| Page Range | 81641-83105 | |
| FR Document |
| Page and Subject | |
|---|---|
| 81 FR 81818 - Sunshine Act Meeting Notice | |
| 81 FR 81769 - Sunshine Act; Notice of Board Member Meeting | |
| 81 FR 81813 - Sunshine Act Meeting: Board of Directors and Operations & Regulations Committee Telephonic Meetings | |
| 81 FR 81807 - Government in the Sunshine Act Meeting Notice | |
| 81 FR 81798 - Notice of Proposed Withdrawal and Notice of Public Meeting; California | |
| 81 FR 81801 - Notice of Realty Action: Application for Conveyance of Federally Owned Mineral Interests in Lee County, FL | |
| 81 FR 81765 - Registration Review; Draft Malathion Human Health Risk Assessment; Extension of Comment Period | |
| 81 FR 81761 - Notice of Receipt of Requests to Voluntarily Cancel Certain Pesticide Registrations and Amend Registrations To Terminate Certain Uses | |
| 81 FR 81857 - Virginia Disaster Number VA-00065 | |
| 81 FR 81856 - North Carolina Disaster #NC-00086 | |
| 81 FR 81780 - Determination That BENEMID (Probenecid) Tablet and Other Drug Products Were Not Withdrawn From Sale for Reasons of Safety or Effectiveness | |
| 81 FR 81772 - Agency Information Collection Activities; Proposed Collection; Comment Request; Premarket Notification | |
| 81 FR 81765 - Environmental Impact Statements; Notice of Availability | |
| 81 FR 81785 - Use of The Seafood List To Determine Acceptable Seafood Names; Draft Compliance Policy Guide; Availability | |
| 81 FR 81783 - Submission of Premarket Notifications for Magnetic Resonance Diagnostic Devices; Guidance for Industry and Food and Drug Administration Staff; Availability | |
| 81 FR 81744 - Procurement List; Proposed Deletions | |
| 81 FR 81776 - Agency Information Collection Activities: Proposed Collection; Comment Request; Guidance for Industry on Special Protocol Assessment | |
| 81 FR 81787 - Submission for OMB Review; 30-Day Comment Request: A National Survey of Nurse Coaches (NIH Clinical Center) | |
| 81 FR 81685 - Medical Gas Containers and Closures; Current Good Manufacturing Practice Requirements | |
| 81 FR 81866 - Submission for OMB Review; Comment Request | |
| 81 FR 81772 - Agency Information Collection Activities: Proposed Collection; Comment Request | |
| 81 FR 81788 - Certificate of Alternative Compliance for the TUG MAXWELL PAUL MORAN | |
| 81 FR 81857 - SJI Board of Directors Meeting, Notice | |
| 81 FR 81699 - Fisheries of the Northeastern United States; Atlantic Herring Fishery; 2016 Management Area 1B Directed Fishery Closure | |
| 81 FR 81807 - Certain Mobile Electronic Devices; Institution of Investigation | |
| 81 FR 81768 - Notice of Proposals To Engage in or To Acquire Companies Engaged in Permissible Nonbanking Activities | |
| 81 FR 81769 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding Company | |
| 81 FR 81748 - Notice of Public Meetings for the Draft Environmental Impact Statement for EA-18G “Growler” Airfield Operations at the Naval Air Station Whidbey Island Complex, Washington | |
| 81 FR 81698 - Fisheries of the Northeastern United States; Northeast Multispecies Fishery; Georges Bank Cod Trimester Total Allowable Catch Area Closure and Possession and Trip Limit Reductions for the Common Pool Fishery | |
| 81 FR 81786 - Notice of Joint Meeting by the Urology Interagency Coordinating Committee and the Diabetes Mellitus Interagency Coordinating Committee Meeting | |
| 81 FR 81736 - Proposed Information Collection; Comment Request; Voluntary Self-Disclosure of Violations of the Export Administration Regulations | |
| 81 FR 81733 - Submission for OMB Review; Comment Request | |
| 81 FR 81739 - Submission for OMB Review; Proposed Information Collection; Comment Request; Limited Access Death Master File Accredited Conformity Assessment Body Application for Firewalled Status | |
| 81 FR 81766 - Proposed Collection; Comment Request | |
| 81 FR 81745 - Procurement List; Additions | |
| 81 FR 81738 - Solid Urea From Russia: Final Results of Antidumping Duty Administrative and New Shipper Reviews; 2014-2015 | |
| 81 FR 81818 - Information Collection Request; Submission for OMB Review | |
| 81 FR 81814 - Applied Sciences Advisory Committee; Meeting | |
| 81 FR 81755 - Waterford Power, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization | |
| 81 FR 81752 - Lawrenceburg Power, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request For Blanket Section 204 Authorization | |
| 81 FR 81758 - Gavin Power, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization | |
| 81 FR 81757 - Pima Energy Storage System, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request For Blanket Section 204 Authorization | |
| 81 FR 81758 - Columbia Gas Transmission, LLC; Notice of Request Under Blanket Authorization | |
| 81 FR 81754 - Combined Notice of Filings #2 | |
| 81 FR 81751 - Combined Notice of Filings #1 | |
| 81 FR 81759 - Commission Information Collection Activities (FERC-511, FERC-515, & FERC-574); Comment Request | |
| 81 FR 81751 - Northern Indiana Public Service Company; Notice of Availability of Final Environmental Assessment | |
| 81 FR 81750 - PacifiCorp, Klamath River Renewal Corporation; Notice of Applications Filed With the Commission | |
| 81 FR 81753 - Entergy Arkansas, Inc.; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and Protests | |
| 81 FR 81755 - Commission Information Collection Activities (FERC-547); Comment Request | |
| 81 FR 81753 - Three Peaks Power, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization | |
| 81 FR 81756 - Darby Power, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization | |
| 81 FR 81753 - Midwest Generation, LLC; Notice of Filing | |
| 81 FR 81817 - Advisory Committee on Reactor Safeguards (ACRS), Meeting of the ACRS Subcommittee on Fukushima; Notice of Meeting | |
| 81 FR 81741 - Request for Comments and Notice of Public Meeting on a Preliminary Draft Convention on the Recognition and Enforcement of Foreign Judgments Currently Being Negotiated at The Hague Conference on Private International Law | |
| 81 FR 81817 - Advisory Committee on Reactor Safeguards (ACRS) Meeting of the ACRS Subcommittee on APR 1400; Notice of Meeting | |
| 81 FR 81819 - New Postal Products | |
| 81 FR 81858 - Ninety Seventh Plenary for RTCA SC-159 Navigation Equipment Using the Global Positioning System | |
| 81 FR 81859 - Thirtieth RTCA SC-216 Aeronautical Systems Security Plenary | |
| 81 FR 81857 - Thirteenth RTCA SC-231 TAWS Plenary | |
| 81 FR 81860 - Sixteenth Meeting of the RTCA Tactical Operations Committee | |
| 81 FR 81816 - Advisory Committee on Reactor Safeguards (ACRS) Meeting of the ACRS Subcommittee on Planning and Procedures; Notice of Meeting | |
| 81 FR 81719 - International Sanitary and Phytosanitary Standard-Setting Activities | |
| 81 FR 81816 - Notice of Permit Modification Received Under the Antarctic Conservation Act of 1978 | |
| 81 FR 81814 - Notice of Permit Applications Received Under the Antarctic Conservation Act of 1978 | |
| 81 FR 81815 - Notice of Permit Modification Received Under the Antarctic Conservation Act of 1978 | |
| 81 FR 81734 - Order Denying Export Privileges | |
| 81 FR 81735 - Order Denying Export Privileges | |
| 81 FR 81737 - Order Denying Export Privileges | |
| 81 FR 81732 - Order Denying Export Privileges | |
| 81 FR 81746 - Lake Eufaula Advisory Committee Meeting Notice | |
| 81 FR 81746 - Notice of Intent To Grant Exclusive Patent License to Per Vivo Labs, Inc.; Kingsport, TN | |
| 81 FR 81731 - Order Denying Export Privileges | |
| 81 FR 81808 - Agency Information Collection Activities; Proposed eCollection eComments Requested; Applicant Information Form (1-783) | |
| 81 FR 81808 - Agency Information Collection Activities; Proposed eCollection eComments Requested; Extension of a Currently Approved Collection: National Clandestine Laboratory Seizure Report | |
| 81 FR 81733 - Order Denying Export Privileges | |
| 81 FR 81719 - Submission for OMB Review; Comment Request | |
| 81 FR 81747 - Government-Industry Advisory Panel; Notice of Federal Advisory Committee Meeting | |
| 81 FR 81663 - Temporary General License: Extension of Validity | |
| 81 FR 81787 - Government-Owned Inventions; Availability for Licensing and/or Co-Development | |
| 81 FR 81782 - Medical Devices Regulated by the Center for Biologics Evaluation and Research; Availability of Safety and Effectiveness Summaries for Premarket Approval Applications | |
| 81 FR 81779 - Revised Recommendations for Determining Eligibility of Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products Who Have Received Human-Derived Clotting Factor Concentrates; Guidance for Industry; Availability | |
| 81 FR 81796 - Incidental Take Permit Applications for Alabama Beach Mouse; Gulf Shores, Alabama | |
| 81 FR 81802 - Filing of Plats of Survey; NV | |
| 81 FR 81798 - Filing of Plats of Survey: Oregon/Washington | |
| 81 FR 81778 - Bacillus Calmette-Guerin-Unresponsive Nonmuscle Invasive Bladder Cancer: Developing Drugs and Biologics for Treatment; Draft Guidance for Industry; Availability | |
| 81 FR 81774 - Generic Drug User Fee Amendments of 2012: Questions and Answers Related to User Fee Assessments; Guidance for Industry; Availability | |
| 81 FR 81766 - Notice to All Interested Parties of Intent To Terminate the Receivership of 10400, Sun Security Bank, Ellington, Missouri | |
| 81 FR 81861 - Maritime Environmental and Technical Assistance (META) Program Workshop on Battery Applications in Maritime Transportation | |
| 81 FR 81756 - Combined Notice of Filings #2 | |
| 81 FR 81752 - Combined Notice of Filings #1 | |
| 81 FR 81761 - Utilization In the Organized Markets of Electric Storage Resources as Transmission Assets Compensated Through Transmission Rates, for Grid Support Services Compensated in Other Ways, and for Multiple Services; Notice Inviting Post-Technical Conference Comments | |
| 81 FR 81856 - Proposed Collection; Comment Request | |
| 81 FR 81825 - Proposed Collection; Comment Request | |
| 81 FR 81820 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending the Fees for NYSE Arca BBO and NYSE Arca Trades To Lower the Enterprise Fee | |
| 81 FR 81835 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of Bats BZX Exchange, Inc. | |
| 81 FR 81834 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fee Schedule on the BOX Market LLC (“BOX”) Options Facility | |
| 81 FR 81842 - Self-Regulatory Organizations; Bats BYX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of Bats BYX Exchange, Inc. | |
| 81 FR 81828 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Fees for Use of Bats EDGX Exchange, Inc. | |
| 81 FR 81832 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees for Use of Bats EDGA Exchange, Inc. | |
| 81 FR 81825 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the DTC Settlement Service Guide and Distributions Guide Relating to the Anticipated U.S. Market Transition to a Shortened Settlement Cycle | |
| 81 FR 81854 - 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 81830 - Self-Regulatory Organizations; The Depository Trust Company; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the DTC Settlement Service Guide With Respect to Settlement Instructions Provided to DTC by Matching Utilities | |
| 81 FR 81844 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving Rule Change Amending the Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes To Require All Parties Other Than Pro Se Customers To File and Serve Pleadings and Documents Through the FINRA Office of Dispute Resolution's Party Portal and To Permit Mediation Parties To Use the Portal | |
| 81 FR 81837 - Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of a Proposed Rule Change To Extend the MSRB's Customer Complaint and Related Recordkeeping Rules to Municipal Advisors and To Modernize Those Rules | |
| 81 FR 81866 - Sanctions Actions Pursuant to Executive Order 13660 | |
| 81 FR 81745 - Fair Credit Reporting Act Disclosures | |
| 81 FR 81726 - Notice of Solicitation of Applications (NOSA) Inviting Applications for the Rural Business Development Grant Program To Provide Technical Assistance for Rural Transportation Systems | |
| 81 FR 81697 - Medicare Program; Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Part B for CY 2017; Medicare Advantage Bid Pricing Data Release; Medicare Advantage and Part D Medical Loss Ratio Data Release; Medicare Advantage Provider Network Requirements; Expansion of Medicare Diabetes Prevention Program Model; Medicare Shared Savings Program Requirements | |
| 81 FR 81805 - Notice of Temporary Concession Contracts for Certain Visitor Services in Acadia National Park | |
| 81 FR 81724 - Applications for Licensing as a Non-Leveraged Rural Business Investment Company Under the Rural Business Investment Program | |
| 81 FR 81858 - Thirteenth RTCA SC-228 Focused Plenary | |
| 81 FR 81789 - Agency Information Collection Activities: Record of Vessel Foreign Repair or Equipment Purchase | |
| 81 FR 81805 - Notice of Continuation of Concession Contracts | |
| 81 FR 81802 - Notice of Extension of Concession Contracts | |
| 81 FR 81857 - Revocation of License of Small Business Investment Company | |
| 81 FR 81769 - Formations of, Acquisitions by, and Mergers of Bank Holding Companies | |
| 81 FR 81859 - Forty Sixth RTCA SC-206 Aeronautical Information and Meteorological Data Link Services Plenary | |
| 81 FR 81860 - Forty Fifth RTCA SC-224 Airport Security Access Control Systems Plenary | |
| 81 FR 81812 - Mine Safety and Health Administration | |
| 81 FR 81810 - Petitions for Modification of Application of Existing Mandatory Safety Standards | |
| 81 FR 81861 - Agency Information Collection Activities: Information Collection Revision; Submission for OMB Review; Diversity Self-Assessment Template for OCC-Regulated Entities | |
| 81 FR 81863 - Agency Information Collection Activities: Information Collection Renewal; Comment Request; Reporting, Recordkeeping, and Disclosure Requirements Associated With Proprietary Trading and Certain Interests in and Relationships With Covered Funds | |
| 81 FR 81765 - SES Performance Review Board-Appointment of Members | |
| 81 FR 81819 - New Postal Product | |
| 81 FR 81820 - Order Approving Public Company Accounting Oversight Board Supplemental Budget for Calendar Year 2016 | |
| 81 FR 81740 - Proposed Information Collection; Comment Request; Limited Access Death Master File Systems Safeguards Attestation Forms | |
| 81 FR 81867 - National Research Advisory Council; Notice of Meeting | |
| 81 FR 81770 - Agency Information Collection Activities: Proposed Collection; Comment Request | |
| 81 FR 81797 - Invasive Species Advisory Committee; Meeting | |
| 81 FR 81805 - 1-Hydroxyethylidene-1,1-Diphosphonic Acid from China; Scheduling of the Final Phase of Countervailing Duty and Antidumping Duty Investigations | |
| 81 FR 83104 - Federal Acquisition Regulation; Federal Acquisition Circular 2005-92; Small Entity Compliance Guide | |
| 81 FR 81664 - Used Motor Vehicle Trade Regulation Rule | |
| 81 FR 83103 - Federal Acquisition Regulation; Technical Amendments | |
| 81 FR 83092 - Federal Acquisition Regulation; Federal Acquisition Circular 2005-92; Introduction | |
| 81 FR 83092 - Federal Acquisition Regulation; Public Disclosure of Greenhouse Gas Emissions and Reduction Goals-Representation | |
| 81 FR 83097 - Federal Acquisition Regulation: Removal of Regulations Relating to Telegraphic Communication | |
| 81 FR 81712 - Approval and Disapproval and Promulgation of Air Quality Implementation Plans; Interstate Transport for Wyoming | |
| 81 FR 81711 - Revisions to the Prevention of Significant Deterioration (PSD) and Title V Greenhouse Gas (GHG) Permitting Regulations and Establishment of a Significant Emissions Rate (SER) for GHG Emissions Under the PSD Program | |
| 81 FR 81657 - Pima Agriculture Cotton Trust Fund and Agriculture Wool Apparel Manufacturers Trust Fund | |
| 81 FR 83008 - Waste Prevention, Production Subject to Royalties, and Resource Conservation | |
| 81 FR 81709 - Airworthiness Directives; Zodiac Aero Evacuation Systems | |
| 81 FR 81789 - Federal Property Suitable as Facilities To Assist the Homeless | |
| 81 FR 82398 - Retention of EB-1, EB-2, and EB-3 Immigrant Workers and Program Improvements Affecting High-Skilled Nonimmigrant Workers | |
| 81 FR 81704 - Airworthiness Directives; Learjet Inc. Airplanes | |
| 81 FR 81707 - Airworthiness Directives; The Boeing Company Airplanes | |
| 81 FR 81701 - Occupational Radiation Protection | |
| 81 FR 81660 - Airworthiness Directives; Various Aircraft Equipped With BRP-Powertrain GmbH & Co KG 912 A Series Engine | |
| 81 FR 81809 - Notice of Intent To Prepare a Supplemental Revised Final Environmental Impact Statement for the Proposed United States Penitentiary and Federal Prison Camp in Letcher County, Kentucky | |
| 81 FR 81641 - Standards of Ethical Conduct for Employees of the Executive Branch; Amendment to the Standards Governing Solicitation and Acceptance of Gifts from Outside Sources | |
| 81 FR 81870 - Investment Company Reporting Modernization | |
| 81 FR 82142 - Investment Company Liquidity Risk Management Programs | |
| 81 FR 82084 - Investment Company Swing Pricing | |
| 81 FR 82494 - Walking-Working Surfaces and Personal Protective Equipment (Fall Protection Systems) | |
| 81 FR 82272 - Protection of Stratospheric Ozone: Update to the Refrigerant Management Requirements Under the Clean Air Act |
Animal and Plant Health Inspection Service
Commodity Credit Corporation
Rural Business-Cooperative Service
Industry and Security Bureau
International Trade Administration
National Oceanic and Atmospheric Administration
National Technical Information Service
Patent and Trademark Office
Army Department
Navy Department
Federal Energy Regulatory Commission
Agency for Healthcare Research and Quality
Centers for Medicare & Medicaid Services
Food and Drug Administration
National Institutes of Health
Coast Guard
U.S. Customs and Border Protection
Fish and Wildlife Service
Land Management Bureau
National Park Service
Prisons Bureau
Mine Safety and Health Administration
Occupational Safety and Health Administration
Federal Aviation Administration
Maritime Administration
Comptroller of the Currency
Foreign Assets Control Office
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Office of Government Ethics (OGE).
Final rule.
The U.S. Office of Government Ethics is issuing a final rule revising the portions of the Standards of Ethical Conduct for Executive Branch Employees that govern the solicitation and acceptance of gifts from outside sources. The final rule modifies the existing regulations to more effectively advance public confidence in the integrity of Federal officials. The final rule also incorporates past interpretive guidance, adds and updates regulatory examples, improves clarity, updates citations, and makes technical corrections.
This final rule is effective January 1, 2017.
Leigh J. Francis, Assistant Counsel, or Christopher J. Swartz, Assistant Counsel, Office of Government Ethics, Suite 500, 1201 New York Avenue NW., Washington, DC 20005-3917; Telephone: 202-482-9300; TTY: 800-877-8339; FAX: 202-482-9237.
On November 27, 2015, the U.S. Office of Government Ethics (OGE) published for public comment a proposed rule setting forth comprehensive revisions to subpart B of the Standards of Ethical Conduct for Employees of the Executive Branch (Standards of Ethical Conduct), 5 CFR part 2635. 80 FR 74004 (Nov. 27, 2015). Subpart B of part 2635 contains the regulations governing the solicitation and acceptance of gifts from outside sources by officers and employees of the Executive Branch. These regulations implement the gift restrictions set forth in 5 U.S.C. 7353 and section 101(d) of Executive Order 12674, as modified by Executive Order 12731. The proposed rule was issued following OGE's retrospective review of the regulations found in subpart B, pursuant to section 402(b)(12) of the Ethics in Government Act of 1978, Public Law 95-521, codified at 5 U.S.C. Appendix IV, sec. 402(b)(12). Prior to publishing the proposed rule, OGE consulted with the Office of Personnel Management and the Department of Justice in accordance with section 402(b) of the Ethics in Government Act and section 201(a) of Executive Order 12674, as modified by Executive Order 12731, and with other officials throughout the Federal Government.
The proposed rule provided a 60-day comment period, which ended on January 26, 2016. OGE received ten timely and responsive comments, which were submitted by four individuals, three professional associations, two Federal agencies, and a law firm. After carefully considering all comments and making appropriate modifications, and for the reasons set forth below and in the preamble to the proposed rule at
OGE received one comment from an individual observing that various references to spousal and dating relationships in the examples used dual-gendered relationships and gender-specific pronouns. The commenter expressed concern that such examples could be read as excluding same-sex marriages or relationships. OGE treats same-sex spouses the same as opposite-sex spouses for the purposes of all of its regulations. OGE Legal Advisory LA-13-10 (Aug. 19, 2013). OGE has therefore reviewed the examples highlighted by the commenter and has replaced the terms “husband” and “wife” with the gender-neutral term “spouse.”
Various commenters suggested that one or more of the proposed amendments to the rule might negatively impact the ability of the public to interact with Federal employees. These commenters pointed out the beneficial impact of this interaction and encouraged OGE to consider this equity in drafting gift regulations. As a general matter, OGE agrees with the commenters' proposition that communication between the Government and the public is vital to ensuring that Government decisions are responsive to citizen needs. Public interaction done in a non-preferential manner may: (1) Provide executive branch decisionmakers with information and data they may not otherwise possess; (2) identify policy options and alternatives that may not have been raised internally; and (3) produce better and more thoughtful decisions. These interactions must, however, occur in an environment that promotes the public's confidence in the integrity of Government decisionmaking. When Federal employees accept or solicit gifts from members of the public who have interests that are affected by the employee's agency, the public's confidence can be eroded as “[s]uch gifts may well provide a source of illicit influence over the government official; in any case they create a suspicious and unhealthy appearance.”
OGE received comments from three sources on proposed § 2635.201(b)(1). Section 2635.201(b)(1) establishes a non-binding standard that can assist employees in considering whether to decline an otherwise permissible gift. The standard encourages employees to consider whether their acceptance of a gift that would otherwise be permissible to accept would nonetheless create the appearance that their integrity or ability
Based on past experience with executive branch agencies applying subpart B of part 2635, OGE is concerned that employees and ethics officials may not be sufficiently analyzing appearance concerns and, instead, may be focusing exclusively on whether a gift can be accepted under a regulatory gift exception. This kind of analysis may unintentionally overlook other important considerations, such as “whether acceptance of the gift could affect the perceived integrity of the employee or the credibility and legitimacy of [an] agency's programs.” 80 FR 74004, 74004 (Nov. 27, 2015). The non-binding standard in § 2635.201(b)(1) was explicitly included in subpart B to correct for this tendency and to enhance the overall quality of employees' ethical decisionmaking.
Commenters on this section raised concerns with the new standard and the factors for applying the standard. OGE appreciates the concerns raised by commenters, which are examined in detail below. OGE has addressed these concerns by making appropriate adjustments to the standard, rather than adopting some of the commenters' requests for the outright removal of this section. The changes make the standard easier for employees to understand and apply.
A few commenters suggested that ethics training would be more effective than a regulatory change in ensuring that employees consider appearance issues before accepting gifts. OGE fully agrees with the commenters' suggestions that ethics education is important. Without this amendment of the regulation, however, there would not be a uniform standard upon which to base ethics training regarding appearance issues in connection with gifts. Prior to this amendment, the regulation cautioned only that “it is never inappropriate and frequently prudent for an employee to decline a gift,” but the regulation did not articulate an applicable standard or any factors for employees to use in identifying the frequently arising circumstances when it would be prudent to decline a gift. OGE believes it is imperative that the regulatory framework itself enable and encourage employees to meaningfully consider the appearances of accepting gifts. By articulating the standard and relevant factors, the amended § 2635.201(b)(1) will increase the value and uniformity of agency ethics training because that standard and those factors will become a focus of ethics training.
One commenter believed that the proposed standard creates confusion because it moves away from the previous system of bright-line rules regarding gift acceptance. Specifically, the commenter requested that OGE amend the regulation in a way that sets out definitive rules as to whether “a gift is simply permissible or impermissible, without further parsing the permissible gifts into additional categories,
The commenters also suggested that employees will feel compelled by this non-binding standard to always decline legally permissible gifts. OGE does not agree that the standard creates a presumption that all legally permissible gifts should be declined. Although some employees will decline legally permissible gifts after carefully analyzing them under the standard that § 2635.201(b)(1) establishes, the standard does not change the fact that the determination as to whether a legally permissible gift should be accepted is the employee's to make. Section 2635.201(b)(1) is designed to increase uniformity and promote public trust by articulating factors, which are informed by the ethical values consistent with the executive branch's Principles of Ethical Conduct, in order to guide the employee's decisionmaking process. This section provides employees an effective means of adequately assessing whether, notwithstanding a gift exception, the specific factual circumstances may raise appearance concerns weighing against acceptance of a gift.
In light of the comments referenced above, however, OGE has streamlined the language of § 2635.201(b). OGE has also clarified the overarching objective of that provision by placing the emphasis in § 2635.201(b)(1) on an assessment as to whether “a reasonable person with knowledge of the relevant facts would question the employee's integrity or impartiality.” In the proposed rule, substantially similar language appeared in the list of factors in § 2635.201(b)(2). Because this language articulates the standard to be applied, however, it is more appropriately included in paragraph (b)(1), which establishes the standard, than in paragraph (b)(2), which provides factors for determining whether the standard has been met. Using this “reasonable person” language in the articulated standard has the added benefit of addressing a commenter's concern regarding the potential for confusion, as executive branch employees have extensive experience applying this particular standard, which has long been used to address appearance concerns under § 2635.502. At the end of § 2635.201(b)(1), OGE has also added “as a result of accepting the gift” in order to tie the appearance concerns to the specific action giving rise to them.
As a final note, one commenter was concerned that the application of the reasonable person standard could vary, resulting in the “unequal application” of the standard. Reliance on a reasonable person standard, however, is not a novel approach in Government ethics. The Standards of Ethical Conduct at part 2635 have successfully employed the reasonable person standard for over two decades.
Two commenters requested that OGE remove § 2635.201(b)(2), which sets out factors that employees may consider when determining whether to decline
OGE reviewed each of the proposed factors closely to determine whether any could be removed, streamlined, or changed to eliminate unnecessary complexity or confusion. OGE removed several factors that appeared in the proposed rule on the basis that clarification of the reasonable person standard in § 2635.201(b)(1) in the final rule has rendered them unnecessary:
• Whether acceptance of the gift would lead the employee to feel a sense of obligation to the donor;
• Whether acceptance of the gift would cause a reasonable person to question the employee's ability to act impartially; and
• Whether acceptance of the gift would interfere with the employee's conscientious performance of official duties.
OGE has also revised the factor articulated at § 2635.201(b)(2)(iv). The proposed language read: “Whether acceptance of the gift would reasonably create an appearance that the employee is providing the donor with preferential treatment or access to the Government.” OGE's intent was that the word “preferential” would be read to modify both “treatment” and “access.” In light of concerns the commenters expressed regarding the clarity of § 2635.201(b)(2) generally, OGE has determined that the proposed language could have been clearer in this respect. In reviewing this language, OGE also noted that the phrase “preferential treatment” is redundant of the phrase “preferential . . . access to the Government,” in that the specific preferential treatment at issue is the preferential access that the donor may be perceived as having received. The concern is that a donor may offer a gift that, by its nature, would provide the donor with significantly disproportionate access to the employee. This concern can arise in connection with gifts such as frequent lunches, trips, social invitations, free attendance at widely attended gatherings, and other items. If such gifts were to result in an employee spending considerable time with a donor, the donor may appear to have inordinate opportunities to discuss matters of interest to the donor and, thereby, unduly influence the employee. Accordingly, OGE has simplified this language and made it more specific. The language at § 2635.201(b)(2)(iv) now reads: “Acceptance of the gift would provide the donor with significantly disproportionate access.” This language should not be read as discouraging employees from attending events merely because they present opportunities to discuss official business. There is no requirement to provide exact parity in all cases with regard to the level of access afforded to those with competing viewpoints, but there is a value in guarding against any person, or multiple persons with a common interest or viewpoint, from enjoying significantly disproportionate access as a result of having given gifts to employees. An employee who is concerned about the level of access provided to those with a particular viewpoint may choose to decline the offered gifts or may take steps to ensure that those with different viewpoints are able to communicate with the employee, such as by taking their telephone calls, agreeing to meet with them in the employee's office, or convening a public forum.
OGE has also removed the following two factors:
• With regard to a gift of free attendance at an event, whether the Government is also providing persons with views or interests that differ from those of the donor with access to the Government;
• With regard to a gift of free attendance at an event, whether the event is open to interested members of the public or representatives of the news media.
OGE believes that these changes to § 2635.201(b)(2) diminish the potential for confusion created by the longer list of factors included in the proposed rule while continuing to provide guidance as to how employees should apply the standard in § 2635.201(b)(1) in the areas that OGE believes raise the greatest potential for appearance problems.
One commenter raised a concern about the language OGE used in § 2635.201(b)(4), which reminds employees to contact an appropriate agency ethics official if they have questions regarding whether acceptance of a gift is permissible and advisable. The commenter was concerned that the statement “[e]mployees who have questions regarding . . . whether the employee
Nevertheless, to partly address the commenter's concern, OGE has deleted the reference to § 2635.107(b) at the end of § 2635.201(b)(4). After considering the commenter's concern, OGE recognized that the reference to § 2635.107(b) was potentially confusing because that section provides a safe harbor against disciplinary action in certain circumstances when an employee has consulted an agency ethics official. As § 2635.201(b)(3) makes clear, however, employees may not be disciplined under this provision and have no need for the safe harbor provision in connection with the appearance analysis under § 2635.201(b).
One commenter suggested that OGE should add examples to the regulation to indicate how to apply new § 2635.201(b). OGE has added Example 1 to paragraph (b) in order to illustrate how an employee may use the standard and factors found in § 2635.201(b). The same commenter also suggested that OGE provide additional guidance documents to further assist agency officials and employees in understanding how to apply the standard found in § 2635.201(b). OGE intends to provide additional guidance and training as needed on an ongoing basis.
OGE received no comments on § 2635.202. OGE is adopting the amendments to this section as proposed for the reasons described in the preamble to the proposed rule. A small change to Example 1 to paragraph (c) was made after the Supreme Court's recent decision in
OGE received a number of comments on the definitions of the terms “gift,” “market value,” “indirectly solicited or accepted,” and “free attendance.” In regard to the definition of “gift,” all comments focused on the exclusions to the definition. The comments for these terms are separately addressed in greater detail below.
OGE received three comments on proposed Example 1 to § 2635.203(b)(1). Section 2635.203(b)(1) explains that the definition of “gift” for purposes of subpart B excludes “[m]odest items of food and refreshments, such as soft drinks, coffee and donuts, offered other than as part of a meal.” Proposed Example 1 to paragraph (b)(1) was included for the purpose of making explicit OGE's longstanding interpretation that alcohol is not a modest item of refreshment under § 2635.203(b)(1). Because none of the beverages currently listed in the regulation are alcoholic and the exclusion specifically refers to “soft,” meaning non-alcoholic drinks, OGE has long treated alcoholic beverages as not being part of the class of modest refreshments covered by the exclusion.
All three of the commenters were concerned that the example seemed to indicate that attendance at an event where alcohol is served is
OGE received two comments on the proposed revisions to § 2635.203(b)(2). The first comment, from a professional association, was in favor of the proposal to modify the exclusion for presentation items. The second comment, from an individual, requested that OGE further amend the regulation to state that “items with little intrinsic value . . . intended primarily for presentation” are excluded from the definition of “gift” only if they “do not have significant independent use.” The individual noted that OGE used this phrase in proposed Example 2 to paragraph (b)(2) when explaining why a $25 portable music player would not be excluded from the definition of “gift” under this provision. OGE has decided not to adopt this change. As evidenced by the example, the fact that an item lacks other uses is a legitimate consideration in support of a finding that the item is intended “primarily for presentation.” The regulation does not, however, require that an item lack any potential other use in order to qualify as an item intended “primarily for presentation.”
OGE received one comment on the proposed example to § 2635.203(b)(7), which states that Federal employees may retain certain “travel promotional items, such as frequent flyer miles, received as a result of [] official travel, if done in accordance with 5 U.S.C. 5702, note, and 41 CFR part 301-53.” The commenter explained: (1) That employees who receive such frequent flyer miles should be encouraged to use such frequent flyer miles for subsequent official travel; and (2) that no personal use should be allowed for employees of the Federal Aviation Administration. OGE has not changed the substance of this example. As explained in the example, Congress passed a statute specifically permitting employees to accept these types of travel-related benefits. The General Services Administration (GSA) has primary authority for implementing that statute, and has done so through regulations found at 41 CFR part 301-53. To partly address the commenter's concern, however, OGE revised the language “if done in accordance with 5 U.S.C. 5702, note, and 41 CFR part 301-53,” to read “to the extent permitted by 5 U.S.C. 5702, note, and 41 CFR part 301-53,” in order to clarify that OGE's regulation does not create any new authority for accepting these travel related benefits beyond what Congress and GSA provided for in the statute and the regulation.
One commenter requested that OGE expand § 2635.203(b)(8) to exclude from the definition of “gift” free attendance at events where employees are speaking in their personal capacity on matters that are unrelated to their duties. The commenter noted that § 2635.203(b)(8) excludes free attendance in connection with official speaking engagements and requested a parallel exclusion for personal speaking engagements. OGE has not adopted this change. Normally, the Standards of Ethical Conduct would not prohibit an employee from accepting free attendance at an event at which the employee has a
OGE received two comments on the proposed amendments to the definition of “market value,” as used throughout the regulation, as well as the examples following the definition. OGE proposed to amend “market value” to mean “the cost that a member of the general public would reasonably expect to incur to purchase the gift.” One commenter was generally in favor of the amendment, as well as the examples illustrating how the definition would be applied in
OGE received one comment on § 2635.203(f), which establishes when a gift will be deemed to have been accepted or solicited indirectly. The commenter was in favor of OGE's amendment at § 2635.203(f)(2). OGE has adopted the language as proposed for the reasons set forth in the preamble to the proposed rule.
OGE received two comments in favor of the proposed subpart-wide definition of “free attendance” at § 2635.203(g). Both commenters supported OGE's amendment allowing employees who are presenting at an event to accept attendance at “speakers' meals” provided by the sponsor of the event. OGE has adopted the language as proposed for the reasons set forth in the preamble to the proposed rule.
Although OGE did not receive a specific comment on the title of the regulation, OGE has made a technical change to the title of this section for clarity and to more closely track the substance of the regulation.
OGE has also revised the introductory text to remind employees to consider the standard found in § 2635.201(b) when determining whether to rely on an exception. The revised language is modeled on the introductory text found in the current version of § 2635.204, but cross-references § 2635.201(b).
OGE received two comments requesting that OGE raise the regulatory dollar thresholds found in the gift exception at § 2635.204(a). Pursuant to § 2635.204(a), an employee may accept otherwise prohibited gifts not exceeding $20 per occasion so long as he or she does not accept more than $50 worth of gifts from the same person per year. In support of this request, one commenter pointed out the effect that inflation has had on the value of this
OGE carefully considered these commenters' suggestions. As OGE explained when it issued the final gift regulations, the
OGE received one comment in support of the new Example 3 to § 2635.204(b), which provides guidance on assessing whether a gift provided by a social media contact falls within the bounds of the gift exception. OGE has adopted the text of § 2635.204(b) substantially as proposed for the reasons set forth in the preamble to the proposed rule.
OGE did not make changes based on comments received from two individuals on proposed § 2635.204(d). Section 2635.204(d) permits employees to accept gifts of certain awards and honorary degrees, including items incident to such awards and degrees. The first commenter suggested that OGE relocate the two examples following paragraph (d)(1) so that they would appear after paragraph (d)(2). OGE has not adopted the suggestion. These examples address paragraph (d)(1), which establishes the several requirements for accepting awards, and do not specifically address paragraph (d)(2), which defines the term “established program of recognition.”
The second commenter addressed the acceptance of qualifying honorary degrees from certain “foreign institution[s] of higher education.”
OGE received one comment on the proposed amendments to § 2635.204(e), which sets forth various exceptions to the general prohibitions on accepting and soliciting gifts when such gifts are offered as a result of an outside business or employment relationship. The commenter was generally in favor of the amendments. OGE has retained the exception as proposed for the reasons set out in the preamble to the proposed rule.
OGE received a number of comments related to the exception at § 2635.204(g), permitting employees to accept offers of free attendance to widely attended gatherings (WAGs) if certain criteria are met. In the proposed rule, OGE presented a number of amendments to the WAG, including changes to: (1) Make it clear that an event does not qualify as a WAG if it does not present “an opportunity to exchange ideas and views among invited persons”; (2) require employees to obtain written authorizations before accepting gifts of free attendance at WAGs; and (3) require agency designees to weigh the agency's interest in employees' attendance at WAGs against the possibility that acceptance of gifts of free attendance will influence their decisionmaking or create the appearance that they will be influenced in their decisionmaking.
One commenter expressed concern about the proposed amendment to the definition of “widely attended gatherings.” The proposed language clarifies that events do not qualify as WAGs unless there is “an opportunity to exchange ideas and views among invited persons.” The commenter suggested that this language would narrow the rule to apply to only “panel or roundtable events.” OGE believes that this is a mischaracterization of the regulatory amendment. Nothing in the amendment would narrow the definition exclusively to roundtable or panel events. The amendment reflects only OGE's longstanding interpretation that the event must present an opportunity for an “exchange” or “interchange” of ideas among attendees.
Several commenters objected to the change requiring written authorizations because it might increase the workload of ethics officials. Three commenters raised workload concerns in connection with the requirement that an employee obtain a written authorization from an agency designee prior to accepting free attendance to a WAG, though one commenter acknowledged that a requirement to obtain written authorization “protects both the employee and the private sector sponsors.” OGE has not eliminated the requirement to obtain written authorization before an employee attends a WAG. Any additional burden on ethics officials will not be so substantial as to outweigh the potential benefits of recording WAG authorizations. In this regard, it is worth noting that agency ethics officials have long been required to make several of the findings required by § 2635.204(g)(3), as proposed. In addition, some agencies have already adopted the practice of recording all WAG authorizations in writing. In any case, most of the work required of ethics officials under the amended regulation will stem from the requirement to make a number of determinations that have always been required under the regulation. After making these determinations, ethics officials have discretion to determine the level of detail to include in the written authorization. The amended regulation does not, however, require a “formal written opinion” as one commenter suggested.
One commenter noted that the amended rule requires agencies to determine in all cases whether “[t]he agency's interest in the employee's attendance outweighs the concern that the employee may be, or may appear to be, improperly influenced in the performance of [his or her] official duties.” The regulation did not previously require this determination in every case, but agency officials have always been charged with evaluating “all the relevant circumstances of any proposed WAG before an employee is authorized to accept free attendance.” OGE Informal Advisory Opinion 07 x 14 (Dec. 5, 2007). The determination now required in all cases is consistent with this preexisting requirement, inasmuch as improper influence, or the appearance of improper influence, would necessarily have been a relevant circumstance to be analyzed under the regulation even prior to the current amendment.
Two commenters expressed concern that ethics officials will approve attendance at fewer events for substantive reasons. However, the new regulation does not significantly change the substantive analysis, which remains focused, as it always has been, on the potential for improper influence and the appearance of improper influence. Disapproval of a gift of free attendance, when an agency has determined that an employee's acceptance of the gift would result in improper influence or the appearance of improper influence, is a proper outcome under any responsible ethics regime.
OGE received two additional comments related to § 2635.204(g). One commenter posited a hypothetical case under § 2635.204(g)(1). OGE is not in a position to assess the interests of a hypothetical agency or other relevant factual circumstances not specified in the commenter's hypothetical. At the request of the other commenter, however, OGE has inserted a reference to the written determination requirement in proposed Example 4 to paragraph (g).
OGE received one comment from an agency on proposed § 2635.204(h), which permits an employee and accompanying guests to accept certain benefits that are provided at a “social event” so long as the person extending the invitation is not a prohibited source. The proposed rule added a requirement that employees receive a written determination that such attendance would not cause a reasonable person to question the employee's integrity if the event is sponsored by, or the invitation is from, an organization. The commenting agency questioned the purpose of this amendment and suggested that it could increase the workload of agency ethics officials.
Although OGE understands the programmatic consideration raised by the commenter, OGE does not believe that those concerns weigh significantly against the written determination requirement. In many cases, OGE believes that the analysis as to whether a reasonable person would question the employee's integrity or impartiality in attending will be relatively easy to assess, particularly given that the offeror cannot be a prohibited source. Likewise, the standard should be easier to meet if the circumstances indicate that the event is for purely social reasons or is open to a wide variety of attendees. Moreover, ethics officials have discretion to determine the level of detail to include in the written authorization and to choose an appropriate means, such as email, for transmitting the authorization. OGE does not, therefore, believe that the amended regulation will substantially increase the burden on ethics officials. At the same time, there is a heightened risk for, at a minimum, an appearance that the motivation for the gift is to advance a business objective when the sponsor of the event, or offeror of the invitation, is an organization. For this reason, OGE believes that the additional requirement with regard to organizations is warranted.
OGE has made three technical changes to the language of this exception for consistency with other sections and for clarity. First, OGE added the phrase “with knowledge of the relevant facts” to the language in § 2635.204(h)(3), which establishes a reasonable person standard for consistency with the wording of the reasonable person standard in § 2635.201(b) and elsewhere in the Standards of Ethical Conduct.
OGE has made a technical correction to § 2635.204(l)(1) so that the language tracks the interpreting regulation for 5 U.S.C. 4111 at part 410 of this title.
Two professional associations and an individual commented on the new exception at § 2635.204(m). The exception permits employees to accept qualifying gifts of informational materials. The exception also sets out certain procedural safeguards and defines what constitutes “informational materials” for the purposes of this provision.
One professional association welcomed the addition of the new exception on the basis that it will allow a flow of useful information to employees. The second professional association also supported the new exception, but requested that OGE amend the rule in two ways: (1) Clarify that the rule would permit the acceptance of “marketing and promotional materials”; and (2) clarify that when a gift of informational materials exceeds $100, an agency may authorize the employee to accept the gift on behalf of the agency if the agency has separate statutory authority. OGE has decided not to revise the proposed exception to include “marketing and promotional materials” as a specific category of acceptable informational materials. Whether an item qualifies for the exception will depend on whether the factual circumstances support a determination that the item offered meets the specific criteria set forth in § 2635.204(m). OGE has likewise decided not to amend the regulatory text to clarify that agencies may accept gifts of informational materials when the gift exceeds $100. Agencies with gift acceptance authorities have established their own procedures and policies regarding the acceptance of such gifts consistent with their interpretations of those authorities, and OGE is not in a position to direct another agency on the use of its gift acceptance authority.
Another commenter raised two general concerns with the regulatory exception. The first concern is that employees who accept informational materials might sell them. Although it might prove somewhat difficult to sell used informational materials, OGE is generally sensitive to the underlying concern expressed by the commenter. To address this concern, OGE has amended the regulation to add an additional limitation on the use of this exception. As revised, the exception will now require employees to obtain written authorization from the agency designee before accepting informational materials from a single person that in the aggregate exceed $100 in a calendar year. The commenter's other concern is that gifts relating to an employee's official duties, the agency's mission, or a subject matter of interest to the agency “ought to be a gift to the Agency.” The commenter questions whether such gifts might be construed as augmenting an agency's appropriations. Such gifts would not implicate augmentation concerns, however, because, as with all of OGE's regulatory gift exceptions, the items accepted are for personal use, not the agency's use.
Following careful review of the regulation, OGE has also reorganized § 2635.204(m) to move the limitations on what constitutes permissible “informational materials” to § 2635.204(m)(2), which contains the definition of “informational materials.” OGE refined the language indicating that, to qualify as “informational material,” an item must be “primarily provided for educational or instructive purposes,” changing it to state more clearly that the item must be “educational or instructive in nature.” As previously written, the regulation could have been misconstrued as requiring employees to ascertain the donor's intent in offering an item. As modified, the regulation now makes clear that the focus is on the objective nature of the gift, and not the subjective intent of the donor. A corresponding change replaces “not including,” with “Are not primarily,” at the beginning of the phrase “Are not primarily created for entertainment, display, or decoration.” This change is intended to avoid excluding items that are clearly educational or instructive in nature but may have some tangential or incidental qualities that could arguably be characterized as entertaining or visually attractive. OGE believes this modification will make the rule easier to understand and apply.
OGE further reorganized the exception to reduce its structural complexity. As proposed, § 2635.204(m) had several tiers, including: a first tier denoted by numbers, such as the number “(2)”; a second tier denoted by lowercase roman numerals, such as the numeral “(ii)”; a third tier denoted by capital letters, such as the letter “(B)”; and a fourth tier denoted again by numbers, such as the number “(2).” By reorganizing the language of this section, OGE was able to eliminate the fourth tier.
OGE has made four other technical changes for consistency and clarity. First, OGE used the word “person” in paragraphs (m)(1)(i) and (ii) to be consistent with the language in § 2635.204(a), when aggregating gifts. Second, OGE changed the language “an agency designee makes a written determination that,” at § 2635.204(m)(1)(ii)(B) of the proposed rule, to “an agency designee has made a written determination after finding that,” now at § 2635.204(m)(1)(ii). The change makes the language of this paragraph consistent with the language used in § 2635.204(g)(3) and § 2635.204(h)(3). Third, OGE has added “provided that” to the opening language of § 2635.204(m)(1) in order to clarify that the $100 limit in § 2635.204(m)(1)(i) applies in every case unless an employee first obtains a written determination under § 2635.204(m)(1)(ii). Fourth, OGE has revised the reference to “programs and operations” of the agency so that it reads “programs or operations” of the agency. It was not OGE's intention to require that the subject matter relate to both a program and an operation, or to require that employees somehow distinguish “programs” from “operations.”
