De Petrocellis and Di Marzo, 2009), but the concentration of CB1 receptors there is considerably lower than in the central nervous system (Herkenham et al., 1990; 1992). CB2 receptors are found primarily in the immune system and predominantly in B lymphocytes and natural killer cells (Bouaboula et al., 1993). CB2 receptors are also found in the central nervous system, primarily in the cerebellum and hippocampus (Gong et al., 2006).
Two endogenous ligands to the cannabinoid receptors, anandamide and arachidonyl glycerol (2-AG), were identified in 1992 (Devane et al., 1992) and 1995 (Mechoulam et al., 1995), respectively. Anandamide is a low-efficacy agonist (Brievogel and Childers, 2000) and 2-AG is a high efficacy agonist (Gonsiorek et al., 2000) to the cannabinoid receptors. These endogenous ligands are present in both the central nervous system and in the periphery (HHS, 2015).
Δ
Animal abuse potential studies (drug discrimination, self-administration, conditioned place preference) are discussed more fully in Factor 1. Briefly, it was consistently demonstrated that Δ
The clinical psychoactive effects of marijuana are discussed more fully in Factor 1. Briefly, the psychoactive effects from marijuana use are considered pleasurable and associated with drug-seeking or drug-taking (HHS, 2015; Maldonado, 2002). Further, it was noted by HHS that marijuana users prefer higher concentrations of the principal psychoactive component (Δ
Studies have evaluated psychoactive effects of THC in the presence of high CBD, CBC, or CBN ratios. Even though some studies suggest that CBD may decrease some of Δ
In one study (Ilan et al., 2005), the authors calculated the naturally occurring concentrations of CBC and CBD in marijuana cigarettes with either 1.8 or 3.6% Δ
The HHS also referred to a study with Δ
Several factors may influence marijuana's behavioral effects including the duration (chronic or short term), frequency (daily, weekly, or occasionally), and amount of use (heavy or moderate). Researchers have examined how long behavioral impairments persist following chronic marijuana use. These studies used self-reported histories of exposure duration, frequency, and amount of marijuana use, and administered several performance and cognitive tests at different time points following marijuana abstinence. According to HHS, behavioral impairments may persist for up to 28 days of abstinence in chronic marijuana users.
Psychoactive effects of marijuana can lead to behavioral impairment including cognitive decrements and decreased ability to operate motor vehicles (HHS, 2015). Block et al. (1992) evaluated cognitive measures in 48 healthy male subjects following smoking a marijuana cigarette that contained 2.57% or 19 mg Δ
Ramaekers et al. (2006) reported that in 20 recreational users of marijuana, acute administration of 250 µg/kg and 500 µg/kg Δ
As mentioned in the HHS document, some studies examined the persistence of the behavioral impairments immediately after marijuana administration. Some of marijuana's acute effects may still be present for at least 24 hours after the acute psychoactive effects have subsided. In a brief communication, Heishmann et al. (1990) reported that there were cognitive impairments (digit recall and arithmetic tasks) in two out of three experienced marijuana smokers for 24 hours after smoking marijuana cigarettes containing 2.57% Δ
Persistence of behavioral impairments following repeated and chronic use of marijuana has also been investigated and was reviewed in the HHS document (HHS, 2015). In particular, researchers examined how long behavioral impairments last following chronic marijuana use. In studies examining persistence of effects in chronic and heavy marijuana users, there were significant decrements in cognitive and motor function tasks in all studies of up to 27 days, and in most studies at 28 days (Solowij et al., 2002; Messinis et al., 2006; Lisdahl and Price, 2012; Pope et al., 2002; Bolla et al., 2002; Bolla et al., 2005). In studies that followed heavy marijuana users for longer than 28 days and up to 20 years of marijuana abstinence, cognitive and psychomotor impairments were no longer detected (Fried et al., 2005; Lyons et al., 2004; Tait et al., 2011). For example, Fried et al. (2005) reported that after 3 months of abstinence from marijuana, any deficits in intelligence (IQ), memory, and processing speeds following heavy marijuana use were no longer observed (Fried et al., 2005). In a meta-analysis that examined non-acute and long-lasting effects of marijuana, any deficits in neurocognitive performance that were observed within the first month
As mentioned in the HHS document (HHS, 2015), the intensity and persistence of neurological impairment from chronic marijuana use also may be dependent on the age of first use. In two separate smaller scale studies (less than 100 participants per exposure group), Fontes et al. (2011) and Gruber et al. (2012) compared neurological function in early onset (chronic marijuana use prior to age 15 or 16) and late onset (chronic marijuana use after age 15 or 16) heavy marijuana users and found that there were significant deficits in executive neurological function in early onset users which were not observed or were less apparent in late onset users. In a prospective longitudinal birth cohort study following 1,037 individuals (Meier et al., 2012), a significant decrease in IQ and neuropsychological performance was observed in adolescent-onset users and persisted even after abstinence from marijuana for at least one year. However, Meier et al. (2012) reported in there was no significant change in IQ in adult-onset users.
The HHS noted that there is some evidence that the severity of the persistent neurological impairments may also be due in part to the amount of marijuana usage. In the study mentioned above, Gruber et al. (2012) found that the early onset users consumed three times as much marijuana per week and used it twice as often as late onset users. Meier et al. (2012) reported in their study, mentioned above, that there was a correlation between IQ deficits in adolescent onset users and the increased amount of marijuana used.
In studies that examined effects of prenatal marijuana exposure, many of the pregnant women also used alcohol and tobacco in addition to marijuana. Even though other drugs were used in conjunction with marijuana, there is evidence of an association between heavy prenatal marijuana exposure and deficits in some cognitive function. There have been two prospective longitudinal birth cohort studies following individuals prenatally exposed to marijuana from birth until adulthood: The Ottawa Prenatal Prospective Study (OPPS; Fried et al., 1980), and the Maternal Health Practices and Child Development Project (MHPCD; Day et al., 1985). Both longitudinal studies report that heavy prenatal marijuana use is associated with decreased performance on tasks assessing memory, verbal and quantitative reasoning in 4-year-olds (Fried and Watkinson, 1990) and in 6 year olds (Goldschmidt et al., 2008). In subsequent studies with the OPPS cohort, deficits in sustained attention were reported in children ages 6 and 13-16 years (Fried et al., 1992; Fried, 2002) and deficits in executive neurological function were observed in 9- and 12-year-old children (Fried et al., 1998). DEA further notes that with the MHPCD cohort, follow-up studies reported an increased rate of delinquent behavior (Day et al., 2011) and decreased achievement test scores (Goldschmidt et al., 2012) at age 14. When the MHPCD cohort was followed to age 22, there was a marginal (
There has been extensive research to determine whether marijuana usage is associated with development of schizophrenia or other psychoses, and the HHS indicated that the available data do not suggest a causative link between marijuana and the development of psychosis (HHS, 2015; Minozzi et al., 2010). As mentioned in the HHS review (HHS, 2015), numerous large scale longitudinal studies demonstrated that subjects who used marijuana do not have a greater incidence of psychotic diagnoses compared to non-marijuana users (van Os et al., 2002; Fergusson et al., 2005; Kuepper et al., 2011). Further, the HHS commented that when analyzing the available data examining the association between marijuana and psychosis, it is critical to differentiate whether the patients in a study are already diagnosed with psychosis or if the individuals have a limited number of symptoms associated with psychosis without qualifying for a diagnosis of the disorder.
As mentioned by the HHS, some of the studies examining the association between marijuana and psychosis utilized non-standard methods to categorize psychosis and these methods did not conform to the criteria in the Diagnostic and Statistical Manual (DSM-5) or the International Classification of Diseases (ICD-10) and would not be appropriate for use in evaluating the association between marijuana use and psychosis. For example, researchers characterized psychosis as “schizophrenic cluster” (Maremmani et al., 2004), “subclinical psychotic symptoms” (van Gastel et al., 2012), “pre-psychotic clinical high risk” (van der Meer et al., 2012), and symptoms related to “psychosis vulnerability” (Griffith-Lendering et al., 2012).
The HHS discussed an early epidemiological study conducted by Andreasson et al. (1987), which examined the link between psychosis and marijuana use. In this study, about 45,000 18- and 19-year-old male Swedish subjects provided detailed information on their drug-taking history and 274 of these subjects were diagnosed with schizophrenia over a 14-year period (1969-1983). Out of the 274 subjects diagnosed with psychosis, 21 individuals (7.7%) had used marijuana more than 50 times, while 197 individuals (72%) never used marijuana. As presented by the authors (Andreasson et al., 1987), individuals who claimed to take marijuana on more than 50 occasions were 6 times more likely to be diagnosed with schizophrenia than those who had never consumed the drug. The authors concluded that marijuana users who are vulnerable to developing psychoses are at the greatest risk for schizophrenia. In a 35 year follow up to the subjects evaluated in Andreasson et al. (1987), Manrique-Garcia et al. (2012) reported similar findings. In the follow up study, 354 individuals developed schizophrenia. Of those, 32 individuals (9%) had used marijuana more than 50 times and were 6.3 times more likely to develop schizophrenia. 255 of the 354 individuals (72%) never used marijuana.
The HHS also noted that many studies support the assertion that psychosis from marijuana usage may manifest only in individuals already predisposed to development of psychotic disorders. Marijuana use may precede diagnosis of psychosis (Schimmelmann et al., 2011), but most reports indicate that prodromal symptoms of schizophrenia are observed prior to marijuana use (Schiffman et al., 2005). In a review examining gene-environmental interaction between marijuana exposure and the development of psychosis, it was concluded that there is some evidence to support that marijuana use may influence the development of psychosis but only for susceptible individuals (Pelayo-Teran et al., 2012).
Degenhardt et al. (2003) modeled the prevalence of schizophrenia against marijuana use across eight birth cohorts in individuals born during 1940 to 1979 in Australia. Even though there was an increase in marijuana use in the adult subjects over this time period, there was not an increase in diagnoses of psychosis for these same subjects. The authors concluded that use of marijuana may increase schizophrenia only in persons vulnerable to developing psychosis.
The HHS stated that acute use of marijuana causes an increase in heart rate (tachycardia) and may increase blood pressure (Capriotti et al., 1988; Benowitz and Jones, 1975). There is some evidence that associates the increased heart rate from Δ
Prolonged exposure to Δ
As stated in the HHS recommendation (HHS, 2015), marijuana exposure causes orthostatic hypotension (fainting-like feeling; sudden drop in blood pressure upon standing up) and tolerance can develop to this effect upon repeated, chronic exposure (Jones, 2002). Tolerance to orthostatic hypotension is potentially related to plasma volume expansion, but tolerance does not develop to supine hypotensive effects (Benowitz and Jones, 1975).
Marijuana smoking, particularly by those with some degree of coronary artery or cerebrovascular disease, poses risks such as increased cardiac work, increased catecholamines and carboxyhemoglobin, myocardial infarction and postural hypotension (Benowitz and Jones, 1981; Hollister, 1988; Mittleman et al., 2001; Malinowska et al., 2012). However, electrocardiographic changes were minimal after administration of large cumulative doses of Δ
The DEA notes two recent reports that reviewed several case studies on marijuana and cardiovascular complications (Panayiotides, 2015; Hackam, 2015). Panayiotides (2015) reported that approximately 25.6% of the cardiovascular cases from marijuana use resulted in death from data provided by the French Addictovigilance Network during the period of 2006-2010. Several case studies on marijuana usage and cardiovascular events were discussed and it was concluded that although a causal link cannot be established due to not knowing exact amounts of marijuana used in the cases and confounding variables, the available evidence supports a link between marijuana and cardiotoxicity. Hackham (2015) reviewed 34 case reports or case series reports of marijuana and stroke/ischemia in 64 stroke patients and reported that in 81% of the cases there was a temporal relationship between marijuana usage and stroke or ischemic event. The author concluded that collective analysis of the case reports supports a causal link between marijuana use and stroke.
The HHS stated that transient bronchodilation is the most typical respiratory effect of acute exposure to marijuana (Gong et al., 1984). In a recent longitudinal study, information on marijuana use and pulmonary data function were collected from 5,115 individuals over 20 years from 4 communities in the United States (Oakland, CA; Chicago, IL; Minneapolis, MN; Birmingham, AL) (Pletcher et al., 2012). Of the 5,115 individuals, 795 individuals reported use of only marijuana (without tobacco). The authors reported that occasional use of marijuana (7 joint-years for lifetime or 1 joint/day for 7 years or 1 joint/week for 49 years) does not adversely affect pulmonary function. Pletcher et al. (2012) further concluded that there is some preliminary evidence suggesting that heavy marijuana use may have a detrimental effect on pulmonary function, but the sample size of heavy marijuana users in the study was too small. Further, as mentioned in the HHS recommendation document (HHS, 2015), long-term use of marijuana may lead to chronic cough, increased sputum, as well as increased frequency of chronic bronchitis and pharyngitis (Adams and Martin, 1996; Hollister, 1986).
The HHS stated that the evidence that marijuana may lead to cancer of the respiratory system is inconsistent, with some studies suggesting a positive correlation while others do not (Lee and Hancox, 2011; Tashkin, 2005). The HHS noted a case series that reported lung cancer occurrences in three marijuana smokers (age range 31-37 years) with no history of tobacco smoking (Fung et al., 1999). Furthermore, in a case-control study (n = 173 individuals with squamous cell carcinoma of the head and neck; n = 176 controls; Zhang et al., 1999), prevalence of marijuana use was 9.7% in controls and 13.9% in cases and the authors reported that marijuana use may dose-dependently interact with mutagenic sensitivity, cigarette smoking, and alcohol use to increase risk associated with head and neck cancers (Zhang et al., 1999). However, in a large clinical study with 1,650 subjects, no positive correlation was found between marijuana use and lung cancer (Tashkin et al., 2006). This finding held true regardless of the extent of marijuana use when both tobacco use and other potential confounding factors were controlled. The HHS concluded that new evidence suggests that the effects of smoking marijuana on respiratory function and cancer are different from the effects of smoking tobacco (Lee and Hancox, 2011).
The DEA further notes the publication of recent review articles critically evaluating the association between marijuana and lung cancer. Most of the reviews agree that the association is weak or inconsistent (Huang et al., 2015; Zhang et al., 2015; Gates et al., 2014; Hall and Degenhardt, 2014). Huang et al. (2015) identified and reviewed six studies evaluating the association between marijuana use and lung cancer and the authors concluded that an association is not supported most likely due to the small amounts of marijuana smoked in comparison to tobacco. Zhang et al. (2015) examined six case control studies from the US, UK, New Zealand, and Canada within the International Lung Cancer Consortium and found that there was a weak association between smoking marijuana and lung cancer in individuals who never smoked tobacco, but precision of the association was low at high marijuana exposure levels. Hall and Degenhardt (2014) noted that even though marijuana smoke contains several of the same carcinogens and co-carcinogens as tobacco smoke (Roth et al., 1998) and has been found to be mutagenic and carcinogenic in the mouse skin test, epidemiological studies have been inconsistent, but more consistent positive associations have been reported in case control studies. Finally Gates et al. (2014), reviewed the studies evaluating marijuana use and lung cancer and concluded that there is evidence that marijuana produces changes in the respiratory system (precursors to cancer) that could lead to
The HHS stated that administration of marijuana to humans does not consistently alter the endocrine system. In a controlled human exposure study (n = 4 males), subjects were acutely administered smoked marijuana containing 2.8% Δ
The HHS noted that there is a discrepancy in the effect of marijuana on female reproductive system functionality between animals and humans (HHS, 2015). Female rhesus monkeys that were administered 2.5 mg/kg Δ
The HHS stated that recent studies support a possible association between frequent, long-term marijuana use and increased risk of testicular germ cell tumors. In a hospital-based case-control study, the frequency of marijuana use was compared between testicular germ cell tumor (TGCT) patients (n = 187) and controls (n = 148) (Trabert et al., 2011).
TGCT patients were more likely to be frequent marijuana users than controls with an odds ratio (OR) of 2.2 (95% confidence limits of 1.0-5.1) and were less likely to be infrequent or short-term users with odds ratios of 0.5 and 0.6, respectively in comparison to controls (Trabert et al., 2011). The DEA further notes that in two population-based case-control studies (Daling et al., 2009; Lacson et al., 2012), marijuana use was compared between patients diagnosed with TGCT and matched controls in Washington State or Los Angeles County. In both studies, it was reported that TCGT patients were twice as likely as controls to use marijuana. Authors of both studies concluded that marijuana use is associated with an elevated risk of TGCT (Daling et al., 2009; Lacson et al., 2012).
The HHS cited a study (Sarfaraz et al., 2005) demonstrating that WIN 55,212-2 (a mixed CB1/CB2 agonist) induces apoptosis (one form of cell death) in prostate cancer cells and decreases expression of androgen receptors and prostate specific antigens, suggesting a potential therapeutic value for cannabinoid agonists in the treatment of prostate cancer, an androgen-stimulated type of carcinoma.
In more recent studies, as cited by the HHS, chronic marijuana use by subjects (n = 39) characterized as dependent on marijuana according to the ICD-10 criteria did not affect serum levels of thyroid hormones: TSH (thyrotropin), T4 (thyroxine), and T3 (triiodothyronine) (Bonnet, 2013). With respect to appetite hormones, in a pilot study with HIV-positive males, smoking marijuana dose-dependently increased plasma levels of ghrelin and leptin and decreased plasma levels of peptide YY (Riggs et al., 2012).
The HHS stated that Δ
The HHS stated that cannabinoids alter immune function but that there can be differences between the effects of synthetic, natural, and endogenous cannabinoids (Croxford and Yamamura, 2005; Tanasescu and Constantinescu, 2010).
The HHS noted that there are conflicting results in animal and human studies with respect to cannabinoid effects on immune functioning in subjects with compromised immune systems. Abrams et al. (2003) examined the effects of marijuana and Δ
The DEA notes two recent clinical studies reporting a decrease in cytokine and interleukin levels following marijuana use. Keen et al. (2014) compared the differences in the levels of IL-6 (interleukin-6), a proinflammatory cytokine, amongst non-drug users (n = 78), marijuana only users (n = 46) and marijuana plus other drug users (n = 45) in a community-based sample of middle-aged African Americans (Keen et al., 2014). After adjusting for confounders, analyses revealed that lifetime marijuana only users had significantly lower IL-6 levels than the nonuser group. Further, Sexton et al. (2014) compared several immune parameters in healthy individuals and subjects with multiple sclerosis (MS) and found that the chronic use of marijuana resulted in reduced monocyte migration, and decreased levels of CCL2 and IL-17 in both healthy and MS groups.
The DEA also notes a review suggesting that Δ
(1) The petitioners state that
As detailed in the HHS review and as discussed later in this document (see Factor 3), there are neither adequate safety studies nor adequate, well-controlled studies proving marijuana's efficacy. The DEA notes that neither the CSA nor established scheduling criteria suggest that the HHS and DEA should consider the relative safety profiles of drugs when determining the proper schedule. To the extent that the petitioners were referring to abuse and dependence liability, this document discusses those effects in factors 1, 4, and 7.
(2) The petitioners state that “
The government agrees that many articles
(3) The petitioners mentioned on page 9 of exhibit B that
As more fully discussed in Factor 3 below, the HHS and DEA conclude that there are not adequate studies to determine the safety of marijuana. As discussed in the HHS document and below, the determination of safety is more complex than a mere determination of the rate or likelihood of death. Moreover, the lack of overdose deaths attributed to a drug is not evidence that the drug is safe for medical use.
The HHS stated that marijuana, also known as
The HHS indicated in its evaluation that the petitioners defined marijuana as including all
Since there is considerable variability in the cannabinoid concentrations and chemical constituency among marijuana samples, the interpretation of clinical data with marijuana is complicated. A primary issue is the lack of consistent concentrations of Δ
Various
Of the cannabinoids found in marijuana, Δ
Other relatively well-characterized cannabinoids present in marijuana include cannabidiol (CBD), cannabichromene (CBC), and cannabinol (CBN). CBD and CBC are major cannabinoids in marijuana and are both lipophilic. The chemical name for CBD is 2-[(1
In summary, marijuana has several strains with high variability in the concentrations of Δ
Pharmacokinetics of marijuana in humans is dependent on the route of administration and formulation (Adams and Martin, 1996; Agurell et al., 1984; Agurell et al., 1986). Individuals primarily smoke marijuana as a cigarette (weighing between 0.5 and 1 gram) or in a pipe. More recently, vaporizers have been used as another means for individuals to inhale marijuana. Marijuana may also be ingested orally in foods or as an extract in ethanol or other solvents. Pharmacokinetic studies with marijuana focused on evaluating the absorption, metabolism, and elimination profile of Δ
There is high variability in the pharmacokinetics of Δ
Δ
Following oral administration of Δ
Studies evaluating cannabinoid metabolism and excretion focused on Δ
Plasma clearance of Δ
Most of the absorbed Δ
According to the HHS, there are numerous human clinical studies with marijuana in the United States under FDA-regulated IND applications. Results of small clinical exploratory studies have been published in the medical literature. Approval of a human drug for marketing, however, is contingent upon FDA approval of a New Drug Application (NDA) or a Biologics License Application (BLA). According to the HHS, the FDA has not approved any drug product containing marijuana for marketing.
The HHS noted that a drug may be found to have a medical use in treatment in the United States for purposes of the CSA if the drug meets the five elements described by the DEA in 1992. Those five elements “are both necessary and sufficient to establish a prima facie case of currently accepted medical use” in treatment in the United States.” (57 FR 10499, 10504 (March 26, 1992)). This five-element test, which the HHS and DEA have utilized in all such analyses for more than two decades, has been upheld by the Court of Appeals.
In its review (HHS, 2015), the HHS evaluated the five elements with respect to the currently available research for marijuana. The HHS concluded that marijuana does not meet any of the five elements—all of which must be demonstrated to find that a drug has a “currently accepted medical use.” A brief summary of the HHS's evaluation is provided below.
Marijuana, as defined in the petition, includes all
The HHS stated that there are no adequate safety studies on marijuana. As indicated in their evaluation of Element #1, the considerable variation in the chemistry of marijuana complicates the safety evaluation. The HHS concluded that marijuana does not satisfy Element #2 for having adequate safety studies such that medical and scientific experts may conclude that it is safe for treating a specific ailment.
As indicated in the HHS's review of marijuana (HHS, 2015), there are no adequate or well-controlled studies that prove marijuana's efficacy. The FDA independently reviewed (FDA, 2015) publicly available clinical studies on marijuana published prior to February 2013 to determine if there were appropriate studies to determine marijuana's efficacy (please refer to FDA, 2015 and HHS, 2015 for more details). After review, the FDA determined that out of the identified articles, including those identified through a search of bibliographic references and 566 abstracts located on PubMed, 11 studies met the
The HHS concluded that there is currently no evidence of a consensus among qualified experts that marijuana is safe and effective in treating a specific and recognized disorder. The HHS indicated that medical practitioners who are not experts in evaluating drugs cannot be considered qualified experts (HHS, 2015; 57 FR 10499, 10505). Further, the HHS noted that the 2009 American Medical Association (AMA) report entitled, “Use of Cannabis for Medicinal Purposes” does not conclude that there is a currently accepted medical use for marijuana. HHS also pointed out that state-level “medical marijuana” laws do not provide evidence of such a consensus among qualified experts.
The HHS concluded that the currently available data and information on marijuana is not sufficient to allow scientific scrutiny of the chemistry, pharmacology, toxicology, and effectiveness. In particular, scientific evidence demonstrating the chemistry of a specific
(1) The petitioners indicate that there is medical support and acceptance for the medical use of marijuana and stated that “
Furthermore, they stated that
The DEA notes that the statements by the cited organizations (AMA, ACP, IOM) support more research into the potential medical properties associated with marijuana. The HHS did not find that the statements by these organizations provide evidence supporting a conclusion that adequate safety studies and adequate, well-controlled efficacy studies demonstrate the safety and efficacy of marijuana (HHS, 2015). The AMA's official policy on medicinal use of marijuana is as follows: “
The DEA further notes that the 2013 AMA House of Delegates report states that, “
As detailed in the HHS review, in order for a drug to be found to have a “currently accepted medical use,” it must be accepted by qualified experts. There is no evidence that there is a consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognized disorder.
(2) The petitioners claim that, “
As indicated by the HHS, the petitioners defined marijuana to include all
Because the petition defines marijuana as including all cultivated strains, the DEA believes that the THC and CBD level of specific strains is not relevant to this consideration. In fact, the average Δ
The DEA also notes statements in the petitioners' document that support the conclusion reached by DEA and HHS that the chemistry of marijuana as broadly defined by the petitioners is not reproducible or well-defined. For example, the petitioners acknowledge that “Cannabis is a complex plant, with several subtypes of cannabis.” (Exhibit
(3) The petitioners stated in Exhibit B, page 8, that “
The petitioners also cited in Exhibit B, page 8, “
As cited in the HHS recommendation document (HHS, 2015), the FDA conducted its own evaluation of the published clinical studies on the medical application of marijuana prior to February 2013 (FDA, 2015). Further details on the FDA review can be found in the published report (FDA, 2015). Based on the analysis, 11 studies were evaluated further and the FDA concluded that none of these studies “meet the criteria required by the FDA to determine if marijuana is safe and effective in specific therapeutic areas.” (page 6; FDA, 2015).
The DEA has reviewed the systematic review by Wang et al. (2008) and notes that most of the studies included in the review were synthetic cannabinoid medicines (
With respect to the 30-year study cited by the petitioners (Russo et al., 2001) on page 8 of Exhibit B, it should be clarified that the referenced study was not jointly administered by NIDA and the FDA. As with other clinical studies, an IND application was approved by the FDA and marijuana was supplied by NIDA. The authors evaluated only 8 patients over this period, of which one patient died. While the findings cited by the petitioners and authors (
Marijuana continues to be the most widely used illicit drug. In 2013, an estimated 24.6 million Americans age 12 or older were current (past month) illicit drug users. Of those, 19.8 million were current (past month) marijuana users. As of 2013, an estimated 114.7 million Americans age 12 and older had used marijuana or hashish in their lifetime and 33.0 million had used it in the past year.
According to the NSDUH estimates, 3.0 million people age 12 or older used an illicit drug for the first time in 2014. Marijuana initiates totaled 2.6 million in 2014. Nearly half (46.8%) of the 2.6 million new users were less than 18 years of age. In 2014, marijuana was used by 82.2% of current (past month) illicit drug users. In 2014, among past year marijuana users age 12 or older, 18.5% used marijuana on 300 or more days within the previous 12 months. This translates into 6.5 million people using marijuana on a daily or almost daily basis over a 12-month period, a significant increase from the 3.1 million daily or almost daily users in 2006 and from the 5.7 million in just the previous year. In 2014, among past month marijuana users, 41.6% (9.2 million people) used the drug on 20 or more days in the past month, a significant increase from the 8.1 million in 2013.
Marijuana is also the illicit drug with the highest numbers of past year dependence or abuse in the U.S. population. According to the 2014 NSDUH report, of the 7.1 million persons aged 12 or older who were classified with illicit drug dependence or abuse, 4.2 million of them abused or were dependent on marijuana (representing 59.0% of all those classified with illicit drug dependence or abuse and 1.6% of the total U.S. non-institutionalized population aged 12 or older).
According to the 2015 Monitoring the Future (MTF) survey, marijuana is used by a large percentage of American youths, and is the most commonly used illicit drug among American youth. Among students surveyed in 2015, 15.5% of 8th graders, 31.1% of 10th graders, and 44.7% of 12th graders reported that they had used marijuana in their lifetime. In addition, 11.8%, 25.4%, and 34.9% of 8th, 10th, and 12th graders, respectively, reported using marijuana in the past year. A number of high school students reported daily use in the past month, including 1.1%, 3.0%, and 6.0% of 8th, 10th, and 12th graders, respectively.
The prevalence of marijuana use and abuse is also indicated by criminal investigations for which drug evidence was analyzed in federal, state, and local forensic laboratories, as discussed above in Factor 1. The National Forensic Laboratory System (NFLIS), a DEA program, systematically collects drug identification results and associated information from drug cases submitted to and analyzed by federal, state, and local forensic laboratories. NFLIS data shows that marijuana was the most frequently identified drug from January 2001 through December 2014. In 2014, marijuana accounted for 29.3% (432,989) of all drug exhibits in NFLIS.
The high consumption of marijuana is being fueled by increasing amounts of domestically grown marijuana as well as increased amounts of foreign source marijuana being illicitly smuggled into the United States. In 2014, the Domestic Cannabis Eradication and Suppression Program (DCE/SP) reported that 3,904,213 plants were eradicated in outdoor cannabis cultivation areas compared to 2,597,798 in 2000, as shown above in Table 3. Significant quantities of marijuana were also eradicated from indoor cultivation operations. There were 396,620 indoor plants eradicated in 2014 compared to 217,105 eradicated in 2000. As shown in Table 2 above, in 2014, the National Seizure System (NSS) reported seizures of 1,767,741 kg of marijuana.
(1) The petitioners indicated that the history and current pattern of abuse is difficult to estimate since “
Marijuana usage numbers mentioned in both the HHS Recommendation and this DEA document include surveys from NSDUH and MTF. These surveys measure extent of use of marijuana. As mentioned in this Factor, according to the results of the 2013 NSDUH survey, 17.4% of past year marijuana users age 12 or older used marijuana on 300 or
(2) As stated in Exhibit B on page 26, subpart A, “
The authors of study cited by the petitioners (Compton et al., 2004) concluded that a higher percentage of American adults had a marijuana use disorder in 2001-2002 (1.5%) than in 1991-1992 (1.2%). Compton et al. (2004) noted that the marijuana use disorder increase of 0.3% over the 10 year period would equate to an increase from 2.2 million people to 3 million people in the United States. The petitioners failed to explain the impact of 1.5% (or less than 2 percent) of the U.S. population having a marijuana use disorder. In order to put these numbers into perspective, the DEA reviewed the literature and found that non-medical prescription drug use and abuse rates were examined in the same NLAES and NESARC (1991-1992 and 2001-2002) populations (Blanco et al., 2007). Blanco et al (2007) examined non-medical prescription drug use and abuse rates from the periods of 1991-1992 and 2001-2002. In 1991 through 1992, the prevalence of non-medical prescription drug (opioid, stimulant, and tranquilizer) abuse and dependence was 0.1%. Non-medical prescription drug (primarily opioid-based drugs) abuse and dependence increased to 0.3% in 2001 through 2002. Therefore, in the same 2001-2002 NLAES and NESARC populations, the percentage of people with a marijuana use disorder was approximately five-fold higher (1.5% versus 0.3%) than those with opioid abuse and dependence resulting from non-medical prescription drug use.
Further, Volkow et al. (2014) reported that in long-term or heavy marijuana users, 9% of users become addicted to marijuana. This percentage increases to 17% when marijuana use starts in adolescence and it increases to 25 to 50% of those who are daily users.
Abuse of marijuana is widespread and significant. As previously noted, according to the NSDUH, in 2014, an estimated 117.2 million Americans (44.2%) age 12 or older had used marijuana or hashish in their lifetime, 35.1 million (13.2%) had used it in the past year, and 22.2 million (8.4%) had used it in the past month. Past year and past month marijuana use has increased significantly since 2013. Past month marijuana use is highest among 18-21 year olds and it declines among those 22 years of age and older. In 2014, an estimated 18.5% of past year marijuana users age 12 or older used marijuana on 300 or more days within the past 12 months. This translates into 6.5 million persons using marijuana on a daily or almost daily basis over a 12-month period. In 2014, an estimated 41.6% (9.2 million) of past month marijuana users age 12 or older used the drug on 20 or more days in the past month (SAMHSA, NSDUH). Chronic use of marijuana is associated with a number of health risks (see Factors 2 and 6).
Furthermore, the average percentage of Δ
TEDS data show that in 2013, marijuana/hashish was the primary substance of abuse in 16.8% of all admissions to substance abuse treatment among patients age 12 and older. TEDS data also show that marijuana/hashish was the primary substance of abuse for 77.0% of all 12- to 14-year-olds admitted for drug treatment and 75.5% of all 15- to 17-year-olds admitted for drug treatment in 2013. Among the 281,991 admissions to drug treatment in 2013 in which marijuana/hashish was the primary drug, the average age at admission was 25 years and the peak age cohort was 15 to 17 years (22.5%). Thirty-nine percent of the 281,991 primary marijuana/hashish admissions (35.9%) were under the age of 20.
In summary, the recent statistics from these various surveys and databases (see Factor 1 for more details) demonstrate that marijuana continues to be the most commonly used illicit drug, with large incidences of heavy use and dependence in teenagers and young adults.
(1) Petitioners' contend that, “
The prevalence of marijuana usage and marijuana dependence is significant in the United States. The 2014 NSDUH findings indicate that there are approximately 6.5 million Americans using marijuana on a daily or almost daily basis. Further, Volkow et al. (2014) reported that in long-term or heavy marijuana users, 9% of users become addicted to marijuana. Among those who began using marijuana in adolescence, marijuana dependence increases to 17%, and it further increases to 25 to 50% of daily users that started using marijuana during adolescence. These collective findings indicate that there is considerable significance associated with marijuana use and abuse since 9% of users become addicted to marijuana, 25 to 50% of daily marijuana users started during adolescence, and prevalence of usage is significantly high based on the data presented from Volkow et al (2014) and the 2014 NSDUH survey.
In its recommendation, the HHS discussed public health risks associated with acute and chronic marijuana use in Factor 6. Public health risks as measured by emergency department visits and drug treatment admissions are discussed by HHS and DEA in Factors 1, 4, and 5. Similarly, Factor 2 discusses marijuana's pharmacology and presents some of the adverse health effects associated with use. Marijuana use may affect the physical and/or psychological functioning of an individual user, but may also have broader public impacts including driving impairments and fatalities from car accidents.
As discussed in the HHS review document (HHS, 2015), acute usage of marijuana impairs psychomotor performance including motor control and impulsivity, risk taking and executive function (Ramaekers et al., 2004; Ramaekers et al., 2006). In a
In its recommendation, HHS references a meta-analysis conducted by Li et al (2012) where the authors concluded that psychomotor impairments associated with acute marijuana usage have also been associated with increased risk of car accidents with individuals experiencing acute marijuana intoxication (Li et al., 2012; HHS, 2015). The DEA further notes more recent studies examining the risk associated with marijuana use and driving. Younger drivers (under 21) have been characterized as the highest risk group associated with marijuana use and driving (Whitehill et al., 2014). Furthermore, in 2013, marijuana was found in 13% of the drivers involved in automobile-related fatal accidents (McCartt, 2015). The potential risk of automobile accidents associated with marijuana use appears to be increasing since there has been a steady increase in individuals intoxicated with marijuana over the past 20 years (Wilson et al., 2014). However, a recent study commissioned by the National Highway Traffic Safety Administration (NHTSA) reported that when adjusted for confounders (
The DEA also notes recent studies examining unintentional exposures of children to marijuana (Wang et al., 2013; 2014). Wang et al. (2013) reviewed emergency department (ED) visits at a children's hospital in Colorado from January 1, 2005 to December 31, 2011. As stated by the authors, in 2000 Colorado passed Amendment 20 which allowed for the use of marijuana. Following the passage of “a new Justice Department policy” instructing “federal prosecutors not to seek arrest of medical marijuana users and suppliers as long as they conform to state laws” (as stated in Wang et al., 2013), 14 patients in Colorado under the age of 12 were admitted to the ED for the unintended use of marijuana over a 27 month period. Prior to the passage of this policy, from January 1, 2005 to September 30, 2009 (57 months), there were no pediatric ED visits due to unintentional marijuana exposure (Wang et al., 2013). The DEA also notes a larger scale evaluation of pediatric exposures using the National Poison Data System (Wang et al., 2014). That study reported that there were 985 unintentional marijuana exposures in children (9 years and younger) between January 1, 2005 to December 31, 2011. The authors stratified the ED visits by states with laws allowing medical use of marijuana, states transitioning to legalization for medical use, and states with no such laws. Out of the 985 exposures, 495 were in non-legal states (n = 33 states), 93 in transitional states (n = 8 states), and 396 in “legal” states (n = 9 states). The authors reported that there was a twofold increase (OR = 2.1) in moderate or major effects in children with unintentional marijuana use and a threefold increase (OR = 3.4) in admissions to critical care units in states allowing medical use of marijuana, in comparison to non-legal states.
The HHS noted that a major risk from chronic marijuana use is a distinctive withdrawal syndrome, as described in the 2013 DSM-5. The HHS analysis also quoted the following description of risks associated with marijuana [cannabis] abuse from the DSM-5:
The HHS stated that chronic marijuana use produces acute and chronic adverse effects on the respiratory system, memory and learning. Regular marijuana smoking can produce a number of long-term pulmonary consequences, including chronic cough and increased sputum (Adams and Martin, 1996), and histopathologic abnormalities in bronchial epithelium (Adams and Martin, 1996).
The HHS reviewed the clinical studies evaluating the gateway hypothesis in marijuana and found them to be limited. The primary reasons were: (1) Recruited participants were influenced by social, biological, and economic factors that contribute to extensive drug abuse (Hall and Lynskey, 2005), and (2) most studies testing the gateway drug hypothesis for marijuana use the determinative measure
The HHS cited several studies where marijuana use did not lead to other illicit drug use (Kandel and Chen, 2000; von Sydow et al., 2002; Nace et al., 1975). Two separate longitudinal studies with adolescents using marijuana did not demonstrate an association with use of other illicit drugs (Kandel and Chen, 2000; von Sydow et al., 2002).
It was noted by the HHS that, when evaluating the gateway hypothesis, differences appear when examining use versus abuse or dependence of other illicit drugs. Van Gundy and Rebellon (2010) reported that there was a correlation between marijuana use in adolescence and other illicit drug use in early adulthood, but when examined in terms of drug abuse of other illicit drugs, age-linked stressors and social roles were confounders in the association. Degenhardt et al. (2009) reported that marijuana use often precedes use of other illicit drugs, but dependence involving drugs other than marijuana frequently correlated with higher levels of illicit drug abuse. Furthermore, Degenhardt et al. (2010) reported that in countries with lower prevalence of marijuana usage, use of other illicit drugs before marijuana was often documented.
Based on these studies among others, the HHS concluded that although many individuals with a drug abuse disorder may have used marijuana as one of their first illicit drugs, this does not mean that individuals initiated with marijuana inherently will go on to become regular users of other illicit drugs.
(1) The petitioners commented that marijuana does not significantly impact social behavior in domains such as motivation, driving, aggression, or hostility (Exhibit B, pages 30-41).
The HHS concluded that “Marijuana's acute effects can significantly interfere with a person's ability . . . to operate motor vehicles.” (HHS, 2015) As mentioned in this factor, there is a significant risk with marijuana use and driving. Marijuana was found in 13% of drivers involved in automobile fatal accidents (McCartt, 2015). Furthermore, in a meta-analysis conducted by Li et al. (2011), an association was identified between marijuana use by the driver and an increased risk of getting into a car accident.
The DEA notes that the petitioners only considered whether marijuana creates social problems, and did not consider physiological changes and impacts that also should be evaluated in determining the risk to public health. The HHS and DEA considered the public health impacts of such physiological effects, as discussed in this factor and others above. Marijuana may result in acute cardiovascular toxicity as indicated by recent reviews examining these associations (Hackham, 2015; Panayiotides, 2015). There is a possible association between frequent, long-term marijuana use and increased risk of testicular germ cell cancers and some evidence that chronic marijuana use may lead to lung cancer although the evidence is inconsistent. Furthermore, a more recent risk is the increase in ED visits of children unintentionally exposed to marijuana with increased risk factors for major adverse effects or admission to critical care units in states that have legalized marijuana for medical purposes (Wang et al., 2014).
The HHS stated that heavy and chronic use of marijuana can lead to physical dependence (DSM-5, 2013; Budney and Hughes, 2006; Haney et al., 1999). Tolerance is developed following repeated administration of marijuana and withdrawal symptoms are observed as following discontinuation of marijuana usage (HHS, 2015).
The HHS mentioned that tolerance can develop to some of marijuana's effects, but does not appear to develop with respect to the psychoactive effects. It is believed that lack of tolerance to psychoactive effects may relate to electrophysiological data demonstrating that chronic Δ
The HHS indicated that down-regulation of cannabinoid receptors may be a possible mechanism for tolerance to marijuana's effects (Hirvonen et al., 2012; Gonzalez et al., 2005; Rodriguez de Fonseca et al., 1994; Oviedo et al., 1993).
As indicated by the HHS, the most common withdrawal symptoms in heavy, chronic marijuana users are sleep difficulties, decreased appetite or weight loss, irritability, anger, anxiety or nervousness, and restlessness (Budney and Hughes, 2006; Haney et al., 1999). As reported by HHS, most marijuana withdrawal symptoms begin within 24-48 hours of discontinuation, peak within 4-6 days, and last for 1-3 weeks.
The HHS pointed out that the American Psychiatric Association's (APA's) Diagnostic and Statistical Manual of Mental Disorders-5 (DSM-5) included a list of withdrawal symptoms following marijuana [cannabis] use (DSM-5, 2013). The DEA notes that a DSM-5 working group report indicated that marijuana withdrawal symptoms were added to DSM-5 (they were not previously included in DSM-IV) because marijuana withdrawal has now been reliably presented in several studies (Hasin et al., 2013). In short, marijuana withdrawal signs are reported in up to one-third of regular users and between 50% and 90% of heavy users (Hasin et al., 2013). According to DSM-5 criteria, in order to be characterized as having marijuana withdrawal, an individual must develop at least three of the seven symptoms within one week of decreasing or stopping the heavy and prolonged use (DSM-5, 2013). These seven symptoms are: (1) Irritability; anger or aggression, (2) nervousness or anxiety, (3) sleep difficulty, (4) decreased appetite or weight loss, (5) restlessness, (6) decreased mood, (7) somatic symptoms causing significant discomfort (DSM-5, 2013).
High levels of psychoactive effects such as positive reinforcement correlate with increased marijuana abuse and dependence (Scherrer et al., 2009; Zeiger et al., 2010). Epidemiological marijuana use data reported by NSDUH, MTF, and TEDS support this assertion as presented in the HHS 2015 review of marijuana and updated by the DEA. According to the findings in the 2014 NSDUH survey, an estimated 9.2 million individuals 12 years and older used marijuana daily or almost daily (20 or more days within the past month). In the 2015 MTF report, daily marijuana use (20 or more days within the past 30 days) in 8th, 10th, and 12th graders is 1.1%, 3.0%, and 6.0%, respectively.
The 2014 NSDUH report stated that 4.2 million persons were classified with dependence on or abuse of marijuana in the past year (representing 1.6% of the total population age 12 or older, and 59.0% of those classified with illicit drug dependence or abuse) based on criteria specified in the Diagnostic and Statistical Manual of Mental Disorders, 4th edition (DSM-IV). Furthermore, of the admissions to licensed substance abuse facilities, as presented in TEDS, marijuana/hashish was the primary substance of abuse for; 18.3% (352,297) of 2011 admissions; 17.5% (315,200) of 2012 admissions; and 16.8% (281,991) of 2013 admissions. Of the 281,991 admissions in 2013 for marijuana/hashish as the primary substance, 24.3% used marijuana/hashish daily. Among admissions to treatment for marijuana/hashish as the primary substance in 2013, 27.4% were ages 12 to 17 years and 29.7% were ages 20 to 24 years.
(1) The petitioners stated,
The HHS states that marijuana withdrawal syndrome “appears to be mild compared to classical alcohol and barbiturate withdrawal syndromes” and is similar in magnitude and time course to tobacco withdrawal syndrome.
DSM-5 now recognizes and describes a marijuana [cannabis] withdrawal syndrome. The lifetime risk of dependence to marijuana is approximately 9% among heavy or long-term users (Volkow et al., 2014). Marijuana results in tolerance and withdrawal as described earlier in this Factor 7. The data from NSDUH indicate that there is constant desire for marijuana as noted by the consistently high numbers of current daily users in adults and adolescents. Marijuana use also persists despite problems associated with the drug. Changes in IQ have been noted in adolescent-onset, chronic or dependent marijuana users, in addition to withdrawal symptoms. However, marijuana use has not declined in the time that usage of this drug has been monitored. Additionally, there has been an increase in content of the primary psychoactive chemical, Δ
Marijuana is not an immediate precursor of another controlled substance.
After consideration of the eight factors discussed above and of the HHS's Recommendation, the DEA finds that marijuana meets the three criteria for placing a substance in schedule I of the CSA under 21 U.S.C. 812(b)(1):
1. Marijuana has a high potential for abuse.
The HHS concluded that marijuana has a high potential for abuse based on a large number of people regularly using marijuana, its widespread use, and the vast amount of marijuana that is available through illicit channels.
Marijuana is the most abused and trafficked illicit substance in the United States. Approximately 22.2 million individuals in the United States (8.4% of the United States population) were past month users of marijuana according to the 2014 NSDUH survey. A 2015 national survey (Monitoring the Future) that tracks drug use trends among high school students showed that by 12th grade, 21.3% of students reported using marijuana in the past month, and 6.0% reported having used it daily in the past month. In 2011, SAMHSA's Drug Abuse Warning Network (DAWN) reported that marijuana was mentioned in 36.4% of illicit drug-related emergency department (ED) visits, corresponding to 455,668 out of approximately 1.25 million visits. The Treatment Episode Data Set (TEDS) showed that 16.8% of non-private substance-abuse treatment facility admissions in 2013 were for marijuana as the primary drug.
Marijuana has dose-dependent reinforcing effects that encourage its abuse. Both clinical and preclinical studies have demonstrated that marijuana and its principle psychoactive constituent, Δ
2. Marijuana has no currently accepted medical use in treatment in the United States.
The HHS stated that the FDA has not approved an NDA for marijuana. The HHS noted that there are opportunities for scientists to conduct clinical research with marijuana and there are active INDs for marijuana, but marijuana does not have a currently accepted medical use in the United States, nor does it have an accepted medical use with severe restrictions.
FDA approval of an NDA is not the sole means through which a drug can be determined to have a “currently accepted medical use” under the CSA. Applying the five-part test summarized below, a drug has a currently accepted medical use if all of the following five elements have been satisfied. As detailed in the HHS evaluation and as set forth below, none of these elements has been fulfilled for marijuana:
i.
Chemical constituents including Δ
ii.
There are not adequate safety studies on marijuana for use in any specific, recognized medical condition. The considerable variation in the chemistry of marijuana results in differences in safety, biological, pharmacological, and toxicological parameters amongst the various marijuana samples.
iii.
There are no adequate and well-controlled studies that determine marijuana's efficacy. In an independent review performed by the FDA of publicly available clinical studies on marijuana (FDA, 2015), FDA concluded that these studies do not have enough information to “
iv.
At this time, there is no consensus of opinion among experts concerning the medical utility of marijuana for use in treating specific recognized disorders.
v.
The currently available data and information on marijuana is not sufficient to address the chemistry, pharmacology, toxicology, and effectiveness. The scientific evidence regarding marijuana's chemistry with regard to a specific cannabis strain that could be formulated into standardized and reproducible doses is not currently available.
3. There is a lack of accepted safety for use of marijuana under medical supervision.
Currently, there are no FDA-approved marijuana products. The HHS also concluded that marijuana does not have a currently accepted medical use in treatment in the United States or a currently accepted medical use with severe restrictions. According to the HHS, the FDA is unable to conclude that marijuana has an acceptable level of
Drug Enforcement Administration, Department of Justice.
Denial of petition to initiate proceedings to reschedule marijuana.
By letter dated July 19, 2016 the Drug Enforcement Administration (DEA) denied a petition to initiate rulemaking proceedings to reschedule marijuana. Because the DEA believes that this matter is of particular interest to members of the public, the agency is publishing below the letter sent to the petitioner which denied the petition, along with the supporting documentation that was attached to the letter.
August 12, 2016.
Michael J. Lewis, Office of Diversion Control, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-6812
On December 17, 2009, you petitioned the Drug Enforcement Administration (DEA) to initiate rulemaking proceedings under the rescheduling provisions of the Controlled Substances Act (CSA). Specifically, you petitioned DEA to have marijuana removed from schedule I of the CSA and rescheduled in any schedule other than schedule I of the CSA.
You requested that DEA remove marijuana from schedule I based on your assertion that:
1. Marijuana has accepted medical use in the United States;
2. Studies have shown that smoked marijuana has proven safety and efficacy;
3. Marijuana is safe for use under medical supervision; and
4. Marijuana does not have the abuse potential for placement in schedule I
In accordance with the CSA scheduling provisions, after gathering the necessary data, DEA requested a scientific and medical evaluation and scheduling recommendation from the Department of Health and Human Services (HHS). HHS concluded that marijuana has a high potential for abuse, has no accepted medical use in the United States, and lacks an acceptable level of safety for use even under medical supervision. Therefore, HHS recommended that marijuana remain in schedule I. The scientific and medical evaluation and scheduling recommendation that HHS submitted to DEA is attached hereto.
Based on the HHS evaluation and all other relevant data, DEA has concluded that there is no substantial evidence that marijuana should be removed from schedule I. A document prepared by DEA addressing these materials in detail also is attached hereto. In short, marijuana continues to meet the criteria for schedule I control under the CSA because:
(1)
(2)
(3)
The statutory mandate of 21 U.S.C. 812(b) is dispositive. Congress established only one schedule, schedule I, for drugs of abuse with “no currently accepted medical use in treatment in the United States” and “lack of accepted safety for use under medical supervision.” 21 U.S.C. 812(b).
Although the HHS evaluation and all other relevant data lead to the conclusion that marijuana must remain in schedule I, it should also be noted that, in view of United States obligations under international drug control treaties, marijuana cannot be placed in a schedule less restrictive than schedule II. This is explained in detail in the accompanying document titled “Preliminary Note Regarding Treaty Considerations.”
Accordingly, and as set forth in detail in the accompanying HHS and DEA documents, there is no statutory basis under the CSA for DEA to grant your petition to initiate rulemaking proceedings to reschedule marijuana. Your petition is, therefore, hereby denied.
Cover Letter from HHS to DEA Summarizing the Scientific and Medical Evaluation and Scheduling Recommendation for Marijuana.
U.S. Department of Health and Human Services (HHS)—Basis for the Recommendation for Maintaining Marijuana in Schedule I of the Controlled Substances Act
U.S. Department of Justice—Drug Enforcement Administration (DEA), Schedule of Controlled Substances: Maintaining Marijuana in Schedule I of the Controlled Substances Act, Background, Data, and Analysis: Eight Factors Determinative of Control and Findings Pursuant to 21 U.S.C. 812(b)
As the Controlled Substances Act (CSA) recognizes, the United States is a party to the Single Convention on Narcotic Drugs, 1961 (referred to here as the Single Convention or the treaty). 21 U.S.C. 801(7). Parties to the Single Convention are obligated to maintain various control provisions related to the drugs that are covered by the treaty. Many of the provisions of the CSA were enacted by Congress for the specific purpose of ensuring U.S. compliance with the treaty. Among these is a scheduling provision, 21 U.S.C. 811(d)(1). Section 811(d)(1) provides that, where a drug is subject to control under the Single Convention, the DEA Administrator (by delegation from the Attorney General) must “issue an order controlling such drug under the schedule he deems most appropriate to carry out such [treaty] obligations, without regard to the findings required by [21 U.S.C. 811(a) or 812(b)] and without regard to the procedures prescribed by [21 U.S.C. 811(a) and (b)].”
Marijuana is a drug listed in the Single Convention. The Single Convention uses the term “cannabis” to refer to marijuana.
Because schedules I and II are the only possible schedules in which marijuana may be placed, for purposes of evaluating this scheduling petition, it is essential to understand the differences between the criteria for placement of a substance in schedule I and those for placement in schedule II. These criteria are set forth in 21 U.S.C. 812(b)(1) and (b)(2), respectively. As indicated therein, substances in both schedule I and schedule II share the characteristic of “a high potential for abuse.” Where the distinction lies is that schedule I drugs have “no currently accepted medical use in treatment in the United States” and “a lack of accepted safety for use of the drug . . . under medical supervision,” while schedule II drugs do have “a currently accepted medical use in treatment in the United States.”
Accordingly, in view of section 811(d)(1), this scheduling petition turns on whether marijuana has a currently accepted medical use in treatment in the United States. If it does not, DEA must, pursuant to section 811(d), deny the petition and keep marijuana in schedule I.
As indicated, where section 811(d)(1) applies to a drug that is the subject of a rescheduling petition, the DEA Administrator must issue an order controlling the drug under the schedule he deems most appropriate to carry out United States obligations under the Single Convention, without regard to the findings required by sections 811(a) or 812(b) and without regard to the procedures prescribed by sections 811(a) and (b). Thus, since the only determinative issue in evaluating the present scheduling petition is whether marijuana has a currently accepted medical use in treatment in the United States, DEA need not consider the findings of sections 811(a) or 812(b) that have no bearing on that determination, and DEA likewise need not follow the procedures prescribed by sections 811(a) and (b) with respect to such irrelevant findings. Specifically, DEA need not evaluate the relative abuse potential of marijuana or the relative extent to which abuse of marijuana may lead to physical or psychological dependence.
As explained below, the medical and scientific evaluation and scheduling recommendation issued by the Secretary of Health and Human Services concludes that marijuana has no currently accepted medical use in treatment in the United States, and the DEA Administrator likewise so concludes. For the reasons just indicated, no further analysis beyond this consideration is required. Nonetheless, because of the widespread public interest in understanding all the facts relating to the harms associated with marijuana, DEA is publishing here the entire medical and scientific analysis and scheduling evaluation issued by the Secretary, as well as DEA's additional analysis.
Pursuant to the Controlled Substances Act (CSA, 21 U.S.C. 811(b), (c), and (f)), the Department of Health and Human Services (HHS) is recommending that marijuana continue to be maintained in Schedule I of the CSA.
The Food and Drug Administration (FDA) has considered the abuse potential and dependence-producing characteristics of marijuana.
Marijuana meets the three criteria for placing a substance in Schedule I of the CSA under 21 U.S.C. 812(b)(1). As discussed in the enclosed analyses, marijuana has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. Accordingly, HHS recommends that marijuana be maintained in Schedule I of the CSA. Enclosed are two documents prepared by FDA's Controlled Substance Staff (in response to petitions filed in 2009 by Mr. Bryan Krumm and in 2011 by Governors Lincoln D. Chafee and Christine O. Gregoire) that form the basis for the recommendation. Pursuant to the requests in the petitions, FDA broadly evaluated marijuana, and did not focus its evaluation on particular strains of marijuana or components or derivatives of marijuana.
FDA's Center for Drug Evaluation and Research's current review of the available evidence and the published clinical studies on marijuana demonstrated that since our 2006 scientific and medical evaluation and scheduling recommendation responding to a previous DEA petition, research with marijuana has progressed. However, the available evidence is not sufficient to determine that marijuana has an accepted medical use. Therefore, more research is needed into marijuana's effects, including potential medical uses for marijuana and its derivatives. Based on the current review, we identified several methodological challenges in the marijuana studies published in the literature. We recommend they be addressed in future clinical studies with marijuana to ensure that valid scientific data are generated in studies evaluating marijuana's safety and efficacy for therapeutic use. For example, we recommend that studies need to focus on consistent administration and reproducible dosing of marijuana, potentially through the use of administration methods other than smoking. A summary of our review of the published literature on the clinical uses of marijuana, including recommendations for future studies, is attached to this document.
FDA and the National Institutes of Health's National Institute on Drug Abuse (NIDA) also believe that work continues to be needed to ensure support by the federal government for the efficient conduct of clinical research using marijuana. Concerns have been raised about whether the existing federal regulatory system is flexible enough to respond to increased interest in research into the potential therapeutic uses of marijuana and marijuana-derived drugs. HHS welcomes an opportunity to continue to explore these concerns with DEA.
Should you have any questions regarding theses recommendations, please contact Corinne P. Moody, Science Policy Analyst, Controlled Substances Staff, Center for Drug Evaluation and Research, FDA, at (301) 796-3152.
On December 17, 2009, Mr. Bryan Krumm submitted a petition to the Drug Enforcement Administration (DEA) requesting that proceedings be initiated to repeal the rules and regulations that place marijuana
In accordance with 21 U.S.C. 811(b), the DEA has gathered information related to the control of marijuana
All parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin. Such term does not include the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt, derivative, mixture, or preparation of such mature stalks (except the resin extracted therefrom), fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination (21 U.S.C. 802(16)).
In this document, FDA recommends continued control of marijuana in Schedule I of the CSA. Pursuant to 21 U.S.C. 811(c), the eight factors pertaining to the scheduling of marijuana are considered below.
Under the first factor the Secretary must consider marijuana's actual or relative potential for abuse. The CSA does not define the term “abuse.” However, the CSA's legislative history suggests the following in determining whether a particular drug or substance has a potential for abuse:
a. There is evidence that individuals are taking the drug or drugs containing such a substance in amounts sufficient to create a hazard to their health or to the safety of other individuals or to the community.
b. There is a significant diversion of the drug or drugs containing such a substance from legitimate drug channels.
c. Individuals are taking the drug or drugs containing such a substance on their own initiative rather than on the basis of medical advice from a practitioner licensed by law to administer such drugs in the course of his professional practice.
d. The drug or drugs containing such a substance are new drugs so related in their action to a drug or drugs already listed as having a potential for abuse to make it likely that the drug will have the same potentiality for abuse as such drugs, thus making it reasonable to assume that there may be significant diversions from legitimate channels, significant use contrary to or without medical advice, or that it has a substantial capability of creating hazards to the health of the user or to the safety of the community.