OGE received no comments on § 2635.205. OGE is adopting the amendments to this section as proposed for the reasons set forth in the preamble to the proposed rule. OGE, however, has replaced the period with a semi-colon in the phrase: “Accept a gift in violation of any statute; relevant statutes applicable to all employees include, but are not limited to,” found at § 2635.205(d). OGE has made this change for clarity because paragraph (d) in that section is part of a longer list that is connected by a semi-colon and the word “or” after paragraph (e) in that same section. By eliminating the period, OGE seeks to ensure that the period is not misconstrued as invalidating paragraphs (e) and (f) in the remainder of that list.
OGE received four comments on § 2635.206, which explains what steps an employee must take to properly dispose of a prohibited gift. OGE amended this section to provide additional guidance on what steps are required to comply with the disposition authorities. One commenter was generally supportive of the additional guidance provided by OGE. Three commenters expressed concern that OGE's amendment of § 2635.206(a)(1) to allow employees to destroy prohibited tangible gifts worth $100 or less was wasteful. These three commenters also recommended that OGE amend § 2635.206(a)(1) to permit employees to donate prohibited tangible gifts worth $100 or less to charity.
For the following reasons, OGE has not accepted the commenters' suggestions. Allowing the destruction of relatively low-value, tangible gifts provides useful flexibility, while continuing to prohibit employees from retaining impermissible gifts. Setting the value threshold at $100 establishes a reasonable range that imposes minimal administrative burden in determining whether most low value items qualify for destruction. Setting the threshold far below that level would increase transaction costs because official time would necessarily have to be expended researching the precise market value of inexpensive items in order to determine whether they could be destroyed. It bears noting that, as is explained in § 2635.206(a), an employee is not required to destroy prohibited gifts; destruction is only one of several authorized options for disposition. Other options include returning the gift to the donor, paying the donor the gift's market value, or not accepting the gift in the first instance. Whenever the value of an item approaches the higher end of the $100 range, employees and agency ethics officials may be disinclined to destroy the item; in fact, the administrative burden of researching the item's precise market value in order to avoid exceeding the permissible value threshold creates a natural incentive to choose another option for disposition of more expensive items.
Authorizing donations to charity in lieu of destruction would present other problems. OGE has considered and rejected this option in the past.
OGE has, however, revised § 2635.206(a)(1) for clarity. In the proposed regulation, the first sentence read: “The employee must promptly return any tangible item to the donor, or pay the donor its market value, or, in the case that the tangible item has a market value not in excess of $100, the employee may destroy the item.” In the final regulation, that sentence now reads: “The employee must promptly return any tangible item to the donor or pay the donor its market value; or, in the case of a tangible item with a market value of $100 or less, the employee may destroy the item.” The meaning of the sentence is unchanged, but the revised sentence is easier to understand. In addition, OGE has removed the legal citation at the end of that paragraph, which referred to the definition of “market value” at § 2635.203(c), because the cross reference was unnecessary and potentially confusing to the reader.
As Director of the Office of Government Ethics, I certify under the Regulatory Flexibility Act (5 U.S.C. chapter 6) that this final rule would not have a significant economic impact on a substantial number of small entities because it primarily affects current Federal executive branch employees.
The Paperwork Reduction Act (44 U.S.C. chapter 35) does not apply because this regulation does not contain information collection requirements that require approval of the Office of Management and Budget.
For purposes of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. chapter 5, subchapter II), this final rule would not significantly or uniquely affect small governments and will not result in increased expenditures by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (as adjusted for inflation) in any one year.
Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select the regulatory approaches that maximize net benefits (including economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated as a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, this rule has been reviewed by the Office of Management and Budget.
As Director of the Office of Government Ethics, I have reviewed this final rule in light of section 3 of Executive Order 12988, Civil Justice Reform, and certify that it meets the applicable standards provided therein.
Conflict of interests, Executive Branch standards of ethical conduct, Government employees.
Accordingly, for the reasons set forth in the preamble, the Office of Government Ethics is amending 5 CFR part 2635, as set forth below:
5 U.S.C. 7301, 7351, 7353; 5 U.S.C. App. (Ethics in Government Act of 1978); E.O. 12674, 54 FR 15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 42547, 3 CFR, 1990 Comp., p. 306.
(a)
(b)
(2) An employee who is considering whether acceptance of a gift would lead a reasonable person with knowledge of the relevant facts to question his or her integrity or impartiality may consider, among other relevant factors, whether:
(i) The gift has a high market value;
(ii) The timing of the gift creates the appearance that the donor is seeking to influence an official action;
(iii) The gift was provided by a person who has interests that may be substantially affected by the performance or nonperformance of the employee's official duties; and
(iv) Acceptance of the gift would provide the donor with significantly disproportionate access.
(3) Notwithstanding paragraph (b)(1) of this section, an employee who accepts a gift that qualifies for an exception under § 2635.204 does not violate this subpart or the Principles of Ethical Conduct set forth in § 2635.101(b).
(4) Employees who have questions regarding this subpart, including whether the employee should decline a gift that would otherwise be permitted under an exception found in § 2635.204, should seek advice from an agency ethics official.
An employee of the Peace Corps is in charge of making routine purchases of office supplies. After a promotional presentation to highlight several new products, a vendor offers to buy the employee lunch, which costs less than $20. The employee is concerned that a reasonable person may question her impartiality in accepting the free lunch, as the timing of the offer indicates that the donor may be seeking to influence an official action and the company has interests that may be substantially affected by the performance or nonperformance of the employee's duties. As such, although acceptance of the gift may be permissible under § 2635.204(a), the employee decides to decline the gift.
(a)
(1) Solicit a gift from a prohibited source; or
(2) Solicit a gift to be given because of the employee's official position.
(b)
(1) Accept a gift from a prohibited source; or
(2) Accept a gift given because of the employee's official position.
(c)
A Government contractor who specializes in information technology software has offered an employee of the Department of Energy's information technology acquisition division a $15 gift card to a local restaurant if the employee will recommend to the agency's contracting officer that she select the contractor's products during the next acquisition. Even though the gift card is less than $20, the employee may not accept the gift under § 2635.204(a) because it is conditional upon official action by the employee. Pursuant to §§ 2635.202(c) and 2635.205(a), notwithstanding any exception to the rule, an employee may not accept a gift in return for being influenced in the performance of an official act.
For purposes of this subpart, the following definitions apply:
(a)
(b)
(1) Modest items of food and non-alcoholic refreshments, such as soft drinks, coffee and donuts, offered other than as part of a meal;
(2) Greeting cards and items with little intrinsic value, such as plaques, certificates, and trophies, which are intended primarily for presentation;
After giving a speech at the facility of a pharmaceutical company, a Government employee is presented with a glass paperweight in the shape of a pill capsule with the name of the company's latest drug and the date of the speech imprinted on the side. The employee may accept the paperweight because it is an item with little intrinsic value which is intended primarily for presentation.
After participating in a panel discussion hosted by an international media company, a Government employee is presented with an inexpensive portable music player emblazoned with the media company's logo. The portable music player has a market value of $25. The employee may not accept the portable music player as it has a significant independent use as a music player rather than being intended primarily for presentation.
After giving a speech at a conference held by a national association of miners, a Department of Commerce employee is presented with a block of granite that is engraved with the association's logo, a picture of the Appalachian Mountains, the date of the speech, and the employee's name. The employee may accept this item because it is similar to a plaque, is designed primarily for presentation, and has little intrinsic value.
(3) Loans from banks and other financial institutions on terms generally available to the public;
(4) Opportunities and benefits, including favorable rates and commercial discounts, available to the public or to a class consisting of all Government employees or all uniformed military personnel, whether or not restricted on the basis of geographic considerations;
(5) Rewards and prizes given to competitors in contests or events, including random drawings, open to the public unless the employee's entry into the contest or event is required as part of the employee's official duties;
A Government employee is attending a free trade show on official time. The trade show is held in a public shopping area adjacent to the employee's office building. The employee voluntarily enters a drawing at an individual vendor's booth which is open to the public. She fills in an entry form on the vendor's display table and drops it into the contest box. The employee may accept the resulting prize because entry into the contest was not required by or related to her official duties.
Attendees at a conference, which is not open to the public, are entered in a drawing for a weekend getaway to Bermuda as a result of being registered for the conference. A Government employee who attends the
(6) Pension and other benefits resulting from continued participation in an employee welfare and benefits plan maintained by a current or former employer;
(7) Anything which is paid for by the Government or secured by the Government under Government contract;
An employee at the Occupational Safety and Health Administration is assigned to travel away from her duty station to conduct an investigation of a collapse at a construction site. The employee's agency is paying for her travel expenses, including her airfare. The employee may accept and retain travel promotional items, such as frequent flyer miles, received as a result of her official travel, to the extent permitted by 5 U.S.C. 5702, note, and 41 CFR part 301-53.
(8) Free attendance to an event provided by the sponsor of the event to:
(i) An employee who is assigned to present information on behalf of the agency at the event on any day when the employee is presenting;
(ii) An employee whose presence on any day of the event is deemed to be essential by the agency to the presenting employee's participation in the event, provided that the employee is accompanying the presenting employee; and
(iii) The spouse or one other guest of the presenting employee on any day when the employee is presenting, provided that others in attendance will generally be accompanied by a spouse or other guest, the offer of free attendance for the spouse or other guest is unsolicited, and the agency designee, orally or in writing, has authorized the presenting employee to accept;
An employee of the Department of the Treasury who is assigned to participate in a panel discussion of economic issues as part of a one-day conference may accept the sponsor's waiver of the conference fee. Under the separate authority of § 2635.204(a), the employee may accept a token of appreciation that has a market value of $20 or less.
An employee of the Securities and Exchange Commission is assigned to present the agency's views at a roundtable discussion of an ongoing working group. The employee may accept free attendance to the meeting under paragraph (b)(8) of this section because the employee has been assigned to present information at the meeting on behalf of the agency. If it is determined by the agency that it is essential that another employee accompany the presenting employee to the roundtable discussion, the accompanying employee may also accept free attendance to the meeting under paragraph (b)(8)(ii) of this section.
An employee of the United States Trade and Development Agency is invited to attend a cocktail party hosted by a prohibited source. The employee believes that he will have an opportunity to discuss official matters with other attendees while at the event. Although the employee may voluntarily discuss official matters with other attendees, the employee has not been assigned to present information on behalf of the agency. The employee may not accept free attendance to the event under paragraph (b)(8) of this section.
(9) Any gift accepted by the Government under specific statutory authority, including:
(i) Travel, subsistence, and related expenses accepted by an agency under the authority of 31 U.S.C. 1353 in connection with an employee's attendance at a meeting or similar function relating to the employee's official duties which take place away from the employee's duty station, provided that the agency's acceptance is in accordance with the implementing regulations at 41 CFR chapter 304; and
(ii) Other gifts provided in-kind which have been accepted by an agency under its agency gift acceptance statute; and
(10) Anything for which market value is paid by the employee.
(c)
An employee who has been given a watch inscribed with the corporate logo of a prohibited source may determine its market value based on her observation that a comparable watch, not inscribed with a logo, generally sells for about $50.
During an official visit to a factory operated by a well-known athletic footwear manufacturer, an employee of the Department of Labor is offered a commemorative pair of athletic shoes manufactured at the factory. Although the cost incurred by the donor to manufacture the shoes was $17, the market value of the shoes would be the $100 that the employee would have to pay for the shoes on the open market.
A prohibited source has offered a Government employee a ticket to a charitable event consisting of a cocktail reception to be followed by an evening of chamber music. Even though the food, refreshments, and entertainment provided at the event may be worth only $20, the market value of the ticket is its $250 face value.
A company offers an employee of the Federal Communication Commission (FCC) free attendance for two to a private skybox at a ballpark to watch a major league baseball game. The skybox is leased annually by the company, which has business pending before the FCC. The skybox tickets provided to the employee do not have a face value. To determine the market value of the tickets, the employee must add the face value of two of the most expensive publicly available tickets to the game and the market value of any food, parking or other tangible benefits provided in connection with the gift of attendance that are not already included in the cost of the most expensive publicly available tickets.
An employee of the Department of Agriculture is invited to a reception held by a prohibited source. There is no entrance fee to the reception event or to the venue. To determine the market value of the gift, the employee must add the market value of any entertainment, food, beverages, or other tangible benefit provided to attendees in connection with the reception, but need not consider the cost incurred by the sponsor to rent or maintain the venue where the event is held. The employee may rely on a per-person cost estimate provided by the sponsor of the event, unless the employee or an agency designee has determined that a reasonable person would find that the estimate is clearly implausible.
(d)
(1) Is seeking official action by the employee's agency;
(2) Does business or seeks to do business with the employee's agency;
(3) Conducts activities regulated by the employee's agency;
(4) Has interests that may be substantially affected by the performance or nonperformance of the employee's official duties; or
(5) Is an organization a majority of whose members are described in paragraphs (d)(1) through (4) of this section.
(e)
Gifts between employees are subject to the limitations set forth in subpart C of this part.
Where free season tickets are offered by an opera guild to all members of the Cabinet, the gift is offered because of their official positions.
Employees at a regional office of the Department of Justice (DOJ) work in Government-leased space at a private office building, along with various
(f)
(1) Given with the employee's knowledge and acquiescence to the employee's parent, sibling, spouse, child, dependent relative, or a member of the employee's household because of that person's relationship to the employee; or
(2) Given to any other person, including any charitable organization, on the basis of designation, recommendation, or other specification by the employee, except the employee has not indirectly solicited or accepted a gift by the raising of funds or other support for a charitable organization if done in accordance with § 2635.808.
An employee who must decline a gift of a personal computer pursuant to this subpart may not suggest that the gift be given instead to one of five charitable organizations whose names are provided by the employee.
(g)
Subject to the limitations in § 2635.205, this section establishes exceptions to the prohibitions set forth in § 2635.202(a) and (b). Even though acceptance of a gift may be permitted by one of the exceptions contained in this section, it is never inappropriate and frequently prudent for an employee to decline a gift if acceptance would cause a reasonable person to question the employee's integrity or impartiality. Section 2635.201(b) identifies considerations for declining otherwise permissible gifts.
(a)
An employee of the Securities and Exchange Commission and his spouse have been invited by a representative of a regulated entity to a community theater production, tickets to which have a face value of $30 each. The aggregate market value of the gifts offered on this single occasion is $60, $40 more than the $20 amount that may be accepted for a single event or presentation. The employee may not accept the gift of the evening of entertainment. He and his spouse may attend the play only if he pays the full $60 value of the two tickets.
An employee of the National Geospatial-Intelligence Agency has been invited by an association of cartographers to speak about her agency's role in the evolution of missile technology. At the conclusion of her speech, the association presents the employee a framed map with a market value of $18 and a ceramic mug that has a market value of $15. The employee may accept the map or the mug, but not both, because the aggregate value of these two tangible items exceeds $20.
On four occasions during the calendar year, an employee of the Defense Logistics Agency (DLA) was given gifts worth $10 each by four employees of a corporation that is a DLA contractor. For purposes of applying the yearly $50 limitation on gifts of $20 or less from any one person, the four gifts must be aggregated because a person is defined at § 2635.102(k) to mean not only the corporate entity, but its officers and employees as well. However, for purposes of applying the $50 aggregate limitation, the employee would not have to include the value of a birthday present received from his cousin, who is employed by the same corporation, if he can accept the birthday present under the exception at paragraph (b) of this section for gifts based on a personal relationship.
Under the authority of 31 U.S.C. 1353 for agencies to accept payments from non-Federal sources in connection with attendance at certain meetings or similar functions, the Environmental Protection Agency (EPA) has accepted an association's gift of travel expenses and conference fees for an employee to attend a conference on the long-term effect of radon exposure. While at the conference, the employee may accept a gift of $20 or less from the association or from another person attending the conference even though it was not approved in advance by the EPA. Although 31 U.S.C. 1353 is the authority under which the EPA accepted the gift to the agency of travel expenses and conference fees, a gift of $20 or less accepted under paragraph (a) of this section is a gift to the employee rather than to her employing agency.
During off-duty time, an employee of the Department of Defense (DoD) attends a trade show involving companies that are DoD contractors. He is offered software worth $15 at X Company's booth, a calendar worth $12 at Y Company's booth, and a deli lunch worth $8 from Z Company. The employee may accept all three of these items because they do not exceed $20 per source, even though they total more than $20 at this single occasion.
An employee of the Department of Defense (DoD) is being promoted to a higher level position in another DoD office. Six individuals, each employed by a different defense contractor, who have worked with the DoD employee over the years, decide to act in concert to pool their resources to buy her a nicer gift than each could buy her separately. Each defense contractor employee contributes $20 to buy a desk clock for the DoD employee that has a market value of $120. Although each of the contributions does not exceed the $20 limit, the employee may not accept the $120 gift because it is a single gift that has a market value in excess of $20.
During a holiday party, an employee of the Department of State is given a $15 store gift card to a national coffee chain by an agency contractor. The employee may accept the card as the market value is less than $20. The employee could not, however, accept a gift card that is issued by a credit card company or other financial institution, because such a card is equivalent to a gift of cash.
(b)
An employee of the Federal Deposit Insurance Corporation (FDIC) has been dating an accountant employed by a member bank. As part of its “Work-Life Balance” program, the bank has given each employee in the accountant's division two tickets to a professional basketball game and has urged each to invite a family member or friend to share the evening of entertainment. Under the circumstances, the FDIC employee may accept the invitation to attend the game. Even though the tickets were initially purchased by the member bank, they were given without reservation to the accountant to use as she wished, and her invitation to the employee was motivated by their personal friendship.
Three partners in a law firm that handles corporate mergers have invited an employee of the Federal Trade Commission (FTC) to join them in a golf tournament at a private club at the firm's expense. The entry fee is $500 per foursome. The employee cannot accept the gift of one-quarter of the entry fee even though he and the three partners have developed an amicable relationship as a result of the firm's dealings with the FTC. As evidenced in part by the fact that the fees are to be paid by the firm, it is not a personal friendship but a business relationship that is the motivation behind the partners' gift.
A Peace Corps employee enjoys using a social media site on the internet in his personal capacity outside of work. He has used the site to keep in touch with friends, neighbors, coworkers, professional contacts, and other individuals he has met over the years through both work and personal activities. One of these individuals works for a contractor that provides language services to the Peace Corps. The employee was acting in his official capacity when he met the individual at a meeting to discuss a matter related to the contract between their respective employers. Thereafter, the two communicated occasionally regarding contract matters. They later also granted one another access to join their social media networks through their respective social media accounts. However, they did not communicate further in their personal capacities, carry on extensive personal interactions, or meet socially outside of work. One day, the individual, whose employer continues to serve as a Peace Corps contractor, contacts the employee to offer him a pair of concert tickets worth $30 apiece. Although the employee and the individual are connected through social media, the circumstances do not demonstrate that the gift was clearly motivated by a personal relationship, rather than the position of the employee, and therefore the employee may not accept the gift pursuant to paragraph (b) of this section.
(c)
(1) A reduction or waiver of the fees for membership or other fees for participation in organization activities offered to all Government employees or all uniformed military personnel by professional organizations if the only restrictions on membership relate to professional qualifications; and
(2) Opportunities and benefits, including favorable rates, commercial discounts, and free attendance or participation not precluded by paragraph (c)(3) of this section:
(i) Offered to members of a group or class in which membership is unrelated to Government employment;
(ii) Offered to members of an organization, such as an employees' association or agency credit union, in which membership is related to Government employment if the same offer is broadly available to large segments of the public through organizations of similar size; or
(iii) Offered by a person who is not a prohibited source to any group or class that is not defined in a manner that specifically discriminates among Government employees on the basis of type of official responsibility or on a basis that favors those of higher rank or rate of pay.
A computer company offers a discount on the purchase of computer equipment to all public and private sector computer procurement officials who work in organizations with over 300 employees. An employee who works as the computer procurement official for a Government agency could not accept the discount to purchase the personal computer under the exception in paragraph (c)(2)(i) of this section. Her membership in the group to which the discount is offered is related to Government employment because her membership is based on her status as a procurement official with the Government.
An employee of the Consumer Product Safety Commission (CPSC) may accept a discount of $50 on a microwave oven offered by the manufacturer to all members of the CPSC employees' association. Even though the CPSC is currently conducting studies on the safety of microwave ovens, the $50 discount is a standard offer that the manufacturer has made broadly available through a number of employee associations and similar organizations to large segments of the public.
An Assistant Secretary may not accept a local country club's offer of membership to all members of Department Secretariats which includes a waiver of its $5,000 membership initiation fee. Even though the country club is not a prohibited source, the offer discriminates in favor of higher ranking officials.
(3) An employee may not accept for personal use any benefit to which the Government is entitled as the result of an expenditure of Government funds, unless authorized by statute or regulation (
The administrative officer for a field office of U.S. Immigration and Customs Enforcement (ICE) has signed an order to purchase 50 boxes of photocopy paper from a supplier whose literature advertises that it will give a free briefcase to anyone who purchases 50 or more boxes. Because the paper was purchased with ICE funds, the administrative officer cannot keep the briefcase which, if claimed and received, is Government property.
(d)
(i) The award and any item incident to the award are not from a person who has interests that may be substantially affected by the performance or nonperformance of the employee's official duties, or from an association or other organization if a majority of its members have such interests; and
(ii) If the award or any item incident to the award is in the form of cash or an investment interest, or if the aggregate value of the award and any item incident to the award, other than free attendance to the event provided to the employee and to members of the employee's family by the sponsor of the event, exceeds $200, the agency ethics official has made a written determination that the award is made as part of an established program of recognition.
Based on a written determination by an agency ethics official that the prize meets the criteria set forth in paragraph (d)(2) of this section, an employee of the National Institutes of Health (NIH) may accept the Nobel Prize for Medicine, including the cash award which accompanies the prize, even though the prize was conferred on the basis of laboratory work performed at NIH.
A defense contractor, ABC Systems, has an annual award program for the outstanding public employee of the year. The award includes a cash payment of $1,000. The award program is wholly funded to ensure its continuation on a regular basis for the next twenty years and selection of award recipients is made pursuant to written standards. An employee of the Department of the Air Force, who has duties that include overseeing contract performance by ABC Systems, is selected to receive the award. The employee may not accept the cash award because ABC Systems has interests that may be substantially affected by the performance or
An ambassador selected by a nonprofit organization as a recipient of its annual award for distinguished service in the interest of world peace may, together with his spouse and children, attend the awards ceremony dinner and accept a crystal bowl worth $200 presented during the ceremony. However, where the organization has also offered airline tickets for the ambassador and his family to travel to the city where the awards ceremony is to be held, the aggregate value of the tickets and the crystal bowl exceeds $200, and he may accept only upon a written determination by the agency ethics official that the award is made as part of an established program of recognition.
(2)
(i) Awards have been made on a regular basis or, if the program is new, there is a reasonable basis for concluding that awards will be made on a regular basis based on funding or funding commitments; and
(ii) Selection of award recipients is made pursuant to written standards.
(3)
When the honorary degree is offered by a foreign institution of higher education, the agency may need to make a separate determination as to whether the institution of higher education is a foreign government for purposes of the Emoluments Clause of the U.S. Constitution (U.S. Const., art. I, sec. 9, cl. 8), which forbids employees from accepting emoluments, presents, offices, or titles from foreign governments, without the consent of Congress. The Foreign Gifts and Decorations Act, 5 U.S.C. 7342, however, may permit the acceptance of honorary degrees in some circumstances.
A well-known university located in the United States wishes to give an honorary degree to the Secretary of Labor. The Secretary may accept the honorary degree only if an agency ethics official determines in writing that the timing of the award of the degree would not cause a reasonable person to question the Secretary's impartiality in a matter affecting the university.
(4)
(e)
(1) Resulting from the business or employment activities of an employee's spouse when it is clear that such benefits have not been offered or enhanced because of the employee's official position;
A Department of Agriculture employee whose spouse is a computer programmer employed by a Department of Agriculture contractor may attend the company's annual retreat for all of its employees and their families held at a resort facility. However, under § 2635.502, the employee may be disqualified from performing official duties affecting her spouse's employer.
Where the spouses of other clerical personnel have not been invited, an employee of the Defense Contract Audit Agency whose spouse is a clerical worker at a defense contractor may not attend the contractor's annual retreat in Hawaii for corporate officers and members of the board of directors, even though his spouse received a special invitation for herself and the employee.
(2) Resulting from the employee's outside business or employment activities when it is clear that such benefits are based on the outside business or employment activities and have not been offered or enhanced because of the employee's official status;
The members of an Army Corps of Engineers environmental advisory committee that meets six times per year are special Government employees. A member who has a consulting business may accept an invitation to a $50 dinner from her corporate client, an Army construction contractor, unless, for example, the invitation was extended in order to discuss the activities of the advisory committee.
(3) Customarily provided by a prospective employer in connection with
An employee of the Federal Communications Commission with responsibility for drafting regulations affecting all cable television companies wishes to apply for a job opening with a cable television holding company. Once she has properly disqualified herself from further work on the regulations as required by subpart F of this part, she may enter into employment discussions with the company and may accept the company's offer to pay for her airfare, hotel, and meals in connection with an interview trip.
(4) Provided by a former employer to attend a reception or similar event when other former employees have been invited to attend, the invitation and benefits are based on the former employment relationship, and it is clear that such benefits have not been offered or enhanced because of the employee's official position.
An employee of the Department of the Army is invited by her former employer, an Army contractor, to attend its annual holiday dinner party. The former employer traditionally invites both its current and former employees to the holiday dinner regardless of their current employment activities. Under these circumstances, the employee may attend the dinner because the dinner invitation is a result of the employee's former outside employment activities, other former employees have been asked to attend, and the gift is not offered because of the employee's official position.
(5) For purposes of paragraphs (e)(1) through (4) of this section, “employment” means any form of non-Federal employment or business relationship involving the provision of personal services.
(f)
The Secretary of the Department of Health and Human
(g)
(2)
(3)
(i) The event is a widely attended gathering, as set forth in paragraph (g)(2) of this section;
(ii) The employee's attendance at the event is in the agency's interest because it will further agency programs or operations;
(iii) The agency's interest in the employee's attendance outweighs the concern that the employee may be, or may appear to be, improperly influenced in the performance of official duties; and
(iv) If a person other than the sponsor of the event invites or designates the employee as the recipient of the gift of free attendance and bears the cost of that gift, the event is expected to be attended by more than 100 persons and the value of the gift of free attendance does not exceed $375.
(4)
(i) The importance of the event to the agency;
(ii) The nature and sensitivity of any pending matter affecting the interests of the person who extended the invitation and the significance of the employee's role in any such matter;
(iii) The purpose of the event;
(iv) The identity of other expected participants;
(v) Whether acceptance would reasonably create the appearance that the donor is receiving preferential treatment;
(vi) Whether the Government is also providing persons with views or interests that differ from those of the donor with access to the Government; and
(vii) The market value of the gift of free attendance.
(5)
(6)
An aerospace industry association that is a prohibited source sponsors an industry-wide, two-day seminar for which it charges a fee of $800 and anticipates attendance of approximately 400. An Air Force contractor pays $4,000 to the association so that the association can extend free invitations to five Air Force officials designated by the contractor. The Air Force officials may not accept the gifts of free attendance because (a) the contractor, rather than the association, provided the cost of their attendance; (b) the contractor designated the specific employees to receive the gift of free attendance; and (c) the value of the gift exceeds $375 per employee.
An aerospace industry association that is a prohibited source sponsors an industry-wide, two-day seminar for which it charges a fee of $25 and anticipates attendance of approximately 50. An Air Force contractor pays $125 to the association so that the association can extend free invitations to five Air Force officials designated by the contractor. The Air Force officials may not accept the gifts of free attendance because (a) the contractor, rather than the association, provided the cost of their attendance; (b) the contractor designated the specific employees to receive the gift of free attendance; and (c) the event was not expected to be attended by more than 100 persons.
An aerospace industry association that is a prohibited source sponsors an industry-wide, two-day seminar for which it charges a fee of $800 and anticipates attendance of approximately 400. An Air Force contractor pays $4,000 in order that the association might invite any five Federal employees. An Air Force official to whom the sponsoring association, rather than the contractor, extended one of the five invitations could attend if the employee's participation were determined to be in the interest of the agency and he received a written authorization.
An employee of the Department of Transportation is invited by a news organization to an annual press dinner sponsored by an association of press organizations. Tickets for the event cost $375 per person and attendance is limited to 400 representatives of press organizations and their guests. If the employee's attendance is determined to be in the interest of the agency and she receives a written authorization from the agency designee, she may accept the invitation from the news organization because more than 100 persons will attend and the cost of the ticket does not exceed $375. However, if the invitation were extended to the employee and an accompanying guest, the employee's guest could not be authorized to attend for free because the market value of the gift of free attendance would exceed $375.
An employee of the Department of Energy (DOE) and his spouse have been invited by a major utility executive to a small dinner party. A few other officials of the utility and their spouses or other guests are also invited, as is a representative of a consumer group concerned with utility rates and her spouse. The DOE official believes the dinner party will provide him an opportunity to socialize with and get to know those in attendance. The employee may not accept the free invitation under this exception, even if his attendance could be determined to be in the interest of the agency. The small dinner party is not a widely attended gathering. Nor could the employee be authorized to accept even if the event were instead a corporate banquet to which forty company officials and their spouses or other guests were invited. In this second case, notwithstanding the larger number of persons expected (as opposed to the small dinner party just noted) and despite the presence of the consumer group representative and her spouse who are not officials of the utility, those in attendance would still not represent a diversity of views
An Assistant U.S. Attorney is invited to attend a luncheon meeting of a local bar association to hear a distinguished judge lecture on cross-examining expert witnesses. Although members of the bar association are assessed a $15 fee for the meeting, the Assistant U.S. Attorney may accept the bar association's offer to attend for free, even without a determination of agency interest. The gift can be accepted under the $20 gift exception at paragraph (a) of this section.
An employee of the Department of the Interior authorized to speak on the first day of a four-day conference on endangered species may accept the sponsor's waiver of the conference fee for the first day of the conference under § 2635.203(b)(8). If the conference is widely attended, the employee may be authorized to accept the sponsor's offer to waive the attendance fee for the remainder of the conference if the agency designee has made a written determination that attendance is in the agency's interest.
A military officer has been approved to attend a widely attended gathering, pursuant to paragraph (g) of this section, that will be held in the same city as the officer's duty station. The defense contractor sponsoring the event has offered to transport the officer in a limousine to the event. The officer may not accept the offer of transportation because the definition of “free attendance” set forth in § 2635.203(g) excludes travel, and the market value of the transportation would exceed $20.
(h)
(1) The invitation is unsolicited and is from a person who is not a prohibited source;
(2) No fee is charged to any person in attendance; and
(3) If either the sponsor of the event or the person extending the invitation to the employee is not an individual, the agency designee has made a written determination after finding that the employee's attendance would not cause a reasonable person with knowledge of the relevant facts to question the employee's integrity or impartiality, consistent with § 2635.201(b).
An employee of the White House Press Office has been invited to a social dinner for current and former White House Press Officers at the home of an individual who is not a prohibited source. The employee may attend even if she is being invited because of her official position.
(i)
(1) The market value in the foreign area of the food, refreshments or entertainment provided at the meeting or event, as converted to U.S. dollars, does not exceed the per diem rate for the foreign area specified in the U.S. Department of State's Maximum Per Diem Allowances for Foreign Areas, Per Diem Supplement Section 925 to the Standardized Regulations (GC-FA), available on the Internet at
(2) There is participation in the meeting or event by non-U.S. citizens or by representatives of foreign governments or other foreign entities;
(3) Attendance at the meeting or event is part of the employee's official duties to obtain information, disseminate information, promote the export of U.S. goods and services, represent the United States, or otherwise further programs or operations of the agency or the U.S. mission in the foreign area; and
(4) The gift of meals, refreshments, or entertainment is from a person other than a foreign government as defined in 5 U.S.C. 7342(a)(2).
A number of local business owners in a developing country are eager for a U.S. company to locate a manufacturing facility in their province. An official of the Overseas Private Investment Corporation may accompany the visiting vice president of the U.S. company to a dinner meeting hosted by the business owners at a province restaurant where the market value of the food and refreshments does not exceed the per diem rate for that country.
(j)
(k)
(l)
(1) Free attendance, course or meeting materials, transportation, lodgings, food and refreshments or reimbursements therefor incident to training or meetings when accepted by the employee under the authority of 5 U.S.C. 4111. The employee's acceptance must be approved by the agency in accordance with part 410 of this title; or
(2) Gifts from a foreign government or international or multinational organization, or its representative, when accepted by the employee under the authority of the Foreign Gifts and Decorations Act, 5 U.S.C. 7342. As a condition of acceptance, an employee must comply with requirements imposed by the agency's regulations or procedures implementing that Act.
(m)
(i) The aggregate market value of all informational materials received from any one person does not exceed $100 in a calendar year; or
(ii) If the aggregate market value of all informational materials from the same person exceeds $100 in a calendar year, an agency designee has made a written determination after finding that acceptance by the employee would not be inconsistent with the standard set forth in § 2635.201(b).
(2)
(i) Are educational or instructive in nature;
(ii) Are not primarily created for entertainment, display, or decoration; and
(iii) Contain information that relates in whole or in part to the following categories:
(A) The employee's official duties or position, profession, or field of study;
(B) A general subject matter area, industry, or economic sector affected by or involved in the programs or operations of the agency; or
(C) Another topic of interest to the agency or its mission.
An analyst at the Agricultural Research Service receives an edition of an agricultural research journal in the mail from a consortium of private farming operations concerned with soil toxicity. The journal edition has a market value of $75. The analyst may accept the gift.
An inspector at the Mine Safety and Health Administration
An employee at the Department of the Army is offered an encyclopedia on cyberwarfare from a prohibited source. The cost of the encyclopedia is far in excess of $100. The agency designee determines that acceptance of the gift would be inconsistent with the standard set out in § 2635.201(b). The employee may not accept the gift under paragraph (m) of this section.
Notwithstanding any exception provided in this subpart, other than § 2635.204(j), an employee may not:
(a) Accept a gift in return for being influenced in the performance of an official act;
(b) Use, or permit the use of, the employee's Government position, or any authority associated with public office, to solicit or coerce the offering of a gift;
(c) Accept gifts from the same or different sources on a basis so frequent that a reasonable person would be led to believe the employee is using the employee's public office for private gain;
A purchasing agent for a Department of Veterans Affairs medical center routinely deals with representatives of pharmaceutical manufacturers who provide information about new company products. Because of his crowded calendar, the purchasing agent has offered to meet with manufacturer representatives during his lunch hours Tuesdays through Thursdays, and the representatives routinely arrive at the employee's office bringing a sandwich and a soft drink for the employee. Even though the market value of each of the lunches is less than $6 and the aggregate value from any one manufacturer does not exceed the $50 aggregate limitation in § 2635.204(a) on gifts of $20 or less, the practice of accepting even these modest gifts on a recurring basis is improper.
(d) Accept a gift in violation of any statute; relevant statutes applicable to all employees include, but are not limited to:
(1) 18 U.S.C. 201(b), which prohibits a public official from, directly or indirectly, corruptly demanding, seeking, receiving, accepting, or agreeing to receive or accept anything of value personally or for any other person or entity in return for being influenced in the performance of an official act; being influenced to commit or aid in committing, or to collude in, or allow, any fraud, or make opportunity for the commission of any fraud, on the United States; or for being induced to do or omit to do any action in violation of his or her official duty. As used in 18 U.S.C. 201(b), the term “public official” is broadly construed and includes regular and special Government employees as well as all other Government officials; and
(2) 18 U.S.C. 209, which prohibits an employee, other than a special Government employee, from receiving any salary or any contribution to or supplementation of salary from any source other than the United States as compensation for services as a Government employee. The statute contains several specific exceptions to this general prohibition, including an exception for contributions made from the treasury of a State, county, or municipality;
(e) Accept a gift in violation of any Executive Order; or
(f) Accept any gift when acceptance of the gift is specifically prohibited by a supplemental agency regulation issued with the concurrence of the Office of Government Ethics, pursuant to § 2635.105.
(a) Unless a gift is accepted by an agency acting under specific statutory authority, an employee who has received a gift that cannot be accepted under this subpart must dispose of the gift in accordance with the procedures set forth in this section. The employee must promptly complete the authorized disposition of the gift. The obligation to dispose of a gift that cannot be accepted under this subpart is independent of an agency's decision regarding corrective or disciplinary action under § 2635.106.
(1)
A Department of Commerce employee received a $25 T-shirt from a prohibited source after providing training at a conference. Because the gift would not be permissible under an exception to this subpart, the employee must either return or destroy the T-shirt or promptly reimburse the donor $25. Destruction may be carried out by physical destruction or by permanently discarding the T-shirt by placing it in the trash.
To avoid public embarrassment to the seminar sponsor, an employee of the National Park Service did not decline a barometer worth $200 given at the conclusion of his speech on Federal lands policy. To comply with this section, the employee must either promptly return the barometer or pay the donor the market value of the gift. Alternatively, the National Park Service may choose to accept the gift if permitted under specific statutory gift acceptance authority. The employee may not destroy this gift, as the market value is in excess of $100.
(2)
With approval by the recipient's supervisor, a floral arrangement sent by a disability claimant to a helpful employee of the Social Security Administration may be placed in the office's reception area.
(3)
A Department of Defense employee wishes to attend a charitable event to which he has been offered a $300 ticket by a prohibited source. Although his attendance is not in the interest of the agency under § 2635.204(g), he may attend if he reimburses the donor the $300 face value of the ticket.
(4)
(b) An agency may authorize disposition or return of gifts at Government expense. Employees may use penalty mail to forward reimbursements required or permitted by this section.
(c) An employee who, on his or her own initiative, promptly complies with the requirements of this section will not be deemed to have improperly accepted an unsolicited gift. An employee who promptly consults his or her agency ethics official to determine whether acceptance of an unsolicited gift is proper and who, upon the advice of the ethics official, returns the gift or otherwise disposes of the gift in accordance with this section, will be considered to have complied with the requirements of this section on the employee's own initiative.
(d) Employees are encouraged to record any actions they have taken to
Foreign Agricultural Service and Commodity Credit Corporation (CCC), USDA.
Final rule.
This final rule makes amendments to the final rule, with request for comments, published in the
This final rule is effective November 18, 2016.
Peter W. Burr, Import Policies and Export Reporting Division, Office of Trade Programs, Foreign Agricultural Service, USDA; email:
On March 9, 2015, FAS published a final rule, with request for comments, in the
The following is a summary and discussion of the comments received relative to the Agriculture Pima Trust and the Agriculture Wool Trust programs along with the reasoning for the revisions made.
A commenter suggested that applicants not be required as noted in § 1471.1(b)(3)(iii), § 1471.1(b)(4), § 1471.10(b)(3)(iii), and § 1471.10(b)(4), to annually file IRS forms W-9 (U.S. person or resident alien) or the 1199A (direct deposit) with an application for either the Agriculture Pima Trust or Agriculture Wool Trust programs unless a change in the applicant's W-9 or 1199A information had occurred when compared to their previous year's application. This was deemed to be reasonable. Beginning in 2017, IRS forms W-9 and 1199A will only need to be filed if changes in the information have occurred.
A commenter noted that a technical correction is necessary in paragraphs (1) and (2) of § 1471.2(c) by closing the parentheticals after the word “insurance.” This correction will be made.
A commenter identified an error common to paragraphs (b)(1)(ii) and (b)(2)(ii) of § 1471.11, Payments to manufacturers of certain worsted wool fabrics. The payment formula for payments to eligible persons is provided for under this section. The payment formula mistakenly states in paragraph (ii) that payments will be calculated based on the eligible person's production in the preceding year. However, the payments are actually based on the eligible person's production of qualifying worsted wool fabric during calendar years 1999, 2000, and 2001. This correction will be made.
A commenter suggested that the scope of the monetization of the wool tariff rate quota payment as noted under § 1471.13(a)(2)(i) be expanded to include eligible entities, that are manufacturers and would otherwise be eligible for monetization payments, that import qualifying worsted wool into a free trade zone (FTZ), cut the wool and use it to make worsted wool suits for men and boys within the FTZ.
The monetization payment requires that the eligible entities receiving a monetization payment (1) import into the Customs territory of the United States the qualifying worsted wool directly or indirectly; (2) manufacture in the United States the qualifying worsted wool into worsted wool suits for men and boys; and (3) own the worsted wool at the time it's cut and manufactured.
An entity that manufactures the suits in an FTZ and does not export from the FTZ into the Customs territory of the United States the qualifying worsted wool directly or indirectly, does not qualify for this benefit because by definition the entity avoided paying the import duty on the qualifying worsted wool. However, an eligible entity that manufacturers the suits in an FTZ and exports into the Customs territory of the United States the qualifying worsted wool directly or indirectly and thus pays the import duty on the qualifying worsted wool, does qualify for this benefit. For the purpose of the monetization payment, the worsted wool suits for men and boys are manufactured in the U.S. and all environmental, worker safety, and wage protection laws, etc., would apply to this manufacturer.
USDA will also broaden the scope of eligible entities as it pertains to the wool yarn, wool fiber, and wool top compensation payment found at § 1471.14(a)(2)(i) to include those operating within a FTZ.
A commenter suggested that the definition of an eligible person found at § 1471.13(a)(2)(i) in the monetization of the wool tariff rate quota payment be modified to allow an eligible person to claim the annual dollar value and quantity of imported qualifying worsted wool fabric cut and sewn if the eligible person owned the wool at the time it was cut and sewn, whether the person actually cut and sewed the imported qualifying worsted wool or another person cut and sewed the wool on behalf of the eligible person. This was deemed reasonable and is already
USDA will also make this change as it pertains to the wool yarn, wool fiber, and wool top duty compensation payment found at § 1471.14(a)(2)(i).
A commenter suggested that applicants for the monetization of the wool tariff rate quota payment not be required to include direct imports on their annual application for this payment. The commenter's suggestion was based on their observance that countries of origin of imported qualifying worsted wool by direct importers is included on the Customs and Border Protection (CBP) form #7501, which is provided to the Secretary of Treasury every year, and thus it was redundant to also require this information to be included on the affirmation part of the annual application. Even though this information is provided to CBP each year, USDA will maintain the requirement as found at § 1471.13(d)(2)(iii)(A) and (B) that applicants for the monetization of the wool tariff rate quota payment include their direct and indirect imports on their annual application. Including direct and indirect imports on the application for this payment will make it easier for USDA to process the annual payments and to distribute them in a timely manner.
Regarding the monetization of the wool tariff rate quota payment, found at § 1471.13(a)(2), a commenter suggested that the definitions of eligible person and qualifying worsted wool, a provision eliciting specific business information, and the scope of the affirmation, be expanded to include all importers of qualifying worsted wool suitable for worsted wool suits, as opposed to importers of qualifying worsted wool that actually used the wool to make suits for men or boys. To support the commenter's position, the commenter cited statutory references to types of worsted wool fabrics categorized under the harmonized tariff schedule (HTS). However the commenter conflates statutory provisions authorizing the tariffs for HTS categories of worsted wool suitable for wool suits with defining the universe of eligible manufacturers who import qualifying worsted wool and are eligible for payments under this program. The wool tariff rate quota administered by the Secretary of Commerce, until its statutory sunset in 2014, in fact required that to benefit from the tariff reduction, the worsted wool had to be actually used for worsted wool suits. This monetization program provides payments to manufacturers who formerly benefitted from the tariff reduction. The requirement in the monetization payment that the qualifying worsted wool must be used by the manufacturer receiving the payment to make suits for men and boys will remain unchanged.
A commenter made a suggestion regarding the wool yarn, wool fiber, and wool top duty compensation payment found at § 1471.14(a)(2) that is similar to the comment above. The commenter suggested that the definitions of eligible person and qualifying wool, a provision eliciting specific business information, and the scope of the affirmation, be expanded from manufacturers that directly or indirectly imported qualifying wool and manufactured the qualifying wool, to include all importers of qualifying wool (whether or not the importer was also the manufacturer of the wool). To support this position, the commenter referred to statutory authority that did not require importers of qualifying wool to also be manufacturers of the qualifying wool. The commenter further stated that the wool duty refund program, of which only manufacturers of qualifying wool have participated, did not impose the requirement that the entity actually manufacture the qualifying wool. However the commenter is incorrect about what the statutory authority actually provides, and conflates extension of the duty suspension (that was applicable to all importers, regardless of whether they also manufactured men's and boy's wool suits) in section 5102 of the Trade Act of 2002, Public Law 107-210 and the wool duty refund payment program (that applied only to manufacturers of men's and boy's wool suits) in section 5101 of the Trade Act of 2002. The duty refund program administered by the U.S. Customs Service and by Customs and Border Protection in the Department of Homeland Security from 2002-2014 required that the importer must also be the manufacturer of the qualifying wool. The requirements in the wool yarn, wool fiber, and wool top duty compensation payment that the qualifying wool must be imported and must also be used for further manufacturing by the importing manufacturer will remain unchanged.
The Wool Duty Refund payment found at § 1471.12 was administered by the Department of Homeland Security's Customs and Border Protection (CBP) through 2015. In the Farm Bill, the Wool Duty Refund payment was established for the year 2016 through 2019 and was transferred to USDA. The Wool Duty Refund payment is open to U.S. entities that manufactured certain wool articles made with certain imported wool products during calendar years 2000, 2001 and 2002; received a 2005 payment under section 505 of the Trade and Development Act of 2000; and as of January 1st of the payment year, continues to be a manufacturer in the U.S. as provided for in Section 505(a) of the Trade and Development Act of 2000. FAS will administer the Wool Duty Refund payment for 2016-2019 exactly the same as it was administered by CBP.