In the development of this scientific and medical evaluation for the purpose of scheduling, the Secretary analyzed considerable data related to the substance's abuse potential. The data include a discussion of the prevalence and frequency of use, the amount of the substance available for illicit use, the ease of obtaining or manufacturing the substance, the reputation or status of the substance “on the street,” and evidence relevant to at-risk populations. Importantly, the petitioners define marijuana as including all
Determining the abuse potential of a substance is complex with many dimensions, and no single test or assessment provides a complete characterization. Thus, no single measure of abuse potential is ideal. Scientifically, a comprehensive evaluation of the relative abuse potential of a substance can include consideration of the following elements: Receptor binding affinity, preclinical pharmacology, reinforcing effects, discriminative stimulus effects, dependence producing potential, pharmacokinetics, route of administration, toxicity, data on actual abuse, clinical abuse potential studies, and public health risks. Importantly, abuse can exist independently from tolerance or physical dependence because individuals may abuse drugs in doses or patterns that don not induce these phenomena. Additionally evidence of clandestine population and illicit trafficking of a substance can shed light on both the demand for a substance as well as the ease of obtaining a substance. Animal and human laboratory data and epidemiological data are all used in determining a substance's abuse potential. Moreover, epidemiological data can indicate actual abuse.
The petitioner compares the effects of marijuana to currently controlled Schedule II substances and make repeated claims about their comparative effects. Comparisons between marijuana and the diverse array of Schedule II substances is difficult, because of the pharmacologically dissimilar actions of substances of Schedule II of the CSA. For example, Schedule II substances include stimulant-like drugs (
In addition, many substances scheduled under the CSA are reviewed and evaluated within the context of commercial drug development, using data submitted in the form of a new drug application (NDA). A new analgesic drug might be compared to a currently scheduled analgesic drug as part of the assessment of its relative abuse potential. However, because the petitioners have not identified a specific indication for the use of marijuana, identifying an appropriate comparator based on indication cannot be done.
a. There is evidence that individuals are taking the substance in amounts sufficient to create a hazard to their health or to the safety of other individuals or to the community.
Evidence shows that some individuals are taking marijuana in amounts sufficient to create a hazard to their health and to the safety of other individuals and the community. A large number of individuals use marijuana. HHS provides data on the extent of marijuana abuse through NIDA and the Substance Abuse and Mental Health Services Administration (SAMHSA). According to the most recent data from SAMHSA's 2012 National Survey on Drug Use and Health (NSDUH), which estimates the number of individuals who have use a substance within a month prior to the study (described as “current use”), marijuana is the most commonly used illicit drug among American aged 12 years and older, with an estimated 18.9 million Americans having used marijuana within the month prior to the 2012 NSDUH. Compared to 2004, when an estimated 14.6 million individuals reported using marijuana within the month prior to the study, the estimated rates in 2012 show an increase of approximately 4.3 million individuals. The 2013 Monitoring the Future (MTF) survey of 8th, 10th, and 12th grade students also indicates that marijuana is the most widely used illicit substance in this age group. Specifically, current month use was at 7.0 percent of 8th graders, 18.0 percent of 10th, graders and 22.7 percent of 12th graders. Additionally, the 2011 Treatment Episode Data Set (TEDS) reported that primary marijuana abuse accounted for 18.1 percent of non-private substance-abuse treatment facility admissions, with 24.3 percent of those admitted reporting daily use. However, of these admissions for primary marijuana abuse, the criminal justice system referred 51.6 percent to treatment. SAMHSA's Drug Abuse Warning Network (DAWN) was a national probability survey of U.S. hospitals with emergency departments (EDs) and was designed to obtain information on ED visits in which marijuana was mentioned, accounting for 36.4 percent of illicit drug related ED visits. There are some limitations related to DAWN data on ED visits, which are discussed in detail in Factor 4, “Its History and Current Pattern of Abuse;” Factor 5, “The Scope, Duration, and Significance of Abuse;” and Factor 6, “What, if an, Risk There is to the Public Health.” These factors contain detailed discussions of these data.
A number of risks can occur with both acute and chronic use of marijuana. Detailed discussions of the risks are addressed in Factor 2, “Scientific Evidence of its Pharmacological Effect, if Known,” and Factor 6, “What, if any, Risk There is to the Public Health.”
b. There is significant diversion of the substance from legitimate drug channels.
There is a lack of evidence of significant diversion of marijuana from legitimate drug channels, but this is likely due to the fact that marijuana is more widely available from illicit sources rather than through legitimate channels. Marijuana is not an FDA-approved drug product, as an NDA or biologics license application (BLA) has not been approved for marketing in the United States. Numerous states and the District of Columbia have state-level medical marijuana laws that allow for marijuana use within that state. These state-level drug channels do not have sufficient collection of data related to medical treatment, including efficacy and safety.
Marijuana is used by researchers for nonclinical research as well as clinical research under investigational new drug (IND) applications; this represents the only legitimate drug channel in the United States. However, marijuana used for research reporesents a very small contribution of the total amount of marijuana available in the United States, and thus provides limited information about diversion. In addition, the lack of significant diversion of investigation supplies is likely because of the widespread availability of illicit marijuana of equal or greater amounts of delta
c. Individuals are taking the substance on their own initiative rather than on the basis of medical advice from a practitioner licensed by law to administer such substances.
Because the FDA has not approved an NDA or BLA for a marijuana drug product for any therapeutic indication, the only way an individual can take marijuana on the basis of medical advice through legitimate channels at the federal level is by participating in research under an IND application. That said, numerous states and the District of Columbia have passed state-level medical marijuana laws allowing for individuals to use marijuana under certain cicrumstances. However, data are not yet available to determine the number of individuals using marijuana under these state-level medical marijuana laws. Regardless, according to the 2012 NSDUH data, 18.9 million American adults currently use marijuana (SAMHSA, 2013). Based on the large number of individuals reporting current use of marijuana and the lack of an FDA-approved drug product in the United States, one can assume that it is likely that the majority of individuals using marijuana do so on their own initiative rather than on the basis of medical advice from a licensed practitioner.
d. The substance is so related in its action to a substance already listed as having a potential for abuse to make it likely that it will have the same potential for abuse as such substance, thus making it reasonable to assume that there may be significant diversions from legitimate channels, significant use contrary to or without medical advice, or that it has a substantial capability of creating hazards to the health of the user or to the safety of the community.
FDA has approved two drug products containing cannabinoid compounds that are structurally related to the active components in marijuana. These two marketed products are controlled under the CSA. Once a specific drug product containing cannabinoids becomes approved, that specific drug product may be moved from Schedule I to a different Schedule (II-V) under the CSA. Firstly, Marinol—generically known as dronabinol—is a Schedule III drug product containing synthetic delta
Under the second factor, the Secretary must consider the scientific evidence of marijuana's pharmacological effects. Abundant scientific data are available on the neurochemistry, toxicology, and pharmacology of marijuana. This section includes a scientific evaluation of marijuana's neurochemistry; pharmacology; and human and animal behavioral, central nervous system, cognitive, cardiovascular, autonomic, endocrinological, and immunological system effects. The overview presented below relies upon the most current research literature on cannabinoids.
Marijuana is a plant that contains numerous natural constituents, such as cannabinoids, that have a variety of pharmacological actions. The petition defines marijuana as including all Cannabis cultivated strains. Different marijuana samples derived from various cultivated strains may have very different chemical constituents including delta
According to ElSohly and Slade (2005) and Appendino et al. (2011), marijuana contains approximately 525 identified natural constituents, including approximately 100 compounds classified as cannabinoids. Cannabinoids primarily exist in Cannabis, and published data suggests that most major cannabinoid compounds occurring naturally have been identified chemically. New and minor cannabinoids and other new compounds are continuously being characterized (Pollastro et al., 2011). So far, only two cannabinoids (cannabigerol and its corresponding acid) have been obtained from a non-Cannabis source. A South African
The site of cannabinoid action is at the cannabinoid receptors. Cloning of cannabinoid receptors, first from rat brain tissue (Matsuda et al., 1990) and then from human brain tissue (Gerard et al., 1991), has verified the site of action. Two cannabinoid receptors, CB
The cannabinoid receptors, CB
Cannabinoid receptor activation inhibits N- and P/Q-type calcium channels and activates inwardly rectifying potassium channels (Mackie et al., 1995; Twitchell et al., 1997). N-type calcium channel inhibition decreases neurotransmitter release from several tissues. Thus, calcium channel inhibition may be the mechanism by which cannabinoids inhibit acetylcholine, norepinephrine, and glutamate release from specific areas of the brain. These effects may represent a potential cellular mechanism underlying cannabinoids' antinociceptive and psychoactive effects (Ameri, 1999).
CB
CB
Cannabinoid receptors have endogenous ligands. In 1992 and 1995, two endogenous cannabinoid receptor agonists, anandamide and arachidonyl glycerol (2-AG), respectively, were identified (Di Marzo, 2006). Anandamide is a low efficacy agonist (Breivogel and Childers, 2000) and 2-AG is a high efficacy agonist (Gonsiorek et al., 2000). Cannabinoid endogenous ligands are present in central as well as peripheral tissues. A combination of uptake and hydrolysis terminate the action of the endogenous ligands. The endogenous cannabinoid system is a locally active signaling system that, to help restore homeostasis, is activated “on demand” in response to changes to the local homeostasis (Petrocellis and Di Marzo, 2009). The endogenous cannabinoid system, including the endogenous cannabinoids and the cannabinoid receptors, demonstrate substantial plasticity in response to several physiological and pathological stimuli (Petrocellis and Di Marzo, 2009). This plasticity is particularly evident in the central nervous system.
Delta
Delta
Self-administration is a method that assesses the ability of a drug to produce rewarding effects. The presence of rewarding effects increases the likelihood of behavioral responses to obtain additional drug. Animal self-administration of a drug is often useful in predicting rewarding effects in humans, and is indicative of abuse liability. A good correlation is often observed between those drugs that rhesus monkeys self-administer and those drugs that humans abuse (Balster and Bigelow, 2003). Initially, researchers could not establish self-administration of cannabinoids, including delta
Squirrel monkeys, with and without prior exposure to other drugs of abuse, self-administer delta
Additionally, data demonstrate that under specific conditions, rodents self-administer cannabinoids. Rats will self-administer delta
Aversive effects, rather than reinforcing effects, occur in rats that received high doses of WIN 55212 (Chaperon et al., 1998) or delta
Conditioned place preference (CPP) is a less rigorous method than self-administration for determining whether or not a drug has rewarding properties. In this behavioral test, animals spend time in two distinct environments: One where they previously received a drug and one where they received a placebo. If the drug is reinforcing, animals will choose to spend more time in the environment paired with the drug, rather than with the placebo, when presented with both options s.imultaneously.
Animals show CPP to delta
Drug discrimination is a method where animals indicate whether a test drug produces physical or psychic perceptions similar to those produced by a known drug of abuse. In this test, an animal learns to press one bar when it receives the known drug of abuse and another bar when it receives placebo. To determine whether the test drug is like the known drug of abuse, a challenge session with the test drug demonstrates which of the two bars the animal presses more often.
In addition to humans (Lile et al., 2009; Lile et al., 2011), it has been noted that animals, including monkeys (McMahon, 2009), mice (McMahon et al., 2008), and rats (Gold et al., 1992), are able to discriminate cannabinoids from other drugs or placebo. Moreover, the major active metabolite of delta
Discriminative stimulus effects of delta
Below is a list of the common subjective responses to cannabinoids (Adams and Martin, 1996; Gonzalez, 2007; Hollister 1986, 1988; Institute of Medicine, 1982). According to Maldonado (2002), these responses to marijuana are pleasurable to many humans and are often associated with drug-seeking and drug-taking. High levels of positive psychoactive effects are associated with increased marijuana use, abuse, and dependence (Scherrer et al., 2009; Zeiger et al., 2010).
(1) Disinhibition, relaxation, increased sociability, and talkativeness.
(2) Increased merriment and appetite, and even exhilaration at high doses.
(3) Enhanced sensory perception, which can generate an increased appreciation of music, art, and touch.
(4) Heightened imagination, which can lead to a subjective sense of increased creativity.
(5) Initial dizziness, nausea, tachycardia, facial flushing, dry mouth, and tremor.
(6) Disorganized thinking, inability to converse logically, time distortions, and short-term memory impairment.
(7) Ataxia and impaired judgment, which can impede driving ability or lead to an increase in risk-tasking behavior.
(8) Illusions, delusions, and hallucinations that intensify with higher doses.
(9) Emotional lability, incongruity of affect, dysphoria, agitation, paranoia, confusion, drowsiness, and panic attacks, which are more common in inexperienced or high-dosed users.
As with many psychoactive drugs, a person's medical, psychiatric, and drug-taking history can influence the individual's response to marijuana. Dose preferences to marijuana occur in that marijuana users prefer higher concentrations of the principal psychoactive substance (1.95 percent delta
The petitioners contend that many of marijuana's naturally occurring cannabinoids mitigate the psychoactive effects of delta
DEA's final published rule entitled “Rescheduling of the Food and Drug Administration Approved Product Containing Synthetic Dronabinol [(-)-delta
Hollister and Gillespie (1973) estimated that delta
The formulation of Marinol is a factor that contributes to differential scheduling of Marinol and marijuana. For example, extraction and purification of dronabinol from the encapsulated sesame oil mixture of Marinol is highly complex and difficult. Additionally, the presence of sesame oil mixture in the formulation may preclude the smoking of Marinol-laced cigarettes.
Additionally, there is a dramatic difference between actual abuse and illicit trafficking of Marinol and marijuana. Despite Marinol's availability in the United States, there have been no significant reports of abuse, diversion, or public health problems due to Marinol. By comparison, 18.9 million American adults report currently using marijuana (SAMHSA, 2013).
In addition, FDA's approval of an NDA for Marinol allowed for Marinol to be rescheduled to Schedule II, and subsequently to Schedule III of the CSA. In conclusion, marijuana and Marinol differ on a wide variety of factors that contribute to each substance's abuse potential. These differences are major reasons distinguishing the higher abuse potential for marijuana and the different scheduling determinations of marijuana and Marinol.
In terms of the petitioners' claim that different cannabinoids present in marijuana mitigate the psychoactive effects of delta
The oral administration of a combination of either 15, 30, or 60 mg CBD with 30 mg delta
Even though some studies suggest that CBD may decrease some of delta
Marijuana induces various psychoactive effects that can lead to behavioral impairment. Marijuana's acute effects can significantly interfere with a person's ability to learn in the classroom or to operate motor vehicles. Acute administration of smoked marijuana impairs performance on learning, associative processes, and psychomotor behavioral tests (Block et al., 1992). Ramaekers et al. (2006a) showed that acute administration of 250 μg/kg and 500 μg/kg of delta
In addition to measuring the acute effects immediately following marijuana administration, researchers have conducted studies to determine how long behavioral impairments last after abstinence. Some of marijuana's acute effects may not fully resolve until at least one day after the acute psychoactive effects have subsided. Heishman et al. (1990) showed that impairment on memory tasks persists for 24 hours after smoking marijuana cigarettes containing 2.57 percent delta
A number of factors may influence marijuana's behavioral effects including the duration of use (chronic or short term), frequency of use (daily, weekly, or occasionally), and amount of use (heavy or moderate). Researchers also have examined how long behavioral impairments last following chronic marijuana use. These studies used self-reported histories of past duration, frequency, and amount of past marijuana use, and administered a variety of performance and cognitive measures at different time points following marijuana abstinence. In chronic marijuana users, behavioral impairments may persist for up to 28 days of abstinence. Solowij et al. (2002) demonstrated that after 17 hours of abstinence, 51 adult heavy chronic marijuana users performed worse on memory and attention tasks than 33 non-using controls or 51 heavy, short-term users. Another study noted that heavy, frequent marijuana users, abstinent for at least 24 hours, performed significantly worse than the controls on verbal memory and psychomotor speed tests (Messinis et al., 2006). Additionally, after at least 1 week of abstinence, young adult frequent marijuana users, aged 18-28, showed deficits in psychomotor speed, sustained attention, and cognitive inhibition (Lisdahl and Price, 2012). Adult heavy, chronic marijuana users showed deficits on memory tests after 7 days of supervised abstinence (Pope et al., 2002). However, when these same individuals were again tested after 28 days of abstinence, they did not show significant memory deficits. The authors concluded, “cannabis-associated cognitive deficits are reversible and related to recent cannabis exposure, rather than irreversible and related to cumulative lifetime use.”
The effects of chronic marijuana use do not seem to persist after more than 1 to 3 months of abstinence. After 3 months of abstinence, any deficits observed in IQ, immediate memory, delayed memory, and information-processing speeds following heavy marijuana use compared to pre-drug use scores were no longer apparent (Fried et al., 2005). Marijuana did not appear to have lasting effects on performance of a comprehensive neuropsychological battery when 54 monozygotic male twins (one of whom used marijuana, one of whom did not) were compared 1-20 years after cessation of marijuana use (Lyons et al., 2004). Similarly, following abstinence for a year or more, both light and heavy adult marijuana users did not show deficits on scores of verbal memory compared to non-using controls (Tait et al., 2011). According to a recent meta-analysis looking at non-acute and long-lasting effects of marijuana use on neurocognitive performance, any deficits seen within the first month following abstinence are generally not present after about 1 month of abstinence (Schreiner and Dunn, 2012).
Another aspect that may be a critical factor in the intensity and persistence of impairment resulting from chronic marijuana use is the age of first use. Individuals with a diagnosis of marijuana misuse or dependence who were seeking treatment for substance use, who initiated marijuana use before the age of 15 years, showed deficits in performance on tasks assessing sustained attention, impulse control, and general executive functioning compared to non-using controls. These deficits were not seen in individuals who initiated marijuana use after the age of 15 years (Fontes et al., 2011). Similarly, heavy, chronic marijuana users who began using marijuana before the age of 16 years had greater decrements in executive functioning tasks than heavy, chronic marijuana users who started using after the age of 16 years and non-using controls (Gruber et al., 2012). Additionally, in a prospective longitudinal birth cohort study of 1,037 individuals, marijuana dependence or chronic marijuana use was associated with a decrease in IQ and general neuropsychological performance compared to pre-marijuana exposure levels in adolescent onset users (Meier et al., 2012). The decline in adolescent-onset user's IQ persisted even after reduction or abstinence of marijuana use for at least 1 year. In contrast, the adult-onset chronic marijuana users showed no significant
In addition to the age of onset of use, some evidence suggests that the amount of marijuana used may relate to the intensity of impairments. In the above study by Gruber et al. (2012), where early-onset users had greater deficits than late-onset users, the early-onset users reported using marijuana twice as often and using three times as much marijuana per week than the late-onset users. Meier et al. (2012) showed that the deficits in IQ seen in adolescent-onset users increased with the amount of marijuana used. Moreover, when comparing scores for measures of IQ, immediate memory, delayed memory, and information-processing speeds to pre-drug-use levels, the current, heavy, chronic marijuana users showed deficits in all three measures while current, occasional marijuana users did not (Fried et al., 2005).
Studies with children at different stages of development are used to examine the impact of prenatal marijuana exposure on performance in a series of cognitive tasks. However, many pregnant women who reported marijuana use were more likely to also report use of alcohol, tobacco, and cocaine (Goldschmidt et al., 2008). Thus, with potential exposure to multiple drugs, it is difficult to determine the specific impact of prenatal marijuana exposure.
Most studies assessing the behavioral effects of prenatal marijuana exposure included women who, in addition to using marijuana, also reported using alcohol and tobacco. However, some evidence suggests an association between heavy prenatal marijuana exposure and deficits in some cognitive domains. In both 4-year-old and 6-year-old children, heavy prenatal marijuana use is negatively associated with performance on tasks assessing memory, verbal reasoning, and quantitative reasoning (Fried and Watkinson, 1987; Goldschmidt et al., 2008). Additionally, heavy prenatal marijuana use is associated with deficits in measures of sustained attention in children at the ages of 6 years and 13-16 years (Fried et al., 1992; Fried, 2002). In 9- to 12-year-old children, prenatal marijuana exposure is negatively associated with executive functioning tasks that require impulse control, visual analysis, and hypothesis (Fried et al., 1998).
This analysis evaluates only the evidence for a direct link between prior marijuana use and the subsequent development of psychosis. Thus, this discussion does not consider issues such as whether marijuana's transient effects are similar to psychotic symptoms in healthy individuals or exacerbate psychotic symptoms in individuals already diagnosed with schizophrenia.
Extensive research has been conducted to investigate whether exposure to marijuana is associated with the development of schizophrenia or other psychoses. Although many studies are small and inferential, other studies in the literature use hundreds to thousands of subjects. At present, the available data do not suggest a causative link between marijuana use and the development of psychosis (Minozzi et al., 2010). Numerous large, longitudinal studies show that subjects who used marijuana do not have a greater incidence of psychotic diagnoses compared to those who do not use marijuana (Fergusson et al., 2005; Kuepper et al., 2011; Van Os et al., 2002).
When analyzing the available evidence of the connection between psychosis and marijuana, it is critical to determine whether the subjects in the studies are patients who are already diagnosed with psychosis or individuals who demonstrate a limited number of symptoms associated with psychosis without qualifying for a diagnosis of the disorder. For example, instead of using a diagnosis of psychosis, some researchers relied on non-standard methods of representing symptoms of psychosis including “schizophrenic cluster” (Maremmani et al., 2004), “subclinical psychotic symptoms” (Van Gastel et al., 2012), “pre-psychotic clinical high risk” (Van der Meer et al., 2012), and symptoms related to “psychosis vulnerability” (Griffith-Lendering et al., 2012). These groupings do not conform to the criteria in the Diagnostic and Statistical Manual (DSM-5) or the International Classification of Diseases (ICD-10) for a diagnosis of psychosis. Thus, these groupings are not appropriate for use in evaluating marijuana's impact on the development of actual psychosis. Accordingly, this analysis includes only those studies that use subjects diagnosed with a psychotic disorder.
In the largest study evaluating the link between psychosis and drug use, 274 of the approximately 45,500 Swedish conscripts in the study population (<0.01 percent) received a diagnosis of schizophrenia within the 14-year period following military induction from 1969 to 1983 (Andreasson et al., 1987). Of the conscripts diagnosed with psychosis, 7.7 percent (21 of the 274 conscripts with psychosis) had used marijuana more than 50 times at induction, while 72 percent (197 of the 274 conscripts with psychosis) had never used marijuana. Although high marijuana use increased the relative risk for schizophrenia to 6.0, the authors note that substantial marijuana use history “accounts for only a minority of all cases” of psychosis (Andreasson et al., 1987). Instead, the best predictor for whether a conscript would develop psychosis was a non-psychotic psychiatric diagnosis upon induction. The authors concluded that marijuana use increased the risk for psychosis only among individuals predisposed to develop the disorder. In addition, a 35-year follow up to this study reported very similar results (Manrique-Garcia et al., 2012). In this follow up study, 354 conscripts developed schizophrenia; of these 354 conscripts, 32 used marijuana more than 50 times at induction (9 percent, an odds ratio of 6.3), while 255 had never used marijuana (72 percent).
Additionally, the conclusion that the impact of marijuana may manifest only in individuals likely to develop psychotic disorders has been shown in many other types of studies. For example, although evidence shows that marijuana use may precede the presentation of symptoms in individuals later diagnosed with psychosis (Schimmelmann et al., 2011), most reports conclude that prodromal symptoms of schizophrenia appear prior to marijuana use (Schiffman et al., 2005). Similarly, a review of the gene-environment interaction model for marijuana and psychosis concluded that some evidence supports marijuana use as a factor that may influence the development of psychosis, but only in those individuals with psychotic liability (Pelayo-Teran et al., 2012).
A similar conclusion was drawn when the prevalence of schizophrenia was modeled against marijuana use across eight birth cohorts in Australia in individuals born between the years 1940 to 1979 (Degenhardt et al., 2003). Although marijuana use increased over time in adults born during the four-decade period, there was not a corresponding increase in diagnoses for psychosis in these individuals. The authors conclude that marijuana may precipitate schizophrenic disorders only in those individuals who are vulnerable to developing psychosis. Thus, marijuana
Single smoked or oral doses of delta
However, prolonged delta
Marijuana smoking by individuals, particularly those with some degree of coronary artery or cerebrovascular disease, poses risks such as increased cardiac work, catecholamines and carboxyhemoglobin, myocardial infarction, and postural hypotension (Benowitz and Jones, 1981; Hollister, 1988; Mittleman et al., 2001; Malinowska et al., 2012).
After acute exposure to marijuana, transient bronchodilation is the most typical respiratory effect (Gong et al., 1984). A recent 20-year longitudinal study with over 5,000 individuals collected information on the amount of marijuana use and pulmonary function data at years 0, 2, 5, 10, and 20 (Pletcher et al., 2012). Among the more than 5,000 individuals who participated in the study, almost 800 of them reported current marijuana use but not tobacco use at the time of assessment. Pletcher et al. (2012) found that the occasional use of marijuana is not associated with decreased pulmonary function. However, some preliminary evidence suggests that heavy marijuana use may be associated with negative pulmonary effects (Pletcher et al., 2012). Long-term use of marijuana can lead to chronic cough and increased sputum, as well as an increased frequency of chronic bronchitis and pharyngitis. In addition, pulmonary function tests reveal that large-airway obstruction can occur with chronic marijuana smoking, as can cellular inflammatory histopathological abnormalities in bronchial epithelium (Adams and Martin 1996; Hollister 1986).
Evidence regarding marijuana smoking leading to cancer is inconsistent, as some studies suggest a positive correlation while others do not (Lee and Hancox, 2011; Tashkin, 2005). Several lung cancer cases have been reported in young marijuana users with no tobacco smoking history or other significant risk factors (Fung et al., 1999). Marijuana use may dose-dependently interact with mutagenic sensitivity, cigarette smoking, and alcohol use to increase the risk of head and neck cancer (Zhang et al., 1999). However, in a large study with 1,650 subjects, a positive association was not found between marijuana and lung cancer (Tashkin et al., 2006). This finding remained true, regardless of the extent of marijuana use, when controlling for tobacco use and other potential confounding variables. Overall, new evidence suggests that the effects of marijuana smoking on respiratory function and carcinogenicity differ from those of tobacco smoking (Lee and Hancox, 2011).
Experimental marijuana administration to humans does not consistently alter many endocrine parameters. In an early study, male subjects who experimentally received smoked marijuana showed a significant depression in luteinizing hormone and a significant increase in cortisol (Cone et al., 1986). However, two later studies showed no changes in hormones. Male subjects experimentally exposed to smoked delta
The effects of marijuana on female reproductive system functionality differ between humans and animals. In monkeys, delta
The presence of
Some studies support a possible association between frequent, long-term marijuana use and increased risk of testicular germ cell tumors (Trabert et al., 2011). On the other hand, recent data suggest that cannabinoid agonists may have therapeutic value in the treatment of prostate cancer, a type of carcinoma in which growth is stimulated by androgens. Research with prostate cancer cells shows that the mixed CB
Cannabinoids affect the immune system in many different ways. Synthetic, natural, and endogenous cannabinoids often cause different effects in a dose-dependent biphasic manner (Croxford and Yamamura, 2005; Tanasescu and Constantinescu, 2010).
Studies in humans and animals give conflicting results about cannabinoid
Under the third factor, the Secretary must consider the state of current scientific knowledge regarding marijuana. Thus, this section discusses the chemistry, human pharmacokinetics, and medical uses of marijuana.
Marijuana is one of the common names of
The petition defines marijuana as including all
Marijuana contains numerous naturally occurring constituents including cannabinoids. Overall, various
Cannabinoids primarily exist in
Among the cannabinoids found in marijuana, delta
Other cannabinoids present in marijuana include CBD, CBC, and CBN. CBD, a major cannabinoid of marijuana, is insoluble in water and lipid-soluble. Chemically, CBD is 2-[(1R,6R)-3-methyl-6-prop-1-en-2-ylcyclohex-2-en-1-yl]-5-pentylbenzene-1,3-diol. CBD does not have cannabinol-like psychoactivity (Adams and Martin, 1996; Agurell et al., 1984, 1986; Hollister, 1986). CBC is another major cannabinoid in marijuana. Chemically, CBC is 2-methyl-2-(4-methylpent-3-enyl)-7-pentyl-5-chromenol. CBN, a major metabolite of delta
Different marijuana samples derived from various cultivated strains may differ in chemical constituents including delta
Overall, these variations in the concentrations of cannabinoids and other chemical constituents in marijuana complicate the interpretation of clinical data using marijuana. The lack of consistent concentrations of delta
The term marijuana is often used to refer to a mixture of the dried flowering tops and leaves from
Marijuana can vary in cannabinoid content and potency (Agurell et al., 1984, 1986; Mechoulam 1973, Cascini et al., 2012). In the usual mixture of leaves and stems distributed as marijuana, the concentration of delta
Hashish consists of the dried and compressed cannabinoid-rich resinous material of
Hash oil is produced by solvent extraction of the cannabinoids from plant material. The extract's color and odor vary, depending on the solvent type used. Hash oil is a viscous brown- or amber-colored liquid containing approximately 50 percent cannabinoids. One or two drops of the liquid placed on a cigarette purportedly produce the equivalent of a single· marijuana cigarette (DEA, 2005).
In conclusion, marijuana has hundreds of cultivars containing variable concentrations of delta
Marijuana can be taken in a variety of formulations by multiple routes of administration. Individuals smoke marijuana as a cigarette, weighing between 0.5 and 1.0 gram, or in a pipe. Additionally, individuals take marijuana orally in foods or as an extract in ethanol or other solvents. More recently, access to vaporizers provides another means for abusers to inhale marijuana,
The absorption, metabolism, and pharmacokinetic profile of delta
Characterization of the pharmacokinetics of delta
Smoked marijuana results in absorption of delta
The bioavailability of the delta
After oral administration of delta
Cannabinoid metabolism is complex. Delta
Plasma clearance of delta
The majority of the absorbed delta
State-level public initiatives, including laws and referenda in support of the medical use of marijuana, have generated interest in the medical community and the need for high quality clinical investigation as well as comprehensive safety and effectiveness data. In order to address the need for high quality clinical investigations, the state of California established the Center for Medicinal Cannabis Research (CMCR,
FDA approves medical use of a drug following a submission and review of an NDA or BLA. The FDA has not approved any drug product containing marijuana for marketing. Even so, results of small clinical exploratory studies have been published in the current medical literature. Many studies describe human research with marijuana in the United States under FDA-regulated IND applications.
However, FDA approval of an NDA is not the only means through which a drug can have a currently accepted medical use in treatment in the United States. In general, a drug may have a “currently accepted medical use” in treatment in the United States if the drug meets a five-part test. Established case law (Alliance for Cannabis Therapeutics v. DEA, 15 F.3d 1131, 1135 (D.C. Cir. 1994)) upheld the Administrator of DEA's application of the five-part test to determine whether a drug has a “currently accepted medical use.” The following describes the five elements that characterize “currently accepted medical use” for a drug:
“The substance's chemistry must be scientifically established to permit it to be reproduced into dosages which can be standardized. The listing of the substance in a current edition of one of the official compendia, as defined by section 201 G) of the Food, Drug and Cosmetic Act, 21 U.S.C. 321G), is sufficient to meet this requirement.”
“There must be adequate pharmacological and toxicological studies, done by all methods reasonably applicable, on the basis of which it could fairly and responsibly be concluded, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, that the substance is safe for treating a specific, recognized disorder.”
“There must be adequate, well-controlled, well-designed, well-conducted, and well-documented studies, including clinical investigations, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, on the basis of which it could be fairly and responsibly concluded by such experts that the substance will have the intended effect in treating a specific, recognized disorder.”
“The drug has a New Drug Application (NDA) approved by the Food and Drug Administration, pursuant to the Food, Drug and Cosmetic Act, 21 U.S.C. 355. Or, a consensus of the national community of experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, accepts the safety and effectiveness of the substance for use in treating a specific, recognized disorder. A material conflict of opinion among experts precludes a finding of consensus.” and
“In the absence of NDA approval, information concerning the chemistry, pharmacology, toxicology, and effectiveness of the substance must be reported, published, or otherwise widely available, in sufficient detail to permit experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, to fairly and responsibly conclude the substance is safe and effective for use in treating a specific, recognized disorder.”
Marijuana does not meet any of the five elements necessary for a drug to have a “currently accepted medical use.”
Firstly, the chemistry of marijuana, as defined in the petition, is not reproducible in terms of creating a standardized dose. The petition defines marijuana as including all
As to the second and third criteria; there are neither adequate safety studies nor adequate and well-controlled studies proving marijuana's efficacy. To support the petitioners' assertion that marijuana has accepted medical use, the petitioners cite the American Medical Association's (AMA) 2009 report entitled “Use of Cannabis for Medicinal Purposes.” The petitioners claim the AMA report is evidence the AMA accepts marijuana's safety and efficacy. However, the 2009 AMA report clarifies that the report “should not be viewed as an endorsement of state-based medical cannabis programs, the legalization of marijuana, or that scientific evidence on the therapeutic use of cannabis meets the same and current standards for a prescription drug product.”
Currently, no published studies conducted with marijuana meet the criteria of an adequate and well-controlled efficacy study. The criteria for an adequate and well-controlled study for purposes of determining the safety and efficacy of a human drug are defined under the Code of Federal Regulations (CFR) in 21 CFR 314.126. In order to assess this element, FDA conducted a review of clinical studies published and available in the public domain before February, 2013. Studies were identified through a search of PubMed
The PubMed search yielded a total of 566 abstracts of scientific articles. Of these abstracts, a full-text review was conducted with 85 papers to assess eligibility. Of the studies identified through the search of the references and the 566 abstracts from the PubMed search, only 11 studies met all the criteria for selection (Abrams et al., 2007; Corey-Bloom et al., 2012; Crawford and Merritt, 1979; Ellis et al., 2009; Haney et al., 2005; Haney et al., 2007; Merritt et al., 1980; Tashkin et al., 1974; Ware et al., 2010; Wilsey et al., 2008; Wilsey et al., 2013). These 11 studies were published between 197 4 and 2013. Ten of these studies were conducted in the United States and one study was conducted in Canada. The identified studies examine the effects of smoked and vaporized marijuana for the indications of chronic neuropathic pain, spasticity related to Multiple Sclerosis (MS), appetite stimulation in human immunodeficiency virus (HIV) patients, glaucoma, and asthma. All studies used adult subjects.
The 11 identified studies were individually evaluated to determine if they successfully meet accepted scientific standards. Specifically, they were evaluated on study design including subject selection criteria, sample size, blinding techniques, dosing paradigms, outcome measures, and the statistical analysis of the results. The analysis relied on published studies, thus information available about protocols, procedures, and results were limited to documents published and widely available in the public domain. The review found that all 11 studies that examined effects of inhaled marijuana do not currently prove efficacy of marijuana in any therapeutic indication based on a number of limitations in their study design; however, they may be considered proof of concept studies. Proof of concept studies provide preliminary evidence on a proposed hypothesis involving a drug's effect. For drugs under development, the effect often relates to a short-term clinical outcome being investigated. Proof of concept studies often serve as the link between preclinical studies and dose ranging clinical studies. Thus, proof of concept studies generally are not sufficient to prove efficacy of a drug because they provide only preliminary information about the effects of a drug.
In addition to the lack of published adequate and well-controlled efficacy studies proving efficacy, the criteria for adequate safety studies has also not been met. Importantly, in its discussion of the five-part test used to determine whether a drug has a “currently accepted medical use,” DEA said, “No drug can be considered safe in the abstract. Safety has meaning only when judged against the intended use of the drug, its known effectiveness, its known and potential risks, the severity of the illness to be treated, and the availability of alternative remedies” (57 FR 10504). When determining whether a drug product is safe and effective for any indication, FDA performs an extensive risk-benefit analysis to determine whether the risks posed by the drug product's side effects are outweighed by the drug product's potential benefits for a particular indication. Thus, contrary to the petitioner's assertion that marijuana has accepted safety, in the absence of an accepted therapeutic indication which can be weighed against marijuana's risks, marijuana does not satisfy the element for having adequate safety studies such that experts may conclude that it is safe for treating a specific, recognized disorder.
The fourth of the five elements for determining “currently accepted medical use” requires that the national community of experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, accepts the safety and effectiveness of the substance for use in treating a specific, recognized disorder. A material conflict of opinion among experts precludes a finding of consensus. Medical practitioners who are not experts in evaluating drugs are not qualified to determine whether a drug is generally recognized as safe and effective or meets NDA requirements (57 FR 10499-10505).
There is no evidence that there is a consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognized disorder. As discussed above, there are not adequate scientific studies that show marijuana is safe and effective in treating a specific, recognized disorder. In addition, there is no evidence that a consensus of qualified experts have accepted the safety and effectiveness of marijuana for use in treating a specific, recognized disorder. Although medical practitioners are not qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, we also note that the AMA's report, entitled “Use of Cannabis for Medicinal Purposes,” does not accept that marijuana currently has accepted medical use. Furthermore, based on the above definition of a “qualified expert”, who is an individual qualified by scientific training and experience to evaluate the safety and effectiveness of a drug, state-level medical marijuana laws do not provide evidence of a consensus among qualified experts that marijuana is safe and effective for use in treating a specific, recognized disorder.
As to the fifth part of the test, which requires that information concerning the chemistry, pharmacology, toxicology, and effectiveness of marijuana to be reported in sufficient detail, the scientific evidence regarding all of these aspects is not available in sufficient detail to allow adequate scientific scrutiny. Specifically, the scientific evidence regarding marijuana's chemistry in terms of a specific
Alternately, a drug can be considered to have a “currently accepted medical use with severe restrictions” (21 U.S.C. 812(b)(2)(B)), as allowed under the stipulations for a Schedule II drug. Yet, as stated above, currently marijuana does not have any accepted medical use, even under conditions where its use is severely restricted.
In conclusion, to date, research on marijuana's medical use has not progressed to the point where marijuana is considered to have a “currently accepted medical use” or a “currently accepted medical use with severe restrictions.”
Under the fourth factor, the Secretary must consider the history and current pattern of marijuana abuse. A variety of sources provide data necessary to assess abuse patterns and trends of marijuana. The data indicators of marijuana use include the NSDUH, MTF, DAWN, and TEDS. The following briefly describes each data source, and summarizes the data from each source.
According to 2012 NSDUH
The majority of individuals who try marijuana at least once in their lifetime do not currently use marijuana. The 2012 NSDUH estimates that 111.2 million individuals (42.8 percent of the U.S. population) have used marijuana at least once in their lifetime. Based on this estimate and the estimate for the number of individuals currently using marijuana, approximately 16.9 percent of those who have tried marijuana at least once in their lifetime currently use marijuana; conversely, 83.1 percent do not currently use marijuana. In terms of the frequency of marijuana use, an estimated 40.3 percent of individuals who used marijuana in the past month used marijuana on 20 or more days within the past month. This amount corresponds to an estimated 7.6 million individuals who used marijuana on a daily or almost daily basis.
Some characteristics of marijuana users are related to age, gender, and criminal justice system involvement. In observing use among different age cohorts, the majority of individuals who currently use marijuana are shown to be between the ages of 18-25, with 18.7 percent of this age group currently using marijuana. In the 26 and older age group, 5.3 percent of individuals currently use marijuana. Additionally, in individuals aged 12 years and older, males reported more current marijuana use than females.
NSDUH includes a series of questions aimed at assessing the prevalence of dependence and abuse of different substances in the past 12 months.
According to MTF,
Importantly, many factors can influence the estimates of ED visits, including trends in overall use of a substance as well as trends in the reasons for ED usage. For instance, some drug users may visit EDs for life-threatening issues while others may visit to seek care for detoxification because they needed certification before entering treatment. Additionally, DAWN data do not distinguish the drug responsible for the ED visit from other drugs that may have been used concomitantly. As stated in a DAWN report, “Since marijuana/hashish is frequently present in combination with other drugs, the reason for the ED visit may be more relevant to the other drug(s) involved in the episode.”
For 2011, DAWN
During the same period, DAWN estimates that 1,252,500 (CI: 976,169 to 1,528,831) drug related ED visits involved illicit drugs. Thus, over half of all drug-related ED visits associated with drug misuse or abuse involved an illicit drug. For ED visits involving illicit drugs, 56.3 percent involved multiple drugs while 43.7 percent involved a single drug.
Marijuana was involved in 455,668 ED visits (CI: 370,995 to 540,340), while cocaine was involved in 505,224 (CI: 324,262 to 686,185) ED visits, heroin was involved in 258,482 (CI: 205,046 to 311,918) ED visits and stimulants including amphetamine and methamphetamine were involved in 159,840 (CI: 100,199 to 219,481) ED visits. Other illicit drugs, such as PCP, MDMA, GHB and LSD were much less frequently associated with ED visits. The number of ED visits involving marijuana has increased by 62 percent since 2004.
Marijuana-related ED visits were most frequent among young adults and minors. Individuals under the age of 18 accounted for 13.2 percent of these marijuana-related visits, whereas this age group accounted for approximately 1.2 percent of ED visits involving cocaine, and less than 1 percent of ED visits involving heroin. However, the age group with the most marijuana-related ED visits was between 25 and 29 years old. Yet, because populations differ between age groups, a standardized measure for population size is useful to make comparisons. For marijuana, the rates of ED visits per 100,000 population were highest for patients aged 18 to 20 (443.8 ED visits per 100,000) and for patients aged 21 to 24 (446.9 ED visits per 100,000).
While DAWN provides estimates for ED visits associated with the use of medical marijuana for 2009-2011, the validity of these estimates is questionable. Because the drug is not approved by the FDA, reporting medical marijuana may be inconsistent and reliant on a number of factors including whether the patient self-reports the marijuana use as medicinal, how the treating health care provider records the marijuana use, and lastly how the SAMHSA coder interprets the report. All of these aspects will vary greatly between states with medical marijuana laws and states without medical marijuana laws. Thus, even though estimates are reported for medical marijuana related ED visits, medical marijuana estimates cannot be assessed with any acceptable accuracy at this time, as FDA has not approved marijuana treatment of any medical condition. These data show the difficulty in evaluating abuse of a product that is not currently approved by FDA, but authorized for medical use, albeit inconsistently, at the state level. Thus, we believe the likelihood of the treating health care provider or SAMHSA coder attributing the ED visit to “medical marijuana” versus “marijuana” to be very low. Overall, the available data are inadequate to
Primary marijuana abuse accounted for 18.1 percent of all 2011 TEDS
An important aspect of TEDS admission data for marijuana is of the referral source for treatment. Specifically, primary marijuana admissions were less likely than all other admissions to either be self-referred or referred by an individual for treatment. Instead, the criminal justice system referred more than half (51.6 percent) of primary marijuana admissions.
Since 2003, the percent of admissions for primary marijuana abuse increased from 15.5 percent of all admissions in 2003 to 18.l percent in 2011. This increase is less than the increase seen for admissions for primary opioids other than heroin, which increased from 2.8 percent in 2003 to 7.3 percent in 2011. In contrast, the admissions for primary cocaine abuse declined from 9.8 percent in 2003 to 2.0 percent in 2011.
Under the fifth factor, the Secretary must consider the scope, duration, and significance of marijuana abuse. According to 2012 data from NSDUH and 2013 data from MTF, marijuana remains the most extensively used illegal drug in the United States, with 42.8 percent of U.S. individuals over age 12 (111.2 million) and 45.5 percent of 12th graders having used marijuana at least once in their lifetime. Although the majority of individuals over age 12 (83.1 percent) who have ever used marijuana in their lifetime do not use the drug monthly, 18.9 million individuals (7.3 percent of the U.S. population) report that they used marijuana within the past 30 days. An examination of use among various age cohorts through NSDUH demonstrates that monthly use occurs primarily among college-aged individuals, with use dropping off sharply after age 25. Additionally, NSDUH data show the number of individuals reporting past-month use of marijuana has increased by 4.3 million individuals since 2004. Data from MTF shows that annual prevalence of marijuana use declined for all three grades from 2005 through 2007, then began to rise through 2013. Additionally, in 2013, 1.1 percent of 8th graders, 4.0 percent of 10th graders, and 6.5 percent of 12th graders reported daily use of marijuana, defined as use on 20 or more days within the past 30 days.
The 2011 DAWN data show that marijuana use was mentioned in 455,668 ED visits, which amounts to approximately 36.4 percent of all illicit drug-related ED visits.
TEDS data for 2011 show that 18.1 percent of all admissions were for primary marijuana abuse.
Under the sixth factor, the Secretary must consider the risks posed to the public health by marijuana. Factors 1, 4, and 5 include a. discussion of the risk to the public health as measured by emergency room episodes and drug treatment admissions. Additionally, Factor 2 includes a discussion of marijuana's central nervous system, cognitive, cardiovascular, autonomic, respiratory, and immune system effects. Factor 6 focuses on the health risks to the individual user in terms of the risks from acute and chronic use of marijuana, as well as the “gateway hypothesis.”
Acute use of marijuana impairs psychomotor performance, including complex task performance, which makes operating motor vehicles or heavy equipment after using marijuana inadvisable (Ramaekers et al., 2004; Ramaekers et al., 2006a). A meta-analysis conducted by Li et al. (2011) showed an association between marijuana use by the driver and a significantly increased risk of involvement in a car accident. Additionally, in a minority of individuals who use marijuana, some potential responses include dysphoria and psychological distress, including prolonged anxiety reactions (Haney et al., 1999).
A distinctive marijuana withdrawal syndrome following long term or chronic use has been identified. The withdrawal syndrome indicates that marijuana produces physical dependence that is mild, short-lived, and comparable to tobacco withdrawal (Budney et al., 2008). Marijuana withdrawal syndrome is described in detail below under Factor 7.
The following states how the DSM-V (2013) of the American Psychiatric Association describes the consequences of
Individuals with cannabis use disorder may use cannabis throughout the day over a period of months or years, and thus may spend many hours a day under the influence. Others may use less frequently, but their use causes recurrent problems related to family,
Kandel (1975) proposed nearly 40 years ago the hypothesis that marijuana is a “gateway drug” that leads to the use or abuse of other illicit drugs. Since that time, epidemiological research explored this premise. Overall, research does not support a direct causal relationship between regular marijuana use and other illicit drug use. The studies examining the gateway hypothesis are limited. First, in general, studies recruit individuals influenced by a myriad of social, biological, and economic factors that contribute to extensive drug abuse (Hall & Lynskey, 2005). Second, most studies that test the hypothesis that marijuana use causes abuse of illicit drugs use the determinative measure
Little evidence supports the hypothesis that initiation of marijuana use leads to an abuse disorder with other illicit substances. For example, one longitudinal study of 708 adolescents demonstrated that early onset marijuana use did not lead to problematic drug use (Kandel & Chen, 2000). Similarly, Nace et al. (1975) examined Vietnam-era soldiers who extensively abused marijuana and heroin while they were in the military, and found a lack of correlation of a causal relationship demonstrating marijuana use leading to heroin addiction. Additionally, in another longitudinal study of 2,446 adolescents, marijuana dependence was uncommon but when it did occur, the common predictors of marijuana dependence were the following: parental death, deprived socio-economic status, and baseline illicit drug use other than marijuana (von Sydow et al., 2002).
When examining the association between marijuana and illicit drugs, focusing on drug use versus abuse or dependence, different patterns emerge. For example, a study examining the possible causal relationship of the gateway hypothesis found a correlation between marijuana use in adolescents and other illicit drug use in early adulthood and, adjusting for age-linked experiences, did not effect this correlation (Van Gundy and Rebellon, 2010). However, when examining the association in terms of development of drug abuse; age-linked stressors and social roles moderated the correlation between marijuana use in adolescents and other illicit drug abuse. Similarly, Degenhardt et al. (2009) examined the development of drug dependence and found an association that did not support the gateway hypothesis. Specifically, drug dependence was significantly associated with the use of other illicit drugs prior to marijuana use.
Interestingly, the order of initiation of drug use seems to depend on the prevalence of use of each drug, which varies by country. Based on the World Health Organization (WHO) World Mental Health Survey that includes data from 17 different countries, the order of drug use initiation varies by country and relates to prevalence of drug use in each country (Degenhardt et al., 2010). Specifically, in the countries with the lowest prevalence of marijuana use, use of other illicit drugs before marijuana was common. This sequence of initiation is less common in countries with higher prevalence of marijuana use. A study of 9,282·households in the United States found that marijuana use often preceded the use of other illicit drugs; however, prior non-marijuana drug dependence was also frequently correlated with higher levels of illicit drug abuse (Degenhardt et al., 2009). Additionally, in a large 25-year longitudinal study of 1,256 New Zealand children, the author concluded that marijuana use correlated to an increased risk of abuse of other drugs, including cocaine and heroin (Fergusson et al., 2005).
Although many individuals with a drug abuse disorder may have used marijuana as one of their first illicit drugs, this fact does not correctly lead to the reverse inference that most individuals who used marijuana will inherently go on to try or become regular users of other illicit drugs. Specifically, data from the 2011 NSDUH survey illustrates this issue (SAMHSA, 2012). NSDUH data estimates 107.8 million individuals have a lifetime history of marijuana use, which indicates use on at least one occasion, compared to approximately 36 million individuals having a lifetime history of cocaine use and approximately 4 million individuals having a lifetime history of heroin use. NSDUH data do not provide information about each individual's specific drug history. However, even if one posits that every cocaine and heroin user previously used marijuana, the NSDUH data show that marijuana use at least once in a lifetime does not predict that an individual will also use another illicit drug at least once.
Finally, a review of the gateway hypothesis by Vanyukov et al. (2012) notes that because the gateway hypothesis only addresses the order of drug use initiation, the gateway hypothesis does not specify any mechanistic connections between drug “stages” following exposure to marijuana and does not extend to the risks for addiction. This concept contrasts with the concept of a common liability to addiction that involves mechanisms and biobehavioral characteristics pertaining to the entire course of drug abuse risk and disorders.
Under the seventh factor, the Secretary must consider marijuana's psychic or physiological dependence liability.
Psychic or psychological dependence has been shown in response to marijuana's psychoactive effects. Psychoactive responses to marijuana are pleasurable to many humans and are associated with drug-seeking and drug-taking (Maldonado, 2002). Moreover, high levels of psychoactive effects, notably positive reinforcement, are associated with increased marijuana use, abuse, and dependence (Scherrer et al., 2009; Zeiger et al., 2010). Epidemiological data support these findings through 2012 NSDUH statistics that show that of individuals years 12 or older who used marijuana in the past month, an estimated 40.3 percent used marijuana on 20 or more days within the past month. This equates to approximately 7.6 million individuals aged 12 or older who used marijuana on a daily or almost daily basis.
Tolerance is a state of adaptation where exposure to a drug induces changes that result in a diminution of one or more of the drug's effects over time (American Academy of Pain Medicine, American Pain Society and American Society of Addiction Medicine consensus document, 2001). Tolerance can develop to some, but not all, of marijuana's effects. Specifically, tolerance does not seem to develop in response to many of marijuana's psychoactive effects. This lack of tolerance may relate to electrophysiological data demonstrating that chronic delta
However, humans can develop tolerance to marijuana's cardiovascular, autonomic, and behavioral effects (Jones et al., 1981). Tolerance to some of marijuana's behavioral effects seems to develop after heavy marijuana use, but not after occasional marijuana use. For instance, following acute administration of marijuana, heavy marijuana users did not exhibit impairments in tracking and attention tasks, as were seen in occasional marijuana users (Ramaekers et al., 2009). Furthermore, a neurophysiological assessment administered through an electroencephalograph (EEG) which measures event-related potentials (ERP) conducted in the same subjects as the previous study, found a corresponding effect in the P100
Importantly, pharmacological tolerance alone does not indicate a drug's physical dependence liability. In order for physical dependence to exist, evidence of a withdrawal syndrome is needed. Physical dependence is a state of adaptation, manifested by a drug-class specific withdrawal syndrome produced by abrupt cessation, rapid dose reduction, decreasing blood level of the drug, and/or administration of an antagonist
Discontinuation of heavy, chronic marijuana use has been shown to lead to physical dependence and withdrawal symptoms (American Psychiatric Association DSM-V, 2013; Budney and Hughes, 2006; Haney et al., 1999). In heavy, chronic marijuana users, the most commonly reported withdrawal symptoms are sleep difficulties, decreased appetite or weight loss, irritability, anger, anxiety or nervousness, and restlessness. Some less commonly reported withdrawal symptoms are depressed mood, sweating, shakiness, physical discomfort, and chills (Budney and Hughes, 2006; Haney et al., 1999). The occurrence of marijuana withdrawal symptoms in light or non-daily marijuana users has not been established. The American Psychiatric Association's DSM-V (2013) includes a list of symptoms of “cannabis withdrawal.” Most marijuana withdrawal symptoms begin within 24-48 hours of discontinuation, peak within 4-6 days, and last for 1-3 weeks. Marijuana withdrawal syndrome has been reported in adolescents and adults admitted for substance abuse treatment.
Based on clinical descriptions, this syndrome appears to be mild compared to classical alcohol and barbiturate withdrawal syndromes, which can include more serious symptoms such as agitation, paranoia, and seizures. Multiple studies comparing marijuana and tobacco withdrawal symptoms in humans demonstrate that the magnitude and time course of the two withdrawal syndromes are similar (Budney et al., 2008; Vandrey et al., 2005, 2008).
Under the eight factor analysis, the Secretary must consider whether marijuana is an immediate precursor of a controlled substance. Marijuana is not an immediate precursor of another controlled substance.
After consideration of the eight factors discussed above, FDA recommends that marijuana remain in Schedule I of the CSA. NIDA concurs with this scheduling recommendation.Marijuana meets the three criteria for placing a substance in Schedule I of the CSA under 21 U.S.C. 812(b)(l):
(1) Marijuana has a high potential for abuse:
A number of factors indicate marijuana's high abuse potential, including the large number of individuals regularly using marijuana, marijuana's widespread use, and the vast amount of marijuana available for illicit use. Approximately 18.9 million individuals in the United States (7.3 percent of the U.S. population) used marijuana monthly in 2012. Additionally, approximately 4.3 million individuals met diagnostic criteria for marijuana dependence or abuse in the year prior to the 2012 NSDUH survey. A 2013 survey indicates that by 12th grade, 36.4 percent of students report using marijuana within the past year, and 22.7 percent report using marijuana monthly. In 2011, 455,668 ED visits were marijuana-related, representing 36.4 percent of all illicit drug-related episodes. Primary marijuana use accounted for 18.1 percent of admissions to drug treatment programs in 2011. Additionally, marijuana has dose-dependent reinforcing effects, as demonstrated by data showing that humans prefer relatively higher doses to lower doses. Furthermore, marijuana use can result in psychological dependence.
(2) Marijuana has no currently accepted medical use in treatment in the United States:
FDA has not approved a marketing application for a marijuana drug product for any indication. The opportunity for scientists to conduct clinical research with marijuana exists, and there are active INDs for marijuana; however, marijuana does not have a currently accepted medical use for treatment in the United States, nor does marijuana have an accepted medical use with severe restrictions.
A drug has a “currently accepted medical use” if all of the following five elements have been satisfied:
a. The drug's chemistry is known and reproducible;
b. there are adequate safety studies;
c. there are adequate and well-controlled studies proving efficacy;
d. the drug is accepted by qualified experts; and
e. the scientific evidence is widely available.
Marijuana does not meet any of the elements for having a “currently accepted medical use.” First, FDA broadly evaluated marijuana, and did not focus its evaluation on particular strains of marijuana or components or derivatives of marijuana. Since different strains may have different chemical constituents, marijuana, as identified in this petition, does not have a known and reproducible chemistry, which would be needed to provide standardized doses. Second, there are not adequate safety studies on marijuana in the medical literature in relation to a specific, recognized disorder. Third, there are no published adequate and well controlled studies proving efficacy of marijuana. Fourth, there is no evidence that qualified experts accept marijuana for use in treating a specific, recognized disorder. Lastly, the scientific evidence regarding marijuana's chemistry in terms of a specific
Alternately, a Schedule II drug can be considered to have a “currently accepted medical use with severe restrictions” (21 U.S.C. 812(b)(2)(B)). Yet as stated above, the lack of accepted medical use for a specific, recognized disorder precludes the use of marijuana even under conditions where its use is severely restricted.
In conclusion, to date, research on marijuana's medical use has not developed to the point where marijuana is considered to have a “currently accepted medical use” or a “currently accepted medical use with severe restrictions.”
(3) There is a lack of accepted safety for use of marijuana under medical supervision:
There are currently no FDA-approved marijuana drug products. Marijuana does not have a currently accepted medical use in treatment in the United States or a currently accepted medical use with severe restrictions. Thus, FDA has not determined that marijuana is safe for use under medical supervision.
In addition, FDA cannot conclude that marijuana has an acceptable level of safety relative to its effectiveness in treating a specific, recognized disorder without evidence that the substance is contamination free, and assurance of a consistent and predictable dose. Investigations into the medical use of marijuana should include information and data regarding the chemistry, manufacturing, and specifications of marijuana. Additionally, a procedure for delivering a consistent dose of marijuana should also be developed. Therefore, FDA concludes marijuana does not currently have an accepted level of safety for use under medical supervision.
Marijuana is a Schedule I substance under the Controlled Substances Act (CSA). Schedule I indicates a high potential for abuse, no currently accepted medical use in the United States, and a lack of accepted safety for use under medical supervision. To date, marijuana has not been subject to an approved new drug application (NDA) that demonstrates its safety and efficacy for a specific indication under the Food Drug and Cosmetic Act (FDCA).
Nevertheless, as of October 2014, twenty-three states and the District of
The present review was undertaken by the Food and Drug Administration (FDA) to analyze the clinical studies published in the medical literature investigating the use of marijuana in any therapeutic areas. First, we discuss the context for this scientific review. Next, we describe the methods used in this review to identify adequate and well-controlled studies evaluating the safety and efficacy of marijuana for particular therapeutic uses.
The FDA conducted a systematic search for published studies in the medical literature that meet the described criteria for study design and outcome measures prior to February 2013. While not part of our systematic review, we have continued to routinely follow the literature beyond that date for subsequent studies. Studies were considered to be relevant to this review if the investigators administered marijuana to patients with a diagnosed medical condition in a well-controlled, double-blind, placebo-controlled clinical trial. Of the eleven studies that met the criteria for review, five different therapeutic areas were investigated:
For each of these eleven clinical studies, information is provided regarding the subjects studied, the drug conditions tested (including dose and method of administration), other drugs used by subjects during the study, the physiological and subjective measures collected, the outcome of these measures comparing treatment with marijuana to placebo, and the reported and observed adverse events. The conclusions drawn by the investigators are then described, along with potential limitations of these conclusions based on the study design. A brief summary of each study's findings and limitations is provided at the end of the section.