This Executive Order requires careful evaluation of governmental actions that interfere with constitutionally protected property rights. This rule does not interfere with any property rights and, therefore, does not need to be evaluated on the basis of the criteria outlined in Executive Order 12630.
This final rule is issued in conformance with Executive Order 12866 and Administrative Procedure Act (5 U.S.C. 553). It has been determined to be not significant for the purposes of Executive Order 12866 and was not reviewed by OMB for this purpose. A cost-benefit assessment of this rule was not completed.
This final rule is not subject to Executive Order 12372, which requires 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 final rule has been reviewed in accordance with Executive Order 12988. This rule would not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. This rule would not be retroactive.
This final rule has been reviewed under Executive order 13132, “Federalism.” The policies contained in this final rule do not have any substantial direct effect on States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various
This final rule has been reviewed for compliance with E.O. 13175. The policies contained in this final rule do not have tribal implications that preempt tribal law.
The Regulatory Flexibility Act does not apply to this final rule because FAS is not required by 5 U.S.C. 553 or any other law to publish a notice of proposed rulemaking with respect to the subject matter of this final rule.
No major civil rights impact is likely to result from the announcement of this final rule. It will not have a negative civil rights impact on very-low income, low income, moderate income, and minority populations.
The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347), the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and FAS regulations for compliance with NEPA (7 CFR part 799). FAS has determined that NEPA does not apply to this final rule and that no environmental assessment or environmental impact statement will be prepared.
This final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (UMRA). Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.
FAS is committed to complying 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, services, and for other purposes. The forms, regulations, and other information collection activities required to be utilized by a person subject to this final rule are available at:
Agricultural commodities, imports.
Accordingly, 7 CFR part 1471 is amended as follows:
Sections 501-506, Pub. L. 106-200, (114 Stat. 299-304); Section 4002, Pub. L. 108-429 (7 U.S.C. 7101 note); Section 1633, Pub. L. 109-280 (120 Stat. 1166); Section 325, Pub. L. 110-343 (122 Stat. 3875); Sections 12314 and 12315, Pub. L. 113-79 (7 U.S.C. 2101 note and 7101 note).
(b) * * *
(3) * * *
(iii) A W-9 providing the Federal tax identification number of the person (if the information required by Form W-9 has changed since the previous application).
(4) Standard Form 1199A. Every person claiming a payment must provide Standard Form 1199A, a direct deposit sign-up form, to facilitate any transfer of funds (if the information required by Form 1199A has changed since the previous application).
In addition to applicable information requirements in § 1471.1, trade associations filing a claim for a payment must electronically provide a statement which states that during the calendar year immediately preceding the payment they were, as determined by the Secretary, a domestic nationally recognized association established and operating for the promotion of pima cotton for domestic use in textile and apparel goods.
(b) * * *
(3) * * *
(iii) A W-9 providing the Federal tax identification number of the person (if the information required by Form W-9 has changed since the previous application).
(4) Every person claiming a payment must provide Standard Form 1199A, a direct deposit sign-up form, to facilitate any transfer of funds (if the information required by Form 1199A has changed since the previous application).
(b) * * *
(1) * * *
(ii)
(2) * * *
(ii)
(a)
(b)
(i) Imported eligible wool directly or indirectly; and
(ii) Used the imported wool to make men's or boy's suits; or
(iii) Further manufactured the eligible imported wool.
(2)
(a) * * *
(2) * * *
(i)
(A) Imported qualifying worsted wool fabric; and
(B) Used the imported qualifying worsted wool fabric directly or had another person use the qualifying worsted wool fabric providing the eligible person owned the qualifying worsted wool fabric at the time it was used:
(
(
(d) * * *
(3) * * *
(i) * * *
(A)
(ii) * * *
(A)
(a) * * *
(2) * * *
(i)
(A) Imported qualifying wool; and
(B) Manufactured the qualifying wool directly or had another person manufacture the qualifying wool providing the eligible person owned the qualifying wool at the time it was manufactured.
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for various aircraft equipped with a BRP-Powertrain GmbH & Co KG (formerly Rotax Aircraft Engines) 912 A series engine. This AD results from mandatory continuing airworthiness information (MCAI) issued by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as a manufacturing defect found in certain carburetor floats where an in-flight engine shutdown and forced landing could occur when the affected cylinder had reduced or blocked fuel supply. We are issuing this AD to require actions to address the unsafe condition on these products.
This AD is effective December 23, 2016.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of December 23, 2016.
You may examine the AD docket on the Internet at
For service information identified in this AD, contact BRP-Powertrain GmbH & Co. KG, Welser Strasse 32, A-4623 Gunskirchen, Austria; phone: +43 7246 601 0; fax: +43 7246 601 9130; Internet:
Jim Rutherford, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4165; fax: (816) 329-4090; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to various aircraft equipped with a BRP-Powertrain GmbH & Co KG (formerly Rotax Aircraft Engines) 912 A series engine. The NPRM was published in the
Due to a quality escape in the manufacturing process of certain floats, Part Number (P/N) 861185, a partial separation of the float outer skin may occur during engine operation. Separated particles could lead to a restriction of the jets in the carburetor, possibly reducing or blocking the fuel supply to the affected cylinder.
This condition, if not detected and corrected, could lead to in-flight engine shutdown and forced landing, possibly resulting in damage to the aeroplane and injury to occupants.
To address this potential unsafe condition, BRP-Powertrain published Alert Service Bulletin (ASB) ASB-912-069/ASB-914-051 (single document, hereafter referred to as `the ASB' in this AD), providing instructions for identification and replacement of the affected parts.
For the reasons stated above, this AD required identification and replacement of the affected floats with serviceable parts.
This AD is republished to correct one typographical error in Table 2 of Appendix 2, and to include reference to revision 1 of the ASB in the Referenced Publications.
You may examine the MCAI 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 relevant 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.
We reviewed BRP-Powertrain GmbH & CO KG Rotax Aircraft Engines BRP Alert Service Bulletin ASB-912-069R1/ASB-914-051R1 (co-published as one document), Revision 1, dated July 22, 2016. The service information describes procedures for identifying and replacing defective carburetor floats. 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 will affect 65 products of U.S. registry. We also estimate that it will take about 2 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $100 per product.
Based on these figures, we estimate the cost of this AD on U.S. operators to be $17,550, or $270 per product.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this 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 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.
You may examine the AD docket on the Internet at
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 airworthiness directive (AD) becomes effective December 23, 2016.
None.
This AD applies to all serial numbers (S/N) of the airplanes listed in table 1 of paragraph (c) of this AD, certificated in any category, that incorporate one of the following:
(1) A BRP-Powertrain GmbH & Co KG (formerly Rotax Aircraft Engines) 912 A series engine having a serial number with a carburetor part number (P/N) and S/N listed in table 2 of paragraph (c) of this AD, installed as noted, in cylinder head position 1 through 4; or
(2) an engine that, after May 8, 2016, has had an affected float, P/N 861185, installed in service as part of the airframe. Affected floats were initially delivered between May 9, 2016, and July 17, 2016, and do not have three dots stamped on the surface, as shown in paragraph 3.3) of the Accomplishment/Instructions in Rotax Aircraft Engines BRP Alert Service Bulletin ASB-912-069R1/ASB-914-051R1 (co-published as one document), Revision 1, dated July 22, 2016. A certification document (
Air Transport Association of America (ATA) Code 73: Engine—Fuel and Control.
This AD was prompted by mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as a manufacturing defect found in certain carburetor floats. We are issuing this AD to require actions to prevent the fuel supply to the affected cylinder from becoming reduced or blocked, which could cause an in-flight engine shutdown and result in a forced landing and damage to the airplane or injury to the occupants.
Unless already done, do the following actions:
(1) Within the next 25 hours time-in-service after December 23, 2016 (the effective date of this AD) or within the next 30 days after December 23, 2016 (the effective date of this AD), whichever occurs first, replace all affected floats with a serviceable float following paragraph (3) Accomplishment/Instructions in Rotax Aircraft Engines BRP Alert Service Bulletin ASB-912-069R1/ASB-914-051R1 (co-published as one document), Revision 1, dated July 22, 2016.
(2) As of December 23, 2016 (the effective date of this AD), do not install a float, P/N 861185, that does not have three dots stamped on the surface, as shown in paragraph (3.3) of the Accomplishment/Instructions in Rotax Aircraft Engines BRP Alert Service Bulletin ASB-912-069R1/ASB-914-051R1 (co-published as one document), Revision 1, dated July 22, 2016.
The following provisions also apply to this AD:
(1)
(2)
Refer to MCAI European Aviation Safety Agency (EASA) AD No.: 2016-0144, correction dated July 25, 2016, and BRP-Powertrain GmbH & CO KG Rotax Aircraft Engines BRP Alert Service Bulletin ASB-912-069/ASB-914-051 (co-published as one document), dated July 14, 2016, for related information. You may examine the MCAI on the Internet at
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Rotax Aircraft Engines BRP Alert Service Bulletin ASB-912-069R1/ASB-914-051R1 (co-published as one document), Revision 1, dated July 22, 2016.
(ii) Reserved.
(3) For Rotax Aircraft Engines BRP service information identified in this AD, contact BRP-Powertrain GmbH & Co. KG, Welser Strasse 32, A-4623 Gunskirchen, Austria; phone: +43 7246 601 0; fax: +43 7246 601 9130; Internet:
(4) You may view this referenced service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329-4148. In addition, you can access this service information on the Internet at
(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:
Bureau of Industry and Security, Commerce.
Final rule.
On March 24, 2016, the Bureau of Industry and Security (BIS) published a final rule, Temporary General License. The March 24 final rule created a temporary general license that restored, for a specified time period, the licensing requirements and policies under the Export Administration Regulations (EAR) for exports, reexports, and transfers (in-country) as of March 7, 2016, to two entities (ZTE Corporation and ZTE Kangxun) that were added to the Entity List on March 8, 2016. At this time, the U.S. Government has decided to extend the temporary general license until February 27, 2017. In order to implement this decision, this final rule revises the temporary general license to remove the expiration date of November 28, 2016, and to substitute the date of February 27, 2017. This final rule makes no other changes to the EAR.
This rule is effective November 18, 2016 through February 27, 2017. The expiration date of the final rule published on March 24, 2016 (81 FR 15633) is extended until February 27, 2017.
Chair, End-User Review Committee, Office of the Assistant Secretary, Export Administration, Bureau of Industry and Security, Department of Commerce, Phone: (202) 482-5991, Email:
On March 24, 2016, the Bureau of Industry and Security (BIS) published a final rule, Temporary General License (81 FR 15633). The March 24 final rule amended the EAR by adding Supplement No. 7 to part 744 to create a temporary general license that returned, until June 30, 2016, the licensing and other policies of the EAR regarding exports, reexports, and transfers (in-country) to Zhongxing Telecommunications Equipment (ZTE) Corporation and ZTE Kangxun to that which were in effect prior to their addition to the Entity List on March 8, 2016.
On June 28, 2016, BIS published a final rule, Temporary General License: Extension of Validity (81 FR 41799), which extended the validity of the temporary general license until August 30, 2016. On August 19, 2016, BIS published a final rule, Temporary General License: Extension of Validity (81 FR 55372), which extended, for a second time, the validity of the Temporary General License until November 28, 2016. Details regarding the scope of the listing are at 81 FR 12004 (Mar. 8, 2016), (“Additions to the Entity List”). Details regarding the Temporary General License can be found in the March 24 final rule and in Supplement No. 7 to Part 744—Temporary General License.
BIS issued the March 24 final rule, and the June 28 and August 19 extension of validity final rules, in connection with a request to remove or modify the listings. The March 24 final rule, and the June 28 and August 19 final rules, specified that the temporary general license was renewable if the U.S. Government determined, in its sole discretion, that ZTE Corporation and ZTE Kangxun were performing their undertakings to the U.S. Government in a timely manner and otherwise cooperating with the U.S. Government in resolving the matter which led to the two entities' listing.
At this time, the U.S. Government has decided to extend the temporary general license until February 27, 2017. In order to implement this U.S. Government decision, this final rule revises the temporary general license to remove the date of November 28, 2016, and substitute the date of February 27, 2017. This final rule makes no other changes to the EAR.
Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of August 4, 2016, 81 FR 52587 (August 8, 2016), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222, as amended by Executive Order 13637.
1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.
2. Notwithstanding any other provision of law, no person is required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
3. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.
4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public comment, and a delay in effective date are inapplicable because this regulation involves a military or foreign affairs function of the United States. (
Exports, Reporting and recordkeeping requirements, Terrorism.
Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730 through 774) is amended as follows:
50 U.S.C. 4601
Federal Trade Commission.
Final rule.
The Federal Trade Commission (“FTC” or “Commission”) amends the Used Motor Vehicle Trade Regulation Rule (“Rule” or “Used Car Rule”). The Final Rule adopts the following proposals: adding a Buyers Guide statement recommending that consumers obtain a vehicle history report (“VHR”), and directing them to an FTC website for more information about VHRs and safety recalls; revising the Buyers Guide statement describing the meaning of an “As Is” sale in which a dealer offers a vehicle for sale without a warranty; adding boxes to the front of the Buyers Guide where dealers can indicate additional warranty and service contract coverage; adding a Spanish statement to the English Buyers Guide advising consumers to ask for a copy of the Buyers Guide in Spanish if the dealer is conducting the sale in Spanish (and providing a Spanish translation of the optional consumer acknowledgment of receipt of the Buyers Guide); and adding air bags and catalytic converters to the list of major defects on the back of the Buyers Guide.
This Rule is effective on January 27, 2017.
Copies of this document are available on the Commission's website,
John C. Hallerud, (312) 960-5634, Attorney, Midwest Region, Federal Trade Commission, 55 West Monroe Street, Suite 1825, Chicago, IL 60603.
The Used Car Rule requires dealers to display on used cars offered for sale a window sticker called a “Buyers Guide” containing warranty and other information. The Commission promulgated the Used Car Rule in 1984, and the Rule became effective in 1985.
In July 2008, the Commission commenced its periodic regulatory review of the Rule (“Regulatory Review”) to examine its efficacy, costs, and benefits, and to determine whether to retain, to modify, or to rescind the Rule.
In December 2012, the FTC issued a notice of proposed rulemaking (“NPRM”) with proposed changes to the Rule.
After reviewing the comments, the Commission published a supplemental notice of proposed rulemaking (“SNPRM”).
The Commission also proposed modifying the Buyers Guide statement that describes the meaning of an “As Is” sale in light of comments concerning a revision of the statement proposed in the NPRM. The “As Is” statement is meant to clarify that a dealer is offering the vehicle for sale without a warranty,
After reviewing the entire record, the Commission declines to adopt the approach proposed in the SNPRM, which would have required dealers that had obtained a VHR to check a new Buyers Guide box indicating that they had obtained a VHR and would provide a copy upon request. Instead, similar to what was proposed in the NPRM, the Commission has decided to add a statement to the Buyers Guide encouraging consumers to seek vehicle history information and directing consumers to an FTC website for more information. The Commission is aware that the marketplace for vehicle history information is changing rapidly and will continue to monitor developments in this area.
The Commission also has decided to revise the “As Is” statement proposed in the SNPRM. The revised statement in the Final Rule is:
(See Figure 1). The Commission is also adopting the revised “Implied Warranties Only” disclosure proposed in the NPRM for use in jurisdictions that prohibit “As Is” used vehicle sales.
The Commission has decided to modify the Buyers Guide in other ways proposed in the NPRM and SNPRM. The modified Buyers Guide in the Final Rule includes boxes on the front of the Buyers Guide where dealers can disclose manufacturer and other non-dealer warranties. The Commission is also reformatting the Service Contract box on the front of the Buyers Guide to make it flush with the non-dealer warranty boxes.
The Commission is adding a statement in Spanish to the front of the English Buyers Guide. The statement alerts Spanish-speaking consumers who cannot read the English Buyers Guide to ask for a Spanish Buyers Guide, if the dealer conducts the sale in Spanish. The additional Spanish statement is not intended to change the Rule's existing requirement that dealers provide a Spanish Buyers Guide if the dealer conducts a sale in Spanish.
The Commission received forty-one comments during the SNPRM comment period from groups and individuals. The Commission has considered those comments as well as the comments submitted in response to the NPRM and the 2008 Regulatory Review in promulgating the Final Rule. Commenters on the three notices include consumer advocacy groups, industry trade associations, state attorneys general (“State AGs”),
The Commission has decided to modify the Buyers Guide by adding a statement that advises consumers to obtain VHRs and to visit an FTC website for more information. The Final Rule is similar to the approach proposed in the NPRM, in which the Commission proposed a Buyers Guide containing a statement that advised consumers to obtain VHRs and directed consumers to an FTC website for more information.
The informational approach to VHRs adopted here should help reduce deception and consumer injury that could result from undisclosed or deceptive disclosure of title brands or other pieces of problematic history. It
In reaching this decision, the Commission has considered the differences in VHRs and providers, the strengths and limitations of VHRs, and the evolving development of the collection and distribution of vehicle history information. The Commission notes that consumers currently can gain access to VHRs at no cost from many dealers, automobile market websites, buying services, and other sources and can purchase VHRs at a nominal cost from commercial vendors. This approach balances the benefits to consumers of vehicle history information and the burden of requiring dealers to procure and disclose vehicle history information.
Vehicle history information is available from a variety of public and private sources. These sources include state titling agencies (
NMVTIS is a nationwide electronic database of vehicle history information created pursuant to the Anti-Car Theft Act of 1992.
Although NMVTIS is intended to be a reliable source of vehicle brand and title history, it does not contain detailed repair history and may not include significant damage history.
The NMVTIS Web site,
Title and other vehicle history information are also available in commercial reports from vendors such as CARFAX and Experian's AutoCheck. CARFAX and AutoCheck enable consumers to purchase VHRs, and some dealers distribute them to consumers free of charge. CARFAX and AutoCheck obtain data from state titling agencies, insurers, repair facilities, automobile auctions, salvage facilities, and fleet rental firms. These reports can include information on prior ownership, usage, damage, repair history, etc. They may even disclose whether a vehicle has had regular oil changes. Both CARFAX and AutoCheck offer mobile apps that allow real-time access to their reports. In addition, both CARFAX and AutoCheck offer consumers an option to pay a flat fee to receive multiple reports.
Commercial VHRs may include vehicle condition data from sources other than NMVTIS.
In the NPRM, the Commission proposed a statement on the Buyers Guide informing consumers about the availability of VHRs and advising consumers to obtain the reports. In response, many consumer advocacy groups, the State AG Group, and some NMVTIS vendors recommended that the Commission require dealers to obtain NMVTIS reports and/or adopt California Assembly Bill 1215 (“AB 1215”) (codified as Cal. Vehicle Code 11713.26), or some variation of it.
Rather than issuing a final rule based on the NPRM or AB 1215, the Commission published the SNPRM to seek comments on requiring dealers to disclose on the Buyers Guide if they had a VHR and to provide a copy of whatever report they had to requesting consumers. The SNPRM also invited public comments on several other approaches to vehicle history information proposed in the comments on the NPRM. The various approaches ranged from recommending that the Rule not address vehicle history information at all to approaches that generally fell somewhere between the NPRM's informational approach and the required disclosures of AB 1215.
The National Automobile Dealers Association (“NADA”) and the National Independent Automobile Dealers Association (“NIADA”) argue that a rule provision dealing with VHRs would exceed the Commission's authority.
Section 18 rulemakings are sometimes called Magnuson-Moss rulemakings, after the name of the bill that created section 18 of the FTC Act. But rulemakings under
NADA, but not NIADA, further argues that the Commission must use more elaborate rulemaking procedures than those specified by the Administrative Procedure Act (“APA”)
NADA and NIADA argue that the Commission lacks statutory authority to issue these Rule amendments. That argument, however, founders on the mistaken premise that the Rule rests solely on the Magnuson-Moss Warranty Act and not also on the FTC Act. As discussed in more detail below, the Rule has historically rested on
Ever since the Used Car Rule was promulgated, the Commission has made clear that the authority for the Rule “is derived from two sources”: Title I of the Magnuson-Moss Warranty Act and the FTC Act.
The dual bases of statutory authority are also reflected in the Rule's existing provisions and the procedures that the Commission used to promulgate the Rule. Some of the current provisions in the Used Car Rule deal with unfair or deceptive acts or practices that are not directly related to warranties or warranty practices.
NADA and NIADA are thus incorrect in arguing that the VHR amendments exceed the FTC's rulemaking authority.
Section 1029 of the DFA authorizes standard APA rulemaking procedures when the Commission uses its section 5 and section 18 rulemaking authority to address unfair or deceptive acts or practices by motor vehicle dealers. The DFA defines a “motor vehicle dealer” to mean someone who is (1) licensed by a State or territory to sell motor vehicles, and (2) takes title, owns, or has physical custody of them.
Section 1029(d) authorizes the FTC “to prescribe rules under sections 5 and 18(a)(1)(B) of the Federal Trade Commission Act” with respect to motor vehicle dealers that are “predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.”
NADA argues that some non-franchised used car dealers are outside the scope of DFA 1029(a) because they sell but do not “service” vehicles.
That definition captures activities undertaken by essentially all used car dealers. For example, whether or not they offer
The legislative history of DFA 1029 likewise confirms that Congress intended to preserve the FTC's existing rulemaking authority over auto dealers but streamline the procedures applicable to all such dealers, not only to an arbitrarily defined subset of them. When Congress enacted section 1029 of DFA, Congress sought to achieve two ends. First, Congress was aware of and intended to preserve the FTC's existing authority over auto dealers. For example, Representative Frank said, “We are not increasing the authority that the FTC has. There is no further grant of powers other than what the FTC already has.”
Second, Congress was aware that the FTC's existing section 18 rulemaking process is time consuming and wanted to speed up the FTC's rulemaking process with respect to auto dealers. As Representative Frank explained, the reason for section 1029 was to “expedite the ability of the FTC to act responding to” concerns about dealers' unfair or deceptive acts or practices.
Congress never suggested that it intended to apply the expedited rulemaking procedures to only a subset of the car dealers who are subject to the FTC's jurisdiction. Moreover, Congress had no clear basis for requiring different rulemaking procedures for different used-car dealers depending on what types of post-sale services those dealers happened to offer. In short, NADA's argument not only conflicts with the statutory text and legislative history, but would serve no rational policy objective.
Finally, as discussed, NADA's argument about the scope of the FTC's APA rule-making authority rests on an unduly narrow interpretation of “servicing” that includes only post-sale activities and excludes pre-sale activities such as refurbishing. But NADA's members are franchised dealers who are required to offer
Some commenters raised arguments against including vehicle history information in the Buyers Guide. First,
The Commission concludes that incorporating vehicle history information into the Rule fits within the general framework of the existing Rule and would benefit consumers by reducing deception in the used car market. Encouraging consumers to obtain VHRs independently will serve to direct consumers to an additional source of pre-sale information that is not controlled by the dealer and thereby lessen the consumer's reliance on dealers for information. The incorporation of vehicle history information should help reduce deception by unscrupulous dealers, because any misrepresentations will be contradicted by information that consumers have obtained independently.
Second, NADA and CARFAX commented that including vehicle history information on the Buyers Guide is not necessary because dealers already obtain and share commercial VHRs with consumers.
Finally, some commenters expressed doubt about the reliability of vehicle history information.
A disclaimer, however, is unnecessary because the reports are typically dated and contain disclaimers about the limits of the data in them.
Some commenters approved of the informational approach proposed by the NPRM,
The Commission has decided to use an informational approach to vehicle history that reduces consumer reliance on dealers for information. The chosen approach does not endorse any type of or vendor of vehicle history information. Encouraging consumers to obtain VHRs independently will reduce deception in the marketplace by directing consumers to sources of information about the vehicles that they are considering buying that are not controlled by the selling dealer and thereby reduce the potential for consumers to rely upon misrepresentations from unscrupulous dealers.
The commenters who recommended incorporating vehicle history information into the Rule proposed several different approaches. Some favored an informational approach; some recommended a Rule that, like AB 1215, would require dealers to obtain VHRs and to disclose information about them to consumers; some suggested various approaches in between. Below, the Commission discusses why it has declined to adopt three of the alternative approaches recommended by commenters.
First, in response to the NPRM and the SNPRM, the State AG Group, other regulators, and consumer advocacy groups stated that they prefer an approach like AB 1215 along with a requirement that dealers obtain and provide consumers with NMVTIS reports.
The Commission, however, has decided that it will not adopt an amended Rule modeled on AB 1215 for the reasons already stated in the SNPRM.
Second, as an alternative to the AB 1215 approach, the State AG Group proposed a vehicle history disclosure model similar to the SNPRM with the addition of a “branded title checkbox” that the dealer would be required to check to indicate that the vehicle's title had a brand.
The “branded title check box” proposal from the State AG Group suffers from a number of practical problems if dealers are not also required to obtain either NMVTIS reports or other VHRs. Without a requirement that dealers obtain a VHR, the branded title check box could encourage dealers to forego VHRs entirely or to acquire only favorable ones. In addition, if an unchecked box, indicating that the dealer is unaware that the vehicle has a branded title, is incorporated into the contract as the dealer's affirmative representation that the vehicle in fact does not have a branded title, the dealer could face liability if a subsequent VHR shows a branded title. The lack of a checkmark could also suggest to consumers that the vehicle is in good condition when the lack of a checkmark is actually the far more limited representation that the dealer does not know whether the vehicle has a branded title.
Third, CAS commented that its preferred approach is “something of a hybrid” between AB 1215 and the State AG Group's approach.
As noted, the Commission has decided against following AB 1215 and requiring dealers to obtain NMVTIS reports.
The Commission is also not adopting the CAS approach because of the recordkeeping that it seems to necessarily entail. The CAS approach would impose new recordkeeping obligations by requiring dealers to keep copies of any reports that they view. The purpose of the CAS recordkeeping requirement is to prevent dealers from selecting favorable reports or from, for example, viewing reports online, but not printing or storing them, or obtaining information orally without ever viewing, or possessing, an actual report. But it is not clear how the Commission could construct detailed rules about when a dealer will be deemed to have viewed a report that would encompass all situations or how the Commission would enforce those rules if they could be devised.
As noted above, in the SNPRM, the Commission proposed requiring dealers who had obtained VHRs to check a box so indicating and to provide a copy of the report to consumers upon request. The SNPRM proposal also contained additional text recommending that consumers obtain a VHR, regardless of whether the box was checked, and advising that consumers visit an FTC website for information on how to obtain a VHR, how to search for safety recalls, and other topics. Many commenters criticized the SNPRM approach.
Consumer advocacy groups identified several problems with the SNPRM vehicle history approach. CAS, other consumer advocacy groups, and the State AG Group note that dealers could avoid revealing negative information in VHRs by, for example, picking and choosing among reports to select the most favorable report, discarding older (or newer) reports, selecting a report that showed the fewest problems, or selecting a vendor that generates reports showing minimal problems.
NADA further questioned the value of VHRs to consumers. NADA reiterated its earlier comments that VHRs are unreliable and of limited utility, which NADA states VHR vendors acknowledge in their own disclaimers about the accuracy, reliability, or completeness of the data in the reports.
Dealers' groups identified several additional problems with the vehicle history approach proposed in the SNPRM. NADA questioned the need for a rule about VHRs in the first instance because most franchised dealers, and potentially other dealers, already provide VHRs to consumers and because of a lack of evidence that dealers fail to disclose known title brands.
Both NADA and NIADA commented that the SNPRM does not define a VHR.
The commenters disagreed about whether dealers or consumers should be required to pay for copies of the VHRs contemplated by the SNPRM. Dealers' groups commented that dealers should be permitted to pass along their costs to consumers.
Consumer advocacy groups, the State AG Group, and other commenters would place the costs of VHRs on dealers.
The American Association of Motor Vehicle Administrators supported disclosure of vehicle history data at the point of sale. Both it and the Virginia DMV commented that the FTC should recommend or reference only VHRs that integrate NMVTIS data because NMVTIS is a congressionally mandated database.
A number of commenters urged the Commission to address safety recalls in an amended Rule. Several recommended that the Commission prohibit the sale of vehicles with open recalls.
Rather than adopt these proposals, the Commission has decided to address safety recalls by including a Buyers Guide statement directing consumers to check for open safety recalls by visiting
The Commission does note, however, that under the FTC Act's existing prohibition on deceptive acts and practices, an advertiser's claims may trigger the need for the advertiser to disclose information about open safety recalls. For example, the Commission approved for public comment proposed consent orders concerning advertising that, according to the Commission's complaints, touted the benefits of rigorous inspections of used vehicles, but failed to disclose adequately that some of the vehicles were subject to open safety recalls.
The Commission has considered the comments and entire record and has decided to adopt a final rule similar to what it initially proposed in the NPRM. Accordingly, the Commission is revising the Buyers Guide to include a statement advising consumers to obtain a VHR and directing consumers to an FTC website for more information. The Buyers Guide VHR statement appears in Figures 1 and 2. The Spanish translation appears in Figures 4 and 5.
As described above, the views expressed by the commenters include those advocating that the Rule and the Buyers Guide should not address vehicle history information at all, those favoring an informational approach, and those favoring an approach that, like AB 1215, would require dealers to obtain VHRs (specifically a NMVTIS report in the case of AB1215) and to disclose information about them to consumers, and various approaches in between.
The Final Rule incorporates an informational approach to VHRs. Revising the Buyers Guide by directing consumers to obtain a vehicle history report should help reduce consumer injury and deception that could result from undisclosed or deceptive disclosure of title brands or other pieces of problematic history. The SNPRM approach could encourage consumers to rely too much on particular VHRs and dealers for mechanical condition information to the neglect of information available from sources independent of dealers. On the other hand, specifying the source of or type of VHR that consumers consult, such as AB 1215 does, could discourage consumers from choosing VHRs that best suit their needs. Finally, an informational approach to VHR disclosures should not increase the burden on dealers much beyond what the Rule already imposes.
The Commission agrees that the SNPRM approach to VHR disclosures suffers from practical problems raised by the commenters. Among these is whether the Commission must define a VHR, or adopt a standard, such as NMVTIS, for the minimum amount of information that a VHR must contain to comply with a VHR disclosure requirement. Another question is whether the Commission would have to define what it means to obtain a report and whether the Commission can prevent dealers from viewing a report online or discarding reports. Other problematic issues also would arise, such as whether consumers or dealers should bear the cost of the reports. If dealers bear the cost, should they be required to produce reports to all requesting consumers, or should they be required to provide reports only to
In addition, requiring dealers to produce any VHRs that the dealer possesses, as proposed by the SNPRM, could reduce the availability of VHRs that dealers currently provide because of dealer liability concerns. Such a requirement would likely necessitate an extensive, and potentially unwieldy, rule defining what constitutes a VHR and when a dealer will be deemed to have obtained a VHR that would likely be difficult to apply in all situations.
Moreover, the marketplace for VHRs is evolving rapidly. Consumers currently can purchase the reports from commercial vendors for between $2 and $40 per report and can also gain access to them at no cost from many dealers, automobile market websites, buying services, etc.
The Commission is also adding language to the Buyers Guide statement directing consumers to check for open safety recalls by visiting
The existing Buyers Guide contains a box that dealers who offer to sell a used car without a warranty are required to mark to indicate that the vehicle is offered “As Is,”
After reviewing the comments that addressed the “As Is” statement, the Commission has decided to adopt the following “As Is” statement on the Buyers Guide which will appear next to a box that dealers would check in appropriate circumstances:
The statement is intended to convey nothing more than that the dealer does not intend to provide post-sale repairs under a warranty. Dealer groups strenuously objected to the Commission's SNPRM proposal to include the statement, “But you may have other legal rights and remedies for dealer misconduct.”
The existing “As Is” statement on the Buyers Guide has been part of the Buyers Guide since the Rule's promulgation in 1984. The “As Is” statement was formulated to correct consumer misunderstanding of the term “As Is.”
In the NPRM, the Commission proposed revising the Buyers Guide “As Is” statement to improve readability and to clarify the meaning of the term “As Is.” The Buyers Guide in the NPRM stated:
After reviewing the comments filed in response to the NPRM, the Commission, in the SNPRM, proposed retaining the “regardless of any oral statements about the vehicle” from the existing Rule and added “but you may have other legal rights and remedies for dealer misconduct.” Thus, the Buyers Guide in the SNPRM contains the following “As Is” statement:
THE DEALER WILL NOT PAY FOR ANY REPAIRS. The dealer does not accept responsibility to make or to pay for any repairs to this vehicle after you buy it regardless of any oral statements about the vehicle. But you may have other legal rights and remedies for dealer misconduct. (“SNRPRM `As Is' Statement”).
NCLC commented that the phrase “regardless of any oral statements” is “troubling” because “[i]t is likely to convey to consumers that the dealer has the right not to stand behind its oral statements.”
The State AG Group proposed eliminating the use of “As Is” entirely.
The Commission agrees that the description of an “As Is” sale should focus on whether the dealer is offering a warranty rather than on an affirmative statement that the dealer will not pay for repairs. Likewise, the disclosure should not focus on an affirmative statement about a consumer's likely obligation in an “As Is” sale (“you will pay all costs for any repairs.”). Accordingly, the Commission has decided to delete the affirmative statements concerning the dealer's and consumer's respective obligations. Instead, the Commission has revised the Buyers Guide to add the explanatory statement, “the dealer does not provide a warranty for any repairs after sale.”
The Commission, however, has decided to retain the term “As Is.” As noted in the 1984 rulemaking, the Uniform Commercial Code specifically identifies using “As Is” as a method to disclaim implied warranties.
To balance the potential of the “regardless of oral statements” language to insulate dealers from liability and to dissuade consumers from pursuing remedies for oral misrepresentations that may be available in some circumstances, the Commission, in the SNPRM, proposed adding “but you may
Dealers' organizations strongly objected to the proposed language. NIADA commented that “one is hard pressed not to read the third sentence as anything more than a provocation of consumers to search for dealer misconduct whether it exists or not.”
The Commission has decided against including the phrase “but you may have other legal rights and remedies for dealer misconduct,” as it had proposed in the SNPRM. The Commission agrees that the phrase may suggest that dealer misconduct exists or that consumers should look for it when none exists. Simplifying the description of an “As Is” sale to one in which the “dealer does not provide a warranty” should lessen the likelihood of consumer confusion and provide clearer guidance on whether a dealer affirmatively offers a warranty.
The Commission has decided to adopt a simplified “As Is” statement to address comments about whether the existing statement on the Buyers Guide clearly conveys that the dealer is not offering a warranty. The Commission has also considered the comments critical of various formulations of the phrase “regardless of any oral statements about the vehicle” and has decided to delete the phrase. The Commission notes that the Buyers Guide will continue to warn consumers that oral promises are difficult to enforce and to advise that consumers ask the dealer to put all promises in writing.
The proposed Buyers Guide in the SNPRM included boxes (“non-dealer warranty boxes”) that dealers could check to indicate whether an unexpired manufacturer warranty, a manufacturer used car warranty, or some other warranty applies, and whether a service contract is available. The version of the Buyers Guide proposed in the NPRM included similar boxes on the back of the Buyers Guide.
As suggested by the comments, the Commission has decided to make the non-dealer warranty boxes more prominent and accessible by moving them to the front of the Buyers Guide, as proposed in the SNPRM and shown in Figures 1 and 2. The Commission is also modifying the existing Rule's description of a service contract as proposed in the SNPRM and making the service contract box flush with the non-dealer warranty boxes.
The Commission has also decided to modify the statement that dealers may use on the Buyers Guide to disclose the applicability of an unexpired manufacturer's warranty.
The Final Rule permits dealers to use their existing stock of Buyers Guides for up to one year after the effective date of the Rule amendments. It includes a revised disclosure that dealers must use if they choose to disclose unexpired manufacturers' warranties, or other non-dealer warranties, using those Buyers Guides.
The Commission has decided to adopt the language initially proposed by CAS to disclose unexpired manufacturer's warranties because the language more accurately describes that an unexpired manufacturer's warranty typically refers to warranty coverage over some components of a used vehicle rather than the bumper-to-bumper coverage associated with a new vehicle. Accordingly, the amended Final Rule will provide dealers the ability to disclose that a “manufacturer's original warranty has not expired on some components of the vehicle.”
For the reasons discussed in the NPRM, the Commission declines to make the disclosure of non-dealer warranties mandatory on the Buyers Guide.
The Commission has decided to add a revised statement, in Spanish, to the front of the English Buyers Guide advising Spanish-speaking consumers who cannot read the English Buyers Guide to ask for a copy of the Spanish Buyers Guide if the dealer conducts the sale in Spanish. A proposed Spanish statement was included in the Buyers Guide published with the NPRM and incorporated into the SNPRM Buyers Guide.
The Rule permits dealers to add an optional signature line to the back of the Buyers Guide where consumers can acknowledge receipt of the Buyers Guide.
The Final Rule and Buyers Guide incorporate text and other modifications to the Buyers Guide that the Commission proposed in the NPRM. The Buyers Guide's statement advising consumers to ask the dealer about a mechanical inspection has been relocated above the proposed vehicle history information box to enhance its prominence.
In the NPRM, the Commission proposed adding air bags and catalytic converters, as part of the exhaust system, to the list of some major defects that may occur in used vehicles.
When the Commission promulgated the Rule in 1984, the Commission noted that it did not intend to regulate those service contracts that are “excluded from the Commission's jurisdiction by the McCarran-Ferguson Act.”
The Regulatory Flexibility Act (“RFA”)
The Commission believes that the amendments will not have a significant economic impact on small entities, although they will likely affect a substantial number of small entities. The Rule, and the amendments, apply primarily to independent used vehicle dealers and franchised new vehicle dealers, which typically also sell used vehicles, such as vehicles traded for new car purchases. Most dealers would be classified as small businesses, as explained
The amendments revise the Buyers Guide that the Rule requires dealers to display on used vehicles by changing pre-printed disclosures that appear on the Buyers Guide and adding boxes that dealers can check if they choose to disclose additional information concerning non-dealer warranties. Although the amendments will require that dealers eventually substitute the revised Buyers Guides, the amendments permit dealers to use their existing stock of Buyers Guides for up to one year after the effective date of these Rule amendments before doing so. The Rule already permits dealers to make the disclosures in the check boxes, but the check boxes will make the disclosures easier for those dealers who choose to make them. Therefore, the Commission certifies that amending the Rule will not have a significant economic impact on a substantial number of small businesses.
The Final Rule is similar to the rule proposed in the NPRM. In its Initial Regulatory Flexibility Analysis (“IRFA”), the Commission determined that the NPRM Proposed Rule was not likely to have a significant economic impact on a substantial number of small entities.
Although the Commission certifies under the RFA that the amendments will not have a significant impact on a substantial number of small entities, the Commission nonetheless has determined that publishing a final regulatory flexibility analysis (FRFA) is appropriate to ensure that the impact of the amendments is fully addressed.
The purpose of the amendments is to provide material information about vehicle histories and used car warranties to help protect consumers from dealer misrepresentations and to aid consumers in making informed choices when purchasing a used vehicle. In particular, the amendments seek to promote consumer awareness of vehicle history information, to clarify the meaning of “as is” in the sale of used vehicles without warranties, to make disclosures concerning non-dealer warranties more prominent, to improve Spanish-speaking consumers' access to the Spanish Buyers Guide during sales conducted in Spanish, and to provide additional information about defects that may be found in used vehicles.
None of the comments disputed the Initial Regulatory Flexibility Analysis in the NPRM or in the SNPRM. In the SNPRM, the Commission proposed that dealers indicate on the Buyers Guide that they had obtained a VHR and, if so, provide a copy of the VHR to consumers upon request. Commenters questioned whether the cost of providing copies of VHRs to consumers should be borne by consumers or dealers. The Final Rule does not require dealers to provide copies of VHRs to consumers, but instead a pre-printed statement on the Buyers Guide recommends that consumers visit an FTC website to learn more about obtaining VHRs. Accordingly, the amendments will not require dealers to bear the cost of providing VHRs to consumers.
The Commission did not receive any comments from the Small Business Administration Chief Counsel for Advocacy.
The Used Car Rule primarily applies to “dealers” defined as “any individual or business which sells or offers for sale a used vehicle after selling or offering for sale five (5) or more used vehicles in the previous twelve months.”
Most independent used vehicle dealers would be classified as small businesses. In 2012, the United States' 37,892 independent used vehicle dealers
The SBA would also classify many franchised new car dealers as small businesses. In 2015, the nation's 16,545 franchised new car dealers
The Used Car Rule imposes disclosure obligations on used vehicle dealers, but does not impose any reporting or recordkeeping requirements. Specifically, the Rule requires dealers to complete and to display a Buyers Guide on each used car offered for sale. Neither the existing Rule nor the Final Rule requires dealers to disclose non-dealer warranties. Under the existing Rule, dealers who choose to disclose non-dealer warranties, in particular, unexpired manufacturer's warranties, may do so by adding a statement to the Buyers Guide that is prescribed by the Rule. The Final Rule permits dealers to disclose unexpired manufacturer's warranties and other third-party warranties, but does not require that dealers make those disclosures. For those dealers who choose to disclose non-dealer warranties, the Final Rule should make the disclosure easier because dealers can make the disclosures by checking a box on the Buyers Guide rather than adding a statement prescribed by the Rule.
In other
The Commission has not proposed any specific small entity exemption or other significant alternatives because the amendments simply modify the pre-printed disclosures that dealers are already required to make in connection with offering used cars for sale.
The Commission believes that the Final Rule will help reduce potential deception by promoting consumer awareness of vehicle history information, consumer understanding of the meaning of “As Is” in used vehicle sales transactions in which a dealer disclaims warranties, and consumer awareness of warranties that may apply to a used vehicle. The revised Buyers Guide contains pre-printed statements that direct consumers to consumer-oriented websites for additional information, including live links to outside sources of information. The Rule also requires dealers to complete parts of the Buyers Guide by, among other things, listing the VIN and indicating the warranty coverage, if any, that applies to the vehicle. A downloadable, fillable version of the revised Buyers Guide is available on the Commission's Web site.
The Rule also provides that the Buyers Guide is incorporated into the sales contract. The Rule requires that dealers complete a Buyers Guide for each used vehicle offered for sale, display a physical Buyers Guide on the vehicle, and provide a copy of that Buyers Guide to consumers. Therefore, consumers are able to see the Buyers Guide disclosures upon even a casual inspection of a used vehicle that they are considering buying. Consumers likely expect to see a physical label on used cars because disclosure labels (“Monroney” stickers) are required to be affixed to new cars.
The Commission considered several different approaches to vehicle history information discussed in the comments. In the SNPRM, the Commission proposed requiring dealers who have VHRs to disclose that fact on the Buyers Guide and to provide copies of the reports to requesting consumers. In the NPRM, the Commission proposed placing a statement on the Buyers Guide that would advise consumers about the availability of vehicle history information and direct consumers to an FTC website for more information. The Commission also considered requiring dealers to obtain VHRs. such as NMVTIS reports, and requiring dealers to make disclosures similar to those required by California's AB 1215. Currently consumers can gain access to VHRs at no cost from many dealers, automobile marketplace websites, buying services, etc., and from commercial vendors at a nominal cost. Given the availability of various sources for and types of VHRs, the Commission has chosen not to require that dealers obtain reports or to designate specific types of reports or specific vendors. In doing so, the Commission sought to balance the burden placed on dealers with the goals of promoting consumer choice and access to vehicle history information.
The Commission considered comments on the Buyers Guide “As Is” statement and the various formulations of the statement proposed by the comments. The Commission chose the “As Is” statement in this Final Rule because the Commission believes that the statement clearly and accurately describes the meaning of “As Is.”
The Commission considered comments on the non-dealer warranty boxes proposed in the NPRM. In response to those comments, the Commission has moved those boxes to the front of the Buyers Guide.
Under these circumstances, the Commission does not believe a special exemption for small entities or significant compliance alternatives are necessary or appropriate to minimize the compliance burden, if any, on small entities while achieving the intended purposes of the amendments.
Under section 22 of the FTC Act, the Commission must issue a regulatory analysis for a proceeding to amend a rule only when it: (1) Estimates that the amendment will have an annual effect on the national economy of $100,000,000 or more; (2) estimates that the amendment will cause a substantial change in the cost or price of certain categories of goods or services; or (3) otherwise determines that the amendment will have a significant effect upon covered entities or upon consumers.
After careful consideration of the comments, and the record as a whole, the Commission has determined that there are no facts in the record, or other reasons to believe, that these amendments will have significant effects on the national economy, on the cost of goods or services, or on covered parties or consumers. No commenter provided a cost estimate of the amendments. Moreover, none indicated that the amendments would have an annual impact of more than $100,000,000, cause substantial change in the cost of goods or services, or otherwise have a significant effect upon covered entities or consumers.
In any event, to the extent, if any, these final rule amendments will have such effects, the Commission has explained above the need for, and the objectives of, the final amendments; the regulatory alternatives that the Commission considered; the projected benefits and adverse economic or other effects, if any, of the amendments; the reasons that the final amendments will attain their intended objectives in a manner consistent with applicable law; the reasons for the particular amendments that the agency has adopted; and the significant issues raised by public comments, including the Commission's assessment of and response to those comments on those issues.
The existing Rule contains no recordkeeping or reporting requirements, but it does contain disclosure requirements that constitute “information collection requirements” as defined by 5 CFR 1320.3(c) under the Office of Management and Budget (“OMB”) regulations that implement the Paperwork Reduction Act (“PRA”). OMB has approved the Rule's existing information collection requirements through Jan. 31, 2017 (OMB Control No. 3084-0108).
As discussed above, the Commission is retaining the requirement that dealers must display a Buyers Guide on used cars offered for sale and is updating the text of the disclosures that dealers must provide in the Buyers Guide. The Commission is also amending the Buyers Guide to provide dealers with a method to disclose optional additional information about non-dealer warranties. The amendments about non-dealer warranties do not require dealers to disclose this additional information nor do they alter the Rule's existing disclosure requirements or impose recordkeeping requirements.
The Commission has made amended Buyers Guides available on its Web site for downloading by dealers free of charge. The Commission expects that current suppliers of Buyers Guides, such as commercial vendors and dealer trade associations, will supply dealers with amended Buyers Guides. Accordingly, individual dealer cost to obtain amended Buyers Guides should increase only marginally, if at all.
As explained in the NPRM, FTC staff has estimated that dealers will make the optional disclosures on 25% of used cars offered for sale. Dealers who choose to make the optional disclosures should obtain amended Buyers Guides and complete them by checking additional boxes not appearing on the current Buyers Guide. Staff has in the past estimated that completing Buyers Guides requires approximately 2 minutes per vehicle for vehicles sold without a warranty and 3 minutes per vehicle for vehicles sold with a warranty.
Staff also anticipates that dealers can use lower level clerical staff at a mean hourly wage of $15.33 per hour
Estimating, as stated above, that dealers will make the optional disclosures on 25% of the 27,966,551 used cars offered for sale, and assuming further a cost of thirty cents per preprinted Buyers Guide, incremental purchase costs per year will total $2,097,491. Any other capital costs associated with the amendments are likely to be minimal. This analysis is consistent with the analysis provided in the NPRM, but has been updated with more recent data regarding the number of used vehicles sold and labor costs tied to making the optional disclosures for those sales. None of the comments disputed the PRA analysis in the NPRM.
Motor vehicles, Trade practices.
For the reasons set forth in the preamble, the Federal Trade Commission amends part 455 of title 16, Code of Federal Regulations, as follows:
15 U.S.C. 2309; 15 U.S.C. 41-58.
(d) * * *
(7)
(a)
(2) The capitalization, punctuation and wording of all items, headings, and text on the form must be exactly as required by this Rule. The entire form must be printed in 100% black ink on a white stock no smaller than 11 inches high by 7
(b)
(ii) If your State law limits or prohibits “as is” sales of vehicles, that State law overrides this part and this rule does not give you the right to sell “as is.” In such States, the heading “As Is—No Dealer Warranty” and the paragraph immediately accompanying that phrase must be deleted from the form, and the following heading and paragraph must be substituted as illustrated in the Buyers Guide in Figure 2. If you sell vehicles in States that permit “as is” sales, but you choose to offer implied warranties only, you must also use the following disclosure instead of “As Is—No Dealer Warranty” as illustrated by the Buyers Guide in Figure 2.
The dealer doesn't make any promises to fix things that need repair when you buy the vehicle or afterward. But
(2)
(i) Whether the warranty offered is “Full” or “Limited.” Mark the box next to the appropriate designation. A “Full” warranty is defined by the Federal Minimum Standards for Warranty set forth in section 104 of the Magnuson-Moss Act, 15 U.S.C. 2304 (1975). The Magnuson-Moss Act does not apply to vehicles manufactured before July 4, 1975. Therefore, if you choose not to designate “Full” or “Limited” for such vehicles, cross out both designations, leaving only “Warranty.”
(ii) Which of the specific systems are covered (for example, “engine, transmission, differential”). You cannot use shorthand, such as “drive train” or “power train” for covered systems.
(iii) The duration (for example, “30 days or 1,000 miles, whichever occurs first”).
(iv) The percentage of the repair cost paid by you (for example, “The dealer will pay 100% of the labor and 100% of the parts.”)
(v) You may, but are not required to, disclose that a warranty from a source other than the dealer applies to the vehicle. If you choose to disclose the applicability of a non-dealer warranty, mark the applicable box or boxes beneath “NON-DEALER WARRANTIES FOR THIS VEHICLE” to indicate: “MANUFACTURER'S WARRANTY STILL APPLIES. The manufacturer's original warranty has not expired on some components of the vehicle,” “MANUFACTURER'S USED VEHICLE WARRANTY APPLIES,” and/or “OTHER USED VEHICLE WARRANTY APPLIES.”
If, following negotiations, you and the buyer agree to changes in the warranty coverage, mark the changes on the form, as appropriate. If you first offer the vehicle with a warranty, but then sell it without one, cross out the offered warranty and mark either the “As Is—No Dealer Warranty” box or the “Implied Warranties Only” box, as appropriate.
(3)
□ SERVICE CONTRACT. A service contract on this vehicle is available for an extra charge. Ask for details about coverage, deductible, price, and exclusions. If you buy a service contract within 90 days of your purchase of this vehicle,
(a) If you conduct a sale in Spanish, the window form required by § 455.2 and the contract disclosures required by § 455.3 must be in that language. You may display on a vehicle both an English language window form and a Spanish language translation of that form. Use the translation and layout for Spanish language sales in Figures 4, 5, and 6.
(b) Use the following language for the “Implied Warranties Only” disclosure when required by § 455.2(b)(1) as illustrated by Figure 5:
El concesionario no hace ninguna promesa de reparar lo que sea necesario cuando compre el vehículo o posteriormente. Sin embargo, las
(c) Use the following language for the “Service Contract” disclosure required by § 455.2(b)(3) as illustrated by Figures 4 and 5:
CONTRATO DE MANTENIMIENTO. Con un cargo adicional, puede obtener un contrato de mantenimiento para este vehículo. Pregunte acerca de los detalles de la cobertura, los deducibles, el precio y las exclusiones. Si compra un contrato de mantenimiento dentro de los 90 días desde el momento en que compró el vehículo, las
(d) Use the following language if you choose to use the Optional Signature Line provided by § 455.2(f):
Por este medio confirmo que he recibido copia de la Guía del Comprador al momento de la compraventa.
By direction of the Commission.
Food and Drug Administration, HHS.
Final rule.
The Food and Drug Administration (FDA or the Agency) is amending its current good manufacturing practice (CGMP) and labeling regulations regarding medical gases. FDA is requiring that portable cryogenic medical gas containers not manufactured with permanent gas use outlet connections have gas-specific use outlet connections that cannot be readily removed or replaced except by the manufacturer. FDA is also requiring that portable cryogenic medical gas containers and high-pressure medical gas cylinders meet certain labeling, naming, and color requirements. These requirements are intended to increase the likelihood that the contents of medical gas containers are accurately identified and reduce the likelihood of the wrong gas being connected to a gas
This rule is effective January 17, 2017. See section V of this document for the compliance date of this final rule.
J. Patrick Raulerson, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6260, Silver Spring, MD 20993-0002, 301-796-3522.
On April 10, 2006, FDA issued a proposed rule to amend our regulations on CGMP to include new or revised requirements for the labeling, color, dedication, and design of medical gas containers and closures (71 FR 18039). The chief impetus for the proposed rule was a number of incidents in which a medical gas container holding a gas other than oxygen was erroneously connected to a health care facility's oxygen supply system, leading to serious injuries and deaths. In addition, FDA recognized that the regulation that conditionally exempts certain medical gases from certain otherwise-applicable prescription drug labeling regulations did not reflect either industry best practices or FDA's current regulatory expectations.
Following consideration of comments received and further internal deliberation, we are finalizing this rule as described in this document. The final rule is intended to increase the likelihood that the contents of medical gas containers are accurately identified and reduce the likelihood of the wrong gas being connected to a gas supply system or container. The final rule also modifies the medical gas conditional labeling exemption regulation such that it now largely reflects existing industry best practices and FDA's current regulatory expectations regarding the labeling of medical gases.
We received approximately 50 comments on the proposed rule. The most detailed comments were from industry trade associations. The other comments were largely from individual medical gas firms, consultants, or other industry stakeholders, and they generally expressed agreement with the trade associations' comments. We discuss all significant comments in section IV.
The final rule requires that portable cryogenic medical gas containers not manufactured with permanent gas use outlet connections have gas-specific use outlet connections that cannot be readily removed or replaced except by the manufacturer. The rule further requires that portable cryogenic medical gas containers and high-pressure medical gas cylinders meet certain labeling, naming, and color requirements. Principally, portable cryogenic medical gas containers are required to bear a 360° wraparound label identifying the contents of the container, and high-pressure medical gas cylinders are required to be colored on the shoulder of the container in the FDA-designated color or colors associated with the gas or gases held in the container. These requirements are intended to increase the likelihood that the contents of medical gas containers are accurately identified and reduce the likelihood of the wrong gas being connected to a gas supply system or container.
The final rule also revises the medical gas conditional labeling exemption regulation to add oxygen and nitrogen to the list of medical gases subject to the exemption, and to remove cyclopropane and ethylene from the list. The final rule further revises this regulation by adding new warning statement content to be included in oxygen labeling and by expanding the scope of the regulation to include medically appropriate mixtures of medical gases.
Medical gases are generally regulated as prescription drugs under sections 201(g)(1) and 503(b)(1) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 321(g)(1) and 353(b)(1)) (though oxygen may be dispensed without a prescription for certain uses specified at section 576(b)(2) of the FD&C Act (21 U.S.C. 360ddd-1(b)(2)), and are subject to regulation under section 501(a)(2)(B) of the FD&C Act (21 U.S.C. 351(a)(2)(B)). Sections 575 and 576 of the FD&C Act (21 U.S.C. 360ddd and 360ddd-1) address the regulation of medical gases and designated medical gases. FDA is invoking its authority under sections 501(a)(2)(B), 502(f) (21 U.S.C. 352(f)), 576(a), and 701(a) (21 U.S.C. 371(a)) of the FD&C Act to create or modify CGMP and labeling regulations applicable to medical gases to ensure that they meet the requirements of the FD&C Act as to safety and have the identity and strength, and meet the quality and purity characteristics, that they purport or are represented to possess, and are labeled with adequate warnings and instructions for use.
The rule is expected to provide a modest net social benefit (estimated benefits minus estimated costs) to society. Costs are attributed to coloring medical gas containers, complying with the 360° wraparound label requirement for portable cryogenic containers, and requiring gas-specific use outlet connections on portable cryogenic containers to be permanently attached to the valve body (
In the
Accordingly, FDA proposed certain regulatory requirements intended to (1) reduce the likelihood of the wrong gas being attached to a gas supply system or container (and in particular to reduce the likelihood of a gas other than oxygen being connected to an oxygen supply system), (2) make the contents of medical gas containers more easily and accurately identifiable, and (3) reduce the risk of contamination of medical gases. Additionally, FDA proposed including medical air, oxygen, and nitrogen among, and excluding cyclopropane and ethylene from, the list of gases that are conditionally exempt from certain labeling requirements as described in § 201.161 (21 CFR 201.161). FDA solicited written comments on the proposed rule.
Following publication of the proposed rule, the Food and Drug Administration Safety and Innovation Act (FDASIA) was enacted (Pub. L. 112-144 (July 9, 2012)). Title XI, Subtitle B of FDASIA, “Medical Gas Product Regulation,” added new sections 575, 576, and 577 to the FD&C Act (21 U.S.C. 360ddd, 360ddd-1, and 360ddd-2), creating a new certification process for certain “designated” medical gases, including all of the gases listed at § 201.161 as amended by this rule. Section 575 of the FD&C Act defines the term “designated medical gas” to include oxygen, nitrogen, nitrous oxide, carbon dioxide, helium, carbon monoxide, and medical air that meet the standards set forth in an official compendium. Section 576 of the FD&C Act permits any person to file a request for certification of a medical gas as a designated medical gas for certain specified indications. A designated medical gas for which a certification is granted is deemed to have in effect an approved application under section 505 (New Drug Application) or 512 (New Animal Drug Application) of the FD&C Act (21 U.S.C. 355 or 360b) (
Section 576 of the FD&C Act also addresses the labeling and prescription drug status of designated medical gases. Section 576(a)(3)(A)(ii) of the FD&C Act, similar to the conditional labeling exemption at § 201.161(a), specifies how the labeling of designated medical gases may meet certain generally applicable statutory labeling requirements. Specifically, section 576(a)(3)(A)(ii) of the FD&C Act provides that the requirements of sections 503(b)(4) of the FD&C Act (regarding labeling of a drug as a prescription drug) and 502(f) of the FD&C Act (regarding inclusion of adequate directions for use and adequate warnings in drug labeling) are deemed to have been met for a designated medical gas if the labeling on the final use container for the medical gas bears: (1) The information required by section 503(b)(4); (2) a warning statement concerning the use of the medical gas as determined by the Secretary by regulation; and (3) appropriate directions and warnings concerning storage and handling. Section 576(b)(2)(B) of the FD&C Act further provides that, in the case of oxygen provided for certain uses specified at section 576(b)(2)(A), the requirements of section 503(b)(4) of the FD&C Act are deemed to have been met if the labeling bears a warning that the oxygen can be used for emergency use only and for all other medical applications a prescription is required. Finally, section 576(b) of the FD&C Act provides that designated medical gases shall generally be subject to the requirements of section 503(b)(1) of the FD&C Act (requiring that drugs meeting certain specified conditions be dispensed only upon prescription), while also providing that oxygen may be dispensed without a prescription for certain specified uses.
FDA received approximately 50 written comments on the proposed rule. Comments were submitted by trade associations representing the medical gas and home health care industries, medical gas firms, medical gas industry consultants and other industry stakeholders, and one State regulatory body.
The comments addressed the following topics, among others:
• The appropriate warning statements to be included in oxygen and medical air labeling.
• Safety issues associated with converting a gas container from industrial to medical use and how best to address them.
• The utility and appropriateness of coloring medical gas containers in whole or in part.
• The appropriate content and configuration of wraparound labeling on portable cryogenic medical gas containers.
• Estimated costs to comply with the proposed rule and whether such costs are justified under a cost-benefit analysis.
This final rule includes many of the provisions of the April 2006 proposed rule, with certain modifications described in section IV.C of this document. In particular, the final rule adds oxygen and nitrogen to, and removes cyclopropane and ethylene from, the list of medical gases in § 201.161(a) that are conditionally exempt from the labeling requirements of § 201.100(b)(2) and (3), and (c)(1). The final rule also requires that portable cryogenic medical gas containers and high-pressure medical gas cylinders meet certain labeling, naming, and coloring requirements as provided in new § 201.328. The final rule further requires that portable cryogenic medical gas containers not manufactured with permanent gas use outlet connections have gas-specific use outlet connections that cannot be readily removed or replaced except by the manufacturer by amending § 211.94 (21 CFR 211.94) through the addition of new paragraph (e).
This final rule also reflects revisions FDA is making to the April 2006 proposed rule in light of comments received. In addition to other changes discussed in section IV.C of this document, FDA is making the following significant changes to the proposed rule:
FDA is making additional revisions to § 201.161 in response to concerns raised by comments. First, in response to a comment questioning § 201.161(b)'s exclusion of gas mixtures from the scope of the § 201.161(a) conditional labeling exemptions applicable to
If the labeling on a final use container of a designated medical gas (or medically appropriate mixture of designated medical gases) includes the information required by section 503(b)(4) of the FD&C Act as well as the information required to obtain the conditional labeling exemptions provided at § 201.161(a) as revised by this rule, FDA will consider such labeling to meet the conditions set forth at section 576(a)(3)(A)(ii) of the FD&C Act, and, therefore, to have met the requirements of sections 503(b)(4) and 502(f) of the FD& C Act.
In § 211.94(e)(1) of the proposed rule, FDA proposed generally prohibiting cryogenic containers and high-pressure cylinders used to hold industrial gases from being converted to medical use to minimize the risk of contamination of medical gases by industrial contaminants or cleaning solvents. As discussed further in section IV.C of this document, FDA agrees with comments stating that such a prohibition would be unnecessarily costly, as these types of contamination incidents appear to be rare and existing regulations regarding cleaning and inspection of drug containers and closures are sufficient to address this issue. Accordingly, FDA is not finalizing this proposed requirement.
Medical gases are generally regulated as prescription drugs under sections 201(g)(1) and 503(b)(1) of the FD&C Act (though oxygen may be dispensed without a prescription for certain uses specified at section 576(b)(2) of the FD&C Act, and are subject to regulation under section 501(a)(2)(B) of the FD&C Act. Sections 575 and 576 of the FD&C Act address the regulation of medical gases and designated medical gases. Under sections 501(a)(2)(B), 502(f), and 701(a) of the FD&C Act, FDA has the authority to create and modify CGMP and labeling regulations to ensure that drugs meet the requirements of the FD&C Act as to safety and have the identity and strength, and meet the quality and purity characteristics, that they purport or are represented to possess, and are labeled with adequate warnings and instructions for use. Medical gas containers, closures, and labeling are integral parts of medical gas drug products and play a critical role in ensuring that these products are safe and have the appropriate identity, strength, quality, and purity. Medical gas mix-ups have caused deaths and serious injuries. These incidents have occurred despite current regulations and guidance addressing the safe handling of medical gases. FDA is therefore invoking the authority granted by sections 701(a), 501(a)(2)(B), 502(f), and 576(a) of the FD&C Act to issue CGMP and labeling regulations designed to facilitate the safe use of medical gases and to ensure that medical gases are labeled with adequate warnings and instructions for use. The specific requirements in these regulations will help to ensure the safety of these products.
We describe and respond to comments on the proposed rule in this section. We respond to certain comments on the Preliminary Regulatory Impact Analysis (PRIA) in the Final Regulatory Impact Analysis (see Section VI). For ease of identification, the word “Comment,” in parentheses, will appear before the comment's description, and the word “Response,” in parentheses, will appear before our response. The number assigned to each comment is purely for organizational purposes and does not signify the comment's value or importance or the order in which it was received. Many of the comments voiced the same or highly similar concerns and made the same or highly similar recommendations; these comments have been consolidated where possible.
(Comment 1) Many comments contend that FDA's proposal does not reflect the risk-based principles that have historically been enunciated in connection with recent CGMP policy. These comments state that risk-based principles focus regulation on critical areas that are likely to achieve the greatest public health impact. Thus, these comments state that because the impact of FDA's proposed rule is disproportionate to and beyond the scope of any public health risk associated with medical gases, it is inconsistent with the Agency's risk-based approach for CGMP. The comments further contend that the incidents cited in the preamble of the proposed rule do not support the number of requirements proposed, and that a single requirement in the proposed rule—requirement for secure connections on portable containers—would have prevented all but one of the fatalities cited in the preamble.
(Response 1) FDA agrees in part with these comments and has, following reanalysis of expected costs and benefits, declined to adopt certain provisions in the proposed rule and has revised other proposed provisions to more efficiently achieve public health objectives. Many of the requirements in the final rule are consistent with what we understand to be industry practices (Refs. 1-3). We continue to believe that medical gas containers and closures, such as portable cryogenic containers and high-pressure cylinders, are integral parts of the drug product and play a critical role in ensuring that the drug provided to the patient has the appropriate identity, strength, quality, and purity. Accordingly, we believe that this rule, as finalized, is fully consistent with FDA's risk-based approach to CGMP regulation.
(Comment 2) Many comments contend that FDA significantly underestimated the costs to industry imposed by the rule as proposed. These comments estimate these potential costs to be in the range of $855 million to $1.3 billion, as opposed to FDA's estimate of $950,000 to $1.2 million. These comments request that the cost assumptions and conclusions contained in the preamble to the proposed rule be critically reexamined by the Department of Health and Human Services and the Office of Management and Budget (OMB).
(Response 2) We considered these concerns, as appropriate, in preparing the Final Regulatory Impact Analysis (see Section VI).
FDA proposed adding medical air, oxygen, and nitrogen to the list of gases conditionally exempted by § 201.161(a) from the labeling requirements of § 201.100(b)(2) and (3), and (c)(1). FDA proposed these changes because, based on its years of regulatory experience with these gases, FDA believed that compliance with § 201.100(b)(2) and (3), and (c)(1) would be unnecessary if the warning statement and storage and handling directions required to obtain the conditional § 201.161(a) labeling exemptions were included in the labeling of such gases and the labeling and coloring requirements found in proposed § 211.94(e)(4) were met. FDA also proposed removing cyclopropane and ethylene from § 201.161(a), as these gases are no longer used in medical procedures because they are flammable and pose a risk of explosion or fire.
Comments support these proposed changes to the list of exempted gases. Many comments expressed concern, however, over how these proposed changes would affect the labeling of oxygen and medical air. These concerns are set forth in comments 3 and 4, followed by FDA's response.
(Comment 3) Many comments express significant concerns with FDA's proposal to add oxygen to the list of gases at § 201.161(a) without providing a warning statement specific to oxygen. The warning statement at § 201.161(a)(1) previously provided that the gas may only be used by or under the supervision of a licensed practitioner. These comments argue that requiring this statement for oxygen could eliminate the ability of first responders to administer oxygen without a prescription. These comments also note that the labeling on oxygen containers that has long been in use by the industry, which provides for use without a prescription in certain situations when administered by properly trained personnel, would no longer be acceptable and would need to be changed. These comments state that further changes are needed to address these issues.
(Comment 4) Many comments further note that the warning statement at § 201.161(a) does not include certain warnings currently included on oxygen labels. For instance, widely used oxygen labeling warns that uninterrupted use of high concentrations of oxygen over a long duration without monitoring its effect on oxygen content of arterial blood may be harmful and that oxygen should not be used on patients who have stopped breathing unless used in conjunction with resuscitative equipment.
(Response to Comments 3 and 4) FDA is further revising § 201.161(a)(1) in response to these comments.
Prior to the revisions finalized in this rule, § 201.161(a) provided that if the labeling of the medical gases listed in the rule—carbon dioxide, cyclopropane, ethylene, helium, and nitrous oxide intended for drug use—bore a specified warning statement and any needed directions concerning the conditions for storage and warnings against the inherent dangers in the handling of the specific compressed gas, those gases would be exempt from certain otherwise-applicable labeling requirements concerning the recommended or usual dosage, the drug's route of administration, and adequate directions for use. Section 201.161(b) provided that the exemption in § 201.161(a) did not apply to any mixture of the gases covered by the regulation with oxygen or with each other. In the 2006 proposed rulemaking FDA proposed adding oxygen, medical air, and nitrogen, and removing cyclopropane and ethylene, from the scope of § 201.161, but proposed no other changes to the rule.
As many comments point out, the warning statement previously specified at § 201.161(a)(1) differs significantly from the warning statement that has long been in use on oxygen labeling. FDA agrees with these comments that this oxygen-specific warning statement is more useful and appropriate for oxygen than the general warning statement previously specified at § 201.161(a)(1).
FDA further agrees with these comments that conditioning the § 201.161(a) labeling exemptions on inclusion of a warning statement limiting oxygen to prescription use would be inconsistent with the longstanding use of oxygen without a prescription in certain situations. It would also be inconsistent with new section 576(b)(2)(B) of the FD&C Act which, as discussed in section II.A of this document, provides that, in the case of oxygen provided without a prescription for certain uses specified at section 576(b)(2)(A), the requirements of section 503(b)(4) of the FD&C Act shall be deemed to have been met if the labeling bears a warning that the oxygen can be used for emergency use only and for all of other medical applications a prescription is required.
Therefore, § 201.161(a)(1)(i) of this final rule provides warning statement requirements specific to oxygen, as well as an additional warning statement requirement for oxygen that may be provided for certain uses without a prescription. FDA believes most oxygen containers currently marketed in the United States bear labeling that satisfies these new requirements (Ref. 1).
(Comment 5) Some comments express concerns with FDA's proposal to add medical air to the list of gases at § 201.161(a) without providing a warning statement specific to medical air. These comments point out that widely used medical air labeling indicates that medical air may be used without a prescription by properly trained personnel for breathing support, while for all other uses a prescription is required. These comments note that such labeling would be inconsistent with the warning statement previously specified at § 201.161(a)(1), which provided that the gas may only be used by or under the supervision of a licensed practitioner.
(Response 5) FDA acknowledges the comments that certain non-prescription uses of medical air are medically appropriate, and, accordingly, that the `prescription only' warning statement at § 201.161(a)(1)(i) as finalized by this rule is not appropriate for medical air. FDA is not finalizing the proposal to add medical air to the list of gases at § 201.161, and the question of what constitutes an appropriate warning statement for medical air remains under consideration by FDA.
(Comment 6) Many comments note that the proposed rule does not address labeling for medical gas mixtures, but rather leaves in place § 201.161(b)'s exclusion of gas mixtures from the scope of the § 201.161(a) conditional labeling exemptions. These comments recommend for the short term that § 201.161(b) remain as currently published but that FDA nonetheless permit these medical gas mixtures to be labeled consistent with industry practice, which utilizes the warning statement previously specified at § 201.161(a)(1).
(Response 6) FDA notes that, as discussed in section II.A of this document, following publication of the proposed rule new section 576(a)(3)(A)(i) was added to the FD&C Act by FDASIA. This new section provides that designated medical gases for which a certification is granted are deemed alone or in combination, as medically appropriate, with one or more other designated medical gases for which certifications have been granted to have in effect an approved application.
Accordingly, FDA is further revising § 201.161(a)(1) in response to these
(Comment 7) A comment requests that medical xenon be added to the list of exempted gases in § 201.161(a) as it is used clinically as a general anesthetic and as a diagnostic and test agent.
(Response 7) FDA disagrees that medical xenon should be added to the list of gases for which the § 201.161(a) conditional labeling exemptions are available. Xenon is not a designated medical gas and is not otherwise approved for use as a general anesthetic. Certain xenon gas radioisotopes have been approved as diagnostic agents, but these products have approved prescription drug labeling. Accordingly, it would be inappropriate to add xenon gas to the list of gases at § 201.161(a).
(Comment 8) Many comments contend that the content in proposed § 211.94(e)(4) is misplaced by being located in part 211 (21 CFR part 211, CGMP requirements) rather than part 201 (21 CFR part 201, labeling requirements). These comments recommend that any proposed labeling requirements be included in part 201.
(Response 8) FDA largely agrees with these comments and is reorganizing this content in the final rule. Specifically, the labeling content requirements in proposed § 211.94(e)(4) are being finalized under new § 201.328, while requirements that medical gas labels and coloring materials be resistant to wear and, in the case of labels, not susceptible to inadvertent removal, have been retained in § 211.94(e).
In § 211.94(e)(4) of the proposed rule (renumbered as § 201.328(a)(1) in this final rule), FDA proposed to require portable cryogenic containers to bear 360° wraparound labeling that meets naming, lettering, and placement specifications.
(Comment 9) Many comments expressed concern about the proposed requirement that the word “Medical” precede the name of the gas on the wraparound label. These comments state that there is a risk that users would focus on the “Medical” designation and ignore the more significant information,
(Response 9) FDA proposed adding the word “Medical” to the wraparound label to distinguish containers labeled with medical gases from containers holding industrial gases. This proposed requirement was intended to make the contents of the containers more readily and accurately identified by persons responsible for handling and connecting them to medical gas supply systems in hospitals or other health care facilities and thereby reduce the likelihood of medical gas mix-ups. However, FDA agrees with the comments that inclusion of the word “Medical” in the name of the gas would be inconsistent with the established names of medical gases.
Accordingly, as set forth in § 201.328(a)(2), FDA will instead require that the portable cryogenic containers bear a label (either the wraparound label or a separate label) near the top of the container but below the top seam weld that includes the phrase “For Medical Use,” “Medical Gas,” or some similar phrase that indicates the gas is for medical use in conspicuous lettering.
FDA has also reconsidered the proposed requirement that gases be identified on the wraparound label by their “standard names.” Section 502(e) of the FD&C Act provides that a drug product is misbranded unless its label bears the established name of the drug, if there is such a name. All of the gases listed at § 201.328(c) have established names. Thus, the proposed requirement regarding “standard names” is not necessary, and we are removing this concept from the final rule.
(Comment 10) A few of the parties providing comments state that while they agree with the proposed requirement at § 211.94(e)(4)(i)(E) that the label be placed “as close to the top of the container as possible but below the top weld seam”, they object to the following phrase: “. . . so that it cannot be easily detached or worn” (§ 211.94(e)(4)(i)(F)). These comments express concern that if the label is worn or detached by the user, for whatever reason, the manufacturer may be considered to be not in compliance with the proposed rule requirements, when in fact the firm may have properly placed the label.
(Response 10) FDA agrees that this proposed requirement should be revised. The key issue is that the wraparound label be affixed such that it is not susceptible to wear or to being inadvertently removed during normal use, and FDA is revising this requirement accordingly (see § 211.94(e)(2) of this final rule).
(Comment 11) Many comments note that the minimum lettering height requirement for the name of the gas on the wraparound label in the proposed rule (2
(Response 11) FDA is revising the minimum letter height requirement in consideration of these comments. The final rule states that the lettering height for the name of the gas on the label must be at least 2 inches high (see § 201.328(a)(1)(ii) of this final rule).
(Comment 12) Many comments support color-coding high-pressure cylinders, but are concerned that FDA may be placing undue emphasis on this means of identification. These comments contend that health care personnel should primarily rely on the label to identify the gas or gases in a container, and argue that reliance on color is problematic because of the variability of lighting conditions, color fading, and potential personnel colorblindness. Other comments state that reliance on color coding would appear to contradict training programs that industry and FDA have implemented to prevent mix-ups, as the consistent and fundamental themes of these training programs has been to emphasize that the label should be the primary indicator of a container's contents.
(Response 12) FDA agrees that the wording on the label should be used as the primary means of identifying a drug product. Requiring color coding of high-pressure cylinders, which we understand is already industry practice (Ref. 2), simply provides an additional safeguard to facilitate accurate identification of the drug product and
(Comment 13) Many comments recommend removing the requirement of “colored in whole” for non-aluminum high-pressure cylinders. These comments state that the current industry practice is to paint the shoulder to match the designated color for that medical gas. This is based on manufacturer recommendations that some non-aluminum high-pressure cylinders should not be painted in whole due to concerns about concealing defects.
(Response 13) FDA agrees with these comments. Thus, the final rule requires only that high-pressure medical gas cylinders be colored on the shoulder portion of the cylinder (see § 201.328(b)), which is consistent with what FDA understands to be industry practice (Ref. 2).
(Comment 14) Many comments dispute FDA's assumption that a large majority of high-pressure medical gas cylinders are already in compliance with the proposed coloring requirements. These comments note that portions of the shoulders of many cylinders are painted white to make retest information more visible, and that the upper neck portion of many cylinders are not painted a color based on the contents of the cylinder.
(Response 14) The cylinder coloring requirement in the final rule (see § 201.328(b)) would not require recoloring of cylinders colored in the manner described in the comments. As long as the cylinder shoulder is colored in the FDA-designated color or colors, the upper neck portion of the cylinder need not be that same color and use of white to make retesting information on a portion of the shoulder of the cylinder more visible is acceptable.
(Comment 15) Many comments recommend removal of the requirement that high-pressure medical gas cylinders containing mixtures of gases be painted in rough proportion to the fractions of gases contained in the mixture. These comments express concern that this method may cause the end user to ignore the label and rely on color proportions to identify the contents of a mixture. Additionally, these comments recommend that the following language be incorporated in the regulation: “when color marking consists of 2 or more colors, the pattern shall permit a portion of the colors to be seen together when viewed from the top,” which is consistent with industry practice.
(Response 15) FDA agrees with these comments. Therefore, FDA is revising the rule to require that the color for every constituent gas be visible when the cylinder is viewed from the top, and to remove the proportionality requirement.
(Comment 16) Many comments recommend removing the proposed requirement (at § 211.94(e)(4)(i)(G) in the proposed rule) that if the shoulder portion of a portable cryogenic medical gas container is colored, the color used must be the FDA-designated color of the gas held in the container. These comments point out that painting cryogenic containers with dark colors causes increased heat absorption, accelerating the rate of product venting, which could lead to unsafe conditions. These comments also note that large cryogenic containers made from carbon steel are painted in whole (including on the shoulder) in a light-reflective color, which would not necessarily correspond to the FDA-designated color or colors of the gas or gases held in the container.
(Response 16) FDA agrees with these concerns and is revising the proposed coloring requirement for portable cryogenic medical gas containers. As set forth in § 201.328(a)(1)(v) of the final rule, a portable cryogenic medical gas container may only be colored, in whole or in part, in the color or colors designated at § 201.328(c) if the gas or gases held in the container correspond to that color or those colors. The container may still be colored in a light-reflective color such as white (or some other color that is not an FDA-designated gas color), or simply not colored at all.
Finally, FDA is revising color requirements for the wraparound label such that they only apply to portable cryogenic medical gas containers that hold a single gas (see § 201.328(a)(1)(i) of this final rule). FDA believes that multiple colors on a single wraparound label—either in the lettering or in the background—may be impractical. Firms may still choose to follow the color scheme at § 201.328(a)(1)(i) for portable cryogenic medical gas containers that hold gas mixtures or blends, but will not be required to do so.
In § 211.94(e)(1) of the proposed rule, FDA proposed prohibiting cryogenic containers and high-pressure cylinders used to hold industrial gases from being converted to medical use, subject to limited exceptions.
(Comment 17) Many comments oppose any requirements to dedicate high-pressure cylinders and cryogenic containers to solely one use—industrial or medical. These comments contend that the root cause of the contamination incidents involving high-pressure cylinders discussed in the preamble to the proposed rule was the improper cleaning of cylinders, regardless of whether the cylinders previously held gases intended for medical or industrial use. These comments argue that the costs that would be associated with implementing this rule are not justified considering that the preamble to the proposed rule identified only two contamination incidents leading to injuries. According to these comments, these costs would include procuring additional containers (and associated assets), tracking individual containers over their useful life, marking containers for industrial or medical use, and increased distribution expenses. These comments further argue that FDA significantly underestimated the costs associated with this requirement in the economic analysis provided in the preamble to the proposed rule.
Many comments state that the proposed prohibition on conversion of medical gas containers from industrial to medical use is unwarranted because existing CGMP requirements, particularly § 211.94(c) (requiring cleaning of containers and closures to assure they are suitable for their intended use) and § 211.100(a) (requiring written procedures for process and production control designed to assure drug products have the identity, strength, quality, and purity they purport or are represented to possess), are adequate to prevent contamination associated with such conversion. These comments further argue that the proposed rule is inconsistent with FDA's past advice that medical gas assets can be converted from industrial to medical use and need not be dedicated to industrial use provided the items in question undergo validated cleaning procedures when converted to medical use.
(Response 17) FDA has reevaluated this proposed requirement in light of these concerns. FDA has determined that the risk of contamination associated with converting gas containers from industrial to medical use is relatively low, and can be fully addressed if the manufacturer, in compliance with §§ 211.84(a), 211.94(c), 211.100, and other applicable CGMP regulations, employs adequate, validated cleaning
(Comment 18) One comment states that the incidents dated March 20, 1998, and March 27, 1996, attributed in the proposed rule to contamination likely associated with conversion of high-pressure cylinders from industrial to medical use, could have been ignition events involving polytetraethylene seals or sealing tape. The comment suggests that a more detailed description of these events should be provided in order to make clear that the odors and compounds detected were from improper cleaning and not from ignition events.
(Response 18) As stated, FDA has reevaluated the necessity of the proposed non-conversion requirement and is removing it from the final rule.
In § 211.94(e)(3) of the proposed rule, FDA proposed to require that portable cryogenic medical gas containers not manufactured with permanent gas use outlet connections have gas-specific use outlet connections that cannot be readily removed or replaced except by the manufacturer. FDA is finalizing this provision (renumbered as § 211.94(e)(1)) with certain minor modifications explained in this document.
(Comment 19) Many comments support this requirement, as it would have a positive impact on patient safety by making medical gas mix-ups less likely. In fact, these comments recommend that the rule be extended to other outlets typically found on portable cryogenic medical gas containers, namely, the vent outlet and liquid fill/withdrawal outlet.
(Response 19) FDA is not aware of mix-up incidents involving the vent outlet valves or with liquid fill/withdrawal outlets, and such hypothetical mix-ups do not seem likely, given that the gas use outlet connection should be the only connection used to connect a portable cryogenic container to a health care facility's gas supply system. Accordingly, FDA believes that it is not necessary to extend the secure gas-specific use outlet connection requirement to vent outlets or liquid fill/withdrawal outlets.
(Comment 20) Some comments propose that the Agency slightly modify the exemption for “small cryogenic gas containers for use by individual patients” from the proposed definition of “portable cryogenic medical gas containers.” These comments note that some liquid oxygen home units designed for use by individual patients are, in fact, also used in certain situations to fill other containers for use by patients. These comments are concerned that if the exemption is not clarified, these liquid oxygen home units may be subject to the secure gas use outlet connection rule if they are used to fill other containers. Accordingly, these comments propose that the exemption be revised to include “small cryogenic gas containers
(Comment 21) Many comments propose that FDA clarify in the rule that the requirement for secure gas-specific use outlet connections is inapplicable to cryogenic containers that are too large (
(Response to Comments 20 and 21) FDA agrees that the definition of “portable cryogenic medical gas container” as used in the rule should be clarified. As such, we are clarifying in the final rule that cryogenic gas containers not designed to be connected to a medical gas supply system, including tank trucks, trailers, rail cars, and liquid oxygen home units, are exempt from the secure gas-specific use outlet connection requirement.
(Comment 22) A comment recommends that base units used to fill portable containers for use by patients in hospitals and other health care facilities, and large cryogenic containers that may be placed on trailers along with vaporizers and that are used as emergency backup when repairs are performed on the health care facility's permanent storage system, also be excluded from the rule. The comment states that because these base units and containers remain within the control of the medical gas manufacturer, and not the consumer, the risk of an improper connection is substantially reduced.
(Response 22) FDA does not agree that base units used to fill portable containers for use by patients in hospitals and other health care facilities and large cryogenic containers that may be placed on trailers along with vaporizers and that are used as emergency backup when repairs are performed on the health care facility's permanent storage system should be excluded from the rule. We believe that requiring such containers (which are designed to be connected to a medical gas supply system) to have secure gas-specific use outlet connections will help minimize the likelihood that an incorrect gas is connected to a gas distribution system or container.
(Comment 23) Many comments express concern with the discussion of records maintenance in the proposed rule. The PRIA indicated that there could be a slight increase in the medical gas industry's container closure records maintenance activities under § 211.184 if the industry chooses to use locking valves or devices to bring portable cryogenic containers into compliance with the secure gas-specific use outlet connection requirement. The proposed rule stated that under existing § 211.184(b), records of the results of any test or examination of a container closure under § 211.82(a) must be maintained, and that under existing § 211.184(c), an individual inventory record must be maintained for each container closure. FDA estimated that about 10 percent of the existing inventory of portable cryogenic containers would need to be modified to comply with the secure gas-specific use outlet connection requirement, that the industry would choose to comply through use of locking valves or devices (rather than silver brazing, which is more expensive), and that the records maintenance activities associated with this work would amount to about 2 minutes per locking device per year, resulting in an annualized records maintenance cost of about $54,000 dollars per year. The estimate of 2 minutes per locking device per year includes time associated with the initial inspection of the locking valve or device by the manufacturer (71 FR 18039 at 18048-18049).
The comments express concern that the proposed rule's reference to § 211.184(c) in particular entails a change of policy from FDA's historic application of records maintenance regulations to the medical gas industry and amounts to a new records maintenance expectation for medical gas containers and closures that would cost the industry between $376 and $665 million dollars to meet. The comments appear to reach this much higher number by assuming that it would be necessary to serialize valves and/or permanently mark all valves and connections on portable cryogenic containers to meet what they contend
(Response 23) FDA does not believe that serializing or permanently marking all valves and connections on portable cryogenic containers is necessary to satisfy the requirements of § 211.184. FDA did not intend to announce new or heightened records maintenance expectations for medical gas container closures in the proposed rule. While FDA believes that the records maintenance activities used to arrive at the estimate in the PRIA section for the records maintenance costs associated with the secure gas-specific use outlet connection requirement are appropriate, medical gas manufacturers may employ alternative records maintenance procedures to document any work performed to bring container closures into compliance with the secure gas-specific use outlet connection requirement.
As discussed in the Final Regulatory Impact Analysis (see Section VI), the estimated records maintenance costs associated with the secure gas use outlet connections requirements have been revised to range between $70 and $3,500. This reduction in estimated costs is largely driven by updated information showing that the number of portable cryogenic containers in the market is much lower than was thought at the time the proposed rule was issued.
(Comment 24) A comment requests that the final rule include a requirement that all personnel handling medical gases have documented competency training. This comment states that medical gases are USP listed and should be delivered by qualified personnel, such as respiratory therapists (who, according to this comment, are the only health care professionals specifically educated and competency-tested in all aspects of oxygen therapy).
(Response 24) In § 211.25 individuals engaged in the manufacture, processing, packing, or holding of a drug product (which would include a medical gas manufacturer's delivery personnel) are required to have the education, training, and experience necessary to perform assigned functions. Further, we are not aware that actual administration of medical gases to patients is part of the function of medical gas delivery personnel, so it is not clear why such personnel would need to be trained to administer gases to patients. We believe the existing regulation (§ 211.25) is sufficient to address any issues that may arise regarding the qualifications of a medical gas manufacturer's delivery personnel.
This rule is effective January 17, 2017. Affected firms and persons are encouraged to comply as soon as possible after the effective date. We recognize, however, that while most of the requirements of this final rule are already industry practices (Refs. 1-3), such practices are not ubiquitous. Accordingly, the compliance date is May 17, 2017. We believe it would be reasonable for affected firms and persons to fully implement this final rule in that amount of time.
(Comment 25) FDA received several comments that the 60-day time period proposed for implementation of the proposed rule is insufficient. These comments state that the proposal will impact every portable cryogenic container and request that FDA provide a reasonable transition period consistent with FDA precedents.
(Response 25) FDA agrees, and is establishing a compliance date that is 180 days after publication of the final rule in the
We have examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). We believe that this final rule is not a significant regulatory action as defined by Executive Order 12866.
The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the final rule imposes new burdens on small entities, we cannot certify that the final rule will not have a significant economic impact on a substantial number of small entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year.” The current threshold after adjustment for inflation is $146 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. FDA does not expect this final rule to result in an expenditure in any year that meets or exceeds this amount.
This final rule amends the CGMP and labeling regulations for medical gases. These amendments include the following: (1) Portable cryogenic medical gas containers not manufactured with permanent gas use outlet connections must have gas-specific use outlet connections that cannot be readily removed or replaced except by the manufacturer; (2) portable cryogenic medical gas containers must have a 360° wraparound label that clearly identifies the container's contents and conforms to certain placement, lettering, and other requirements; (3) high-pressure medical gas cylinders (and portable cryogenic medical gas containers, if colored) must be colored using an FDA-designated standard color (or colors in the case of gas mixtures); (4) the list of medical gases that are conditionally exempt from certain otherwise-applicable labeling requirements has been revised; and (5) the warning statements required to be on final use containers to qualify for the conditional exemption from certain otherwise-applicable labeling requirements have been modified for oxygen and medical air.
The rule is expected to provide a modest net social benefit (estimated benefits minus estimated costs) to society. Costs are attributed to coloring medical gas containers, complying with the 360° wraparound label requirement for portable cryogenic containers, and requiring gas-specific use outlet connections on portable cryogenic containers to be permanently attached to the valve body (
FDA also examined the economic implications of the rule as required by the Regulatory Flexibility Act. If a rule will have a significant economic impact on a substantial number of small entities, the Regulatory Flexibility Act requires us to analyze regulatory options that would lessen the economic effect of the rule on small entities. The rule imposes new costs to small entities. We estimate the rule's one-time costs to roughly range between 0.0001 percent and 0.13 percent of average annual revenues.
The full analysis of economic impacts is available in the docket for this final rule (Ref. 4) and at
We have determined under 21 CFR 25.30(j) and (k) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
This final rule contains information collection requirements that are subject to review by the OMB under the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501-3520). The title, description, and respondent description of the information collection provisions are shown in this section with an estimate of the third-party disclosure and recordkeeping burdens. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information.
We estimate the burden for the collection of information as follows:
A gas listed at § 201.161(a) is exempt from certain labeling requirements if its labeling bears, among other things, a warning statement that conforms to § 201.161(a)(1). Section 201.161(a)(1)(i) specifies the content to be included in a warning statement for oxygen and § 201.161(a)(1)(ii) specifies the content to be included in a warning statement for nitrogen, carbon dioxide, helium, nitrous oxide, and any medically appropriate combinations of any of the gases listed in § 201.161(a). FDA believes most medical gases are already labeled in a manner that complies with § 201.161(a) as finalized. Furthermore, because § 201.161(a) provides the warning statement content to be included in medical gas labeling, the inclusion of these warning statements on medical gas labeling is not considered a “collection of information” subject to review under the PRA. See 5 CFR 1320.3(c)(2) (providing that “the public disclosure of information originally supplied by the Federal government to the recipient for the purpose of disclosure to the public is not included” within the definition of “collection of information”).
Under § 201.328(a)(1), each portable cryogenic medical gas container must be conspicuously marked with a 360° wraparound label identifying its contents. The identity of the medical gas held in the container must be printed on the label in one of the following ways: Using lettering that appears in the standard color designated for the gas in § 201.328(c) and that is printed against a white background, or using lettering that appears in white against a background that is painted in the standard color for the gas as designated in § 201.328(c). The lettering for the name of the gas on the label must be at least 2 inches high; the name of the gas must be printed continuously around the label and be capable of being read around the entire container; the label must be on the sidewall of the container, as close to the top of the container as possible but below the top weld seam; and, if the shoulder portion
Under § 201.328(a)(2), the 360° wraparound label required in § 201.328(a)(1), or a separate label, must include in conspicuous lettering the phrase “For Medical Use,” “Medical Gas,” or some similar phrase that indicates the gas is for medical use. Finally, under § 211.94(e)(2), the wraparound label must be affixed to the container in a manner that does not interfere with other labeling and such that it is not susceptible to becoming worn or inadvertently detached during normal use, and the wraparound label must be reasonably resistant to fading, durable when exposed to atmospheric conditions, and not readily soluble in water.