The eleven clinical studies that met the criteria and were evaluated in this review showed positive signals that marijuana may produce a desirable therapeutic outcome, under the specific experimental conditions tested. Notably, it is beyond the scope of this review to determine whether these data demonstrate that marijuana has a currently accepted medical use in the United States. However, this review concludes that these eleven clinical studies serve as proof-of-concept studies, based on the limitations of their study designs, as described in the study summaries. Proof-of-concept studies provide preliminary evidence on a proposed hypothesis regarding a drug's effect. For drugs under development, the effect often relates to a short-term clinical outcome being investigated. Proof-of-concept studies serve as the link between preclinical studies and dose ranging clinical studies. Therefore, proof-of-concept studies are not sufficient to demonstrate efficacy of a drug because they provide only preliminary information about the effects of a drug. However, the studies reviewed produced positive results, suggesting marijuana should be further evaluated as an adjunct treatment for neuropathic pain, appetite stimulation in HIV patients, and spasticity in MS patients.
The main limitations identified in the eleven studies testing the medical applications of marijuana are listed below:
• The small numbers of subjects enrolled in the studies, which limits the statistical analyses of safety and efficacy.
• The evaluation of marijuana only after acute administration in the studies, which limits the ability to determine efficacy following chronic administration.
• The administration of marijuana typically through smoking, which exposes ill patients to combusted material and introduces problems with determining the doses delivered.
• The potential for subjects to identify whether they received marijuana or placebo, which breaks the blind of the studies.
• The small number of cannabinoid naïve subjects, which limits the ability to determine safety and tolerability in these subjects.
• The low number of female subjects, which makes it difficult to generalize the study findings to subjects of both genders.
Thus, this review discusses the following methodological changes that may be made in order to resolve these limitations and improve the design of future studies which examine the safety and efficacy of marijuana for specific therapeutic indications:
• Determine the appropriate number of subjects studied based on recommendations in various FDA
• Administer consistent and reproducible doses of marijuana based on recommendations in the FDA
• Evaluate the effects of marijuana under therapeutic conditions following both acute and chronic administration.
• Consider alternatives to smoked marijuana (
• Address and improve whenever possible the difficulty in blinding of marijuana and placebo treatments in clinical studies.
• Evaluate the effect of prior experience with marijuana with regard to the safety and tolerability of marijuana.
• Strive for gender balance in the subjects used in studies.
In conclusion, the eleven clinical studies conducted to date do not meet the criteria required by the FDA to determine if marijuana is safe and effective in specific therapeutic areas. However, the studies can serve as proof-of-concept studies and support further research into the use of marijuana in these therapeutic indications. Additionally, the clinical outcome data and adverse event profiles reported in these published studies can beneficially inform how future research in this area is conducted. Finally, application of the recommendations listed above by investigators when designing future studies could greatly improve the available clinical data that can be used to determine if marijuana has validated and reliable medical applications.
In response to citizen petitions submitted to the Drug Enforcement Administration (DEA) requesting DEA to reschedule marijuana, the DEA Administrator requested that the U.S. Department of Health and Human Services (HHS) provide a scientific and medical evaluation of the available information and a scheduling recommendation for marijuana, in accordance with 21 U.S.C. 811(b). The Secretary of HHS is required to consider in a scientific and medical evaluation eight factors determinative of control under the Controlled Substance Act (CSA). Administrative responsibilities for evaluating a substance for control under the CSA are performed by the Food and Drug Administration (FDA), with the concurrence of the National Institute on Drug Abuse (NIDA). Part of
Under Section 202 of the CSA, marijuana is currently controlled as a Schedule I substance (21 U.S.C. 812). Schedule I includes those substances that have a high potential for abuse, have no currently accepted medical use in treatment in the United States, and lack accepted safety for use under medical supervision (21 U.S.C. 812(b)(1)(A)-(C)).
A drug product which has been approved by FDA for marketing in the United States is considered to have a “currently accepted medical use.” Marijuana is not an FDA-approved drug product, as a New Drug Application (NDA) or Biologics License application (BLA) for marijuana has not been approved by FDA. However, FDA approval of an NDA is not the only means through which a drug can have a currently accepted medical use in the United States.
In general, a drug may have a “currently accepted medical use” in the United States if the drug meets a five-part test. Established case law (
“The substance's chemistry must be scientifically established to permit it to be reproduced into dosages which can be standardized. The listing of the substance in a current edition of one of the official compendia, as defined by section 201(j) of the Food, Drug and Cosmetic Act, 21 U.S.C. 321(j), is sufficient to meet this requirement.”
“There must be adequate pharmacological and toxicological studies, done by all methods reasonably applicable, on the basis of which it could fairly and responsibly be concluded, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, that the substance is safe for treating a specific, recognized disorder.”
“There must be adequate, well-controlled, well-designed, well-conducted, and well-documented studies, including clinical investigations, by experts qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, on the basis of which it could be fairly and responsibly concluded by such experts that the substance will have the intended effect in treating a specific, recognized disorder.”
“The drug has a New Drug Application (NDA) approved by the Food and Drug Administration, pursuant to the Food, Drug and Cosmetic Act, 21 U.S.C. 355. Or, a consensus of the national community of experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, accepts the safety and effectiveness of the substance for use in treating a specific, recognized disorder. A material conflict of opinion among experts precludes a finding of consensus.” and
“In the absence of NDA approval, information concerning the chemistry, pharmacology, toxicology, and effectiveness of the substance must be reported, published, or otherwise widely available, in sufficient detail to permit experts, qualified by scientific training and experience to evaluate the safety and effectiveness of drugs, to fairly and responsibly conclude the substance is safe and effective for use in treating a specific, recognized disorder.”
One way to pass the five-part test for having “currently accepted medical use” is through submission of an NDA or BLA which is approved by FDA. However, FDA approval of an NDA or BLA is not required for a drug to pass the five-part test.
This review focuses on FDA's analysis of one element of the five-part test for determining whether a drug has “currently accepted medical use”. Specifically, the present review assesses the 3rd criterion that addresses whether marijuana has “adequate and well-controlled studies proving efficacy”. Thus, this review evaluates published clinical studies that have been conducted using marijuana in subjects who have a variety of medical conditions by assessing the adequacy of the summarized study designs and the study data. The methodology for selecting the studies that were evaluated is delineated below.
FDA's evaluation and conclusions regarding the remaining four criteria for whether marijuana has a “currently accepted medical use,” as well as the eight factors pertaining to the scheduling of marijuana, are outside the scope of this review. A detailed discussion of these factors is contained in FDA's scientific and medical evaluation of marijuana.
The methods for selecting the studies to include in this review involved the following steps, which are described in detail in the subsections below:
1. Define the objective of the review.
2. Define “marijuana” in order to facilitate the medical literature search for studies that administered the substance,
3. Define “adequate and well-controlled studies” in order to facilitate the search for relevant data and literature,
4. Search medical literature databases and identify relevant adequate and well-controlled studies, and
5. Review and analyze the adequate and well-controlled clinical studies to determine if they demonstrate efficacy of marijuana for any therapeutic indication.
The objective of this review is to assess the study designs and resulting data from clinical studies published in the medical literature that were conducted with marijuana (as defined below) as a treatment for any therapeutic indication, in order to determine if they meet the criteria of “adequate and well-controlled studies proving efficacy”.
In this review, the term “marijuana” refers to the flowering tops or leaves of the
Studies which administered individual cannabinoids (whether experimental substances or marketed drug products) or marijuana extracts were excluded from this review. Additionally, studies of administered neutral plant material or placebo marijuana (marijuana with all cannabinoids extracted) that had subsequently been supplemented by the addition of specific amounts of THC or other cannabinoids were also excluded (Chang et al., 1979).
The criteria for an “adequate and well-controlled study” for purposes of determining the safety and efficacy of a human drug is defined under the Code of Federal Regulations (CFR) in 21 CFR 314.126. The elements of an adequate and well-controlled study as described in 21 CFR 314.126 can be summarized as follows:
1. The main objective must be to assess a therapeutically relevant outcome.
2. The study must be placebo-controlled.
3. The subjects must qualify as having the medical condition being studied.
4. The study design permits a valid comparison with an appropriate control condition.
5. The assignment of subjects to treatment and control groups must be randomized.
6. There is minimization of bias through the use of a double-blind study design.
7. The study report contains a full protocol and primary data.
8. Analysis of the study data is appropriately conducted.
As noted above, the current review examines only those data available in the public domain and thus relies on clinical studies published in the medical literature. Published studies by their nature are summaries that do not include the level of detail required by studies submitted to FDA in an NDA.
While the majority of the elements defining an adequate and well-controlled study can be satisfied through a published paper (elements #1-6), there are two elements that cannot be met by a study published in the medical literature: element #7 (availability of a study report with full protocol and primary data) and element #8 (a determination of whether the data analysis was appropriate). Thus, for purposes of this review, only elements #1-6 will be used to qualify a study as being adequate and well-controlled.
We identified randomized, double-blind, placebo-controlled clinical studies conducted with marijuana to assess marijuana's efficacy in any therapeutic indication. Two primary medical literature databases were searched for all studies posted to the databases prior to February 2013:
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Figure 1 (below) provides an overview of the process used to identify studies from the PubMed search. The eleven studies reviewed were published between 1974 and 2013. Ten of these studies were conducted in the United States and one study was conducted in Canada. These eleven studies examined the effects of smoked and vaporized marijuana for the indications of chronic neuropathic pain, spasticity related to multiple sclerosis (MS), appetite stimulation in patients with human immunodeficiency virus (HIV), glaucoma, and asthma. All included studies used adult patients as subjects. All studies conducted in the United States were conducted under an IND as Phase 2 investigations.
Two qualifying studies, which assessed marijuana for glaucoma, were previously reviewed in the 1999 Institute of Medicine (IOM) report entitled “Marijuana and Medicine: Assessing the Science Base”.
Based on the selection criteria for relevant studies described in Section 2.3 (Define Adequate and Well-Controlled Clinical Studies), a number of clinical studies that investigated marijuana, as defined in this review, were excluded from this review. Studies that examined the effects of marijuana in healthy subjects were excluded because they did not test a patient population with a medical condition (Flom et al., 1975; Foltin et al., 1986; Foltin et al., 1988; Hill et al., 1974; Milstein et al., 1974; Milstein et al., 1975; Soderpalm et al., 2001; Wallace et al., 2007; Greenwald and Stitzer, 2000). A 1975 study by Tashkin et al. was excluded because it had a single-blind, rather than double-blind, study design. Two other studies were excluded because the primary outcome measure assessed safety rather than a therapeutic outcome (Greenberg et al., 1994; Abrams et al., 2003).
Qualified clinical studies that evaluated marijuana for therapeutic purposes were examined in terms of adequacy of study design including method of drug administration, study size, and subject inclusion and exclusion criteria. Additionally, the measures and methods of analysis used in the studies to assess the treatment effect were examined.
The eleven qualifying studies in this review assessed a variety of therapeutic indications. In order to better facilitate analysis and discussion of the studies, the following sections group the studies by therapeutic area. Within each section, each individual study is summarized in terms of its design, outcome data and important limitations. This information is also provided in the Appendix in tabular form for each study.
Five randomized, double-blind, placebo-controlled Phase 2 clinical studies have been conducted to examine the effects of inhaled marijuana smoke on neuropathic pain associated with HIV-sensory neuropathy (Abrams et al., 2007; Ellis et al., 2009) and chronic neuropathic pain from multiple causes
Two studies examined the effect of marijuana to reduce the pain induced by HIV-sensory neuropathy.
Abrams et al. (2007) conducted the first study entitled, “Cannabis in painful HIV-associated sensory neuropathy: A randomized placebo-controlled trial”. The subjects were 50 adult patients with uncontrolled HIV-associated sensory neuropathy, who had at least 6 experiences with smoking marijuana. The subjects were split into two parallel groups of 25 subjects each. More than 68% of subjects were current marijuana users, but all individuals were required to discontinue using marijuana prior to the study. Most subjects were taking medication for pain during the study, with the most common medications being opioids and gabapentin. Upon entry into the study, subjects had an average daily pain score of at least 30 on a 0-100 visual analog scale (VAS).
Subjects were randomized to receive either smoked marijuana (3.56% THC
Primary outcome measures included daily VAS ratings of chronic pain and the percentage of subjects who reported a result of more than 30% reduction in pain intensity. The ability of smoked marijuana to induce acute analgesia was assessed using both thermal heat model and capsaicin sensitization model, while anti-hyperalgesia was assessed with brush and von Frey hair stimuli. The immediate analgesic effects of smoked marijuana was assessed using a 0-100 point VAS at 40-minute intervals three times before and three times after the first and last smoking sessions, which was done to correspond to the time of peak plasma cannabinoid levels. Notably, not all subjects completed the induced pain portion of the study (n = 11 in marijuana group, 9 in placebo group) because of their inability to tolerate the stimuli. Throughout the study, subjects also completed the Profile of Mood States (POMS) questionnaire, as well as subjective VAS measures of anxiety, sedation, disorientation, paranoia, confusion, dizziness, and nausea.
As a result, the median daily pain was reduced 34% by smoked marijuana compared to 17% by placebo (
There were no serious AEs and no episodes of hypertension, hypotension, or tachycardia requiring medical intervention. No subjects withdrew from the study for drug related reasons. Subjects in the marijuana group reported higher ratings on the subjective measures of anxiety, sedation, disorientation, confusion, and dizziness compared to the placebo group. There was one case of severe dizziness in a marijuana-treated subject. By the end of the study, subjects treated with marijuana and placebo reported a reduction in total mood disturbance as measured by POMS.
The authors conclude that smoked marijuana effectively reduced chronic neuropathic pain from HIV-associated sensory neuropathy with tolerable side effects. However, limitations of this study include: Maintenance of subjects on other analgesic medication while being tested with marijuana and a lack of information about the number of puffs during each inhalation of smoke. These limitations make it difficult to conclude that marijuana has analgesic properties on its own and that the actual AEs experienced during the study in response to marijuana are tolerable. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled HIV-associated sensory neuropathy.
Ellis et al. (2009) conducted a more recent study entitled “Smoked medicinal cannabis for neuropathic pain in HIV: a randomized, crossover clinical trial”. The subjects were 28 HIV-positive adult male patients with intractable neuropathic pain that was refractory to the effects of at least two drugs taken for analgesic purposes. Upon entry into the study, subjects had a mean score of >5 on the Pain Intensity subscale of the Descriptor Differential Scale (DDS). Subjects were allowed to continue taking their current routine of pain medications, which included opioids, non-narcotic analgesics, antidepressants, and anticonvulsants. Previous experience with marijuana was not required for participation in the study, but 27 of 28 subjects (96%) reported previous experience with marijuana. However, of these 27 experienced subjects, 63% (n = 18) reported no marijuana use within the past year.
The study procedures compared the effects of the target dose of marijuana and placebo during two treatment periods lasting 5 days, with 2 weeks washout periods. The marijuana strengths available were 1%, 2%, 4%, 6%, or 8% THC concentration by weight. Subjects smoked marijuana or placebo cigarettes four times per day, approximately 90-120 minutes apart, using a standardized cued smoking procedure: (1) 5 second smoke inhalation, (2) 10 second hold of smoke in lungs, (3) 40 second exhale and normal breathing between puffs. The investigators did not provide a description of the number of puffs taken at any smoking session. All subjects practiced the smoking procedures using placebo marijuana prior to test sessions.
On the first day of each test period, dose titration occurred throughout the four smoking sessions scheduled for that day, with a starting strength of 4% THC concentration. Subjects were allowed to titrate to a personalized “target dose”, which was defined as the dose that provided the best pain relief without intolerable adverse effects. This dose titration was accomplished by allowing subjects to either increase the dose incrementally (to 6% or 8% THC) to improve analgesia, or to decrease the dose incrementally (to 1% or 2% THC) if AEs were intolerable. For the next 4 days of each test period, the subjects smoked their target dose during each of the four daily smoking sessions. To maintain the blind, placebo marijuana was represented as containing 1%-8% THC, even though it did not contain any cannabinoids.
The primary outcome measure was the change in pain magnitude on the DDS at the end of each test period compared to baseline, with a clinically significant level of analgesia considered to be a reduction in pain of at least 30%. Additional measures included the POMS, the Sickness Impact Profile (SIP), the Brief Symptom Inventory (BSI) and the UKU Side Effect Rating Scale and a subjective highness/sedation VAS.
During the marijuana treatment week, 19 subjects titrated to the 2%-4% THC dose while the 6%-8% dose was
The degree of pain reduction was significantly greater after administration of marijuana compared to placebo (median change of 3.3 points on DDS,
In terms of safety, there were no alterations in HIV disease parameters in response to marijuana or placebo. The authors report that marijuana led to a greater degree of UKU responses as well as AEs such as difficulty in concentration, fatigue, sleepiness or sedation, increased duration of sleep, reduced salivation and thirst compared to placebo (data not provided in paper). Two subjects withdrew from the study because of marijuana-related AEs: one subject developed an intractable smoking-related cough during marijuana administration and the sole marijuana-naïve subject in the study experienced an incident of acute cannabis-induced psychosis.
The authors conclude that smoked marijuana effectively reduced chronic neuropathic pain from HIV-associated sensory neuropathy. The limitations of this study include: a lack of information about the number of puffs during each inhalation of smoke; a lack of information about the specific timing of the subjective assessments and collection of AEs relative to initiation of the smoking sessions; and the inclusion of only one marijuana-naïve subject. These limitations make it difficult to conclude that the actual AEs experienced during the study in response to marijuana are tolerable. It is especially concerning that the only marijuana-naïve subject left the study because of serious psychiatric responses to marijuana exposure at analgesic doses. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled HIV-associated sensory neuropathy.
Three studies examined the effect of marijuana on chronic neuropathic pain.
Wilsey et al. (2008) examined chronic neuropathic pain from multiple causes in the study entitled, “A Randomized, Placebo-Controlled, Crossover Trial of Cannabis Cigarettes in Neuropathic Pain”. The subjects were 32 patients with a variety of neuropathic pain conditions, including 22 with complex regional pain syndrome, 6 with spinal cord injury, 4 with multiple sclerosis, 3 with diabetic neuropathy, 2 with ilioinguinal neuralgia, and 1 with lumbosacral plexopathy. All subjects reported a pain intensity of at least 30 on a 0-100 VAS and were allowed to continue taking their regular medications during the study period, which included opioids, antidepressants, anticonvulsants, and NSAIDs. All subjects were required to have experience with marijuana but could not use any cannabinoids for 30 days before study sessions.
The study consisted of three test sessions with an interval of 3-21 days between sessions. Treatment conditions were high-strength marijuana (7% delta-9-THC), low-strength marijuana (3.5% delta-9-THC), and placebo cigarettes, administered through a standardized cued-puff procedure: (1) “light the cigarette” (30 seconds), (2) “get ready” (5 seconds), (3) “inhale” (5 seconds), (4) “hold smoke in lungs” (10 seconds), (5) “exhale,” and (6) wait before repeating the puff cycle (40 seconds). Participants took 2 puffs after baseline measurements, 3 puffs an hour later, and 4 puffs an hour after that, for a cumulative dose of 9 puffs per test session.
Hourly assessment periods were scheduled before and after each set of puffs and for 2 additional hours during the recovery period. Plasma cannabinoids were measured at baseline, 5 minutes after the first puff and again at 3 hours after the last puff cycle.
The primary outcome measure was spontaneous pain relief, as measured by a 0-100 point VAS for current pain. Pain unpleasantness was measured on a 0-100 point VAS, and degree of pain relief was measured on a 7-point Patient Global Impression of Change (PGIC) scale. Secondary measures included the Neuropathic Pain Scale (NPS), a 0-100 point VAS for allodynia, and changes in thermal pain threshold. Subjective measures were also evaluated with unipolar 0-100 point VAS for any drug effect, good drug effect, bad drug effect, high, drunk, impaired, stoned, like the drug effect, sedated, confused, nauseated, desire more of the drug, anxious, down, hungry, and bipolar 0-100 point VAS for sad/happy, anxious/relaxed, jittery/calm, bad/good, paranoid/self-assured, fearful/unafraid. Neurocognitive assessments measured attention and concentration, learning and memory, and fine motor speed.
Marijuana produced a reduction in pain compared to placebo, as measured by the pain VAS, the PGIC and on pain descriptors in the NPS, including sharp (
Marijuana at both strengths produced increases on measures of any drug effect, good drug effect, high, stoned, impairment, sedation, confusion, and hunger. The 7% THC marijuana increased anxiety scores and bad drug effect (later in session) compared to placebo. Neither strength of marijuana affected the measures of mood. On neurocognitive measures, both the 3.5% THC and 7% THC marijuana produced impairment in learning and memory, while only the 7% THC marijuana impaired attention and psychomotor speed, compared to placebo. There were no adverse cardiovascular side effects and no subjects dropped out because of an adverse event related to marijuana.
The authors conclude that marijuana may be effective at ameliorating neuropathic pain at doses that induce mild cognitive effects, but that smoking is not an optimum route of administration. The limitations of this study include: Inclusion of subjects with many forms of neuropathic pain and maintenance of subjects on other analgesic medication while being tested with marijuana. These limitations make it difficult to conclude that marijuana has analgesic properties on its own and that the actual AEs experienced during the study in response to marijuana are tolerable. The authors compared pain score results by the type of pain
The second study, conducted by Ware et al. (2010) in Canada is entitled, “Smoked cannabis for chronic neuropathic pain: a randomized controlled trial”. The subjects were 21 adult patients with neuropathic pain caused by trauma or surgery compounded with allodynia or hyperalgesia, and a pain intensity score greater than 4 on a 10 point VAS. All subjects maintained their current analgesic medication and they were allowed to use acetaminophen for breakthrough pain. Eighteen subjects had previous experience with marijuana but none of them had used marijuana within a year before the study.
The study design used a four-period crossover design, testing marijuana (2.5%, 6.0% and 9.4% THC) and placebo marijuana. The 2.5% and 6.0% doses of marijuana were included to increase successful blinding. Each period was 14 days in duration, beginning with 5 days on the study drug followed by a 9-day washout period. Doses were delivered as 25 mg of marijuana that was smoked in a single inhalation using a titanium pipe. The first dose of each period was self-administered using a standardized puff procedure: (1) Inhale for 5 seconds, (2) hold the smoke in their lungs for 10 seconds, and (3) exhale. Subsequent doses were self-administered in the same manner for a total of three times daily at home on an outpatient basis for the first five days of each period.
The primary measure was an 11-point pain intensity scale, averaged over the 5 day treatment period, which was administered once daily for present, worst, least and average pain intensity during the previous 24 hours. Secondary measures included an acute pain 0-100 point VAS, pain quality assessed with the McGill Pain Questionnaire, sleep assessed with the Leeds Sleep Evaluation Questionnaire, mood assessed with the POMS, quality of life assessed using the EQ-5D health outcome instrument. Subjective measures included 0-100 point VAS scales for high, relaxed, stressed and happy.
Over the first three hours after smoking marijuana, ratings of pain, high, relaxation, stress, happiness and heart rate were recorded. During the five days of each study period, participants were contacted daily to administer questionnaires on pain intensity, sleep, medication and AEs. Subjects returned on the fifth day to complete questionnaires on pain quality, mood, quality of life and assessments of potency. At the end of the study, participants completed final adverse event reports and potency assessments.
The average daily pain intensity was significantly lower on 9.4% THC marijuana (5.4) than on placebo marijuana (6.1) (
The most frequent drug-related adverse events reported in the group receiving 9.4% THC marijuana were headache, dry eyes, burning sensation, dizziness, numbness and cough. Reports of high and euphoria occurred on only three occasions, once in each dose of THC. There were no significant changes in vital signs, heart-rate variability, or renal function. One subject withdrew from the study due to increased pain during administration of 6% THC marijuana.
The authors conclude that smoked marijuana reduces neuropathic pain, improves mood and aids in sleep, but that smoking marijuana is not a preferable route of administration. The limitations of this study include: The lack of information on timing of assessments during the outpatient portion of the study and maintenance of subjects on other analgesic medication while being tested with marijuana. These limitations make it difficult to conclude that marijuana has analgesic properties on its own and that the actual AEs experienced during the study in response to marijuana are tolerable. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled neuropathic pain.
Wilsey et al. (2013) conducted the most recent study entitled, “Low-Dose Vaporized Cannabis Significantly Improves Neuropathic Pain”. This study is the only one in this review that utilized vaporization as a method of marijuana administration. The subjects were 36 patients with a neuropathic pain disorder (CRPS, thalamic pain, spinal cord injury, peripheral neuropathy, radiculopathy, or nerve injury) who were maintained on their current medications (opioids, anticonvulsants, antidepressants, and NSAIDs). Although subjects were required to have a history of marijuana use, they refrained from use of cannabinoids for 30 days before study sessions.
Subjects participated in three sessions in which they received 1.29% or 3.53% THC marijuana or placebo marijuana. The marijuana was vaporized using the Volcano vaporizer and a standardized cued-puff procedure: (1) “hold the vaporizer bag with one hand and put the vaporizer mouthpiece in their mouth” (30 seconds), (2) “get ready” (5 seconds), (3) “inhale” (5 seconds), (4) “hold vapor in lungs” (10 seconds), (5) “exhale and wait” before repeating puff cycle (40 seconds). Subjects inhaled 4 puffs at 60 minutes. At 180 minutes, the vaporizer was refilled with marijuana vapor and subjects were allowed to inhale 4 to 8 puffs using the cued procedure. Thus, cumulative dosing allowed for a range of 8 to12 puffs in total for each session, depending on the subjects desired response and tolerance. The washout time between each session ranged from 3-14 days.
The primary outcome variable was spontaneous pain relief, as assessed using a 0-100 point VAS for current pain. Secondary measures included the Patient Global Impression of Change (PGIC), the Neuropathic Pain Scale (NPS), a 0-100 point VAS for allodynia. Acute pain threshold was measured with a thermal pain model. Subjective measures included 0-100 point unipolar VAS for any drug effect, good drug effect, bad drug effect, high, drunk, impaired, stoned, drug liking, sedated, confused, nauseated, desire more drug, anxious, down and hungry. Bipolar 0-100 point VAS included sad/happy, anxious/relaxed, jittery/calm, bad/good, paranoid/self-assured, and fearful/unafraid.
Neurocognitive assessments assessed attention and concentration, learning and memory, and fine motor speed.
A 30% reduction in pain was achieved in 61% of subjects who received the 3.53% THC marijuana, in 57% of subjects who received the 1.29% THC marijuana and in 26% of subjects who received the placebo marijuana (
On subjective measures, marijuana produced dose-dependent increases compared to placebo on ratings for: any drug effect, good drug effect, drug liking, high, stoned, sedated, confused, and hungry. Both strengths of marijuana produced similar increases in drunk or impaired compared to placebo. In contrast, desire for drug was rated as higher for the 1.29% THC marijuana compared to the 3.53% THC marijuana. There were no changes compared to placebo for bad effect, nauseous, anxiety, feeling down or any of the bipolar mood assessments. There was dose-dependent impairment on learning and memory from marijuana compared to placebo, but similar effects between the two strengths of marijuana on attention.
The authors conclude that vaporization of relatively low doses of marijuana can produce improvements in analgesia in neuropathic pain patients, especially when patients are allowed to titrate their exposure. However, this individualization of doses may account for the general lack of difference between the two strengths of marijuana. No data were presented regarding the total amount of THC consumed by each subject, so it is difficult to determine a proper dose-response evaluation. Additional limitations of this study are the inclusion of subjects with many forms of neuropathic pain and maintenance of subjects on other analgesic medication while being tested with marijuana. These limitations make it difficult to conclude that marijuana has analgesic properties on its own. It is also difficult to determine if any particular subset of neuropathic pain conditions would benefit specifically from marijuana administration. However, the study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for uncontrolled neuropathic pain.
Two randomized, double-blind, placebo-controlled Phase 2 studies examined the effects of smoked marijuana on appetite in HIV-positive subjects (Haney et al., 2005; Haney et al., 2007). Table 2 of the Appendix summarizes both studies.
The first study, conducted by Haney et al. (2005) is entitled, “Dronabinol and marijuana in HIV+ marijuana smokers: Acute effects on caloric intake and mood”. The subjects were 30 HIV-positive patients who were maintained on two antiretroviral medications and either had clinically significant decreases in lean muscle mass
Subjects participated in 8 sessions that tested the acute effects of 0, 10, 20, and 30 mg dronabinol oral capsules and marijuana cigarettes with 0%, 1.8%, 2.8%, and 3.9% THC concentration by weight, using a double-dummy design (with only one active drug per session). The doses of dronabinol are higher than those doses typically prescribed for appetite stimulation in order to help preserve the blinding. There was a one-day washout period between test sessions.
Marijuana was administered using a standardized cued procedure: (1) “light the cigarette” (30 seconds), (2) “prepare” (5 seconds), (3) “inhale” (5 seconds), (4) “hold smoke in lungs” (10 seconds), and (5) “exhale.” Each subject smoked three puffs in this manner, with a 40-second interval between each puff.
Caloric intake was used as a surrogate measure for weight gain. Subjects received a box containing a variety of food and beverage items and were told to record consumption of these items following that day's administration of the test drug. Subjective measures included 0-100 point VAS for feel drug effect, good effect, bad effect, take drug again, drug liking, hungry, full, nauseated, thirsty, desire to eat. Neurocognitive measures and vital signs were monitored.
The low BIA group consumed significantly more calories in the 1.8% and 3.9% THC marijuana conditions (p<0.01) and the 10, 20, and 30 mg dronabinol conditions (p<0.01) compared with the placebo condition. In contrast, in the normal BIA group, neither marijuana nor dronabinol significantly affected caloric intake. This lack of effect may be accountable, however, by the fact that this group consumed approximately 200 calories more than the low BIA group under baseline conditions.
Ratings of high and good drug effect were increased by all drug treatments in both the low-BIA and normal-BIA groups, except in response to the 10 mg dose of dronabinol. The 3.9% THC marijuana increased ratings of good drug effect, drug liking and desire to smoke again compared with placebo. Ratings of sedation were increased in both groups by 10 and 30 mg dronabinol, and in the normal BIA group by the 2.8% THC marijuana. Ratings of stimulation were increased in the normal BIA group by 2.8% and 3.9% THC marijuana and by 20 mg dronabinol. Increases in ratings of forgetfulness, withdrawn, dreaming, clumsy, heavy limbs, heart pounding, jittery, and decreases in ratings of energetic, social, and talkative were reported in the normal BIA group with 30 mg dronabinol. There were no significant changes in vital signs or performance on neurocognitive measures in response to marijuana. Notably, the time course of subjective effects peaked quickly and declined thereafter for smoked marijuana, while oral dronabinol responses took longer to peak and persisted longer. Additionally, marijuana but not dronabinol produced dry mouth and thirst.
In general, AEs reported in this study were low in both drug conditions for both subject groups. In the low BIA group, nausea was reported by one subject in both the 10 and 20 mg dronabinol conditions, while an uncomfortable level of intoxication was produced by the 30 mg dose in two subjects. There were no AEs reported in this group following marijuana at any dose. In the normal BIA group, the 30 mg dose of dronabinol produced an uncomfortable level of intoxication in three subjects and headache in one subject, while the 3.9% marijuana produced diarrhea in one subject.
The authors conclude that smoked marijuana can acutely increase caloric intake in low BIA subjects without significant cognitive impairment. However, it is possible that the low degree of cognitive impairment reported in this study may reflect the development of tolerance to cannabinoids in this patient population, since all individuals had current histories of chronic marijuana use. Additional limitations in this study include not utilizing actual weight gain as a primary measure. However, the study produced positive results suggesting that marijuana should be studied further as a treatment for appetite stimulation in HIV patients.
A second study conducted by Haney et al. (2007) is entitled, “Dronabinol and marijuana in HIV-positive marijuana smokers: Caloric intake, mood, and sleep”. The design of this study was nearly identical to the one conducted by this laboratory in 2005 (see above), but there was no stratification of subjects by BIA. The subjects were 10 HIV-positive patients who were maintained on two antiretroviral medications and had a history of smoking marijuana at least twice weekly for 4 weeks prior to entry into the study. On average, individuals had smoked 3 marijuana cigarettes per day, 5 times per week for 19 years.
Subjects participated in 8 sessions that tested the acute effects of 0, 5 and 10 mg dronabinol oral capsules and marijuana cigarettes with 0, 2.0% and 3.9% THC concentration by weight, using a double-dummy design (with 4 sessions involving only one active drug and 4 interspersed placebo sessions). Both drug and placebo sessions lasted for 4 days each, with active drug administration occurring 4 times per day (every 4 hours). Testing occurred in two 16-day inpatient stays. In the intervening outpatient period, subjects were allowed to smoke marijuana prior to re-entry to the study unit for the second inpatient stay.
Marijuana was administered using a standardized cued procedure: (1) “light the cigarette” (30 seconds), (2) “prepare” (5 seconds), (3) “inhale” (5 seconds), (4) “hold smoke in lungs” (10 seconds), and (5) “exhale.” Each subject smoked three puffs in this manner, with a 40-second interval between each puff.
Caloric intake was used as a surrogate measure for weight gain, but subjects were also weighed throughout the study (a measure which was not collected in the 2005 study by this group). Subjects received a box containing a variety of food and beverage items and were told to record consumption of these items following that day's administration of the test drug. Subjective measures included 0-100 point VAS for drug effect, good effect, bad effect, take drug again, drug liking, hungry, full, nauseated, thirsty, desire to eat. Neurocognitive measures and vital signs were monitored. Sleep was assessed using both the Nightcap sleep monitoring system and selected VAS measures related to sleep.
Both 5 and 10 mg dronabinol (
Ratings of good drug effect, high, drug liking, and desire to smoke again were significantly increased by 10 mg dronabinol and 2.0% and 3.9% THC marijuana doses compared to placebo. Both marijuana doses increased ratings of stimulated, friendly, and self-confident. The 10 mg dose of dronabinol increased ratings of concentration impairment, and the 2.0% THC marijuana dose increased ratings of anxious. Dry mouth was induced by 10 mg dronabinol (10 mg) and 2.0% THC marijuana. There were no changes in neurocognitive performance or objective sleep measures from administration of either cannabinoid. However, 3.9% THC marijuana increased subjective ratings of sleep.
The authors conclude that both dronabinol and smoked marijuana increase caloric intake and produce weight gain in HIV-positive patients. However, it is possible that the low degree of cognitive impairment reported in this study may reflect the development of tolerance to cannabinoids in this subject population, since all individuals had current histories of chronic marijuana use. This study produced positive results suggesting that marijuana should be studied further as a treatment for appetite stimulation in HIV patients.
Only one randomized, double-blind, placebo-controlled Phase 2 study examined the effects of smoked marijuana on spasticity in MS.
This study was conducted by Corey-Bloom et al. (2012) and is entitled, “Smoked cannabis for spasticity in multiple sclerosis: a randomized, placebo-controlled trial”. The subjects were 30 patients with MS-associated spasticity and had moderate increase in tone (score ≥ 3 points on the modified Ashworth scale). Participants were allowed to continue other MS medications, with the exception of benzodiazepines. Eighty percent of subjects had a history of marijuana use and 33% had used marijuana within the previous year.
Subjects participated in two 3-day test sessions, with an 11 day washout period. During each test session they smoked a 4.0% THC marijuana cigarette once per day or a placebo cigarette once per day. Smoking occurred through a standardized cued-puff procedure: (1) Inhalation for 5 seconds, (2) breath-hold and exhalation for 10 seconds, (3) pause between puffs for 45 seconds. Subjects completed an average of four puffs per cigarette.
The primary outcome measure was change in spasticity on the modified Ashworth scale. Additionally, subjects were assessed using a VAS for pain, a timed walk, and cognitive tests (Paced Auditory Serial Addition Test) and AEs.
Treatment with 4.0% THC marijuana reduced subject scores on the modified Ashworth scale by an average of 2.74 points more than placebo (
7 subjects did not complete the study due to adverse events (two subjects felt uncomfortably “high”, two had dizziness and one had fatigue). Of those 7 subjects who withdrew, 5 had little or no previous experience with marijuana. When the data were re-analyzed to include these drop-out subjects, with the presumption they did not have a positive response to treatment, the effect of marijuana was still significant on spasticity.
The authors conclude that smoked marijuana had usefulness in reducing pain and spasticity associated with MS. It is concerning that marijuana-naïve subjects dropped out of the study because they were unable to tolerate the psychiatric AEs induced by marijuana. The authors suggest that future studies should examine whether different doses can result in similar beneficial effects with less cognitive impact. However, the current study produced positive results suggesting that marijuana should be studied further as an adjunct treatment for spasticity in MS patients.
Tashkin et al. (1974) examined bronchodilation in 10 subjects with bronchial asthma in the study entitled, “Acute Effects of Smoked Marijuana and Oral Δ
The study consisted of four test sessions with an interval of at least 48 hours between sessions. On two test sessions subjects smoked 7 mg/kg of body weight of either marijuana, with 2% THC concentration by weight, or placebo marijuana. During the other two test sessions, subjects ingested capsules with either 15 mg of synthetic THC or placebo. Marijuana was administered using a uniform smoking technique: subjects inhaled deeply for 2-4 seconds, held smoke in lungs for 15 seconds, and resumed normal breathing for approximately 5 seconds. The author did not provide a description of the number of puffs taken at any smoking session. The authors state that the smoking procedure was repeated until the cigarette was consumed, which took approximately 10 minutes.
The outcome measure used was specific airway conductance (SGaw), as calculated using measurements of thoracic gas volume (TGV) and airway resistance (Raw) using a variable-pressure body plethysmograph. Additionally, an assessment of degree of intoxication was administered only to those subjects reporting previous marijuana use. This assessment consisted of subjects rating “how `high' they felt” on a scale of 0-7, 7 representing “the `highest' they had ever felt after smoking marijuana”.
Marijuana produced a significant increase of 33-48% in average SGaw compared to both baseline and placebo (P < 0.05). This significant increase in SGaw lasted for at least 2 hours after administration. The average TGV significantly decreased by 4-13% compared to baseline and placebo (P < 0.05). The author stated that all subjects reported feelings of intoxication after marijuana administration.
The authors conclude that marijuana produced bronchodilation in clinically stable asthmatic subjects with minimal to moderate bronchospasms. Study limitations include: inclusion of subjects with varying severity of asthmatic symptoms, use of SGaw to measure lung responses to marijuana administration, and administration of smoke to asthmatic subjects. Smoke delivers a number of harmful substances and is not an optimal delivery symptom, especially for asthmatic patients. FEV1 via spirometry is the gold standard to assess changes in lung function, pre and post asthma treatment, by pharmacotherapy. SGaw has been shown to be a valid tool in bronchoconstriction lung assessment; however, since the FEV1 method was not utilized, it is unclear whether these results would correlate if the FEV1 method had been employed.
Two randomized, double-blind, placebo-controlled Phase 2 clinical studies examined smoked marijuana in glaucoma (Crawford and Merritt, 1979; Merritt et al., 1980). In both studies, intraocular pressure (IOP) was significantly reduced 30 minutes after smoking marijuana. Maximal effects occurred 60-90 minutes after smoking, with IOP returning to baseline within 3-4 hours. These two studies were included in the 1999 IOM report on the medical uses of marijuana. Because our independent analysis of these studies concurred with the conclusions from the 1999 IOM report, these studies will not be discussed in further detail in this review. No recent studies have been conducted examining the effect of inhaled marijuana on IOP in glaucoma patients. This lack of recent studies may be attributed to the conclusions made in the 1999 IOM report that while cannabinoids can reduce intraocular pressure (IOP), the therapeutic effects require high doses that produce short-lasting responses, with a high degree of AEs. This high degree of AEs means that the potential harmful effects of chronic marijuana smoking may outweigh its modest benefits in the treatment of glaucoma.
Of the eleven randomized, double-blind, placebo-controlled Phase 2 clinical studies that met the criteria for review (see Sections 2.2 and 2.3), ten studies administered marijuana through smoking, while one study utilized marijuana vaporization. In these eleven studies, there were five different therapeutic indications: five examined chronic neuropathic pain, two examined appetite stimulation in HIV patients, two examined glaucoma, one examined spasticity in MS, and one examined asthma.
There are limited conclusions that can be drawn from the data in these published studies evaluating marijuana for the treatment of different therapeutic indications. The analysis relied on published studies, thus information available about protocols, procedures, and results were limited to documents published and widely available in the public domain. The published studies on medical marijuana are effectively proof-of-concept studies. Proof-of-concept studies provide preliminary evidence on a proposed hypothesis regarding a drug's effect. For drugs under development, the effect often relates to a short-term clinical outcome being investigated. Proof-of-concept studies serve as the link between preclinical studies and dose ranging clinical studies. Therefore, proof-of-concept studies are not sufficient to demonstrate efficacy of a drug because they provide only preliminary information about the effects of a drug. Although these studies do not provide evidence that marijuana is effective in treating a specific, recognized disorder, these studies do support future larger well-controlled studies to assess the safety and efficacy of marijuana for a specific medical indication. Overall, the conclusions below are preliminary, based on very limited evidence.
In subjects with chronic neuropathic pain who are refractory to other pain treatments, five proof-of-concept studies produced positive results regarding the use of smoked marijuana for analgesia. However, the subjects in these studies continued to use their current analgesic drug regime, and thus no conclusions can be made regarding the potential efficacy of marijuana for neuropathic pain in patients not taking other analgesic drugs. Subjects also had numerous forms of neuropathic pain, making it difficult to identify whether a specific set of symptoms might be more responsive to the effects of marijuana. It is especially concerning that some marijuana-naïve subjects had intolerable psychiatric responses to marijuana exposure at analgesic doses.
In subjects who were HIV-positive, two proof-of-concept studies produced positive results with the use of both dronabinol and smoked marijuana to increase caloric intake and produce weight gain in HIV-positive patients. However, the amount of THC in the marijuana tested in these studies is four times greater than the dose of dronabinol typically tested for appetite stimulation (10 mg vs. 2.5 mg; Haney et al., 2005). Thus, it is possible that the low degree of AEs reported in this study may reflect the development of tolerance to cannabinoids in this patient population, since all individuals had current histories of chronic marijuana use. Thus, individuals with little prior
In subjects with MS, a proof of concept study produced positive results using smoked marijuana as a treatment for pain and symptoms associated with treatment-resistant spasticity. The subjects in this study continued to take their current medication regiment, and thus no conclusions can be made regarding the potential efficacy of marijuana when taken on its own. It is also concerning that marijuana-naïve subjects dropped out of the study because they were unable to tolerate the psychiatric AEs induced by marijuana. The authors suggest that future studies should examine whether different doses can result in similar beneficial effects with less cognitive impact.
In subjects with clinically stable asthma, a proof of concept study produced positive results of smoked marijuana producing bronchodilation. However, in this study marijuana was administered at rest and not while experiencing bronchospasms. Additionally, the administration of marijuana through smoking introduces harmful and irritating substances to the subject, which is undesirable especially in asthmatic patients. Thus the results suggest marijuana may have bronchodilator effects, but it may also have undesirable adverse effects in subjects with asthma.
As noted in Sections 3.5, the two studies that evaluated smoked marijuana for glaucoma were conducted decades ago, and they have been thoroughly evaluated in the 1999 IOM report. The 1999 IOM report concludes that while the studies with marijuana showed positive results for reduction in IOP, the effect is short-lasting, requires a high dose, and is associated with many AEs. Thus, the potential harmful effects may outweigh any modest benefit of marijuana for this condition. We agree with the conclusions drawn in the 1999 IOM report.
The positive results reported by the studies discussed in this review support the conduct of more rigorous studies in the future. This section discusses methodological challenges that have occurred in clinical studies with smoked marijuana. These design issues should be addressed when larger-scale clinical studies are conducted to ensure that valid scientific data are generated in studies evaluating marijuana's safety and efficacy for a particular therapeutic use.
The ability for results from a clinical study to be generalized to a broader population is reliant on having a sufficiently large study sample size. However, as noted above, all of the 11 studies reviewed in this document were early Phase 2 proof of concept studies for efficacy and safety. Thus, the sample sizes used in these studies were inherently small, ranging from 10 subjects per treatment group (Tashkin et al., 1974; Haney et al., 2007) to 25 subjects per treatment group (Abrams et al., 2007). These sample sizes are statistically inadequate to support a showing of safety or efficacy. FDA's recommendations about sample sizes for clinical trials can be found in the
Dose standardization is critical for any clinical study in order to ensure that each subject receives a consistent exposure to the test drug. The
In most marijuana studies discussed in this review, investigators use a standardized cued smoking procedure. In this procedure, a subject is instructed to inhale marijuana smoke for 5 seconds, hold the smoke in the lungs for 10 seconds, exhale and breathe normally for 40 seconds. This process is repeated to obtain the desired dose of the drug. However, this procedure may not lead to equivalent exposure to marijuana and its constituent cannabinoids, based on several factors:
• Intentional or unintentional differences in the depth of inhalation may change the amount of smoke in the subject's lungs.
• Smoking results in loss from side stream smoke, such that the entire dose is not delivered to the subject.
• There may be differences in THC concentration along the length of a marijuana cigarette. According to Tashkin et al. (1991), the area of the cigarette closest to the mouth tends to accumulate a higher concentration of THC, but this section of the cigarette is not smoked during a study.
For example, Wilsey et al. (2008) used this standardized smoking procedure. The reported mean (range) of marijuana cigarettes consumed was 550 mg (200-830mg) for the low strength marijuana (3.5% THC) and 490 mg (270-870mg) for the high strength marijuana (7% THC). This wide range of amounts of marijuana cigarette smoked by the individual subjects, even with standardized smoking procedure and controlled number of puffs, supports the issues with delivering consistent doses with smoke marijuana.
In other marijuana studies that do not use a cued smoking procedure, subjects are simply told to smoke the marijuana cigarette over a specific amount of time (usually 10 minutes) without further instruction (Crawford and Merritt, 1979; Merritt et al., 1980; Ellis et al., 2009). The use of a nonstandardized procedure may lead to non-equivalent exposures to marijuana and its constituent cannabinoids between subjects because of additional factors that are not listed above, such as:
• Differences in absorption and drug response if subjects (especially
• Prolonged periods between puffs may increase loss to side stream smoke.
• Subjects may attempt to smoke the marijuana cigarette in the way they would smoke a tobacco cigarette, which relies primarily on short, shallow puffs.
In both standardized and non-standardized smoking procedures, subjects may seek to control the dose of THC through self-titration (Crawford and Merritt, 1979; Merritt et al., 1980; Tashkin et al., 1974; Abrams et al., 2007; Ellis et al., 2009). Self-titration involves an individual moderating the amount of marijuana smoke inhaled over time in order to obtain a preferred level of psychoactive or clinical response. The ability of an individual to self-titrate by smoking is one reason given by advocates of “medical marijuana” in support of smoking of marijuana rather than through its ingestion via edibles. However, for research purposes, self-titration interferes with the ability to maintain consistent dosing levels between subjects, and thus, valid comparisons between study groups.
All of these factors can make the exact dose of cannabinoids received by a subject in a marijuana study difficult to determine with accuracy. Testing whether plasma levels of THC or other cannabinoids are similar between subjects following the smoking procedure would establish whether the procedure is producing appropriate results. Additionally, studies could be conducted to determine if vaporization can be used to deliver consistent doses of cannabinoids from marijuana plant material. Specifically, vaporization devices that involve the collection of vapors in an enclosed bag or chamber may help with delivery of consistent doses of marijuana. Thus, more information could be collected on whether vaporization is comparable to or different than smoking in terms of producing similar plasma levels of THC in subjects using identical marijuana plant material.
The studies that were reviewed administered the drug for short durations lasting no longer than 5 days (Abrams et al., 2007; Ellis et al., 2009; Ware et al., 2010). Thus all studies examined the short-term effect of marijuana administration for therapeutic purposes. However, many of the medical conditions that have been studied are persistent or expected to last the rest of a patient's life. Therefore, data on chronic exposure to smoked marijuana in clinical studies is needed. In this way, more information will be available regarding whether tolerance, physical dependence, or specific adverse events develop over the course of time with continuing use of therapeutic marijuana.
As has been pointed out by the IOM and other groups, smoking is not an optimum route of administration for marijuana-derived therapeutic drug products, primarily because introducing the smoke from a burnt botanical substance into the lungs of individuals with a disease state is not recommended when their bodies may be physically compromised. The 1999 IOM report on medicinal uses of marijuana noted that alternative delivery methods offering the same ability of dose titration as smoking marijuana will be beneficial and may limit some of the possible long-term health consequences of smoking marijuana. The primary alternative to smoked marijuana is vaporization, which can reduce exposure to combusted plant material containing cannabinoids. The only study to use vaporization as the delivery method was Wilsey et al. (2013). The results from Wilsey et al. (2013) showed a similar effect of decreased pain as seen in the other studies using smoking as the delivery method (Ware et al., 2010; Wilsey et al., 2008). This similar effect of decrease pain supports vaporization as a possibly viable route to administer marijuana in research, while potentially limiting the risks associated with smoking.
An adequate and well-controlled clinical study involves double-blinding, where both the subjects and the investigators are unable to tell the difference between the test treatments (typically consisting of at least a test drug and placebo) when they are administered. All of the studies reviewed in this document administered study treatments under double-blind conditions and thus were considered to have an appropriate study design.
However, even under the most rigorous experimental conditions, blinding can be difficult in studies with smoked marijuana because the rapid onset of psychoactive effects readily distinguishes active from placebo marijuana. The presence of psychoactive effects also occurs with other drugs. However, most other drugs have a similar psychoactive effect with substances with similar mechanisms of actions. These substances can be used as positive controls to help maintain blinding to the active drug being tested. Marijuana on the other hand, has a unique set of psychoactive effects which makes the use of appropriate positive controls difficult (Barrett et al., 1995). However, two studies did use Dronabinol as a positive control drug to help maintain blinding (Haney et al., 2005; Haney et al., 2007).
When blinding is done using only placebo marijuana, the ability to distinguish active from placebo marijuana may lead to expectation bias and an alteration in perceived responsivity to the therapeutic outcome measures. With marijuana-experienced subjects, for example, there may be an early recognition of the more subtle cannabinoid effects that can serve as a harbinger of stronger effects, which is less likely to occur with marijuana-naïve subjects. To reduce this possibility, investigators have tested doses of marijuana other than the one they were interested in experimentally to maintain the blind (Ware et al., 2010).
Blinding can also be compromised by differences in the appearance of marijuana plant material based on THC concentration. Marijuana with higher concentrations of THC tends to be heavier and seemingly darker, with more “tar-like” substance. Subjects who have experience with marijuana have reported being able to identify marijuana from placebo cigarettes by sight alone when the plant material in a cigarette was visible (Tashkin et al., 1974; Ware et al., 2010). Thus, to maintain a double-blind design, many studies obscure the appearance of plant material by closing both ends of the marijuana cigarette and placing it in in an opaque plastic tube.
While none of these methods to secure blinding may be completely effective, it is important to reduce bias as much as possible to produce consistent results between subjects under the same experimental conditions.
Marijuana use histories in test subjects may influence outcomes, related to both therapeutic responsivity and psychiatric AEs. Marijuana-naïve subjects may also experience a marijuana drug product as so aversive that they would not want to use the drug product. Thus, subjects' prior experience with marijuana may affect the conduct and results of studies.
Most of the studies reviewed in this document required that subjects have a history of marijuana use (see tables in Appendix that describe specific
The varying histories of use might affect everything from scores on adverse event measures, safety measures, or efficacy measures. Additionally, varying amounts of experience can impact cognitive effect measures assessed during acute administration studies. For instance, Schreiner and Dunn (2012) contend cognitive deficits in heavy marijuana users continue for approximately 28 days after cessation of smoking. Studies requiring less than a month of abstinence prior to the study may still see residual effects of heavy use at baseline and after placebo marijuana administration, thus showing no significant effects on cognitive measures. However, these same measurements in occasional or naïve marijuana users may demonstrate a significant effect after acute marijuana administration. Therefore, the amount of experience and the duration of abstinence of marijuana use are important to keep in mind when analyzing results for cognitive and other adverse event measures. Lastly, a study population with previous experience with marijuana may underreport the incidence and severity of adverse events. Because most studies used subjects with prior marijuana experience, we are limited in our ability to generalize the results, especially for safety measures, to marijuana naïve populations.
Five of 11 studies reviewed in this document included both marijuana-naïve and marijuana-experienced subjects (Corey-Bloom et al., 2012; Ellis et al., 2009; Ware et al., 2010; Merritt et al., 1980; Tashkin et al., 1974). Since the number of marijuana-naïve subjects in these studies was low, it was not possible to conduct a separate analysis compared to experienced users. However, systematically evaluating the effect of marijuana experience on study outcomes is important, since many patients who might use a marijuana product for a therapeutic use will be marijuana-naïve.
Research shows that marijuana-experienced subjects have a higher ability to tolerate stronger doses of oral dronabinol than marijuana-naïve subjects (Haney et al., 2005). Possibly, this increased tolerance is also the case when subjects smoke or vaporize marijuana. Thus, studies could be conducted that investigate the role of marijuana experience in determining tolerability of and responses to a variety of THC concentrations in marijuana.
For safety reasons, all clinical studies have inclusion and exclusion criteria that restrict the participation of individuals with certain medical conditions. For studies that test marijuana, these criteria may be based on risks associated with exposure to smoked material and the effects of THC. Thus, most studies investigating marijuana require that subjects qualify for the study based on restrictive symptom criteria such that individuals do not have other symptoms that may be known to interact poorly with cannabinoids.
Similarly, clinical studies with marijuana typically exclude individuals with cardiac or pulmonary problems, as well as psychiatric disorders. These exclusion criteria are based on the well-known effects of marijuana smoke to produce increases in heart rate and blood pressure, lung irritation, and the exacerbation of psychiatric disturbances in vulnerable individuals. Although these criteria are medically reasonable for research protocols, it is likely that future marijuana products will be used in patients who have cardiac, pulmonary or psychiatric conditions. Thus, individuals with these conditions should be evaluated, whenever possible.
Additionally, all studies reviewed in this document allowed the subjects to continue taking their current regimen of medications. Thus all results evaluated marijuana as an adjunct treatment for each therapeutic indication.
A common problem in clinical research is the limited number of females who participate in the studies. This problem is present in the 11 studies reviewed in this document, in which one study did not include any female subjects (Ellis et al., 2009), and three studies had a low percentage of female subjects (Abrams et al., 2007; Haney et al., 2005; Haney et al., 2007). However, each of these four studies investigated an HIV-positive patient population, where there may have been a larger male population pool from which to recruit compared to females.
Since there is some evidence that the density of CB1 receptors in the brain may vary between males and females (Crane et al., 2012), there may be differing therapeutic or subjective responsivity to marijuana. Studies using a study population that is equal parts male and female may show whether and how the effects of marijuana differ between male and female subjects.
On December 17, 2009, Bryan Krumm, CNP, submitted a petition to the Drug Enforcement Administration (DEA) to initiate proceedings for a repeal of the rules or regulations that place marijuana
1. Marijuana has accepted medical use in the United States;
2. Studies have shown that smoked marijuana has proven safety and efficacy;
3. Marijuana is safe for use under medical supervision; and
4. Marijuana does not have the abuse potential for placement in schedule I
The DEA accepted this petition for filing on April 3, 2010.
The Attorney General may by rule transfer a drug or other substance between schedules of the CSA if she finds that such drug or other substance has a potential for abuse, and makes the findings prescribed by 21 U.S.C. 812(b) for the schedule in which such drug is to be placed. 21 U.S.C. 811(a)(1). The Attorney General has delegated this responsibility to the Acting Administrator of the DEA. 28 CFR 0.100(b).
In accordance with 21 U.S.C. 811(b), after gathering the necessary data, the DEA submitted the petition and necessary data to the Department of Health and Human Services (HHS) on May 6, 2011, and requested that HHS provide a scientific and medical evaluation and scheduling recommendation for marijuana. In documents dated June 3 and June 25, 2015, the acting Assistant Secretary for Health of the HHS
Before initiating proceedings to reschedule a substance, the CSA requires the Acting Administrator to determine whether the HHS scheduling recommendation, scientific and medical evaluation, and “all other relevant data” constitute substantial evidence that the drug should be rescheduled as proposed. 21 U.S.C. 811(b). The Acting Administrator must determine whether there is substantial evidence to conclude that the drug meets the criteria for placement in another schedule based on the criteria set forth in 21 U.S.C. 812(b). The CSA requires that both the DEA and the HHS consider the eight factors specified by Congress in 21 U.S.C. 811(c). This document lays out those considerations and is organized according to the eight factors. As DEA sets forth in detail below, the evidence shows:
1.
2.
3.
4.
5.
6.
7.
8.
As specified in 21 U.S.C. 812(b)(1), in order for a substance to be placed in schedule I, the Acting Administrator must find that:
A. The drug or other substance has a high potential for abuse.
B. The drug or other substance has no currently accepted medical use in treatment in the United States.
C. There is a lack of accepted safety for use of the drug or other substance under medical supervision.
To be classified in another schedule under the CSA (
A drug that is the subject of an approved new drug application (NDA) or abbreviated new drug application (ANDA) under Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355), is considered to have a currently accepted medical use in treatment in the United States for purposes of the CSA. The HHS stated in its review, however, that FDA has not approved any NDA for marijuana for any indication.