We estimate that there are approximately 35,000 portable cryogenic containers in medical gas service that are subject to the labeling requirements at § 201.328(a). As discussed in the Economic Analysis of Impacts, FDA conservatively estimates that all manufacturers will choose to comply with § 201.328(a) by removing any existing wraparound labels from all portable cryogenic containers and replacing them with wraparound labels that meet all of the requirements at § 201.328(a). Thus, on average, each manufacturer would need to add labels to (or re-label) approximately 14 containers (35,000 ÷ 2,500). FDA estimates that approximately 6 minutes would be required to remove any existing wraparound label and attach a new wraparound label to each container. Thus, the total burden third-party disclosure burden hours associated with § 201.328(a)(1) and (2) is approximately 3,500 hours (2,500 × 14 × 0.10 hours).
Section 201.328(a)(1)(v) also provides that a portable cryogenic cylinder may only be colored in the color or colors designated in § 201.328(c) if the gas or gases held within the container correspond to that color or those colors. Alternatively, the container may be colored in a light-reflective color such as white (or some other color which is not an FDA-designated gas color), or simply not colored at all. Based on discussions with subject matter experts, we believe that few to no cryogenic containers will require recoloring as a result of this requirement, and therefore we estimate no third-party disclosure burden associated with this requirement.
Under § 201.328(b), high-pressure medical gas cylinders must be colored on the shoulder with the colors designated in § 201.328(c) for the gas contained in the cylinder, and such colors must be visible when viewed from the top of the cylinder. Under § 211.94(e)(2), the materials used for coloring medical gas containers must be reasonably resistant to fading, durable when exposed to atmospheric conditions, and not readily soluble in water. Based on information contained in the Economic Analysis of Impacts (see Section VI), we estimate that as many as 10 percent of the estimated 24.6 million high-pressure cylinders in medical service will require coloring or recoloring to comply with § 201.328(b). Thus, on average, each manufacturer would need to color 984 containers (2.46 million ÷ 2,500). We conservatively estimate that it will take an average of 6 minutes to color a cylinder. Thus, the total third-party disclosure burden hours associated with § 201.328(b) is approximately 246,000 hours (2,500 × 984 × 0.10 hours).
Section 211.94(e)(1) requires that portable cryogenic medical gas containers that are not manufactured with permanent gas use outlet connections must have gas-specific use outlet connections that are attached to the valve body so that they cannot be readily removed or replaced except by the manufacturer. A small portion of the existing inventory of portable cryogenic containers would need to be modified to comply with this requirement, and manufacturers must maintain records in accordance with § 211.184 for drug product containers. As discussed in the Economic Analysis of Impacts (see Section VI), FDA conservatively estimates that manufacturers will need to secure the gas use outlets of as many as 1,750 portable cryogenic containers to bring them into compliance with the final rule. As a result each manufacturer would incur annual recordkeeping under § 211.184 incident to bringing, on average, 0.7 containers into compliance with the secure gas use outlet connection requirement (1,750 ÷ 2,500). Consistent with our estimate in the proposed rule, this should require an average of 2 minutes (0.033 hours) per container. This results in an annual burden of 58 hours (2,500 × 0.7 × 0.033 hours) for 1,750 records.
The information collection provisions of this final rule have been submitted to OMB for review, as required by section 3507(d) of the PRA. Before the effective date of this final rule, FDA will publish a notice in the
We have analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies 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. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.
The following reference is on display in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; it is also available electronically at
Drugs, Labeling, Reporting and recordkeeping requirements.
Drugs, Labeling, Laboratories, Packaging and containers, Prescription drugs, Reporting and recordkeeping requirements, Warehouses.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR parts 201 and 211 are amended as follows:
21 U.S.C. 321, 331, 351, 352, 353, 355, 358, 360, 360b, 360gg-360ss, 371, 374, 379e; 42 U.S.C. 216, 241, 262, 264.
(a) Oxygen, nitrogen, carbon dioxide, helium, and nitrous oxide gases intended for drug use, and medically appropriate combinations of any of these gases intended for drug use, are exempted from the requirements of § 201.100(b)(2) and (3), and (c)(1), provided that, where applicable, the requirements of §§ 201.328 and 211.94(e)(2) of this chapter are met and the labeling bears, in addition to any other information required by the Federal Food, Drug, and Cosmetic Act, the following:
(1)(i) In the case of oxygen, a warning statement providing that uninterrupted use of high concentrations of oxygen over a long duration, without monitoring its effect on oxygen content of arterial blood, may be harmful; that oxygen should not be used on patients who have stopped breathing unless used in conjunction with resuscitative equipment; and, in the case of oxygen that may be provided without a prescription for use in the event of depressurization or other environmental oxygen deficiency, or for oxygen deficiency or for use in emergency resuscitation when administered by properly trained personnel, a warning statement providing that oxygen may be used for emergency use only when administered by properly trained personnel for oxygen deficiency and resuscitation, and that for all other medical applications a prescription is required.
(ii) In the case of nitrogen, carbon dioxide, helium, nitrous oxide, and medically appropriate combinations of any of the gases listed in paragraph (a) of this section, a warning statement providing that the administration of the gas or gas combination (as applicable) may be hazardous or contraindicated; and that the gas or gas combination (as applicable) should be used only by or under the supervision of a licensed practitioner who is experienced in the use and administration of the gas or gas combination (as applicable) and is familiar with the indications, effects, dosages, methods, and frequency and duration of administration, and with the hazards, contraindications, and side effects and the precautions to be taken.
(2) Any needed directions concerning the conditions for storage and warnings against the inherent dangers in the handling of the specific compressed gas.
(b) [Reserved]
(a)
(1) Each portable cryogenic medical gas container must be conspicuously marked with a 360° wraparound label identifying its contents. Such label must meet the requirements of § 211.94(e)(2) of this chapter and the following additional requirements.
(i) If the container holds a single gas, the name of the gas held in the container must be printed on the label in one of the following ways:
(A) Using lettering that appears in the color designated for the gas in paragraph (c) of this section and that is printed against a white background, or
(B) Using lettering that appears in white against a background that is painted in the color for the gas designated in paragraph (c) of this section.
(ii) The lettering for the name of the gas on the label must be at least 2 inches high.
(iii) The name of the gas must be printed continuously around the label and be capable of being read around the entire container.
(iv) The label must be on the sidewall of the container, as close to the top of the container as possible but below the top weld seam.
(v) A portable cryogenic medical gas container may only be colored in the color or colors designated in paragraph (c) of this section if the gas or gases held within the container correspond to that color or those colors.
(2) A label on the container (either the 360° wraparound label required in paragraph (a)(1) of this section or a separate label) must include, in conspicuous lettering, the phrase “For Medical Use”, “Medical Gas,” or some similar phrase that indicates the gas is for medical use.
(b)
(c)
21 U.S.C. 321, 351, 352, 355, 360b, 371, 374; 42 U.S.C. 216, 262, 263a, 264.
(e)
(2)
(c) * * * Labeling reconciliation is also waived for 360° wraparound labels on portable cryogenic medical gas containers.
Centers for Medicare & Medicaid Services (CMS), HHS.
Final rule; correction.
This document corrects technical errors in the final rule that was placed on public inspection at the Office of the Federal Register on November 2, 2016 and scheduled for publication in the
This correcting document is effective January 1, 2017.
Terri Plumb, (410) 786-4481, Gaysha Brooks, (410) 786-9649, or Annette Brewer (410) 786-6580.
In FR Doc 2016-26668, that was placed on public inspection at the Office of the Federal Register on November 2, 2016 and scheduled for publication in the
In the CY 2017 PFS final rule, we inadvertently omitted or included language in § 410.79(b), (c)(1)(ii) and (iv), (c)(2)(i) and § 424.59(a)(1) and (5), (b)(4)(i), and (e)(2)(i).
Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rule in the
In our view, this correcting document does not constitute a rulemaking that would be subject to these requirements. This document merely corrects technical errors in the CY 2017 PFS final rule. The corrections contained in this document are consistent with, and do not make substantive changes to, the policies and payment methodologies
Even if this were a rulemaking to which the notice and comment and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this document into the CY 2017 PFS final rule or delaying the effective date of the corrections would be contrary to the public interest because it is in the public interest to ensure that the rule accurately reflects the public comment period. Further, such procedures would be unnecessary, because we are not making any substantive revisions to the final rule, but rather, we are simply correcting the
In FR Doc. 16-26668 appearing on page 80170 in the
The revisions read as follows:
(b) * * *
(c) * * *
(1) * * *
(ii) Have as of the date of attendance at the first core session a body mass index (BMI) of at least 25 if not self-identified as Asian or a BMI of at least 23 if self-identified as Asian.
(iv) Have no previous diagnosis of type 1 or type 2 diabetes (other than gestational diabetes).
(2) * * *
(i)
(a) * * *
(1) At the time of enrollment has full CDC DPRP recognition.
(5) Submits a roster of all coaches who will be furnishing MDPP services on the entity's behalf that includes the coaches' first and last names, SSN, and NPI.
(b) * * *
(4) * * *
(i) Has attended one, four or nine core sessions, or
(e) * * *
(2) * * *
(i) Become eligible to bill for MDPP services again if it meets the requirements of paragraph (a)(1) of this section, and enrolls again in Medicare as an MDPP supplier subject to paragraph (a) of this section.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; area closure and inseason adjustment.
This action closes the Georges Bank Cod Trimester Total Allowable Catch Area to Northeast multispecies common pool vessels and adjusts the Georges Bank cod possession and trip limit for common pool vessels for the remainder of Trimester 2, through December 31, 2016. The common pool fishery is projected to catch 90 percent of its Trimester 2 quota for Georges Bank cod. The closure and possession and trip limit reductions are intended to prevent an overage of the common pool's quota for this stock.
This action is effective November 15, 2016, through December 31, 2016.
Liz Sullivan, Fishery Management Specialist, (978) 282-8493.
Federal regulations at 50 CFR 648.82(n)(2)(ii) require the Regional Administrator to close a common pool Trimester Total Allowable Catch (TAC) Area for a stock when 90 percent of the Trimester TAC is projected to be caught. The closure applies to all common pool vessels fishing with gear capable of catching that stock for the remainder of the trimester.
As of November 5, 2016, the common pool fishery has caught approximately 87 percent of the Trimester 2 TAC (4.2 mt) for Georges Bank (GB) cod. We
Effective November 15, 2016, the GB Cod Trimester TAC Area is closed for the remainder of Trimester 2, through December 31, 2016, to all common pool vessels fishing with trawl gear, sink gillnet gear, and longline/hook gear. The GB Cod Trimester TAC Area consists of statistical areas 521, 522, 525, and 561. The area reopens at the beginning of Trimester 3 on January 1, 2017.
The intent of the trimester TAC area closure is to close the area where 90 percent of the catch of the stock has occurred. However, data indicate that common pool vessels have caught approximately 35 percent of the total catch in Trimester 2 from outside the statistical areas that will be affected by the closure described above. Federal regulations at § 648.86(o) authorize the Regional Administrator to adjust the possession and trip limits for common pool vessels to prevent the overharvest or underharvest of the common pool quotas. Therefore, the possession and trip limits for GB cod, are reduced as shown in Table 1, effective November 15, 2016, through December 31, 2016. This is intended to prevent the common pool from exceeding its sub-annual catch limit, but still allow for landing incidental catch of GB cod in areas not affected by the closure.
On January 1, 2017, common pool possession and trip limits for GB cod will return to the initial limits set by Framework Adjustment 55 to the Northeast Multispecies Fishery Management Plan (FMP).
If a vessel declared its trip through the Vessel Monitoring System (VMS) or the interactive voice response system, and crossed the VMS demarcation line prior to November 15, 2016, it may complete its trip within the Trimester TAC Area. Additionally, such vessels are not subject to the new possession and trip limits for that trip. A vessel that has set gillnet gear prior to November 15, 2016, may complete its trip by hauling such gear.
Any overage of the Trimester 1 or 2 TACs must be deducted from the Trimester 3 TAC. Any uncaught portion of the Trimester 1 and Trimester 2 TACs is carried over into the next trimester. If the common pool fishery exceeds its sub-ACL for the 2016 fishing year, the overage must be deducted from the common pool's sub-ACL for fishing year 2017. However, any uncaught portion of the common pool's sub-ACL may not be carried over into the following fishing year.
Weekly quota monitoring reports for the common pool fishery are on our Web site at:
This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.
The Assistant Administrator for Fisheries, NOAA, finds good cause pursuant to 5 U.S.C. 553(b)(B) and 5 U.S.C. 553(d)(3) to waive prior notice and the opportunity for public comment and the 30-day delayed effectiveness period because it would be impracticable and contrary to the public interest.
Regulations require the Regional Administrator to close a trimester TAC area to the common pool fishery when 90 percent of the Trimester TAC for a stock has been caught. Updated catch information only recently became available indicating that the common pool fishery caught 90 percent of its Trimester 2 TAC for GB cod by November 7, 2016. The time necessary to provide for prior notice and comment, and a 30-day delay in effectiveness, prevents the immediate closure of the GB Cod Trimester 2 TAC Area and reduction of the common pool's GB cod possession and trip limits. Delaying the effective date of a closure and possession and trip limit reduction increases the likelihood that the common pool fishery will exceed its quota of GB cod to the detriment of this stock, which could undermine management objectives of the Northeast Multispecies FMP.
Additionally, an overage of the common pool quota could cause negative economic impacts to the common pool fishery as a result of overage paybacks in a future trimester or fishing year.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; directed fishery closure.
NMFS is closing the directed herring fishery in management Area 1B, limiting catch from that area to 2,000 lb (907.2 kg) per trip and prohibiting landing more than once per calendar day, because it projects that 92 percent of the 2016 annual seasonal catch limit for that area will have been caught by the effective date. This action is
Effective 0001 hr local time, November 18, 2016, through December 31, 2016.
Daniel Luers, Fishery Management Specialist, (978) 282-8457.
The reader can find regulations governing the herring fishery at 50 CFR part 648. The regulations require annual specification of the overfishing limit, acceptable biological catch, annual catch limit (ACL), optimum yield, domestic harvest and processing, U.S. at-sea processing, border transfer, and sub-ACLs for each management area. The 2016 Domestic Annual Harvest is 103,045 metric tons (mt); the 2016 sub-ACL allocated to Area 1B is 4,600 mt, and 138 mt of the Area 1B sub-ACL is set aside for research (78 FR 61828, October 4, 2013). The 2016 Area 1B sub-ACL was decreased to 2,941 mt to account for the 1,521 mt overage in 2014 catch. For management Area 1B, the catch of sub-ACL is currently allocated to the seasonal period from May 1 through December 31. There is no catch currently allocated to the seasonal period from January 1 through April 30. Therefore, under current regulations, vessels are prohibited from fishing for herring in or from Area 1B during the January 1 through April 30 period.
The regulations at § 648.201 require that when the NMFS Administrator of the Greater Atlantic Region (Regional Administrator) projects herring catch will reach 92 percent of the sub-ACL allocated in any of the four management areas designated in the Atlantic Herring Fishery Management Plan (FMP), NMFS will prohibit herring vessel permit holders from fishing for, catching, possessing, transferring, or landing more than 2,000 lb (907.2 kg) of herring per trip and landing more than once per calendar day in or from the specified management area for the remainder of the directed fishery closure period. The Regional Administrator monitors the herring fishery catch in each of the management areas based on dealer reports, state data, and other available information. NMFS publishes notification in the
The Regional Administrator has determined, based on dealer reports and other available information, that the herring fleet will catch 92 percent of the total herring sub-ACL allocated to Area 1B for the 2016 seasonal period from May 1 through December 31, 2016, by November 18, 2016. Therefore, effective 0001 hr local time, November 18, 2016, federally permitted vessels may not fish for, catch, possess, transfer, or land more than 2,000 lb (907.2 kg) of herring per trip and land more than once per calendar day, in or from Area 1B through December 31, 2016, except that vessels that have entered port before 0001 hr on November 18, 2016, may offload and sell more than 2,000 lb (907.2 kg) of herring from Area 1B from that trip after the closure. During the directed fishery closure, November 18, 2016, through December 31, 2016, a vessel may transit through Area 1B with more than 2,000 lb (907.2 kg) of herring on board, provided the vessel did not catch more than 2,000 lb (907.2 kg) of herring in Area 1B and its fishing gear is not available for immediate use as defined by § 648.2. Effective 0001 hr, November 18, 2016, federally permitted dealers may not receive herring from federally permitted herring vessels that harvest more than 2,000 lb (907.2 kg) of herring from Area 1B through 2400 hr local time, December 31, 2016, unless it is from a trip landed by a vessel that entered port before 0001 hr on November 18, 2016. Under current regulations during the seasonal period from January 1, 2017, through April 30, 2017, vessels are prohibited from fishing for, catching, possessing, transferring, or landing herring from Area 1B during this seasonal period. Vessels may transit area 1B with herring on board provided such herring were caught in an area or areas with sub-ACL available and that all fishing gear is stowed and not available for immediate use as defined in § 648.2, and the vessel is issued a permit that authorizes the amount of herring on board for the area where the herring was harvested. Beginning on May 1, 2017, the 2017 allocation for Area 1B is expected to become available.
This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.
NMFS finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest and impracticable. The herring fishery opened for the 2016 fishing year on January 1, 2016, and Management Area 1B opened on May 1, 2016. Data indicating the herring fleet will have landed at least 92 percent of the 2016 sub-ACL allocated to Area 1B have only recently become available. Landings data is updated on a weekly basis, and NMFS monitors catch data on a daily basis as catch increases toward the limit for the area. Further, high-volume catch and landings in this fishery increase total catch relative to the sub-ACL quickly. This action is a required response to that recently available data and closes the directed herring fishery and imposes a 2,000-lb (907.2-kg) possession limit for Management Area 1B through December 31, 2016, under current regulations. The regulations at § 648.201(a) require such action to ensure that herring vessels do not exceed the 2016 sub-ACL allocated to Area 1B. If implementation of this closure is delayed to solicit prior public comment, the sub-ACL for Area 1B for this fishing year may be exceeded, thereby undermining the conservation objectives of the FMP. If sub-ACLs are exceeded, the excess must also be deducted from a future sub-ACL and would reduce future fishing opportunities. Also, the public had prior notice and full opportunity to comment on this process when these provisions were put in place. Based on these considerations, NMFS further finds, pursuant to 5 U.S.C. 553(d)(3), good cause to waive the 30-day delayed effectiveness period for the reasons stated above.
16 U.S.C. 1801
Office of Environment, Health, Safety and Security, U.S. Department of Energy.
Notice of proposed rulemaking.
The U.S. Department of Energy (DOE) proposes to amend the values listed in two appendices to its current occupational radiation protection regulations. The proposed amendment to appendix C would correct the derived air concentration value for any single radionuclide not listed in the appendix C table with a decay mode other than alpha emission or spontaneous fission and with radioactive half-life less than two hours, adjusted for an 8-hr work day. The proposed amendments to appendix E would correct the activity information of two radionuclides, Rh-102 and Rh-102m.
The comment period for this proposed rule will end on December 19, 2016.
You may submit comments, identified by docket number AU-RM-16-ORP, and/or Regulation Identification Number (RIN) 1992-AA51 in one of four ways (please select only one of the ways listed):
1.
2.
3.
4.
For detailed instructions on submitting comments and additional information on the rulemaking process, see Section IV of this document (Public Participation).
James Dillard, U.S. Department of Energy, Office of Environment, Health, Safety and Security, Mailstop AU-11, 1000 Independence Ave. SW., Washington, DC 20585. Telephone: 301-903-1165. Email:
The requirements in title 10, Code of Federal Regulations, part 835 (10 CFR part 835),
Title 10 CFR part 835 appendix E values were developed to ensure the proper accountability of sealed radioactive sources, as well as radioactive material posting and labeling requirements (63 FR 59662, November 4, 1998). DOE most recently amended the values of appendix E to part 835 on June 8, 2007 (72 FR 31904), using the International Commission on Radiological Protection (ICRP) Publication 60 methodology (ref. 1) and the same exposure scenarios discussed in a 1998 amendment to 10 CFR part 835 (63 FR 59662, November 4, 1998). The values were based on the more limiting of the quantity of radioactive material which results in either an external or internal whole body dose, from either inhalation or ingestion, of 100 millirems. However, the final rule incorrectly listed values for two radionuclides. This proposed amendment to appendix E would provide the correct activity values for these two radionuclides (Rh-102 and Rh-102m), calculated from internal exposure scenario derived from ICRP Publication 119 (ref. 2).
A. Appendix C—Derived Air Concentration (DAC) for Workers from External Exposure During Immersion in a Cloud of Airborne Radioactive Material. The proposed amendment would provide a correction to the derived air concentration value for any single radionuclide not listed in the Appendix C table with a decay mode other than alpha emission or spontaneous fission and with radioactive half-life less than two hours to 1E-06 µCi/mL (7E+04 Bq/m
B. Appendix E—Values for Establishing Sealed Radioactive Source Accountability and Radioactive Material Posting and Labeling Requirements. The proposed amendment would correct the activity for Rh-102 to 6.4E+05 µCi and the activity from Rh-102m to 3.0E+05 µCi.
This regulatory action has been determined not to be “not significant” under Executive Order 12866, “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Accordingly, this action was not subject to review under that Executive Order by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).
The Regulatory Flexibility Act of 1980 (5 U.S.C. 601
This proposed rule would amend DOE requirements for nuclear safety and occupational radiation protection at DOE sites. The requirements of part 835 are primarily implemented by contractors who conduct work at DOE facilities. DOE considered whether these contractors are “small businesses” as the term is defined in the Regulatory Flexibility Act (5 U.S.C. 601(3)). The Regulatory Flexibility Act's definition incorporates the definition of small business concerns in the Small Business Act, which the Small Business Administration (SBA) has developed through size standards in 13 CFR part 121. The DOE contractors subject to this rule exceed the SBA's size standards for small businesses. In addition, DOE expects that any potential economic impact of this rule would be negligible because DOE activities are conducted by contractors who are reimbursed through their contracts with DOE for the costs of complying with DOE nuclear safety and radiation protection requirements, including the costs of complying with the proposed rule. For these reasons, DOE certifies that this proposed rule, if promulgated, would not have a significant economic impact on a substantial number of small entities, and therefore, no regulatory flexibility analysis has been prepared. DOE's certification and supporting statement of factual basis will be provided to the Chief Counsel of Advocacy of the SBA pursuant to 5 U.S.C. 605(b).
This proposed rule does not impose a collection of information requirement subject to the Paperwork Reduction Act (44 U.S.C. 3501
DOE has concluded that promulgation of this rule falls into a class of actions that would not individually or cumulatively have a significant impact on the human environment, as determined by DOE's regulations implementing the National Environmental Policy Act of 1969 (42 U.S.C. 4321
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, February 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplification and burden reduction. Section 3(b)(2) 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, to be given to the regulation; (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, to be given to the regulation; (5) 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 the standards. DOE has completed the
Executive Order 13132, “Federalism” (64 FR 43255, August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. 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, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. No further action is required by Executive Order 13132.
Under Executive Order 13175 (65 FR 67249, November 6, 2000) on “Consultation and Coordination with Indian Tribal Governments,” DOE may not issue a discretionary rule that has “tribal” implications and imposes substantial direct compliance costs on Indian tribal governments. DOE has determined that the proposed rule would not have such effects and concluded that Executive Order 13175 does not apply to this proposed rule.
Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), 2 U.S.C. 1531
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 OMB a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any 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 would not have a significant adverse effect on the supply, distribution, or use of energy and is therefore not a significant energy action. Accordingly, DOE has not prepared a Statement of Energy Effects.
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family well-being. The proposed 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.
The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB.
OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed this proposed rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
DOE will accept comments, data and information regarding this proposed rule before or after the public hearings, but no later than the date provided in the
1.
Do not submit to
DOE processes submissions made through
2.
Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via mail or hand delivery/courier, please provide all items on a CD or USB flash drive, if feasible. It is not necessary to submit printed copies. No facsimiles (faxes) will be accepted.
Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
3.
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).
4.
The Secretary of Energy has approved publication of this proposed rule.
Federal buildings and facilities, Nuclear energy, Nuclear materials, Nuclear power plants and reactors, Nuclear safety, Occupational safety and health, Radiation protection, and Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Department of Energy proposes to amend part 835 of chapter III of title 10 of the Code of Federal Regulations as set forth below:
42 U.S.C. 2201, 7191, 50 U.S.C. 2410.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Learjet Inc. Model 36A airplanes. This proposed AD was prompted by a report indicating that an aileron cable failed on an airplane during a tension check and a determination that Model 36A airplanes were not included in AD 2005-13-36, which addresses this issue for other Learjet Inc. airplanes. This proposed AD would require a one-time inspection of the center ball of the aileron control cables for a defective
We must receive comments on this proposed AD by January 3, 2017.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Learjet, Inc., One Learjet Way, Wichita, KS 67209-2942; telephone 316-946-2000; fax 316-946-2220; email
You may examine the AD docket on the Internet at
Donald Ristow, Aerospace Engineer, Systems and Propulsion Branch, ACE-116W, FAA, Wichita Aircraft Certification Office (ACO), 1801 Airport Road, Room 100, Dwight D. Eisenhower National Airport, Wichita, Kansas 67209; phone: 316-946-4120; fax: 316-946-4107; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We received a report indicating that an aileron cable failed on a Learjet Inc. Model 35A (C-21A) airplane when the cable underwent a tension check while being installed. Further investigation showed that an over-sized ball was swaged onto the cable during manufacture. Swaging an over-sized ball onto a cable allows excess material into the swaging die, which causes the ball to over-swage and then sever the cable strands. This condition, if not corrected, could result in severe weakening of the aileron cable, and consequent reduced controllability of the airplane.
The subject area on Learjet Inc. Model 36A airplanes is identical to that on the affected Model 35A (C-21A) airplane. Therefore, Model 36A airplanes may be subject to the same unsafe condition.
We previously issued AD 2005-13-36, Amendment 39-14173 (70 FR 38578, July 5, 2005) (“AD 2005-13-36”), for Learjet Inc. Model 23, 24, 24A, 24B, 24B-A, 24C, 24D, 24D-A, 24E, 24F, 24F-A, 25, 25A, 25B, 25C, 25D, 25F, 28, 29, 31, 31A, 35, 35A (C-21A), and 36 airplanes. Model 36A airplanes were inadvertently omitted from the applicability of that AD. The applicability of AD 2005-13-36 referred to Bombardier Alert Service Bulletin A35/36-27-42, dated December 23, 2002, for Model 35, 35A (C-21A), and 36 airplanes. However, Model 36A airplanes are also identified in that service information.
We reviewed Bombardier Alert Service Bulletin A35/36-27-42, dated December 23, 2002. The service information describes procedures for a one-time inspection of the center ball of the aileron control cables for a defective swage, and replacement of defective cables. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously, except as described in “Differences between this Proposed AD and the Service Information.”
Bombardier Alert Service Bulletin A35/36-27-42, dated December 23, 2002, recommends that operators accomplish the actions within 10 flight hours after receipt. This proposed AD would require that operators accomplish the actions within 100 flight hours, or 90 days after the effective date of the AD, whichever occurs first. We find that the proposed compliance time addresses the unsafe condition soon enough to maintain an adequate level of safety for the affected fleet. In developing an appropriate compliance time for this proposed AD we considered the degree of urgency associated with addressing the unsafe condition, and the maximum interval of time allowable for all affected airplanes to continue to operate without compromising safety.
We estimate that this proposed AD affects 21 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary replacement that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need this replacement:
According to the manufacturer, some of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 3, 2017.
None.
This AD applies to Learjet Inc. Model 36A airplanes, certificated in any category, as identified in Bombardier Alert Service Bulletin A35/36-27-42, dated December 23, 2002.
Air Transport Association (ATA) of America Code 27, Flight controls.
This AD was prompted by a report indicating that an aileron cable failed on an airplane during a tension check. We are issuing this AD to prevent severe weakening of the aileron cable, and consequent reduced controllability of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Within 100 flight hours or 90 days after the effective date of this AD, whichever occurs first, do a detailed inspection of the center ball of the aileron control cables for a defective swage, and before further flight, replace any damaged or defective cable with a new cable, in accordance with the Accomplishment Instructions of Bombardier Alert Service Bulletin A35/36-27-42, dated December 23, 2002. For the purposes of this AD, a detailed inspection is: An intensive examination of a specific item, installation, or assembly to detect damage, failure, or irregularity. Available lighting is normally supplemented with a direct source of good lighting at an intensity deemed appropriate. Inspection aids such as mirrors, magnifying lenses, etc., may be necessary. Surface cleaning and elaborate procedures may be required.
As of the effective date of this AD, no person may install on any airplane an aileron control cable unless it has been inspected in accordance with paragraph (g) of this AD.
Although Bombardier Alert Service Bulletin A35/36-27-42, dated December 23, 2002, has procedures for submitting a report showing compliance and for returning any discrepant parts to the manufacturer, this AD does not include those requirements.
(1) The Manager, Wichita Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (k)(1) of this AD.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(1) For more information about this AD, contact Donald Ristow, Aerospace Engineer, Systems and Propulsion Branch, ACE-116W, FAA, Wichita ACO, 1801 Airport Road, Room 100, Dwight D. Eisenhower National Airport, Wichita, Kansas 67209; phone: 316-946-4120; fax: 316-946-4107; email:
(2) For service information identified in this AD, contact Learjet, Inc., One Learjet Way, Wichita, KS 67209-2942; telephone 316-946-2000; fax 316-946-2220; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model 737-300, -400, and -500 series airplanes. This proposed AD was prompted by a report of a crack in a certain body station (BS) frame inboard chord during supplemental structural inspection document (SSID) inspections. This proposed AD would require repetitive detailed and high frequency eddy current (HFEC) inspections for any crack at the frame inboard chords, and repair if necessary. We are proposing this AD to prevent the unsafe condition on these products.
We must receive comments on this proposed AD by January 3, 2017.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740; telephone: 562-797-1717; Internet:
You may examine the AD docket on the Internet at
Galib Abumeri, Aerospace Engineer, Airframe Branch, ANM 120L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5324; fax: 562-627-5210; email:
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We have received a report indicating a crack of approximately 1.00 inch was found in the BS 616 frame inboard chord during SSID inspections. The crack was located at the lowest fastener hole of the inboard chord inboard strap below stringer S-11R. The airplane had accumulated 75,584 total flight hours and 63,570 total flight cycles. Cracking in the inboard chord is the result of fatigue caused by cyclic pressurization of the fuselage. This condition, if not corrected, could result in structural failure of the frame and possible rapid decompression.
We reviewed Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016. The service information describes procedures for repetitive detailed and HFEC inspections for cracking at the frame inboard chords, and repair. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.” For information on the procedures and compliance times, see this service information at
Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016, specifies to contact the manufacturer for certain instructions, but this proposed AD would require using repair methods, modification deviations, and alteration deviations in one of the following ways:
• In accordance with a method that we approve; or
• Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.
We estimate that this proposed AD affects 400 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:
We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 3, 2017.
None.
This AD applies to all The Boeing Company Model 737-300, -400, and -500 series airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 53, Fuselage.
This AD was prompted by a report of a crack in the body station (BS) 616 frame inboard chord during supplemental structural inspection document (SSID) inspections; the crack was located at the lowest fastener hole of the inboard chord inboard strap below stringer S-11R. We are issuing this AD to detect and correct any crack in the inboard chord of the BS 616 frame below stringers S-11L or S-11R, which could result in structural failure of the frame and possible rapid decompression.
Comply with this AD within the compliance times specified, unless already done.
Except as required by paragraph (i) of this AD, at the applicable times specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016: Do detailed and HFEC inspections for any crack at the frame inboard chords, in accordance with the Accomplishment Instructions of Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016. Repeat the inspections thereafter at the time specified in table 1 of paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016.
If any crack is found during any inspection required by paragraph (g) of this AD, repair before further flight using a method approved in accordance with the procedures specified in paragraph (j) of this AD. Although Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016, specifies to contact Boeing for repair instructions, and specifies that action as “RC” (Required for Compliance), this AD requires repair as specified in this paragraph.
Where Boeing Alert Service Bulletin 737-53A1366, dated May 17, 2016, specifies a compliance time “after the original issue date of this service bulletin,” this AD requires compliance within the specified compliance time after the effective date of this AD.
(1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (k) of this AD. Information may be emailed to
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
(3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Los Angeles ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.
(4) Except as required by paragraph (h) of this AD: For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (j)(4)(i) and (j)(4)(ii) of this AD apply.
(i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. If a step or sub-step is labeled “RC Exempt,” then the RC requirement is removed from that step or sub-step. An AMOC is required for any deviations to RC steps, including substeps and identified figures.
(ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.
(1) For more information about this AD, contact Galib Abumeri, Aerospace Engineer, Airframe Branch, ANM 120L, FAA, Los Angeles ACO, 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5324; fax: 562-627-5210; email:
(2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740; telephone: 562-797-1717; Internet:
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for Zodiac Aero Evacuation Systems fusible plugs installed on emergency evacuation equipment for various transport category airplanes. This proposed AD was prompted by reports indicating that affected fusible plugs activated (vented gas) below the rated temperature. This proposed AD would require an inspection of the fusible plugs to determine the part number, and lot number and replacement of all affected fusible plugs. We are proposing this AD to prevent the unsafe condition on these products.
We must receive comments on this proposed AD by January 3, 2017.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
You may examine the AD docket on the Internet at
Cesar Gomez, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE-171, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 516-228-7318; fax: 516-794-5531.
We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
We will post all comments we receive, without change, to
We have received reports indicating that certain fusible plugs installed on emergency evacuation equipment activated below the rated temperature. Fusible plugs are safety devices that vent air from charged inflation systems if the inflation systems encounter excessive temperatures. Tests conducted on affected fusible plugs revealed that the plugs activated (vented gas) between 130 and 150 degrees Fahrenheit (ºF) instead of the rated temperature of 174 °F. The affected fusible plugs shipped from Air Cruisers, which is a component of Zodiac Aero Evacuation Systems, from October 1, 2008, through
We reviewed Air Cruisers Service Information Letter 25-246, Rev. No. 1, dated February 21, 2014. The service information provides information regarding affected fusible plugs and provides guidance on fusible plug replacement.
We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
This proposed AD would require an inspection of the fusible plugs to determine the part number and lot number, and replacement of all affected fusible plugs. This proposed AD also would require, for affected part and lot numbers only, sending the part number identification results to Air Cruisers.
We estimate that this proposed AD affects 3,384 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need these replacements:
According to the manufacturer, some of the costs of this proposed AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all available costs in our cost estimate.
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 proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by January 3, 2017.
None.
This AD applies to Zodiac Aero Evacuation Systems fusible plugs installed on emergency evacuation equipment. These affected fusible plugs might be installed on the emergency evacuation equipment of various transport airplanes, certificated in any category, including, but not limited to, the airplanes of manufacturers specified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD.
(1) Airbus.
(2) The Boeing Company.
(3) BAE Systems (Operations) Limited.
(4) Fokker Services B.V.
Air Transport Association (ATA) of America Code 25, Equipment/furnishings.
This AD was prompted by reports indicating that affected fusible plugs activated (vented gas) below the rated temperature. We are issuing this AD to detect and correct fusible plugs that might activate below the rated temperature, which renders the evacuation system unusable.
Comply with this AD within the compliance times specified, unless already done.
Within 30 days after the effective date of this AD: Do an inspection to determine the part number and lot number of the fusible plugs installed in the emergency evacuation equipment (including all inflation valves, reservoir and valve assemblies, and evacuation slides, slides/rafts and liferafts). A review of airplane maintenance records is acceptable to make this determination if the part number and lot number of the fusible plugs can be conclusively determined from that review. If any fusible plug has part number (P/N) B13984-3, stamped with Lot PA-21 or PA-22: Before further flight, replace the fusible plug with a new part.
Guidance can be found in the applicable component maintenance manual for the replacement. In addition, Air Cruisers Service Information Letter 25-246, Rev. No. 1, dated February 21, 2014, provides information regarding affected fusible plugs and guidance on the replacement.
If any fusible plug having P/N B13984-3, stamped with Lot PA-21 or PA-22, is identified during the inspection required by paragraph (g) of this AD: At the time specified in paragraph (h)(1) or (h)(2) of this AD, report the finding to Air Cruisers, Attention Kelly Schmidt, 1747 State Route 34, Wall Township, NJ 07727-3935; fax: 732-681-9163; email:
(1) If any affected fusible plug was identified on or after the effective date of this AD: Submit the report within 30 days after the part number identification.
(2) If any affected fusible plug was identified 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 on any airplane any fusible plug having P/N B13984-3, stamped with Lot PA-21 or PA-22.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a 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 OMB Control Number for this information collection is 2120-0056. Public reporting for this collection of information is estimated to be approximately 5 minutes per response, including the time for reviewing instructions, completing and reviewing the collection of information. All responses to this collection of information are 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.
(1) The Manager, New York Aircraft Certification Office (ACO), ANE-170, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the ACO, send it to ATTN: Program Manager, Continuing Operational Safety, FAA, New York ACO, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 516-228-7300; fax: 516-794-5531.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Cesar Gomez, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE-171, FAA, New York ACO, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 516-228-7318; fax: 516-794-5531.
Environmental Protection Agency (EPA).
Proposed rule; extension of comment period.
On August 26, 2016, the Environmental Protection Agency (EPA) issued a proposed rule to revise provisions in the Prevention of Significant Deterioration (PSD) and title V permitting regulations applicable to greenhouse gases (GHGs) to fully conform with recent court decisions. The EPA is extending the comment period on this proposed rule that was scheduled to close on December 2, 2016. The EPA received a letter requesting the extension of the proposed rule public comment period to allow the public additional time to review the rule and supporting documentation.
The public comment period on the proposed rule published in the
Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2015-0355, at
For additional information on this action, contact Jessica Montañez, Office of Air Quality Planning and Standards, Environmental Protection Agency (C504-03), Research Triangle Park, North Carolina 27711; telephone number (919) 541-3407; fax number (919) 541-5509; email address:
After considering the request to extend the public comment period, the EPA has decided to extend the public comment period by 2 weeks, until December 16, 2016. This extension will ensure that the public has additional time to review the proposed rule and its supporting documents.
Environmental Protection Agency (EPA).
Proposed rule.
The Environmental Protection Agency (EPA) is proposing action on the portions of six submissions from the State of Wyoming that are intended to demonstrate that the State Implementation Plan (SIP) meets certain interstate transport requirements of the Clean Air Act (Act or CAA). These submissions address the 2006 and 2012 fine particulate matter (PM
Comments must be received on or before December 19, 2016.
Submit your comments, identified by Docket ID No. EPA-R08-OAR-2016-0521 at
Adam Clark, Air Program, U.S. Environmental Protection Agency, Region 8, Mail Code 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129. (303) 312-7104,
1.
2.
• 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;
• Provide specific examples to illustrate your concerns, and suggest alternatives;
• 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.
On September 21, 2006, the EPA revised the primary 24-hour NAAQS for PM
Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS or within such shorter period as the EPA may prescribe. Section 110(a)(2) requires states to address structural SIP elements such as requirements for monitoring, basic program requirements, and legal authority that are designed to provide for implementation, maintenance and enforcement of the NAAQS. The SIP submission required by these provisions is referred to as the “infrastructure” SIP. Section 110(a) imposes the obligation upon states to make a SIP submission to the EPA for a new or revised NAAQS, but the contents of individual state submissions may vary depending upon the facts and circumstances.
CAA 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 emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in another state. The two provisions of this section are referred to as prong 1 (significant contribution to nonattainment) and prong 2 (interfere with maintenance). Section 110(a)(2)(D)(i)(II) requires SIPs to contain adequate provisions to prohibit emissions that will interfere with measures required to be included in the applicable implementation plan for any other state under part C to prevent significant deterioration of air quality (prong 3) or to protect visibility (prong 4).
The Wyoming Department of Environmental Quality (Department or WDEQ) submitted the following: A certification of Wyoming's infrastructure SIP for the 2006 PM
Each of these infrastructure certifications addressed all of the infrastructure elements including section 110(a)(2)(D)(i)(I), referred to as infrastructure element (D).
In its February 6, 2014 infrastructure submittal for the 2008 ozone NAAQS, WDEQ addressed 110(a)(2)(D)(i)(I) prongs 1 and 2 by presenting ambient monitoring and wind rose data, among other information,
WDEQ's approach to evaluating its compliance with the CAA section 110(a)(2)(D)(i)(I) as to the 2008 ozone NAAQS is incomplete for two reasons. First, transported emissions may cause an area to measure exceedances of the standard even if that area is not formally designated nonattainment by the EPA. While WDEQ considered its potential impact to the Denver nonattainment area based on general wind patterns, the State did not provide analysis showing that it did not contribute to ozone levels in the Denver nonattainment area on the particular days with measured exceedances. Moreover, while the State considered whether there were designated nonattainment areas in four of several nearby states, WDEQ did not evaluate whether it contributed to ozone levels elsewhere in Colorado or in other nearby states (
Second, WDEQ's submission does not provide any technical analysis demonstrating that the SIP contains adequate provisions prohibiting emissions that will interfere with maintenance of the 2008 ozone NAAQS in any other state (prong 2). In remanding the Clean Air Interstate Rule (CAIR) to the EPA in
The EPA developed technical information and a related analysis to assist states with meeting section 110(a)(2)(D)(i)(I) requirements for the 2008 ozone NAAQS, and used this technical analysis to support the recently finalized Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQS (“CSAPR Update”).
In the technical analysis supporting the CSAPR Update, the EPA used detailed air quality analyses to determine where projected nonattainment or maintenance areas would be and whether emissions from an eastern state contribute to downwind air quality problems at those projected nonattainment or maintenance receptors.
As discussed in the CSAPR Update, the air quality modeling contained in the EPA's technical analysis (1) identified locations in the U.S. where the EPA anticipates nonattainment or maintenance issues in 2017 for the 2008 ozone NAAQS (these are identified as nonattainment and maintenance receptors), and (2) quantified the projected contributions from emissions from upwind states to downwind ozone concentrations at the receptors in 2017.
Consistent with the framework established in the original CSAPR rulemaking, the EPA's technical analysis in support of the CSAPR Update applied a threshold of one percent of the 2008 ozone NAAQS of 75 ppb (0.75 ppb) to identify linkages between upwind states and the downwind nonattainment and maintenance receptors.
As to western states, the EPA noted in the CSAPR Update that there may be geographically specific factors to consider in evaluating interstate transport, and given the near-term 2017 implementation timeframe, the EPA focused the final CSAPR Update on eastern states.
The EPA's air quality modeling as updated for the final CSAPR Update projects that for the Western U.S. (outside of California), there are no nonattainment receptors and only three maintenance receptors located in the Denver, Colorado area. Wyoming emissions are projected to contribute above one percent of the NAAQS at one of these receptors (the “Douglas County maintenance receptor”; see Table 1, below). The modeling also shows that multiple upwind states would collectively contribute to the projected Douglas County maintenance receptor in Colorado. The EPA found that the contribution to ozone concentrations from all states upwind of the Douglas County maintenance receptor in Colorado is about 9.7 percent.
As noted, the Agency has historically found that the one percent threshold is appropriate for identifying interstate transport linkages for states collectively contributing to downwind ozone nonattainment or maintenance problems because that threshold captures a high percentage of the total pollution transport affecting downwind receptors. The EPA believes contribution from an individual state equal to or above one percent of the NAAQS could be considered significant where the collective contribution of emissions from one or more upwind states is responsible for a considerable portion of the downwind air quality problem regardless of where the receptor is geographically located. In this case, three states contributing to the Douglas County maintenance receptor, including Wyoming, contribute emissions greater than or equal to one percent of the 2008 ozone NAAQS. Given these data, the EPA is proposing to find that the one percent threshold is also appropriate to determine the linkage from Wyoming to the Douglas County maintenance receptor in Colorado with respect to the 2008 ozone NAAQS.
The EPA is not necessarily determining that one percent of the NAAQS is always an appropriate threshold for identifying interstate transport linkages for all states in the West. For example, the EPA recently evaluated the impact of emissions from Arizona on two projected nonattainment receptors identified in California and concluded that even though Arizona's modeled contribution was greater than one percent of the 2008 ozone NAAQS, Arizona did not significantly contribute to nonattainment or interfere with maintenance at those receptors.
Likewise, the EPA is not determining that because Wyoming contributes above the one percent threshold, it is necessarily making a significant contribution that warrants further reductions in emissions. As noted above, the one percent threshold identifies a state as “linked,” prompting further inquiry into whether the contributions are significant and whether there are cost-effective controls that can be employed. That inquiry with regard to Wyoming's SIP submittal is provided below.
In summary, Table 1 shows the air quality modeling results from the final modeling in support of the CSAPR Update. The modeling indicates that Wyoming contributes emissions above the one percent threshold of 0.75 ppb with respect to the Douglas County maintenance receptor in the Denver, Colorado area.
Wyoming's largest contribution to any projected downwind maintenance-only site is 1.18 ppb, which is approximately 1.57% of the 2008 ozone NAAQS of 75 ppb. Thus, the final modeling in support of the CSAPR Update indicates that the contributions from Wyoming are above the one percent threshold of 0.75 ppb with respect to the Douglas County maintenance receptor in the Denver, Colorado area, and the State's emissions require further evaluation, taking into account both air quality and cost considerations, to determine what, if any, emissions reductions might be necessary to address the State's emission reduction obligation pursuant to 110(a)(2)(D)(i)(I). However, WDEQ in its SIP submittal neither identified nor included any ozone or ozone precursor emission reduction measures that the EPA could evaluate to determine whether the state has fully addressed these transport impacts. Accordingly, the EPA cannot conclude that Wyoming's SIP contains sufficient provisions to prohibit emissions that will interfere with maintenance of the 2008 ozone NAAQS in the Denver, Colorado area.
WDEQ's analysis regarding prong 1 is also incomplete as previously described, but the EPA's modeling indicates that Wyoming does not contribute above the one percent threshold to any nonattainment receptors. As discussed above, while the EPA is not necessarily determining that one percent of the NAAQS is always an appropriate threshold for identifying interstate transport linkages for all states in the West, this low level of contribution suggests that Wyoming does not contribute significantly to nonattainment of the 2008 ozone NAAQS in any other state. Thus, the EPA is proposing that the Wyoming SIP meets the 110(a)(2)(D)(i) prong 1 requirement for the 2008 ozone NAAQS.
Based on WDEQ's SIP submittal and the EPA's most recent modeling, the EPA proposes to approve prong 1 and disapprove the prong 2 portion of the February 6, 2014, 2008 ozone NAAQS infrastructure submittal. The EPA is soliciting public comments on this proposed action and will consider public comments received during the comment period.
WDEQ's analysis of potential interstate transport for the 2008 Pb NAAQS discussed the lack of sources with significant Pb emissions near the State's borders. As noted in our October 14, 2011 Infrastructure Guidance Memo, there is a sharp decrease in Pb concentrations, at least in the coarse fraction, as the distance from a Pb source increases.
Wyoming's 2010 NO
The EPA does not agree with the Wyoming's reliance on area designations for purposes of determining whether the State has met the requirements of section 110(a)(2)(D)(i)(I) with respect to the 2010 NO
Due to the State's limited technical analysis, the EPA evaluated NO
In addition to the monitored levels of NO
Based on all of these factors, EPA concurs with the State's conclusion that Wyoming does not contribute significantly to nonattainment or interfere with maintenance of the 2010 NO
In Wyoming's 2008 ozone, 2010 SO
WDEQ addressed visibility for the 2008 Pb NAAQS by pointing to the lack of significant sources of Pb in Wyoming near the State's border.
As stated in the EPA's 2013 Guidance, “[o]ne way in which prong 4 may be satisfied for any relevant NAAQS is through an air agency's confirmation in its infrastructure SIP submission that it has an approved regional haze SIP that fully meets the requirements of 40 CFR 51.308 or 51.309. 40 CFR 51.308 and 51.309 specifically require that a state participating in a regional planning process include all measures needed to achieve its apportionment of emission reduction obligations agreed upon through that process.”
On January 12, 2011 and April 19, 2012, Wyoming submitted to the EPA SIP revisions to address the requirements of the regional haze program. The EPA approved Wyoming's April 19, 2012 submittal and partially approved Wyoming's January 12, 2011 submittal in a final action published December 12, 2012. 77 FR 73926. This included EPA approval of Wyoming's BART alternative for SO
The 2013 Guidance states that section 110(a)(2)(D)(i)(II)'s prong 4 requirements can be satisfied by approved SIP provisions that the EPA has found to adequately address a state's contribution to visibility impairment in other states. The EPA interprets prong 4 to be pollutant-specific, such that the infrastructure SIP submission need only address the potential for interference with protection of visibility caused by the pollutant (including precursors) to which the new or revised NAAQS applies.
The 2013 Guidance lays out two ways in which a state's infrastructure SIP submittal may satisfy prong 4. As explained above, one way is through a state's confirmation in its infrastructure SIP submittal that it has an EPA approved regional haze SIP in place. Alternatively, in the absence of a fully approved regional haze SIP, a state can make a demonstration in its infrastructure SIP submittal that emissions within its jurisdiction do not interfere with other states' plans to protect visibility. Such a submittal should point to measures in the state's SIP that limit visibility-impairing pollutants and ensure that the resulting reductions conform to any mutually agreed emission reductions under the relevant regional haze regional planning organization (RPO) process.
WDEQ worked through its RPO, the WRAP, to develop strategies to address regional haze. To help states in establishing reasonable progress goals for improving visibility in Class I areas, the WRAP modeled future visibility conditions based on the mutually agreed emissions reductions from each state. The WRAP states then relied on this modeling in setting their respective reasonable progress goals. As a result, we consider emissions reductions from measures in Wyoming's SIP that conform with the level of emission reductions the State agreed to include in the WRAP modeling to meet the visibility requirement of CAA section 110(a)(2)(D)(i)(II).
With regard to the 2010 SO
The EPA is also proposing to approve Wyoming's prong 4 SIP submittal for the 2008 Pb NAAQS. The EPA has found that significant impacts from Pb emissions from stationary sources are expected to be limited to short distances from the source. The State noted that it does not have any major sources of Pb located near any bordering state. Further, when evaluating the extent to which Pb could impact visibility, the EPA has found Pb-related visibility impacts insignificant (
The EPA is proposing to disapprove Wyoming's prong 4 infrastructure SIP submittals for the 2006 PM
As noted, Wyoming referenced both its Regional Haze SIP and WAQSR Chapter 9, Section 2 as justification for the approvability of prong 4 for the 2008 ozone, 2010 NO
If the EPA disapproves an infrastructure SIP submission for prong 4, as we are proposing for the 2006 PM
The EPA is proposing to approve CAA section 110(a)(2)(D)(i)(I) prongs 1, 2 and 4 for the 2008 Pb NAAQS, prong 1 for the 2008 ozone NAAQS, and prong 4 for the 2010 SO
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 actions, provided that they meet the criteria of the Clean Air Act. Accordingly, this proposed action merely proposes approval of some state law as meeting federal requirements and proposes disapproval of other state law because it does not meet federal requirements; this proposed action does not propose 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).
In addition, the SIP does not 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 proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
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
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; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
Comments regarding this information collection received by December 19, 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 20502. 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.
Animal and Plant Health Inspection Service, USDA.
Notice and request for comments.
In accordance with legislation implementing the results of the Uruguay Round of negotiations under the General Agreement on Tariffs and Trade, we are informing the public of the international standard-setting activities of the World Organization for Animal Health, the Secretariat of the International Plant Protection Convention, and the North American Plant Protection Organization, and we are soliciting public comment on the standards to be considered.
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 general information on the topics covered in this notice, contact Ms. Jessica Mahalingappa, Assistant Deputy Administrator for Trade and Capacity Building, International Services, APHIS, room 1132, USDA South Building, 14th Street and Independence Avenue SW., Washington, DC 20250; (202) 799-7121.
For specific information regarding standard-setting activities of the World Organization for Animal Health, contact Dr. Michael David, Director, International Animal Health Standards Team, National Import Export Services, VS, APHIS, 4700 River Road Unit 33, Riverdale, MD 20737-1231; (301) 851-3302.
For specific information regarding the standard-setting activities of the International Plant Protection Convention, contact Dr. Marina Zlotina, PPQ's IPPC Technical Director, International Phytosanitary Standards, PPQ, APHIS, 4700 River Road Unit 130, Riverdale, MD 20737; (301) 851-2200.
For specific information on the North American Plant Protection Organization, contact Ms. Patricia Abad, PPQ's NAPPO Technical Director, International Phytosanitary Standards, PPQ, APHIS, 4700 River Road Unit 130, Riverdale, MD, 20737; (301) 851-2264.
The World Trade Organization (WTO) was established as the common international institutional framework for governing trade relations among its members in matters related to the Uruguay Round Agreements. The WTO is the successor organization to the General Agreement on Tariffs and Trade. U.S. membership in the WTO was approved by Congress when it enacted the Uruguay Round Agreements Act (Pub. L. 103-465), which was signed into law on December 8, 1994. The WTO Agreements, which established the WTO, entered into force with respect to the United States on January 1, 1995. The Uruguay Round Agreements Act amended Title IV of the Trade Agreements Act of 1979 (19 U.S.C. 2531
“International standard” is defined in 19 U.S.C. 2578b as any standard, guideline, or recommendation: (1) Adopted by the Codex Alimentarius Commission (Codex) regarding food safety; (2) developed under the auspices of the World Organization for Animal Health (OIE, formerly known as the Office International des Epizooties) regarding animal health and welfare, and zoonoses; (3) developed under the auspices of the Secretariat of the International Plant Protection Convention (IPPC) in cooperation with the North American Plant Protection Organization (NAPPO) regarding plant health; or (4) established by or developed under any other international organization agreed to by the member countries of the North American Free Trade Agreement (NAFTA) or the member countries of the WTO.
The President, pursuant to Proclamation No. 6780 of March 23, 1995 (60 FR 15845), designated the Secretary of Agriculture as the official responsible for informing the public of the SPS standard-setting activities of Codex, OIE, IPPC, and NAPPO. The United States Department of Agriculture's (USDA's) Food Safety and Inspection Service (FSIS) informs the public of Codex standard-setting activities, and USDA's Animal and Plant Health Inspection Service (APHIS) informs the public of OIE, IPPC, and NAPPO standard-setting activities.
FSIS publishes an annual notice in the
APHIS is responsible for publishing an annual notice of OIE, IPPC, and NAPPO activities related to international standards for plant and animal health and representing the United States with respect to these standards. Following are descriptions of the OIE, IPPC, and NAPPO organizations and the standard-setting agenda for each of these organizations. We have described the agenda that each of these organizations will address at their annual general sessions, including standards that may be presented for adoption or consideration, as well as other initiatives that may be underway at the OIE, IPPC, and NAPPO.
The agendas for these meetings are subject to change, and the draft standards identified in this notice may not be sufficiently developed and ready for adoption as indicated. Also, while it is the intent of the United States to support adoption of international standards and to participate actively and fully in their development, it should be recognized that the U.S. position on a specific draft standard will depend on the acceptability of the final draft. Given the dynamic and interactive nature of the standard-setting process, we encourage any persons who are interested in the most current details about a specific draft standard or the U.S. position on a particular standard-setting issue, or in providing comments on a specific standard that may be under development, to contact APHIS. Contact information is provided at the beginning of this notice under
The OIE was established in Paris, France, in 1924 with the signing of an international agreement by 28 countries. It is currently composed of 180 Members, each of which is represented by a delegate who, in most cases, is the chief veterinary officer of that country or territory. The WTO has recognized the OIE as the international forum for setting animal health standards, reporting global animal disease events, and presenting guidelines and recommendations on sanitary measures relating to animal health.
The OIE facilitates intergovernmental cooperation to prevent the spread of contagious diseases in animals by sharing scientific research among its Members. The major functions of the OIE are to collect and disseminate information on the distribution and occurrence of animal diseases and to ensure that science-based standards govern international trade in animals and animal products. The OIE aims to achieve these through the development and revision of international standards for diagnostic tests, vaccines, and the safe international trade of animals and animal products.
The OIE provides annual reports on the global distribution of animal diseases, recognizes the free status of Members for certain diseases,
The next OIE General Session is scheduled for May 21 to May 26, 2017, in Paris, France. Currently, the Chief Trade Advisor for APHIS' Veterinary Services program is the official U.S. Delegate to the OIE. The Chief Trade Advisor for APHIS' Veterinary Services program intends to participate in the proceedings and will discuss or comment on APHIS' position on any standard up for adoption. Information about OIE draft Terrestrial and Aquatic Animal Health Code chapters may be found on the Internet at
More than 26 Code chapters were amended, rewritten, or newly proposed and presented for adoption at the General Session. The following Code chapters are of particular interest to the United States:
Text was not changed in this Code chapter for the definition of “casings.” The proposal to include esophagi and stomachs in the definition of “casings” was rejected because these contain striated muscle, which is not used in the production of casings.
Text in this Code chapter was modified for clarity.
Text in this Code chapter was modified for clarity and consistency.
Text in this Code chapter was modified for clarity and consistency.
This Code chapter was deleted from the Terrestrial Code because the noted tests are included in the Terrestrial Manual.
A minor change was adopted and approved by Member Countries.
The text in this chapter was modified to clarify the therapeutic use of antimicrobial agents means the administration of antimicrobial agents to animals for treating and controlling infectious diseases.
The diagrams of the heads of animals detailing the specific locations for the use of captive bolts for the purpose of slaughtering were proposed for removal from the chapter. The diagrams are to be relocated to the OIE Web site.
References to the use of penetrating and non-penetrating captive bolts as procedures for killing adult poultry were added.
Some outcome-based measurables were added, as well as minor editorial changes.
This Code chapter includes prescriptive language regarding the housing of dairy cattle to which the United States continues to object and challenge.
This is a new Code chapter that was adopted this year. The United States noted an area of concern that will be considered by the Code Commission for future review.
The current chapter received minor updates that were adopted.
This chapter was adopted in 2015 and received minor updates to make it consistent with other vector borne diseases.
Minor changes were made to create harmonization among the vector-borne disease chapters.
A minor addition referencing the pertinent Codex Guideline was made and the chapter was adopted.
An editorial change was made to correct an error in Article 14.7.21. and the chapter was adopted.
An addition referencing the prevention of
The following Aquatic Manual chapters were revised and adopted, and are of particular interest to the United States:
• Glossary.
• Chapter 1.4., Animal health surveillance.
• Chapter 2.X., Criteria for assessing the safety of commodities.
• Chapter 4.3., Zoning and compartmentalization.
• Chapter 4.16., High Health Status Horse Subpopulation.
• Chapter 5.3., OIE procedures relevant to the WTO/SPS Agreement.
• Chapter 6.1., The role of veterinary services in food safety.
• Chapter 6.X., Prevention and control of
• Chapter 6.Y., Prevention and control of
• Chapter 7.5., Slaughter of animals.
• Chapter 8.8., Foot and mouth disease virus.
• Chapter 8.X., Infection with Mycobacterium tuberculosis complex.
• Chapter 10.4., Infection with avian influenza virus.
• Chapter 10.5., Avian mycoplasmosis (
• Chapter 11.11., Infection with lumpy skin disease.
• Chapter 12.10., Glanders.
• Chapter 15.1., Infection with African swine fever virus.
• Chapter 15.X., Infection with porcine reproductive and respiratory syndrome virus.
The IPPC is a multilateral convention adopted in 1952 for the purpose of securing common and effective action to prevent the spread and introduction of pests of plants and plant products and to promote appropriate measures for their control. The WTO has recognized the IPPC as the standard setting body for plant health. Under the IPPC, the understanding of plant protection has been, and continues to be, broad, encompassing the protection of both cultivated and non-cultivated plants from direct or indirect injury by plant pests. Activities addressed by the IPPC include the development, adoption and implementation of international phytosanitary (or plant health) standards (ISPMs), the harmonization of phytosanitary activities through emerging standards, the facilitation of the exchange of official and scientific information among countries, and the furnishing of technical assistance to developing countries that are contracting parties to the IPPC.
The IPPC is deposited with the Food and Agriculture Organization (FAO), and is an international agreement of 182 contracting parties (CPs). The Convention is implemented by national plant protection organizations (NPPOs) in cooperation with regional plant protection organizations (RPPOs), the Commission on Phytosanitary Measures (CPM), and the Secretariat of the IPPC. The IPPC has been, and continues to be, administered at the national level by plant quarantine officials whose primary objective is to safeguard plant resources from injurious pests. In the United States, the NPPO is APHIS' Plant Protection and Quarantine (PPQ) program.
The Eleventh Session of the CPM took place from April 4 to 8, 2016, at FAO Headquarters in Rome, Italy. The Deputy Administrator for APHIS' PPQ program was the U.S. delegate to the CPM. The Deputy Administrator participated in the proceedings and discussed or commented on APHIS' position on any standards up for adoption.
The following standards were adopted by the CPM at its 2016 meeting. The United States, represented by the Deputy Administrator for APHIS' PPQ program, participated in consideration of these standards. The U.S. position on each of these issues were developed prior to the CPM session and were based on APHIS' analysis, information from other U.S. Government agencies, and relevant scientific information from interested stakeholders:
• Revisions to ISPM 5: Glossary of Phytosanitary Terms
• ISPM 37: Determination of host status of fruit to fruit flies (Tephritidae)
• Annexes to ISPM 28: Phytosanitary treatments:
○ 20: Irradiation treatment for
○ 21: Vapor heat treatment for
• Annexes to ISPM 27: Diagnostic Protocols
○ 08:
○ 09: Genus
○ 10:
○ 11:
○ 12:
Other APHIS key achievements from the 2016 CPM meeting were:
• Continued development of a global electronic phytosanitary system, including to proceed with a pilot study immediately with 14 selected countries, including the United States;
• Worked towards an International Year of Plant Health (IYPH) in 2020, including the establishment of a steering committee to plan and guide the process for securing a United Nations proclamation for an IYPH and to identify and plan plant health activities and events that will occur in the lead up to and during the international year. The United States will be an active supporter of this initiative;
• Established a focus group to analyze, develop, and recommend a coherent IPPC program aimed at improving the implementation of adopted standards and to recommend an appropriate committee to oversee this new area of work at the IPPC;
• Held a special CPM session on phytosanitary risks of sea containers where the CPs agreed to temporarily suspend work on an international standard on sea containers, but consider other actions that IPPC contracting parties can take to continue addressing the sea container pathway for the introduction of plant pests; and
• Agreed on a path forward on commodity specific standards, which allows countries interested in such standards to resubmit proposals for such work.
A number of expert working group (EWG) meetings or other technical consultations took place during 2016 on the topics listed below. These standard-setting initiatives are under development and may be considered for future adoption. APHIS intends to participate actively and fully in each of these working groups. The U.S. position on each of the topics to be addressed by these various working groups will be developed prior to these working group meetings and will be based on APHIS' technical analysis, information from other U.S. Government agencies, and relevant scientific information from interested stakeholders:
• EWG on the international movement of grain
• Technical Panel on Fruit Flies
• Technical Panel for the Glossary of Phytosanitary Terms
• Technical Panel on Diagnostic Protocols
• Technical Panel on Phytosanitary Treatments
• Technical Panel on Forest Quarantine
For more detailed information on the above, contact Dr. Marina Zlotina (see
APHIS posts links to draft standards on the Internet as they become available and provides information on the due dates for comments.
NAPPO, a regional plant protection organization created in 1976 under the IPPC, coordinates the efforts among the United States, Canada, and Mexico to protect their plant resources from the entry, establishment, and spread of harmful plant pests, while facilitating
The 40th NAPPO annual meeting was held October 31 to November 3, 2016, in Montreal, Canada. The NAPPO Executive Committee meetings took place on October 31, 2016. The Deputy Administrator for PPQ is the U.S. member of the NAPPO Executive Committee.
Below is a summary of the current NAPPO work program as it relates to the ongoing development of NAPPO standards and projects. The United States (
The 2016 work program includes the following topics being worked on by NAPPO expert groups:
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Work to finalize the
Revise Annex 6,
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The PPQ Deputy Administrator, as the official U.S. delegate to NAPPO, intends to participate in the adoption of these regional plant health standards and projects, including the work described above, once they are completed and ready for such consideration.
The information in this notice contains all the information available to us on NAPPO standards under development or consideration. For updates on meeting times and for information on the expert groups that may become available following publication of this notice, visit the NAPPO Web site or contact Ms. Patricia Abad (see
Rural Business-Cooperative Service, USDA.
Notice.
This Notice announces the acceptance of applications from newly-formed Rural Business Investment Companies (RBICs) or new funds from existing RBICs who are interested in obtaining a licensed fund as non-leveraged RBICs under the Agency's Rural Business Investment Program (RBIP).
The Agency began accepting applications for non-leveraged status on August 6, 2012, and will continue to accept applications for non-leveraged status on a continuous basis until such time the Agency determines otherwise.
Detailed information on the RBIP, including application materials and instructions, can be found on the Agency's Web site at
The Paperwork Reduction Act of 1995 defines “collection of information” as a requirement for “answers to * * * identical reporting or recordkeeping requirements imposed on ten or more persons” (44 U.S.C. 3502(3)(A)). The collection requirement associated with this Notice is expected to receive less than 10 respondents and therefore the Act does not apply.
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Prior to August 6, 2012, the Agency issued licenses to qualified RBICs as leveraged RBICs only. A notice published in the
The purpose of this current Notice is to notify interested RBICs that the Agency is still accepting applications from qualified RBICs for licensing as non-leveraged RBICs under the RBIP. The Agency will continue to accept such applications until such other time the Agency determines otherwise.
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Applicants and their applications are subject to the provisions of this Notice and to the provisions of 7 CFR part 4290. In order to be eligible for non-leveraged status under this Notice, the applicant must demonstrate that one or more Farm Credit System (FCS) institution(s) will invest in the RBIC and, individually or collectively, hold 10 percent or more the applicant's total capital.
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Application materials may also be obtained via
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Contents of the initial application include RD Form 4290-1, “Rural Business Investment Program (RBIP) Application,” Part I, Management Assessment Questionnaire (MAQ), and RD Form 4290-2, “Rural Business Investment Program (RBIP) Application,” Part II, Exhibits (exhibits A, B, C, D, E, F, G, H, K, L, P, V, and Z).
Submit two complete, original hard copy sets of the RD Form 4290-1 and RD Form 4290-2 (excluding Exhibit P, which is required in electronic form only). Place each of the two original sets in a large 3-ring binder. Label the binders with the RBIC's name. Submit one complete and unbound one-sided hard copy of the MAQ and Exhibits suitable for photocopying (
Applicants must enclose in their submission a nonrefundable licensing fee of $500 in the form of a check payable to USDA.
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This section of the Notice identifies the procedures the Agency will use to process and select applicants for licensing as a non-leveraged RBIC. More information about the RBIP is available in the regulation at 7 CFR part 4290.
The Agency will review each application it receives in response to this Notice with regard to eligibility and completeness. If the application is incomplete, the Agency will notify the applicant of the information that is missing. The applicant must then provide the missing information in order for the Agency to further review the application.
The Agency will select applicants for licensing as a non-leveraged RBIC on a first-come, first-served basis. The Agency will determine the order of applications based on the date the Agency receives a complete application.
Only those applications that are eligible will be processed further for determining whether the applicant will be licensed as a non-leveraged RBIC. However, not all applications received in response to this Notice will receive this further processing. For each application that receives further processing, the Agency or its designee will focus its assessment of the application on the consistency of the newly formed RBIC's business plan with the goals of the RBIP program and on the applicant's management team's qualifications. Following this assessment, if the initial recommendation is favorable, the Agency or its designee will interview the applicant's management team.
Based on the assessment and interview, a preliminary determination will be made as to whether or not to select the applicant for non-leveraged status. If the preliminary determination is favorable, the Agency will send to the applicant a Letter of Conditions (also known as a “Green Light” letter) and the applicant will be invited to submit an updated RD Form 4290-1, Part I, Management Assessment Questionnaire, and RD Form 4290-2, Part II, Exhibits. Upon receipt of the Letter of Conditions, the applicant has 24 months to raise their private equity capital. Once a selected applicant has achieved full compliance with the regulations governing licensing as an RBIC, the Agency will issue the non-leveraged license to the RBIC.
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For further information about this Notice or for assistance with the program requirements, please contact the Specialty Programs Division, U.S. Department of Agriculture, Room 4204-S, 1400 Independence Avenue SW., Washington, DC 20250-3226. Telephone: (202) 720-1400.
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at
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USDA is an equal opportunity provider, employer, and lender.
Rural Business-Cooperative Service, USDA.
Notice.
This Notice is to invite applications for grants to provide Technical Assistance for Rural Transportation (RT) systems under the Rural Business Development Grant (RBDG) program pursuant to 7 CFR part 4280, subpart E, 2 CFR chapter IV and 2 CFR part 200 for fiscal year (FY) 2017, subject to the availability of funding to provide Technical Assistance for RT systems and for RT systems to Federally Recognized Native American Tribes' (FRNAT) (collectively “Programs”) and the terms provided in such funding. This Notice is being issued before the FY 2017 appropriation has been enacted in order to allow applicants sufficient time to leverage financing, prepare and submit their applications, and give the Agency time to process applications in FY 2017. This Notice is based on the assumption that the FY 2017 appropriation will be identical to its successors. Should that not be the case, this Notice will be amended to reflect those changes. Successful applications will be selected by the Agency for
All applicants are responsible for any expenses incurred in developing their applications.
All initially capitalized terms in this Notice, other than proper names, are defined in 7 CFR 4280.403.
Completed applications must be received in the USDA Rural Development State Office no later than 4:30 p.m. (local time) on March 31, 2017. Applications received at a USDA Rural Development State Office after this date will not be considered for FY 2017 funding.
Submit applications in paper format to the USDA Rural Development State Office for the State where the Project is located. A list of the USDA Rural Development State Office contacts can be found at:
Specialty Programs Division, Business Programs, Rural Business-Cooperative Service, U.S. Department of Agriculture, 1400 Independence Avenue SW., MS 3226, Room 4204-South, Washington, DC 20250-3226, or call 202-720-1400. For further information on this Notice, please contact the USDA Rural Development State Office in the State in which the applicant's headquarters is located.
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Awards under the RBDG passenger transportation program will be made on a competitive basis using specific selection criteria contained in 7 CFR part 4280, subpart E, and in accordance with section 310B(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(c)). Information required to be in the application package includes Standard Form (SF) 424, “Application for Federal Assistance;” environmental documentation in accordance with 7 CFR part 1970, “Environmental Policies and Procedures;” Scope of Work Narrative; Income Statement; Balance Sheet or Audit for previous 3 years; AD-1047, “Debarment/Suspension Certification;” AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion;” AD-1049, “Certification Regarding Drug-Free Workplace Requirements;” SF LLL, “Disclosure of Lobbying Activities;” RD 400-1, “Equal Opportunity Agreement;” RD 400-4, “Assurance Agreement;” and a letter providing Board authorization to obtain assistance. For the FRNAT grant, which must benefit FRNATs, at least 75 percent of the benefits of the Project must be received by members of FRNATs. The Project that scores the greatest number of points based on the RBDG selection criteria and the discretionary points will be selected for each grant.
Applicants must be qualified national Nonprofit organizations with experience in providing Technical Assistance and training to Rural communities nationwide for the purpose of improving passenger transportation service or facilities. To be considered “national,” RBS requires a qualified organization to provide evidence that it operates RT assistance programming nation-wide. There is not a requirement to use the grant funds in a multi-State area. Grants will be made to qualified national non-profit organizations for the provision of Technical Assistance and training to Rural communities for the purpose of improving passenger transportation services or facilities.
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To be considered eligible, an entity must be a qualified national Nonprofit organization serving Rural Areas as evidenced in its organizational documents and demonstrated experience, per 7 CFR part 4280, subpart E. Grants will be competitively awarded to qualified national Nonprofit organizations.
The Agency requires the following information to make an eligibility determination that an applicant is a national Nonprofit organization. These applications must include, but are not limited to, the following:
(a) An original and one copy of SF 424, “Application for Federal Assistance (For Non-construction);”
(b) Copies of applicant's organizational documents showing the applicant's legal existence and authority to perform the activities under the grant;
(c) A proposed scope of work, including a description of the proposed Project, details of the proposed activities to be accomplished and timeframes for completion of each task, the number of months duration of the Project, and the estimated time it will take from grant approval to beginning of Project implementation;
(d) A written narrative that includes, at a minimum, the following items:
(i) An explanation of why the Project is needed, the benefits of the proposed Project, and how the Project meets the grant eligible purposes;
(ii) Area to be served, identifying each governmental unit,
(iii) Description of how the Project will coordinate Economic Development activities with other Economic Development activities within the Project area;
(iv) Businesses to be assisted, if appropriate, and Economic Development to be accomplished;
(v) An explanation of how the proposed Project will result in newly created, increased, or supported jobs in the area and the number of projected new and supported jobs within the next 3 years;
(vi) A description of the applicant's demonstrated capability and experience in providing the proposed Project assistance, including experience of key staff members and persons who will be providing the proposed Project activities and managing the Project;
(vii) The method and rationale used to select the areas and businesses that will receive the service;
(viii) A brief description of how the work will be performed, including whether organizational staff or consultants or contractors will be used; and
(ix) Other information the Agency may request to assist it in making a grant award determination.
(e) The latest 3 years of financial information to show the applicant's financial capacity to carry out the proposed work. If the applicant is less than 3 years old, at a minimum, the information should include all balance sheet(s), income statement(s) and cash flow statement(s). A current audited report is required if available;
(f) Documentation regarding the availability and amount of other funds to be used in conjunction with the funds from RBDG;
(g) A budget which includes salaries, fringe benefits, consultant costs, indirect costs, and other appropriate direct costs for the Project.
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Applications will only be accepted from qualified national Nonprofit organizations to provide Technical Assistance for RT. There are no “responsiveness,” or “threshold” eligibility criteria for these grants. There is no limit on the number of applications an applicant may submit under this announcement. In addition to the forms listed under program description, Form AD-3030 “Representations Regulation Felony Conviction and Tax Delinquent Status for Corporate Applicants,” must be completed in the affirmative.
None of the funds made available may be used to enter into a contract, memorandum of understanding, or cooperative agreement with, make a grant to, or provide a loan or loan guarantee to, any corporation that has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, where the awarding agency is aware of the unpaid tax liability, unless a Federal agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government.
None of the funds made available may be used to enter into a contract, memorandum of understanding, or cooperative agreement with, make a grant to, or provide a loan or loan guarantee to, any corporation that was convicted of a felony criminal violation under any Federal law within the preceding 24 months, where the awarding agency is aware of the conviction, unless a Federal agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government.
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Applications will not be considered for funding if they do not provide sufficient information to determine eligibility or are missing required elements.
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For further information, entities wishing to apply for assistance should contact the USDA Rural Development State Office provided in the
Applications must be submitted in paper format. Applications submitted to a USDA Rural Development State Office must be received by the closing date and local time.
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An application must contain all of the required elements. Each application received in a USDA Rural Development State Office will be reviewed to determine if it is consistent with the eligible purposes contained in section 310B(c) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1932(c)). Each selection priority criterion outlined in 7 CFR 4280.435 must be addressed in the application. Failure to address any of the criterion will result in a zero-point score for that criterion and will impact the overall evaluation of the application. Copies of 7 CFR part 4280, subpart E, will be provided to any interested applicant making a request to a USDA Rural Development State Office.
All Projects to receive Technical Assistance through these passenger transportation grant funds are to be identified when the applications are submitted to the USDA Rural Development State Office. Multiple Project applications must identify each individual Project, indicate the amount of funding requested for each individual Project, and address the criteria as stated above for each individual Project.
For multiple-Project applications, the average of the individual Project scores will be the score for that application.
The applicant documentation and forms needed for a complete application are located in the PROGRAM DESCRIPTION section of this notice, and 7 CFR part 4280, subpart E.
(a) There are no specific formats, specific limitations on number of pages, font size and type face, margins, paper size, number of copies, and the sequence or assembly requirements.
(b) The component pieces of this application should contain original signatures on the original application.
(c) Since these grants are for Technical Assistance for transportation purposes, no additional information requirements other than those described in this Notice and 7 CFR part 4280, subpart E are required.
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All applicants must have a Dun and Bradstreet Data Universal Numbering System (DUNS) number which can be obtained at no cost via a toll-free request line at (866) 705-5711 or at
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(a) Application Deadline Date: No later than 4:30 p.m. (local time) on March 31, 2017.
Explanation of Deadlines: Applications must be in the USDA Rural Development State Office by the local deadline date and time as indicated above. If the due date falls on a Saturday, Sunday, or Federal holiday, the application is due the next business day.
(b) The deadline date means that the completed application package must be received in the USDA Rural Development State Office by the deadline date established above. All application documents identified in this Notice are required.
(c) If complete applications are not received by the deadline established above, the application will neither be reviewed nor considered under any circumstances.
(d) The Agency will determine the application receipt date based on the actual date postmarked.
(e) This Notice is for RT Technical Assistance grants only and therefore, intergovernmental reviews are not required.
(f) These grants are for RT Technical Assistance grants only, no construction or equipment purchases are permitted. If the grantee has a previously approved indirect cost rate, it is permissible, otherwise, the applicant may elect to charge the 10 percent indirect cost permitted under 2 CFR 200.414(f) or request a determination of its Indirect Cost Rate. Due to the time required to evaluate Indirect Cost Rates, it is likely that all funds will be awarded by the time the Indirect Cost Rate is determined. No foreign travel is permitted. Pre-Federal award costs will only be permitted with prior written approval by the Agency.
(g) Applicants must submit applications in hard copy format as previously indicated in the APPLICATION AND SUBMISSION INFORMATION section of this notice. If the applicant wishes to hand deliver its application, the addresses for these deliveries can be located in the
(h) If you require alternative means of communication for program information (
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All eligible and complete applications will be evaluated and scored based on the selection criteria and weights contained in 7 CFR 4280.435 and will select grantees subject to the grantees' satisfactory submission of the additional items required by 7 CFR part 4280, subpart E and the USDA Rural Development Letter of Conditions. Failure to address any one of the criteria in 7 CFR 4280.435 by the application deadline will result in the application being determined ineligible, and the application will not be considered for funding. The amount of an RT grant may be adjusted, at the Agency's discretion, to enable the Agency to award RT grants to the applications with the highest priority scores in each category.
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The State Offices will review applications to determine if they are eligible for assistance based on requirements contained in 7 CFR 4280.416 and 4280.417. If determined eligible, your application will be submitted to the National Office. Funding of Projects is subject to the applicant's satisfactory submission of the additional items required by that subpart and the USDA Rural Development Letter of Conditions. The Agency reserves the right to award additional discretionary points under 7 CFR 4280.435(k).
In awarding discretionary points, the Agency scoring criteria regularly assigns points to applications that direct loans or grants to Projects based in or serving census tracts with poverty rates greater than or equal to 20 percent. This emphasis will support Rural Development's mission of improving the quality of life for Rural Americans and commitment to directing resources to those who most need them.
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Successful applicants will receive notification for funding from their USDA Rural Development State Office. Applicants must comply with all applicable statutes and regulations before the grant award will be approved. Unsuccessful applications will receive notification by mail.
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Additional requirements that apply to grantees selected for this program can be found in 7 CFR 4280.408, 4280.410, and 4280.439. Awards are subject to USDA Departmental Grant Regulations at 2 CFR Chapter IV which incorporates the new Office of Management and Budget (OMB) regulations at 2 CFR part 200.
All successful applicants will be notified by letter, which will include a Letter of Conditions, and a Letter of Intent to Meet Conditions. This letter is not an authorization to begin performance. If the applicant wishes to consider beginning performance prior to the grant being officially closed, all pre-award costs must be approved in writing and in advance by the Agency. The grant will be considered officially awarded when all conditions in the Letter of Conditions have been met and the Agency obligates the funding for the Project.
Additional requirements that apply to grantees selected for this program can be found in 7 CFR part 4280, subpart E; the Grants and Agreements regulations of the U.S. Department of Agriculture codified in 2 CFR Chapter IV, and successor regulations.
In addition, all recipients of Federal financial assistance are required to report information about first-tier sub-awards and executive compensation (see 2 CFR part 170). You will be required to have the necessary processes and systems in place to comply with the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282) reporting requirements (see 2 CFR 170.200(b), unless you are exempt under 2 CFR 170.110(b)). More information on
The following additional requirements apply to grantees selected for this program:
(a) Form RD 4280-2 “Rural Business-Cooperative Service Financial Assistance Agreement.”
(b) Letter of Conditions.
(c) Form RD 1940-1, “Request for Obligation of Funds.”
(d) Form RD 1942-46, “Letter of Intent to Meet Conditions.”
(e) Form AD-1047, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters-Primary Covered Transactions.”
(f) Form AD-1048, “Certification Regarding Debarment, Suspension, Ineligibility and Voluntary Exclusion-Lower Tier Covered Transactions.”
(g) Form AD-1049, “Certification Regarding a Drug-Free Workplace Requirement (Grants).”
(h) Form AD-3030, “Assurance Regarding Felony Conviction or Tax Delinquent Status for Corporate Applicants.” Must be signed by corporate applicants who receive an award under this Notice.
(i) Form RD 400-4, “Assurance Agreement.” Each prospective recipient must sign Form RD 400-4, Assurance Agreement, which assures USDA that the recipient is in compliance with Title VI of the Civil Rights Act of 1964, 7 CFR part 15 and other Agency regulations. That no person will be discriminated against based on race, color or national origin, in regard to any program or activity for which the re-lender receives Federal financial assistance. That nondiscrimination statements are in advertisements and brochures.
Collect and maintain data provided by ultimate recipients on race, sex, and national origin and ensure Ultimate Recipients collect and maintain this data. Race and ethnicity data will be collected in accordance with OMB
The applicant and the ultimate recipient must comply with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Americans with Disabilities Act (ADA), Section 504 of the Rehabilitation Act of 1973, Age Discrimination Act of 1975, Executive Order 12250, Executive Order 13166 Limited English Proficiency (LEP), and 7 CFR part 1901, subpart E.
(j) SF LLL, “Disclosure of Lobbying Activities,” if applicable.
(k) Form SF 270, “Request for Advance or Reimbursement.”
3.
(a) A Financial Status Report and a Project performance activity report will be required of all grantees on a quarterly basis until initial funds are expended and yearly thereafter, if applicable, based on the Federal fiscal year. The grantee will complete the Project within the total time available to it in accordance with the Scope of Work and any necessary modifications thereof prepared by the grantee and approved by the Agency. A final Project performance report will be required with the final Financial Status Report. The final report may serve as the last quarterly report. The final report must provide complete information regarding the jobs created and supported as a result of the grant if applicable. Grantees must continuously monitor performance to ensure that time schedules are being met, projected work by time periods is being accomplished, and other performance objectives are being achieved. Grantees must submit an original of each report to the Agency no later than 30 days after the end of the quarter. The Project performance reports must include, but not be limited to, the following:
(1) A comparison of actual accomplishments to the objectives established for that period;
(2) Problems, delays, or adverse conditions, if any, which have affected or will affect attainment of overall Project objectives, prevent meeting time schedules or objectives, or preclude the attainment of particular Project work elements during established time periods. This disclosure shall be accompanied by a statement of the action taken or planned to resolve the situation;
(3) Objectives and timetable established for the next reporting period;
(4) Any special reporting requirements, such as jobs supported and created, businesses assisted, or Economic Development which results in improvements in median household incomes, and any other specific requirements, should be placed in the reporting section in the Letter of Conditions; and
(5) Within 90 days after the conclusion of the Project, the grantee will provide a final Project evaluation report. The last quarterly payment will be withheld until the final report is received and approved by the Agency. Even though the grantee may request reimbursement on a monthly basis, the last 3 months of reimbursements will be withheld until a final Project, Project performance, and financial status report are received and approved by the Agency.
For general questions about this announcement, please contact your USDA Rural Development State Office provided in the
All grants made under this Notice are subject to Title VI of the Civil Rights Act of 1964 as required by the USDA (7 CFR part 15, subpart A) and Section 504 of the Rehabilitation Act of 1973, Title VIII of the Civil Rights Act of 1968, Title IX, Executive Order 13166 (Limited English Proficiency), Executive Order 11246, and the Equal Credit Opportunity Act of 1974.
In accordance with the Paperwork Reduction Act of 1995, the information collection requirement contained in this Notice is approved by OMB under OMB Control Number 0570-0070.
All applicants, in accordance with 2 CFR part 25, must have a DUNS number, which can be obtained at no cost via a toll-free request line at (866) 705-5711 or online at
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD 3027, found online at
USDA is an equal opportunity provider, employer, and lender.
In the Matter of: Luis Alberto Najera-Citalan, Inmate Number: 10656-279, FCI Beaumont Low, Federal Correctional Institution, P.O. Box 26020, Beaumont, TX 77720.
On June 9, 2015, in the U.S. District Court for the Southern District of Texas, Luis Alberto Najera-Citalan (“Najera-Citalan”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Specifically, Najera-Citalan intentionally and knowingly conspired to knowingly and willfully export, attempt to export, and cause to be exported to Mexico from the United States a defense article, that is, to wit: approximately five (5) AR-15 style rifles which were designated as defense articles on the United States Munitions List, without having first obtained from the Department of State a license for such export or written authorization for such export. Najera-Citalan was sentenced to 60 months in prison, three years of supervised release, and a $100 assessment.
Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”)
BIS has received notice of Najera-Citalan's conviction for violating the AECA, and has provided notice and an opportunity for Najera-Citalan to make a written submission to BIS, as provided in Section 766.25 of the Regulations. BIS has not received a submission from Najera-Citalan.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Najera-Citalan's export privileges under the Regulations for a period of 10 years from the date of Najera-Citalan's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Najera-Citalan had an interest at the time of his conviction.
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
In the Matter of: Jorge Santana, Jr., Inmate Number: 00927-180, FCI Beaumont Low, Federal Correctional Institution, P.O. Box 26020, Beaumont, TX 77720.
On May 5, 2014, in the U.S. District Court for the Southern District of Texas, Jorge Santana, Jr. (“Santana”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Specifically, Santana knowingly and willfully attempted to export and caused to be exported from the United States to Mexico a defense article, that is, a .357 caliber magazine, two (2) 9mm magazines, a Smith & Wesson .40 caliber magazine, approximately 5,440 rounds of 7.62 caliber ammunition, 200 rounds of .40 caliber ammunition, and 400 rounds of .38 super caliber ammunition, which were designed as a defense article on the United States Munitions List, without having first obtained from the Department of State a license for such export or written authorization for such export. Santana was sentenced to 66 months in prison, three years of supervised release, 100 hours of community service, and a $100 assessment.
Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”)
BIS has received notice of Santana's conviction for violating the AECA, and has provided notice and an opportunity for Santana to make a written submission to BIS, as provided in Section 766.25 of the Regulations. BIS has not received a submission from Santana.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Santana's export privileges under the Regulations for a period of 10 years from the date of Santana's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Santana had an interest at the time of his conviction.
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
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).
Copies of the above information collection proposal can be obtained by calling or writing Jennifer Jessup, Departmental Paperwork Clearance Officer, (202) 482-0266, Department of Commerce, Room 7845, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to Jasmeet Seehra, Office of Management and Budget (OMB), by email to
On November 3, 2015, in the U.S. District Court for the District of South Carolina, Hassan Jamil Salame (“Salame”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Specifically, Salame knowingly and willfully attempted to export and caused to be exported, defense articles, that is, firearms and ammunition, including a Ruger .44 Magnum revolver, two Bushmaster .223 caliber rifles, a Ruger .45 caliber pistol, a Glock .45 caliber pistol, and a Beretta 9mm pistol from the United States to Lebanon, without first having obtained a license or written approval from the United States Department of State. Salame was sentenced to 45 months in prison, three years of supervised release, and a $300 assessment.
Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”)
BIS has received notice of Salame's conviction for violating the AECA, and has provided notice and an opportunity for Salame to make a written submission to BIS, as provided in Section 766.25 of the Regulations. BIS has not received a submission from Salame.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Salame's export privileges under the Regulations for a period of 10 years from the date of Salame's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Salame had an interest at the time of his conviction.
Accordingly, it is hereby
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
On August 25, 2015, in the U.S. District Court for the Southern District of Texas, Daniel Miranda-Mendoza (“Miranda-Mendoza”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Specifically, Miranda-Mendoza intentionally and knowingly conspired to knowingly and willfully export, attempt to export, and caused to be exported from the United States to Mexico, a defense article, that is, to wit: Approximately one Kel-Tec pistol, Model PMR-30, .22 caliber, one Remington rifle, Model 7400, .30-06 caliber, and one Browning rifle, Model X-bolt, .270 caliber, which were designated as defense articles on the United States Munitions List, without having first obtained from the Department of State a license for such export or written authorization for such export. Miranda-Mendoza was sentenced to 37 months in prison and a $100 assessment.
Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”)
BIS has received notice of Miranda-Mendoza's conviction for violating the AECA, and has provided notice and an opportunity for Miranda-Mendoza to make a written submission to BIS, as provided in Section 766.25 of the Regulations. BIS has not received a submission from Miranda-Mendoza.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Miranda-Mendoza's export privileges under the Regulations for a period of 10 years from the date of Miranda-Mendoza's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Miranda-Mendoza had an interest at the time of his conviction.
Accordingly, it is hereby
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
On January 13, 2015, in the U.S. District Court for the Southern District of Florida, Javier Nenos Rea (“Nenos Rea”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Specifically, Nenos Rea knowingly and willfully attempted to export defense articles, that is, AK-47 assault rifles and a .40 caliber semi-automatic pistol, from the United States to Bolivia without having first obtained a license or written approval from the United States Department of State. Nenos Rea was sentenced to 46 months in prison, two years of supervised release, and a $100 assessment.
Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”)
BIS has received notice of Nenos Rea's conviction for violating the AECA, and has provided notice and an opportunity for Nenos Rea to make a written submission to BIS, as provided in Section 766.25 of the Regulations. BIS has not received a submission from Nenos Rea.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Nenos Rea's export privileges under the Regulations for a period of 10 years from the date of Nenos Rea's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Nenos Rea had an interest at the time of his conviction.
Accordingly, it is hereby
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
Bureau of Industry and Security.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before January 17, 2017.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Mark Crace, BIS ICB Liaison, (202) 482-4895,
This collection of information is needed to detect violations of the Export Administration Act and Regulations, and determine if an investigation or prosecution is necessary and to reach a settlement with violators. Voluntary
Submitted on paper.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
In the Matter of: Julio Cesar Solis-Castilleja, Inmate Number: 56152-379, FCI Victorville Medium I, Federal Correctional Institution, Correctional Institution, P.O. Box 3725, Adelanto, CA 92301.
On June 30, 2014, in the U.S. District Court for the Southern District of Texas, Julio Cesar Solis-Castilleja (“Solis-Castilleja”), was convicted of violating Section 38 of the Arms Export Control Act (22 U.S.C. 2778 (2012)) (“AECA”). Specifically, Solis-Castilleja knowingly and willfully attempted to export and caused to be exported from the United States to Mexico a defense article, that is, a Norinco MAK 90 Sporter 7.62 × 39mm caliber rifle, a Bushmaster .308 caliber rifle, a DPMS Panther .308 caliber rifle, a FN Herstal .308 caliber rifle, a PTR 91C .308 caliber rifle, four (4) 7.62 × 51mm magazines, and one (1) 7.62 × 39mm magazine, which were designated as a defense article on the United States Munitions List, without having first obtained from the Department of State a license for such export or written authorization for such export. Solis-Castilleja was sentenced to 46 months in prison, three years of supervised release, and a $100 assessment.
Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”)
BIS has received notice of Solis-Castilleja's conviction for violating the AECA, and has provided notice and an opportunity for Solis-Castilleja to make a written submission to BIS, as provided in Section 766.25 of the Regulations. BIS has not received a submission from Solis-Castilleja.
Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Solis-Castilleja's export privileges under the Regulations for a period of 10 years from the date of Solis-Castilleja's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Solis-Castilleja had an interest at the time of his conviction.
A. Applying for, obtaining, or using any license, License Exception, or export control document;
B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or
C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.
A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;
B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;
C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;
D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or
E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
On August 12, 2016, the Department of Commerce (the Department) published the preliminary results of the administrative review and new shipper review of the antidumping duty order on solid urea from Russia. The period of review (POR) is July 1, 2014, through June 30, 2015. For the final results of these reviews, we continue to find that subject merchandise has not been sold at less than normal value.
Effective November 18, 2016.
Michael A. 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, and (202) 482-2201, respectively.
On August 12, 2016, the Department published the
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.
The Department made no changes to its calculations announced in the
The Department made no changes to its calculations announced in the
In accordance with 19 CFR 351.212 and the
For entries of subject merchandise during the period of review produced by MCC EuroChem and PhosAgro for which they did not know 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
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 the administrative and new shipper 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 administrative review respondent, MCC EuroChem, will be 0.00 percent, the weighted average dumping margin established in the final results of the administrative review; (2) for merchandise exported by manufacturers 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 in which that manufacturer or exporter participated; (3) if the exporter is not a firm covered in this administrative review, a prior review, or the original investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recently completed segment of this proceeding for the manufacturer of subject merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 64.93 percent, the all-others rate established in the original less-than-fair-value investigation.
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 0.00 percent; (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 final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to administrative protective order (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 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 sanctionable violation.
We are issuing and publishing these results of administrative and new shipper reviews in accordance with sections 751(a)(1) 751(a)(2)(B)(iii), 751(a)(3)and 777(i)(1) of the Act and 19 CFR 351.213(h), 351.214 and 351.221(b)(5).
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).
The final rule requires that, in order to become certified, a Person or Certified Person must submit a written attestation from an “Accredited Conformity Assessment Body” (ACAB), as defined in the final rule, that such Person has information security systems, facilities and procedures in place to protect the security of the Limited Access DMF, as required under Section 1110.102(a)(2) of the final rule. A Certified Person also must provide a new written attestation periodically for renewal of its certification as specified in the final rule. The ACAB must be independent of the Person or Certified Person seeking certification, unless it is a third party conformity assessment body which qualifies for “firewalled
The Firewalled Status Application Form collects information that NTIS will use to evaluate whether the respondent qualifies for “firewalled status” under the rule, and, therefore, can provide a written attestation in lieu of an independent ACAB's attestation. This information includes specific requirements of Section 1110.502(b) of the final rule, which the respondent ACAB must certify are satisfied, and the provision of specific information by the respondent ACAB, such as the identity of the Person or Certified Person that would be the subject of the attestation and the basis upon which the certifications were made.
This information collection request may be viewed at reginfo.gov. Follow the instructions to view Department of Commerce collections currently under review by OMB.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
National Technical Information Service (NTIS), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. The purpose of this notice is to allow for 60 days of public comment.
Written comments must be submitted on or before January 17, 2017.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to John W. Hounsell, Business and Industry Specialist, Office of Product and Program Management, National Technical Information Service, Department of Commerce, 5301 Shawnee Road, Alexandria, VA 22312, email:
This notice informs the public that the National Technical Information Service (NTIS) is requesting approval of a new information collection described in Section II for use in connection with the final rule for the “Certification Program for Access to the Death Master File.” The final rule was published on June 1, 2016 (81 FR 34882), with the rule to become effective on November 28, 2016. The new information collection described in Section II, if approved, will become effective on the effective date of the final rule.
On December 30, 2014, NTIS initially described a “Limited Access Death Master File Systems Safeguards Attestation Form” in the notice of proposed rulemaking (79 FR 78314 at 78321). To accommodate the requirements of the final rule, NTIS is using both the ACAB Systems Safeguards Attestation Form and the AG or IG Systems Safeguards Attestation Form.
The ACAB Systems Safeguards Attestation Form requires an “Accredited Conformity Assessment Body” (ACAB), as defined in the final rule, to attest that a Person seeking certification or a Certified Person seeking renewal of certification has information security systems, facilities and procedures in place to protect the security of the Limited Access DMF, as required under Section 1110.102(a)(2) of the final rule. The ACAB Systems Safeguards Attestation Form collects information based on an assessment by the ACAB conducted within three years prior to the date of the Person or Certified Person's submission of a completed certification statement under Section 1110.101(a) of the final rule. This collection includes specific requirements of the final rule, which the ACAB must certify are satisfied, and the provision of specific information by the ACAB, such as the date of the assessment and the auditing standard(s) used for the assessment.
Section 1110.501(a)(2) of the final rule provides that a state or local government office of AG or IG and a Person or Certified Person that is a department or agency of the same state or local government, respectively, are not considered to be owned by a common “parent” entity under Section 1110.501(a)(1)(ii) for the purpose of determining independence, and attestation by the AG or IG is possible. The AG or IG Systems Safeguards Attestation Form is for the use of a state or local government AG or IG to attest on behalf of a state or local government department or agency Person or Certified Person. The AG or IG Systems Safeguards Attestation Form requires the state or local government AG or IG to attest that a Person seeking certification or a Certified Person seeking renewal of certification has
NTIS estimates the total annual cost to the public for both the ACAB Systems Safeguards Attestation Forms and the AG or IG Systems Safeguards Attestation Forms to be $514,500 ($465,000 for ACAB Systems Safeguards Attestation Forms + $49,500 for AG or IG Systems Safeguards Attestation Forms.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
United States Patent and Trademark Office, Department of Commerce.
Notice of public meeting; request for comments.
The Hague Conference on Private International Law (“The Hague Conference”), an international organization in the Netherlands, is sponsoring negotiations for a convention on the recognition and enforcement of foreign judgments in civil and commercial matters. In February 2016, the Council on General Affairs and Policy of The Hague Conference created a Special Commission on the Recognition and Enforcement of Foreign Judgments (“the Special Commission”) to prepare a preliminary draft text of the convention, which is subject to a formal diplomatic negotiation open to member States of The Hague Conference. At its first session in June 2016, the Special Commission produced a Preliminary Draft Convention that contains general and specific provisions that would apply to the recognition and enforcement of judgments arising from transnational intellectual property disputes. The United States Patent and Trademark Office (USPTO) seeks public comments on the June 2016 Preliminary Draft Convention (the “Preliminary
To assist the USPTO in determining the best way to address this topic, the USPTO will host a public meeting to obtain public input. The meeting will be open to the public and will provide a forum for discussion of the questions identified in this notice. Written comments in response to the questions set forth in this notice also are requested.
The public meeting will be held on January 12, 2017, beginning at 1:00 p.m. Eastern Standard Time (EST) and ending at 4:00 p.m. EST.
Event Address: The public meeting will be held in the USPTO Headquarters, Global Intellectual Property Academy (GIPA), Madison Building (East), Second Floor, 600 Dulany Street, Alexandria, Virginia 22314.
All comments received are part of the public record and will be available for public inspection without change via the USPTO's Web site at
Requests for additional information should be directed to the attention of Michael Shapiro, Senior Counsel, Office of Policy and International Affairs, USPTO, by telephone at 571-272-9300, or by email to
The Hague Conference is sponsoring negotiations for a convention on the recognition and enforcement of foreign judgments. Following preparatory work on the draft convention by a Working Group beginning in 2012, in February 2016, the Council on General Affairs and Policy of The Hague Conference established a Special Commission to prepare a preliminary draft convention on the recognition and enforcement of foreign judgments in civil and commercial matters. The first meeting of the Special Commission took place June 1-9, 2016, at The Hague, Netherlands. The second meeting of the Special Commission is scheduled to take place February 16-24, 2017, at The Hague. The text of the Preliminary Draft produced at the first session of the Special Commission, along with other documents relating to the convention is available at:
The Preliminary Draft currently contains 16 articles organized into two chapters. Chapter I (Articles 1-3) sets forth the scope and definitions for the draft treaty. Chapter II (Articles 4-16) sets forth the basic rules governing the recognition and enforcement of judgments under the treaty.
The Preliminary Draft applies to the recognition and enforcement of judgments in a Contracting State of judgments relating to civil or commercial matters in another Contracting State (Article 1). The term “judgment” means any decision on the merits, including determinations of costs or expenses related to such decisions (Article 3). Judgments related to revenue, customs, and administrative matters are excluded from the scope of the Convention (Article 1) as well as more specific subject matter such as family law matters, wills and succession, and insolvency, but judgments related to intellectual property matters (Article 2) are not excluded.
The Preliminary Draft requires that a judgment of a court in a Contracting State (the “State of origin”) be recognized and enforced in another Contracting State (the “requested State”) without reviewing its merits (Article 4). Recognition and enforcement, however, may be refused but only under the grounds set forth in the treaty. The Preliminary Draft sets forth the bases for recognition and enforcement of judgments (Article 5).
Of particular importance to the intellectual property community are paragraphs 5(1)(k) and 5(1)(l), which set forth the bases for the recognition and enforcement of judgments for infringements of a patent, trademark, design, or other similar right, and judgments on the validity or infringement of a copyright or a related right, respectively. It should also be noted (subject to Article 6, discussed below), a judgment in such an infringement case might also be enforceable if one of the other bases for recognition and enforcement of the judgment set forth in Article 5 exists (for example, the person against whom recognition or enforcement is sought brought the claim on which the judgment is based) applies.
Notwithstanding Article 5, a judgment on the registration or validity of patents, trademarks, designs, or other similar rights that are required to be deposited or registered is eligible for recognition and enforcement in a requested State “if and only if” the State of origin is the State where the deposit or registration took place, or is deemed to have taken place under an international or regional
The Preliminary Draft bars the recognition and enforcement of rulings on the registration or validity of patents, trademarks, and designs, or other similar rights that arose as a preliminary question in courts other than those with exclusive jurisdiction under Article 6 (Article 8(1)). The Explanatory Note Providing Background on the Proposed Draft Text and Identifying Outstanding Issues (Prel. Doc. No. 2) provides the following example of a preliminary question: a ruling on the validity of a patent raised as a defense to an infringement claim (Prel. Doc. No. 2, para. 111). In such instances, however, a court may refuse or postpone the recognition or enforcement of a ruling on validity only (1) where the ruling is inconsistent with a judgment or a decision of a competent authority on the matter or (2) where the proceedings on validity took place in the State with exclusive jurisdiction under Article 6 (Article 8(3)). A court may refuse to recognize a judgment “if, and to the extent that, it was based on” a ruling on registration or validity as a preliminary question by in courts other than those with exclusive jurisdiction under Article 6.
The Preliminary Draft allows the court of the requested State to refuse recognition and enforcement of judgment awarding damages if and to the extent that those damages (including exemplary or punitive damages) do not compensate a party for actual loss or harm suffered (Article 9). The Preliminary Draft does not expressly address enforcement of judgments for injunctive relief. However, the Explanatory on the Preliminary Draft notes, without expressly mentioning injunctive relief, that “non-money judgments have been included in the scope of the Proposed Draft Text” (Prel. Doc. No 2, para. 52).
The USPTO is seeking comments on the Preliminary Draft as it relates to intellectual property. Interested members of the public are invited to present written comments on any issues they believe to be relevant to protection of intellectual property or any aspect of the proposed Convention as it relates to intellectual property. Comments also are invited on any or all of the questions listed below.
As used in the Preliminary Draft, the term “intellectual property rights” includes patents, trademarks, designs, and copyrights or related rights. If your response does not apply to all of these intellectual property rights, please state the specific intellectual property right, or rights, to which your response applies. Other intellectual property rights that are outside the scope of the current text of the Preliminary Draft, such as trade secrets, are identified separately in this notice where appropriate.
With respect to these and any other issues raised by the Preliminary Draft, in your responses, please: (1) Clearly identify the matter being addressed; (2) provide examples where appropriate; (3) identify any relevant legal authorities to support your comment; (4) indicate approaches and provisions that are unacceptable; and (5) express preferences for approaches, effective solutions to specific challenges, and drafting recommendations to address the matter being addressed.
1. What are your experiences in having U.S. judgments involving intellectual property matters recognized and enforced in foreign courts?
2. What are the benefits, if any, of increasing the recognition and enforcement of U.S. judgments involving intellectual property matters in foreign courts through joining a multilateral treaty?
3. What are your experiences in having foreign judgments recognized in U.S. courts, including on the basis of comity or under state statutes?
4. What are the risks, if any, of increasing the recognition and enforcement of foreign judgments involving intellectual property matters by U.S. courts through joining a multilateral treaty?
5. Are uniform rules for international enforcement of intellectual property judgments desirable?
6. What impact, if any, would the territorial nature of intellectual property rights have on enforcing rights across borders?
7. What impact, if any, would differences in procedural practices across borders have on enforcing intellectual property rights across borders?
8. What impact, if any, would differences in substantive law have on enforcing intellectual property rights across borders?
9. Would this convention have any disproportionate effects on a particular technology sector? If so, which ones and how?
10. Please identity problems that could occur from recognizing or enforcing judgments rendered on intellectual property matters in other Contracting States that have policies or laws that are inconsistent with U.S. intellectual property laws and policies.
11. Please identify any challenges with respect to enforcement in foreign courts of U.S. judgments, or in U.S. courts of foreign judgments, involving intellectual property matters.
12. How often are U.S. nationals also foreign intellectual property owners who would then be able to use this Convention to have judgments they obtain in foreign courts enforced by U.S. courts? Would that be useful for U.S. nationals?
13. What changes, if any, to U.S. law would be needed to implement the proposed convention? Please identify any drawbacks and/or advantages to such changes.
14. What effect, if any, would the Preliminary Draft have on the enforcement of intellectual property rights in the digital environment? In particular, should the language in the Preliminary Draft be revised to take into account issues that arise in connection with infringement and enforcement of intellectual property rights on the Internet?
15. Should judgments on the validity and/or the infringements of intellectual property rights, other than copyright and related rights, be excluded from the scope of the treaty under Article 2(2)? Please identify the specific intellectual property right at issue and the specific concerns, if any, raised by including it within the scope of this convention?
16. Should judgments on the validity, ownership, subsistence, and/or the infringement of copyright and related rights be excluded from the scope of the treaty under Article 2(2)? Please state the specific concerns, if any, raised by including copyrights or related rights within the scope of this convention.
17. Should judgments on the validity or misappropriation and/or theft of trade secrets be excluded from the scope of the treaty under Article 2(2)? Please state the specific concerns, if any, raised by including judgments on the validity or misappropriation and/or theft of trade secrets within the scope of this convention.
18. Should judgments on the infringement of intellectual property rights, other than copyright and related
19. Should judgments on the infringements of plant breeders' rights be included in Article 5(1)(k)?
20. Should judgments on the infringements of service marks, trade dress, and geographical indications rights be expressly included in Article 5(1)(k)?
21. Should judgments on the validity or infringement of unregistered designs and trademarks be included in Article 5(1)(l)?
22. Should judgments on the validity or the misappropriation and/or theft of trade secrets be included in Article 5(1)(l)?
23. Should the bracketed language in Article 5(1)(l) be included?
24. Should judgments on the validity, ownership, subsistence or infringement of copyright or related rights be included in Article 5(1)(l) in cases where the right arose under the law of the State of origin?
25. Should such judgments be included in Article 5(1)(l) where the right did not arise under the law of the State of origin but where another basis for jurisdiction set forth in Article 5 is satisfied?
26. With respect to a judgment on the registration or validity of patents, trademarks, designs, or other similar rights that are required to be deposited, registered, or issued, the Preliminary Draft provides for exclusive jurisdiction of the court in the State of origin where the right issued or registration took place, or is deemed to have taken place under an international or regional instrument (Article 6). Please comment on the appropriateness of this rule.
27. Should a judgment on the registration or validity of mask works or vessel designs that are required to be deposited, registered, or issued be included in Article 6?
28. What are your experiences in having U.S. rulings on preliminary questions, or judgments based on such rulings, involving the registration or validity of patents, trademarks, and designs, or other similar rights, by courts other than those with exclusive jurisdiction recognized and enforced by a foreign court?
29. Should a judgment on the registration or validity of mask works or vessel designs that are required to be deposited, registered, or issued be included in Article 8?
30. Does Article 8 provide an appropriate framework for resolving problems, if any, related to recognition and enforcement of rulings on preliminary questions and judgments based on such rulings?
31. How much discretion should a court in the requested State have to refuse or postpone the recognition or enforcement of a ruling on the validity of a patent, trademark, design, and other similar rights raised as preliminary matter in a court in the State of origin?
Remedies
32. Article 9 provides that recognition or enforcement of a judgment may be refused if, and to the extent that, the judgment awards damages, including exemplary or punitive damages, that do not compensate a party for actual loss or harm suffered. Should the court in a requested State be allowed to recognize and enforce non-compensatory damages in judgments involving intellectual property matters?
33. Does Article 9 include the types of damages that would provide effective relief for intellectual property right owners? If not, what other types of damages or other remedies ought to be included? Why?
34. How should statutory damages for copyright infringement be treated under this Article, and should Article 9 be amended to address statutory damages expressly?
35. When a judgment for infringement of an intellectual property covered by the convention includes injunctive relief, should a court in the requested State be required to recognize and enforce the award of injunctive relief?
36. If so, should there be any limitation on the circumstances under which such awards should be recognized and enforced (for example, by specifying the limitation in Article 5)? If not, should a judgment for infringement of an intellectual property right covered by the convention that includes injunctive relief be excluded as a basis for recognition and enforcement, or whole or in part, under Article 5?
Event Registration Information: To register to attend or to request to present as a speaker, please send an email message 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 previously furnished by a nonprofit agency employing persons who are blind or have other severe disabilities.
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 are proposed for deletion from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Additions to the Procurement List.
This action adds products to the Procurement List that will be furnished by a nonprofit agency employing persons who are blind or have other severe disabilities.
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 9/23/2016 (81 FR 65629-65630), the Committee for Purchase From People Who Are Blind or Severely Disabled published notice 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 impact of the additions on the current or most recent contractors, the Committee has determined that the products 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 organization that will furnish the products to the Government.
2. The action will result in authorizing a small entity to furnish the products 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 proposed for addition to the Procurement List.
Accordingly, the following products are added to the Procurement List:
Bureau of Consumer Financial Protection.
Notice regarding charges for certain disclosures under the Fair Credit Reporting Act.
The Bureau of Consumer Financial Protection (Bureau) announces that the ceiling on allowable charges under section 612(f) of the Fair Credit Reporting Act (FCRA) will remain unchanged at $12.00, effective for 2017. The Bureau is required to increase the $8.00 amount referred to in section 612(f)(1)(A)(i) of the FCRA on January 1 of each year, based proportionally on changes in the Consumer Price Index for All Urban Consumers (CPI-U), with fractional changes rounded to the nearest fifty cents. The CPI-U increased 49.77 percent between September 1997, when the FCRA amendments took effect, and September 2016. This increase in the CPI-U, and the requirement that any increase be rounded to the nearest fifty cents, result in a maximum allowable charge of $12.00.
Effective January 1, 2017.
Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552, at (202) 435-7700.
Section 612(f)(1)(A) of the Fair Credit Reporting Act (FCRA) provides that a consumer reporting agency may charge a consumer a reasonable amount for making a disclosure to the consumer pursuant to section 609 of the FCRA. Section 612(f)(1)(A)(i) of the FCRA provides that, where a consumer reporting agency is permitted to impose a reasonable charge on a consumer for making a disclosure to the consumer pursuant to section 609 of the FCRA, the charge shall not exceed $8.00 and shall be indicated to the consumer before making the disclosure. Section 612(f)(2) of the FCRA states that the Bureau shall increase the $8.00 maximum amount on
Section 612(a) of the FCRA gives consumers the right to a free disclosure upon request once every 12 months. The maximum allowable charge established by this notice does not apply to requests made under that provision. The charge does apply when a consumer who orders a file disclosure has already received a free annual disclosure and does not otherwise qualify for an additional free disclosure.
The Bureau is using the $8.00 amount set forth in section 612(f)(1)(A)(i) of the FCRA as the baseline for its calculation of the increase in the ceiling on reasonable charges for certain disclosures made under section 609 of the FCRA. Since the effective date of section 612(a) was September 30, 1997, the Bureau calculated the proportional increase in the CPI-U from September 1997 to September 2016. The Bureau then determined what modification, if any, from the original base of $8.00 should be made effective for 2017, given the requirement that fractional changes be rounded to the nearest fifty cents.
Between September 1997 and September 2016, the CPI-U increased by 49.77 percent from an index value of 161.2 in September 1997 to a value of 241.428 in September 2016. An increase of 49.77 percent in the $8.00 base figure would lead to a figure of $11.98. However, because the statute directs that the resulting figure be rounded to the nearest $0.50, the maximum allowable charge is $12.00. The Bureau therefore determines that the maximum allowable charge for the year 2017 will remain at $12.00, effective January 1, 2017.
Department of the Army, DoD.
Notice of intent.
The Department of the Army hereby gives notice of its intent to grant to Per Vivo Labs, Inc.; a corporation having its principle place of business at 2002 Brookside Lane, Kingsport, TN 37660, an exclusive license.
Written objections must be filed not later than 15 days following publication of this announcement.
Send written objections to U.S. Army Research Laboratory Technology Transfer and Outreach Office, RDRL-DPT/Thomas Mulkern, Building 321 Room 110, Aberdeen Proving Ground, MD 21005-5425.
Thomas Mulkern, (410) 278-0889, E-Mail:
The Department of the Army plans to grant an exclusive license to Per Vivo Labs, Inc., in the field of use related to physical therapy/rehabilitation resistance bands incorporating rate-actuated tethers (RATs) relative to the following:
• “Rate-Responsive, Stretchable Devices”, US Patent No.: 9,303,717, Filing Date June 26, 2013, Issue Date April 5, 2016.
• “Rate-Responsive, Stretchable Devices (Further Improvements)”, US Patent Application No.: 15/057,944, Filing Date March 1, 2016.
The prospective exclusive license may be granted unless within fifteen (15) days from the date of this published notice, the U.S. Army Research Laboratory receives written objections including evidence and argument that establish that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209(e) and 37 CFR 404.7(a)(1)(i),. Competing applications completed and received by the U.S. Army Research Laboratory within fifteen (15) days from the date of this published notice will also be treated as objections to the grant of the contemplated exclusive license.
Objections submitted in response to this notice will not be made available to the public for inspection and, to the extent permitted by law, will not be released under the Freedom of Information Act, 5 U.S.C. 552.
Department of the Army, U.S. Army Corps of Engineers, DoD.
Notice of open committee meeting.
The Department of the Army is publishing this notice to announce the following Federal advisory committee meeting of the Lake Eufaula Advisory Committee (LEAC). The meeting is open to the public.
The Committee will meet from 10:00 a.m.-12:00 p.m. on Monday, December 12, 2016.
The meeting will be held at Three Forks Harbor, 5201 Three Forks Road, Fort Gibson, OK 74434.
Mr. Jeff Knack; Designated Federal Officer (DFO) for the Committee, in writing at Eufaula Lake Office, 102 E. BK 200 Rd, Stigler, OK 74462-1829, or by email at
This meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Sunshine in the Government Act of 1976 (U.S.C. 552b, as amended) and 41 Code of the Federal Regulations (CFR 102-3.150).
Pursuant to 41 CFR 102-3.140d, the Committee is not obligated to allow a member of the public to speak or otherwise address the Committee during the meeting. Members of the public will be permitted to make verbal comments during the Committee meeting only at the time and in the manner described below. If a member of the public is interested in making a verbal comment at the open meeting, that individual must submit a request, with a brief statement of the subject matter to be addressed by the comment, at least three (3) days in advance to the Committee's Designated Federal Officer, via electronic mail, the preferred mode of submission, at the addresses listed in the
Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), Department of Defense (DoD).
Federal advisory committee meeting notice.
The Department of Defense is publishing this notice to announce the following Federal advisory committee meeting of the Government-Industry Advisory Panel. This meeting is open to the public.
The meeting will be held from 9:00 a.m. to 5:00 p.m. on Tuesday, November 29, 2016. Public registration will begin at 8:45 a.m. For entrance into the meeting, you must meet the necessary requirements for entrance into the Pentagon. For more detailed information, please see the following link:
Pentagon Library, Washington Headquarters Services, 1155 Defense Pentagon, Washington, DC 20301-1155. The meeting will be held in Room B7. The Pentagon Library is located in the Pentagon Library and Conference Center (PLC2) across the Corridor 8 bridge.
LTC Andrew Lunoff, Office of the Assistant Secretary of Defense (Acquisition), 3090 Defense Pentagon, Washington, DC 20301-3090, email:
Due to circumstances beyond the control of the Designated Federal Officer and the Department of Defense, the Government-Industry Advisory Panel is unable to provide public notification, as required by 41 CFR 102-3.150(a), for its meeting on Tuesday, November 29, 2016. Accordingly, the Advisory Committee Management Officer for the Department of Defense, pursuant to 41 CFR 102-3.150(b), waives the 15-calendar day notification requirement.
Minor changes to the agenda will be announced at the meeting. All materials will be posted to the FACA database after the meeting.
Individuals requiring special accommodations to access the public meeting or seeking additional information about public access procedures, should contact LTC Lunoff, the committee DFO, at the email address or telephone number listed in the
Department of the Navy, DoD
Notice.
Pursuant to Section 102(2)(c) of the National Environmental Policy Act of 1969 and regulations implemented by the Council on Environmental Quality (40 Code of Federal Regulations parts 1500-1508), the Department of the Navy (DoN) has prepared and filed with the U.S. Environmental Protection Agency a Draft Environmental Impact Statement (EIS) to assess the potential environmental impacts of adding up to 36 Growler aircraft at the Naval Air Station (NAS) Whidbey Island complex, and continuing and increasing Growler airfield operations. The NAS Whidbey Island complex is located in Island County, Washington, on Whidbey Island, in the northern Puget Sound region. The complex includes the main air station (Ault Field), which is in the north-central part of the island, adjacent to the city of Oak Harbor, and Outlying Landing Field (OLF) Coupeville. The OLF is approximately 10 miles south of Ault Field and is dedicated primarily to Field Carrier Landing Practice (FCLP).
With the filing of the Draft EIS, the DoN is initiating an extended public comment period of 75 days, beginning on November 10, 2016 and ending on January 25, 2017. Public meetings are scheduled to inform the public and receive comments on the environmental analysis presented in the Draft EIS. This notice announces the dates, times, and
The DoN will hold public meetings to inform the public about the Draft EIS and the proposed action and alternatives under consideration and to provide opportunities for the public to comment on the Draft EIS. Federal, state, and local agencies and officials, Native American Indian Tribes and Nations, and interested organizations and individuals are encouraged to provide comments in person at the public meetings or in writing during the 75-day public review period. Public meetings will be held at the following dates, times, and locations:
1. Monday, December 5, 2016, from 3:00 p.m. to 6:00 p.m., at the Fort Worden State Park Conference Center, USO Hall, 200 Battery Way, Port Townsend, Washington 98368.
2. Tuesday, December 6, 2016, from 4:00 p.m. to 7:00 p.m., at the Oak Harbor Elks Lodge Grande Hall, 155 NE Ernst Street, Oak Harbor, Washington 98277.
3. Wednesday, December 7, 2016, from 3:00 p.m. to 6:00 p.m., at the Lopez Center for Community and the Arts, 204 Village Road, Lopez Island, Washington 98261.
4. Thursday, December 8, 2016, from 3:00 p.m. to 6:00 p.m., at the Seafarers' Memorial Park Building, 601 Seafarers Way, Anacortes, Washington 98221.
5. Friday, December 9, 2016, from 4:00 p.m. to 7:00 p.m., at the Coupeville High School Commons, 501 South Main Street, Coupeville, Washington 98239.
The public meetings will be open house sessions with informational poster stations. Members of the public will have the opportunity to ask questions of DoN representatives and subject matter experts. Attendees will also be able to provide verbal comments to a stenographer or submit written comments during the public meetings. In addition to participating in the public meetings, members of the public may submit comments via the U.S. Postal Service using the mailing address identified in the contact information later in this notice or electronically using the project Web site (
The DoN may release the city, state, and 5-digit zip code of individuals who provide comments during the Draft EIS public review period. However, the names, street addresses, email addresses and screen names, telephone numbers, or other personally identifiable information of those individuals will not be released by the DoN unless required by law. Prior to each commenter making verbal comments to the stenographer at the public meetings the commenter will be asked whether he/she agrees to a release of their personally identifiable information. Those commenters submitting written comments, either using comment forms or via the project Web site, will be asked whether they authorize release of personally identifiable information by checking a “release” box.
EA-18G EIS Project Manager, Naval Facilities Engineering Command (NAVFAC) Atlantic, Attention: Code EV21/SS; 6506 Hampton Boulevard, Norfolk, Virginia 23508.
On September 5, 2013, the DoN published a notice of intent (NOI) in the
The DoN's proposed action is to: (1) Continue and expand existing Growler operations at Ault Field and OLF Coupeville; (2) increase capabilities to accommodate up to 36 additional aircraft, including the construction and renovation of facilities at Ault Field; (3) support flight operations of other aircraft, and (4) station additional personnel in the region.
The purpose of the proposed action is to augment the DoN's existing Electronic Attack community at NAS Whidbey Island by operating additional Growler aircraft as appropriated by Congress. The DoN needs to effectively and efficiently increase electronic attack capabilities in order to counter increasingly sophisticated threats and provide more aircraft per squadron in order to give operational commanders more flexibility in addressing future threats and missions. The need for the proposed action is to maintain and expand Growler operational readiness to support national defense requirements under Title 10, United States Code (U.S.C.), Section 5062.
In developing the proposed range of alternatives that meet the purpose of and need for the proposed action, the DoN carefully reviewed important considerations unique to the Growler community that is single-sited at NAS Whidbey Island, as well as Growler squadron training in light of Title 10 responsibilities; existing training requirements and regulations; existing DoN infrastructure; and Chief of Naval Operations guidance to support operating Naval Forces. Furthermore, the DoN evaluated past home basing decisions, reconsidered alternatives previously eliminated from analysis, and thoughtfully considered basing and training options suggested by the public during the two scoping periods. The Draft EIS explains the DoN's reasons for eliminating some alternatives and suggested options from further consideration. In addition, the Draft EIS explains why some alternatives presented in the October 10, 2014 revised NOI were not carried forward.
The action alternatives evaluated in the Draft EIS vary in terms of force structure and operations to accommodate the proposed increase in Growler aircraft. In addition, three operational scenarios (sub-alternatives) are evaluated, all of which focus on the distribution of annual FCLP airfield operations between Ault Field and OLF Coupeville.
In addition to the action alternatives, the DoN evaluated the potential environmental effects of the No Action Alternative. Under this alternative, the proposed action would not occur. Although the No Action Alternative would not meet the purpose of or need for the proposed action, the conditions associated with the No Action Alternative serve as reference points for describing and quantifying the potential environmental impacts associated with the proposed action alternatives. For this Draft EIS, the DoN is using the year 2021 for the No Action Alternative because it represents conditions when events at Ault Field affecting aircraft loading, facility and infrastructure assets, personnel levels, and number of aircraft are expected to be fully implemented and complete from previous aircraft home basing, aircraft retirement, and other related decisions.
The Draft EIS provides an analysis of the potential environmental effects of the proposed action on the following resources: Airspace and airfield operations; noise; public health and safety; air quality; land use; cultural resources; American Indian traditional resources; biological resources; water resources; socioeconomics; environmental justice; transportation;
The Draft EIS was distributed to federal, state, and local agencies and elected officials, Native American Indian Tribes and Nations, and other interested individuals and organizations. The Draft EIS is available for public electronic viewing or download at the project Web site (
To be included on the DoN's mailing list for future updates on the EIS, submit a request electronically using the project Web site or submit a written request to the address previously identified for further information. The same policy for release of personally identifiable information as identified above will be maintained by the DoN for individuals requesting to be included on the EIS mailing list.
Take notice that the following hydroelectric applications have been filed with the Commission and are available for public inspection:
a.
b.
c.
d.
For license surrender: Klamath River Renewal Corporation.
e.
Lower Klamath Project (P-14803).
f.
Lower Klamath Project—on the Klamath River in Klamath County, Oregon, and Siskiyou County, California. The project would include about 395 acres of federal lands administered by the Bureau of Land Management.
g.
h.
Michael Carrier, President, Klamath River Renewal Corporation, 423 Washington Street, 3rd Floor, San Francisco, CA 94111, (415) 820-4441,
i.
Surrender: John Mudre: (202) 502-8902,
j.
k.
l. With this notice, we are initiating informal consultation with: (a) the U.S. Fish and Wildlife Service and NOAA Fisheries under section 7 of the Endangered Species Act and the joint agency implementing regulations at 50 CFR part 402; (b) NOAA Fisheries under section 305(b) of the Magnuson-Stevens Fishery Conservation and Management Act and implementing regulations at 50 CFR 600.920; and (c) the California and Oregon State Historic Preservation Officers, as required by section 106 of the National Historic Preservation Act, and the implementing regulations of the Advisory Council on Historic Preservation at 36 CFR part 800.
m. With this notice, we are designating PacifiCorp and the Renewal
n.
o. Individuals desiring to be included on the Commission's mailing list for these proceedings should so indicate by writing to the Secretary of the Commission.
p.
In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission or FERC's) regulations, 18 Code of Federal Regulations (CFR) Part 380, the Office of Energy Projects has reviewed Northern Indiana Public Service Company's application for amendment of the license for the Norway-Oakdale Hydroelectric Project (FERC Project No. 12514-074), on the Tippecanoe River near the city of Monticello in Carroll and White Counties, Indiana, and prepared a final environmental assessment (EA) for the project. The project does not occupy any federal lands.
The final EA contains staff's analysis of the potential environmental effects of implementing the proposed modified definition of abnormal flow conditions that would be included in a revised article 403, which defines the operation of the project. Staff concludes that authorizing the amendment, with staff's recommended modification to the definition of abnormal river conditions, would not constitute a major federal action that would significantly affect the quality of the human environment.
A copy of the final EA is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site at
You may also register online at
For further information, contact Mark Pawlowski at 202-502-6052.
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following electric reliability filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests,
This is a supplemental notice in the above-referenced proceeding Lawrenceburg Power, LLC`s application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 30, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following public utility holding company filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced proceeding Three Peaks Power, LLCs application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 30, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that on November 14, 2016, Midwest Generation, LLC submitted tariff filing per: Refund Report to be effective N/A, pursuant to Federal Energy Regulatory Commission's (Commission) October 11, 2016 Order.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. On or before the comment date, it is not necessary to serve motions to intervene or protests on persons other than the Applicant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Take notice that the following hydroelectric application has been filed with the Federal Energy Regulatory Commission and is available for public inspection:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j. Deadline for filing comments, motions to intervene, and protests is 30 days from the issuance of this notice by the Commission. The Commission strongly encourages electronic filing. Please file motions to intervene, protests, and comments using the Commission's eFiling system at
k.
l.
m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
n.
o.
Take notice that the Commission received the following exempt wholesale generator filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced proceeding Waterford Power, LLC`s application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 30, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Federal Energy Regulatory Commission, DOE.
Comment request.
In compliance with the requirements of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(a)(1)(D), the Federal Energy Regulatory Commission (Commission or FERC) is submitting its information collection FERC-547 (Gas Pipeline Rates: Refund Report Requirements) to the Office of Management and Budget (OMB) for review of the information collection requirements. Any interested person may file comments directly with OMB and should address a copy of those comments to the Commission as explained below. The Commission previously issued a Notice in the
Comments on the collection of information are due by December 19, 2016.
Comments filed with OMB, identified by the OMB Control No. 1902-0084, should be sent via email to the Office of Information and Regulatory Affairs:
A copy of the comments should also be sent to the Commission, in Docket No. IC16-13-000, by either of the following methods:
• eFiling at Commission's Web site:
•
Ellen Brown may be reached by email at
The Commission uses the data to monitor refunds owed by natural gas companies to ensure that the flow-through of refunds owed by these companies are made as expeditiously as possible and to assure that refunds are made in compliance with the Commission's regulations.
This is a supplemental notice in the above-referenced proceeding Darby Power, LLC`s application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 30, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced proceeding Pima Energy Storage System, LLC`s application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 30, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed
This is a supplemental notice in the above-referenced proceeding Gavin Power, LLC`s application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is November 30, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that on November 3, 2016 Columbia Gas Transmission, LLC (Columbia Gas), 5151 San Felipe, Suite 2500, Houston, Texas 77056 filed a prior notice request pursuant to sections 157.205 and 157.213(b) of the Commission's regulations under the Natural Gas Act for authorization to construct and operate certain natural gas storage facilities located in Jackson County, West Virginia. Specifically, Columbia proposes to construct and operate three new storage wells and related pipeline to tie the wells into existing pipelines at Columbia's Ripley Storage Field. It is estimated that the three new directional wells will provide a combined total of 15 MMcf per day of improved deliverability to the Columbia system, all as more fully set forth in the application which is on file with the Commission and open to public inspection. The filing may also be viewed on the web at
Any questions regarding this Application should be directed to Robert D. Jackson, Manager, Certificates & Regulatory Administration, Columbia Gas Transmission, LLC, 700 Louisiana Street, Suite 700, Houston, Texas 77002, by calling (832) 320-5487, or by fax (832) 320-6487, or by email at
Any person may, within 60 days after the issuance of the instant notice by the Commission, file pursuant to Rule 214 of the Commission's Procedural Rules (18 CFR 385.214) a motion to intervene or notice of intervention. Any person filing to intervene or the Commission's staff may, pursuant to section 157.205 of the Commission's Regulations under the NGA (18 CFR 157.205) file a protest to the request. If no protest is filed within the time allowed therefore, the proposed activity shall be deemed to be authorized effective the day after the time allowed for protest. If a protest is filed and not withdrawn within 30 days after the time allowed for filing a protest, the instant request shall be treated as an application for authorization pursuant to section 7 of the NGA.
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenter's will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with he Commission's environmental review process. Environmental commenter's will not be required to serve copies of filed documents on all other parties. However, the non-party commentary, will not receive copies of all documents
The Commission strongly encourages electronic filings of comments, protests, and interventions via the internet in lieu of paper. See 18 CFR 385.2001(a) (1) (iii) and the instructions on the Commission's Web site (
Federal Energy Regulatory Commission, Department of Energy.
Comment request.
In compliance with the requirements of the Paperwork Reduction Act of 1995, 44 U.S.C. 3507(a)(1)(D), the Federal Energy Regulatory Commission (Commission or FERC) is submitting its information collections [FERC-511 (Transfer of Electric License), FERC-515 (Rules of Practice and Procedure: Declaration of Intention), and FERC-574 (Gas Pipeline Certificates: Hinshaw Exemption)] to the Office of Management and Budget (OMB) for review of the information collection requirements. Any interested person may file comments directly with OMB and should address a copy of those comments to the Commission as explained below. The Commission previously issued a Notice in the
Comments on the collection of information are due by December 19, 2016.
Comments filed with OMB, identified by the OMB Control No. 1902-0069 (FERC-511), 1902-0079 (FERC-515), or 1902-0116 (FERC-574) should be sent via email to the Office of Information and Regulatory Affairs:
A copy of the comments should also be sent to the Commission, in Docket No. IC16-12-000, by either of the following methods:
•
•
Ellen Brown may be reached by email at
The exemption applies to companies engaged in the transportation, sale, or resale of natural gas in interstate commerce if: (a) They receive gas at or within the boundaries of the state from another person at or within the boundaries of that state; (b) such gas is ultimately consumed in such state; (c) the rates, service and facilities of such company are subject to regulation by a State Commission; and (d) that such State Commission is exercising that jurisdiction. 18 CFR part 152 specifies the data required to be filed by pipeline companies for an exemption.
On November 9, 2016, the Federal Energy Regulatory Commission staff convened a technical conference to discuss the utilization of electric storage resources as transmission assets compensated through transmission rates, for grid support services that are compensated in other ways, and for multiple services.
All interested persons are invited to file post-technical conference comments on the topics discussed in the Supplemental Notice of Technical Conference issued in this proceeding on November 1, 2016 (Supplemental Notice), including the questions listed therein. Commenters need not respond to all topics or questions asked. Commenters should organize responses consistent with the organization of the topics and questions in the Supplemental Notice. Commenters may reference material previously filed in this docket, including the technical conference transcript, but are encouraged to submit new or additional information rather than reiterate information that is already in the record. In particular, commenters are encouraged, when possible, to provide examples in support of their answers. These comments are due within 30 days of the date of this notice.
For more information about this notice, please contact:
Environmental Protection Agency (EPA).
Notice.
In accordance with the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), EPA is issuing a notice of receipt of requests by the registrants to voluntarily cancel their registrations and to amend product registrations to terminate uses.
EPA intends to grant these requests at the close of the comment period for this announcement unless the Agency receives substantive comments within the comment period that would merit its further review of the requests, or unless the registrants withdraw its requests. If these requests are granted, any sale, distribution, or use of products listed in this notice will be permitted after the registrations have been cancelled and uses terminated only if such sale, distribution, or use is consistent with the terms as described in the final order.
Comments must be received on or before December 19, 2016.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPP-2016-0577, by one of the following methods:
•
•
•
Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at
Christopher Green, Information Technology and Resources Management Division (7502P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone number: (703) 347-0367; email address:
This action is directed to the public in general, and may be of interest to a wide range of stakeholders including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
1.
2.
This notice announces receipt by EPA of requests from registrants to cancel certain pesticide products and amend product registrations to terminate certain uses. The affected products and the registrants making the requests are identified in Tables 1-3 of this unit.
Unless a request is withdrawn by the registrant or if the Agency determines that there are substantive comments that warrant further review of this request, EPA intends to issue an order in the
Table 3 of this unit includes the names and addresses of record for the registrants of the products listed in Table 1 and Table 2 of this unit, in sequence by EPA company number. This number corresponds to the first part of the EPA registration numbers of the products listed in Table 1 and Table 2 of this unit.
Section 6(f)(1) of FIFRA (7 U.S.C. 136d(f)(1)) provides that a registrant of a pesticide product may at any time request that any of its pesticide registrations be canceled or amended to terminate one or more uses. FIFRA further provides that, before acting on the request, EPA must publish a notice of receipt of any such request in the
Section 6(f)(1)(B) of FIFRA (7 U.S.C. 136d(f)(1)(B)) requires that before acting on a request for voluntary cancellation, EPA must provide a 30-day public comment period on the request for voluntary cancellation or use termination. In addition, FIFRA section 6(f)(1)(C) (7 U.S.C. 136d(f)(1)(C)) requires that EPA provide a 180-day comment period on a request for voluntary cancellation or termination of any minor agricultural use before granting the request, unless:
1. The registrants request a waiver of the comment period, or
2. The EPA Administrator determines that continued use of the pesticide would pose an unreasonable adverse effect on the environment.
The registrants listed in Table 3 of Unit II have requested that EPA waive the 180-day comment period. Accordingly, EPA will provide a 30-day comment period on the proposed requests.
Registrants who choose to withdraw a request for product cancellation or use termination should submit the withdrawal in writing to the person listed under
Existing stocks are those stocks of registered pesticide products that are currently in the United States and that were packaged, labeled, and released for shipment prior to the effective date of the action. If the requests for voluntary cancellation and amendments to terminate uses are granted, the Agency intends to publish the cancellation order in the
In any order issued in response to these requests for cancellation of product registrations and for amendments to terminate uses, EPA proposes to include the following provisions for the treatment of any existing stocks of the products listed in Tables 1 and 2 of Unit II.
For voluntary product cancellations, registrants will be permitted to sell and distribute existing stocks of voluntarily canceled products for 1 year after the effective date of the cancellation, which will be the date of publication of the cancellation order in the
Once EPA has approved the product labels reflecting the requested amendments to terminate uses, registrants will be permitted to sell or distribute the products under the previously approved labeling for a period of 18 months after the date of
Environmental Protection Agency (EPA).
Notice; extension of comment period.
EPA issued a notice in the
Comments, identified by docket identification (ID) number EPA-HQ-OPP-2009-0317, must be received on or before December 21, 2016.
Follow the detailed instructions provided under
Richard Dumas, Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; telephone number: (703) 308-8015; email address:
This document extends the public comment period established in the
To submit comments, or access the docket, please follow the detailed instructions provided under
7 U.S.C. 136
Equal Employment Opportunity Commission.
Notice.
Notice is hereby given of the appointment of members to the Performance Review Board of the Equal Employment Opportunity Commission.
Traci M. DiMartini, Chief Human Capital Officer, U.S. Equal Employment Opportunity Commission, 131 M Street NE., Washington, DC 20507, (202) 663-4306.
Publication of the Performance Review Board (PRB) membership is required by 5 U.S.C. 4314(c)(4). The PRB reviews and evaluates the initial appraisal of a senior executive's performance by the supervisor, and makes recommendations to the Chair, EEOC, with respect to performance ratings, pay level adjustments and performance awards.
The following are the names and titles of executives appointed to serve as members of the SES PRB. Members will serve a 12-month term, which begins on November 29, 2016.
By the direction of the Commission.
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 Housing Finance Agency.
60-day notice of submission of information collection for approval from Office of Management and Budget.
In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA), the Federal Housing Finance Agency (FHFA or the Agency) is seeking public comments concerning a new information collection known as “Contractor Workforce Inclusion Good Faith Efforts.” This information collection has not yet been assigned a control number by the Office of Management and Budget (OMB). FHFA intends to submit the information collection to OMB for review and approval of a three-year control number.
Interested persons may submit comments on or before January 17, 2017.
Submit comments to FHFA, identified by “Proposed Collection; Comment Request: `Contractor Workforce Inclusion Good Faith Efforts, (No. 2016-N-11)' ” by any of the following methods:
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•
We will post all public comments we receive without change, including any personal information you provide, such as your name and address, email address, and telephone number, on the FHFA Web site at
Eric Howard, Diversity and Inclusion Principal Advisor, Office of Minority and Women Inclusion,
Section 342(a)(1)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) requires FHFA and certain other Federal agencies each to establish an Office of Minority and Women Inclusion (OMWI) responsible for all matters of the agency relating to diversity in management, employment, and business activities.