In the absence of NDA or ANDA approval, DEA has established a five-element test for determining whether the drug has a currently accepted medical use in treatment in the United States. Under this test, a drug will be considered to have a currently accepted medical use only if the following five elements are satisfied:
1. The drug's chemistry is known and reproducible;
2. There are adequate safety studies;
3. There are adequate and well-controlled studies proving efficacy;
4. The drug is accepted by qualified experts; and
5. The scientific evidence is widely available.
As discussed in Factor 3, below, HHS concluded, and DEA agrees, that the scientific evidence is insufficient to demonstrate that marijuana has a currently accepted medical use under the five-element test. The evidence was insufficient in this regard also when the DEA considered petitions to reschedule marijuana in 1992 (57 FR 10499),
The limited existing clinical evidence is not adequate to warrant rescheduling of marijuana under the CSA. To the contrary, the data in this scheduling review document show that marijuana continues to meet the criteria for schedule I control under the CSA for the following reasons:
1. Marijuana has a high potential for abuse.
2. Marijuana has no currently accepted medical use in treatment in the United States.
3. Marijuana lacks accepted safety for use under medical supervision.
Marijuana is the most commonly abused illegal drug in the United States. It is also the most commonly used illicit drug by high school students in the United States. Further, marijuana is the most frequently identified drug by state, local and federal forensic laboratories. Marijuana's main psychoactive ingredient, Δ
The HHS has concluded in its document, “Basis for the Recommendation for Maintaining Marijuana in Schedule I of the Controlled Substances Act,” that marijuana has a high potential for abuse. The finding of “abuse potential” is critical for control under the Controlled Substances Act (CSA). Although the term is not defined in the CSA, guidance in determining abuse potential is provided in the legislative history of the Act (Comprehensive Drug Abuse Prevention and Control Act of 1970, H.R. Rep. No. 91-1444, 91st Cong., Sess. 2 (1970), reprinted in 1970 U.S.C.C.A.N. 4566, 4603). Accordingly, the following items are indicators that a drug or other substance has potential for abuse:
•
•
•
•
Of course, evidence of actual abuse of a substance is indicative that a drug has a potential for abuse.
In its recommendation, the HHS analyzed and evaluated data on marijuana as applied to each of the above four criteria. The analysis presented in the recommendation (HHS, 2015) is discussed below:
The HHS stated that some individuals are taking marijuana in amounts sufficient to create a hazard to their health and to the safety of other individuals and the community. Data from national databases on actual abuse of marijuana support the idea that a large number of individuals use marijuana. In its recommendation (HHS, 2015), the HHS presented data from the National Survey on Drug and Health (NSDUH) of the Substance Abuse and Mental Health Services Administration (SAMHSA) and the Monitoring the Future (MTF) survey of the National Institute on Drug Abuse (NIDA), and the DEA has since updated this information. The most recent data from SAMHSA's NSDUH in 2014 reported that marijuana was the most used illicit drug. Among Americans aged 12 years and older, an estimated 22.2 million Americans used marijuana within the past month according to the 2014 NSDUH. In 2004, an estimated 14.6 million individuals reported using marijuana within the month prior to the study. The estimated rates in 2014 thus reflect an increase of approximately 7.6 million individuals over a 10-year period. According to the 2013 NSDUH report, an estimated 19.8 million individuals reported using marijuana. Thus, over a period of one year (2013 NSDUH-2014 NSDUH), there was an estimated increase of 2.4 million individuals in the United States using marijuana.
The results from the 2015 Monitoring the Future survey of 8th, 10th, and 12th grade students indicate that marijuana was the most widely used illicit drug in these age groups. Current monthly use was 6.5% of 8th graders, 14.8% of 10th graders, and 21.3% of 12th graders. The Treatment Episode Data Set (TEDS) in 2013 reported that marijuana abuse was the primary factor in 16.8 percent of non-private substance-abuse treatment facility admissions. In 2011, SAMHSA's Drug Abuse Warning Network (DAWN) reported that marijuana was mentioned in 36.4% (455,668 out of approximately 1.25 million) of illicit drug-related Emergency Department (ED) visits.
Data on the extent and scope of marijuana abuse are presented under Factors 4 and 5 of this analysis. Discussion of the health effects of marijuana is presented under Factor 2, and the assessment of risk to the public health posed by acute and chronic marijuana abuse is presented under Factor 6 of this analysis.
In accordance with the CSA, the only lawful source of marijuana in the United States is that produced and distributed for research purposes under the oversight of NIDA and in conformity with United States obligations under the Single Convention on Narcotic Drugs.
The DEA notes that the magnitude of the demand for illicit marijuana is evidenced by information from a number of databases presented under Factor 4. Briefly, marijuana is the most commonly used illegal drug in the United States. It is also the most commonly used illicit drug by American high schoolers. Marijuana is the most frequently identified drug in state, local, and federal forensic laboratories, with increasing amounts of both domestically grown and of illicitly smuggled marijuana.
Given that marijuana has long been the most widely trafficked and abused controlled substance in the United States, and that all aspects of such illicit activity are entirely outside of the closed system of distribution mandated by the CSA, it may well be the case that there is little thought given to diverting marijuana from the small supplies produced for legitimate research purposes. Thus, the lack of data indicating diversion of marijuana from legitimate channels to the illicit market is not indicative of a lack of potential for abuse of the drug.
The HHS stated that the FDA has not evaluated or approved an NDA or BLA for marijuana for any therapeutic indication. Consistent with federal law, therefore, an individual legitimately can take marijuana based on medical advice from a practitioner only by participating in research that is being conducted under an Investigational New Drug (IND) application. The HHS noted that there are several states as well as the District of Columbia which have passed laws allowing for individuals to use marijuana for purported “medical” use under certain circumstances, but data are not available yet to determine the number of individuals using marijuana under these state laws. Nonetheless, according to 2014 NSDUH data, 22.2 million American adults currently use marijuana (SAMHSA, 2015a). Based on the large number of individuals who use marijuana and the lack of an FDA-approved drug product, the HHS concluded that the majority of individuals using marijuana do so on their own initiative rather than by following medical advice from a licensed practitioner.
Marijuana and its primary psychoactive ingredient, Δ
The HHS stated that one approved, marketed drug product contains synthetic Δ
Marinol is a schedule III drug product containing synthetic Δ
Cesamet is a drug product containing the schedule II substance nabilone, a synthetic substance structurally related to Δ
In addition to the indicators suggested by the CSA's legislative history, data as to preclinical and clinical abuse liability studies, as well as actual abuse, including clandestine manufacture, trafficking, and diversion from legitimate sources, are considered in this factor.
Abuse liability evaluations are obtained from studies in the scientific and medical literature. There are many preclinical measures of a drug's effects that when taken together provide an accurate prediction of the human abuse liability. Clinical studies of the subjective and reinforcing effects in humans and epidemiological studies provide quantitative data on abuse liability in humans and some indication of actual abuse trends. Both preclinical and clinical studies have clearly demonstrated that marijuana and Δ
Preclinical and most clinical abuse liability studies have been conducted with the psychoactive constituents of marijuana, primarily Δ
Δ
The drug discrimination paradigm is used as an animal model of human subjective effects (Solinas et al., 2006) and is a method where animals are able to indicate whether a test drug is able to produce physical or psychological changes similar to a known drug of abuse. Animals are trained to press one bar (in an operant chamber) when they receive a known drug of abuse and another bar when they receive a placebo. When a trained animal receives a test drug, if the drug is similar to the known drug of abuse, it will press the bar associated with the drug.
Discriminative stimulus effects of Δ
Laboratory animals including monkeys (McMahon et al., 2009), mice (McMahon et al., 2008), and rats (Gold et al., 1992) are able to discriminate cannabinoids from other drugs and placebo. The major active metabolite of Δ
Animal self-administration behavior associated with a drug is a commonly used method for evaluating if the drug produces rewarding effects and for predicting abuse potential (Balster, 1991; Balster and Bigelow, 2003). Drugs that are self-administered by animals are likely to produce rewarding effects in humans. As mentioned in the HHS review document, earlier attempts to demonstrate self-administration of Δ
Justinova et al. (2003) were able to demonstrate self-administration of Δ
Self-administration behavior with Δ
Conditioned place preference (CPP) is a behavioral assay where animals are given the opportunity to spend time in two distinct environments: one where they previously received a drug and one where they received a placebo. If the drug is reinforcing, animals in a drug-free state will choose to spend more time in the environment paired with the drug when both environments are presented simultaneously.
CPP has been demonstrated withΔ
In its scientific review (HHS, 2015), the HHS provided a list of common subjective psychoactive responses to cannabinoids based on information from several references (Adams and Martin, 1996; Gonzalez, 2007; Hollister, 1986;
The HHS mentioned that marijuana users prefer higher concentrations of the principal psychoactive component (Δ
Marijuana has also been recognized by scientific experts to have withdrawal symptoms (negative reinforcement) following moderate and heavy use. As discussed further in Factor 7, the DEA notes that the American Psychiatric Association's (APA) Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5) included a list of withdrawal symptoms following marijuana [cannabis] use (DSM-5, 2013).
Marijuana continues to be the most widely used illicit drug. Evidence of actual abuse can be defined by episodes/mentions in databases indicative of abuse/dependence. The HHS provided in its recommendation (HHS, 2015) information relevant to actual abuse of marijuana including data results from the National Survey on Drug Use and Health (NSDUH), a Monitoring the Future (MTF) survey, the Drug Abuse Warning Network (DAWN), and the Treatment Episode Data Set (TEDS). These data sources provide quantitative information on many factors related to abuse of a particular substance, including incidence and patterns of use, and profile of the abuser of specific substances. The DEA is providing updated information from these databases in this discussion. The DEA also includes data on trafficking and illicit availability of marijuana from DEA databases including the National Forensic Laboratory Information System (NFLIS) and the National Seizure System (NSS), formerly the Federal-wide Drug Seizure System (FDSS), as well as other sources of data specific to marijuana, including the Potency Monitoring Project and the Domestic Cannabis Eradication and Suppression Program (DCE/SP).
The National Survey on Drug Use and Health (NSDUH) is conducted annually by the Department of Health and Human Service's Substance Abuse and Mental Health Services Administration (SAMHSA). SAMHSA is the primary source of estimates of the prevalence and incidence of pharmaceutical drugs, illicit drugs, alcohol, and tobacco use in the United States. The survey is based on a nationally representative sample of the civilian, non-institutionalized population 12 years of age and older. The survey excludes homeless people who do not use shelters, active military personnel, and residents of institutional group quarters such as jails and hospitals.
According to the 2014 NSDUH report, marijuana was the most commonly used and abused illicit drug. That data showed that there were 22.2 million people who were past month users (8.4%) among those aged 12 and older in the United States. (Note: NSDUH figures on marijuana use include hashish use; the relative proportion of hashish use to marijuana use is very low). Marijuana had the highest rate of past-year dependence or abuse in 2014. The NSDUH report estimates that 3.0 million people aged 12 or older used an illicit drug for the first time in 2014; a majority (70.3%) of these past year initiates reported that their first drug used was marijuana. Among those who began using illicit drugs in the past year, 65.6%, 70.3%, and 67.6% reported marijuana as the first illicit drug initiated in 2012, 2013, and 2014 respectively. In 2014, the average age of marijuana initiates among 12- to 49-year-olds was 18.5 years. These usage rates and demographics are relevant in light of the risks presented.
Marijuana had the highest rate of past year dependence or abuse of any illicit drug in 2014. The 2014 NSDUH report stated that 4.2 million persons were classified with substance dependence or abuse of marijuana in the past year (representing 1.6% of the total population aged 12 or older, and 59.0% of those classified with illicit drug dependence or abuse) based on criteria specified in the Diagnostic and Statistical Manual of Mental Disorders, 4th edition (DSM-IV).
Among past year marijuana users age 12 or older, 18.5% used marijuana on 300 or more days within the previous 12 months in 2014. This translates into 6.5 million people using marijuana on a daily or almost daily basis over a 12-month period, significantly more than the estimated 5.7 million daily or almost daily users in just the year before. Among past month marijuana users, 41.6% (9.2 million) used the drug on 20 or more days in the past month, a significant increase from the 8.1 million who used marijuana 20 days or more in 2013.
Monitoring the Future (MTF) is an ongoing study which is funded under a series of investigator-initiated competing research grants from the National Institute on Drug Abuse (NIDA). MTF tracks drug use trends among American adolescents in the 8th, 10th, and 12th grades. According to its 2015 survey results, marijuana was the most commonly used illicit drug, as was the case in previous years. Approximately 6.5% of 8th graders,
The Drug Abuse Warning Network (DAWN) is a public health surveillance system that monitors drug-related hospital emergency department (ED) visits to track the impact of drug use, misuse, and abuse in the United States. For the purposes of DAWN, the term “drug abuse” applies if the following conditions are met: (1) The case involved at least one of the following: use of an illegal drug, use of a legal drug contrary to directions, or inhalation of a non-pharmaceutical substance; and (2) the substance was used for one of the following reasons: because of drug dependence, to commit suicide (or attempt to commit suicide), for recreational purposes, or to achieve other psychic effects. Importantly, many factors can influence the estimates of ED visits, including trends in overall use of a substance as well as trends in the reasons for ED usage. For instance, some drug users may visit EDs for life-threatening issues while others may visit to seek care for detoxification because they needed certification before entering treatment. Additionally, DAWN data do not distinguish the drug responsible for the ED visit from other drugs that may have been used concomitantly. As stated in a DAWN report, “Since marijuana/hashish is frequently present in combination with other drugs, the reason for the ED visit may be more relevant to the other drug(s) involved in the episode.”
In 2011, marijuana was involved in 455,668 ED visits out of 2,462,948 total ED visits involving all abuse or misuse in the United States and out of 1.25 million visits involving abuse or misuse of illicit drugs (excluding alcohol-related visits), as estimated by DAWN. This is lower than the number of ED visits involving cocaine (505,224) and higher than the number of ED visits involving heroin (258,482) and stimulants (
In young patients, marijuana is the illicit drug most frequently involved in ED visits, according to DAWN estimates, with 240.2 marijuana-related ED visits per 100,000 population ages 12 to 17, 443.8 per 100,000 population ages 18 to 20, and 446.9 per 100,000 population ages 21 to 24.
The Treatment Episode Data Set (TEDS) system is part of the SAMHSA Drug and Alcohol Services Information System and is a national census of annual admissions to state licensed or certified, or administratively tracked, substance abuse treatment facilities. The TEDS system contains information on patient demographics and substance abuse problems of admissions to treatment for abuse of alcohol and/or drugs in facilities that report to state administrative data systems. For this database, the primary substance of abuse is defined as the main substance of abuse reported at the time of admission. TEDS also allows for the recording of two other substances of abuse (secondary and tertiary).
In 2011, the TEDS system included 1,928,792 admissions to substance abuse treatment; in 2012 there were 1,801,385 admissions; and in 2013 there were 1,683,451 admissions. Marijuana/hashish was the primary substance of abuse for 18.3% (352,397) of admissions in 2011; 17.5% (315,200) in 2012; and 16.8% (281,991) in 2013. Of the 281,991 admissions for marijuana/hashish treatment in 2013, 24.3% used marijuana/hashish daily. Among those treated for marijuana/hashish as the primary substance in 2013, 27.4% were ages 12 to 17 years and 29.7% were ages 18 to 24 years. Those admitted for marijuana/hashish were mostly male (72.6%) and non-Hispanic (82.2%). Non-hispanic whites (43.2%) represented the largest ethnic group of marijuana admissions.
Data on marijuana seizures from federal, state, and local forensic laboratories have indicated that there is significant trafficking of marijuana. The National Forensic Laboratory System (NFLIS) is a program sponsored by the Drug Enforcement Administration's Office of Diversion Control. NFLIS systematically collects drug identification results and associated information from drug exhibits encountered by law enforcement and analyzed in federal, state, and local forensic laboratories. NFLIS is a comprehensive information system that includes data from 278 individual forensic laboratories that report more than 91% of the drug caseload in the U.S. NFLIS captures data for all drugs and chemicals identified and reported by forensic laboratories. More than 1,700 unique substances are represented in the NFLIS database.
Data from NFLIS showed that marijuana was the most frequently identified drug in federal, state, and local laboratories from January 2004 through December 2014. Marijuana accounted for between 29.47% and 34.84% of all drug exhibits analyzed annually during that time frame (Table 1).
Since 2004, the total number of reports of marijuana and the amount of marijuana encountered federally has remained high (see data from Federal-wide Drug Seizure System and Domestic Cannabis Eradication and Suppression Program below).
The Federal-wide Drug Seizure System (FDSS) contains information about drug seizures made within the jurisdiction of the United States by the Drug Enforcement Administration, the Federal Bureau of Investigation, United States Customs and Border Protection, and United States Immigration and Customs Enforcement. It also records maritime seizures made by the United States Coast Guard. Drug seizures made by other Federal agencies are included in the FDSS database when drug evidence custody is transferred to one of the agencies identified above. FDSS is now incorporated into the National Seizure System (NSS), which is a repository for information on clandestine laboratory and contraband (chemicals and precursors, currency, drugs, equipment and weapons). FDSS reports total federal drug seizures [in kilograms (kg)] of substances such as cocaine, heroin, MDMA, methamphetamine, and cannabis (marijuana and hashish). The yearly volume of cannabis seized (Table 2), consistently exceeding a thousand metric tons per year, shows that cannabis is very widely trafficked in the United States.
The University of Mississippi's Potency Monitoring Project (PMP), through a contract with the National Institute on Drug Abuse (NIDA), analyzes and compiles data on the Δ
The Domestic Cannabis Eradication and Suppression Program (DCE/SP) was established in 1979 to reduce the supply of domestically cultivated marijuana in the United States. The program was designed to serve as a partnership between federal, state, and local agencies. Only California and Hawaii were active participants in the program at its inception. However, by 1982 the program had expanded to 25 states and by 1985 all 50 states were participants. Cannabis is cultivated in remote locations and frequently on public lands and illicitly grown in all states. Data provided by the DCE/SP (Table 3) show that in the United States in 2014, there were 3,904,213 plants eradicated in outdoor cannabis cultivation areas compared to 2,597,798 plants in 2000. Significant quantities of marijuana were also eradicated from indoor cultivation operations. There were 396,620 indoor plants eradicated in 2014 compared to 217,105 eradicated in 2000.
The recent statistics from these various surveys and databases show that marijuana continues to be the most commonly used illicit drug, with considerable rates of heavy abuse and dependence. They also show that marijuana is the most readily available illicit drug in the United States.
(1) The petitioner states on pages 1-2 of the petition that
First, the petitioners failed to review the indicators of abuse potential, as discussed in the legislative history of the CSA. The petitioners did not use data on marijuana usage, diversion, psychoactive properties, and dependence in their evaluation of marijuana abuse potential. The HHS and the DEA discuss those indicators above in this factor. HHS's evaluation of the full range of data led HHS and DEA to conclude that marijuana has a high potential for abuse.
Second, the HHS indicated that modulating effects of the other cannabinoids in marijuana on Δ
Marinol was rescheduled from schedule II to schedule III on July 2, 1999 (64 FR 35928, DEA 1999). In assessing Marinol, HHS compared Marinol to marijuana on several aspects of abuse potential and found that major differences between the two, such as formulation, availability, and usage, contribute to differences in abuse potential. The psychoactive effects from smoking are generally more rapid and intense that those that occur through oral administration (HHS, 2015; Wesson and Washburn, 1990; Hollister and Gillespie, 1973). Therefore, as concluded by both the HHS and the DEA, the delayed onset of action and longer duration of action from an oral dose of Marinol may contribute in limiting the abuse potential of Marinol relative to marijuana, which is most often smoked. The HHS also stated that the extraction and purification of dronabinol from the encapsulated sesame oil mixture of Marinol is highly complex and difficult and that the presence of sesame oil mixture may preclude the smoking of Marinol-laced cigarettes.
Additionally, the FDA approved a New Drug Application (NDA) for Marinol, indicating a legitimate medical use for Marinol in the United States and allowing for Marinol to be rescheduled into schedule II and subsequently into schedule III of the CSA. The HHS mentioned that marijuana and Marinol differ on a wide variety of factors and these differences are major reasons for differential scheduling of marijuana and Marinol. Marijuana, as discussed more fully in Factors 3 and 6, does not have a currently accepted medical use in the United States, is highly abused, and has a lack of accepted safety.
Finally, the DEA notes that under the CSA, for a substance to be placed in schedule II, III, IV, or V, it must have a currently accepted medical use in treatment in the United States.
The HHS stated that there are large amounts of scientific data on the neurochemistry, mechanistic effects, toxicology, and pharmacology of marijuana. A scientific evaluation, as conducted by the HHS and the DEA, of marijuana's neurochemistry, human and animal behavioral pharmacology, central nervous system effects, and other pharmacological effects (
Marijuana contains numerous constituents such as cannabinoids that have a variety of pharmacological actions. The HHS stated that different marijuana samples derived from various cultivated strains may differ in their chemical constituents including Δ
The primary site of action for cannabinoids such as Δ
CB1 receptors are primarily found in the central nervous system and are located mainly in the basal ganglia, hippocampus and cerebellum of the brain (Howlett et al., 2004). CB1 receptors are also located in peripheral tissues such as the immune system (De Petrocellis and Di Marzo, 2009), but the concentration of CB1 receptors there is considerably lower than in the central nervous system (Herkenham et al., 1990; 1992). CB2 receptors are found primarily in the immune system and predominantly in B lymphocytes and natural killer cells (Bouaboula et al., 1993). CB2 receptors are also found in the central nervous system, primarily in the cerebellum and hippocampus (Gong et al., 2006).
Two endogenous ligands to the cannabinoid receptors, anandamide and arachidonyl glycerol (2-AG), were identified in 1992 (Devane et al., 1992) and 1995 (Mechoulam et al., 1995), respectively. Anandamide is a low-efficacy agonist (Brievogel and Childers, 2000) and 2-AG is a high efficacy agonist (Gonsiorek et al., 2000) to the cannabinoid receptors. These endogenous ligands are present in both the central nervous system and in the periphery (HHS, 2015).
Δ
Animal abuse potential studies (drug discrimination, self-administration, conditioned place preference) are discussed more fully in Factor 1. Briefly, it was consistently demonstrated that Δ
The clinical psychoactive effects of marijuana are discussed more fully in Factor 1. Briefly, the psychoactive effects from marijuana use are considered pleasurable and associated with drug-seeking or drug-taking (HHS, 2015; Maldonado, 2002). Further, it was noted by HHS that marijuana users prefer higher concentrations of the principal psychoactive component (Δ
Studies have evaluated psychoactive effects of THC in the presence of high CBD, CBC, or CBN ratios. Even though some studies suggest that CBD may decrease some of Δ
In one study (Ilan et al., 2005), the authors calculated the naturally occurring concentrations of CBC and CBD in marijuana cigarettes with either 1.8 or 3.6% Δ
The HHS also referred to a study with Δ
Several factors may influence marijuana's behavioral effects including the duration (chronic or short term), frequency (daily, weekly, or occasionally), and amount of use (heavy or moderate). Researchers have examined how long behavioral impairments persist following chronic marijuana use. These studies used self-reported histories of exposure duration, frequency, and amount of marijuana use, and administered several performance and cognitive tests at different time points following
Psychoactive effects of marijuana can lead to behavioral impairment including cognitive decrements and decreased ability to operate motor vehicles (HHS, 2015). Block et al. (1992) evaluated cognitive measures in 48 healthy male subjects following smoking a marijuana cigarette that contained 2.57% or 19 mg Δ
Ramaekers et al. (2006) reported that in 20 recreational users of marijuana, acute administration of 250 µg/kg and 500 µg/kg Δ
As mentioned in the HHS document, some studies examined the persistence of the behavioral impairments immediately after marijuana administration. Some of marijuana's acute effects may still be present for at least 24 hours after the acute psychoactive effects have subsided. In a brief communication, Heishmann et al. (1990) reported that there were cognitive impairments (digit recall and arithmetic tasks) in two out of three experienced marijuana smokers for 24 hours after smoking marijuana cigarettes containing 2.57% Δ
Persistence of behavioral impairments following repeated and chronic use of marijuana has also been investigated and was reviewed in the HHS document (HHS, 2015). In particular, researchers examined how long behavioral impairments last following chronic marijuana use. In studies examining persistence of effects in chronic and heavy marijuana users, there were significant decrements in cognitive and motor function tasks in all studies of up to 27 days, and in most studies at 28 days (Solowij et al., 2002; Messinis et al., 2006; Lisdahl and Price, 2012; Pope et al., 2002; Bolla et al., 2002; Bolla et al., 2005). In studies that followed heavy marijuana users for longer than 28 days and up to 20 years of marijuana abstinence, cognitive and psychomotor impairments were no longer detected (Fried et al., 2005; Lyons et al., 2004; Tait et al., 2011). For example, Fried et al. (2005) reported that after 3 months of abstinence from marijuana, any deficits in intelligence (IQ), memory, and processing speeds following heavy marijuana use were no longer observed (Fried et al., 2005). In a meta-analysis that examined non-acute and long-lasting effects of marijuana, any deficits in neurocognitive performance that were observed within the first month were no longer apparent after approximately one month of abstinence (Schreiner and Dunn, 2012). HHS further notes that in moderate marijuana users deficits in decision-making skills were not observed after 25 days of abstinence and additionally IQ, immediate memory and delayed memory skills were not significantly impacted as observed with heavy and chronic marijuana users (Fried et al., 2005; HHS, 2015)
As mentioned in the HHS document (HHS, 2015), the intensity and persistence of neurological impairment from chronic marijuana use also may be dependent on the age of first use. In two separate smaller scale studies (less than 100 participants per exposure group), Fontes et al. (2011) and Gruber et al. (2012) compared neurological function in early onset (chronic marijuana use prior to age 15 or 16) and late onset (chronic marijuana use after age 15 or 16) heavy marijuana users and found that there were significant deficits in executive neurological function in early onset users which were not observed or were less apparent in late onset users. In a prospective longitudinal birth cohort study following 1,037 individuals (Meier et al., 2012), a significant decrease in IQ and neuropsychological performance was observed in adolescent-onset users and persisted even after abstinence from marijuana for at least one year. However, Meier et al (2012) reported in there was no significant change in IQ in adult-onset users.
The HHS noted that there is some evidence that the severity of the persistent neurological impairments may also be due in part to the amount of marijuana usage. In the study mentioned above, Gruber et al. (2012) found that the early onset users consumed three times as much marijuana per week and used it twice as often as late onset users. Meier et al. (2012) reported in their study, mentioned above, that there was a correlation between IQ deficits in adolescent onset users and the increased amount of marijuana used.
In studies that examined effects of prenatal marijuana exposure, many of the pregnant women also used alcohol and tobacco in addition to marijuana. Even though other drugs were used in conjunction with marijuana, there is evidence of an association between heavy prenatal marijuana exposure and deficits in some cognitive function. There have been two prospective longitudinal birth cohort studies following individuals prenatally exposed to marijuana from birth until adulthood: The Ottawa Prenatal Prospective Study (OPPS; Fried et al., 1980), and the Maternal Health Practices and Child Development Project (MHPCD; Day et al., 1985). Both longitudinal studies report that heavy prenatal marijuana use is associated with decreased performance on tasks assessing memory, verbal and quantitative reasoning in 4-year-olds (Fried and Watkinson, 1990) and in 6 year olds (Goldschmidt et al., 2008). In subsequent studies with the OPPS cohort, deficits in sustained attention were reported in children ages 6 and 13-16 years (Fried et al., 1992; Fried, 2002) and deficits in executive neurological function were observed in 9- and 12-year-old children (Fried et al., 1998). DEA further notes that with the MHPCD cohort, follow-up studies reported an increased rate of delinquent behavior (Day et al., 2011) and decreased achievement test scores (Goldschmidt et al., 2012) at age 14. When the MHPCD cohort was followed to age 22, there was a marginal (
There has been extensive research to determine whether marijuana usage is associated with development of schizophrenia or other psychoses, and the HHS indicated that the available data do not suggest a causative link between marijuana and the development of psychosis (HHS, 2015; Minozzi et al., 2010). As mentioned in the HHS review (HHS, 2015), numerous large scale longitudinal studies demonstrated that subjects who used marijuana do not have a greater incidence of psychotic diagnoses compared to non-marijuana users (van Os et al., 2002; Fergusson et al., 2005; Kuepper et al., 2011). Further, the HHS commented that when analyzing the available data examining the association between marijuana and psychosis, it is critical to differentiate whether the patients in a study are already diagnosed with psychosis or if the individuals have a limited number of symptoms associated with psychosis without qualifying for a diagnosis of the disorder.
As mentioned by the HHS, some of the studies examining the association between marijuana and psychosis utilized non-standard methods to categorize psychosis and these methods did not conform to the criteria in the Diagnostic and Statistical Manual (DSM-5) or the International Classification of Diseases (ICD-10) and would not be appropriate for use in evaluating the association between marijuana use and psychosis. For example, researchers characterized psychosis as “schizophrenic cluster” (Maremmani et al., 2004), “subclinical psychotic symptoms” (van Gastel et al., 2012), “pre-psychotic clinical high risk” (van der Meer et al., 2012), and symptoms related to “psychosis vulnerability” (Griffith-Lendering et al., 2012).
The HHS discussed an early epidemiological study conducted by Andreasson et al. (1987), which examined the link between psychosis and marijuana use. In this study, about 45,000 18- and 19-year-old male Swedish subjects provided detailed information on their drug-taking history and 274 of these subjects were diagnosed with schizophrenia over a 14-year period (1969-1983). Out of the 274 subjects diagnosed with psychosis, 21 individuals (7.7%) had used marijuana more than 50 times, while 197 individuals (72%) never used marijuana. As presented by the authors (Andreasson et al., 1987), individuals who claimed to take marijuana on more than 50 occasions were 6 times more likely to be diagnosed with schizophrenia than those who had never consumed the drug. The authors concluded that marijuana users who are vulnerable to developing psychoses are at the greatest risk for schizophrenia. In a 35 year follow up to the subjects evaluated in Andreasson et al. (1987), Manrique-Garcia et al. (2012) reported similar findings. In the follow up study, 354 individuals developed schizophrenia. Of those, 32 individuals (9%) had used marijuana more than 50 times and were 6.3 times more likely to develop schizophrenia. 255 of the 354 individuals (72%) never used marijuana.
The HHS also noted that many studies support the assertion that psychosis from marijuana usage may manifest only in individuals already predisposed to development of psychotic disorders. Marijuana use may precede diagnosis of psychosis (Schimmelmann et al., 2011), but most reports indicate that prodromal symptoms of schizophrenia are observed prior to marijuana use (Schiffman et al., 2005). In a review examining gene-environmental interaction between marijuana exposure and the development of psychosis, it was concluded that there is some evidence to support that marijuana use may influence the development of psychosis but only for susceptible individuals (Pelayo-Teran et al., 2012).
Degenhardt et al. (2003) modeled the prevalence of schizophrenia against marijuana use across eight birth cohorts in individuals born during 1940 to 1979 in Australia. Even though there was an increase in marijuana use in the adult subjects over this time period, there was not an increase in diagnoses of psychosis for these same subjects. The authors concluded that use of marijuana may increase schizophrenia only in persons vulnerable to developing psychosis.
The HHS stated that acute use of marijuana causes an increase in heart rate (tachycardia) and may increase blood pressure (Capriotti et al., 1988; Benowitz and Jones, 1975). There is some evidence that associates the increased heart rate from Δ
Prolonged exposure to Δ
As stated in the HHS recommendation (HHS, 2015), marijuana exposure causes orthostatic hypotension (fainting-like feeling; sudden drop in blood pressure upon standing up) and tolerance can develop to this effect upon repeated, chronic exposure (Jones, 2002). Tolerance to orthostatic hypotension is potentially related to plasma volume expansion, but tolerance does not develop to supine hypotensive effects (Benowitz and Jones, 1975).
Marijuana smoking, particularly by those with some degree of coronary artery or cerebrovascular disease, poses risks such as increased cardiac work, increased catecholamines and carboxyhemoglobin, myocardial infarction and postural hypotension (Benowitz and Jones, 1981; Hollister, 1988; Mittleman et al., 2001; Malinowska et al., 2012). However, electrocardiographic changes were minimal after administration of large cumulative doses of Δ
The DEA notes two recent reports that reviewed several case studies on marijuana and cardiovascular complications (Panayiotides, 2015; Hackam, 2015). Panayiotides (2015) reported that approximately 25.6% of the cardiovascular cases from marijuana use resulted in death from data provided by the French Addictovigilance Network during the period of 2006-2010. Several case studies on marijuana usage and cardiovascular events were discussed and it was concluded that although a causal link cannot be established due to not knowing exact amounts of marijuana used in the cases and confounding variables, the available evidence supports a link between marijuana and cardiotoxicity. Hackham (2015) reviewed 34 case reports or case series reports of marijuana and stroke/ischemia in 64 stroke patients and reported that in 81% of the cases there was a temporal relationship between marijuana usage and stroke or ischemic event. The author concluded that collective analysis of the case reports supports a causal link between marijuana use and stroke.
The HHS stated that transient bronchodilation is the most typical respiratory effect of acute exposure to marijuana (Gong et al., 1984). In a recent
The HHS stated that the evidence that marijuana may lead to cancer of the respiratory system is inconsistent, with some studies suggesting a positive correlation while others do not (Lee and Hancox, 2011; Tashkin, 2005). The HHS noted a case series that reported lung cancer occurrences in three marijuana smokers (age range 31-37 years) with no history of tobacco smoking (Fung et al., 1999). Furthermore, in a case-control study (n = 173 individuals with squamous cell carcinoma of the head and neck; n = 176 controls; Zhang et al., 1999), prevalence of marijuana use was 9.7% in controls and 13.9% in cases and the authors reported that marijuana use may dose-dependently interact with mutagenic sensitivity, cigarette smoking, and alcohol use to increase risk associated with head and neck cancers (Zhang et al., 1999). However, in a large clinical study with 1,650 subjects, no positive correlation was found between marijuana use and lung cancer (Tashkin et al., 2006). This finding held true regardless of the extent of marijuana use when both tobacco use and other potential confounding factors were controlled. The HHS concluded that new evidence suggests that the effects of smoking marijuana on respiratory function and cancer are different from the effects of smoking tobacco (Lee and Hancox, 2011).
The DEA further notes the publication of recent review articles critically evaluating the association between marijuana and lung cancer. Most of the reviews agree that the association is weak or inconsistent (Huang et al., 2015; Zhang et al., 2015; Gates et al., 2014; Hall and Degenhardt, 2014). Huang et al. (2015) identified and reviewed six studies evaluating the association between marijuana use and lung cancer and the authors concluded that an association is not supported most likely due to the small amounts of marijuana smoked in comparison to tobacco. Zhang et al. (2015) examined six case control studies from the US, UK, New Zealand, and Canada within the International Lung Cancer Consortium and found that there was a weak association between smoking marijuana and lung cancer in individuals who never smoked tobacco, but precision of the association was low at high marijuana exposure levels. Hall and Degenhardt (2014) noted that even though marijuana smoke contains several of the same carcinogens and co-carcinogens as tobacco smoke (Roth et al., 1998) and has been found to be mutagenic and carcinogenic in the mouse skin test, epidemiological studies have been inconsistent, but more consistent positive associations have been reported in case control studies. Finally Gates et al. (2014), reviewed the studies evaluating marijuana use and lung cancer and concluded that there is evidence that marijuana produces changes in the respiratory system (precursors to cancer) that could lead to lung cancer, but overall association is weak between marijuana use and lung cancer especially when controlling for tobacco use.
The HHS stated that administration of marijuana to humans does not consistently alter the endocrine system. In a controlled human exposure study (n = 4 males), subjects were acutely administered smoked marijuana containing 2.8% Δ
The HHS noted that there is a discrepancy in the effect of marijuana on female reproductive system functionality between animals and humans (HHS, 2015). Female rhesus monkeys that were administered 2.5 mg/kg Δ
The HHS stated that recent studies support a possible association between frequent, long-term marijuana use and increased risk of testicular germ cell tumors. In a hospital-based case-control study, the frequency of marijuana use was compared between testicular germ cell tumor (TGCT) patients (n = 187) and controls (n = 148) (Trabert et al., 2011). TGCT patients were more likely to be frequent marijuana users than controls with an odds ratio (OR) of 2.2 (95% confidence limits of 1.0-5.1) and were less likely to be infrequent or short-term users with odds ratios of 0.5 and 0.6, respectively in comparison to controls (Trabert et al., 2011). The DEA further notes that in two population-based case-control studies (Daling et al., 2009; Lacson et al., 2012), marijuana use was compared between patients diagnosed with TGCT and matched controls in Washington State or Los Angeles County. In both studies, it was reported that TCGT patients were twice as likely as controls to use marijuana. Authors of both studies concluded that marijuana use is associated with an elevated risk of TGCT (Daling et al., 2009; Lacson et al., 2012).
The HHS cited a study (Sarfaraz et al., 2005) demonstrating that WIN 55,212-2 (a mixed CB1/CB2 agonist) induces apoptosis (one form of cell death) in
In more recent studies, as cited by the HHS, chronic marijuana use by subjects (n = 39) characterized as dependent on marijuana according to the ICD-10 criteria did not affect serum levels of thyroid hormones: TSH (thyrotropin), T4 (thyroxine), and T3 (triiodothyronine) (Bonnet, 2013). With respect to appetite hormones, in a pilot study with HIV-positive males, smoking marijuana dose-dependently increased plasma levels of ghrelin and leptin and decreased plasma levels of peptide YY (Riggs et al., 2012).
The HHS stated that Δ
The HHS stated that cannabinoids alter immune function but that there can be differences between the effects of synthetic, natural, and endogenous cannabinoids (Croxford and Yamamura, 2005; Tanasescu and Constantinescu, 2010).
The HHS noted that there are conflicting results in animal and human studies with respect to cannabinoid effects on immune functioning in subjects with compromised immune systems. Abrams et al. (2003) examined the effects of marijuana and Δ
The DEA notes two recent clinical studies reporting a decrease in cytokine and interleukin levels following marijuana use. Keen et al. (2014) compared the differences in the levels of IL-6 (interleukin-6), a proinflammatory cytokine, amongst non-drug users (n = 78), marijuana only users (n = 46) and marijuana plus other drug users (n = 45) in a community-based sample of middle-aged African Americans (Keen et al., 2014). After adjusting for confounders, analyses revealed that lifetime marijuana only users had significantly lower IL-6 levels than the nonuser group. Further, Sexton et al. (2014) compared several immune parameters in healthy individuals and subjects with multiple sclerosis (MS) and found that the chronic use of marijuana resulted in reduced monocyte migration, and decreased levels of CCL2 and IL-17 in both healthy and MS groups.
The DEA also notes a review suggesting that Δ
The HHS stated that marijuana, also known as
Different marijuana samples are derived from numerous cultivated strains and may have different chemical compositions including levels of Δ
Since there is considerable variability in the cannabinoid concentrations and chemical constituency among marijuana samples, the interpretation of clinical data with marijuana is complicated. A primary issue is the lack of consistent concentrations of Δ
Various
Of the cannabinoids found in marijuana, Δ
Other relatively well-characterized cannabinoids present in marijuana include cannabidiol (CBD), cannabichromene (CBC), and cannabinol (CBN). CBD and CBC are major cannabinoids in marijuana and are both lipophilic. The chemical name for CBD is 2-[(1
In summary, marijuana has several strains with high variability in the concentrations of Δ
Pharmacokinetics of marijuana in humans is dependent on the route of administration and formulation (Adams and Martin, 1996; Agurell et al., 1984; Agurell et al., 1986). Individuals primarily smoke marijuana as a cigarette (weighing between 0.5 and 1 gram) or in a pipe. More recently, vaporizers have been used as another means for individuals to inhale marijuana. Marijuana may also be ingested orally in foods or as an extract in ethanol or other solvents. Pharmacokinetic studies with marijuana focused on evaluating the absorption, metabolism, and elimination profile of Δ
There is high variability in the pharmacokinetics of Δ
Δ
Following oral administration ofΔ
Studies evaluating cannabinoid metabolism and excretion focused on Δ
Δ
Plasma clearance of Δ
Most of the absorbed Δ
According to the HHS, there are numerous human clinical studies with marijuana in the United States under FDA-regulated IND applications. Results of small clinical exploratory studies have been published in the medical literature. Approval of a human drug for marketing, however, is contingent upon FDA approval of a New Drug Application (NDA) or a Biologics License Application (BLA). According to the HHS, the FDA has not approved any drug product containing marijuana for marketing.
The HHS noted that a drug may be found to have a medical use in treatment in the United States for purposes of the CSA if the drug meets the five elements described by the DEA in 1992. Those five elements “are both necessary and sufficient to establish a prima facie case of currently accepted medical use” in treatment in the United States.” (57 FR 10499, 10504 (March 26, 1992)). This five-element test, which the HHS and DEA have utilized in all such analyses for more than two decades, has been upheld by the Court of Appeals.
In its review (HHS, 2015), the HHS evaluated the five elements with respect to the currently available research for marijuana. The HHS concluded that marijuana does not meet any of the five elements—all of which must be demonstrated to find that a drug has a “currently accepted medical use.” A brief summary of the HHS's evaluation is provided below.
As defined by the CSA, marijuana includes all species of the genus
The HHS stated that there are no adequate safety studies on marijuana. As indicated in their evaluation of Element #1, the considerable variation in the chemistry of marijuana complicates the safety evaluation. The HHS concluded that marijuana does not satisfy Element #2 for having adequate safety studies such that medical and scientific experts may conclude that it is safe for treating a specific ailment.
As indicated in the HHS's review of marijuana (HHS, 2015), there are no adequate or well-controlled studies that prove marijuana's efficacy. The FDA independently reviewed (FDA, 2015) publicly available clinical studies on marijuana published prior to February 2013 to determine if there were appropriate studies to determine marijuana's efficacy (please refer to FDA, 2015 and HHS, 2015 for more
The HHS concluded that there is currently no evidence of a consensus among qualified experts that marijuana is safe and effective in treating a specific and recognized disorder. The HHS indicated that medical practitioners who are not experts in evaluating drugs cannot be considered qualified experts (HHS, 2015; 57 FR 10499, 10505). Further, the HHS noted that the 2009 American Medical Association (AMA) report entitled, “Use of Cannabis for Medicinal Purposes” does not conclude that there is a currently accepted medical use for marijuana. HHS also pointed out that state-level “medical marijuana” laws do not provide evidence of such a consensus among qualified experts.
The HHS concluded that the currently available data and information on marijuana is not sufficient to allow scientific scrutiny of the chemistry, pharmacology, toxicology, and effectiveness. In particular, scientific evidence demonstrating the chemistry of a specific
(1) The petitioner states on page 2 of the petition,
As noted above, the HHS concluded that there is currently no evidence of a consensus among qualified experts that marijuana is safe and effective in treating a specific and recognized disorder, as required by the established standards. HHS pointed out that state-level “medical marijuana” laws do not provide evidence of such a consensus among qualified experts. HHS also indicated that medical practitioners who are not experts in evaluating drugs cannot be considered qualified experts (HHS, 2015; 57 FR 10499, 10505).
Further, the HHS pointed out that the 2009 AMA report entitled, “Use of Cannabis for Medicinal Purposes” does not conclude that there is a currently accepted medical use for marijuana. Instead, the AMA, like several other professional and medical associations, recommended further testing with marijuana to determine its medicinal value. The AMA official policy on medicinal use of marijuana is as follows: “
(2) The petitioner asserts on page 3 of the petition that,
The HHS, in its scientific and medical evaluation, reviewed marijuana clinical studies evaluating therapeutic properties and concluded that there is not enough data to confirm the safety and efficacy of smoked marijuana for use in treating a specific and recognized disorder. Relevant to efficacy, for instance, the HHS concluded, for instance, that “smoking marijuana currently has not been shown to allow delivery of consistent and reproducible doses,” and that the bioavailability of the delta-9 -THC from marijuana in a cigarette or pipe can range from 1 percent to 24 percent with the fraction absorbed rarely exceeding 10 to 20%. Issues relating to the safety of smoked marijuana were discussed above in Factor 2.
(3) On page 3, the petitioner states that
As described above, in the absence of NDA or ANDA approval, DEA has established a five-element test for determining whether the drug has a currently accepted medical use in treatment in the United States. 57 FR 10499, 10506 (March 26, 1992)).
Marijuana continues to be the most widely used illicit drug. In 2013, an estimated 24.6 million Americans age 12 or older were current (past month) illicit drug users. Of those, 19.8 million were current (past month) marijuana users. As of 2013, an estimated 114.7 million Americans age 12 and older had
According to the NSDUH estimates, 3.0 million people age 12 or older used an illicit drug for the first time in 2014. Marijuana initiates totaled 2.6 million in 2014. Nearly half (46.8%) of the 2.6 million new users were less than 18 years of age. In 2014, marijuana was used by 82.2% of current (past month) illicit drug users. In 2014, among past year marijuana users age 12 or older, 18.5% used marijuana on 300 or more days within the previous 12 months. This translates into 6.5 million people using marijuana on a daily or almost daily basis over a 12-month period, a significant increase from the 3.1 million daily or almost daily users in 2006 and from the 5.7 million in just the previous year. In 2014, among past month marijuana users, 41.6% (9.2 million people) used the drug on 20 or more days in the past month, a significant increase from the 8.1 million in 2013.
Marijuana is also the illicit drug with the highest numbers of past year dependence or abuse in the U.S. population. According to the 2014 NSDUH report, of the 7.1 million persons aged 12 or older who were classified with illicit drug dependence or abuse, 4.2 million of them abused or were dependent on marijuana (representing 59.0% of all those classified with illicit drug dependence or abuse and 1.6% of the total U.S. non-institutionalized population aged 12 or older).
According to the 2015 Monitoring the Future (MTF) survey, marijuana is used by a large percentage of American youths, and is the most commonly used illicit drug among American youth. Among students surveyed in 2015, 15.5% of 8th graders, 31.1% of 10th graders, and 44.7% of 12th graders reported that they had used marijuana in their lifetime. In addition, 11.8%, 25.4%, and 34.9% of 8th, 10th, and 12th graders, respectively, reported using marijuana in the past year. A number of high school students reported daily use in the past month, including 1.1%, 3.0%, and 6.0% of 8th, 10th, and 12th graders, respectively.
The prevalence of marijuana use and abuse is also indicated by criminal investigations for which drug evidence was analyzed in federal, state, and local forensic laboratories, as discussed above in Factor 1. The National Forensic Laboratory System (NFLIS), a DEA program, systematically collects drug identification results and associated information from drug cases submitted to and analyzed by federal, state, and local forensic laboratories. NFLIS data shows that marijuana was the most frequently identified drug from January 2001 through December 2014. In 2014, marijuana accounted for 29.3% (432,989) of all drug exhibits in NFLIS.
The high consumption of marijuana is being fueled by increasing amounts of domestically grown marijuana as well as increased amounts of foreign source marijuana being illicitly smuggled into the United States. In 2014, the Domestic Cannabis Eradication and Suppression Program (DCE/SP) reported that 3,904,213 plants were eradicated in outdoor cannabis cultivation areas compared to 2,597,798 in 2000, as shown above in Table 3. Significant quantities of marijuana were also eradicated from indoor cultivation operations. There were 396,620 indoor plants eradicated in 2014 compared to 217,105 eradicated in 2000. As shown in Table 2 above, in 2014, the National Seizure System (NSS) reported seizures of 1,767,741 kg of marijuana.
Abuse of marijuana is widespread and significant. As previously noted, according to the NSDUH, in 2014, an estimated 117.2 million Americans (44.2%) age 12 or older had used marijuana or hashish in their lifetime, 35.1 million (13.2%) had used it in the past year, and 22.2 million (8.4%) had used it in the past month. Past year and past month marijuana use has increased significantly since 2013. Past month marijuana use is highest among 18-21 year olds and it declines among those 22 years of age and older. In 2014, an estimated 18.5% of past year marijuana users age 12 or older used marijuana on 300 or more days within the past 12 months. This translates into 6.5 million persons using marijuana on a daily or almost daily basis over a 12-month period. In 2014, an estimated 41.6% (9.2 million) of past month marijuana users age 12 or older used the drug on 20 or more days in the past month (SAMHSA, NSDUH). Chronic use of marijuana is associated with a number of health risks (see Factors 2 and 6).
Furthermore, the average percentage of Δ
TEDS data show that in 2013, marijuana/hashish was the primary substance of abuse in 16.8% of all admissions to substance abuse treatment among patients age 12 and older. TEDS data also show that marijuana/hashish was the primary substance of abuse for 77.0% of all 12- to 14-year-olds admitted for drug treatment and 75.5% of all 15- to 17-year-olds admitted for drug treatment in 2013. Among the 281,991 admissions to drug treatment in 2013 in which marijuana/hashish was the primary drug, the average age at admission was 25 years and the peak age cohort was 15 to 17 years (22.5%). Thirty-nine percent of the 281,991 primary marijuana/hashish admissions (35.9%) were under the age of 20.
In summary, the recent statistics from these various surveys and databases (see Factor 1 for more details) demonstrate that marijuana continues to be the most commonly used illicit drug, with large incidences of heavy use and dependence in teenagers and young adults.
In its recommendation, the HHS discussed public health risks associated with acute and chronic marijuana use in Factor 6. Public health risks as measured by emergency department visits and drug treatment admissions are discussed by HHS and DEA in Factors 1, 4, and 5. Similarly, Factor 2 discusses marijuana's pharmacology and presents some of the adverse health effects associated with use. Marijuana use may affect the physical and/or psychological functioning of an individual user, but may also have broader public impacts including driving impairments and fatalities from car accidents.
As discussed in the HHS review document (HHS, 2015), acute usage of marijuana impairs psychomotor performance including motor control and impulsivity, risk taking and executive function (Ramaekers et al., 2004; Ramaekers et al., 2006). In a minority of individuals using marijuana, dysphoria, prolonged anxiety, and psychological distress may be observed (Haney et al., 1999). The DEA further notes a recent review of acute marijuana effects (Wilkinson et al., 2014) that reported impaired neurological function including altered perception, paranoia, delayed response time, and memory deficits.
In its recommendation, HHS references a meta-analysis conducted by Li et al. (2012) where the authors concluded that psychomotor impairments associated with acute marijuana usage have also been
The DEA also notes recent studies examining unintentional exposures of children to marijuana (Wang et al., 2013; 2014). Wang et al. (2013) reviewed emergency department (ED) visits at a children's hospital in Colorado from January 1, 2005 to December 31, 2011. As stated by the authors, in 2000 Colorado passed Amendment 20 which allowed for the use of marijuana. Following the passage of “a new Justice Department policy” instructing “federal prosecutors not to seek arrest of medical marijuana users and suppliers as long as they conform to state laws” (as stated in Wang et al., 2013), 14 patients in Colorado under the age of 12 were admitted to the ED for the unintended use of marijuana over a 27 month period. Prior to the passage of this policy, from January 1, 2005 to September 30, 2009 (57 months), there were no pediatric ED visits due to unintentional marijuana exposure (Wang et al., 2013). The DEA also notes a larger scale evaluation of pediatric exposures using the National Poison Data System (Wang et al., 2014). That study reported that there were 985 unintentional marijuana exposures in children (9 years and younger) between January 1, 2005 to December 31, 2011. The authors stratified the ED visits by states with laws allowing medical use of marijuana, states transitioning to legalization for medical use, and states with no such laws. Out of the 985 exposures, 495 were in non-legal states (n=33 states), 93 in transitional states (n=8 states), and 396 in “legal” states (n=9 states). The authors reported that there was a twofold increase (OR = 2.1) in moderate or major effects in children with unintentional marijuana use and a threefold increase (OR = 3.4) in admissions to critical care units in states allowing medical use of marijuana, in comparison to non-legal states.
The HHS noted that a major risk from chronic marijuana use is a distinctive withdrawal syndrome, as described in the 2013 DSM-5. The HHS analysis also quoted the following description of risks associated with marijuana [cannabis] abuse from the DSM-5:
The HHS stated that chronic marijuana use produces acute and chronic adverse effects on the respiratory system, memory and learning. Regular marijuana smoking can produce a number of long-term pulmonary consequences, including chronic cough and increased sputum (Adams and Martin, 1996), and histopathologic abnormalities in bronchial epithelium (Adams and Martin, 1996).
The HHS reviewed the clinical studies evaluating the gateway hypothesis in marijuana and found them to be limited. The primary reasons were: (1) Recruited participants were influenced by social, biological, and economic factors that contribute to extensive drug abuse (Hall and Lynskey, 2005), and (2) most studies testing the gateway drug hypothesis for marijuana use the determinative measure
The HHS cited several studies where marijuana use did not lead to other illicit drug use (Kandel and Chen, 2000; von Sydow et al., 2002; Nace et al., 1975). Two separate longitudinal studies with adolescents using marijuana did not demonstrate an association with use of other illicit drugs (Kandel and Chen, 2000; von Sydow et al., 2002).
It was noted by the HHS that, when evaluating the gateway hypothesis, differences appear when examining use versus abuse or dependence of other illicit drugs. Van Gundy and Rebellon (2010) reported that there was a correlation between marijuana use in adolescence and other illicit drug use in early adulthood, but when examined in terms of drug abuse of other illicit drugs, age-linked stressors and social roles were confounders in the association. Degenhardt et al. (2009) reported that marijuana use often precedes use of other illicit drugs, but dependence involving drugs other than marijuana frequently correlated with higher levels of illicit drug abuse. Furthermore, Degenhardt et al. (2010) reported that in countries with lower prevalence of marijuana usage, use of other illicit drugs before marijuana was often documented.
Based on these studies among others, the HHS concluded that although many individuals with a drug abuse disorder may have used marijuana as one of their first illicit drugs, this does not mean that individuals initiated with marijuana inherently will go on to become regular users of other illicit drugs.
The HHS stated that heavy and chronic use of marijuana can lead to physical dependence (DSM-5, 2013; Budney and Hughes, 2006; Haney et al., 1999). Tolerance is developed following repeated administration of marijuana and withdrawal symptoms are observed as following discontinuation of marijuana usage (HHS, 2015).
The HHS mentioned that tolerance can develop to some of marijuana's effects, but does not appear to develop with respect to the psychoactive effects. It is believed that lack of tolerance to
The HHS indicated that down-regulation of cannabinoid receptors may be a possible mechanism for tolerance to marijuana's effects (Hirvonen et al., 2012; Gonzalez et al., 2005; Rodriguez de Fonseca et al., 1994; Oviedo et al., 1993).
As indicated by the HHS, the most common withdrawal symptoms in heavy, chronic marijuana users are sleep difficulties, decreased appetite or weight loss, irritability, anger, anxiety or nervousness, and restlessness (Budney and Hughes, 2006; Haney et al., 1999). As reported by HHS, most marijuana withdrawal symptoms begin within 24-48 hours of discontinuation, peak within 4-6 days, and last for 1-3 weeks.
The HHS pointed out that the American Psychiatric Association's (APA's) Diagnostic and Statistical Manual of Mental Disorders—5 (DSM-5) included a list of withdrawal symptoms following marijuana [cannabis] use (DSM-5, 2013). The DEA notes that a DSM-5 working group report indicated that marijuana withdrawal symptoms were added to DSM-5 (they were not previously included in DSM-IV) because marijuana withdrawal has now been reliably presented in several studies (Hasin et al., 2013). In short, marijuana withdrawal signs are reported in up to one-third of regular users and between 50% and 90% of heavy users (Hasin et al., 2013). According to DSM-5 criteria, in order to be characterized as having marijuana withdrawal, an individual must develop at least three of the seven symptoms within one week of decreasing or stopping the heavy and prolonged use (DSM-5, 2013). These seven symptoms are: (1) Irritability; anger or aggression, (2) nervousness or anxiety, (3) sleep difficulty, (4) decreased appetite or weight loss, (5) restlessness, (6) decreased mood, (7) somatic symptoms causing significant discomfort (DSM-5, 2013).
High levels of psychoactive effects such as positive reinforcement correlate with increased marijuana abuse and dependence (Scherrer et al., 2009; Zeiger et al., 2010). Epidemiological marijuana use data reported by NSDUH, MTF, and TEDS support this assertion as presented in the HHS 2015 review of marijuana and updated by the DEA. According to the findings in the 2014 NSDUH survey, an estimated 9.2 million individuals 12 years and older used marijuana daily or almost daily (20 or more days within the past month). In the 2015 MTF report, daily marijuana use (20 or more days within the past 30 days) in 8th, 10th, and 12th graders is 1.1%, 3.0%, and 6.0%, respectively.
The 2014 NSDUH report stated that 4.2 million persons were classified with dependence on or abuse of marijuana in the past year (representing 1.6% of the total population age 12 or older, and 59.0% of those classified with illicit drug dependence or abuse) based on criteria specified in the Diagnostic and Statistical Manual of Mental Disorders, 4th edition (DSM-IV). Furthermore, of the admissions to licensed substance abuse facilities, as presented in TEDS, marijuana/hashish was the primary substance of abuse for; 18.3% (352,297) of 2011 admissions; 17.5% (315,200) of 2012 admissions; and 16.8% (281,991) of 2013 admissions. Of the 281,991 admissions in 2013 for marijuana/hashish as the primary substance, 24.3% used marijuana/hashish daily. Among admissions to treatment for marijuana/hashish as the primary substance in 2013, 27.4% were ages 12 to 17 years and 29.7% were ages 20 to 24 years.
Marijuana is not an immediate precursor of another controlled substance.
After consideration of the eight factors discussed above and of the HHS's Recommendation, the DEA finds that marijuana meets the three criteria for placing a substance in schedule I of the CSA under 21 U.S.C. 812(b)(1):
1. Marijuana has a high potential for abuse.
The HHS concluded that marijuana has a high potential for abuse based on a large number of people regularly using marijuana, its widespread use, and the vast amount of marijuana that is available through illicit channels.
Marijuana is the most abused and trafficked illicit substance in the United States. Approximately 22.2 million individuals in the United States (8.4% of the United States population) were past month users of marijuana according to the 2014 NSDUH survey. A 2015 national survey (Monitoring the Future) that tracks drug use trends among high school students showed that by 12th grade, 21.3% of students reported using marijuana in the past month, and 6.0% reported having used it daily in the past month. In 2011, SAMHSA's Drug Abuse Warning Network (DAWN) reported that marijuana was mentioned in 36.4% of illicit drug-related emergency department (ED) visits, corresponding to 455,668 out of approximately 1.25 million visits. The Treatment Episode Data Set (TEDS) showed that 16.8% of non-private substance-abuse treatment facility admissions in 2013 were for marijuana as the primary drug.
Marijuana has dose-dependent reinforcing effects that encourage its abuse. Both clinical and preclinical studies have demonstrated that marijuana and its principle psychoactive constituent, Δ
2. Marijuana has no currently accepted medical use in treatment in the United States.
The HHS stated that the FDA has not approved an NDA for marijuana. The HHS noted that there are opportunities for scientists to conduct clinical research with marijuana and there are active INDs for marijuana, but marijuana
FDA approval of an NDA is not the sole means through which a drug can be determined to have a “currently accepted medical use” under the CSA. Applying the five-part test summarized below, a drug has a currently accepted medical use if all of the following five elements have been satisfied. As detailed in the HHS evaluation and as set forth below, none of these elements has been fulfilled for marijuana:
Chemical constituents including Δ
There are not adequate safety studies on marijuana for use in any specific, recognized medical condition. The considerable variation in the chemistry of marijuana results in differences in safety, biological, pharmacological, and toxicological parameters amongst the various marijuana samples.
There are no adequate and well-controlled studies that determine marijuana's efficacy. In an independent review performed by the FDA of publicly available clinical studies on marijuana (FDA, 2015), FDA concluded that these studies do not have enough information to “
At this time, there is no consensus of opinion among experts concerning the medical utility of marijuana for use in treating specific recognized disorders.
The currently available data and information on marijuana is not sufficient to address the chemistry, pharmacology, toxicology, and effectiveness. The scientific evidence regarding marijuana's chemistry with regard to a specific cannabis strain that could be formulated into standardized and reproducible doses is not currently available.
3. There is a lack of accepted safety for use of marijuana under medical supervision.
Currently, there are no FDA-approved marijuana products. The HHS also concluded that marijuana does not have a currently accepted medical use in treatment in the United States or a currently accepted medical use with severe restrictions. According to the HHS, the FDA is unable to conclude that marijuana has an acceptable level of safety in relation to its effectiveness in treating a specific and recognized disorder due to lack of evidence with respect to a consistent and reproducible dose that is contamination free. The HHS indicated that marijuana research investigating potential medical use should include information on the chemistry, manufacturing, and specifications of marijuana. The HHS further indicated that a procedure for delivering a consistent dose of marijuana should also be developed. Therefore, the HHS concluded that marijuana does not have an acceptable level of safety for use under medical supervision.
Drug Enforcement Administration, Department of Justice.
Policy statement.
To facilitate research involving marijuana and its chemical constituents, DEA is adopting a new policy that is designed to increase the number of entities registered under the Controlled Substances Act (CSA) to grow (manufacture) marijuana to supply legitimate researchers in the United States. This policy statement explains how DEA will evaluate applications for such registration consistent with the CSA and the obligations of the United States under the applicable international drug control treaty.
August 12, 2016.
Michael J. Lewis, Office of Diversion Control, Drug Enforcement Administration; Mailing Address: 8701 Morrissette Drive, Springfield, Virginia 22152; Telephone: (202) 598-6812.
There is growing public interest in exploring the possibility that marijuana or its chemical constituents may be used as potential treatments for certain medical conditions. The Federal Food, Drug and Cosmetic Act requires that before a new drug is allowed to enter the U.S. market, it must be demonstrated through adequate and well-controlled clinical trials to be both safe and effective for its intended uses. Congress long ago established this process, recognizing that it was essential to protect the health and welfare of the American people.
Although no drug product made from marijuana has yet been shown to be safe and effective in such clinical trials, DEA—along with the Food and Drug Administration (FDA) and the National Institutes of Health (NIH)—fully supports expanding research into the potential medical utility of marijuana and its chemical constituents.
There are a variety of factors that influence whether and to what extent such research takes place. Some of the key factors—such as funding—are beyond DEA's control.
For nearly 50 years, the United States has relied on a single grower to produce marijuana used in research. This grower operates under a contract with the National Institute on Drug Abuse (NIDA). This longstanding arrangement has historically been considered by the U.S. Government to be the best way to satisfy our nation's obligations under the applicable international drug control treaty, as discussed in more detail below. For most of the nearly 50 years that this single marijuana grower arrangement has been in existence, the demand for research-grade marijuana in the United States was relatively limited—and the single grower was able to meet such limited demand. However, in recent years, there has been greater public interest in expanding marijuana-related research, particularly with regard to certain chemical constituents in the plant known as cannabinoids.
The term “cannabinoids” generally refers to those chemicals unique to the cannabis plant (marijuana).
The historical system, under which NIDA relied on one grower to supply marijuana on a contract basis, was designed primarily to supply marijuana for use in federally funded research—not for commercial product development. Thus, under the historical system, there was no clear legal pathway for commercial enterprises to produce marijuana for product development. In contrast, under the new approach explained in this policy statement, persons may become registered with DEA to grow marijuana not only to supply federally funded or other academic researchers, but also for strictly commercial endeavors funded by the private sector and aimed at drug product development. Likewise, under the new approach, should the state of scientific knowledge advance in the future such that a marijuana-derived drug is shown to be safe and effective for medical use, pharmaceutical firms will have a legal means of producing such drugs in the United States—independent of the NIDA contract process.
Under the CSA, all persons who seek to manufacture or distribute a controlled substance must apply for a DEA registration. 21 U.S.C. 822(a)(1). Applications by persons seeking to grow
First, while it is DEA's intention to increase the number of registered marijuana growers who will be supplying U.S. researchers, the CSA does not authorize DEA to register an unlimited number of manufacturers. As subsection 823(a)(1) provides, DEA is obligated to register only the number of bulk manufacturers of a given schedule I or II controlled substance that is necessary to “produce an adequate and uninterrupted supply of these substances under adequately competitive conditions for legitimate medical, scientific, research, and industrial purposes.”
Consistent with subsection 823(a)(1), DEA will evaluate each application it receives to determine whether adding such applicant to the list of registered growers is necessary to provide an adequate and uninterrupted supply of marijuana (including extracts and other derivatives thereof) to researchers in the United States.
Second, as with any application submitted pursuant to section 823(a), in determining whether the proposed registration would be consistent with the public interest, among the factors to be considered are whether the applicant has previous experience handling controlled substances in a lawful manner and whether the applicant has engaged in illegal activity involving controlled substances. In this context, illegal activity includes any activity in violation of the CSA (regardless of whether such activity is permissible under State law) as well as activity in violation of State or local law. While past illegal conduct involving controlled substances does not automatically disqualify an applicant, it may weigh heavily against granting the registration.
Third, given the in-depth nature of the analysis that the CSA requires DEA to conduct in evaluating these applications, applicants should anticipate that, in addition to the information requested in the application itself, they will be asked to submit other information germane to the application in accordance with 21 CFR 1301.15. This will include, among other things, detailed information regarding an applicant's past experience in the manufacture of controlled substances. In addition, applicants will be asked to provide a written explanation of how they believe they would be able to augment the nation's supply of research-grade marijuana within the meaning of subsection 823(a)(1). Applicants may be asked to provide additional written support for their application and other information that DEA deems relevant in evaluating the application under section 823(a).
As stated above, DEA may only issue a registration to grow marijuana to supply researchers if the registration is consistent with U.S. obligations under the Single Convention. Although this policy document will not list all of the applicable requirements of the Single Convention,
Under articles 23 and 28 of the Single Convention, a party (
(a) Designate the areas in which, and the plots of land on which, cultivation of the cannabis plant for the purpose of producing cannabis shall be permitted;
(b) License cultivators authorized to cultivate cannabis;
(c) Specify through such licensing the extent of the land on which the cultivation is permitted;
(d) Purchase and take physical possession of all cannabis crops from all cultivators as soon as possible, but not later than four months after the end of the harvest; and
(e) Have the exclusive right of importing, exporting, wholesale trading and maintaining stocks of cannabis.
As DEA has stated in a prior publication, DEA carries out those functions of article 23, paragraph 2, that are encompassed by the DEA registration system (paragraphs (a) through (c) above), and NIDA carries out those functions relating to purchasing the marijuana and maintaining a monopoly over the wholesale distribution (paragraphs (d) and (e) above).
As indicated, DEA's historical approach to ensuring compliance with the foregoing treaty requirements was to limit the registration of marijuana growers who supply researchers to those entities that operate under a contract with NIDA. Under this historical approach, the grower could be considered an extension of NIDA and thus all marijuana produced by the grower was effectively owned by NIDA, with NIDA controlling all distribution to researchers.
However, as further indicated, DEA has concluded, based on discussions with NIDA and FDA, that it would be beneficial for research to allow additional marijuana growers outside the NIDA-contract system, provided this could be accomplished in a manner consistent with the CSA and the treaty. Toward this end, DEA took into account the following statement contained in the official commentary to the Single Convention:
Countries . . . which produce . . . cannabis . . . , [i]n so far as they permit private farmers to cultivate the plants . . . , cannot establish with sufficient exactitude the quantities harvested by individual producers. If they allowed the sale of the crops to private traders, they would not be in a position to ascertain with reasonable exactitude the amounts which enter their controlled trade. The effectiveness of their control régime would thus be considerably weakened. In fact, experience has shown that permitting licensed private traders to purchase the crops results in diversion of large quantities of drugs into illicit channels. . . . [T]he acquisition of the crops and the wholesale and international trade in these agricultural products cannot be entrusted to private traders, but must be undertaken by governmental authorities in the producing countries. Article 23 . . . and article 28 . . . therefore require a government monopoly of the wholesale and international trade in the agricultural product in question in the country which authorizes its production.
Given the foregoing considerations, DEA believes it would be consistent with the purposes of articles 23 and 28 of the Single Convention for DEA to register marijuana growers outside of the NIDA-contract system to supply researchers,
Also, consistent with the purposes and structure of the CSA, persons who become registered to grow marijuana to supply researchers will only be authorized to supply DEA-registered researchers whose protocols have been determined by the Department of Health and Human Services (HHS) to be scientifically meritorious.
Finally, potential applicants should note that any entity granted a registration to manufacture marijuana to supply researchers will be subject to all applicable requirements of the CSA and DEA regulations, including those relating to quotas, record keeping, order forms, security, and diversion control.
Persons interested in applying for a registration to become a bulk manufacturer of marijuana to supply legitimate researchers can find instructions and the application form by going to the DEA Office of Diversion Control Web site registration page at
This document is a general statement of DEA policy. While this document reflects how DEA intends to implement the relevant statutory and regulatory provisions, it does not establish a rule that is binding on any member of the public. Any person who applies for a registration to grow marijuana (as with any other applicant for registration under the CSA) is entitled to due process in the consideration of the application by the Agency. To ensure such due process, the CSA provides that, before taking action to deny an application for registration, DEA must serve upon the applicant an order to show cause why the application should not be denied, which shall provide the applicant with an opportunity to request a hearing on the application in accordance with the Administrative Procedure Act. 21 U.S.C. 824(c).
Federal Railroad Administration (FRA), Department of Transportation (DOT).
Final rule.
FRA is issuing this final rule to mandate that commuter and intercity passenger railroads develop and implement a system safety program (SSP) to improve the safety of their operations. A SSP is a structured program with proactive processes and procedures, developed and implemented by commuter and intercity passenger railroads to identify and mitigate or eliminate hazards and the resulting risks on each railroad's system. A railroad has the flexibility to tailor a SSP to its specific operations. A SSP will be implemented after receiving approval by FRA of a submitted SSP plan. FRA will audit a railroad's compliance with its SSP.
This final rule is effective October 11, 2016. Petitions for reconsideration must be received on or before October 3, 2016. Comments in response to petitions for reconsideration must be received on or before November 15, 2016.
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Daniel Knote, Staff Director, U.S. Department of Transportation, Federal Railroad Administration, Office of Railroad Safety, Passenger Rail Division; telephone: 631-965-1827; email:
This rule requires commuter and intercity passenger railroads (passenger railroads) to develop and implement a system safety program (SSP). A SSP is a structured program with proactive processes and procedures, developed and implemented by passenger railroads. These processes and procedures will identify then mitigate or eliminate hazards and the resulting risks on the railroad's system. A SSP encourages a railroad and its employees to work together to proactively identify hazards and to jointly determine what, if any, action to take to mitigate or eliminate the resulting risks. The rule provides each railroad with a certain amount of flexibility to tailor its SSP to its specific operations. The SSP rule is part of FRA's efforts to continuously improve rail safety and to satisfy the statutory mandate in the Rail Safety Improvement Act of 2008 (RSIA), secs. 103 and 109, Public Law 110-432, Division A, 122 Stat. 4848
On September 7, 2012, FRA published a notice of proposed rulemaking (NPRM) to address the following mandates for commuter and intercity passenger railroads. 77 FR 55372, Sept. 7, 2012. Section 103 (49 U.S.C. 20156) of RSIA enacted a statutory provision directing the Secretary of Transportation (Secretary) to issue a regulation requiring certain railroads, including passenger railroads, to develop, submit to the Secretary for review and approval, and implement a railroad safety risk reduction program. FRA is establishing separate safety risk reduction program rules for passenger
A SSP is implemented by a written SSP plan. The SSP regulation sets forth various elements that a railroad's SSP plan is required to contain to properly implement a SSP. The main components of a SSP are the risk-based hazard management program and risk-based hazard analysis. A properly implemented risk-based hazard management program and risk-based hazard analysis will identify the hazards and resulting risks on the railroad's system, require railroads to develop methods to mitigate or eliminate, if practicable, these hazards and risks, and set forth a plan to implement these methods. As part of its risk-based hazard analysis, a railroad will consider various technologies that may mitigate or eliminate the identified hazards and risks.
As part of its SSP plan, a railroad will also be required to describe the various procedures, processes, and programs it has in place that support the goals of the SSP. These procedures, processes, and programs include, but are not limited to, the following: A maintenance, inspection, and repair program; rules compliance and procedures review(s); SSP employee/contractor training; and a public safety outreach program. Since railroads should already have most of these procedures, processes, and programs in place, railroads will most likely only have to identify and describe such procedures, processes, and programs to comply with the regulation.
A SSP can be successful only if a railroad engages in a robust assessment of the hazards and resulting risks on its system. However, a railroad may be reluctant to reveal such hazards and risks if there is the possibility that such information may be used against it in a court proceeding for damages. Congress directed FRA to conduct a study to determine if it was in the public interest to withhold certain information, including the railroad's assessment of its safety risks and its statement of mitigation measures, from discovery and admission into evidence in proceedings for damages involving personal injury and wrongful death.
To minimize the information protected, information that is generated
In addition to protection from discovery, 49 U.S.C. 20118 specifies that certain risk reduction records obtained by the Secretary also are exempt from the public disclosure requirements of the Freedom of Information Act (FOIA). Records protected under this exemption may only be disclosed if disclosure is necessary to enforce or carry out any Federal law, or disclosure is necessary when a record is comprised of facts otherwise available to the public and FRA has determined that disclosure would be consistent with the confidentiality needed for SSPs. FRA therefore believes that railroad risk reduction records in FRA's possession would generally be exempted from mandatory disclosure under FOIA. Unless one of the two exceptions provided by section 20118 would apply, FRA would withhold disclosing any such records in response to a FOIA request.
A SSP will affect almost all facets of a railroad's operations. To ensure all employees directly affected by a SSP have an opportunity to provide input on the development, implementation, and evaluation of a railroad's SSP, a railroad must consult in good faith and use best efforts to reach agreement with all directly affected employees on the contents of the SSP plan and amendments to the plan. In an appendix, the rule provides guidance regarding what constitutes “good faith” and “best efforts.”
This rule will become effective 60 days after the publication of the final rule except the protection of certain information discussed above will not become effective until one year after the final rule is published. A railroad is required to submit its SSP plan to FRA for review not more than 180 days after the applicability date of the discovery protections,
FRA will work with the railroad and other necessary stakeholders throughout the development of its SSP to help the railroad properly tailor the program to its specific operation.
Most of the passenger railroads affected by this rulemaking already participate in the American Public Transportation Association (APTA) system safety program and are currently participating in the APTA audit program. Railroads that are still negotiating contracts or not participating directly with APTA, have developed, or are in the process of developing an APTA system safety program. Since the majority of intercity passenger or commuter railroads already have APTA system safety programs, there will not be a significant cost for these railroads to implement the regulatory requirements in this final rule. Thus, the economic impact of the final rule is generally incremental in nature for documentation of existing information and inclusion of certain
FRA estimated costs in the following areas: Documenting the SSP plan and the safety certification process; SSP training; preparing for and providing information in response to external audits; providing mitigation method information to FRA; preparing technology analysis results and providing them to FRA; providing an annual assessment of SSP performance and improvement plans; consulting with directly affected employees and preparing consultation statements, amending SSP plans; retaining records; and conducting internal SSP assessments.
FRA also addressed the use and costs of data protection, which is an important element of this rule. While the rule may protect from discovery some information that in the absence of the rule would not be protected, FRA concludes that the benefits of the protections justify the costs. Without the protections, railroads' risk-based hazard analysis and mitigations may be less robust, which may lead to a less safe environment than with the protections in place. No specific or net incremental costs are incurred by the protections (record keeping and reporting paperwork costs are accounted for in the rule). The information protections are important to ensure the effectiveness of a SSP at almost no additional regulatory cost to the railroad. This means that the information protections provide an incentive to the railroad to be forthright about identified risks, without concern the information may be used in litigation against them.
Total estimated twenty-year costs associated with implementation of the final rule, for existing passenger railroads, range from $2.0 million (discounted at 7%) to $2.9 million (discounted at 3%).
FRA believes that there will be new, startup passenger railroads that will be formed during the twenty-year analysis period. FRA is aware of two passenger railroads that intend to begin operations in the near future. FRA assumed that one of these railroads would begin developing its SSP in Year 2, and that the other would begin developing its SSP in Year 3. FRA further assumed that one additional passenger railroad would be formed and begin developing its SSP every other year after that, in Years 5, 7, 9, 11, 13, 15, 17 and 19. Total estimated twenty-year costs associated with implementation of the final rule, for startup passenger railroads, range from $297 thousand (discounted at 7%) to $485 thousand (discounted at 3%).
Total estimated twenty-year costs associated with implementation of the final rule, for existing passenger railroads and startup passenger railroads, range from $2.3 million (discounted at 7%) to $3.4 million (discounted at 3%).
The estimated costs for existing and startup passenger railroads to implement this rule do not include costs of mitigations that railroads may implement to address hazards, as the cost of hazard mitigation will vary greatly depending on what hazard is being eliminated or mitigated. FRA expects that railroads will implement the most cost-effective mitigations to eliminate or mitigate hazards.
Properly implemented SSPs may be successful in optimizing the returns on railroad safety investments. Railroads can use them to proactively identify potential hazards and resulting risks at an early stage, thus minimizing associated casualties and property damage or avoiding them altogether. Railroads can also use them to identify a wide array of potential safety issues and solutions, which in turn may allow them to simultaneously evaluate various alternatives for improving overall safety with resources available. This results in more cost effective investments. In addition, system safety planning may help railroads maintain safety gains over time. Without a SSP plan to guide them, railroads could adopt countermeasures to safety problems that become less effective over time as the focus shifts to other issues. With SSP plans, those safety gains are likely to continue for longer time periods. SSP plans can also be instrumental in reducing casualties resulting from hazards that are not well addressed through conventional safety programs.
During the course of daily operations, hazards are routinely discovered. Railroads must decide which hazards to address and how, with the limited resources available for this purpose. Without a SSP plan in place, the decision process might become arbitrary. In the absence of the information protections provided by the final rule, railroads might also be reluctant to keep detailed records of known hazards. With a SSP plan in place, railroads may be better able to identify and implement the most cost-effective measures to reduce accidents and incidents and resulting casualties.
The SSP NPRM Regulatory Impact Analysis (RIA) was performed on a breakeven basis. The approach has been modified for the final rule due to the lack of empirical evidence currently available to estimate all relevant regulatory costs, namely those from risk analysis and risk mitigation. These costs are not reasonably predictable until the data protections are in place and each railroad produces and implements their SSP plans assessing their hazards and risk levels. The pool of potential safety benefits is large as evidenced by the totality of accidents and incidents experienced on passenger railroads that this final rule could impact. FRA expects that railroads can achieve sufficient safety benefits to justify quantified and unquantified costs.
SSPs under the APTA program are currently voluntary. This rule focuses on a robust risk-based hazard analysis and mitigation, and the oversight required to achieve full compliance. Passenger railroads must demonstrate a robust SSP and the means to implement the SSP and assure compliance. Railroad management and employees will be accountable to achieve the safety goals in their SSPs, but there will also be FRA oversight to monitor and demand corrective actions if and when necessary.
As documented in the RIA, FRA expects that regulatory costs under the SSP final rule will be modest and only incremental in relation to the railroads' non-regulatory costs because the rule provides information to the industry on what FRA's expectations are for a robust SSP. Railroads should be able to assemble a SSP plan to satisfy the rule by packaging what they currently have under the APTA program that complies with the SSP rule's provisions, along with (1) greater emphasis on eliminating or reducing hazards and the resulting risks, (2) rigorous analysis process, and (3) commitment to achieve the railroad's safety goal through setting priorities of its risk reduction efforts of mitigation. The SSP final rule would also address any gaps in those plans that do not meet the requirements of this rule. The few railroads that are not under the APTA program have their own SSPs or are developing such with FRA's assistance. For instance, when a hazard analysis is performed, this rule requires the railroad to demonstrate the processes and procedures it used to carry-out the analysis and mitigation. This means that, for the most part, FRA would only require actions to address gaps in the SSP plans, such as providing a clear or more robust description of the methods and processes they will use. These actions are expected to maintain and improve the economic benefit that can be achieved through the use of a robust SSP. However, it is difficult to provide a precise cap on the regulatory costs and benefits because the type and level of hazards and corresponding risk are not
A benefit (not quantified) of this rule is that it may promote more cost-effective investment of railroad resources. However, FRA does not know to what extent. Therefore, FRA focused on the passenger railroad accidents and incidents this rule will impact. FRA analyzed passenger operation-related accident costs—the costs of accidents this final rule could affect. Between 2001 and 2010, on average, passenger railroads had 3,724 accidents, resulting in 208 fatalities, 3,340 other casualties, and $20.6 million in damage to railroad track and equipment each year. Total quantified twenty-year accident costs total between $33 billion (discounted at 7%) and $51 billion (discounted at 3%). Of course, these accidents also resulted in damage to other property, delays to both railroads and highway users, emergency response and clean-up costs, and other costs not quantified in this analysis. In conclusion, FRA is confident that the accident reduction benefits should justify the $2.3 million (discounted at 7%) to $3.4 million (discounted at 3%) implementation cost over the first twenty years of the final rule.
This rule will certainly have benefits incremental to the APTA program. However, FRA could not estimate the benefits of the final rule as SSPs are mostly an organizational structure and program to manage safety through hazard analysis and mitigation. FRA cannot accurately estimate the rule's incremental safety benefits because FRA cannot reliably predict the specific risks each railroad will identify or the specific actions they will take to mitigate such risks relative to the APTA program.
On September 7, 2012, FRA published an NPRM proposing to require commuter and intercity passenger railroads to develop and implement a SSP to improve the safety of their operations. 77 FR 55372, Sept. 7, 2012. The NPRM was proposed as part of FRA's efforts to continuously improve rail safety and to satisfy the statutory mandates in 49 U.S.C. 20156, 20118, and 20119.
Railroads operate in a dynamic, fast-paced environment that at one time posed extreme safety risks. Through concerted efforts by railroads, labor organizations, the U.S. DOT, and many other entities, railroad safety has vastly improved. Even though FRA has issued safety regulations and guidance that address many aspects of railroad operations, gaps in safety exist, and hazards and risks may arise from these gaps. FRA believes that railroads are in an excellent position to identify many of these gaps and take the necessary action to mitigate or eliminate the arising hazards and resulting risks. Rather than prescribing the specific actions the railroads need to take, FRA believes it will be more effective to allow the railroads to use their knowledge of their unique operating environment to identify the gaps and determine the best methods to mitigate or eliminate the hazards and resulting risks. A SSP provides a railroad with the tools to systematically and continuously evaluate its system to identify hazards and the resulting risks gaps in safety and to mitigate or eliminate these hazards and risks.
There are many programs that are similar to a SSP. Most notably, the Federal Aviation Administration (FAA) has published a final rule requiring each certificate holder operating under 14 CFR part 121 to develop and implement a safety management system (SMS). 80 FR 1308, Jan. 8, 2015. An SMS is a comprehensive, process-oriented approach to managing safety throughout the organization. An SMS includes an organization-wide safety policy; formal methods for identifying hazards, controlling, and continually assessing risk; and promotion of safety culture. Under FAA's final rule an SMS has four components: Safety Policy, Safety Risk Management, Safety Assurance, and Safety Promotion.
The U.S. Department of Defense (DoD) has also set forth guidelines for a System Safety Program. In July 1969, DoD published “System Safety Program Plan Requirements” (MIL-STD-882). MIL-STD-882 is DoD's standard practice for system safety, with the most recent version, MIL-STD-882E, published on May 11, 2012. DoD,
As discussed in the NPRM, system safety is not a new concept to FRA.
As discussed in the NPRM, the Federal Transit Administration has set forth a regulation that covers State-conducted oversight of the safety and security of rail fixed guideway systems that were not regulated by FRA.
MAP-21 made a number of fundamental changes to the statutes that authorize FTA programs at 49 U.S.C. ch. 53. On October 3, 2013, FTA published an advance notice of proposed rulemaking (ANPRM) seeking comment
In the ANPRM, FTA made it clear that if another Federal agency (
On February 5, 2016, FTA published an NPRM proposing requirements for the Public Transportation Agency Safety Plan. 81 FR 6344. The NPRM proposed “requirements for the adoption of Safety Management Systems (SMS) principles and methods; the development, certification, and update of Public Transportation Agency Safety Plans; and the coordination of Public Transportation Agency Safety Plan elements with other FTA programs and proposed rules, as specified in 49 U.S.C. 5329.”
Since FRA is publishing the SSP final rule after FTA published the NPRM for Public Transportation Agency Safety Plans (the FTA Agency Safety Plan NPRM), but before the FTA Agency Safety Plan final rule, railroads and other interested stakeholders will have the opportunity to compare the SSP final rule with the FTA Agency Safety Plan NPRM.
FRA is currently developing, with the assistance of the RSAC, a separate risk reduction rule, referred to as the risk reduction program (RRP), that would implement the requirements of sections 20156, 20118, and 20119 for Class I freight railroads and railroads with inadequate safety performance. The RRP NPRM was published in the
FRA also has established two voluntary, independent programs that exemplify the philosophy of risk reduction: The Confidential Close Call Reporting System (C3RS) and the Clear Signal for Action (CSA) program.
The C3RS and CSA program embody many of the concepts and principles found in a SSP: Proactive identification of hazards and risks, analysis of those hazards and risks, and implementation of appropriate action to eliminate or mitigate the hazards and risks. While FRA does not require any railroad to implement a C3RS or CSA program as part of their SSP, FRA does believe that these types of programs would prove useful in the development of a SSP and encourages railroads to include such programs as part of their SSP.
The SSP rule was developed with the assistance of the RSAC.
In section 103 of the RSIA, Congress enacted a statutory provision directing the Secretary to issue a regulation requiring certain railroads to develop, submit to the Secretary for review and approval, and implement a railroad safety risk reduction program. This statutory mandate is codified at 49 U.S.C. 20156 (section 20156). The Secretary has delegated this statutory responsibility to the FRA Administrator.
(1) Class 1 railroads;
(2) Railroad carriers with inadequate safety performance, as determined by the Secretary; and
(3) Railroad carriers that provide intercity rail passenger or commuter rail passenger transportation (passenger railroads).
The SSP rule implements sections 20156, 20118, and 20119 as they apply to railroad carriers that provide intercity rail passenger or commuter rail passenger transportation (passenger railroads). The SSP rule is a risk reduction program in that it requires a passenger railroad to assess and manage risk and to develop proactive hazard management methods to promote safety improvement. The rule contains provisions that, while not explicitly required by the statutory safety risk reduction program mandate, are necessary to properly implement the mandate and are consistent with the intent behind the mandate. Further, as mentioned previously, many of the elements in the rule are modeled after the APTA System Safety Manual; therefore, the majority of railroads will have already implemented those elements. The rule also implements section 20119, which addresses the protection of information in railroad safety risk analyses and will be discussed further in the rule.
As discussed,
Some overlap may exist between certain components of the SSP and RRP rules. Most significantly, the SSP and RRP final rules most likely will contain similar provisions implementing the consultation requirements of section 20156(g) and responding to the information protection study section 20119(a) mandated. There was significant discussion during the SSP and RRP RSAC processes on how to implement these statutory mandates. FRA worked with the General Passenger Safety Task Force's System Safety Task Group and the RRP Working Group to receive input regarding how information protection and the consultation process should be addressed, with the understanding that the same language would be included in both the SSP and RRP NPRMs for review and comment. Based on the comments received in response to the SSP NPRM, FRA has revised the consultation process requirement and the information protections. These revisions are discussed further in the discussion of comments section.
Section 20119(b) authorizes FRA to issue a rule protecting risk analysis information generated by railroads. These provisions would apply to information generated by passenger railroads pursuant to a SSP.
In section 20118, Congress determined that for risk reduction programs to be effective, the risk analyses must be shielded from production in response to FOIA requests. FOIA is a Federal statute establishing certain requirements for the public disclosure of records held by Federal agencies.
Section 20118(a) specifically provides that a record obtained by FRA pursuant to a provision, regulation, or order related to a risk reduction program or pilot program is exempt from disclosure under FOIA. The term “record” includes, but is not limited to, “a railroad carrier's analysis of its safety risks and its statement of the mitigation measures it has identified with which to address those risks.”
FRA believes that section 20118 qualifies as an Exemption 3 statute under FOIA.
The RSIA also addressed the disclosure and use of risk analysis information in litigation. Section 20119(a), one of the statutory provisions enacted by the RSIA, directed FRA to conduct a study to determine whether it was in the public interest to withhold from discovery or admission into evidence in a Federal or State court proceeding for damages involving personal injury or wrongful death against a carrier any information (including a railroad's analysis of its safety risks and its statement of the mitigation measures with which it will address those risks) compiled or collected for the purpose of evaluating, planning, or implementing a risk reduction program. In conducting this study, section 20119(a) required FRA to solicit input from railroads, railroad non-profit employee labor organizations, railroad accident victims and their families, and the general public.
FRA contracted with a law firm, Baker Botts L.L.P., to conduct the study on FRA's behalf. Various documents related to the study are available for review in public docket number FRA-2011-0025, which can be accessed online at
On October 21, 2011, the contracted law firm produced a final report on the study.
The final report determined that substantial support exists for the conclusion that a rule that protects “railroad safety risk information from use in civil litigation involving claims for personal injuries or wrongful death would serve the broader public interest.”
In response to the final report, the SSP NPRM proposed in § 270.105 to protect any information compiled or collected solely for the purpose of developing, implementing or evaluating a RRP from discovery, admission into evidence, or consideration for other purposes in a Federal or State court proceeding for damages involving personal injury, wrongful death, and property damage. The information protected includes a railroad's identification of its safety hazards, analysis of its safety risks, and its statement of the mitigation measures with which it would address those risks and could be in the following forms or other forms: plans, reports, documents, surveys, schedules, lists, or data. FRA received multiple comments in response to the proposed information protections and made revisions based on these comments. These revisions are discussed further in the discussion of comments section and the corresponding section-by-section analysis.
Section 20156(g)(1), states that a railroad required to establish a safety risk reduction program must “consult with, employ good faith and use its best efforts to reach agreement with, all of its directly affected employees, including any non-profit employee labor organization representing a class or craft of directly affected employees of the railroad carrier, on the contents of the safety risk reduction program.” Section 20156(g)(2) further provides that if a “railroad carrier and its directly affected employees, including any nonprofit employee labor organization representing a class or craft of directly affected employees of the railroad carrier, cannot reach consensus on the proposed contents of the plan, then directly affected employees and such organizations may file a statement with the Secretary explaining their views on the plan on which consensus was not reached.” FRA must consider these views during review and approval of a railroad's SSP plan.
In the NPRM, FRA proposed to implement this mandate by requiring each railroad required to establish a SSP to consult with its directly affected employees (using good faith and best efforts) on the contents of its SSP plan. A railroad is required to include a consultation statement in its submitted plan describing how it consulted with its employees. If a railroad and its employees were not able to reach consensus, directly affected employees could file a statement with FRA describing their views on the plan.
As with the information protection provisions, FRA anticipates the RRP rule will have essentially identical provisions regarding the consultation requirements since there was significant discussion during the SSP and RRP RSAC processes on how to implement section 20156(g). FRA worked with the System Safety Task Group to receive input regarding how the consultation process should be addressed, with the understanding that the same language would be included in both the SSP and RRP NPRMs for review and comment.
Section 20156(d)(2) states that a SSP must include a fatigue management plan that meets the requirements of section 20156(f). This SSP final rule does not address this mandate because it is currently being considered by a separate rulemaking process.
On December 8, 2011, the RSAC voted to establish a Fatigue Management Plans Working Group (FMP Working Group). The purpose of the FMP Working Group is to provide “advice regarding the development of implementing regulations for Fatigue Management Plans and their deployment under the Rail Safety Improvement Act of 2008.”
The working group completed its work in September 2013 and submitted its recommendations to FRA for further consideration. Ultimately, any fatigue management plans required by FRA pursuant to section 20156(d)(2) and 20156(f) would be considered part of a railroad's overall SSP.
FRA notes that the SSP NPRM had a placeholder in proposed § 270.103(t) that would require a railroad, as part of its SSP, to develop a fatigue management plan no later than three years after the effective date of the final rule, or three years after commencing operations, whichever is later. This placeholder did not contain any additional substantive requirements and was intended merely to be an acknowledgement of the statutory fatigue management plan mandate. FRA has elected to not include this placeholder in the final rule because it may create confusion regarding the separate FMP Working Group process and the ongoing fatigue management plans rulemaking.
The preamble of the SSP NPRM outlined FRA's plan to publish a guidance manual that would assist in the development, implementation, and evaluation of a railroad's SSP. FRA believes sufficient guidance is currently available to railroads that would assist in implementing a SSP. As discussed previously, a majority of passenger railroads affected by this rule participate in the APTA system safety program and are currently participating in the APTA audit program. APTA has published significant guidance regarding its program, primarily, APTA's Manual for the Development of System Safety Program Plans for Commuter Railroads. APTA,
FRA received 19 written comments in response to the NPRM, including comments from members of the railroad industry, trade organizations, labor organizations, as well as members of the general public. Specifically, comments were received from the following organizations: Alaska Railroad Corporation, American Association for Justice, Amtrak, Association of American Railroads (AAR), APTA, Maelstrom Society, National Safety Council, New York State Metropolitan Transportation Authority (MTA), Northeast Illinois Regional Commuter Railroad Corporation (Metra), Parsons Brinkerhoff, Inc., and Trinity Railway Express. Interested labor organizations (Labor Organizations) jointly filed a comment. The Labor Organizations included: American Train Dispatchers Association, Brotherhood of Locomotive Engineers and Trainmen, Brotherhood of Maintenance of Way Employes Division, Brotherhood Railway Carmen Division TCU/IAM, Sheet Metal, Air, Rail and Transportation Workers, and Transportation Workers Union of America (TWU). The following discussion provides an overview of the written comments FRA received in response to the NPRM. More detailed discussions of specific comments and how FRA has chosen to address these comments in the final rule can be found in the relevant section-by-section analysis portion of this preamble.
Generally, all of the comments submitted were in favor of SSP. While the comments varied on the structure and breadth of a SSP, there was agreement that a properly implemented SSP would increase safety of the railroad's operations. As discussed previously, there are two concurrent rulemakings that will implement sections 20156, 20118, and 20119, the SSP rule and the RRP rule. FRA established separate safety risk reduction rules for passenger railroads and the Class I freight railroads to account for significant differences between passenger and freight operations. Many commenters requested that FRA make it clear that the SSP requirements are separate from the forthcoming RRP rule and a railroad will not be required to submit both a SSP plan and RRP plan to FRA. It is not the intent that one railroad will be required to satisfy both regulations,
Certain commenters provided specific scenarios involving multiple rail operations and inquired which railroad would be required to comply with which regulation. One example involved a commuter railroad subject to the SSP rule that contracts certain portions of its passenger operations to a freight railroad that may be subject to the proposed RRP rule. In this scenario, the entity that is ultimately responsible for providing the passenger service would be responsible for complying with the SSP rule, which would be the commuter railroad. The fact that the commuter railroad contracts its operations to the freight railroad does not result in the delegation of the duty to comply with the SSP rule to that freight railroad. Contracting out these operations may pose certain hazards and risks. Therefore, the commuter railroad's SSP needs to take into account that the passenger operations are contracted out to another railroad. If the freight railroad also conducts freight operations over the same track in which it conducts the passenger operations for the commuter railroad and the freight railroad is required to implement a RRP, that segment will be included in the freight railroad's RRP and must take into consideration the risks and hazards posed by the passenger operation. Further, if the freight railroad conducts freight operations over the same track in which it conducts the passenger operations for the commuter railroad, the commuter railroad's SSP must take into consideration the risks and hazards posed by the freight operations.
Another commenter presented the scenario in which a passenger railroad subject to the SSP rule owns and maintains, but does not dispatch, a segment of track in which there are freight operations. From the example, it is not clear if the passenger railroad is also operating on that segment. If the passenger railroad is operating on that segment, pursuant to § 270.3(a), it will need to include that segment in its SSP. If the passenger railroad is not operating on that segment of track, but there are freight operations on that segment of
Another example was a situation in which a passenger railroad has two terminals on its system where there are freight operations adjacent (within 25') to the passenger operations. In this scenario, FRA would expect the passenger railroad's SSP to assess what hazards and resulting risks arise due to the proximity of the freight operations to the passenger operations; however, the actual freight operations would not be included in the passenger railroad's SSP. FRA does not intend these three examples to cover every scenario a railroad may encounter; rather, these examples provide guidance concerning what facts FRA will find determinative regarding which railroad will be required to comply with which regulation. Since FRA cannot contemplate every scenario, railroads and other interested parties are welcomed and encouraged to reach out to FRA for guidance regarding application of the SSP rule to a railroad's specific operations.
In many instances in the NPRM, FRA stated that it plans on working with the railroads on certain aspects of the rule. The Labor Organizations expressed concern that FRA plans on exclusively working with the railroads and not allowing any other interested party to be involved, effectively substituting FRA for the Labor Organizations in the statutory-mandated consultation role. This was not FRA's intent behind those statements. Rather, the intent was to make it clear that FRA would be available to provide guidance to the railroads on the various aspects of the rule, not that there would be an exclusive partnership between FRA and the railroads to develop the railroads' SSPs. FRA will work with the railroads and will not replace the Labor Organizations and any other directly affected employee in their consultation role. FRA has amended the language to make this intention clear. It is also important to note that through the consultation process in § 270.107, railroad employees will always have an opportunity to provide input on the railroads' SSPs.
The Labor Organizations also believe that the NPRM supports a continuation of self-analysis by the railroads, which, they claim, is inconsistent with the intent behind RSIA. As evidence, the Labor Organizations point to multiple instances in the NPRM where FRA states that railroads have flexibility and/or discretion to make certain determinations on certain requirements of the rule, such as the waiver section proposed in § 270.7, the lack of a penalty schedule in the NPRM, and that, in limited instances, a railroad is allowed to make safety-critical changes to its SSP without prior FRA approval.
The SSP rule is directly dependent on a railroad's ability to thoroughly and candidly assess its hazards and resulting risks. The SSP requires a railroad to engage in self-analysis that will be conducted in conjunction with the railroad's directly affected employees and FRA oversight. Since no two railroads operations are exactly the same, no SSP will be exactly the same, which means that a railroad will need a certain degree of flexibility to tailor a SSP to its specific operations. Regardless of the amount of flexibility afforded to the railroads, the directly affected employees, including the Labor Organizations, will have an opportunity to provide input and work with the railroads on the development of the SSP. Regarding the lack of a penalty schedule, FRA typically does not include penalty schedules in an NPRM; however, this final rule does include a penalty schedule.
APTA expressed concern that the proposed rule was more prescriptive in significant respects than current FRA practices. APTA believes that the level of specificity in the proposed rule diminishes the flexibility needed so that the railroads can adapt their SSP plans to local conditions. Further, APTA states such specificity could divert a railroad's attention from assessing its operation risk to assessing regulatory compliance risk and would only expand the amount of paper and bureaucracy needed to comply with the rule with little to no increase in safety. APTA believes that FRA has expanded the elements of the APTA program which threatens to divert attention from the railroad's core safety practices and the highest risk of railroad operations. As examples, APTA points to the requirements associated with scheduling, reporting, and conducting consultation with the directly affected employees pursuant to § 270.102; defining, outlining, measuring, and promoting a positive safety culture pursuant to § 270.103(c) and (v); the concept of fully implemented; and the requirement that the railroad establish milestones to track the progress of implementation. Each one of these examples, according to APTA, is an instance in which railroads may have a different understanding of the requirement and therefore, subjectivity is introduced into the process and does not support a consistent regulatory framework.
FRA disagrees with APTA's assertions. As discussed above, the SSP rule is structured so that a railroad can tailor the program to its operations. The SSP rule sets forth general parameters and the railroad will design its program so that it fits these parameters, addresses the railroad's operations, and eliminates or reduces hazards on the railroad's operations. As with most new FRA regulations, significant interaction between FRA, the railroads, and other stakeholders will be necessary to ensure all parties understand the proper implementation for the rule. The majority of railroads that are required to comply with this rule already participate in APTA's system safety program. FRA believes that this rule does not add a significant paperwork and bureaucracy burden compared to what is already required by APTA's program. FRA does not believe the rule is more directive than the APTA program; rather, since most of the railroads that will implement a SSP already participate in the APTA program, the railroads are familiar with the concept and application of system safety and will be ready to adapt their existing APTA program to the requirements set forth in this rule. Further, implementation of the SSP rule will more than likely be the railroad conducting a gap analysis between its current APTA program and the SSP rule and modifying that program where necessary to bring it into compliance with the SSP rule.
The majority of the comments supported and understood that the discovery protections are necessary for a railroad to engage in a thorough and candid analysis of the hazards and resulting risks on its system; however, the American Association for Justice (AAJ) objected to the inclusion of any information protections. AAJ claims that: (1) The proposed information protections are unprecedented; (2) FRA can promulgate a SSP regulation without the information protections; (3)
First, AAJ claims that proposed information protections are unprecedented. AAJ recognizes that there are existing programs that have information protections; however, AAJ argues that these programs have two key features: (1) Congress directed that disclosure of documents be limited, and (2) limited disclosure applies predominately to documents actually submitted to a federal agency. AAJ believes that the SSP information protections do not have either of these key features.
While Congress did not set forth specific information protections in section 20119, Congress gave FRA authority to set forth such specific protections. As discussed previously, in section 20119(a), Congress directed FRA to conduct a study to determine if certain information protections would be in the public interest. Congress set forth the specific parameters of the information protections that the study must consider. Congress then authorized FRA to promulgate a rule, subject to notice and comment, which addressed the results of the study.
Nothing in section 20119 limits the information protections to documents that are submitted to FRA. The language used by Congress in section 20119 indicates the information protections, depending on the results of the study, could apply to information that may not even be submitted to FRA. Pursuant to section 20119(a), the study must consider information protections that would apply to documents that are compiled and collected for “the purpose of planning, implementing, or evaluating a safety risk reduction program.” Since Congress did not limit the information protections only to documents that are submitted to FRA, it is within FRA's authority to set forth information protections that apply to documents within a railroad's possession.
Nothing in 23 U.S.C. 409 (section 409), the statute that SSP information protections are modeled after, or the Supreme Court's decision in
AAJ claims that in the limited circumstances in which data has been protected, the provisions have been narrowly tailored and construed. AAJ believes that SSP information protections are overly broad and inconsistent with any other government program that limits some disclosure of evidence.
FRA agrees with AAJ's assertion that the SSP information protections must be narrowly tailored and construed. In
Furthermore, the SSP protections are more narrowly tailored than the protections in section 409. Section 270.105(a)(2) limits the protections to information that was originally compiled and collected “solely” for the purpose of planning, implementing or evaluating a SSP. This means that information compiled or collected for any other purpose is not protected, even if the railroad also uses that information for its SSP. For example, if a railroad is required by another provision of law or regulation to compile or collect information, the information protections do not apply to that information. “Solely” also means that a railroad must continue to use that information only for its SSP. If a railroad subsequently uses for any other purpose information that was initially compiled or collected for a SSP, that information is not protected to the extent that it is used for the non-SSP purpose. These additional limits result in protections that are more narrow and specific than those in section 409, which does not include any language similar to “solely” that would limit protected information to information generated only for the exclusive purpose of the Hazard Elimination Program.
Second, AAJ contends that FRA can issue a SSP rule without the discovery protections, just like FAA did in its SMS rulemaking. A significant difference between the FRA and FAA programs is the scope of statutory authority Congress gave each agency for protection of information collected or maintained as part of an SMS. The FAA's authority, set forth in 49 U.S.C. 44735, limits the protection of SMS data that is voluntarily submitted, such as reports, data, or other information produced or collected for purposes of developing and implementing an SMS, from FOIA disclosure by the FAA. FRA's authority to implement SMS information protections is based on 49 U.S.C. 20119, and recommendations resulting from the required study under section 20119.
As discussed previously, the Study concluded that it would be within FRA's authority and in the public interest for FRA to promulgate a regulation protecting certain risk analysis information held by the railroads from discovery and use in litigation and makes recommendations for the drafting and structuring of such a regulation.
Third, AAJ believes the SSP information protections will reduce the rights of persons injured in railroad accidents. AAJ points to the fact that in many cases, evidence a railroad knew or should have known of a hazard is the key to proving the railroad's liability, particularly for Federal Employers Liability Act cases. AAJ believes that the study concluded without analysis that injured people could continue to be able to pursue legal remedies because access to documents that are currently discoverable would remain discoverable. AAJ does not believe this conclusion is accurate because the information protections may shield the
The SSP information protections have been drafted with the goal that a plaintiff is no worse off than they would have been had the SSP rule never existed. This is consistent with section 409 and the Court's interpretation of that section.
According to AAJ, the information protections will allow railroads to hide safety hazards. AAJ believes that the threat of disclosure of these hazards creates an incentive for railroads to correct them immediately. AAJ points to multiple cases that they believe provide proof that railroads routinely hide evidence of hazards.
FRA disagrees with this assertion. The purpose of the SSP is for railroads to identify hazards and resulting risks on their system and take the appropriate measures to mitigate or eliminate these hazards. Without the information protections, a SSP could result in an effort-free tool for plaintiffs in litigation against railroads, which would discourage railroads from identifying hazards and resulting risks, thus frustrating the intent behind section 20156. FRA believes that the SSP and information protections will encourage railroads to identify and address, rather than hide, hazards. Furthermore, if a railroad is already required by another law or regulation to collect information to show compliance with existing laws or regulations, that information will not be protected. Therefore, railroads will not be able to use the SSP information protections to hide issues of non-compliance.
Finally, AAJ requests that FRA specifically preserve state tort law based claims. AAJ believes that since railroads are required to submit their SSP plans to FRA for approval, railroads may claim that they are immune from any safety hazard claim or either that the state law claim is preempted by FRA's approval of the SSP.
This concern was also raised by the Labor Organizations. To address this issue, FRA included § 270.201(b)(4) in the final rule, which provides that approval of a railroad's SSP plan under this part does not constitute approval of the specific actions the railroad will implement under its SSP plan pursuant to § 270.103(q)(2) and shall not be construed as establishing a Federal standard regarding those specific actions.
FRA will not review or approve the specific mitigation and elimination measures that a railroad may adopt to address the hazards and risks that it identifies.
FRA is adding a new part 270 to title 49 of the CFR. Part 270 satisfies the statutory requirements regarding safety risk reduction programs for railroads providing intercity rail passenger or commuter rail passenger service.
This section contains a formal statement of the final rule's purpose and scope and remains unchanged from the NPRM. Paragraph (a) states that the purpose of the rule is to improve railroad safety through structured, proactive processes and procedures developed and implemented by railroads. The rule requires a railroad to establish a program that systematically evaluates railroad safety hazards and the resulting risks on its system and manages those risks in order to reduce the number and rates of railroad accidents, incidents, injuries, and fatalities.
Paragraph (b) states that the rule prescribes minimum Federal safety standards for the preparation, adoption, and implementation of railroad system safety programs. The rule does not restrict railroads from adopting and enforcing additional or more stringent requirements not inconsistent with this part.
Paragraph (c) explains that the rule provides for the protection of information generated solely for the purpose of developing, implementing, or evaluating a system safety program under this part. In addition to the SSP, § 270.1(c) of the NPRM proposed implementing protection of information for a railroad safety risk reduction rule required by FRA for Class I freight railroads and railroads with in adequate safety performance,
NY MTA recommended that the term “solely” be deleted from paragraph (c) and § 270.105(a) to protect studies or risk analyses that are not developed expressly to comply with this part. NY MTA believes that it is in the public interest to ensure that railroads conduct on-going and thorough self-critical examinations and expressed concern that if these types of studies or analyses are not protected, they may be used against the railroad in a court proceeding. As discussed further in the section-by-section analysis for § 270.105, FRA only has the authority under section 20119(b) to protect documents that are created pursuant to a SSP; therefore, deleting the term “solely” would improperly expand the protections beyond the limits of FRA's authority.
This section sets forth the applicability of the rule and remains unchanged from the NPRM. Section 20156(a)(1) mandates that FRA require each Class I railroad, a railroad carrier that has inadequate safety performance, or a railroad that provides intercity rail passenger or commuter rail passenger transportation to establish a railroad safety risk reduction program. This rule sets forth the requirements of a railroad safety risk reduction program for a railroad that provides intercity rail passenger or commuter rail passenger
Paragraph (a) explains that this rule applies to railroads that operate intercity or commuter passenger train service on the general railroad system of transportation and railroads that provide commuter or other short-haul rail passenger train service in a metropolitan or suburban area (as described by 49 U.S.C. 20102(2)), including public authorities operating passenger train service. A public authority that provides passenger commuter train service by contracting out the actual operation to another railroad or independent contractor is regulated by FRA as a railroad under the provisions of the rule. Although the public authority is ultimately responsible for the development and implementation of a SSP (along with all related recordkeeping requirements), the railroad or other independent contractor that operates the authority's commuter passenger train service is expected to comply with the SSP established by the public authority, including implementation of the SSP plan.
In commenting on the NPRM, the Alaska Railroad proposed that when FRA next submits technical corrections of Federal statutes to Congress, FRA no longer use the terms “intercity passenger” and “commuter passenger” and instead use the term “passenger” to refer to these type of railroads. The Alaska Railroad believes that the terms, “intercity passenger” and “commuter passenger,” are based on an old, outdated statutory context. While FRA does not agree or disagree with the Alaska Railroad's position regarding the use of these terms, FRA agrees with the Alaska Railroad that this issue is a matter to be handled legislatively by Congress—not a matter to be handled by FRA in a rulemaking.
AAR expressed concern that paragraph (a) could lead to confusion that certain freight railroads may be required to have a SSP in addition to a RRP because some freight railroads operate commuter trains on behalf of commuter agencies and some freight railroads provide tracks over which passenger trains operate. To avoid confusion, AAR proposed that “railroads that primarily provide freight service and are potentially subject to risk reduction program regulations” should be excepted from the rule. The discussion of comments section addressed multiple scenarios raised by commenters that involve freight operations and passenger operations and which railroad would be responsible for which program. Simply because a passenger railroad contracts out passenger service to a freight railroad does not mean the duty to comply with this rule has been automatically delegated to the freight railroad and the passenger railroad no longer is required to comply with this rule. The passenger railroad ultimately is responsible for complying with this rule and the freight railroad providing the passenger service is required to comply with the passenger railroad's SSP.
Metra requested that an RSAC recommendation regarding delegation of duties under this rule be inserted into the final rule. The RSAC recommended that if a passenger railroad contracts all activities that relate to the passenger service to another entity, the sponsoring passenger railroad may seek approval from the FRA Associate Administrator of Safety to delegate responsibility for the SSP to the other entity. FRA chose not to adopt this recommendation. It would not be consistent with FRA's statutory jurisdiction over passenger railroads to allow delegation of responsibility under this part, so that a passenger railroad could effectively divest itself of legal responsibility under the rule. In certain instances, including this part, FRA allows a railroad to contract with another entity to perform the duties required by a rule; however, FRA's approach has always been never to allow a railroad to delegate completely responsibility for compliance with a rule to another entity. Since the SSP rule is the first of its kind for FRA and the railroad industry, FRA believes it is important for the passenger railroad to be responsible for compliance with the rule to ensure that the railroad is involved in system safety planning and implementation under the rule.
In paragraph (b), certain railroads are excepted from the final rule's applicability. The exceptions proposed in the NPRM are adopted in the final rule. The first exception, in paragraph (b)(1), covers rapid transit operations in an urban area that are not connected to the general railroad system of transportation. This paragraph clarifies the circumstances under which rapid transit operations are not subject to FRA jurisdiction under this part. It should be noted, however, that some operations having rapid transit characteristics are within FRA's jurisdiction given their connections to the general system,
Paragraph (b)(2) sets forth an exemption for operations commonly described as tourist, scenic, historic, or excursion service whether on or off the general railroad system. Tourist, scenic, historic, or excursion rail operations is defined in § 270.5. This exemption is consistent with the treatment of tourist, scenic, historic, or excursion rail operations in FRA's other regulations concerning passenger operations, including the underlying basis for the regulatory approach taken in those regulations.
Paragraph (b)(3) makes clear that the requirements of the rule do not apply to the operation of private passenger train cars, including business or office cars and circus train cars. While FRA believes that a private passenger car operation should be held to the same basic level of safety as other passenger train operations, such operations were not specifically identified in the statutory mandate and FRA is taking into account the burden that would be imposed by requiring private passenger car owners and operators to conform to the requirements of this part. Private passenger cars are often hauled by host railroads, such as Amtrak and commuter railroads, and these hosts often impose their own safety requirements on the operation of the private passenger cars. Pursuant to this rule, these host railroads are required to have SSPs in place to protect the safety of their own passengers; in turn, the private car passengers benefit from these programs even without the rule directly covering private car owners or operators. In the case of non-revenue passengers, including employees and guests of railroads that are transported in business and office cars, as well as persons traveling on circus trains, the railroads are expected to provide for their safety consistent with existing safety operating procedures and protocols for normal train operations.
Finally, paragraph (b)(4) sets forth an exception from the requirements of this part for railroads that operate only on track inside an installation that is not part of the general railroad system of transportation (
Section 20156(a)(4) allows a railroad carrier that is not required to submit a railroad safety risk reduction program to voluntarily submit such a program. If the railroad voluntary submits a program, it shall comply with the requirements set forth in section 20156 and is subject to approval by the Secretary. In the NPRM, FRA sought comment on whether a provision that allows a railroad to establish voluntarily a SSP should be added to the final rule. FRA did not receive a significant number of comments in response to this request and the comments FRA did receive, supported voluntary compliance with the rule.
As discussed in the NPRM, FRA anticipates that the majority of railroads which voluntarily submit a railroad safety risk reduction program under section 20156(a)(4) would do so pursuant to the RRP regulation that is the subject of a separate proceeding. Paragraph (a) is broad and intended to cover the majority of the railroads that provide commuter and intercity passenger service. Absent the exceptions in paragraph (b), if a railroad is not required by this part to establish a SSP, that railroad more than likely does not provide commuter and intercity passenger service and, therefore, may be required to establish a RRP. If these railroads are not required to establish a RRP but decide to voluntarily establish a railroad safety risk reduction program pursuant to section 20156(a)(4), the RRP regulation would more than likely be better suited for their operations because, due to the breadth of paragraph (a), they are most likely not a railroad that provides commuter or intercity passenger service. Therefore, FRA believes voluntary compliance with a statutory-mandated risk reduction program, including a SSP, is better addressed in the forthcoming RRP rule.
This section contains a set of definitions that clarify the meaning of important terms as they are used in the rule. The definitions are carefully worded in an attempt to minimize the potential for misinterpretation of the rule. Many of the definitions are based on definitions in FTA's part 659 and APTA's system safety program. In the NPRM, FRA requested comment and input regarding the proposed terms defined in this section and specifically whether other terms should be defined. FRA received multiple comments in response to this request. Generally, commenters did not have significant issues with the proposed definitions; however, some commenters recommended adding definitions for certain terms.
The Labor Organizations suggested that FRA add the definitions that the RSAC recommended but FRA chose not to include in the NPRM. The definitions were for the following terms: Contractor, FTA, hazard analysis, improvement plan, individual investigation, passenger operations, passenger railroad, railroad property, risk-based hazard management, safety, safety certification, safety culture, safety-related services, safety-related employee, sponsoring railroad, system safety program, and system safety program plan. Trinity Railways also requested that FRA add definitions for passenger railroad, safety-related services, and sponsoring railroad. Regarding the terms FTA, individual investigation, passenger operations, railroad property, safety-related employee, and sponsoring railroad, FRA declines to add definitions for these terms because these terms are not used in the rule text. Regarding the terms contractor and safety, these terms have a common understanding throughout the railroad industry and do not have a particular meaning within the rule, so definitions for these terms are not necessary. Regarding the terms hazard analysis, improvement plan, passenger railroad, safety certification, and safety-related services, there are sections within the rule that address the meaning of each term and FRA believes that it is unnecessary to include definitions for these terms as well.
“Administrator” refers to Federal Railroad Administrator or his or her delegate.
“Configuration management” means the process a railroad uses to ensure that the configurations of all property, equipment and system design elements are properly documented.
“FRA” means the Federal Railroad Administration.
“Fully implemented” means that all the elements of the railroad's SSP plan required by this part are established and applied to the safety management of the railroad. APTA commented that the proposed definition for “fully implemented” included two sentences and that each sentence provided the same information but in a different context and that this could lead to confusion as to how it should be applied. However, FRA notes that the proposed definition contained only one sentence and believes that it was sufficiently clear to avoid confusion. APTA may have been referring to the section-by-section analysis discussion for this definition. In this regard, FRA has not included that additional discussion here to maintain clarity.
“Hazard” means any real or potential condition, as identified in the railroad's risk-based hazard analysis under § 270.103(q), that can cause injury, illness, or death; damage to or loss of a system; or damage to equipment, property, or the environment. This definition is based on the existing definition of the term in FTA's part 659. 49 CFR 659.5. FRA does not intend this definition to include hazards that are completely unrelated to railroad safety, such as environmental hazards that would fall under the exclusive jurisdiction of the United States Environmental Protection Agency (EPA) or workplace safety hazards that would fall under the exclusive jurisdiction of the United States Department of Labor's Occupational Safety and Health Administration (OSHA). Railroad safety hazards that fall under FRA jurisdiction that could cause damage to the environment, however, would be included in this definition. For example, the potential of a derailment of a tank car at a location due to track geometry would fall under this definition. If that derailment would not likely result in a release of hazardous materials, it would fall under FRA's jurisdiction. However, if the derailment has a high potential for the release of hazardous material, that would be a hazard that would fall under this definition that is related to railroad safety and may fall under both FRA's and EPA's jurisdiction. An example of a railroad hazard that would fall exclusively under EPA's jurisdiction is air pollution caused by locomotive emissions. This hazard is not within FRA's jurisdiction and would not be included in this definition.
“Passenger” means a person, excluding an on-duty employee, who is on board, boarding, or alighting from a rail vehicle for the purpose of travel. This definition is modeled after the
“Person” means an entity of any type covered under 1 U.S.C. 1, including, but not limited to, the following: A railroad; a manager, supervisor, official, or other employee or agent of a railroad; any owner, manufacturer, lessor, or lessee of railroad equipment, track, or facilities; any independent contractor or subcontractor providing goods or services to a railroad; and any employee of such owner, manufacturer, lessor, lessee, or independent contractor or subcontractor.
“Plant railroad” means a type of operation that has traditionally been excluded from the application of FRA regulations because it is not part of the general railroad system of transportation. Under § 270.3, FRA has chosen to exempt plant railroads, as defined in § 270.5, from the regulation. In the past, FRA has not defined the term “plant railroad” in other regulations that it has issued because FRA assumed that its
The definition clarifies that when an entity operates a locomotive to move rail cars in service for other entities, rather than solely for its own purposes or industrial processes, the services become public in nature. Such public services represent the interchange of goods, which characterizes operations on the general system. As a result, even if a plant railroad moves rail cars for entities other than itself solely on its property, the rail operations will likely be subject to FRA's safety jurisdiction because those rail operations bring plant trackage into the general system.
The definition of the term “plant railroad” is consistent with FRA's longstanding policy that it will exercise its safety jurisdiction over a rail operation that moves rail cars for entities other than itself because those movements bring the track over which the entity is operating into the general system.
“Positive train control system” means a system designed to prevent train-to-train collisions, overspeed derailments, incursions into established work zone limits, and the movement of a train through a switch left in the wrong position, as described in subpart I of 49 CFR part 236. APTA believes that since the term “positive train control” is provided in support of 49 CFR part 236 it does not need to be defined within the context of the SSP rule. FRA disagrees. Since “positive train control system” has a specific meaning within FRA's regulations, it is important that the meaning of the term used within the SSP rule is consistent with part 236.
“Rail vehicle” means railroad rolling stock, including, but not limited to, passenger and maintenance vehicles.
“Railroad” means: (1) Any form of non-highway ground transportation that runs on rails or electromagnetic guideways, including—
(i) Commuter or other short-haul rail passenger service in a metropolitan or suburban area and commuter railroad service that was operated by the Consolidated Rail Corporation on January 1, 1979; and
(ii) High speed ground transportation systems that connect metropolitan areas, without regard to whether those systems use new technologies not associated with traditional railroads, but does not include rapid transit operations in an urban area that are not connected to the general railroad system of transportation; and
(2) A person or organization that provides railroad transportation, whether directly or by contracting out operation of the railroad to another person.
The definition of “railroad” is based upon 49 U.S.C. 20102(1) and (2), and encompasses any person providing railroad transportation directly or indirectly, including a commuter rail authority that provides railroad transportation by contracting out the operation of the railroad to another person, and any form of non-highway ground transportation that runs on rails or electromagnetic guideways, but excludes urban rapid transit not connected to the general system.
“Risk” means the combination of the probability (or frequency of occurrence) and the consequence (or severity) of a hazard.
“Risk-based hazard management” means the processes (including documentation) used to identify and analyze hazards, assess and rank corresponding risks, and eliminate or mitigate the resulting risks. This is a high-level definition of “risk-based hazard management” and will provide a general understanding of the concept of what is “risk-based hazard management.” Risk-based hazard management is a key component of a railroad's SSP and § 270.103(p) sets forth the requirements for a risk-based hazard management program.
“Safety culture” means the shared values, actions and behaviors that demonstrate commitment to safety over competing goals and demands. This definition was proposed in the NPRM section-by-section analysis of § 270.101(b). This definition is from the DOT Safety Council's May 2011 research paper,
“System safety” means the application of management, economic, and engineering principles and techniques to optimize all aspects of safety, within the constraints of operational effectiveness, time, and cost, throughout all phases of the system life cycle. By specifying that system safety operates within certain constraints, this definition clarifies that there may be hazards on the railroad's system that a railroad may not be capable of fully mitigating or eliminating, or where the costs to address the hazard are not commensurate with the risks. Rather, the railroad would monitor the hazard and at some point, if feasible, employ methods to mitigate or eliminate that hazard and resulting risk.
“System safety program” means a comprehensive process for the application management and engineering principles and techniques to optimize all aspects of safety. A railroad's SSP sets out how the railroad will implement system safety in its operations. Because this part describes specific requirements of a system safety program, this definition is intended to be high-level.
“System safety program plan” means a document developed by the railroad that implements and supports the railroad's SSP. Section 270.103 sets forth the specific requirements of a SSP plan.
“Tourist, scenic, historic, or excursion operations” means railroad operations that carry passengers, often using antiquated equipment, with the conveyance of the passengers to a particular destination not being the principal purpose. Train movements of new passenger equipment for demonstration purposes are not tourist, scenic, historic, or excursion operations. This definition is consistent with FRA's other regulations concerning passenger operations.
The NPRM proposed a waiver process in § 270.7 in which a railroad could request a waiver from a provision of the SSP rule. FRA determined that such a provision is unnecessary because the rules governing the FRA waiver process are already set forth in 49 CFR part 211. Therefore, a waiver provision has not been included in the SSP final rule.
This section, originally proposed as § 270.9, contains provisions regarding the penalties for failure to comply with the rule and the responsibility for compliance. It is adopted and remains unchanged from the NPRM.
As explained in the NPRM, paragraph (a) identifies the civil penalties that FRA may impose upon any person that violates or causes a violation of any requirement of this part. These penalties are authorized by 49 U.S.C. 20156(h), 21301, 21302, and 21304. The penalty provision parallels penalty provisions included in numerous other safety regulations issued by FRA. In general, any person who violates any requirement of this part or causes the violation of any such requirement is subject to a civil penalty of at least $839 and not more than $27,455 per violation. Civil penalties may be assessed against individuals only for willful violations. Where a grossly negligent violation or a pattern of repeated violations creates an imminent hazard of death or injury to persons, or causes death or injury, a penalty not to exceed $109,819 per violation may be assessed. In addition, each day a violation continues constitutes a separate offense. Maximum penalties of $27,455 and $109,819 are required by the Federal Civil Penalties Inflation Adjustment Act of 1990, Public Law 101-410, 28 U.S.C. 2461, note, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015, Public Law 114-74, Sec. 701. Furthermore, a person may be subject to criminal penalties under 49 U.S.C. 21311 for knowingly and willfully falsifying reports required by these regulations. FRA believes that the inclusion of penalty provisions for failure to comply with the regulations is important in ensuring that compliance is achieved. This final rule includes a schedule of civil penalties as Appendix A to this part. Because a penalty schedule is a statement of agency policy, notice and comment was not required before its issuance.
Paragraph (b) clarifies that the requirements in the rule are applicable to any person (as defined in the rule) that performs any function or task required by the rule. Although various sections of the rule address the duties of passenger railroads, FRA intends that any person who performs any action on behalf of a passenger railroad or any person who performs any action covered by the rule is required to perform that action in the same manner as required of the passenger railroad, or be subject to FRA enforcement action. For example, if a passenger railroad contracts with another entity to perform duties covered by this rule, that entity is required to perform those duties in the same manner as the passenger railroad. While the passenger railroad remains responsible for complying with the rule, FRA can take enforcement action any person who performs any action on behalf of a passenger railroad or any person who performs any action covered by the rule.
This section sets forth the general requirements of the rule and remains unchanged from the NPRM. Each railroad subject to this part (
To properly implement a SSP, a railroad is required to set forth a SSP plan pursuant to § 270.103. The SSP plan will be a document or a series/collection of documents that contain all of the elements required by this part and shall be designed to support the railroad's SSP.
Paragraph (b) requires that a railroad's SSP be designed so that it promotes a positive safety culture. Safety culture, as defined in § 270.5, is the shared values, actions and behaviors that demonstrate commitment to safety over competing goals and demands. U.S. DOT, Safety Council Research Paper,
This section implements a railroad's SSP through a SSP plan. This section received numerous comments and these comments are addressed in the appropriate subsection to which they refer. As mentioned previously, a railroad is required to create a written SSP plan to fully implement and support its SSP. This section sets forth all of the required elements of the railroad's SSP plan.
Paragraph (a) establishes that a railroad's SSP plan must contain the minimum elements set forth in this section. FRA did not receive any comments regarding paragraph (a) and therefore it remains unchanged from the NPRM. As provided in § 270.201, a railroad's SSP plan must be submitted to and approved by the FRA Associate Administrator for Railroad Safety and Chief Safety Officer. FRA Associate Administrator for Railroad Safety and Chief Safety Officer approval of the SSP plan will be considered approval of the railroad's SSP as required by section 20156(a)(3).
In certain scenarios, a railroad providing passenger service is not the railroad that owns the track on which passenger service is being operated. Rather, the railroad that owns the track hosts the railroad providing the passenger train service. For a railroad providing passenger train service to effectively identify, evaluate, and manage the hazards and resulting risks on the system over which it operates, as required by this part, the railroad needs to evaluate all aspects of the operation. As such, paragraph (a)(2) of this section addresses the coordination that must occur between a railroad providing passenger service and a railroad hosting that passenger service. If certain aspects of the operation are not under the control of the railroad providing passenger service but are controlled by the railroad hosting the operation, the two railroads need to communicate so those aspects can be adequately addressed by the railroad's SSP. A passenger railroad may have multiple railroads hosting its passenger train service on its system and therefore needs to coordinate with each railroad. If a railroad hosting the passenger train service does not cooperate with the railroad providing the passenger train service to coordinate the applicable parts of the SSP, under § 270.7, the railroad hosting the passenger train service may be subject to civil penalties because it may cause the railroad providing the passenger service to violate the requirements of this part. For example, if a passenger railroad service is hosted by a freight railroad and that freight railroad is responsible for track maintenance, the freight railroad will need to provide the passenger railroad the necessary information regarding track maintenance for the passenger railroad to prepare its SSP plan. Since track maintenance has significant impact on the safety of rail operations, it is a vital element of a railroad's SSP plan. Therefore, if the freight railroad refuses to provide the passenger railroad the necessary information regarding track maintenance, the passenger railroad will not be able to fully comply with this part and, consequently, the freight railroad may be subject to civil penalties for causing the passenger railroad to fail to comply with this part.
APTA requested that FRA address coordination issues whereby one railroad can adopt and operate under another railroad's SSP plan. There is nothing in this rule prohibiting a railroad's SSP plan from adopting certain portions of another railroad's SSP plan if those portions cover the same operations on both railroads. However, no two railroad operations are exactly the same; therefore, no two SSP plans will be exactly the same. If a railroad adopts portions of another railroad's plan, the operations covered by those portions of the plan must involve the same directly affected employees and both railroads must independently comply with the consultation requirements under this rule.
APTA also requested that FRA allow railroads to develop SSP plans for a jointly served facility and allow properties with multiple host railroads to have SSP plans specific to each of the territories that a host railroad supports. There is nothing in the rule prohibiting railroads from jointly developing portions of their SSP plans; however, the railroads must ensure that the jointly developed portions address all the necessary requirements of this rule. Each railroad can include the jointly developed portions in their plans, but each portion must involve the same directly affected employees and both railroads must independently comply with the consultation requirements under this rule.
Paragraph (b) requires each SSP plan to have a policy statement that endorses the railroad's SSP. It should be noted that proposed paragraph (c)(1) has been moved to paragraph (b). The policy statement required by this paragraph should define, as clearly as possible, the railroad's authority for the establishment and implementation of the SSP. This includes the legal name of the entity responsible for developing the railroad, any authorizing or implementing legislation, and federal, state & local statutes enacted to establish the railroad.
The policy statement is required to be signed by the chief official of the railroad. This signature would indicate that the top level of management at the railroad endorses the railroad's SSP. AAR requested that the chief official for safety should be required to sign the system safety program, not the chief official at the railroad. AAR believes that the title of “chief official at the railroad” is ambiguous because railroads have different organizational structures and there may not be one person with the title of “chief official.” AAR claims that FRA has departed from the language in the statutory mandate which requires the chief official for safety to sign the SSP plan. AAR also believes that the chief official for safety is the more appropriate person to sign the SSP plan because he/she will be more familiar with the details of the SSP
FRA notes that this policy statement is also required to describe the safety philosophy and culture of the railroad. Section 270.101(b) requires a railroad to design its SSP so that it promotes and supports a positive safety culture as defined by § 270.5. In order for a railroad to properly design its SSP so that it promotes and supports a positive safety culture, it first needs to describe its safety culture and philosophy. As discussed previously, FRA believes that there are 10 elements that are critical to a strong safety culture and these 10 elements provide the necessary framework for a railroad to comprehensively describe its safety culture. Once its safety culture is described, the railroad must also describe how it measures the success of its safety culture pursuant to paragraph (t) of this section. The requirement for this description was proposed in § 270.103(c)(1) of the NPRM; however, as discussed in the next paragraph, FRA has determined to delete proposed § 270.103(c).
As proposed in the NPRM, paragraph (c) would have required a railroad to set forth a statement in its SSP plan that describes the purpose and scope of the railroad's SSP. The statement would have been required to have, at a minimum, three elements. However, upon further consideration, FRA has determined that these three elements are better placed elsewhere in the rule. Therefore, proposed § 270.103(c), Purpose and scope of system safety program, has been removed. As noted above, proposed § 270.103(c)(1) has been moved to § 270.103(b), System safety program policy statement, and proposed § 270.103(c)(2) and (3) have been moved to § 270.103(e), Railroad management and organizational structure, which was proposed as § 270.103(f) in the NPRM. FRA believes by moving these sections, the requirements are clearer and more consistent.
Paragraph (c) of the final rule, proposed as paragraph (d) in the NPRM, addresses the importance of goals in a SSP. The central goal of a SSP is to manage or eliminate hazards and the resulting risks to reduce the number and rates of railroad accidents, incidents, injuries, and fatalities. FRA believes one way to achieve this central goal is for a railroad to set forth goals that are designed in such a way that when the railroad achieves these goals, the central goal is achieved as well. The APTA System Safety Manual served as the model for the guidelines set forth in paragraph (c).
Paragraph (c) requires a railroad to include as part of its SSP plan a statement that defines the goals for its SSP. The statement must describe the clear strategies on how the railroad will achieve these goals. These strategies will be the railroad's opportunity to provide its vision on how these particular goals will ultimately reduce the number and rates of railroad accidents, incidents, injuries and fatalities. The statement must also describe what the railroad's management's responsibilities are to achieve the system safety goals. This statement will make it clear to the railroad, railroad employees, and FRA who, and at what level within management, is responsible for ensuring that the stated goals are achieved.
Rather than setting forth specific requirements that these goals must satisfy, paragraph (c) contains general requirements. This allows railroads the flexibility to establish goals specific to their operations. The general parameters of these goals are that they should be—
• long-term, so that they are relevant to the railroad's SSP. This does not mean that goals cannot have relevance in the short-term. Rather, goals must have significance beyond the short-term and continue to contribute to the SSP. The NPRM proposed that the goals should be relevant to the railroad “throughout the foreseeable life of the railroad.” FRA determined to delete the quoted language to reduce any confusion;
• meaningful, so that they are not so broad that they cannot be attributed to specific aspects of the railroad's operations. The desired results must be specific and must have a meaningful impact on safety;
• measurable, so that they are designed in such a way that it is easily determined whether each goal is achieved or at least progress is being made to achieve the goal; and
• consistent with the overall goal(s) of the SSP, in that they must be focused on the identification of hazards and the elimination or mitigation of the resulting risks.
FRA notes that the NY MTA, in commenting on the NPRM, believes it is critical that FRA and OSHA align their positions related to numerical goals. NY MTA states that OSHA has indicated that simply setting numerical safety goals discourages accident reporting and that the goal of a SSP as described in the NPRM appears to be focused on setting such numerical goals. NY MTA is concerned that any conflict between OSHA's perspective and the main goal of a SSP program could have the unattended effect of hampering safety programs.
FRA agrees with NY MTA that the goals of a SSP cannot be focused exclusively on numerical values,
Paragraph (d), proposed as paragraph (e) in the NPRM, requires a railroad to set forth a statement in its SSP plan describing the characteristics of the railroad's system. FRA received comments from AAR, Labor Organizations, and the NY MTA regarding this paragraph. The railroad's system description is an important part of the overall SSP. This is the section where the railroad will provide sufficient information to allow a basic understanding of the railroad and its operations. A good system description is important to understand the operating
Understanding the breadth of the railroad system is also fundamentally necessary for FRA to be able to review and audit a railroad's SSP. This description will allow FRA to determine whether the railroad's program sufficiently covers the railroad's operations and the extent of the risks/hazards on its system. The description will also focus the railroad on its staff and contractors that have an effect on the safety of its operations and, therefore, have an effect on the success of its SSP.
This information is required for FRA to understand the extent of infrastructure and operations so that they can relate the safety aspects of the plan to the railroad specifically. When carrying out enforcement action such as reviewing annual assessments or performing audits, FRA will have a basis of understanding for what, where and who is responsible. This is a key input in order to establish a “baseline” of a railroad's safety environment and culture.
FRA notes that passenger railroads often answer to officials representing governmental jurisdictions served by those railroads. FRA believes a SSP plan will be ineffective if those officials cannot easily be made aware of the nature of the railroads' operations and how those operations are made safer through the SSPs. FRA believes that for the SSPs required by RSIA to be effective, this information must be readily available to relevant governmental officials. Further, this information will make it easier for those governmental officials to inform railroads of, or place emphasis upon, relevant hazards, improving the quality of the SSPs. For example, States have safety rail inspectors who work in collaboration with FRA, to which that information will be useful. Railroads for the most part have this information currently; it's simply a matter of inserting into the plan document.
Generally, the description of the characteristics of the railroad's system should be sufficient to allow persons who are not familiar with the railroad's operations and railroad operations in general to understand the railroad's system and its basic operations. Specifically, this statement describes the following:
• The railroad's operations (including any host operations), including the role, responsibilities, and organization of the railroad's operating departments.
• The physical characteristics of the railroad, including the number miles of track over which the railroad operates, the number of stations the railroad services, the number and types of grade crossings over which the railroad operates, on which segments the railroad shares track with other railroads, the maximum authorized speed, and toxic inhalation hazard routing.
• The scope of the service the railroad provides, including the number of passengers, the number of routes, and the days and hours when service is provided. The railroad may also provide a system map.
• The maintenance activities performed by the railroad, including the role, responsibilities, and organization of the railroad's various maintenance departments and the type of maintenance required by the railroad's operations and facilities.
• Any other aspects of the railroad pertinent to the railroad's operations.
The NPRM proposed requiring a description of the history of the railroad's operations and physical plant. FRA determined that these descriptions were not necessary because any pertinent information they would provide is already addressed by the other descriptions required by paragraph (d)(1).
Paragraph (d)(2) requires a railroad to identify in its SSP plan certain persons that provide or utilize significant safety-related services. The railroad will identify persons that have entered into a contractual relationship with the railroad to either perform significant safety-related services on the railroad's behalf or to utilize significant safety-related services provided by the railroad for purposes related to railroad operations. The term “significant safety-related services” is intended to be understood broadly to give a railroad the flexibility to evaluate the services other entities provide to the railroad and the degree that these services are safety-related. FRA has edited this section from the NPRM to clarify who needs to be identified by the railroad. First, the NPRM proposed that a railroad identify “entities or persons that provide significant safety-related services.” However, FRA determined that the term “entities” was redundant because the definition for “person” in § 270.5 covers all of the entities that would need to be identified, therefore, the term “entities” has been removed. Second, the proposed rule text in the NPRM did not include the requirement that the person must be providing the services on the railroad's behalf. This was added to clarify the relationship between the railroad and the person providing the service. The contractual basis of this relationship is discussed further in this section.
Third, the proposed rule text in the NPRM did not include the requirement that the railroad describe the persons that utilize significant safety-related services of the railroad; however, the NPRM did request comment on whether FRA should add this requirement. FRA received comments from AAR, APTA, Labor Organizations, and NY MTA in response to this request. AAR was unsure of which persons FRA meant when referring to persons that utilize significant safety-related services and suggested that the railroad itself could be a person that utilizes significant safety-related services. APTA commented that general considerations can be given for customers, motorists using highway rail-grade crossings and communities served by safe alternative transportation. However, APTA believes that there is no useful purpose for including this requirement in the rule. FRA has added the requirement that the railroad identify persons that utilize significant safety-related services, but included language to clarify which persons would fall under this category. The railroad will identify persons that utilize significant safety-related services provided by the railroad for the purpose related to railroad operations. For example, if a railroad contracts with a company to perform bridge maintenance, that company provides a significant safety-related service to the railroad on behalf of the railroad and would be identified as so under this paragraph. If during the bridge maintenance, the company uses the railroad's roadway worker protection, that company is then utilizing a significant safety-related service (roadway worker protection) provided by the railroad and would be identified as so under this paragraph. A railroad does not have to identify persons providing or utilizing significant safety-related services for purposes unrelated to railroad operations, such as railroad passengers or motor vehicle drivers who benefit from a highway-rail grade crossing warning system.
Fourth, FRA has added a contractual element to the relationship between the railroad and persons that provide or utilize significant safety-related services. This was added to ensure that there is a formalized agreement between the railroad and the person regarding the service that is provided or utilized. With the formalized agreement, the duties of the contractor would be clear
NY MTA recommended that FRA permit railroads to use the same safety-related matrix for designating employees that was proposed in the Training Standards NPRM to identify persons that provide significant safety-related services. NY MTA believes this will be more practical for staff changes, while still establishing accountability. On November 7, 2014, FRA published in the
Pursuant to § 243.101(c), the railroad is required to provide a table or other suitable format that lists, among other things, the railroad's safety-related employees. 49 CFR 243.101(c). While the matrix required by the Training Standards rule may provide the railroads with guidance regarding which persons provide significant safety-related services, it is not clear whether the matrix would cover persons that utilize significant safety-related services. Therefore, FRA declines to adopt NY MTA's suggestion.
The Labor Organizations expressed concern that railroads may contract out the majority of their safety-related services or allow a third party to perform such services to evade their statutory obligations under this part. The Labor Organizations believe that simply requiring identification of the persons that a railroad may or may not use for safety-related services would make it very difficult for FRA to determine whether the railroads are complying with this part. To avoid such difficulty, the Labor Organizations request that FRA make clear that the responsibility for compliance with this rule is non-delegable. Pursuant to §§ 270.3 and 270.7, as explained above in the accompanying section-by-section analysis, the railroad is ultimately responsible for compliance with this final rule and cannot delegate this duty. Section 270.7(b) provides that a railroad may contract with another person to perform the duties under this rule; however, that person is required to perform these duties in the same manner as the railroad and is subject to FRA enforcement action. The railroad remains accountable even if it does contract with another person to perform the duties required by this rule. Of course, the other person must perform the required duties in compliance with this rule, and both the railroad and the contracted person are subject to FRA enforcement action.
Finally, an individual also commented that it is important to ensure that persons providing significant safety-related services are qualified or credentialed, or both, to provide such services. FRA believes such a requirement is unnecessary because persons that perform any duty on behalf of the railroad are required to perform these duties consistent with this regulation and any other applicable safety laws and regulations. Therefore, a railroad is required to ensure that any person that provides significant safety-related services do so consistent with this regulation and any other applicable safety laws and regulations.
Paragraph (d)(3) incorporates text from proposed paragraph (f)(4) of the NPRM. FRA determined that the requirements in proposed paragraph (f)(4) were better placed in paragraph (d) because the requirements are part of the railroad system description. Paragraph (d)(3) requires the railroad to describe the relationship and responsibilities between it and certain other persons. These persons include any host railroads, contract operators, shared track/corridor operators, and other persons that utilize or provide significant safety-related services as identified by the railroad in paragraph (d)(2) of this section. Describing the relationship and responsibilities between the railroad and any host railroads, contract operators, or shared track/corridor operators should be relatively straight forward because a railroad most likely has entered into contracts or memoranda of agreement with these persons that outline this information. The description should be detailed enough so that FRA can understand the basis of the relationship and the responsibilities of each person based on that relationship. For example a commuter railroad may contract out operation of the commuter trains to one corporation and contract out track maintenance on the commuter railroad's own trackage to another corporation. For a certain section of the route, the commuter railroad's trains are hosted by another railroad on the other railroad's tracks and that other railroad provides the dispatching and signal/track maintenance for that portion of track. The commuter railroad would need to outline these relationships and responsibilities in the plan. Not only to ensure that FRA understands, but also to ensure the railroad has a complete understanding of who performs the various activities. Many departments know who and what they do and
Paragraph (e), proposed as paragraph (f) in the NPRM, requires a railroad to set forth a statement in its SSP plan that describes the management and organizational structure of the railroad. RSIA requires a railroad's hazard analysis to identify and analyze the railroad's management structure. 49 U.S.C. 20156(c). Under this section, the railroad will identify its management structure and how safety responsibilities are distributed throughout the railroad.
As discussed previously, to maintain consistency and increase clarity, proposed paragraphs (c)(2) and (3) have been incorporated into paragraph (e) of this section. The statement pursuant to paragraph (e) shall include a chart or other visual representation of the organizational structure of the railroad; description of the railroad's management responsibilities within the SSP; description of how the safety responsibilities are distributed within the railroad organization; clear identification of the lines of authority used by the railroad to manage safety issues; and a description of the roles and responsibilities in the railroad's system safety program for each host railroad, contract operator, shared track/corridor operator, and other person that utilizes or provides significant safety-related services as identified by the railroad pursuant to (d)(2) of this section. The statement shall also describe how each host railroad, contractor operator, shared track/corridor operator, and any other person that utilizes or provides significant safety-related services as identified by the railroad pursuant to paragraph (d)(2) of this section supports and participates in the railroad's system safety program, as appropriate. Under paragraph (e)(1), the chart or other visual representation of the organizational structure of the railroad does not need to be overly detailed. Rather, it must identify the divisions within the railroad, the key management positions within each division, and titles of the officials in those positions.
Under paragraph (e)(2), the railroad shall describe the railroad's management's responsibilities within the SSP. This description clarifies who within the railroad's management are responsible for which aspects of the SSP.
Under paragraph (e)(3), a railroad must identify how the safety responsibilities are distributed within the railroad's departments. A railroad may have one department that handles safety matters or there may be multiple departments and each department has separate and distinct responsibilities for handling safety matters. Regardless of how the railroad distributes the overall responsibility to manage safety issues, it is important that the railroad identifies and describes how safety is being managed on its system.
Under paragraph (e)(4), the railroad also needs to clearly identify which of the management positions within the department(s) are responsible for managing the safety issues within the railroad. Identification of these lines of authority allows FRA to determine who within the organization and at what level has responsibility for managing the safety issues. While FRA recognizes that safety is everybody's responsibility within the railroad organization, the management personnel responsible for managing the safety issues need to be identified.
Paragraph (e)(5) requires the railroad to describe the roles and responsibilities in the railroad's SSP for each host railroad, contract operator, shared track/corridor operator, and any other person that utilizes or provides significant safety-related services. Since these persons play a key role in the safe operation of the railroad, their role and responsibilities in the railroad's SSP must be described.
Paragraph (e)(5) also requires the railroad to describe how each host railroad, contractor, shared track/corridor operator, and any other person that utilizes or provides significant safety-related services as identified by the railroad pursuant to paragraph (d)(2) supports and participates in the railroad's SSP, as appropriate.
Paragraph (f), proposed as paragraph (g) in the NPRM, requires a railroad's SSP plan to include a description of the process the railroad will use to implement its SSP. RSIA requires passenger railroads to implement a SSP plan that is approved by the Secretary. 49 U.S.C. 20156(a)(1)(C). Under this section, the railroad will describe how it will implement its SSP, which will allow FRA, during initial plan approval and subsequent audits, to determine if the railroad is properly implementing its SSP.
The implementation process must, at a minimum, address the roles and responsibilities of each position (including those held by employees, contractors, and other persons that utilize or provide significant safety-related services) that has significant responsibilities to implement the SSP. The addition of persons that utilize significant safety-related services is consistent with the discussion in paragraph (d)(2). The NPRM proposed that the statement would address the roles and responsibilities of each position and job function that has significant responsibilities to implement the SSP. FRA determined that the term “job function” was redundant; therefore, all references in the rule have been removed. The process must also identify the milestones necessary to be reached to properly implement the SSP. FRA did not receive any comments in response to paragraph (f); however, as discussed in the next paragraph, FRA has included the requirement in paragraph (f) that the SSP be fully implemented within 36 months of FRA approval. Further, in the NPRM this paragraph proposed to require an implementation plan; however, FRA has determined that a description of the implementation process is more appropriate than requiring a formal plan.
FRA notes that in the NPRM there was no proposal for the railroad to specify a timeframe in which it would be required to fully implement, as defined in § 270.5, its SSP; however FRA believes such a timeline is necessary. FRA has determined that 36 months is a sufficient amount of time for a railroad to fully implement its SSP. With such a time frame, a railroad can effectively allocate the resources necessary to fully implement its SSP while also prioritizing the implementation of specific elements. Further, with this timeframe, the railroad will be able to more precisely set the milestones as required by this section. While “fully implemented” is defined in § 270.5, there are no rigid criteria that determine if a program is fully implemented. To determine if a program is fully implemented, FRA will consider the extent to which each section of the plan is implemented and the railroad, along with its stakeholders, are actively fulfilling each section. For example, regarding paragraph (c), System safety program goals, FRA will consider the extent to which a railroad has developed written goals that are long-term, meaningful, measurable, and focused on the identification of hazards and the mitigation or elimination of the resulting risks, and whether there are programs in place for the railroad to achieve the written goals.
The positions that will be described pursuant to paragraph (f) are those that are responsible for implementing the major elements of the SSP, to the extent that the individuals having these positions have clear and concrete roles and responsibilities. Not every individual who participates in the railroad's SSP needs to be described as part of the implementation process but
In its SSP plan a railroad will set forth the milestones to demonstrate that it has properly implemented its SSP. Each railroad's SSP will be different; therefore, the milestones that must be achieved to properly implement a SSP will be different. A railroad has the flexibility to determine, based on its own SSP and not rigid requirements, realistic benchmarks that need to be achieved to properly implement its SSP. FRA understands that there may be unforeseeable circumstances that can cause a railroad to adjust the implementation of its SSP and subsequently adjust these milestones. The important consideration is that the railroad sets forth milestones that can be used to determine the progress of the railroad's implementation of its SSP.
Paragraph (g), proposed paragraph (h) in the NPRM, addresses a railroad's maintenance and repair program. RSIA requires a railroad's hazard analysis to “identify and analyze” the railroad's “infrastructure” and “equipment.” 49 U.S.C. 20156(c). Under this section, the railroad will identify its procedures and processes for the maintenance, repair, and inspection of such infrastructure and equipment. This identification is necessary for the railroad to conduct a thorough risk-based hazard analysis and will allow FRA, during initial plan review and subsequent audits, to determine if the railroad's SSP sufficiently addresses the risk and hazards generated by the railroad's infrastructure and equipment. FRA received three comments in response to this paragraph. Based on these comments, paragraph (g)(4) was added.
Paragraph (g)(1) requires a railroad's SSP plan to identify and describe the processes and procedures used for maintenance and repair of its infrastructure and equipment directly affecting railroad safety. The phrase “infrastructure and equipment directly affecting railroad safety” is intended to be broadly understood to provide the railroad the opportunity to take a realistic survey of its particular operations and make the determination of which infrastructure and equipment directly affect the safety of that railroad. However, as guidance, a list of the types of infrastructure and equipment that are considered to directly affect railroad safety is provided. This list includes: Fixed facilities and equipment, rolling stock, signal and train control systems, track and right-of-way, passenger train/station platform interface (gaps), and traction power distribution systems. The list in the NPRM did not include passenger train/station platform interface (gaps); however, FRA believes passenger train/station platform interface (gaps) are an important element of a railroad's infrastructure and will provide the railroad with further opportunities to identify hazards and the resulting risks and eliminate or mitigating these hazards. Once the railroad has determined what infrastructure and equipment directly affect railroad safety, it will then identify and describe the processes and procedures used for the maintenance and repair of that infrastructure and equipment. The safety of a railroad's operations depends greatly upon the condition of its infrastructure and equipment; therefore, these maintenance and repair processes and procedures should and are expected to already be in place.
Under paragraph (g)(2), each description of the processes and procedures used for maintenance and repair of infrastructure and equipment directly affecting safety must include the processes and procedures used to conduct testing and inspections of the infrastructure and equipment. Multiple FRA regulations require a railroad to conduct testing and inspection of infrastructure and equipment, and paragraph (g)(2) addresses the processes and procedures that the railroad has developed to meet these regulatory standards. For example, pursuant to 49 CFR part 234, a railroad must inspect, test, and repair warning systems at highway-rail grade crossings. Under paragraph (g)(2), the railroad will describe the internal procedures it has developed to conduct such inspections, tests, and repairs and how it educates its employees on the proper way to conduct the inspection, testing and repair of highway-rail grade crossing warning systems. As discussed below, in certain situations, paragraph (g)(3) permits referencing these manuals in the SSP plan rather than providing the entire manual.
Typically, railroads have a manual or manuals that describe the maintenance and testing procedures and processes used to conduct testing and inspections of the infrastructure and equipment. FRA has included paragraph (g)(3) to address the use of such manuals in a SSP plan. Rather than including an entire manual in its SSP plan, if the manual satisfies all applicable Federal regulations, in most cases simply referencing the manual in the SSP plan will satisfy this paragraph. If a manual does not comply with all applicable Federal regulations, it cannot be included in the plan. If any the regulations that apply to these are updated, the manuals and references to such will need to be updated as well. Approval of a SSP plan that references manuals that describe the maintenance and testing procedures and processes used to conduct testing and inspections of the infrastructure and equipment does not necessarily mean that the manuals satisfy all applicable regulations. Rather, each manual must independently comply with the applicable regulations and is subject to a civil penalty if not in compliance. If FRA finds it necessary to review the manuals, FRA will examine whether the manuals are current, if they are readily available to the employees who are performing the functions the manuals address, and if these employees have been trained on their use.
While FRA is always concerned with the safety of railroad employees performing their duties, employee safety in maintenance and servicing areas generally falls within the jurisdiction of OSHA. It is not FRA's intent in this rule to displace OSHA's jurisdiction regarding the safety of employees while performing inspections, tests, and maintenance, except where FRA has already addressed workplace safety issues, such as blue signal protection in 49 CFR part 218. In other rules, FRA has included a provision that makes it clear that FRA does not intend to displace OSHA's jurisdiction over certain subject matters.
In the NPRM, FRA sought comment on whether such a clarifying statement was necessary for any such subject matter that the proposed rule may affect. APTA, the Labor Organizations, and an individual commenter all provided comments in response to this request. All of the commenters agree that the final rule should contain such a clarifying statement; therefore, paragraph (g)(4) has been included in this section. Modeled after 49 CFR 238.107(c), paragraph (g)(4) makes clear that FRA neither intends to displace OSHA jurisdiction with respect to employee working conditions generally nor specifically with respect to the maintenance, repair, and inspection of infrastructure and equipment directly affecting railroad safety. FRA does not intend to approve any specific portion of a SSP plan that relates exclusively to employee working conditions covered by OSHA. The term “approve” is used to make it clear that any part of a plan that relates to employee working
Paragraph (h), proposed as paragraph (i) in the NPRM, requires a railroad's SSP plan to set forth a statement describing the railroad's processes and procedures for developing, maintaining, and ensuring compliance with the railroad's rules and procedures directly affecting railroad safety and the railroad's processes for complying with applicable railroad safety laws and regulations. RSIA requires a railroad's hazard analysis to identify and analyze the railroad's operating rules and practices. 49 U.S.C. 20156(c). Under this paragraph, the railroad will identify the railroad's operating rules and practices. FRA did not receive any comments in response to this paragraph as proposed in the NPRM; however, the term “maintenance” has been included in paragraph (h)(1) to be consistent with paragraph (h)(3). This statement describes how the railroad not only develops, maintains, and complies with its own safety rules, but also how the railroad complies with applicable railroad safety laws and regulations. The statement includes identification of the railroad's operating and safety rules and procedures that are subject to review under chapter II, subtitle B of title 49 of the Code of Federal Regulations,
The railroad must also identify the techniques used to assess the compliance of its employees with applicable railroad safety laws and regulations and the railroad's operating and safety rules and maintenance procedures. Both Federal railroad safety laws and regulations and railroad operating and safety rules and maintenance procedures are effective at increasing the safety of the railroad's operations only if the railroad and its employees comply with such rules and procedures. By ensuring compliance with such rules and procedures, the overall safety of the railroad is improved. The NPRM proposed requiring that the railroad identify the techniques to assess compliance of the railroad's employees with “applicable FRA regulations”; however, to be consistent with the other requirements in paragraph (h), FRA has revised this language to “railroad safety laws and regulations.”
The railroad must identify the techniques used to assess the effectiveness of the railroad's supervision relating to compliance with applicable railroad safety laws and regulations and the railroad's operating and safety rules and maintenance procedures. If the railroad's supervision relating to compliance with these rules and procedures is effective, the employees' compliance should also be effective, thus improving the overall safety of the railroad.
Paragraph (i), proposed as paragraph (j) in the NPRM, requires each railroad to train necessary personnel on in its SSP plan. As proposed, paragraph (i) did not have the explicit requirement that the railroad train the necessary employees; thus, paragraph (i)(1) has been added to make this clear. Paragraph (i) also requires that each railroad establish and describe its plan how the necessary personnel will be trained on the SSP. As proposed in the NPRM, paragraph (i) did not require a railroad to establish a plan addressing how its employees will be trained on the SSP. Since some railroads will not have a SSP in place before the effective date of this final rule, FRA determined that it was necessary to include the requirement that a railroad not only describe but also establish a plan addressing how its employees will be trained on the SSP. This ensures that a railroad has such a plan in place and that it can be properly described pursuant to this paragraph.
The SSP training plan will describe the procedures in which employees that are responsible for implementing and supporting the program and any other person that utilizes or provides significant safety-related services will be trained on the railroad's SSP. The NPRM proposed that “contractors who provide significant safety-related services” needed to be trained as well. However, FRA determined that the phrase “persons utilizing or performing significant safety-related services” includes contractors who provide significant safety-related services; therefore, the phrase “contractors who provide significant safety-related services” has been removed. A railroad's SSP can be successful only if those who are responsible for implementing and supporting the program understand the requirements and goals of the program. To this end, a railroad would train those responsible for implementing and supporting the railroad's SSP on the elements of the program so that they have the knowledge and skills to fulfill their responsibilities under the program.
For each position or job title that has been identified under paragraph (f)(1)(i) as having significant responsibility for implementing a railroad's SSP, the railroad's training plan must describe the frequency and the content of the training on the SSP that the position or job title receives. If the railroad does not identify a position or job title under paragraph (f)(1)(i) as having significant responsibility to implement the SSP but the position or job title is safety-related or has a significant impact on safety, personnel in these positions will be required to receive basic training on the system safety concepts and the system safety implications of their position. Even though the personnel may not have responsibilities to implement the railroad's SSP, they do have an impact on the program because their position is safety-related or has a significant impact on safety, or both. It is important that all persons who may have an impact on the success of a railroad's SSP understand the requirements of the program so they can work together to achieve its goals.
Paragraph (i)(5) provides that a railroad may conduct its SSP training by classroom, computer-based, or correspondence training. Paragraph (i) is not intended to limit the forms of training; rather, it provides the railroads the flexibility to conduct training using methods other than traditional classroom training. SSP training may also be combined with a railroad's regular safety or rules training and in some cases SSP training could be included in field “tool box” safety training sessions. APTA requested that FRA make it clear in the rule text that the methods listed in paragraph (i)(4) were illustrative and not restrictive. FRA has revised the text of paragraph (i)(4) to address this concern. Additionally, for clarity and consistency with 49 CFR part 243, the methods listed are “classroom, computer-based, or correspondence training,” which differs slightly from the NPRM; however, as discussed, the list is only illustrative and not restrictive.
Paragraph (i)(6) requires each railroad to keep a record of all training conducted under paragraph (i) and describe the process it will use to maintain and update these training records. The requirement that the railroad keep a record of all training was originally proposed in paragraph (i)(1); however, FRA believes it is more consistent to include it in paragraph (i)(6). Paragraph (i)(7) requires each railroad to describe the process that it
NY MTA commented that the training required under this part should apply only to railroads that contract out their operations. NY MTA believed that contractors who are not responsible for actual railroad operations will be governed by the then-forthcoming Training Standards Rule, which proposed to require these contractors to certify that they have trained their employees on all the appropriate safety protocols
Requiring a SSP training component for certain railroad employees and officers is necessary because FRA's Training Standards Rule would not cover such SSP training for each type of employee or officer that this final rule describes as needing the training. As discussed
Paragraph (j), proposed as paragraph (k) in the NPRM, requires that a railroad's SSP plan describe the processes used by the railroad to manage emergencies that may arise within its system. A strong SSP will include effective emergency management processes. This description will allow FRA, during initial plan review and subsequent audits, to understand the railroad's emergency management processes, assess whether the railroad is complying with them, and determine if the processes adequately cover potential emergencies. FRA did not receive any comments in response to the proposal; its text remains unchanged in this final rule. The description must include the processes the railroad uses to comply with the applicable emergency equipment standards in part 238 of this chapter and the passenger train emergency preparedness requirements in part 239 of this chapter.
Paragraph (k), proposed as paragraph (l) in the NPRM, requires that the railroad's SSP plan describe the programs that the railroad has established that protect the safety of its employees and contractors. The description must include: (1) The processes that have been established to help ensure the safety of employees and contractors while working on or in close proximity to the railroad's property as described in paragraph (d) of this section; (2) the processes to help ensure that employees and contractors understand the requirements established by the railroad pursuant to paragraph (f)(1) of this section; (3) any fitness-for-duty programs or any medical monitoring programs; and (4) the standards for the control of alcohol and drug use in part 219 of this chapter.
Workplace safety is an integral part of a railroad's SSP and has a significant impact on railroad safety. Workplace safety touches many of the elements embedded in a SSP and should also be part of the railroad's overall safety philosophy and culture. This description will allow FRA, during initial plan review and subsequent audits, to understand the railroad's workplace safety programs and determine whether the railroad's SSP sufficiently addresses any gaps in the programs.
The NPRM originally proposed that the statement “describe any” of the programs and processes listed; however, FRA believes that this may have indicated that a railroad would not be required to describe all of the programs and processes listed, which was not the intent. FRA has revised the language to make clear that a railroad is required to describe all of the programs and processes listed. FRA also notes that proposed paragraph (k)(3) listed “fatigue management programs established by this part” as one of the fitness-for-duty programs to be described. However, as discussed in the Statutory Background section, to minimize confusion regarding the separate FMP Working Group process and the ongoing fatigue management plans rulemaking, the placeholder in this rule for fatigue management plans, paragraph (s), has been deleted. Therefore, the proposed requirement in paragraph (k)(3) that the railroad describe “fatigue management programs established by this part” has not been included in this final rule.
Moreover, in the NPRM, paragraph (k)(3) proposed that the statement include a description of “fitness-for-duty programs, including standards for the control of alcohol and drug use contained in part 219 of this chapter, and medical monitoring programs.” However, the standards under part 219 are not necessarily “fitness-for-duty programs.” Therefore, to minimize the potential for confusion, the final rule separates the required description of any fitness-for-duty programs or any medical monitoring programs (paragraph (k)(3)) from the description of the standards for the control of alcohol and drug use in part 219 of this chapter (included as paragraph (k)(4)). This change from the NPRM does not add to or remove any of the substantive requirements proposed in the NPRM.
Employees and contractors of the railroad are exposed to many hazards and risks while on railroad property. A railroad's SSP is required to take into consideration the safety of these persons and the programs and processes the railroad already has in place to address the hazards they face and resulting risks. As explained in the discussion of paragraph (g)(4), FRA is always concerned with the safety of employees in performing their duties; however, employee safety in maintenance and servicing areas generally falls within the jurisdiction of OSHA. It is not FRA's intent in this rule to displace OSHA's jurisdiction regarding the safety of employees while performing inspections, tests, and maintenance, except where FRA has already addressed workplace safety issues, such as blue signal protection. As with paragraph (g), FRA requested comment on whether it is necessary to include in the final rule a provision making clear that FRA does not intend to displace OSHA's jurisdiction over certain subject matters. Paragraph (g)(4) was included in response to the comments received and that provision makes clear that nothing in this rule, including paragraph (k), is intended to displace OSHA's jurisdiction.
The Labor Organizations raised a concern on whether paragraph (k) would create new, if any, rights for carriers to use fitness-for-duty programs and medical monitoring programs to undermine the forthcoming statutory-mandated fatigue management program. The Labor Organizations requested that FRA make clear in the final rule that the SSP regulation is not a fitness-for-duty or medical standards regulation. Neither paragraph (k) nor the SSP rule as a whole create any new rights regarding fitness-for-duty or medical monitoring programs, consistent with FRA's intent.
Paragraph (l), proposed as paragraph (m) in the NPRM, requires a railroad to establish and describe in its SSP plan the railroad's public safety outreach program to provide safety information to the railroad's passengers and the general public. Paragraph (l) also requires the railroad's safety outreach program to have a means in which railroad passengers and the general public can report hazards to the railroad.
A railroad's passengers and the general public play a vital role in the success of the railroad's SSP. The public safety outreach program requires the railroad to directly communicate safety information to both passengers and the general public and also allow these individuals to alert the railroad about safety hazards they observe. FRA will review the programs during the initial SSP plan review and subsequent audits to determine if the railroad's SSP sufficiently addresses any gaps in the programs.
FRA did not receive any comments in response to this paragraph; however, as proposed in the NPRM, paragraph (l) did not require a railroad's safety outreach to include a means for railroad passengers and the general republic to report hazards.
As proposed in the NPRM, a railroad's safety outreach program would only provide safety information to railroad passengers and the general public, which was not the intent. While it is important for a railroad's safety outreach program to provide the necessary safety information to the railroad's passengers and to the general public so that they can minimize their exposure to the hazards and resulting risks on the railroad and take appropriate precautions, it is not the sole purpose of the program. FRA believes that it is also important for railroad passengers and the general public to provide the railroad with information regarding any hazards they observed. This information will allow the railroad to address these identified hazards and resulting risks and improve the safety of the overall railroad and the safety information provided to the railroad passengers and the general public.
Paragraph (m), proposed as paragraph (n) in the NPRM, requires that a railroad's SSP plan describe the processes that the railroad uses to receive notification of accidents/incidents, investigate and report those accidents/incidents, and develop, implement, and track any corrective actions found necessary to address an investigation's finding(s). These processes should already be in place because they are necessary to comply with the requirements of part 225 of this chapter. Accidents and incidents can reveal hazards and risks on the railroad's system, which the railroad can then address as part of its SSP. While 49 CFR part 225 sets forth FRA's accident/incident reporting requirements, this section focuses on the actions the railroad will take to address accident/incident investigation results. These actions are important to the overall safety of a railroad's operations and will provide information to the railroad on what additional actions it can take as part of its SSP to address the hazards and resulting risks that contributed to the accident/incident.
FRA did not receive any comments in response to this paragraph as proposed in the NPRM. However, FRA has modified the paragraph to address “accidents/incidents”—rather than just “accidents,” as proposed. This makes clear FRA's intent that the paragraph covers events that provide the railroad with information that may improve the safety of the railroad, which is not exclusive to accidents.
Paragraph (n), proposed as paragraph (o) in the NPRM, requires a railroad to establish and describe in its SSP plan processes that the railroad has or puts in place to collect, maintain, analyze, and distribute safety data in support of the SSP. Accurate safety data collection and the analysis and distribution of that data within a railroad can help the railroad determine where safety problems or hazards exist, develop targeted programs to address the problems and hazards, and focus resources towards the prevention of future incidents and improvement of safety culture. This description will assist FRA's review of these programs during the initial SSP plan review and audits to determine if the railroad's SSP sufficiently addresses any gaps in the programs. As proposed in the NPRM, paragraph (n) did not require a railroad to establish processes to collect, maintain, analyze, and distribute safety data in support of the SSP. Since some railroads will not have a SSP in place before the effective date of this final rule, FRA determined that it was necessary to include the requirement that a railroad not only describe but also establish SSP data acquisition processes. This ensures that a railroad has these processes in place and that it can be properly described pursuant to this paragraph. The data acquisition process described in APTA's System Safety Manual provides guidance on the processes a railroad may use to comply with this part.
Paragraph (o), proposed as paragraph (p) in the NPRM, requires a railroad's SSP plan to describe the process(es) it employs to address safety concerns and hazards during the safety-related contract procurement process. This applies to safety-related contracts to help ensure that the railroad can address as necessary safety concerns and hazards that may result from the procurement. FRA did not receive any comments in response to this proposed paragraph. However, the term “process” was changed to “process(es)” to recognize that a railroad may have more than one process in place.
The main components of a SSP are the risk-based hazard management program and the risk-based hazard analysis. The railroad will use the risk-based hazard management program to describe the various methods, processes, and procedures it will employ to properly and effectively identify, analyze, and mitigate or eliminate hazards and resulting risks. In turn, through the risk-based hazard analysis the railroad will actually identify, analyze, and determine the specific actions it will take to mitigate or eliminate the hazards and the resulting risks. Paragraphs (p) and (q), proposed as paragraphs (q) and (r) in the NPRM, set forth the elements of the railroad's risk-based hazard management program and risk-based hazard analysis. Both of these paragraphs implement sections 20156(c) through (f). FRA received multiple comments addressing the risk-based hazard management program and the risk-based hazard analysis, and these comments are addressed accordingly.
The risk-based hazard management program will be a fully implemented program within the railroad's SSP. Paragraph (p) requires a railroad to establish and describe the various methods, processes, and procedures that, when implemented, will identify, analyze, and mitigate or eliminate hazards and the resulting risks on the railroad's system. This paragraph embodies FRA's intent to provide each railroad with the flexibility to tailor its
APTA commented that paragraph (p) and paragraph (q), Risk-based hazard analysis, do not contain a discussion of the variety of controls or the flexibility this SSP rule provides to the railroads to choose which procedures they will put into place to mitigate or eliminate risks. APTA points out there was substantial discussion at the RSAC on this issue and it was recognized that there are many methods a railroad can apply to keep risk as low as reasonably practicable. APTA further points out that the analysis methods were grouped by RSAC into non-formal (
FRA makes clear that the rule does not limit the methods a railroad may use in its risk-based hazard management program. FRA recognizes that there was agreement in the RSAC that many methods exist to keep risk low, such as MIL-STD-882 or the Government Electronics & Information Technology Association 010 Standard. However, this rule does not prescribe which of these methods must be used. Specifically, the discussion in the NPRM of proposed paragraph (q)(5) (paragraph (p)(1)(i) of the final rule) explained that the railroad would determine the methods it would use in the risk-based hazard analysis in proposed paragraph (r) (paragraph (q) of the final rule), to identify hazards on various aspects of its system. FRA intends that each railroad use this opportunity to use known methods and consider any new or novel techniques or methods to identify hazards that best suits that railroad's operations.
FRA notes that paragraph (p) is structured differently from what was proposed in the NPRM; however, the substance of paragraph (p) remains the same.
Paragraph (p)(1) requires the railroad's risk-based hazard management program to contain eight elements. All of these elements will be fully described in the railroad's SSP plan. First, the railroad shall establish the processes or procedures that will be used in the risk-based hazard analysis to identify the hazards on the railroad's system. This will be the railroad's opportunity to consider any new or novel techniques or methods that best suit the railroad's operations to identify hazards.
Second, the railroad must establish the processes or procedures that will be used in the risk-based hazard analysis that will analyze the identified hazards and, therefore, support the risk-based hazard management program. These processes and procedures will allow the railroad to analyze the hazards and, thus, gain the necessary knowledge to effectively identify the resulting risk.
Third, the railroad must establish the methods that will be used in the risk-based hazard analysis to determine the severity and frequency of hazards and to determine the corresponding risk. Once the railroad has identified the hazards, it will determine the corresponding risk. By developing a method that effectively identifies the severity and frequency of the hazards and determines the resulting risks, the railroad will be able to effectively prioritize the mitigation or elimination of the hazards and resulting risks.
In its comments on the NPRM, Parsons Brinckerhoff inquired as to FRA's intent behind using the terms “calculate” and “resulting risk” in the proposed rule text for paragraph (p)(1)(iii). Parsons Brinckerhoff questioned if FRA's use of the term “calculate” meant that the estimation of the resulting risk should be quantitative and that the use of the term “resulting risk” meant that the risk is a precise product of determining severity and consequence of hazards. Parsons Brinckerhoff suggested replacing “calculate the resulting risk” with “determine the corresponding risk” so that paragraph (p)(1)(iii) is more consistent with paragraph (p)(1)(iv) and allows for a broader range of risk assessment methodologies, which may include: Quantitative, semi-quantitative, qualitative, or some combination of all three. FRA agrees that the estimation of the risk does not necessarily have to involve a formal quantitative analysis, and therefore FRA adopts Parsons Brinckerhoff's suggested language.
Fourth, the railroad must establish the methods that will be used in the risk-based hazard analysis to identify the actions that mitigate or eliminate hazards and corresponding risks. Here the railroad will identify the methods or techniques it will use to determine which actions it will need to take to mitigate or eliminate the identified hazards and risks. As is the case with identifying the hazards and resulting risks, this is the railroad's opportunity to consider any new or novel methods best suited to the railroad's operations to mitigate or eliminate hazards and resulting risks. FRA recognizes that not all hazards and resulting risks can be eliminated or even mitigated, due to costs, feasibility, or other reasons. However, FRA expects the railroads to consider all reasonable actions that may mitigate or eliminate hazards and the resulting risks and to implement those actions that are best suited for that railroad's operations.
Fifth, the railroad must establish the process that will be used in the risk-based hazard analysis to set goals for the risk-based hazard management program and how performance against the goals will be reported. Establishing clear and concise goals will play an important role in the success of a railroad's risk-based hazard management program. The goals should be tailored so that the central goal of the risk-based hazard management program (to effectively identify, analyze, and mitigate or eliminate hazards and resulting risks) is supported for the individual railroad.
Sixth, the railroad must establish a process to make decisions that affect the safety of the rail system relative to the risk-based hazard management program. Railroads make numerous decisions every day that affect the safety of the rail system and this paragraph requires a railroad to describe how those decisions will be made when they relate to the risk-based hazard management program. FRA notes that Parsons Brinckerhoff commented whether this paragraph was meant to address risk acceptance, based on its reading of the discussion of this paragraph in the NPRM. Parsons Brinckerhoff requested that FRA revise this paragraph to make that clear, if it was FRA's intent.
Risk acceptance is a process in which an organization determines the appropriate level of risk to accept. An organization will determine which risks are acceptable based on the resources available to mitigate or eliminate those risks. While risk acceptance is an integral part of a SSP, FRA does not intend this paragraph to establish a risk acceptance requirement. Rather, the overall risk-based hazard management program, in part, establishes a risk acceptance framework for the railroad.
Seventh, the railroad must establish the methods that will be used in the risk-based hazard analysis to support continuous safety improvement throughout the life of the rail system. Consistent with the overall SSP, the railroad will implement methods as part of the risk-based hazard management program that will support continuous safety improvement.
Eighth, the railroad must establish the methods that will be used in the risk-based hazard analysis to maintain records of identified hazards and risks and the mitigation or elimination of the identified hazards and risks throughout the life of the rail system. In this paragraph the railroad will describe how it plans to maintain the records of the results of the risk-based hazard analysis. The railroad will also describe how it will maintain records of the mitigation or elimination of the identified hazards and risks. FRA notes that the proposal in the NPRM expressly addressed only the description of the methods used to maintain records of mitigating the identified hazards and risks. Because the hazards and risks maybe be eliminated by the railroad—not just mitigated—the text of this paragraph in the final rule makes clear that records of the elimination of the identified hazards and risks are covered as well. As a separate matter, while the railroad will not be required to provide in its SSP plan submission to FRA any of the specific records addressed by this paragraph, the railroad will be required to make the results of the risk-based hazard analysis available upon request to representatives of FRA pursuant to § 270.201(a)(2).
Paragraph (p)(2) requires the risk-based hazard management program to identify certain key individuals. First, the railroad must identify the position title of the individual(s) responsible for administering the risk-based hazard management program. These positions will be responsible for developing and implementing the risk-based hazard management program. Rather than identifying the specific individual(s), the railroad will identify the position(s) responsible for administering the risk-based hazard management program so that the SSP will not have to be updated merely because an individual changes positions. This clarification addresses an AAR comment on the NPRM in which AAR opposed the proposed requirements in paragraphs that the railroad identify the individuals responsible for administering the hazard management program and participating in hazard management teams or safety committees. AAR believes the problem with identifying such individuals is that whenever one of these individuals is removed or added, the plan must be amended and no real purpose is served. As a result, FRA makes clear that the final rule only requires the identification of the position titles, not the specific individuals.
Second, the railroad must identify the stakeholders who will participate in the hazard management program. This means the railroad will identify the persons who will be affected by and may play a role in the risk-based hazard management program.
Third, the railroad must identify the position title of the participants and structure of any hazard management teams or safety committees that a railroad may establish to support the risk-based hazard management program. By establishing these types of teams or committees, the railroad can focus on specific hazards and risks and more thoroughly consider the specific actions to effectively mitigate or eliminate the hazards and risks.
Paragraph (q), proposed as paragraph (r) in the NPRM, provides that once FRA has approved a railroad's SSP plan pursuant to § 270.201(b), the railroad shall conduct a risk-based hazard analysis. Paragraph (q)(1) serves to implement the section 20156(c) statutory mandate that a railroad must conduct a “risk analysis.” As discussed earlier, section 20156(c) requires the railroad, as part of its development of a railroad safety risk reduction program (
As proposed in the NPRM, paragraph (q)(1) originally included employee fatigue as identified in proposed paragraph (s), in the list of the aspects of the railroad system that must be analyzed. However, as discussed in the Statutory Background section above, to minimize confusion regarding the separate FMP Working Group process and the ongoing fatigue management plans rulemaking, proposed paragraph (s) has not been included in the final rule; therefore the requirement that the railroad analyze employee fatigue as part of its risk analysis is not included in paragraph (q)(1) of the final rule. FRA also notes that proposed paragraph (q)(1) included “new technology as identified in paragraph (s) of this section”; however, since paragraph (r) of the final rule addresses a separate analysis regarding new technology, including new technology in paragraph (q)(1) would be duplicative.
As provided in the final rule, paragraph (q)(1) requires a railroad to analyze operating rules and practices, infrastructure, equipment, employee levels and schedules, management structure, employee training, and other aspects that have an impact on railroad safety not covered by railroad safety regulations or other Federal regulations. Pursuant to paragraphs (d), (e), and (g) through (i) of this section, a railroad is required to describe in its plan its operating rules and practices, infrastructure, equipment, employee levels and schedules, management structure, and employee training; therefore, the analysis and identification of hazards and resulting risks regarding these aspects pursuant to paragraph (q)(1) should be straightforward. The railroad will determine which aspects of the railroad system have an impact on railroad safety that are not covered by railroad safety regulations or other Federal regulations. When analyzing the various aspects, the railroad will apply the risk-based hazard analysis methodology previously identified in paragraphs (p)(1)(i) through (iii) of this section.
In commenting on the NPRM, Parsons Brinckerhoff stated that paragraph (q)(1) proposed to require that railroads apply the risk-based hazard analysis up through the application of mitigations but that it would not require the railroads to achieve an acceptable level of risk. While the rule does not specifically require a railroad to reduce risk to an acceptable level, paragraph (q)(2) requires a railroad, in part, to implement specific actions that will mitigate or eliminate the identified hazards and resulting risks. FRA believes that requiring railroads to achieve an acceptable level of risk would set forth an ambiguous standard because, due to differences in the size and complexity of passenger railroad operations, an acceptable level of risk for one railroad may not necessarily be the same for another railroad. Requiring a railroad to implement specific actions that will mitigate or eliminate the identified hazards and resulting risks will reduce risk and if FRA determines that a railroad is not properly addressing and reducing risk, FRA will work with the railroad and other stakeholders to address this issue and may take enforcement action if necessary.
Parsons Brinckerhoff also believed that proposed paragraph (q)(1) would not require the application of the risk-based hazard management program to support continuous safety improvement throughout the life of the rail system. Pursuant to paragraph (p)(1)(vii), the railroad will be required to describe the methods it will implement as part of the risk-based hazard management program that will support continuous safety improvement throughout the life of the rail system. Further, as discussed below, pursuant to paragraph (q)(3) a railroad will be required to conduct a risk-based hazard analysis when there are significant operational changes, system extensions, system modifications, or other circumstances that have a direct impact on railroad safety. FRA believes paragraphs (p)(1)(vii) and (q)(3) support continuous safety improvement throughout the life of the rail system.
Once the railroad has analyzed the various aspects of its operations and identified hazards and the resulting risks, the railroad is required to mitigate or eliminate these risks. This requirement is derived directly from section 20156(d), which requires a railroad, as part of its SSP, to have a risk mitigation plan that mitigates the aspects that increase risks to railroad safety and enhances the aspects that decrease the risks to railroad safety. In paragraph (q)(2), the railroad will use the methods described in paragraph (p)(1)(iv) to identify and implement specific actions to mitigate or eliminate the hazards and risks identified by paragraph (q)(1).
FRA makes clear that a risk-based hazard analysis is not a one-time event. Railroads operate in a dynamic environment and certain changes in that environment may expose new hazards and risks that a previous risk-based hazard analysis did not address. Paragraph (q)(3) identifies the changes that FRA believes are significant enough to require that a railroad conduct a new risk-based hazard analysis. Railroads must conduct a risk-based hazard analysis when there are significant operational changes, system extensions, system modifications, or other circumstances that have a direct impact on railroad safety.
As part of its SSP plan, paragraph (r), proposed as paragraph (s) in the NPRM, requires a railroad to conduct a technology analysis and set forth a technology analysis and implementation plan. Paragraph (r) implements sections 20156(d)(2) and 20156(e). Paragraph (r) has been substantially modified from the proposal in the NPRM. As proposed in the NPRM, this paragraph would have required railroads to first conduct a technology analysis, then establish a technology implementation plan containing the results of the technology analysis, and, if the railroad determined to implement any of the technologies, establish a plan and a prioritized implementation schedule for the development, adoption, implementation and maintenance of the technologies over a 10-year period.
FRA believes that the technology analysis and implementation plan requirements should be consistent with the risk-based hazard management program and risk-based hazard analysis requirements. Therefore, FRA has modified paragraph (r) from the proposed rule to ensure that it is consistent with these other requirements. A railroad, in its SSP plan submission to FRA, will describe the process it will use to: (1) Identify and analyze technologies that will mitigate or eliminate the hazards identified by the risk-based hazard analysis, and (2) analyze the safety impact, feasibility, and costs and benefits of implementing the identified technologies. The initial submission to FRA is required to describe only the processes the railroad will use to identify and analyze technology that will mitigate or eliminate hazards and the resulting risks.
The requirement that the railroad “periodically update as necessary” its technology analysis and implementation plan has been added to paragraph (r)(1). This was not proposed in the NPRM; however, section 20156(e) requires the plan to be periodically updated as necessary.
As with the overall SSP, the railroads will have flexibility to determine the processes they will use pursuant to paragraph (r)(2). One of the purposes of the technology analysis and implementation plan is to provide railroads and their stakeholders the opportunity to consider current, new, and novel technology to address hazards and the resulting risks; therefore, FRA encourages the railroads to consider as many different types of technology as possible.
Once FRA reviews and approves a railroad's technology analysis and implementation plan, as part of the SSP plan approval process, the railroad will apply the process identified in paragraph (r)(2)(i) to identify and analyze current, new, or novel technologies that will mitigate or eliminate the hazards and resulting risks identified by the risk-based hazard analysis. As with risk-based hazard analysis, the railroad will not conduct its technology analysis until after FRA has approved its technology analysis and implementation plan. Section 20156(e)(2) mandates that a railroad consider certain technologies as part of its technology analysis. These technologies are: Processor-based technologies, positive train control systems, electronically-controlled pneumatic brakes, rail integrity inspection systems, rail integrity warning systems, switch position monitors and indicators, trespasser prevention technology, and highway-rail grade crossing warning and protection technology.
Once the railroad has identified and analyzed current, new, or novel technologies that will mitigate or eliminate the hazards and resulting risks, the railroad shall apply the processes described in paragraph (r)(2)(ii) to analyze the safety impact, feasibility, and costs and benefits of implementing these technologies. FRA expects the railroads to engage in an appropriate and realistic analysis of the technologies. FRA is not requiring that a railroad use a specific formula to determine whether it should implement any of the technology analyzed in the technology analysis. Rather, the railroad must consider the safety impact, feasibility, and the costs and benefits of these technologies and, based on the railroad's specific operations, decide whether to implement any of the technologies. Technology has proved to be an invaluable tool to manage hazards across all modes of transportation, and a robust SSP certainly needs to include risk mitigation technology.
If a railroad decides to implement any of the technologies identified in paragraph (r)(3), the railroad would be required to update its technology analysis and implementation plan in its SSP to describe how it will develop, adopt, implement, maintain, and use the technologies. This description should be sufficient to allow FRA and other interested stakeholders to determine which technologies the railroad will implement, how they will be implemented, how the technologies will eliminate or reduce hazards and the resulting risks, and how the technologies will be maintained. The railroad will also be required to set forth in its SSP plan a prioritized implementation schedule for the development, adoption, implementation, and maintenance of those technologies over a 10-year period. By establishing this implementation schedule, the railroad will be able to describe its plan as to how it will apply technology on its system to mitigate or eliminate the identified hazards and resulting risks.
Paragraph (r)(5) provides that, except as required by 49 CFR part 236, subpart I (Positive Train Control Systems), if a railroad decides to implement a positive train control (PTC) system as part of its technology implementation plan, the railroad shall set forth and comply with a schedule for implementation of the PTC system consistent with the deadlines in the Positive Train Control Enforcement and Implementation Act of 2015 (PTCEI Act), Public Law 114-73, 129 Stat. 576-82 (Oct. 29, 2015), and 49 CFR 236.1005(b)(7). The NPRM proposed that the railroad would have to implement the PTC system by December 31, 2018, which was consistent with 49 U.S.C. 20156(e)(4)(B). However, Congress subsequently passed the PTCEI Act and FRA has revised paragraph (r)(5) to reflect the changes to PTC implementation deadlines set forth in the Act. This paragraph does not, in itself, require a railroad to implement a PTC system. In the NPRM, FRA sought comment on whether a railroad electing to implement a PTC system would find it difficult to meet the December 31, 2018 implementation deadline. If so, FRA invited comment as to what measures could be taken to assist a railroad struggling to meet the deadline and achieve the safety purposes of the statute. FRA received one comment in response to this request. AAR commented that it does not object to this requirement but that it is impossible to meet the 2015 deadline for an interoperable nationwide PTC system that complies with the statutory-mandate. Consequently, AAR believes that no railroad will take advantage of paragraph (r)(5). FRA recognizes the challenges associated with implementing a PTC system; however, FRA also recognizes that PTC is a technology that a railroad may seek to implement to eliminate or mitigate hazards and the resulting risks. Therefore, the regulation provides railroads the flexibility to decide whether they want to implement a PTC system as part of their technology analysis and implementation plan; if they do so, they must comply with an implementation schedule consistent with the deadlines in the PTCEI Act.
Consistent with the risk-based hazard analysis, a railroad will not include its technology analysis conducted pursuant to paragraph (r)(3) in the SSP submission to FRA under § 270.201. The SSP plan should only include the processes used to conduct its technology analysis as described in paragraph (r)(3). FRA may work with the railroads to ensure that the technology analysis is robust and analyzes a sufficient number of technologies. To achieve this goal, FRA, its representatives, and States participating under part 212 of this chapter will have access to the railroad's technology analysis pursuant to paragraph (r)(5). Furthermore, in its initial submission, a railroad will not include the description and implementation schedule required by paragraph (r)(4) because the railroad will not draft the description and implementation schedule until FRA approves the railroad's technology analysis and implementation plan.
Paragraph (s) sets forth the requirements for ensuring that safety issues are addressed whenever there are certain changes to the railroad's operations. Paragraph (s)(1) requires each railroad to establish and set forth a statement in its SSP plan that describes the processes and procedures used by the railroad to manage significant operational changes, system extensions, system modifications, or other circumstances that will have a direct impact on railroad safety. Since these changes have a direct impact on safety, it is vital that the railroad has a process to manage these changes so that safety is not compromised. Change management processes ensure that, when there is a need for a change to a safety-critical program, the proposed change is vetted through a formalized process within the organization. This description will assist FRA's review of these processes during the initial SSP plan review and subsequent audits to determine if the railroad's SSP sufficiently addresses any gaps in the processes. The term “significant changes that will have a direct impact on railroad safety” is intended to be broadly understood; however, the other changes listed (significant operational changes, system extensions, system modifications) are the type of changes that will also necessitate a process/procedure to properly manage them.
Paragraph (s)(2) requires each railroad to establish in its SSP plan a configuration management program. The term configuration management is defined in § 270.5 as a process that ensures that the configurations of all property, equipment, and system design elements are accurately documented. Accordingly, the railroad's configuration management program shall: (1) Identify who within the railroad has authority to make configuration changes; (2) establish processes to make configuration changes to the railroad's system; and (3) establish processes to ensure that all departments of the railroad affected by the configuration change are formally notified and approve of the change. Configuration management is a process that ensures that all safety-critical documentation relating to the railroad and its various components is current and reflects the actual functional and physical characteristics of the railroad. This description will assist FRA's review of these processes during the initial SSP plan review and subsequent audits to determine if the railroad's SSP sufficiently addresses any gaps in the processes.
Paragraph (s)(3) requires the railroad to establish and describe in its SSP plan the process it uses to certify that safety concerns and hazards are adequately addressed before the initiation of operations or major projects to extend, rehabilitate, or modify an existing system or repair vehicles and equipment. Through a process certifying that safety concerns have been addressed before the railroad initiates operations or major projects to extend, rehabilitate, or modify an existing system or replace vehicles and equipment, the railroad helps to minimize the potential for any negative impact on safety resulting from any of these activities.
In commenting on the NPRM, APTA states that safety certifications are not common in commuter rail operations mostly because these railroads follow FRA regulations and standards and most, if not all, safety certifications have been performed because an FTA funding agreement required one to be performed. According to APTA, FTA does not have a set of regulations and standards to allow operation on the general railroad system of transportation that applies to all railroads under FTA's jurisdiction. Without these national standards, APTA notes that FTA and transit properties rely on design criteria and best engineering practices, and since these design criteria differ at each transit agency, safety certification is the method relied upon to ensure the system is safe. APTA believes that it would be a rare occasion when a commuter railroad would be required to perform a safety certification under paragraph (s)(3) and that the paragraph uses the term “major projects” without elaboration. APTA does not believe that every project will need safety certification unless it falls outside of FRA's existing standards. APTA therefore recommends that FRA clarify the term “major projects” by adding to the end of the sentence: “not otherwise addressed by existing FRA standards.”
FRA expects every major project to be designed and built so that it meets or exceeds existing FRA standards. However, paragraph (s)(3) requires a
As discussed previously, a SSP can only be effective at mitigating or eliminating hazards and risks if the railroad has a robust and positive safety culture. Pursuant to § 270.101(b), the railroad will design its SSP so that it promotes and supports a positive safety culture; pursuant to § 270.103(b)(2), the railroad will identify in its SSP plan its safety culture; and pursuant to paragraph (t) a railroad will describe in its SSP plan how it measures the success of its safety culture. A railroad cannot have a robust safety culture unless it actively promotes it and evaluates whether it is successful. With respect to measuring safety culture, the rule permits railroads to identify the safety culture measurement methods that they find most effective and appropriate for their own operations. It is important that a railroad regularly measure its safety culture. This measurement may be based upon the DOT's 10 traits of a positive safety culture discussed above or the Nuclear Regulatory Commission's nine traits.
Measuring safety culture that is done on a regular basis would be very difficult to establish costs and benefits. As discussed above DOT has 10 traits to guide the measurement of safety culture. A number of different tools have been developed to measure safety culture, and are used in various industries, including aviation and certain manufacturing sectors. To illustrate, one research review listed 24 different tools used to measure safety culture in the health care industry alone.
As discussed in the Statutory Background section, FRA's Study concluded that it is in the public interest to protect certain information generated by railroads from discovery or admission into evidence in litigation. Section 20119(b) provides FRA with the authority to promulgate a regulation if FRA determines that it is in the public interest, including public safety and the legal rights of persons injured in railroad accidents, to prescribe a rule that addresses the results of the Study.
Following the issuance of the Study, the RSAC met and reached consensus on recommendations for this rulemaking, including a recommendation on the discovery and admissibility issue. RSAC recommended that FRA issue a rule that would protect documents generated solely for the purpose of planning, implementing, or evaluating a SSP from (1) discovery, or admissibility into evidence, or considered for other purposes in a Federal or State court proceeding for damages involving property damage, personal injury, or wrongful death; and (2) State discovery rules and sunshine laws that could be used to require the disclosure of such information.
Section 270.105, Discovery and admission as evidence of certain information, sets forth the discovery and admissibility protections that are based on the Study's results and the RSAC recommendations. These protections are narrow and apply only to information that was generated solely for a railroad's SSP, and aim to ensure that a litigant will not be better or worse off than if the protections had never existed. FRA intends these provisions to be strictly construed.
FRA modeled § 270.105 after 23 U.S.C. 409. In section 409, Congress enacted statutory protections for certain information compiled or collected pursuant to Federal highway safety or construction programs.
Section 409 was enacted by Congress in response to concerns raised by the States that compliance with the Federal road hazard reporting requirements could reveal certain information that would increase the State's risk of liability. Without confidentiality protections, States feared that their “efforts to identify roads eligible for aid under the Program would increase the risk of liability for accidents that took place at hazardous locations before improvements could be made.”
The constitutionality and validity of section 409 has been affirmed by the Supreme Court of the United States.
The Court held that section 409 protects information actually compiled or collected by any government entity for the purpose of participating in a Federal highway program, but does not protect information that was originally compiled or collected for purposes unrelated to the Federal highway program, even if the information was at some point used for the Federal highway program.
FRA believes that given the similar concepts between section 409 and section 20119 and the Supreme Court's expressed acknowledgement of the constitutionality of section 409, section 409 is an appropriate model for § 270.105.
Under § 270.105(a) there are certain circumstances in which information will not be subject to discovery, admitted into evidence, or considered for other purposes in a Federal or State court proceeding for damages involving personal injury, wrongful death, or property damage. This information may not be used in such litigation when it is compiled or collected solely for the purpose of planning, implementing, or evaluating a SSP. Section 270.105(a) applies to information whether or not it is also in the Federal government's possession.
FRA notes that paragraph (a) has been reformatted for clarity from the proposal in the NPRM. Paragraph (a) is divided into paragraph (a)(1) and (2) after its introductory text. However, the formatting change does not, in itself, result in any substantive change to the paragraph.
Paragraph (a)(1) describes what may be considered “information” for the purposes of this section. Section 20119(a) identifies reports, surveys, schedules, lists, and data as the forms of information that should be included as part of FRA's Study. However, FRA does not necessarily view this as an exclusive list. In the statute, Congress directed FRA to consider the need for protecting information that includes a railroad's analysis of its safety risks and its statement of the mitigation measures with which it will address those risks.
This paragraph does not protect all information that is part of a SSP; these protections will extend only to information that is compiled or collected after August 14, 2017, solely for purpose of planning, implementing, or evaluating a system safety program. The term “compiled or collected” is taken directly from section 20119(a). FRA recognizes that railroads may be reluctant to compile or collect extensive and detailed information regarding the safety hazards and resulting risks on their systems if this information could potentially be used against them in litigation. The term “compiled” refers to information that was generated by the railroad for the purposes of a SSP; whereas the term “collected” refers to information that was not necessarily generated for the purposes of the SSP, but was assembled in a collection for use by the SSP. It is important to note that in this context, only the collection is protected; however, each separate piece of information that was not originally compiled for use by the SSP remains subject to discovery and admission into evidence subject to any other applicable provision of law or regulation.
Section 20119(b) prohibits the protections from becoming effective until one year after the adoption of the SSP rule. The necessary text has been added to paragraph (a) to implement this effective date.
The information has to be compiled or collected solely for the purpose of planning, implementing, or evaluating a SSP. APTA commented that the use of the term “solely” is not adequately explained in the text of the regulation. APTA proposes that FRA either use a more appropriate term such as “primarily” or “initially” or that FRA define “solely” in the rule text, not just in the preamble. FRA agrees. The use of the term “solely” is deliberate and it is important that the term is understood as used within the four corners of the regulation. Therefore, FRA has included paragraph (a)(2), which defines the term “solely.”
As discussed in the section-by-section analysis for § 270.1(c), NY MTA recommended that the term “solely” be deleted from paragraph (a) to protect studies or risk analyses that are not developed expressly to comply with this part. NY MTA believes that it is in the public interest to ensure that railroads conduct on-going and thorough self-critical examinations and expressed concern if these types of studies or analyses are not protected, they may be used against the railroad in court. As discussed below in response to APTA's request that FRA extend the protections to information collected as part of programs that existed before the SSP regulation but were similar to a SSP, FRA has the authority to protect only documents that are created pursuant to
The term “solely” is intended to narrow circumstances in which the information will be protected. The use of the term “solely” means that the original purpose of compiling or collecting the information was exclusively for the railroad's SSP. A railroad cannot compile or collect information for one purpose and then try to use paragraph (a) to protect that information because it uses that information for its SSP as well. The railroad's original and singular purpose of compiling or collecting the information must be for planning, implementing, or evaluating its SSP in order for the protections to be extended to that information. The term “solely” also means that a railroad shall continue to use the information only for its SSP. If a railroad subsequently uses, for any other purpose, information that was initially compiled or collected for its SSP, paragraph (a) does not protect that information to the extent that it is used for the non-system safety program purpose. The use of that information within the railroad's SSP, however, will remain protected. If the railroad is required by another provision of law or regulation to collect the information, the protections of paragraph (a) do not extend to that information because it is not being compiled or collected solely for the purpose of planning, implementing, or evaluating a SSP. For example, 49 CFR 234.313 requires railroads to retain records regarding emergency notification system (ENS) reports of unsafe conditions at highway-rail grade crossings. Those individual records are not protected by § 270.105. However, if as part of its risk-based hazard analysis a railroad collects several of its § 234.313 reports from a specific time period for the sole purpose of determining if there are any hazards at highway-rail grade crossings, this collection will be protected as used in the SSP. If the railroad decides to use the collection for another purpose other than in its SSP, such as submitting it to an ENS maintenance contractor for routine maintenance, the protections are not extended to that non-SSP use.
The information must be compiled or collected solely for the purpose of planning, implementing, or evaluating a SSP. The three terms—planning, implementing, or evaluating—are taken directly from section 20119(a). These terms cover the necessary uses of the information compiled or collected solely for the SSP. To properly plan and develop a SSP, a railroad will need to determine the proper processes and procedures to identify hazards, the resulting risks, and elimination or mitigation measures to address those hazards and risks. This planning will involve gathering information about the various analysis tools and processes best suited for that particular railroad's operations. This type of information is essential to the risk-based hazard analysis and is information that a railroad does not necessarily already have. In order for the railroad to plan its SSP, the protections are extended to the SSP planning stage. The NPRM used the term “developing” instead of “planning”; however, to remain consistent with section 20119(a), FRA has determined that the term “planning” is more appropriate.
Based on the information generated by the risk-based hazard analysis, the railroad will implement measures to eliminate or mitigate the hazards and risks identified. To properly implement these measures, the railroad will need the information regarding the hazards and risks on the railroad's system identified during the development stage. Therefore, the protection of this information is extended to the implementation stage.
The protections do not apply to information regarding mitigations that the railroad implements. Rather, the railroad's statement of mitigation measures, which could include various proposed and alternate mitigations for a specific hazard, that address the hazards identified by the risk-based hazard analysis is protected. Additionally, the underlying risk analysis information that the implemented mitigation measure addresses is also protected. For instance, if a railroad builds a structure to address a risk identified by the risk-based hazard analysis, the information regarding that structure (
The protections also do not apply to any hazards, risks, or mitigations that fall under the exclusive jurisdiction of another Federal agency. If FRA does not have jurisdiction over a hazard, risk, or mitigation, then the protections under this paragraph cannot be extended to that hazard, risk, or mitigation.
The railroad will also be required to evaluate whether the measures it implements to mitigate or eliminate the hazards and risks identified by the risk-based hazard analysis are effective. To do so, it will need to review the information developed by the risk-based hazard analysis and the methods used to implement the elimination/mitigation measures. The use of this information in the evaluation of the railroad's SSP is protected.
The information covered by this section shall not be subject to discovery, admitted into evidence, or considered for other purposes in a Federal or State court proceeding that involves a claim for damages involving personal injury, wrongful death, or property damage. The protections affect the discovery, admission into evidence, or consideration for other purposes of the information described in this section. The first two situations come directly from section 20119(a); however, FRA determined that for the protections to be effective they must also apply to any other situation where a litigant might try to use the information in a Federal or State court proceeding that involves a claim for damages involving personal injury, wrongful death, or property damage. For example, under this section a litigant will be prohibited from admitting into evidence a railroad's risk-based hazard analysis. Nonetheless, without the additional language: “or considered for other purposes,” the railroad's risk-based hazard analysis could be used by a party for the purpose of refreshing the recollection of a witness or by an expert witness to support an opinion. The additional language ensures that the protected information remains out of such a proceeding completely. The protections would be ineffective if a litigant were able to use the information in the proceeding for another purpose. To encourage railroads to perform the necessary vigorous risk analysis and to implement truly effective elimination or mitigation measures, the protections are extended to any use in a proceeding.
This section applies to Federal or State court proceedings that involve a claim for damages involving personal injury, wrongful death, or property damage. This means, for example, if a proceeding has a claim for personal injury and a claim for property damage, the protections are extended to that entire proceeding; therefore, a litigant cannot use any of the information protected by this section as it applies to either the personal injury or property damage claim. Section 20119(a) required the Study to consider proceedings that involve a claim for damages involving personal injury or wrongful death; however, to effectuate Congress' intent behind section 20156, that railroads engage in a robust and candid hazard analysis and develop meaningful mitigation measures, FRA has determined that it is necessary for
Paragraph (b) ensures that the protections set forth in paragraph (a) do not extend to information compiled or collected for a purpose other than that specifically identified in paragraph (a). This type of information shall continue to be discoverable, admissible into evidence, or considered for other purposes if it was before the date the protections take effect. The type of information that will not receive the protections provided by paragraph (a) include: (1) Information that was compiled or collected on or before August 14, 2017; (2) information that was compiled or collected on or before August 14, 2017, and continues to be compiled or collected, even if used to plan, implement, or evaluate a railroad's SSP; or (3) information that is compiled or collected after August 14, 2017, for a purpose other than that specifically identified in paragraph (a) of this section. Paragraph (b) affirms the intent behind the use of the term “solely” in paragraph (a), in that a railroad may not compile or collect information for a different purpose and then expect to use paragraph (a) to protect that information just because the information is also used in its SSP. If the information was originally compiled or collected for a purpose unrelated to the railroad's SSP, then it is unprotected and will continue to be unprotected.
Examples of the types of information that paragraph (b) applies to may be records related to prior incidents/accidents and reports prepared in the normal course of railroad business (such as inspection reports). Generally, this type of information is often discoverable, may be admissible in Federal and State proceedings, and should remain discoverable and admissible where it is relevant and not unduly prejudicial to a party after the implementation of this part. However, FRA recognizes that evidentiary decisions are based on the facts of each particular case; therefore, FRA does not intend this to be a definitive and authoritative list. Rather, FRA merely provides these as examples of the types of information that paragraph (a) is not intended to protect.
In commenting on the NPRM, the Labor Organizations requested that FRA provide a list of examples of information that is currently discoverable and admissible and will remain so after the enactment of the protections. The Labor Organizations pointed out that such a list was provided to FRA during the Risk Reduction Working Group deliberations and they would like the list to be placed in the discussion of the final rule. While the list that was provided was instructive, as mentioned in the previous paragraph, evidentiary decisions are based on the facts of each particular case and a court's ruling in one case does not guarantee that another court's ruling in another jurisdiction will be the same. FRA believes that the examples provided in the previous paragraph are more than sufficient to provide a general idea of the types of information covered by paragraph (b) that are not protected.
APTA requested that FRA extend the protections to information collected as part of programs that existed before the SSP regulation but were similar to a SSP. APTA pointed out that this information will now be collected under the SSP rule and therefore should receive the protections provided by paragraph (a). APTA believes that the exclusions in paragraph (b) will incentivize railroads with existing SSP-like programs to shut down their programs in anticipation of this part because the information from the SSP-like programs will not be protected even if it were collected as part of the SSP under this part. While FRA understands APTA's concern, FRA does not have the authority to provide retroactive protection to information that was compiled or collected before the protections take effect. The study section 20119(a) mandated only addresses information compiled and collected pursuant to the statutory-mandated risk reduction program. Since a SSP is a risk reduction program mandated by statute (section 20156), the information protections can only be extended to information compiled or collected pursuant to a SSP. This means that any information compiled or collected before the protections take effect is not protected because that is not information compiled or collected pursuant to a SSP. Furthermore, since this is information compiled or collected before the protections take effect, the fact that after the protections take effect the information will be compiled or collected pursuant to the SSP does not mean that the information will then be protected. By virtue of the information being compiled or collected before the SSP rule protections take effect, it is not information collected “solely” for the SSP that is protected by this rule. To clarify this distinction, FRA has included language in the exception in paragraph (b)(2).
Pursuant to paragraph (b)(2), if a railroad compiled or collected certain information that was subject to discovery, admissibility, or consideration for other purposes before the protections take effect and the railroad continues to collect the same type of information pursuant to its SSP required by this part, that information will not be protected by paragraph (a) of this section. For example, before this section takes effect and all else being equal, a litigant that would have been able to have admitted into evidence certain information the railroad compiled will still be able to have that type of information admitted after this section takes effect even if the railroad compiles the information pursuant to this rule. The protections are designed to apply only when the original purpose for the generation of the information was for a SSP required by this part. The original purpose of the generation of the information for the SSP-like programs that existed before the SSP rule would not be for a SSP required by this part; therefore, such information is not protected by paragraph (a).
Paragraph (b)(3) reaffirms that information that is compiled or collected for a purpose other than solely for the purpose of planning, implementing, or evaluating a SSP, shall not be protected.
This section is not intended to replace any other protections provided by law or regulation. Accordingly, paragraph (c) states that the protections set forth in this section will not affect or abridge in any way any other protection of information provided by another provision of law or regulation. Any such provision of law or regulation shall apply independently of the protections provided by this section.
Paragraph (d) clarifies that a litigant cannot rely on State discovery rules, evidentiary rules, or sunshine laws that could be used to require the disclosure of information that is protected by paragraph (a) in a Federal or State court proceeding for damages involving personal injury, wrongful death, or property damage. This provision is necessary to ensure the effectiveness of the Federal protections established in paragraph (a) in situations where there is a conflict with State discovery rules or sunshine laws in a Federal or State court proceeding for damages involving personal injury, wrongful death, or property damage. The concept that Federal law takes precedence where there is a direct conflict between State and Federal law should not be controversial as it derives from the constitutional principal that “the Laws of the United States . . . shall be the supreme Law of the Land.” U.S. Const., Art. VI. Additionally, FRA notes that 49 U.S.C. 20106 is applicable to this section. Section 20106 provides that States may not adopt or continue in effect any law, regulation, or order related to railroad safety or security that covers the subject matter of a regulation prescribed or order issued by the Secretary of Transportation (with respect to railroad safety matters) or the Secretary of Homeland Security (with respect to railroad security matters), except when the State law, regulation, or order qualifies under the “essentially local safety or security hazard” exception to section 20106. In this regard, FRA's Study concluded that a rule “limiting the use of information collected as part of a railroad safety risk reduction program in discovery or litigation” furthers the public interest by “ensuring safety through effective railroad safety risk reduction program plans” (
NY MTA commented that it is in the public interest to protect risk analysis information from production in response to FOIA requests and State freedom of information laws. NY MTA requested that the protection from these types of information disclosure laws be applied to information about system vulnerabilities that could be of interest to terrorist threats. As discussed in the Statutory Background section, section 20118(c) gives FRA the discretion to prohibit the public disclosure of risk analyses or risk mitigation analyses obtained under other FRA regulations if FRA determines that the prohibition of public disclosure is necessary to promote public safety. Furthermore, if a railroad believes that certain risk analysis information qualifies as Sensitive Security Information (SSI), the information can be submitted to FRA for such a determination. If FRA determines the information qualifies as SSI or if the railroad has some other acceptable basis for requesting confidential treatment, pursuant to 49 CFR 209.11, the information will be appropriately marked and handled, which includes redacting it from any publicly disclosed documents.
Section 20119(b) mandates that the effective date of any rule prescribed pursuant to that section must be one year after the adoption of that rule. As discussed in the Statutory Background section, FRA is developing, with the assistance of the RSAC, a separate risk reduction rule that would implement the requirements of sections 20156, 20118, and 20119 for Class I freight railroads and railroads with inadequate safety performance. In the NPRM for this final rule, FRA proposed to apply the protections and the exceptions for SSP information proposed in that NPRM to the information in the forthcoming RRP final rule. The effect of that proposal would have been to make the protections for the forthcoming RRP final rule applicable one year after the publication of this final rule establishing part 270 rather than one year after publication of the RRP final rule. FRA sought comment on this proposal and received one comment from APTA, who supported the proposal.
After further consideration, FRA has determined to implement the RRP protections in the RRP final rule rather than in this rule. Because section 20119(b) states that “
This section implements section 20156(g)(1), which states that a railroad required to establish a SSP must “consult with, employ good faith and use its best efforts to reach agreement with, all of its directly affected employees, including any non-profit employee labor organization representing a class or craft of directly affected employees of the railroad carrier, on the contents of the safety risk reduction program.” This section also implements section 20156(g)(2), which further provides that if a “railroad carrier and its directly affected employees, including any nonprofit employee labor organization representing a class or craft of directly affected employees of the railroad carrier, cannot reach consensus on the proposed contents of the plan, then directly affected employees and such organizations may file a statement with the Secretary explaining their views on the plan on which consensus was not reached.” Section 20156(g)(2) requires FRA to consider these views during review and approval of a railroad's SSP plan. The consultation requirements were proposed in § 270.102 of the NPRM; however, to remain consistent with CFR section numbering format, this section is designated as § 270.107 in this final rule.
RSAC did not provide recommended language for this section. Rather, FRA worked with the System Safety Task Group to receive input regarding how the consultation process should be addressed, with the understanding that language would be provided in the NPRM for review and comment. In response to consultation process language proposed in the NPRM, FRA received comments from AAR, APTA, Labor Organizations, Metra, NY MTA, and an individual commenter.
The Labor Organizations commented that FRA improperly classified the process under section 20156(g) as one of consultation. The Labor Organizations believe that section 20156(g) requires a process of negotiation or bargaining with the directly affected employees, not one of consultation. Nothing in the text of section 20156(g) requires railroads to negotiate or bargain with directly affected employees; rather, the statute requires the railroads to “consult with, employ good faith and use [their]
APTA believes that the consultation requirements in the final rule should mirror text in section 20156(g), and nothing more is needed. Specifically, APTA believes that anything more than the statutory text would be counter-productive, interfere with business relationships, and blur the line between FRA and the National Labor Relations Board's (NLRB) responsibilities. FRA disagrees. FRA believes that § 270.107 and the accompanying Appendix clarify and provide a workable framework for the railroads. As for the blurring of FRA's and NLRB's responsibilities, APTA did not provide any examples in which FRA proposed to intrude upon NLRB's responsibilities. It isn't clear, therefore, to which NLRB responsibilities APTA is referring.
Paragraph (a)(1) of this section implements section 20156(g)(1) by requiring a railroad to consult with its directly affected employees on the contents of its SSP plan. As part of that consultation, a railroad must utilize good faith and best efforts to reach agreement with its directly affected employees on the contents of its plan. APTA requested that FRA expand the consultation requirement to include all parties, including the directly affected employees and those with significant safety responsibilities because, as proposed, the rule would not require any entities other than the railroads to consult in good faith. APTA is concerned that some railroads may not have authority or leverage to successfully bring the other parties to the table during the consultations. FRA agrees that all of the necessary entities should participate in the consultation process; however, section 20156(g) requires only the railroad to employ good faith and use its best efforts to reach agreement with all of its directly affected employees. Pursuant to paragraph (b)(2), if the railroad and certain directly affected employees cannot reach agreement, the railroad will provide a consultation statement to FRA that identifies any known areas of non-agreement and an explanation of why the railroad believes agreement was not reached. This will be the railroad's opportunity to explain whether the result of non-agreement is due to the directly affected employees not acting in good faith or not using their best efforts. Pursuant to paragraph (c), the employees will then have the opportunity to file a statement which will be their opportunity to explain why they or why the railroad believes they did not use good faith or best efforts. Since section 20156(g) requires only the railroad to act in good faith and use best efforts, FRA may approve a plan even if the directly affected employees did not act in good faith or did not use their best efforts, just as long as the railroad employed good faith and best efforts. This means that a railroad will satisfy section 20156(g) if it can show that it acted in good faith and used best efforts to reach agreement, even if other parties did not. FRA believes this will provide the “authority” or “leverage” raised by APTA for a railroad to bring the necessary parties to the table. The directly affected employees will not be able to block approval of a railroad's SSP plan by not acting in good faith or using their own best efforts, as APTA suggests. Rather, the consultation process is the opportunity for the directly affected employees to provide input and work with the railroad to create a SSP plan that addresses any issues the employees believe are critical to the safety of the railroad. If the directly affected employees fail to act in good faith or do not use their best efforts, they will miss an opportunity to have their voices fully heard and may end up being required to comply under the regulation with a SSP plan in which they did not effectively provide input.
APTA also requested that the consultation process be modified so that the process provides a structure for working collaboratively in the development of the SSP and a methodology to handle disputes or reasonable differences in opinion on how to implement the plan. FRA believes that § 270.107 and Appendix B provide a workable, but flexible framework so that the parties can work collaboratively on the development of a SSP and handle any disputes that arise. APTA did not provide any suggestions regarding what type of modifications should be made, so it is unclear to FRA what in the rule should be modified from the NPRM.
Paragraph (a)(2) as proposed in the NPRM specified that the term directly affected employees included any non-profit employee labor organization representing a class or craft of the railroad's directly affected employees. The proposed paragraph made it clear that a railroad that consults with a non-profit employee labor organization is considered to have consulted with the directly affected employees represented by that organization. However, FRA has removed this language from paragraph (a)(2) and incorporated it into paragraphs (a)(1) and (2).
Paragraph (a)(2) clarifies that if a railroad contracts out significant portions of its operations, the contractor and the contractor's employees performing the railroad's operations shall be considered directly affected employees for the purposes of this part. While this provision was not expressly proposed in the NPRM, FRA believes it is necessary to address how the consultation process will be handled when a railroad contracts out significant portions of its operations to other entities. The contracts should be ongoing and involve significant aspects of the railroad's operations. For example, if a railroad contracts out maintenance of its locomotives and rail cars to another entity, it is vital for the employees who are performing this maintenance to be part of that railroad's SSP and have the opportunity to provide their valuable input on the SSP. Another example would be if a railroad contracts out the actual operations of its passenger rail to another entity; the contracted entity that is operating the trains on behalf of the railroad would certainly need to be part of the consultation process. If a railroad is unsure whether a contracted entity is a directly affected employee for the purposes of this part, FRA encourages the railroads and other interested stakeholders to contact FRA for guidance.
Paragraph (a)(3) in the NPRM proposed to require a railroad to meet with its directly affected employees no later than 180 days after the effective date of the final rule to discuss the consultation process. This requirement has been included in paragraph (a)(3) of the final rule. This meeting will be the railroad's and directly affected employees' opportunity to schedule, plan, and discuss the consultation process. FRA does not expect a railroad to discuss any substantive material until the information protections provisions of § 270.105 become applicable. Because some commenters appeared to believe that this meeting would discuss the substance of the SSP plan, FRA is including language in paragraph (a)(3) specifying that the railroad is not required to discuss the substance of a SSP plan. Rather, this meeting should be administrative in nature so that all parties understand the consultation
In commenting on the NPRM, the Labor Organizations pointed out that the meeting under paragraph (a)(3) is the only meeting required by this rule and there is no requirement to have a meeting to discuss the substance of the SSP plan. The Labor Organizations believe that meetings regarding the substance of the SSP plan can occur before the protections of § 270.105 become applicable, because in the past with other programs (
The Labor Organizations also expressed concern with the amount of time estimated in the rule's Paperwork Reduction Act analysis for the railroads to consult with the directly affected employees and the amount of time to prepare a statement under paragraph (b)(2). The Paperwork Reduction Act analysis estimated that each railroad would have four consultation meetings at 4 hours each for a total of 16 hours and that a statement under paragraph (b)(2) would take 20 minutes to prepare. The Labor Organizations claim that these estimated time periods are too short and would result in an inconsequential amount of time for consultation on the contents of the plan. FRA notes that the time periods in the Paperwork Reduction Act analysis were only estimates and comments were requested on these estimates.
Multiple commenters requested FRA modify the timeline in paragraph (a)(3). APTA believes that the proposed consultation (and SSP implementation) schedule is not practical and may not be possible to comply with. APTA states that the requirement to have the initial consultation with the directly affected employees within 180 days of the effective date of the rule is not reasonably achievable. According to APTA, some railroads would be hard pressed to meet this deadline due to the size of their operations and the variety of directly affected employees they would be required to notify. APTA proposes that, rather than requiring the initial consultation to be completed, § 270.201 should require that the initial consultation only begin within the 180 days. FRA notes that § 270.107(a)(3) requires the railroad only to meet “to discuss the consultation process,” not to complete the initial consultation process. As discussed in the previous paragraph, this meeting will be administrative in nature and FRA does not expect the railroad to discuss the substance of the SSP plan. FRA makes clear that it does not expect the railroad to complete an initial consultation on the substance of the SSP plan within this 180-day period; rather, it is understandable that the railroad will wait until the date the § 270.105 protections become applicable before it begins the consultation on the substance of the plan. APTA also requested that the deadline to file the SSP plan pursuant to § 270.201 be extended so that there would be more time to consult with the directly affected employees on the substance of the SSP plan. FRA is extending this time period as discussed in the section-by-section analysis for § 270.201(a), below.
NY MTA and Metra proposed that FRA extend the 180-day deadline for the meeting to 365 days due to the number of employees working under numerous contracts that would need to meet to discuss the consultation process. FRA declines to extend this 180-day period to 365 days because it would be inconsistent with the purpose of requiring the meeting. As discussed above, this meeting will be administrative in nature and FRA does not expect the meeting to address the substance of the SSP plan. If the time period were extended to 365 days after the effective date of the rule, a railroad could hold the initial meeting on day 364, and 121 days
NY MTA also commented that the consultation process should not even begin until after the date the protections in § 270.105 become applicable because protection is needed to ensure that railroads and employees are not discouraged from actively identifying hazards. FRA agrees that the consultation regarding the substance of a SSP plan could not fully begin until after the date the § 270.105 protections
Finally, Metra requested that FRA clarify that the 60-day notification requirement only applies to the initial meeting to discuss the consultation process, and no other meeting. FRA agrees and has included paragraph (a)(3)(ii), which is based on the last sentence of proposed paragraph (a)(3). Paragraph (a)(3)(ii) provides that a railroad shall notify the directly affected employees of the preliminary meeting no less than 60 days before it is held, thereby clarifying that the 60-day period refers only to this preliminary meeting.
Paragraph (a)(4) directs readers to Appendix B for additional guidance on how a railroad might comply with the consultation requirements of § 270.107. The appendix and the comments received in response are discussed later in this preamble in the section-by-section analysis for the Appendix B.
An individual commenter requested that the consultation requirements be more detailed. The commenter suggested adding the following requirements: (1) Visibly post the SSP requirements under this part before the SSP is created because, according to the commenter, the parties tend to get “dug in” once the consultation begins and everyone has expressed their position; (2) hold biannual or quarterly meetings between parties regarding safety hazards and risks and provide the meeting minutes to FRA; (3) have a system in which perceived unsafe work orders can be challenged; (4) do not allow a fully implemented SSP to be changed in a way that reduces safety without FRA approval; and (5) establish a committee to make recommendations on uniform minimum standards for working on the right-of-way, including intercity rail.
As for the commenter's first and second suggested requirements, FRA seeks to provide the railroads and their directly affected employees the flexibility to tailor the consultation process to their specific operations. Therefore, adopting these requirements would only take away some of this flexibility. The commenter's third suggested requirement is actually a type of mitigation measure a railroad may put in place to address identified hazards and resulting risks. However, FRA is not requiring specific mitigation measures under this rule; consequently, FRA declines to adopt the suggested mitigation measure. The commenter's fourth suggested requirement raises an issue that is addressed in § 270.201(c), below. Finally, regarding the commenter's fifth suggested requirement, FRA's RSAC has established working groups and task forces to addresses safety across a wide range of areas, including right-of-way safety. In fact, the safety of roadway workers along the right-of-way is specifically addressed in FRA's regulations at 49 CFR part 214. Accordingly, FRA believes it unnecessary to adopt this suggested requirement.
Paragraph (b) requires a railroad to submit, together with its SSP plan, a consultation statement. The purpose of this consultation statement is twofold: (1) To help FRA determine whether the railroad has complied with § 270.107(a) by, in good faith, consulting with and using its best efforts to reach agreement with its directly affected employees on the contents of its SSP plan; and (2) to ensure that the directly affected employees with which the railroad has consulted are aware of the railroad's submission of its SSP plan to FRA for review. The consultation statement must contain specific information described in paragraphs (b)(1) through (4) of this section.
Paragraph (b)(1) requires that the consultation statement contain a detailed description of the process the railroad utilized to consult with its directly affected employees. This description should contain information such as (but not limited to) the following: (1) How many meetings the railroad held with its directly affected employees; (2) what materials the railroad provided its directly affected employees regarding the draft SSP plan; and (3) how input from directly affected employees was received and handled during the consultation process.
If the railroad is unable to reach agreement with its directly affected employees on the contents of its SSP plan, paragraph (b)(2) requires that the consultation statement identify any known areas of disagreement and provide the railroad's explanation for why it believed agreement was not reached. A railroad could specify, in this portion of the statement, whether it was able to reach agreement on the contents of its SSP plan with certain directly affected employees, but not others.
In commenting on the NPRM, AAR believes that paragraph (b)(2) should be removed. AAR states that a railroad cannot know the motivation behind its directly affected employees' decision (including a labor union's decision) to disagree with a railroad's SSP plan. FRA agrees that the railroad may not know the actual reason(s) why its directly affected employees could not reach agreement with it on the contents of the SSP plan. It is because of this that paragraph (b)(2) requires an explanation only as to why the railroad believes agreement was not reached—not what the directly affected employees believe. If agreement cannot be reached, this statement will provide a record of the railroad's account of the consultation process, and in turn will serve to help FRA evaluate whether good faith and best efforts were used.
In the NPRM, § 270.102(b)(3) proposed to require that the consultation statement identify any provision that would affect a provision of a collective bargaining agreement between the railroad and a non-profit employee labor organization and then explain how the railroad's SSP plan would affect it. In commenting on the NPRM, AAR believes this proposal is unnecessary and requested that FRA delete it. FRA agrees and has not included this provision in the final rule. Generally, FRA is not involved in the collective bargaining process and does not intend to become involved in the process because of this rule. However, if the labor organizations believe that the railroad's SSP plan violates the collective bargaining agreement, they may include this as part of their statement pursuant to paragraph (c)(1) of this section.
Under paragraph (b)(3) in the final rule, proposed as paragraph (b)(4), the consultation statement must include a service list containing the name and contact information for the international/national president of any non-profit employee labor organization representing directly affected employees and any directly affected employee who significantly participated in the consultation process independently of a non-profit labor organization. This paragraph also requires a railroad (at the same time it submits its proposed SSP plan and consultation statement to FRA) to provide individuals identified in the service list a copy of the SSP plan and consultation statement. This service list will help FRA determine whether the railroad has complied with the § 270.107(a) requirement to consult with its directly affected employees. Requiring the railroad to provide individuals identified in the service list with a copy of its submitted plan and consultation statement also serves to notify those individuals that they have 30 days under § 270.107(c)(2) (discussed below) to submit a statement to FRA if they were not able to come to reach agreement with the railroad on the contents of the SSP plan.
As proposed in the NPRM, this paragraph would have required the
In commenting on the NPRM, the Labor Organizations requested that when a railroad submits its SSP plan and consultation statement to FRA, the railroad also “simultaneously” send a copy of these documents to all individuals identified in the service list. FRA agrees and has adopted this suggestion to ensure the directly affected employees receive the SSP plan and consultation statement at approximately the same time FRA does so that they have sufficient time to submit a statement to FRA pursuant to paragraph (c)(2).
Finally, FRA notes that APTA, in commenting on the NPRM, believes that paragraph (b) applies different standards to the parties (railroads and directly affected employees) and presumes that failure to reach agreement would be based on the railroad's failure to use good faith. APTA recognizes that RSIA allows directly affected employees to file a statement with FRA regarding the areas of disagreement; however, APTA believes that paragraph (b) effectively shifts the burden to the railroads. APTA also claims that paragraph (b) presumes that if no agreement is reached, the SSP plan is deficient and the railroad failed to act in good faith, instead of considering the possibility that the SSP plan is adequate but the parties simply disagree. APTA therefore requests that proposed paragraphs (b)(1) through (3) not be included in the final rule.
As discussed previously, FRA has not included proposed paragraph (b)(3) in this final rule. FRA also makes clear that, if there is disagreement between the railroad and certain directly affected employees, including their union representatives, the failure to reach an agreement does not, in itself, lead to a presumption that the railroad acted in bad faith or failed to use best efforts. Rather, the consultation statement required by paragraph (b) is the railroad's opportunity to explain why it believes there was disagreement. If paragraphs (b)(1) and (2) were not included in the final rule, as requested by APTA, FRA would only have the statement from the directly affected employees as an explanation as to why agreement was not reached. To make a balanced and well-informed decision on whether the railroad used good faith and best efforts, FRA believes it necessary to have a statement from both the railroad and the directly affected employees. Further, as noted in the discussion of paragraph (a)(1), FRA may approve a plan even if there is disagreement between the parties, as long as FRA can determine that the railroad consulted in good faith and used its best efforts to reach agreement. In this regard, it would be more difficult for FRA to make this determination without the consultation statement required by paragraphs (b)(1) and (2).
Paragraph (c)(1) implements section 20156(g)(2) by providing that, if a railroad and its directly affected employees cannot reach agreement on the proposed contents of a SSP plan, then the directly affected employees may file a statement with the FRA Associate Administrator for Railroad Safety and Chief Safety Officer explaining his or her views on the plan on which agreement was not reached. The FRA Associate Administrator for Railroad Safety and Chief Safety Officer will consider any such views during the plan review and approval process. Appendix C sets forth the procedures for the submission of statements by directly affected employees.
Paragraph (c)(2) specifies that a railroad's directly affected employees have 30 days following the date of the railroad's submission of its proposed SSP plan to submit the statement described in paragraph (c)(1) of this section. While the NPRM proposed to provide the directly affected employees 60 days to file such a statement, FRA believes that 30 days is more appropriate. This decision takes into account that paragraph (b)(3) ensures that the directly affected employees are provided the SSP plan and the consultation statement at approximately the same time the documents are provided to FRA for review, as requested by the Labor Organizations. Moreover, pursuant to § 270.201(b), FRA will review a SSP plan within 90 days of receipt, as discussed below. As a result, if the directly affected employees were to have up to 60 days to submit a statement when agreement on the SSP plan was not reached, FRA would have only 30 days to consider the directly affected employees' views while reviewing the SSP plan. Thirty days would not be enough time to ensure that the directly affected employees' views are sufficiently addressed during the SSP plan review process.
Paragraph (d) requires that a railroad's SSP plan include a description of the process a railroad will use to consult with its directly affected employees on any substantive amendments to the railroad's SSP plan. As with its initial SSP plan, a railroad must use good faith and best efforts to reach agreement with directly affected employees on any substantive amendments to the plan. Examples of substantive amendments could include the following: The addition of new stakeholder groups (or the removal of a stakeholder group); major changes to the processes employed, including changes to the frequency of governing body meetings; or changing the organizational level of the manager responsible for the SSP (
Section 20156(a)(1)(B) requires a railroad to submit its SSP, including any of the required plans, to the Administrator (as delegate of the Secretary) for review and approval. Subpart C, Review, Approval, and Retention of System Safety Program Plans, addresses these statutory requirements.
This section sets forth the requirements for the filing of a SSP plan and FRA's approval process.
Paragraph (a)(1) requires that each railroad submit one copy of its SSP plan to the FRA Associate Administrator for Railroad Safety and Chief Safety Officer no later than February 8, 2018, or not less than 90 days before commencing operations, whichever is later. In the NPRM, FRA proposed requiring submission no later 395 days after the effective date of the final rule; however, many commenters expressed concern regarding this timeframe. The commenters believe that 395 days after the effective date of the rule is not a sufficient amount of time for a railroad to draft its SSP and conduct the necessary consultation with directly affected employees pursuant to § 270.107. The commenters point out that since the protections under § 270.105 do not go into effect until 365 days after the publication date of the rule, the requirement that the railroad submit its plan to FRA 395 days after the effective date does not provide enough time to conduct consultation regarding the substance of the SSP. To address these concerns, FRA has extended this submission deadline.
The final rule requires a railroad to submit its SSP plan 180 days after the effective date of the protections. Per section 20119(b), the protections cannot go onto effect until 1 year after adoption of the final rule. The final rule will not be effective until 60 days after publication. Therefore, 365 days after publication, the railroad will have 180 days to submit its SSP. In other words, the railroad will submit its SSP plan to FRA 545 days after publication or 485 days after the effective date of the rule. FRA believes providing the railroads with additional time to submit their plans will allow for sufficient time to draft the SSP plan and conduct the necessary consultation with the directly affected employees pursuant to § 270.107.
In addition, APTA raised concerns regarding the requirement that new starts submit their plans not less than 90 days before commencing operations. APTA believes this is not sufficient time if operations begin before the protections under § 270.105 are effective and therefore requests FRA consider extending the amount of time a railroad has to submit a plan before commencing operations. Under paragraph (a)(1), a railroad must have its SSP plan in place 90 days before commencing operations, or by February 8, 2018 (
Paragraph (a)(2) provides that the railroad shall not include the results of its risk-based hazard analysis in its SSP plan that it submits to FRA pursuant to paragraph (a)(1) of this section. The SSP plan should only include the processes and methods used in the risk-based hazard analysis as described in § 270.103(p). However, since the risk-based hazard analysis is a vital element of a SSP, FRA will be available to assist the railroads and other stakeholders to ensure that this analysis is robust and addresses all the necessary aspects of the railroad's operations. To achieve this goal, representatives of FRA and States participating under part 212 of this chapter will have access to the railroad's risk-based hazard analysis pursuant to paragraph (a)(2).
As part of its submission, the railroad must provide certain additional information. Primarily, under paragraph (a)(3), the SSP plan submission shall include the signature, name, title, address, and telephone number of the chief official responsible for safety and who bears primary managerial authority for implementing the SSP for the submitting railroad. By signing, this chief official is certifying that the contents of the SSP plan are accurate and that the railroad will implement the contents of the program as approved by FRA. The SSP plan shall also include the contact information for the primary person managing the SSP and the senior representatives of host railroads, contract operators, and shared track/corridor operators, if any, and any other person who utilizes or provides significant safety-related services. The term “person” has been included in paragraph (a)(3)(iii) to clarify what was meant by “others” as proposed in the NPRM. The inclusion of a person that utilizes or provides significant safety-related services is consistent with the discussion of § 270.103(d)(2). The contact information for the primary person managing the SSP is necessary so that FRA knows who to contact regarding any issues with the railroad's SSP. Likewise, the contact information for the senior representatives of any host railroad, contract operator, shared track/corridor operator, or other person who utilizes or provides significant safety-related services is necessary so that FRA knows who to contact regarding the involvement of these parties in implementing and supporting the railroad's SSP. Separately, FRA notes that it has included proposed paragraph (a)(5) in paragraph (a)(3) to maintain clarity. Paragraph (a)(5) in the NPRM proposed to require the chief official responsible for safety and who bears primary managerial authority for implementing the railroad's SSP to certify that the contents of the railroad's SSP plan are accurate and that the railroad will implement the contents of the program as approved by § 270.201(b). This proposed requirement is specifically reflected in paragraph (a)(3)(i).
Paragraph (a)(4) references the requirements of § 270.107(b), which requires a railroad to submit with its SSP plan a consultation statement describing how it consulted with its directly affected employees on the contents of its SSP. When the railroad provides the consultation statement to FRA, § 270.107(b)(3) also requires that the railroad simultaneously provide a copy of the statement to certain directly affected employees identified in a service list. The directly affected employees can then file a statement for FRA's consideration in evaluating the proposed plan if they do so within 30 days after the railroad has filed its
Paragraph (b) sets forth the FRA approval process for a railroad's SSP plan. Within 90 days of receipt, FRA will review the SSP plan to determine if the elements prescribed in this part are sufficiently addressed in the railroad's submission. FRA notes that the NPRM also proposed that FRA review would alternatively take place “within 90 days of receipt of each SSP plan submitted before the commencement of railroad operations.” However, FRA has not included this alternative condition in the final rule because it would be duplicative and erroneously imply a difference in the 90-day period, when there would be none. FRA's review will consider any statement submitted by directly affected employees pursuant to § 270.107. As with drafting the plan, FRA intends to work with the railroad and any necessary stakeholders when reviewing the plan.
Once FRA determines whether a railroad's SSP plan complies with the requirements of this part, FRA will notify, in writing, each person identified by the railroad in § 270.201(a)(3) whether the railroad's SSP plan is approved or not. The NPRM proposed that FRA notify “the primary contact person of each affected railroad”; however, to maintain consistency within this section, FRA revised the language to “each person identified by the railroad in § 270.201(a)(3).” If FRA does not approve a plan, it will inform the railroad of the specific points in which the plan is deficient. FRA will also provide the notification to each individual identified in the service list accompanying the consultation statement required under § 270.107(b). When the railroad receives notification that the plan is not approved and notice of the specific points in which the plan is deficient, the railroad has 90 days to correct all of the deficiencies identified and resubmit the plan to FRA under paragraph (b)(3). FRA had received comments expressing concern that 60 days was not a sufficient amount of time for a railroad to address the deficient points of a SSP plan, as proposed in the NPRM. To address this concern, FRA has extended the deadline to 90 days in the final rule.
AAJ and the Labor Organizations expressed concern that railroads may claim that they are immune from any safety hazard claim or that a State law claim is preempted because FRA has approved a railroad's SSP plan. The Labor Organizations provided the example that if an employee is injured because of defective ballast in a yard, and a State has a regulation that sets forth walkway standards, a railroad may claim that the State law is preempted because FRA had approved the railroad's SSP which included walkway safety. Accordingly, the Labor Organizations suggested the following language to address this concern: “Neither the approval by FRA of a railroad's System Safety Plan nor its compliance by a railroad shall be admitted into evidence in a lawsuit seeking damages for alleged negligence, nor shall a railroad claim that a state law or regulation is preempted, or that a federal law or regulation is precluded, because of such FRA approval or a railroad's compliance.” FRA understands the concerns expressed by the commenters, and has included paragraph (b)(4) to address those concerns.
The final rule requires the development of a SSP that must be approved by FRA. Under § 270.103(p), the SSP includes a risk-based hazard management program that establishes the processes used in the risk-based hazard analysis to identify hazards and corresponding risks on the railroad's system and the methods used to identify actions that mitigate or eliminate the hazards and corresponding risks. Section 270.201(a)(2) provides that the railroad shall not include in its SSP the risk-based hazard analysis that is conducted pursuant to § 270.103(q). Section 270.103(q) in turn provides that once FRA approves a railroad's SSP, the railroad is to apply the risk-based hazard analysis to identify and analyze hazards on the railroad's system, determine the resulting risks, and identify and implement specific actions that will mitigate or eliminate the hazards. Since FRA will not be reviewing or approving the specific mitigation and elimination measures that a railroad may adopt to address the hazards and risks that it identifies, the final rule is not intended to preempt State standards of care regarding the specific risk mitigation and mitigation actions a railroad will implement under its SSP. Accordingly, § 270.201(b)(4) clarifies that FRA approval of a railroad's SSP plan under this final rule does not constitute approval of the specific mitigation and elimination measures that the railroad will implement pursuant to § 270.103(q)(2) and should not be construed as establishing a Federal standard of care regarding those specific actions.
Paragraph (c) addresses the process a railroad will follow whenever it amends its SSP. When a railroad amends its SSP plan it shall submit the amended SSP plan to FRA not less than 60 days before the proposed effective date of the amendment(s). The railroad shall file the amended SSP plan with a cover letter outlining the proposed changes to the original, approved SSP plan. The cover letter should provide enough information so that FRA knows what is being added, removed, or changed from the original approved SSP. The railroad will also be required to follow the process described pursuant to § 270.107(d) regarding the consultation with directly affected employees concerning the amendment(s) to the SSP plan. The railroad will describe in the cover letter the process it used to consult with its directly affected employees on the amendment(s).
FRA recognizes that some amendments may be safety-critical and that the railroad may not be able to submit the amended SSP plan to FRA 60 days before the proposed effective date of the amendments. In these instances, the railroad shall submit the amended SSP plan to FRA as near as possible to 60 days before the proposed effective date of the amendment(s). The railroad shall provide an explanation why the amendment is safety-critical and describe the effects of the amendment. The requirement that the railroad explain why the amendment is safety-critical was not proposed in the NPRM; however, it was added to the final rule to ensure that it is clear to FRA and other stakeholders the nature of the amendment and why the railroad believes it is safety-critical.
FRA also recognizes that some amendments may be purely administrative in nature. While § 270.201 subjects all changes to a SSP plan to a formal review and approval process, FRA believes that purely administrative changes should be excluded from the process so that the agency can focus its resources on more substantive matters. FRA has therefore included paragraph (c)(1)(iii) in the final rule to limit the need for formal FRA approval of purely administrative changes to previously approved SSP plans. This paragraph will allow these specific types of amendments to become effective immediately upon filing with FRA and thereby help to streamline the approval process. All other proposed amendments must comply with the formal approval process in paragraph (c) of this section.
Except as provided in paragraph (c)(1)(iii), FRA will review the proposed amended SSP plan within 45 days of receipt, under paragraph (c)(2)(i). FRA will then notify the primary contact person whether the proposed amended SSP plan has been approved by FRA. If the amended plan is not approved, FRA
If a proposed amendment to the SSP plan is not approved by FRA, the railroad has two options: Correct all deficiencies and resubmit the amendment to FRA, or provide notice to FRA that it is retracting the proposed amendment. The final rule makes clear that the railroad may retract the proposed amendment rather than correct it, whichever option it believes best. The railroad will have 60 days following receipt of FRA's written notice that any proposed amendment was not approved to either submit a corrected copy of the amendment that addresses all deficiencies noted by FRA or to submit notice that the railroad is retracting the amendment.
Paragraph (d) allows FRA to reopen consideration of a plan or amendment after initial approval of the plan or amendment. Examples of the types of cause for which FRA may reopen review include FRA's determination that the railroad is not complying with its plan or plan amendment, and FRA's awareness of material information about which FRA was unaware when it originally reviewed the plan or amendment. The determination of whether to reopen consideration will be made solely within FRA's discretion on a case-by-case basis.
FRA sought comment in the NPRM on whether electronic submission of a SSP plan should be permitted and, if so, what type of process FRA should use to accept such submissions. All of the commenters who responded to this request supported electronic submission. Therefore, paragraph (e) permits documents to be submitted electronically. To provide guidance on electronic submission, FRA added Appendix C, Procedures for Submission of System Safety Program Plans and Statements from Directly Affected Employees, which is addressed below.
This section sets forth the requirements for a railroad's retention of its SSP plan. FRA did not receive any comments in response to this section and, therefore, it remains unchanged from the NPRM. A railroad will be required to retain at its system headquarters, and at any division headquarters, a copy of its SSP plan and a copy of any amendments to the plan. The railroad must make the plan and any amendments available to representatives of FRA and States participating under part 212 of this chapter for inspection and copying during normal business hours.
Subpart D sets forth the requirements for a railroad's internal SSP assessment and FRA's external audit of the railroad's SSP.
To determine whether a SSP is successful, it will need to be evaluated by both the railroad and FRA on a periodic basis. This section sets forth the general requirement that a railroad's SSP and its implementation will be assessed internally by the railroad and audited externally by FRA or FRA's designee. FRA did not receive any comments in response to this section and, therefore, it remains unchanged from the NPRM.
This section sets forth the requirements for the railroad's internal SSP assessment. FRA did not receive any comments in response to this section and, therefore, it remains substantively unchanged from the NPRM. Once FRA approves a railroad's SSP plan, the railroad shall conduct an annual assessment of the extent to which: (1) The SSP is fully implemented; (2) the railroad is in compliance with the implemented elements of the approved SSP plan; and (3) the railroad has achieved the goals set forth in § 270.103(c). This internal assessment will provide the railroad with an overall survey of the progress of its SSP implementation and the areas in which improvement is necessary.
As part of its SSP plan, the railroad will describe the processes used to: (1) Conduct internal SSP assessments; (2) report the findings of the internal SSP assessments internally; (3) develop, track, and review recommendations as a result of the internal SSP assessments; (4) develop improvement plans based on the internal SSP assessments that, at a minimum, identify who is responsible for carrying out the necessary tasks to address assessment findings and specify a schedule of target dates with milestones to implement the improvements that address the assessment findings; and (5) manage revisions and updates to the SSP plan based on the internal SSP assessments. By describing these processes, the railroad will detail how it plans to assess its SSP and how it will improve it if necessary. Since this is an internal assessment, a railroad will tailor the processes to its specific operations.
FRA notes that the NPRM also proposed that the railroad would describe the process it uses to comply with the reporting requirements set forth in proposed § 270.201. However, FRA has determined that it is not necessary to adopt this proposed requirement, and it is not included in this paragraph (b).
Within 60 days of completing its internal assessment, the railroad will submit a copy of its internal assessment report to the FRA Associate Administrator for Railroad Safety and Chief Safety Officer, Mail Stop 25, 1200 New Jersey Avenue SE., Washington, DC 20590. The NPRM did not specify the individual at FRA to whom the internal assessment report will be sent, which has been clarified in the final rule. This report will include the SSP assessment and the status of internal assessment findings and improvement plans. The railroad will also outline the specific improvement plans for achieving full implementation of its SSP and the milestones it has set forth. The railroad's chief official responsible for safety shall certify the results of the railroad's internal SSP plan assessment.
This section sets forth the process FRA will utilize when it conducts audits of a railroad's SSP. FRA did not receive any comments in response to this section and, therefore, it is essentially unchanged from the NPRM. These audits will evaluate the railroad's compliance with the elements required by this part in the railroad's approved SSP plan. Because this section is predicated on the railroad's SSP plan and any amendments having already been approved by FRA pursuant to § 270.201(b) and (c), this section permits FRA to focus on the extent to which the railroad is complying with its own program.
Similar to the SSP plan review process, FRA does not intend the audit to be conducted in a vacuum. Rather,
If the results of the audit require the railroad to take any corrective action, the railroad is provided 60 days to submit for approval an improvement plan to address the audit findings. The improvement plan will identify who is responsible for carrying out the necessary tasks to address the audit findings and specify target dates and milestones to implement the improvements that address the audit findings. Specification of milestones is important because it will allow the railroad to determine the appropriate progress of the improvements while allowing FRA to gauge the railroad's compliance with its improvement plan.
If FRA does not approve a railroad's improvement plan, FRA will notify the railroad of the specific deficiencies in the improvement plan. The railroad will then amend the improvement plan to correct the deficiencies identified by FRA and provide FRA a copy of the amended improvement plan no later than 30 days after the railroad has received notice from FRA that its improvement plan was not approved. This process is similar to the process provided in § 270.201(b)(3) when FRA does not initially approve a railroad's SSP. Upon request, the railroad shall provide to FRA and States participating under part 212 of this chapter for review a report regarding the status of the implementation of the improvements set forth in the improvement plan established pursuant to paragraph (b)(1) of this section.
Appendix A to part 270 contains a schedule of civil penalties for use to enforce this part. Because such penalty schedules are statements of agency policy, notice and comment are not required before their issuance.
Appendix B contains guidance on how a railroad could comply with § 270.107, which states that a railroad must in good faith consult with and use its best efforts to reach agreement with all of its directly affected employees on the contents of the SSP plan. The appendix begins with a general discussion of the terms “good faith” and “best efforts,” explaining that they are separate terms and that each has a specific and distinct meaning. For example, the good faith obligation is concerned with a railroad's state of mind during the consultation process, and the best efforts obligation is concerned with the specific efforts made by the railroad in an attempt to reach agreement with its directly affected employees. The appendix also explains that FRA will determine a railroad's compliance with the § 270.107 requirements on a case-by-case basis and outlines the potential consequences for a railroad that fails to consult with its directly affected employees in good faith and using best efforts.
The appendix also contains specific guidance on the process a railroad may use to consult with its directly affected employees. This guidance would not establish prescriptive requirements with which a railroad must comply, but provides the road map for how a railroad may conduct the consultation process. The guidance also distinguishes between employees who are represented by a non-profit employee labor organization and employees who are not, as the processes a railroad may use to consult with represented and non-represented employees could differ significantly. Overall, however, the appendix stresses that there are many compliant ways in which a railroad may choose to consult with its directly affected employees and that FRA believes, therefore, that it is important to maintain a flexible approach to the § 270.107 consultation requirements, so a railroad and its directly affected employees may consult in the manner best suited to their specific circumstances.
Appendix C provides railroads and directly affected employees the option to file SSP plans or consultation statements electronically. As discussed above, the NPRM requested comment regarding whether electronic submission of SSP materials should be allowed. All of the comments received in response to this request supported electronic submission, and, therefore, Appendix C has been added.
FRA intends to create a secure document submission site and needs basic information from railroads or directly affected employees before setting up a user's account. To provide secure access, information regarding the points of contact is required. It is anticipated that FRA will be able to approve or disapprove all or part of a program and generate automated notifications by email to a railroad's points of contact. Thus, FRA needs each point of contact to understand that by providing any email addresses, the railroad is consenting to receive approval and disapproval notices from FRA by email. Railroads that allow notice from FRA by email gain the benefit of receiving such notices quickly and efficiently.
Those railroads that choose to submit printed materials to FRA are required to deliver them directly to the specified address. Some railroads may choose to deliver a CD, DVD, or other electronic storage format to FRA rather than requesting access to upload the documents directly to the secure electronic database. Although that is an acceptable method of submission, FRA encourages each railroad to utilize the electronic submission capabilities of the system. Of course, if FRA does not have the capability to read the type of electronic storage format sent, FRA will reject the submission.
FRA may be able to develop a secure document submission site so that confidential materials would be identified and not shared with the general public. However, FRA does not expect the information in a SSP plan to be of such a confidential or proprietary nature, particularly since each railroad is required to share the submitted SSP plan with individuals identified in the service list pursuant to § 270.107(b)(3). SSP records in FRA's possession are also exempted from disclosure under the Freedom of Information Act pursuant to section 20118, and § 270.105 protects any information compiled or collected solely for the
This final rule has been evaluated under existing policies and procedures, and determined to be “Other Significant” under both Executive Orders 12866 and 13563 and DOT policies and procedures. 44 FR 11034, Feb. 26, 1979. FRA has prepared and placed in the docket a regulatory impact analysis (RIA) addressing the economic impact of this final rule.
This final rule directly responds to the Congressional mandate in section 20156(a) that FRA, by delegation from the Secretary, require each railroad that provides intercity rail passenger or commuter rail passenger transportation to establish a railroad safety risk reduction program. This final rule also implements section 20119(b), which authorizes FRA, by delegation from the Secretary, to issue a regulation protecting from discovery and admissibility into evidence in litigation documents generated for the purpose of developing, implementing, or evaluating a SSP. FRA believes that all of the requirements of this final rule are directly or implicitly required by these statutory mandates and will promote railroad safety.
Most of the 30 existing commuter and intercity passenger railroads required to comply with the final rule belong to the APTA system safety program and are currently participating in the APTA system safety triennial audit program. The rule adopts many of the elements contained in the APTA “Manual for the Development of System Safety Program Plans for Commuter Railroads.”
The SSP NPRM RIA was performed on a breakeven basis. FRA modified that approach in this final rule because FRA could not estimate all relevant regulatory costs, namely those resulting from risk analysis and risk mitigation. These costs are not reasonably predictable until data protections are in place and each railroad produces and implements their SSP plans assessing their hazards and risk levels. Nevertheless, the pool of potential safety benefits is large as evidenced by the number of accidents and incidents experienced on passenger railroads this rule could impact. FRA expects railroads will achieve sufficient safety benefits to justify quantified and unquantified costs.
The rule has requirements in addition to those in the APTA program. FRA estimated the rule's costs for those additional requirements which include: Documenting the SSP plan and the safety certification process; SSP training; preparing for and providing information in response to external audits; providing mitigation method information to FRA; preparing technology analysis results and providing them to FRA; providing an annual assessment of SSP performance and improvement plans; consulting with directly affected employees and preparing consultation statements; amending SSP plans; retaining records; and conducting internal SSP assessments. (Table E-1 above summarizes these costs.) FRA did not estimate the full incremental costs of railroads conducting additional and more robust hazard and risk analysis or implementing actions to mitigate identified hazards and risks. FRA lacks information to reliably estimate such costs, as it does not know the level of hazards and risks on each railroad and the means railroads will use to mitigate these risks.
FRA could not estimate the final rule's full benefits quantitatively as SSPs are primarily an organizational structure and program to manage safety
Congress directed FRA to conduct a study to determine if it was in the public interest to withhold certain information from discovery and admission into evidence in Federal or State court proceedings for damages involving personal injury and wrongful death, including the railroad's assessment of its safety risks and its mitigation measures. FRA contracted with an outside organization to conduct this study and the study concluded it was in the public interest to withhold this type of information from these types of proceedings. Thus, the rule sets forth protections of certain SSP information from discovery, admission into evidence, or use for other purposes in a proceeding for damages. FRA expects the information protections will result in railroads conducting more robust risk-based hazard analysis, keeping more detailed records of hazards and risks, and implementing additional actions to mitigate safety risks. FRA could not estimate the costs of the information protections or the resulting incremental safety risk analysis and mitigation activities, but believes they are justified by the resultant safety improvements' benefits.
In conclusion, FRA determined the final rule's benefits justify its costs. To illustrate, FRA estimated the total cost of passenger railroad accidents/incidents is $33 billion (discounted at 7 percent) and $51 billion (discounted at 3 percent) over a 20-year future period. These costs show the potential pool of safety benefits this rule can impact is very large, especially compared to the rule's quantified costs. FRA expects railroads will implement the most cost-effective mitigations to eliminate or mitigate hazards. Railroads are not required to implement mitigations with net costs and FRA expects that railroads will implement mitigations with net benefits. FRA expects railroads can achieve sufficient safety benefits to justify both the costs FRA could estimate and those it could not.
FRA developed the final rule under Executive Order 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”) and DOT's procedures and policies to promote compliance with the Regulatory Flexibility Act (5 U.S.C. 601
The Regulatory Flexibility Act (RFA) requires an agency to review regulations to assess their impact on small entities. An agency must conduct a regulatory flexibility analysis unless it determines and certifies that a rule is not expected to have a significant economic impact on a substantial number of small entities.
FRA conducted an Initial Regulatory Impact Analysis (IRFA) pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)) for the SSP NPRM. 77 FR 55397-99, Sept. 7, 2012. Furthermore, FRA invited all interested parties to submit data and information regarding this certification. The comments received are addressed below. FRA certifies that this final rule would not have a significant economic impact on a substantial number of small entities. Although a substantial number of small railroads would be affected by this final rule, none would be significantly impacted.
The “universe” of the entities under consideration includes only those small entities that can reasonably be expected to be directly affected by the provisions of this final rule. For this final rule there is only one type of small entity that is affected: Small railroads.
“Small entity” is defined in 5 U.S.C. 601. Section 601(6) defines “small entity” as having “the same meaning as the terms `small business', `small organization' and `small governmental jurisdiction' ” as defined by section 601. Section 601(3) defines “small business” as having the same meaning as “small business concern” under section 3 of the Small Business Act. Section 601(4) defines “small organization” as “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Section 601(5) defines “small governmental jurisdiction” as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.”
The U.S. Small Business Administration (SBA) stipulates “size standards” for small entities. It provides that the largest a for-profit railroad business firm may be (and still classify as a “small entity”) is 1,500 employees for “Line-Haul Operating” railroads, and 500 employees for “Short-Line Operating” railroads.
Federal agencies may adopt their own size standards for small entities in consultation with SBA, and in conjunction with public comment. Pursuant to the authority provided to it by SBA, FRA has published a final policy, which formally establishes small entities as railroads that meet the line haulage revenue requirements of a Class III railroad.
Commuter and intercity passenger railroads will have to comply with all provisions of part 270; however, the amount of effort to comply with this rule is commensurate with the size of the entity.
For purposes of this analysis, FRA analyzed two intercity passenger railroads, Amtrak and the Alaska Railroad.
There are 28 commuter or other short-haul passenger railroad operations in the U.S. Most of these commuter railroads are part of larger transit organizations that receive Federal funds and serve major metropolitan areas with populations greater than 50,000. However, two of these railroads do not fall in this category and are considered small entities: Saratoga & North Creek Railway (SNC) and the Hawkeye Express (operated by the Iowa Northern Railway Company (IANR)). All other passenger railroad operations in the United States are part of larger governmental entities, whose service jurisdictions exceed 50,000 in population, and based on the definition,
FRA estimates that the total cost for the final rule will be $4.7 million (undiscounted)—$2.3 million (discounted at 7 percent), or $3.4 million (discounted at 3 percent), for the railroad industry over a 20-year period. The cost burden to the two small entities will be considerably less on average than that of the other 28 railroads. FRA estimates impacts on these two railroads could range on average between $1,590 and $3,346 annualized (non-discounted) to comply with the regulation, depending on the existing level of compliance and discount rate. This estimate was prepared and presented in the IRFA for the NPRM and adjusted in the final rule for revised cost factors applied in the Regulatory Impact Analysis,
Since the time that the NPRM IRFA was prepared, both of the two small entities herein have produced preliminary SSP plans. That plan preparation, with the assistance of FRA and others, will have accomplished much of the work effort envisioned for preparing the formal SSP Plans once the Rule is in effect.
Based on this, FRA concludes that the expected burden of this final rule will not have a significant impact on the competitive position of small entities, or on the small entity segment of the railroad industry as a whole.
This final rule will likely burden only two small railroads; however, this is two out of 30 total railroads impacted by this Rule, and two out of two small railroads. Thus, as noted above, this final rule will impact a substantial number of small railroads.
The final rule is a performance-based rule and the NPRM, and the regulatory evaluation for the NPRM, requested comments and input on the rulemaking and its supporting documents. The following provides a summary of the comments received that pertained to RFA for small businesses, and how those comments were addressed. FRA did not receive any comments from SBA.
APTA commented that they “believe FRA has applied faulty criteria in determining only two railroads should be treated as small entities.” FRA determined that there would be only two passenger railroads affected by the SSP rulemaking as small entities. In applying the guidelines of RFA, FRA includes most Class III railroads impacted by a rule as a small business. Only one railroad that will be governed under this final rule is a Class III railroad. RFA guidelines also indicate that if the entity is a part of or agent of governments of cities, counties, towns, townships, villages, or special districts serving a population of more than 50,000, they would not be classified as a small business. Essentially all, except the two railroads FRA classified as small businesses, are a governmental related transportation agency serving population areas of 50,000 or more or an intercity service provider (Amtrak and Alaska), or both.
APTA also suggested that FRA should ensure “that this proposed rule's requirements are commensurate to the size of the entity” and “compliance with this proposed rule should include flexibility, scalability, and program maturity as relevant factors to determine whether a program is `fully implemented.’ ” FRA does expect the structure and scope of a SSP will be commensurate with the size and maturity of the entity. FRA has regularly provided assistance to both new and smaller passenger entities, including the two small entities considered herein, with setting up their safety programs, and with approaches to hazard and risk management. FRA will continue to provide that assistance in the plan development phase of preparing their SSP Plans. The SSP regulation provides a scalable approach that will be easier to implement on a small railroad.
Pursuant to the Regulatory Flexibility Act (5 U.S.C. 605(b)), FRA certifies that this final rule will not have a significant economic impact on a substantial number of small entities. FRA invited all interested parties to submit data and information regarding the potential economic impact that will result from adoption of the proposals in the NPRM and has addressed those comments in determining that although a substantial number of small railroads will be affected by this final rule, none of these entities will be significantly impacted.
Executive Order 13132, “Federalism” (64 FR 43255, Aug. 10, 1999), requires FRA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” are defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, the agency may not issue a regulation with federalism implications that imposes substantial direct compliance costs and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments or the agency consults with State and local government officials early in the process of developing the regulation. Where a regulation has federalism implications and preempts State law, the agency seeks to consult with State and local officials in the process of developing the regulation.
This final rule has been analyzed under the principles and criteria in Executive Order 13132. FRA has determined that this rule does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. In addition, FRA has determined that this rule does not impose substantial direct compliance costs on State and local governments. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
This rule adds part 270, System Safety Program. FRA notes that this part could have preemptive effect by the operation of law under a provision of the former Federal Railroad Safety Act of 1970, repealed and codified at 49 U.S.C. 20106 (Sec. 20106). Sec. 20106 provides that States may not adopt or continue in effect any law, regulation, or order related to railroad safety or security that covers the subject matter of a regulation prescribed or order issued by the Secretary of Transportation (with respect to railroad safety matters) or the Secretary of Homeland Security (with respect to railroad security matters), except when the State law, regulation, or order qualifies under the “essentially
In sum, FRA has analyzed this proposed rule under the principles and criteria in Executive Order 13132. As explained above, FRA has determined that this proposed rule has minimal federalism implications. Accordingly, FRA has determined that preparation of a federalism summary impact statement for this proposed rule is not required.
The Trade Agreement Act of 1979 prohibits Federal agencies from engaging in any standards or related activities that create unnecessary obstacles to the foreign commerce of the United States. Legitimate domestic objectives, such as safety, are not considered unnecessary obstacles. The statute also requires consideration of international standards and where appropriate, that they be the basis for U.S. standards. This rulemaking is purely domestic in nature and is not expected to affect trade opportunities for U.S. firms doing business overseas or for foreign firms doing business in the United States.
The information collection requirements in this final rule are being submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501
All estimates include the time for reviewing instructions; searching existing data sources; gathering or maintaining the needed data; and reviewing the information. For information or a copy of the paperwork package submitted to OMB, contact Mr. Robert Brogan at 202-493-6292 or Ms. Kimberly Toone at 202-493-6132 or via email at the following addresses:
Organizations and individuals desiring to submit comments on the collection of information requirements should direct them to the Office of Management and Budget, Office of Information and Regulatory Affairs, Washington, DC 20503, Attention: FRA Desk Officer. Comments may also be sent via email to the Office of Management and Budget at the following address:
OMB is required to make a decision concerning the collection of information requirements contained in this final rule between 30 and 60 days after publication of this document in the
FRA is not authorized to impose a penalty on persons for violating information collection requirements which do not display a current OMB control number, if required. FRA intends to obtain current OMB control numbers for any new information collection requirements resulting from this rulemaking action prior to the effective date of the final rule. The OMB control number, when assigned, will be announced by separate notice in the
FRA has evaluated this rule under its “Procedures for Considering Environmental Impacts” (FRA's Procedures) (64 FR 28545, May 26, 1999) as required by the National Environmental Policy Act (42 U.S.C. 4321
* * * (20) Promulgation of railroad safety rules and policy statements that do not result in significantly increased emissions or air or water pollutants or noise or increased traffic congestion in any mode of transportation.”
Consistent with section 4(c) and (e) of FRA's Procedures, the agency has further concluded that no extraordinary circumstances exist with respect to this regulation that might trigger the need for a more detailed environmental review. As a result, FRA finds that this rule is not a major Federal action significantly affecting the quality of the human environment.
Pursuant to section 201 of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4, 2 U.S.C. 1531), each Federal agency “shall, unless otherwise prohibited by law, assess the effects of Federal regulatory actions on State, local, and tribal governments, and the private sector (other than to the extent that such regulations incorporate requirements specifically set forth in law).” Section 202 of the Act (2 U.S.C. 1532) further requires that “before promulgating any general notice of proposed rulemaking that is likely to result in the promulgation of any rule that includes any Federal mandate that may result in 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 1 year, and before promulgating any final rule for which a general notice of proposed rulemaking was published, the agency shall prepare a written statement” detailing the effect on State, local, and tribal governments and the private sector. For the year 2015, this monetary amount of $100,000,000 has been adjusted to $156,000,000 to account for inflation. This final rule will not result in the expenditure of more than $156,000,000 by the public sector in any one year, and thus preparation of such a statement is not required.
Executive Order 13211 requires Federal agencies to prepare a Statement of Energy Effects for any “significant energy action.” 66 FR 28355, May 22, 2001. Under the Executive Order, a “significant energy action” is defined as any action by an agency (normally published in the
Interested parties should be aware that anyone is able to search the electronic form of all comments received into any agency docket by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the
Penalties; Railroad safety; Reporting and recordkeeping requirements; and System safety.
49 U.S.C. 20103, 20106-20107, 20118-20119, 20156, 21301, 21304, 21311; 28 U.S.C. 2461, note; and 49 CFR 1.89.
(a) The purpose of this part is to improve railroad safety through structured, proactive processes and procedures developed and implemented by railroads. This part requires certain railroads to establish a system safety program that systematically evaluates railroad safety hazards and the resulting risks on their systems and manages those risks to reduce the number and rates of railroad accidents, incidents, injuries, and fatalities.
(b) This part prescribes minimum Federal safety standards for the preparation, adoption, and implementation of railroad system safety programs. This part does not restrict railroads from adopting and enforcing additional or more stringent requirements not inconsistent with this part.
(c) This part prescribes the protection of information generated solely for the purpose of planning, implementing, or evaluating a system safety program under this part.
(a) Except as provided in paragraph (b) of this section, this part applies to all—
(1) Railroads that operate intercity or commuter passenger train service on the general railroad system of transportation; and
(2) Railroads that provide commuter or other short-haul rail passenger train service in a metropolitan or suburban area (as described by 49 U.S.C. 20102(2)), including public authorities operating passenger train service.
(b) This part does not apply to:
(1) Rapid transit operations in an urban area that are not connected to the general railroad system of transportation;
(2) Tourist, scenic, historic, or excursion operations, whether on or off the general railroad system of transportation;
(3) Operation of private cars, including business/office cars and circus trains; or
(4) Railroads that operate only on track inside an installation that is not part of the general railroad system of transportation (
As used in this part—
(1) Any form of non-highway ground transportation that runs on rails or electromagnetic guideways, including—
(i) Commuter or other short-haul rail passenger service in a metropolitan or suburban area and commuter railroad service that was operated by the Consolidated Rail Corporation on January 1, 1979; and
(ii) High speed ground transportation systems that connect metropolitan areas, without regard to whether those systems use new technologies not associated with traditional railroads, but does not include rapid transit operations in an urban area that are not connected to the general railroad system of transportation; and
(2) A person or organization that provides railroad transportation, whether directly or by contracting out operation of the railroad to another person.
(a) Any person who violates any requirement of this part or causes the violation of any such requirement is subject to a civil penalty of at least $839 and not more than $27,455 per violation, except that: Penalties may be assessed against individuals only for willful violations, and, where a grossly negligent violation or a pattern of repeated violation has created an imminent hazard of death or injury to persons, or has caused death or injury, a penalty not to exceed $109,819 per violation may be assessed. Each day a violation continues shall constitute a separate offense. Any person who knowingly and willfully falsifies a record or report required by this part may be subject to criminal penalties under 49 U.S.C. 21311 (formerly codified in 45 U.S.C. 438(e)). Appendix A to this part contains a schedule of civil penalty amounts used in connection with this part.
(b) Although the requirements of this part are stated in terms of the duty of a railroad, when any person, including a contractor or subcontractor to a railroad, performs any function covered by this part, that person (whether or not a railroad) shall perform that function in accordance with this part.
(a) Each railroad subject to this part shall establish and fully implement a system safety program that continually and systematically evaluates railroad safety hazards on its system and manages the resulting risks to reduce the number and rates of railroad accidents, incidents, injuries, and fatalities. A system safety program shall include a risk-based hazard management program and risk-based hazard analysis designed to proactively identify hazards and mitigate or eliminate the resulting risks. The system safety program shall be fully implemented and supported by a written SSP plan described in § 270.103.
(b) A railroad's system safety program shall be designed so that it promotes and supports a positive safety culture at the railroad.
(a)
(2) Each railroad subject to this part shall communicate with each railroad that hosts passenger train service for that railroad and coordinate the portions of the SSP plan applicable to the railroad hosting the passenger train service.
(b)
(1) Define the railroad's authority for the establishment and implementation of the system safety program;
(2) Describe the safety philosophy and safety culture of the railroad; and
(3) Be signed by the chief official at the railroad.
(c)
(1) Long-term;
(2) Meaningful;
(3) Measurable; and
(4) Focused on the identification of hazards and the mitigation or elimination of the resulting risks.
(d)
(2) Each railroad shall identify the persons that enter into a contractual relationship with the railroad to either perform significant safety-related services on the railroad's behalf or to utilize significant safety-related services provided by the railroad for purposes related to railroad operations.
(3) Each railroad shall describe the relationships and responsibilities between the railroad and: host railroads, contract operators, shared track/corridor operators, and persons providing or utilizing significant safety-related services as identified by the railroad pursuant to paragraph (d)(2) of this section.
(e)
(1) A chart or other visual representation of the organizational structure of the railroad;
(2) A description of the railroad's management responsibilities within the system safety program;
(3) A description of how safety responsibilities are distributed within the railroad organization;
(4) Clear identification of the lines of authority used by the railroad to manage safety issues; and
(5) A description of the roles and responsibilities in the railroad's system safety program for each host railroad, contract operator, shared track/corridor operator, and any persons utilizing or providing significant safety-related services as identified by the railroad pursuant to (d)(2) of this section. As part of this description, the railroad shall describe how each host railroad, contractor operator, shared track/corridor operator, and any persons utilizing or providing significant safety-related services as identified by the railroad pursuant to paragraph (d)(2) of this section supports and participates in the railroad's system safety program, as appropriate.
(f)
(i) Roles and responsibilities of each position that has significant responsibility for implementing the system safety program, including those held by employees and other persons utilizing or providing significant safety-related services as identified by the railroad pursuant to (d)(2) of this section; and
(ii) Milestones necessary to be reached to fully implement the program.
(2) A railroad's system safety program shall be fully implemented within 36 months of FRA's approval of the SSP plan pursuant to subpart C of this part.
(g)
(2) Each description of the processes and procedures used for maintenance and repair of infrastructure and equipment directly affecting safety shall include the processes and procedures used to conduct testing and inspections of the infrastructure and equipment.
(3) If a railroad has a manual or manuals that comply with all applicable Federal regulations and that describe the processes and procedures that satisfy this section, the railroad may reference those manuals in its SSP plan. FRA approval of a SSP plan that contains or references such manuals is not approval of the manuals themselves; each manual must independently comply with applicable regulations and is subject to a civil penalty if not in compliance with applicable regulations.
(4) The identification and description required by this section of the processes and procedures used for maintenance, repair, and inspection of infrastructure and equipment directly affecting railroad safety is not intended to address and should not include procedures to address employee working conditions that arise in the course of conducting such maintenance, repair, and inspection of infrastructure and equipment directly affecting railroad safety as set forth in the plan. FRA does not intend to approve any specific portion of a SSP plan that relates exclusively to employee working conditions.
(h)
(1) The railroad's operating and safety rules and maintenance procedures that are subject to review under this chapter;
(2) Techniques used to assess the compliance of the railroad's employees with the railroad's operating and safety rules and maintenance procedures, and applicable railroad safety laws and regulations; and
(3) Techniques used to assess the effectiveness of the railroad's supervision relating to the compliance with the railroad's operating and safety rules and maintenance procedures, and applicable railroad safety laws and regulations.
(i)
(2) Each railroad shall establish and describe in its SSP plan the railroad's system safety program training plan. A system safety program training plan shall set forth the procedures by which employees that are responsible for implementing and supporting the system safety program, and any persons utilizing or providing significant safety-related services will be trained on the railroad's system safety program. A system safety program training plan shall help ensure that all personnel who are responsible for implementing and supporting the system safety program understand the goals of the program, are familiar with the elements of the program, and have the requisite knowledge and skills to fulfill their responsibilities under the program.
(3) For each position identified pursuant to paragraph (f)(1)(i) of this section, the training plan shall describe the frequency and content of the system safety program training that the position receives.
(4) If a position is not identified under paragraph (f)(1)(i) of this section as having significant responsibility to implement the system safety program but the position is safety-related or has a significant impact on safety, personnel in those positions shall receive training in basic system safety concepts and the system safety implications of their position.
(5) Training under this subpart may include, but is not limited to, classroom, computer-based, or correspondence training.
(6) The railroad shall keep a record of all training conducted under this part and update that record as necessary. The system safety program training plan shall set forth the process used to maintain and update the necessary training records required by this part.
(7) The system safety program training plan shall set forth the process used by the railroad to ensure that it is complying with the training requirements set forth in the training plan.
(j)
(k)
(1) The processes that help ensure the safety of employees and contractors while working on or in close proximity to the railroad's property as described in paragraph (d) of this section;
(2) The processes that help ensure that employees and contractors understand the requirements established by the railroad pursuant to paragraph (f)(1) of this section;
(3) Any fitness-for-duty programs or any medical monitoring programs; and
(4) The standards for the control of alcohol and drug use in part 219 of this chapter.
(l)
(m)
(n)
(o)
(p)
(1) The risk-based hazard management program shall establish:
(i) The processes or procedures used in the risk-based hazard analysis to identify hazards on the railroad's system;
(ii) The processes or procedures used in the risk-based hazard analysis to analyze identified hazards and support the risk-based hazard management program;
(iii) The methods used in the risk-based hazard analysis to determine the severity and frequency of hazards and to determine the corresponding risk;
(iv) The methods used in the risk-based hazard analysis to identify actions that mitigate or eliminate hazards and corresponding risks;
(v) The process for setting goals for the risk-based hazard management program and how performance against the goals will be reported;
(vi) The process to make decisions that affect the safety of the rail system relative to the risk-based hazard management program;
(vii) The methods used in the risk-based hazard management program to support continuous safety improvement throughout the life of the rail system; and
(viii) The methods used to maintain records of identified hazards and risks and the mitigation or elimination of the identified hazards and risks throughout the life of the rail system.
(2) The railroad's description of the risk-based hazard management program shall include:
(i) The position title of the individual(s) responsible for administering the risk-based hazard management program;
(ii) The identities of stakeholders who will participate in the risk-based hazard management program; and
(iii) The position title of the participants and structure of any hazard management teams or safety committees that a railroad may establish to support the risk-based hazard management program.
(q)
(2) A risk-based hazard analysis shall identify and the railroad shall implement specific actions using the methods described in paragraph (p)(1)(iv) of this section that will mitigate or eliminate the hazards and resulting risks identified by paragraph (q)(1) of this section.
(3) A railroad shall also conduct a risk-based hazard analysis pursuant to paragraphs (q)(1) and (2) of this section when there are significant operational changes, system extensions, system modifications, or other circumstances that have a direct impact on railroad safety.
(r)
(2) A railroad's technology analysis and implementation plan shall describe the process the railroad will use to:
(i) Identify and analyze current, new, or novel technologies that will mitigate or eliminate the hazards and resulting risks identified by the risk-based hazard analysis pursuant to paragraph (q)(1) of this section; and
(ii) Analyze the safety impact, feasibility, and costs and benefits of implementing the technologies identified by the processes under paragraph (r)(2)(i) of this section that will mitigate or eliminate hazards and the resulting risks.
(3) Once FRA approves a railroad's SSP plan pursuant to § 270.201(b), including the technology analysis and implementation plan, the railroad shall apply:
(i) The processes described in paragraph (r)(2)(i) of this section to identify and analyze technologies that will mitigate or eliminate the hazards and resulting risks identified by the risk-based hazard analysis pursuant to paragraph (q)(1) of this section. At a minimum, the technologies a railroad shall consider as part of its technology analysis are: Processor-based technologies, positive train control systems, electronically-controlled pneumatic brakes, rail integrity inspection systems, rail integrity warning systems, switch position monitors and indicators, trespasser prevention technology, and highway-rail grade crossing warning and protection technology; and
(ii) The processes described in paragraph (r)(2)(ii) of this section to the technologies identified by the analysis under paragraph (r)(3)(i) of this section.
(4) If a railroad decides to implement any of the technologies identified in paragraph (r)(3) of this section, in the technology analysis and implementation plan in the SSP plan, the railroad shall:
(i) Describe how it will develop, adopt, implement, maintain, and use the identified technologies; and
(ii) Set forth a prioritized implementation schedule for the development, adoption, implementation and maintenance of those technologies over a 10-year period.
(5) Except as required by subpart I of part 236 of this chapter, if a railroad decides to implement a positive train control system as part of its technology analysis and implementation plan, the railroad shall set forth and comply with a schedule for implementation of the positive train control system consistent with the deadlines in the Positive Train Control Enforcement and Implementation Act of 2015, Public Law 114-73, 129 Stat. 576-82 (Oct. 29, 2015), and 49 CFR 236.1005(b)(7).
(6) The railroad shall not include in its SSP plan the analysis conducted pursuant to paragraph (r)(3) of this section. The railroad shall make the results of any analysis conducted pursuant to paragraph (r)(3) of this section available upon request to representatives of FRA and States participating under part 212 of this chapter.
(s)
(2)
(i) Identify who within the railroad has authority to make configuration changes;
(ii) Establish processes to make configuration changes to the railroad's system; and
(iii) Establish processes to ensure that all departments of the railroad affected by the configuration changes are formally notified and approve of the change.
(3)
(t)
(a)
(1) “Information” includes plans, reports, documents, surveys, schedules, lists, or data, and specifically includes a railroad's analysis of its safety risks under § 270.103(q)(1) and a railroad's statement of mitigation measures under § 270.103(q)(2); and
(2) “Solely” means that a railroad originally compiled or collected the information for the exclusive purpose of planning, implementing, or evaluating a system safety program under this part. Information compiled or collected for any other purpose is not protected, even if the railroad also uses that information for a system safety program. “Solely” also means that a railroad continues to use that information only for its system safety program. If a railroad subsequently uses for any other purpose information that was initially compiled or collected for a system safety program, this section does not protect that information to the extent that it is used for the non-system safety program purpose. The use of that information within the railroad's system safety program, however, remains protected. This section does not protect information that is required to be compiled or collected pursuant to any other provision of law or regulation.
(b)
(1) Information compiled or collected on or before August 14, 2017;
(2) Information compiled or collected on or before August 14, 2017, and that continues to be compiled or collected, even if used to plan, implement, or evaluate a railroad's system safety program; or
(3) Information that is compiled or collected after August 14, 2017, and is compiled or collected for a purpose other than that identified in paragraph (a) of this section.
(c)
(d)
(a)
(2) A railroad that consults with such a non-profit employee labor organization as required by paragraph (a)(1) of this section is considered to have consulted with the directly affected employees represented by that organization. If a railroad contracts out significant portions of its operations, the contractor and the contractor's employees performing the railroad's operations shall be considered directly affected employees for the purposes of this part.
(3) A railroad shall have a preliminary meeting with its directly affected employees to discuss how the consultation process will proceed. A railroad is not required to discuss the substance of a SSP plan during this preliminary meeting. A railroad must:
(i) Hold the preliminary meeting no later than April 10, 2017; and
(ii) Notify the directly affected employees of the preliminary meeting no less than 60 days before it is held.
(4) Appendix B to this part contains non-mandatory guidance on how a railroad may comply with the requirements of this section.
(b)
(1) A detailed description of the process the railroad utilized to consult with its directly affected employees;
(2) If the railroad could not reach agreement with its directly affected employees on the contents of its SSP plan, identification of any known areas of disagreement and an explanation of why it believes agreement was not reached; and
(3) A service list containing the name and contact information for each international/national president of any non-profit employee labor organization representing a class or craft of the railroad's directly affected employees. The service list must also contain the name and contact information for any directly affected employee who significantly participated in the consultation process independently of a non-profit employee labor organization. When a railroad submits its SSP plan and consultation statement to FRA pursuant to § 270.201, it must also simultaneously send a copy of these documents to all individuals identified in the service list.
(c)
(2) A railroad's directly affected employees have 30 days following the date of the railroad's submission of a proposed SSP plan to submit the statement described in paragraph (c)(1) of this section.
(d)
(a)
(2) The railroad shall not include in its SSP plan the risk-based hazard analysis conducted pursuant to § 270.103(q). The railroad shall make the results of any risk-based hazard analysis available upon request to representatives of FRA and States participating under part 212 of this chapter.
(3) The SSP plan shall include:
(i) The signature, name, title, address, and telephone number of the chief safety officer who bears primary managerial authority for implementing the program for the submitting railroad. By signing, this chief official is certifying that the contents of the SSP plan are accurate and that the railroad will implement the contents of the program as approved by FRA;
(ii) The contact information for the primary person responsible for managing the system safety program; and
(iii) The contact information for the senior representatives of any host railroad, contract operator, shared track/corridor operator or persons utilizing or providing significant safety-related services.
(4) As required by § 270.107(b), each railroad must submit with its SSP plan a consultation statement describing how it consulted with its directly affected employees on the contents of its system safety program plan. Directly affected employees may also file a statement in accordance with § 270.107(c).
(b)
(2) FRA will notify each person identified by the railroad in § 270.201(a)(3) in writing whether the proposed plan has been approved by FRA, and, if not approved, the specific points in which the SSP plan is deficient. FRA will also provide this notification to each individual identified in the service list accompanying the consultation statement required under § 270.107(b).
(3) If FRA does not approve a SSP plan, the affected railroad shall amend the proposed plan to correct all deficiencies identified by FRA and provide FRA with a corrected copy of the SSP plan not later than 90 days following receipt of FRA's written notice that the proposed SSP plan was not approved.
(4) Approval of a railroad's SSP plan under this part does not constitute approval of the specific actions the railroad will implement under its SSP plan pursuant to § 270.103(q)(2) and shall not be construed as establishing a Federal standard regarding those specific actions.
(c)
(ii) If an amendment is safety-critical and the railroad is unable to submit the amended SSP plan to FRA 60 days before the proposed effective date of the amendment, the railroad shall submit the amended SSP plan with a cover letter outlining the changes made to the original approved SSP plan by the proposed amendment(s) and why the amendment is safety-critical to FRA as near as possible to 60 days before the proposed effective date of the amendment(s).
(iii) If the proposed amendment is limited to adding or changing a name, title, address, or telephone number of a person, FRA approval is not required under the process in paragraphs (c)(1)(i) and (ii) of this section, although the railroad shall still file the proposed amendment with FRA's Associate
(2)(i) Except as provided in paragraph (c)(1)(iii) of this section, FRA will review the proposed amended SSP plan within 45 days of receipt. FRA will then notify the primary contact person of each affected railroad whether the proposed amended plan has been approved by FRA, and if not approved, the specific points in which each proposed amendment to the SSP plan is deficient.
(ii) If FRA has not notified the railroad by the proposed effective date of the amendment(s) whether the proposed amended plan has been approved or not, the railroad may implement the amendment(s) pending FRA's decision.
(iii) If a proposed SSP plan amendment is not approved by FRA, no later than 60 days following the receipt of FRA's written notice, the railroad shall provide FRA either a corrected copy of the amendment that addresses all deficiencies noted by FRA or written notice that the railroad is retracting the amendment.
(d)
(e)
Each railroad to which this part applies shall retain at its system headquarters, and at any division headquarters, one copy of the SSP plan required by this part and one copy of each subsequent amendment to that plan. These records shall be made available to representatives of FRA and States participating under part 212 of this chapter for inspection and copying during normal business hours.
The system safety program and its implementation shall be assessed internally by the railroad and audited externally by FRA or FRA's designee.
(a) Following FRA's initial approval of the railroad's SSP plan pursuant to § 270.201, the railroad shall annually conduct an assessment of the extent to which:
(1) The system safety program is fully implemented;
(2) The railroad is in compliance with the implemented elements of the approved system safety program; and
(3) The railroad has achieved the goals set forth in § 270.103(c).
(b) As part of its SSP plan, the railroad shall set forth a statement describing the processes used to:
(1) Conduct internal system safety program assessments;
(2) Internally report the findings of the internal system safety program assessments;
(3) Develop, track, and review recommendations as a result of the internal system safety program assessments;
(4) Develop improvement plans based on the internal system safety program assessments. Improvement plans shall, at a minimum, identify who is responsible for carrying out the necessary tasks to address assessment findings and specify a schedule of target dates with milestones to implement the improvements that address the assessment findings; and
(5) Manage revisions and updates to the SSP plan based on the internal system safety program assessments.
(c)(1) Within 60 days of completing its internal SSP plan assessment pursuant to paragraph (a) of this section, the railroad shall:
(i) Submit to FRA a copy of the railroad's internal assessment report that includes a system safety program assessment and the status of internal assessment findings and improvement plans to the FRA Associate Administrator for Railroad Safety and Chief Safety Officer, Mail Stop 25, 1200 New Jersey Avenue SE., Washington, DC 20590; and
(ii) Outline the specific improvement plans for achieving full implementation of the SSP plan, as well as achieving the goals of the plan.
(2) The railroad's chief official responsible for safety shall certify the results of the railroad's internal SSP plan assessment.
(a) FRA may conduct, or cause to be conducted, external audits of a railroad's system safety program. Each audit will evaluate the railroad's compliance with the elements required by this part in the railroad's approved SSP plan. FRA shall provide the railroad written notification of the results of any audit.
(b)(1) Within 60 days of FRA's written notification of the results of the audit, the railroad shall submit to FRA for approval an improvement plan to address the audit findings that require corrective action. At a minimum, the improvement plan shall identify who is responsible for carrying out the necessary tasks to address audit findings and specify target dates and milestones to implement the improvements that address the audit findings.
(2) If FRA does not approve the railroad's improvement plan, FRA will notify the railroad of the specific deficiencies in the improvement plan. The affected railroad shall amend the proposed plan to correct the deficiencies identified by FRA and provide FRA with a corrected copy of the improvement plan no later than 30 days following its receipt of FRA's written notice that the proposed plan was not approved.
(3) Upon request, the railroad shall provide to FRA and States participating under part 212 of this chapter for review a report upon request regarding the status of the implementation of the improvements set forth in the improvement plan established pursuant to paragraph (b)(1) of this section.
A railroad required to develop a system safety program under this part must in good faith consult with and use its best efforts to reach agreement with its directly affected employees on the contents of the SSP plan.
“Good faith” and “best efforts” are not interchangeable terms representing a vague standard for the § 270.107 consultation process. Rather, each term has a specific and distinct meaning. When consulting with directly affected employees, therefore, a railroad must independently meet the standards for both the good faith and best efforts obligations. A railroad that does not meet the standard for one or the other will not be in compliance with the consultation requirements of § 270.107.
The good faith obligation requires a railroad to consult with employees in a manner that is honest, fair, and reasonable, and to genuinely pursue agreement on the contents of a SSP plan. If a railroad consults with its employees merely in a perfunctory manner, without genuinely pursuing agreement, it will not have met the good faith requirement. For example, a lack of good faith may be found if a railroad's directly affected employees express concerns with certain parts of the railroad's SSP plan, and the railroad neither addresses those concerns in further consultation nor attempts to address those concerns by making changes to the SSP plan.
On the other hand, “best efforts” establishes a higher standard than that
When reviewing SSP plans, FRA will determine on a case-by-case basis whether a railroad has met its § 270.107 good faith and best efforts obligations. This determination will be based upon the consultation statement submitted by the railroad pursuant to § 270.107(b) and any statements submitted by employees pursuant to § 270.107(c). If FRA finds that these statements do not provide sufficient information to determine whether a railroad used good faith and best efforts to reach agreement, FRA may investigate further and contact the railroad or its employees to request additional information. If FRA determines that a railroad did not use good faith and best efforts, FRA may disapprove the SSP plan submitted by the railroad and direct the railroad to comply with the consultation requirements of § 270.107. Pursuant to § 270.201(b)(3), if FRA does not approve the SSP plan, the railroad will have 90 days, following receipt of FRA's written notice that the plan was not approved, to correct any deficiency identified. In such cases, the identified deficiency would be that the railroad did not use good faith and best efforts to consult and reach agreement with its directly affected employees. If a railroad then does not submit to FRA within 90 days a SSP plan meeting the consultation requirements of § 270.107, the railroad could be subject to penalties for failure to comply with § 270.201(b)(3).
Because the standard imposed by the best efforts obligation will vary depending upon the railroad, there may be countless ways for various railroads to comply with the consultation requirements of § 270.107. Therefore, FRA believes it is important to maintain a flexible approach to the § 270.107 consultation requirements, to give a railroad and its directly affected employees the freedom to consult in a manner best suited to their specific circumstances.
FRA is nevertheless providing guidance in this appendix as to how a railroad may proceed when consulting (utilizing good faith and best efforts) with employees in an attempt to reach agreement on the contents of a SSP plan. FRA believes this guidance may be useful as a starting point for railroads that are uncertain about how to comply with the § 270.107 consultation requirements. This guidance distinguishes between employees who are represented by a non-profit employee labor organization and employees who are not, as the processes a railroad may use to consult with represented and non-represented employees could differ significantly.
This guidance does not establish prescriptive requirements with which a railroad must comply, but merely outlines a consultation process a railroad may choose to follow. A railroad's consultation statement could indicate that the railroad followed the guidance in this appendix as evidence that it utilized good faith and best efforts to reach agreement with its employees on the contents of a SSP plan.
As provided in § 270.107(a)(2), a railroad consulting with the representatives of a non-profit employee labor organization on the contents of a SSP plan will be considered to have consulted with the directly affected employees represented by that organization.
A railroad may utilize the following process as a roadmap for using good faith and best efforts when consulting with represented employees in an attempt to reach agreement on the contents of a SSP plan.
• Pursuant to § 270.107(a)(3)(i), a railroad must meet with representatives from a non-profit employee labor organization (representing a class or craft of the railroad's directly affected employees) no later than April 10, 2017, to begin the process of consulting on the contents of the railroad's SSP plan. A railroad must provide notice at least 60 days before the scheduled meeting.
• During the time between the initial meeting and the applicability date of § 270.105 the parties may meet to discuss administrative details of the consultation process as necessary.
• Within 60 days after the applicability date of § 270.105 a railroad should have a meeting with the directed affected employees to discuss substantive issues with the SSP.
• Pursuant to § 270.201(a)(1), a railroad would file its SSP plan with FRA no later than February 8, 2018, or not less than 90 days before commencing operations, whichever is later.
• As provided by § 270.107(c), if agreement on the contents of a SSP plan could not be reached, a labor organization (representing a class or craft of the railroad's directly affected employees) may file a statement with the FRA Associate Administrator for Railroad Safety and Chief Safety Officer explaining its views on the plan on which agreement was not reached.
FRA recognizes that some (or all) of a railroad's directly affected employees may not be represented by a non-profit employee labor organization. For such non-represented employees, the consultation process described for represented employees may not be appropriate or sufficient. For example, FRA believes that a railroad with non-represented employees should make a concerted effort to ensure that its non-represented employees are aware that they are able to participate in the development of the railroad's SSP plan. FRA therefore is providing the following guidance regarding how a railroad may utilize good faith and best efforts when consulting with non-represented employees on the contents of its SSP plan.
• By December 12, 2016 (
(1) The railroad is required to consult in good faith with, and use its best efforts to reach agreement with, all directly affected employees on the proposed contents of its SSP plan;
(2) The railroad is required to meet with its directly affected employees within 180 days of the effective date of the final rule to address the consultation process;
(3) Non-represented employees are invited to participate in the consultation process (and include instructions on how to engage in this process); and
(4) If a railroad is unable to reach agreement with its directly affected employees on the contents of the proposed SSP plan, an employee may file a statement with the FRA Associate Administrator for Railroad Safety and Chief Safety Officer explaining his or her views on the plan on which agreement was not reached.
• This initial notification (and all subsequent communications, as necessary or appropriate) could be provided to non-represented employees in the following ways:
(1) Electronically, such as by email or an announcement on the railroad's Web site;
(2) By posting the notification in a location easily accessible and visible to non-represented employees; or
(3) By providing all non-represented employees a hard copy of the notification. A railroad could use any or all of these methods of communication, so long as the notification complies with the railroad's obligation to utilize best efforts in the consultation process.
• Following the initial notification and initial meeting to discuss the consultation process (and before the railroad submits its SSP plan to FRA), a railroad should provide non-represented employees a draft proposal of its SSP plan. This draft proposal should solicit additional input from non-represented employees, and the railroad should provide
• Following this 60-day comment period and any changes to the draft SSP plan made as a result, the railroad should submit the proposed SSP plan to FRA, as required by this part.
• As provided by § 270.107(c), if agreement on the contents of a SSP plan cannot be reached, then a non-represented employee may file a statement with the FRA Associate Administrator for Railroad Safety and Chief Safety Officer explaining his or her views on the plan on which agreement was not reached.
This appendix establishes procedures for the submission of a railroad's SSP plan and statements by directly affected employees consistent with the requirements of this part.
As provided for in § 270.101, a system safety program shall be fully implemented and supported by a written SSP plan. Each railroad must submit its SSP plan to FRA for approval as provided for in § 270.201.
As provided for in § 270.107(c), if a railroad and its directly affected employees cannot come to agreement on the proposed contents of the railroad's SSP plan, the directly affected employees have 30 days following the railroad's submission of its proposed SSP plan to submit a statement to the FRA Associate Administrator for Railroad Safety and Chief Safety Officer explaining the directly affected employees' views on the plan on which agreement was not reached.
The railroad's and directly affected employees' submissions shall be sent to the FRA Associate Administrator for Railroad Safety and Chief Safety Officer, Mail Stop 25, 1200 New Jersey Avenue SE., Washington, DC 20590. When a railroad submits its SSP plan and consultation statement to FRA pursuant to § 270.201, it must also simultaneously send a copy of these documents to all individuals identified in the service list pursuant to § 270.107(b)(3).
Each railroad and directly affected employee is authorized to file by electronic means any submissions required under this part. Before any person submitting anything electronically, the person shall provide the FRA Associate Administrator for Railroad Safety and Chief Safety Officer with the following information in writing:
(1) The name of the railroad or directly affected employee(s);
(2) The names of two individuals, including job titles, who will be the railroad's or directly affected employees' points of contact and will be the only individuals allowed access to FRA's secure document submission site;
(3) The mailing addresses for the railroad's or directly affected employees' points of contact;
(4) The railroad's system or main headquarters address located in the United States;
(5) The email addresses for the railroad's or directly affected employees' points of contact; and
(6) The daytime telephone numbers for the railroad's or directly affected employees' points of contact.
A request for electronic submission or FRA review of written materials shall be addressed to the FRA Associate Administrator for Railroad Safety and Chief Safety Officer, Mail Stop 25, 1200 New Jersey Avenue SE., Washington, DC 20590. Upon receipt of a request for electronic submission that contains the information listed above, FRA will then contact the requestor with instructions for electronically submitting its program or statement. A railroad that electronically submits an initial SSP plan or new portions or revisions to an approved program required by this part shall be considered to have provided its consent to receive approval or disapproval notices from FRA by email. FRA may electronically store any materials required by this part regardless of whether the railroad that submits the materials does so by delivering the written materials to the Associate Administrator and opts not to submit the materials electronically. A railroad that opts not to submit the materials required by this part electronically, but provides one or more email addresses in its submission, shall be considered to have provided its consent to receive approval or disapproval notices from FRA by email or mail.
| 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 |