Further, section 342(c)(3)(A) of the Dodd-Frank Act requires that each agency's standards and procedures include a procedure for determining whether an agency contractor or subcontractor has failed to make a good faith effort to include minorities and women in its workforce. If the OMWI Director determines that a contractor or subcontractor has failed to make such a good faith effort, section 342(c)(3)(B)(i) provides that the OMWI Director shall recommend to the agency administrator that the contract be terminated. Section 342(c)(3)(B)(ii) provides that, upon receipt of such a recommendation, the agency administrator may either terminate the contract, make a referral to the Office of Federal Contract Compliance Programs (OFCCP) of the
As a means of implementing the requirements of section 342(c) of the Dodd-Frank Act, FHFA developed a Minority and Women Inclusion Clause (MWI Clause) that it now includes in all Agency contracts with a dollar value greater than the “simplified acquisition threshold” (currently, $150,000) established in the Federal Acquisition Regulation (FAR).
Finally, the MWI Clause requires a contractor to provide, when requested by FHFA, documentation demonstrating that it and any covered subcontractor has made a good faith effort to ensure the fair inclusion of minorities and women in its workforce. The MWI Clause provides that such documentation may include, but is not limited to: (1) The contractor's total number of employees, and the number of minority and women employees, by race, ethnicity, and gender (
While FHFA has included the MWI Clause in all contracts with a dollar value greater than $150,000 consummated since November 7, 2013, the Agency has not, to this point, asked any contractor or covered subcontractor to provide documentation pursuant to the clause. FHFA is now developing procedures that the OMWI Director will follow in determining whether its contractors and covered subcontractors have made good faith efforts to comply with the MWI Clause. The Agency expects that, once it adopts those procedures, it will begin to request the types of documentation described in the MWI Clause from contractors and covered subcontractors.
The purpose of this information collection is to fulfill the requirements of section 342(c)(3)(B) of the Dodd-Frank Act. The collected information will allow FHFA's OMWI Director to determine whether contractors and covered subcontractors have complied with their obligations to make good faith efforts to ensure, to the maximum extent possible consistent with applicable law, the fair inclusion of minorities and women in their respective workforces.
FHFA estimates that the average annual burden imposed on all respondents by this information collection over the next three years will be 368 hours. All of the assumptions and calculations underlying the total burden estimate are described in detail below.
Because, as explained below, the amount of burden imposed upon a contractor by this information collection will differ depending upon whether the contractor has 50 or more employees, FHFA has based its total burden estimate on two separate sets of calculations—(I) one for contractors with 50 or more employees; and (II) another for contractors with fewer than 50 employees.
FHFA includes the MWI Clause in Agency contracts with a dollar value greater than $150,000. Under the MWI Clause, the FHFA may also request information about covered subcontractors' ownership status, workforce demographics, and workforce inclusion plans. Contractors would request this information from their covered subcontractors, who, because the substance of the MWI Clause would be included in their subcontracts, would have an obligation to keep records and report data as required under the MWI Clause.
FHFA data on the dollar value of contracts awarded by the Agency from the beginning of fiscal year 2013 through the third quarter of fiscal year 2016 shows that 63 contractors were subject to the MWI Clause. FHFA believes that 44 of those contractors have 50 or more employees, while 19 contractors have fewer than 50 employees. FHFA estimates that no more than two subcontracts with a dollar value of $150,000 or more were awarded by Agency contractors during that same time period. Both of those subcontractors have 50 or more employees each. Thus, over the preceding three years, a total of 65 contractors and subcontractors were subject to the MWI Clause—46 of which have 50 or more employees and 19 of which have fewer than 50 employees.
Based on these figures, FHFA estimates that, on average over the next three years, 48 contractors and subcontractors with 50 or more employees and 20 contractors or subcontractors with fewer than 50 employees will be subject to the MWI Clause at any given time. For purposes of these burden estimates, FHFA has assumed that each contractor or subcontractor will provide documentation under the MWI Clause once per year, although it is unlikely that the Agency will actually request documentation from every contractor in every year. (In the interest of brevity, the word “contractor” is intended also to include covered subcontractors in the explanation of the burden estimates that follows.)
FHFA estimates that the average annual burden on contractors with 50 or more employees will be 48 hours (0 recordkeeping hours + 48 reporting hours).
Because Federal contractors with 50 or more employees are already required to maintain the same types of records that may be requested pursuant to the MWI Clause under regulations implementing Title VII of the Civil Rights Act of 1964
With respect to reporting burden, FHFA estimates that it will take each contractor approximately one hour to retrieve and submit to the FHFA the documentation specified in the MWI Clause. Thus, the estimate of the annual burden upon contractors with 50 or more employees associated with reporting requirements under this information collection is 48 hours (48 contractors × 1 hour per contractor).
FHFA estimates that the average annual burden on contractors with fewer than 50 employees will be 320 hours (300 recordkeeping hours + 20 reporting hours).
OFCCP regulations require contractors with fewer than 50 employees to maintain records on the race, ethnicity, and gender of each employee.
In order to estimate the burden associated with creating a workforce inclusion plan, FHFA considered the OFCCP's burden estimates for the time needed to develop the written program summaries required under its regulations.
FHFA estimates that a contractor with fewer than 50 employees would spend approximately 25 hours creating a workforce inclusion plan for the first time. The Agency estimates that each contractor would then spend approximately 10 hours annually in updating and maintaining its plan. This results in an estimated average annual recordkeeping burden over the next three years on each contractor with fewer than 50 employees of 15 hours [(25 + 10 + 10)/3 years]. Thus, FHFA estimates that the average annual recordkeeping burden on all contractors with fewer than 50 employees over the next three years will be 300 hours (20 contractors × 15 hours per contractor).
FHFA estimates that it will take each contractor approximately one hour to retrieve and submit to FHFA the documentation specified in the MWI Clause. Thus, the estimate of the annual burden upon contractors with fewer than 50 employees associated with reporting requirements under this information collection is 20 hours (20 contractors × 1 hour per contractor).
FHFA requests written comments on the following: (1) Whether the collection of information is necessary for the proper performance of FHFA functions, including whether the information has practical utility; (2) the accuracy of FHFA's estimates of the burdens of the collection of information; (3) ways to enhance the quality, utility, and clarity of the information collected; and (4) 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 companies listed in this notice have given notice under section 4 of the Bank Holding Company Act (12 U.S.C. 1843) (BHC Act) and Regulation Y, (12 CFR part 225) to engage
Each notice is available for inspection at the Federal Reserve Bank indicated. The notice also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the question whether the proposal complies with the standards of section 4 of the BHC Act.
Unless otherwise noted, comments regarding the applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than December 13, 2016.
1.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than December 1, 2016.
1.
to retain voting shares of Farmers Bancshares Inc., and thereby retain Independent Farmers Bank, both of Maysville, Missouri.
The companies listed in this notice have applied to the Board for approval, pursuant to the Bank Holding Company Act of 1956 (12 U.S.C. 1841
The applications listed below, as well as other related filings required by the Board, are available for immediate inspection at the Federal Reserve Bank indicated. The applications will also be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing on the standards enumerated in the BHC Act (12 U.S.C. 1842(c)). If the proposal also involves the acquisition of a nonbanking company, the review also includes whether the acquisition of the nonbanking company complies with the standards in section 4 of the BHC Act (12 U.S.C. 1843). Unless otherwise noted, nonbanking activities will be conducted throughout the United States.
Unless otherwise noted, comments regarding each of these applications must be received at the Reserve Bank indicated or the offices of the Board of Governors not later than December 14, 2016.
1.
B. Federal Reserve Bank of New York (Ivan Hurwitz, Vice President) 33 Liberty Street, New York, New York 10045-0001. Comments can also be sent electronically to
1.
The notificants listed below have applied under the Change in Bank Control Act (12 U.S.C. 1817(j)) and § 225.41 of the Board's Regulation Y (12 CFR 225.41) to acquire shares of a bank or bank holding company. The factors that are considered in acting on the notices are set forth in paragraph 7 of the Act (12 U.S.C. 1817(j)(7)).
The notices are available for immediate inspection at the Federal Reserve Bank indicated. The notices also will be available for inspection at the offices of the Board of Governors. Interested persons may express their views in writing to the Reserve Bank indicated for that notice or to the offices of the Board of Governors. Comments must be received not later than December 5, 2016.
1.
Federal Retirement Thrift Investment Board.
77 K Street NE., 10th Floor Board Room, Washington, DC 20002.
Federal Retirement Thrift Investment Board Member Meeting.
November 29, 2016, In-Person, 8:30 a.m.
Information covered under 5 U.S.C. 552b(c)(4), c(6), and (c)(9)(B).
Kimberly Weaver, Director, Office of External Affairs, (202) 942-1640.
Agency for Healthcare Research and Quality, HHS.
Notice.
This notice announces the intention of the Agency for Healthcare Research and Quality (AHRQ) to request that the Office of Management and Budget (OMB) approve the proposed information collection project: “
Comments on this notice must be received by January 17, 2017.
Written comments should be submitted to: Doris Lefkowitz, Reports Clearance Officer, AHRQ, by email at
Copies of the proposed collection plans, data collection instruments, and specific details on the estimated burden can be obtained from the AHRQ Reports Clearance Officer.
Doris Lefkowitz, AHRQ Reports Clearance Officer, (301) 427-1477, or by email at
In 1999, the Institute of Medicine called for health care organizations to develop a “culture of safety” such that their workforce and processes focus on improving the reliability and safety of care for patients (IOM, 1999; To Err is Human: Building a Safer Health System). To respond to the need for tools to assess patient safety culture in health care, AHRQ developed and pilot tested the Pharmacy Survey on Patient Safety Culture with OMB approval (OMB NO. 0935-0183; Approved 08/12/2011). The survey is designed to enable pharmacies to assess staff opinions about patient and medication safety and quality-assurance issuesand includes 36 items that measure 11 dimensions of patient safety culture. AHRQ made the survey publicly available along with a Survey User's Guide and other toolkit materials in October 2012 on the AHRQ Web site.
The AHRQ Pharmacy Survey on Patient Safety Culture (Pharmacy SOPS) Comparative Database consists of data from the AHRQ Pharmacy Survey on Patient Safety Culture. Pharmacies in the U.S. are asked to voluntarily submit data from the survey to AHRQ, through its contractor, Westat. The Pharmacy SOPS Database is modeled after three other SOPS databases: Hospital SOPS [OMB NO. 0935-0162; Approved 05/04/2010]; Medical Office SOPS [OMB NO. 0935-0196; Approved 06/12/12]; and Nursing Home SOPS [OMB NO. 0935-0195; Approved 06/12/12] that were originally developed by AHRQ in response to requests from hospitals, medical offices, and nursing homes interested in knowing how their patient safety culture survey results compare to those of other similar health care organizations.
Rationale for the information collection. The Pharmacy SOPS survey and the Pharmacy SOPS Comparative Database will support AHRQ's goals of promoting improvements in the quality and safety of health care in pharmacy settings. The survey, toolkit materials, and comparative database results are all made publicly available on AHRQ's Web site. Technical assistance is provided by AHRQ through its contractor at no charge to pharmacies, to facilitate the use of these materials for pharmacy patient safety and quality improvement.
Request for information collection approval. The Agency for Healthcare Research and Quality (AHRQ) requests that the Office of Management and Budget (OMB) reapprove, under the Paperwork Reduction Act of 1995, AHRQ's collection of information for the AHRQ Pharmacy Survey on Patient Safety Culture (Pharmacy SOPS) Comparative Database; OMB NO. 0935-0218, last approved on June 12, 2014.
This database will:
(1) Allow pharmacies to compare their patient safety culture survey results with those of other pharmacies,
(2) provide data to pharmacies to facilitate internal assessment and learning in the patient safety improvement process, and
(3) provide supplemental information to help pharmacies identify their strengths and areas with potential for improvement in patient safety culture.
This study is being conducted by AHRQ through its contractor, Westat, pursuant to AHRQ's statutory authority to conduct and support research on health care and on systems for the delivery of such care, including activities with respect to the quality, effectiveness, efficiency, appropriateness and value of health care services; quality measure and development, and database development. 42 U.S.C. 299a(a)(1), (2), and 8.
To achieve the goal of this project the following activities and data collections will be implemented:
(1) Pharmacy Eligibility and Registration Form—The point of contact (POC), often the pharmacy manager of a participating organization, completes a number of data submission steps and forms, beginning with completion of an online Eligibility and Registration Form. The purpose of this form is to collect basic demographic information about the pharmacy and initiate the registration process.
(2) Data Use Agreement—The purpose of the data use agreement, completed by the pharmacy POC, is to state how data submitted by pharmacies will be used and provides confidentiality assurances.
(3) Pharmacy Site Information Form—The purpose of this form, completed by the pharmacy POC, is to collect background characteristics of the pharmacy. This information will be used to analyze data collected with the Pharmacy SOPS survey.
(4) Data Files Submission—POCs upload their data file(s), using the community pharmacy or hospital pharmacy data file specifications, to ensure that users submit standardized and consistent data in the way variables are named, coded, and formatted.
The number of submissions to the database is likely to vary each year because pharmacies do not administer
Survey data from the AHRQ Pharmacy Survey on Patient Safety Culture are used to produce three types of products: (1) A Pharmacy SOPS Comparative Database Report that is made publicly available on the AHRQ Web site (see
Data submitted by pharmacies are also used to give each pharmacy its own customized survey feedback report that presents the pharmacy's results compared to the latest comparative database results. If a pharmacy submits data more than once, its survey feedback report also presents trend data, comparing its previous and most recent data.
Exhibit 1 shows the estimated annualized burden hours for the respondents' time to participate in the database. An estimated 100 POCs from community pharmacies and 50 POCs from hospital pharmacies, each representing an average of 3 individual pharmacies, will complete the database submission steps and forms. Completing the eligibility and registration form will take about 5 minutes. The Pharmacy Site Information Form is completed by all POCs for each of their pharmacies (150 × 3 = 450 forms in total) and is estimated to take 5 minutes to complete. Each POC will complete a data use agreement which takes 3 minutes to complete and submitting the data will take an hour on average. The total burden is estimated to be 209 hours.
Exhibit 2 shows the estimated annualized cost burden based on the respondents' time to submit their data. The cost burden is estimated to be $11,222 annually.
In accordance with the Paperwork Reduction Act, comments on AHRQ's information collection are requested with regard to any of the following: (a) Whether the proposed collection of information is necessary for the proper performance of AHRQ health care research and health care information dissemination functions, including whether the information will have practical utility; (b) the accuracy of AHRQ's estimate of burden (including hours and costs) of the proposed collection(s) 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 upon the respondents, including the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and included in the Agency's subsequent request for OMB approval of the proposed information collection. All
Centers for Medicare & Medicaid Services, HHS.
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (the PRA), federal agencies are required to publish notice in the
Comments must be received by January 17, 2017.
When commenting, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be submitted in any one of the following ways:
1.
2.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:
1. Access CMS' Web site address at
2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to
3. Call the Reports Clearance Office at (410) 786-1326.
Reports Clearance Office at (410) 786-1326.
This notice sets out a summary of the use and burden associated with the following information collections. More detailed information can be found in each collection's supporting statement and associated materials (see
Under the PRA (44 U.S.C. 3501-3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “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 requires federal agencies to publish a 60-day notice in the
1.
The CMS-10631 information collection request was submitted to OMB on October 6, 2016, under ICR Reference No: 201610-0938-001. When approved, the control number can be found on
We are removing the application requirements and burden since this CMS-R-244 package is lengthy and we recognize that it can be somewhat time consuming to review. We believe the change will help streamline the public and OMB's review of the application as well as the remaining requirements and burden under this CMS-R-244 package.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an opportunity for public comment on the
Submit either electronic or written comments on the collection of information by January 17, 2017.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
FDA PRA Staff, Office of Operations, Food and Drug Administration, Three White Flint North, 10A63, 11601 Landsdown St., North Bethesda, MD 20852,
Under the PRA (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
Section 510(k) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360(k)) and the implementing regulation under part 807 (21 CFR part 807, subpart E) requires a person who intends to market a medical device to submit a premarket notification submission to FDA at least 90 days before proposing to begin the introduction, or delivery for introduction into interstate commerce, for commercial distribution of a device intended for human use. Based on the information provided in the notification, FDA must determine whether the new device is substantially equivalent to a legally marketed device, as defined in § 807.92(a)(3) (21 CFR 807.92(a)(3)). If the device is determined to be not substantially equivalent to a legally marketed device, it must have an approved premarket approval application (PMA), product development protocol, humanitarian
Section 807.81 states when a premarket notification is required. A premarket notification is required to be submitted by a person who is: (1) Introducing a device to the market for the first time; (2) introducing a device into commercial distribution for the first time by a person who is required to register; and (3) introducing or reintroducing a device which is significantly changed or modified in design, components, method of manufacturer, or the intended use that could affect the safety and effectiveness of the device.
Form FDA 3514, a summary cover sheet form, assists respondents in categorizing administrative 510(k) information for submission to FDA. This form also assists respondents in categorizing information for other FDA medical device programs such as PMAs, investigational device exemptions, and HDEs. Under § 807.87(h), each 510(k) submitter must include in the 510(k) either a summary of the information in the 510(k) as required by § 807.92 (510(k) summary) or a statement certifying that the submitter will make available upon request the information in the 510(k) with certain exceptions as per § 807.93 (510(k) statement). If the 510(k) submitter includes a 510(k) statement in the 510(k) submission, § 807.93 requires that the official correspondent of the firm make available within 30 days of a request all information included in the submitted premarket notification on safety and effectiveness. This information will be provided to any person within 30 days of a request if the device described in the 510(k) submission is determined to be substantially equivalent. The information provided will be a duplicate of the 510(k) submission including any safety and effectiveness information, but excluding all patient identifiers and trade secret and commercial confidential information.
Section 204 of the Food and Drug Administration Modernization Act (FDAMA) (Pub. L. 105-115) amended section 514 of the FD&C Act (21 U.S.C. 360d). Amended section 514 allows FDA to recognize consensus standards developed by international and national organizations for use in satisfying portions of device premarket review submissions including premarket notifications or other requirements. FDA has published and updated the list of recognized standards regularly since enactment of FDAMA and has allowed 510(k) submitters to certify conformance to recognized standards to meet the requirements of § 807.87. Form FDA 3654, the 510(k) Standards Data Form, standardizes the format for submitting information on consensus standards that a 510(k) submitter chooses to use as a portion of their premarket notification submission (Form FDA 3654 is not for declarations of conformance to a recognized standard). FDA believes that use of this form will simplify the 510(k) preparation and review process for 510(k).
Under § 807.90, submitters may request information on their 510(k) review status 90 days after the initial login date of the 510(k). Thereafter, the submitter may request status reports every 30 days following the initial status request. To obtain a 510(k) status report, the submitter should complete the status request form, Form FDA 3541, and fax it to the Center for Devices and Radiological Health office identified on the form.
FDA estimates the burden of this collection of information as follows:
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of guidance for industry entitled “Generic Drug User Fee Amendments of 2012: Questions and Answers Related to User Fee Assessments.” This guidance provides updated answers to common questions from the generic drug industry and other interested parties involved in the development and/or testing of generic drug products regarding GDUFA user fees and finalizes the revised version of the guidance.
Submit either electronic or written comments on Agency guidances at any time.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• 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:
•
• 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.”
•
Submit written requests for single copies of this guidance to the Division of Drug Information, Center for Drug Evaluation and Research, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Building, 4th Floor, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist that office in processing your requests. See the
Mehrban Iranshad, Division of User Fee Management and Budget Formulation staff, Center for Drug Evaluation and Research, Food and Drug Administration, 10001 New Hampshire Ave., Hillandale Bldg., Rm. 4145, Silver Spring, MD 20993, 301-796-7900,
FDA is announcing the availability of a guidance for industry entitled “Generic Drug User Fee Amendments of 2012: Questions and Answers Related to User Fee Assessments.” GDUFA (Pub. L. 112-144, Title III) was signed into law by the President on July 9, 2012. GDUFA is designed to speed the delivery of safe and effective generic drugs to the public and improve upon the predictability of the review process. GDUFA enables FDA to assess user fees to support critical and measurable enhancements to FDA's generic drugs program. GDUFA establishes fees for abbreviated new drug applications (ANDAs), prior approval supplements (PASs) to ANDAs, and drug master files (DMFs), annual facility fees, and a one-time fee for original ANDAs pending with FDA on October 1, 2012 (backlog fees). Fees are incurred for ANDAs and PASs submitted on or after October 1, 2012. An application fee is also incurred the first time a DMF is referenced in an ANDA or PAS submitted on or after October 1, 2012.
FDA previously announced GDUFA fees for fiscal year 2017 in the
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the Agency's current thinking on “Generic Drug User Fee Amendments of 2012: Questions and Answers Related to User Fee Assessments.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the
Persons with access to the Internet may obtain the guidance at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by January 17, 2017.
You may submit comments as follows:
Submit electronic comments in the following way:
• Federal eRulemaking Portal:
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
FDA PRA Staff, Office of Operations, Food and Drug Administration, Three White Flint North, 11601 Landsdown St., 10A-12M, North Bethesda, MD 20852,
Under the PRA (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed
The “Guidance for Industry on Special Protocol Assessment” describes Agency procedures to evaluate issues related to the adequacy (
As described in the guidance, a sponsor interested in Agency assessment of a carcinogenicity protocol should notify the appropriate division in FDA's Center for Drug Evaluation and Research (CDER) or the Center for Biologics Evaluation and Research (CBER) of an intent to request special protocol assessment at least 30 days prior to submitting the request. With such notification, the sponsor should submit relevant background information so that the Agency may review reference material related to carcinogenicity protocol design prior to receiving the carcinogenicity protocol.
The guidance asks that a request for special protocol assessment be submitted as an amendment to the investigational new drug application (IND) for the underlying product and that it be submitted to the Agency in triplicate with Form FDA 1571 attached. The guidance also suggests that the sponsor submit the cover letter to a request for special protocol assessment via fax to the appropriate division in CDER or CBER. Agency regulations (21 CFR 312.23(d)) state that information provided to the Agency as part of an IND is to be submitted in triplicate and with the appropriate cover form, Form FDA 1571. An IND is submitted to FDA under existing regulations in part 312 (21 CFR part 312), which specifies the information that manufacturers must submit so that FDA may properly evaluate the safety and effectiveness of investigational drugs and biological products. The information collection requirements resulting from the preparation and submission of an IND under part 312 have been estimated by FDA and the reporting and recordkeeping burden has been approved by OMB under OMB control number 0910-0014.
FDA suggests that the cover letter to the request for special protocol assessment be submitted via fax to the appropriate division in CDER or CBER to enable Agency staff to prepare for the arrival of the protocol for assessment. The Agency recommends that a request for special protocol assessment be submitted as an amendment to an IND for two reasons: (1) To ensure that each request is kept in the administrative file with the entire IND and (2) to ensure that pertinent information about the request is entered into the appropriate tracking databases. Use of the information in the Agency's tracking databases enables the appropriate Agency official to monitor progress on the evaluation of the protocol and to ensure that appropriate steps will be taken in a timely manner.
The guidance recommends that the following information should be submitted to the appropriate Center with each request for special protocol assessment so that the Center may quickly and efficiently respond to the request:
• Questions to the Agency concerning specific issues regarding the protocol; and
• All data, assumptions, and information needed to permit an adequate evaluation of the protocol, including: (1) The role of the study in the overall development of the drug; (2) information supporting the proposed trial, including power calculations, the choice of study endpoints, and other critical design features; (3) regulatory outcomes that could be supported by the results of the study; (4) final labeling that could be supported by the results of the study; and (5) for a stability protocol, product characterization and relevant manufacturing data.
FDA estimates the burden of this collection as follows:
Food and Drug Administration, HHS.
Notice of availability.
Summary: The Food and Drug Administration (FDA or Agency) is announcing the availability of a draft guidance for industry entitled “Bacillus Calmette-Guerin (BCG)—Unresponsive Nonmuscle Invasive Bladder Cancer: Developing Drugs and Biologics for Treatment.” The purpose of this guidance is to assist sponsors in the development of drugs and biologics to treat patients with a high-risk form of bladder cancer. The alternative is radical cystectomy, a surgical procedure with significant morbidity and mortality. This guidance will help overcome some of the obstacles in conducting the studies needed to establish efficacy of drugs and biologics for these patients with an unmet medical need.
Although you can comment on any guidance at any time (see 21 CFR 10.115(g)(5)), to ensure that the agency considers your comment on this draft guidance before it begins work on the final version of the guidance, submit either electronic or written comments on the draft guidance by February 16, 2017.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• 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.”
•
Submit written requests for single copies of the draft guidance to the
V. Ellen Maher, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 2352, Silver Spring, MD 20993-0002, 301-796-5017; or Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911.
FDA is announcing the availability of a draft guidance for industry entitled “BCG-Unresponsive Nonmuscle Invasive Bladder Cancer: Developing Drugs and Biologics for Treatment.” This draft guidance is intended to provide a framework for industry to facilitate the development of drugs and biologics to treat patients with nonmuscle invasive bladder cancer (NMIBC). The focus is on the subset of patients with BCG-unresponsive disease. In addition, the pathological diagnosis and staging, risk stratification, and trial design, including assessment of appropriate clinical endpoints, are discussed.
The preferred trial design for demonstrating efficacy of drugs developed to treat NMIBC is a randomized, controlled trial with a time-to-event endpoint of recurrence-free survival. Single-arm trials are appropriate in clinical settings for which a randomized, controlled trial is either unethical or not feasible. Therefore, single-arm trials of patients with BCG-unresponsive carcinoma in situ with or without papillary disease using an endpoint of complete response rate (and duration) may be appropriate.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on developing drugs and biologics for the treatment of BCG-unresponsive NMIBC. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This draft guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR parts 312 and 314 have been approved under OMB control numbers 0910-0014 and 0910-0001, respectively.
Persons with access to the Internet may obtain the draft guidance at
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of a document entitled “Revised Recommendations for Determining Eligibility of Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products Who Have Received Human-Derived Clotting Factor Concentrates; Guidance for Industry.” The guidance document provides establishments that make donor eligibility (DE) determinations for donors of human cells, tissues, and cellular and tissue-based products (HCT/Ps) with information on infectious-disease risks related to receipt of FDA licensed human-derived clotting factor concentrates (HDCFCs). The guidance explains that FDA no longer considers FDA licensed HDCFCs as a risk factor for human immunodeficiency virus (HIV), Hepatitis B virus (HBV), or Hepatitis C virus (HCV). As such, receipt of FDA licensed HDCFCs, or sex with a person who has received FDA licensed HDCFCs, should not be considered a risk factor when determining eligibility of a donor of HCT/Ps. The guidance supplements the recommendations regarding HDCFCs that are contained in the guidance entitled “Eligibility Determination for Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps); Guidance for Industry” dated August 2007.
The Agency is soliciting public comment, but is implementing this guidance immediately because the Agency has determined that prior public participation is not appropriate. Submit either electronic or written comments on Agency guidances at any time.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• 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:
•
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Submit written requests for single copies of the guidance to the Office of Communication, Outreach and Development, Center for Biologics Evaluation and Research (CBER), Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 3128, Silver Spring, MD 20993-0002. Send one self-addressed adhesive label to assist the office in processing your requests. The guidance may also be obtained by mail by calling CBER at 1-800-835-4709 or 240-402-8010. See the
Melissa Segal, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911.
FDA is announcing the availability of a document entitled “Revised Recommendations for Determining Eligibility of Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products Who Have Received Human-Derived Clotting Factor Concentrates; Guidance for Industry.” The guidance document provides establishments that make DE determinations for donors of HCT/Ps with information on infectious disease risks related to receipt of HDCFCs. The guidance explains that FDA no longer considers FDA licensed HDCFCs as a risk factor for HIV, HBV, or HCV. As such, receipt of FDA licensed HDCFCs, or sex with a person who has received FDA licensed HDCFCs, should not be considered a risk factor when determining eligibility of a donor of HCT/Ps. The recommendations in the guidance supersede the recommendations contained in section IV.E.3. of the guidance entitled “Eligibility Determination for Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products (HCT/Ps); Guidance for Industry” dated August 2007.
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). FDA is issuing this guidance for immediate implementation in accordance with 21 CFR 10.115(g)(2) without initially seeking prior comment because the Agency has determined that prior public participation is not appropriate. This guidance recommends a less burdensome policy that is consistent with the public health. The guidance represents the current thinking of FDA on “Revised Recommendations for Determining Eligibility of Donors of Human Cells, Tissues, and Cellular and Tissue-Based Products Who Have Received Human-Derived Clotting Factor Concentrates.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR 1271.47 have been approved under OMB control number 0910-0543.
Persons with access to the Internet may obtain the guidance at either
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) has
Stacy Kane, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6207, Silver Spring, MD 20993-0002, 301-796-8363,
In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. 98-417) (the 1984 amendments), which authorized the approval of duplicate versions of drug products approved under an ANDA procedure. ANDA applicants must, with certain exceptions, show that the drug for which they are seeking approval contains the same active ingredient in the same strength and dosage form as the “listed drug,” which is a version of the drug that was previously approved. ANDA applicants do not have to repeat the extensive clinical testing otherwise necessary to gain approval of a new drug application (NDA).
The 1984 amendments include what is now section 505(j)(7) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(7)), which requires FDA to publish a list of all approved drugs. FDA publishes this list as part of the “Approved Drug Products With Therapeutic Equivalence Evaluations,” which is generally known as the “Orange Book.” Under FDA regulations, a drug is removed from the list if the Agency withdraws or suspends approval of the drug's NDA or ANDA for reasons of safety or effectiveness, or if FDA determines that the listed drug was withdrawn from sale for reasons of safety or effectiveness (21 CFR 314.162).
Under § 314.161(a) (21 CFR 314.161(a)), the Agency must determine whether a listed drug was withdrawn from sale for reasons of safety or effectiveness: (1) Before an ANDA that refers to that listed drug may be approved, (2) whenever a listed drug is voluntarily withdrawn from sale and ANDAs that refer to the listed drug have been approved, and (3) when a person petitions for such a determination under 21 CFR 10.25(a) and 10.30. Section 314.161(d) provides that if FDA determines that a listed drug was withdrawn from sale for safety or effectiveness reasons, the Agency will initiate proceedings that could result in the withdrawal of approval of the ANDAs that refer to the listed drug.
FDA has become aware that the drug products listed in the table in this document are no longer being marketed.
FDA has reviewed its records and, under § 314.161, has determined that the drug products listed in this document were not withdrawn from sale for reasons of safety or effectiveness. Accordingly, the Agency will continue to list the drug products listed in this document in the “Discontinued Drug Product List” section of the Orange Book. The “Discontinued Drug Product List” identifies, among other items, drug products that have been discontinued from marketing for reasons other than safety or effectiveness.
Approved ANDAs that refer to the NDAs and ANDAs listed in this document are unaffected by the discontinued marketing of the products subject to those NDAs and ANDAs. Additional ANDAs that refer to these products may also be approved by the Agency if they comply with relevant legal and regulatory requirements. If FDA determines that labeling for these drug products should be revised to meet current standards, the Agency will advise ANDA applicants to submit such labeling.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) is publishing a list of premarket approval applications (PMAs) that have been approved by the Center for Biologics Evaluation and Research (CBER). This list is intended to inform the public of the availability of safety and effectiveness summaries of approved PMAs through the Internet and the Agency's Division of Dockets Management.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• 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
Jonathan McKnight, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993-0002, 240-402-7911.
In accordance with sections 515(d)(4) and (e)(2) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360e(d)(4) and (e)(2)), notification of an order approving, denying, or withdrawing approval of a PMA will continue to include a notice of opportunity to request review of the order under section 515(g) of the FD&C Act. The 30-day period for requesting reconsideration of an FDA action under § 10.33(b) (21 CFR 10.33(b)) for notices announcing approval of a PMA begins on the day the notice is placed on the Internet. Section 10.33(b) provides that FDA may, for good cause, extend this 30-day period. Reconsideration of a denial or withdrawal of approval of a PMA may be sought only by the applicant; in these cases, the 30-day period will begin when the applicant is notified by FDA in writing of its decision.
The regulations (21 CFR 814.44(d) and 814.45(d)) provide that FDA publish a quarterly list of available safety and effectiveness summaries of PMA approvals and denials that were announced during that quarter. The following is a list of PMAs approved by CBER for which safety and effectiveness summaries were placed on the Internet from October 1, 2010, through September 30, 2016. There were no denial actions during this period. The list provides the manufacturer's name, the product's generic name or the trade name, and the approval date.
Persons with access to the Internet may obtain the documents at
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA) is announcing the availability of the guidance entitled “Submission of Premarket Notifications for Magnetic Resonance Diagnostic Devices.” This guidance provides a detailed description of the information that should be included in a premarket notification for a magnetic resonance diagnostic device (MRDD).
Submit either electronic or written comments on this guidance at any time. General comments on Agency guidance documents are welcome at any time.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• 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
An electronic copy of the guidance document is available for download from the Internet. See the
Jana Delfino, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 4236, Silver Spring, MD 20993-0002, 301-796-6503; or Sunder Rajan, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 62, Rm. 1113, Silver Spring, MD 20993-0002, 301-796-4194.
The purpose of this guidance is to provide a detailed description of the information that should be included in a premarket notification for an MRDD. This guidance is a recommendation of how to comply with certain requirements contained in 21 CFR 807.87 and is intended to be used in conjunction with information regarding the content and format of a 510(k) premarket notification. The approach outlined in this guidance document is intended to facilitate the timely review and marketing clearance of MRDDs.
MRDDs are also electronic products under section 531(2) (21 U.S.C. 360hh(2)) of Subchapter C (Electronic Product Radiation Control (EPRC)) of the Federal Food, Drug and Cosmetic Act (FD&C Act). As such, MRDDs are subject to the radiological health requirements in Title 21, Subchapter J, parts 1000 through 1050 of the Code of Federal Regulations, including applicability of general and specific performance standards (parts 1010-1050) and other general requirements for reporting and recordkeeping (part 1002), notification and corrective actions for defective or non-compliant electronic products (parts 1003 and 1004), and importation (part 1005).
This guidance is applicable to MRDDs as defined in 21 CFR 892.1000. An MRDD is intended for general diagnostic use to present images that reflect the spatial distribution and/or magnetic resonance spectra that reflect frequency and distribution of nuclei exhibiting nuclear magnetic resonance. Other physical parameters derived from the images and/or spectra may also be produced. The device includes hydrogen-1 (proton) imaging, sodium-23 imaging, hydrogen-1 spectroscopy, phosphorus-31 spectroscopy, and chemical shift imaging (preserving simultaneous frequency and spatial information). MRDDs are class II medical devices that require premarket notification and an agency determination of substantial equivalence prior to marketing.
The principal components of current MRDDs include the main magnet, shim and gradient systems, radiofrequency transmitter and receiver, transmit and receive coils, power supplies, computer and software, patient supports, and physiological gating devices. This guidance document is applicable to
In the
This guidance supersedes FDA's guidance entitled “Guidance for Industry: Guidance for the Submissions of Premarket Notifications for Magnetic Resonance Diagnostic Devices” dated November 14, 1998.
This guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The guidance represents the current thinking of FDA on “Submission of Premarket Notifications for Magnetic Resonance Diagnostic Devices.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
Persons interested in obtaining a copy of the guidance may do so by downloading an electronic copy from the Internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
This guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR part 807, subpart E (premarket notification), have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 801 (labeling) have been approved under OMB control number 0910-0485; the collections of information in parts 1002 through 1050 (electronic product requirements) have been approved under OMB control number 0910-0025; and the collections of information in the guidance document “Requests for Feedback on Medical Device Submissions: The Pre-Submission Program and Meetings with Food and Drug Administration Staff” have been approved under OMB control number 0910-0756.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or we) is announcing the availability of a draft guidance for FDA staff entitled “Compliance Policy Guide Sec. 540.750 Use of
Although you can comment on any CPG at any time (see 21 CFR 10.115(g)(5)), to ensure that we consider your comment on the draft CPG before we begin work on the final version of the CPG, submit either electronic or written comments on the draft CPG by January 17, 2017.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• 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
Submit written requests for single copies of the draft CPG to the Food and Feed Policy Staff, Office of Policy and Risk Management, Office of Regulatory Affairs, Food and Drug Administration, 12420 Parklawn Dr., Rockville, MD 20857. Send two self-addressed adhesive labels to assist that office in processing your request. See the
Spring C. Randolph, Center for Food Safety and Applied Nutrition (HFC-325), Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-1421.
We are announcing the availability of the draft CPG entitled “Compliance Policy Guide Sec. 540.750 Use of
We are issuing this draft CPG consistent with our good guidance practices regulation (21 CFR 10.115). The draft CPG, when finalized, will represent our current thinking on acceptable names for seafood in interstate commerce. It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternate approach if it satisfies the requirements of the applicable statutes and regulations.
Persons with access to the Internet may obtain the draft CPG from FDA's Office of Regulatory Affairs CPG history page at
The Diabetes Mellitus Interagency Coordinating Committee (DMICC) and the Urology Interagency Coordinating Committee (UICC) will hold a joint meeting on December 16, 2016. The subject of the meeting will be “The Urologic Complications of Diabetes.” The meeting is open to the public.
The meeting will be held on December 16, 2016; from 9:00 a.m. to 12:00 p.m. Individuals wanting to present oral comments must notify the contact person at least 10 days before the meeting date.
The meeting will be held in the Democracy 2 Building at 6707 Democracy Blvd., Bethesda, MD, in Conference Room 7050.
For further information concerning this meeting, see the DMICC Web site,
The DMICC and the UICC, both chaired by the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK) comprising members of the Department of Health and Human Services and other federal agencies that support diabetes-related or urologic-related activities respectively, facilitate cooperation, communication, and collaboration on diabetes among government entities. The Committees' meetings, held several times a year, provide an opportunity for their members to learn about and discuss current and relevant future programs in their member organizations and to identify opportunities for collaboration. The December 16, 2016 joint meeting will focus on The Urologic Complications of Diabetes.
Any member of the public interested in presenting oral comments to the Committees should notify the contact person listed on this notice at least 10 days in advance of the meeting. Interested individuals and representatives or organizations should submit a letter of intent, a brief description of the organization represented, and a written copy of their oral presentation in advance of the meeting. Only one representative of an organization will be allowed to present; oral comments and presentations will be limited to a maximum of 5 minutes. Printed and electronic copies are requested for the record. In addition, any interested person may file written comments with the Committees 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. Because of time constraints for the meeting, oral comments will be allowed on a first-come, first-serve basis.
Members of the public who would like to receive email notification about
National Institutes of Health, Department of Health and Human Services.
Notice.
The invention listed below is owned by an agency of the U.S. Government and is available for licensing and/or co-development in the U.S. to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing and/or co-development.
Invention Development and Marketing Unit, Technology Transfer Center, National Cancer Institute, 9609 Medical Center Drive, Mail Stop 9702, Rockville, MD 20850-9702.
Information on licensing and co-development research collaborations, and copies of the U.S. patent applications listed below may be obtained by contacting: Attn. Invention Development and Marketing Unit, Technology Transfer Center, National Cancer Institute, 9609 Medical Center Drive, Mail Stop 9702, Rockville, MD 20850-9702, Tel. 240-276-5515 or email
Technology description follows.
The library of compounds is designed to have high affinity and specificity for the dopamine D
This invention is owned by an agency of the U.S. Government and is available for licensing and/or co-development in the U.S., in accordance with 35 U.S.C. 209 and 37 CFR part 404, to achieve expeditious commercialization of results of federally-funded research and development. Foreign patent applications are filed on selected inventions to extend market coverage for companies and may also be available for licensing and/or co-development.
National Institutes of Health.
Notice.
In compliance with the Paperwork Reduction Act of 1995, the National Institutes of Health (NIH) has submitted to the Office of Management and Budget (OMB) a request for review and approval of the information collection listed below. This proposed information collection was previously published in the
Comments regarding this information collection are best assured of having their full effect if received by December 19, 2016.
Written comments and/or suggestions regarding the item(s) contained in this notice, especially regarding the estimated public burden and associated response time, should be
To request more information on the proposed project or to obtain a copy of the data collection plans and instruments, contact: Dr. Alyson Ross, Nurse Researcher, Department of Nursing Research and Translational Science, NIH Clinical Center, Building 10, Room 2B07, MSC-1151, Bethesda, Maryland, 20892 or call non-toll-free number (301) 451-8338 or Email your request, including your address to:
The NIH Clinical Center, National Institutes of Health, may not conduct or sponsor, and the respondent is not required to respond to, an information collection that has been extended, revised, or implemented on or after October 1, 1995, unless it displays a currently valid OMB control number.
In compliance with Section 3507(a)(1)(D) of the Paperwork Reduction Act of 1995, the National Institutes of Health (NIH) has submitted to the Office of Management and Budget (OMB) a request for review and approval of the information collection listed below.
OMB approval is requested for 1 year. There are no costs to respondents other than their time. The total estimated annualized burden hours are 104.
Coast Guard, DHS.
Notice.
The Coast Guard announces that the First District Prevention Department's Inspections and Investigations Division has issued a Certificate of Alternate Compliance (COAC) from the International Regulations for Preventing Collisions at Sea, 1972 (72 COLREGS) for the TUG MAXWELL PAUL MORAN as required by statue. Due to its operations as a harbor assistance and escort vessel it cannot fully comply with the sidelight, stern light, and towing light provisions of the 72 COLREGS without interfering with its ability to make up and assist other vessels. This notice promotes the Coast Guard's maritime safety and stewardship missions.
Documents mentioned in the preamble are part of docket USCG-2016-0965. To view documents mentioned in this preamble as being available in the docket, go to the Federal eRulemaking Portal at
For information or questions about this notice call or email Mr. Kevin Miller, First District Towing Vessel/Barge Safety Specialist, U.S. Coast Guard; telephone (617) 223-8272, email <
The United States is signatory to the International Maritime Organization's International Regulations for Preventing Collisions at Sea, 1972 (72 COLREGS), as amended. The special construction or purpose of some vessels makes them unable to comply with the light, shape, and sound signal provisions of the 72 COLREGS. Under statutory law
The Prevention Department's Inspection and Investigation Division, U.S. Coast Guard First District hereby finds and certifies that the TUG MAXWELL PAUL MORAN is a vessel of special construction or purpose, and that, with respect to the position of the
This notice is issued under authority of 33 U.S.C. 1605(c) and 33 CFR 81.
U.S. Customs and Border Protection, Department of Homeland Security.
30-Day notice and request for comments; extension of an existing collection of information.
U.S. Customs and Border Protection (CBP) of the Department of Homeland Security will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act: Record of Vessel Foreign Repair or Equipment Purchase (CBP Form 226). CBP is proposing that this information collection be extended with no change to the burden hours or to the information collected. This document is published to obtain comments from the public and affected agencies.
Written comments should be received on or before December 19, 2016 to be assured of consideration.
Interested persons are invited to submit written comments on this proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the OMB Desk Officer for Customs and Border Protection, Department of Homeland Security, and sent via electronic mail to
Requests for additional information should be directed to Paperwork Reduction Act Officer, U.S. Customs and Border Protection, Regulations and Rulings, Office of Trade, 90 K Street NE., 10th Floor, Washington, DC 20229-1177, or via email (
This proposed information collection was previously published in the
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
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 a toll-free number.) HHS will mail to the interested provider an application packet, which will include instructions for completing the application. In order to maximize the opportunity to utilize a suitable property, providers should submit their written expressions of interest as soon as possible. For complete details concerning the processing of applications, the reader is encouraged to refer to the interim rule governing this program, 24 CFR part 581.
For properties listed as suitable/to be excess, that property may, if subsequently accepted as excess by GSA, be made available for use by the homeless in accordance with applicable law, subject to screening for other Federal use. At the appropriate time, HUD will publish the property in a Notice showing it as either suitable/available or suitable/unavailable.
For properties listed as suitable/unavailable, the landholding agency has decided that the property cannot be declared excess or made available for use to assist the homeless, and the property will not be available.
Properties listed as unsuitable will not be made available for any other purpose for 20 days from the date of this Notice. Homeless assistance providers interested in a review by HUD of the determination of unsuitability should call the toll free information line at 1-800-927-7588 or send an email to
For more information regarding particular properties identified in this Notice (
Fish and Wildlife Service, Interior.
Notice of availability; request for comments.
Under the Endangered Species Act, we, the U.S. Fish and Wildlife Service, announce the receipt and availability of three proposed low-effect habitat conservation plans and accompanying incidental take permit applications for take of Alabama beach mouse habitat incidental to construction in Orange Beach and Gulf Shores, Alabama. We invite public comments on these documents.
We must receive any written comments at our Alabama Field Office (see
Mr. Bill Lynn, Wildlife Biologist, Alabama Field Office (see
We announce the availability of three proposed low-effect habitat conservation plans (HCPs), which analyze the take of the Alabama beach
The applicant proposes to minimize and mitigate the take of up to 0.11 acres of ABM habitat at a lot off Highway 182 in Orange Beach, Alabama, by using standard ABM conservation measures at the proposed development and by donating an “in-lieu” fee to the Alabama Coastal Heritage Trust (ACHT) group (ACHT). The lot proposed for development currently is undeveloped, but developers will utilize an existing driveway to minimize impacts. The “in-lieu” fee will be donated to the ACHT group, which will use the fee to either manage, maintain, or acquire ABM habitat within the Gulf State Park critical habitat unit and/or immediately adjacent lands.
The applicants propose to minimize and mitigate the take of up to 0.20 acres of ABM habitat at two lots off Dacus Lane in Gulf Shores, Alabama, by using standard ABM conservation measures at the proposed development (such as minimizing construction footprint, restoration of native vegetation, and measures to minimize effects to ABM during occupancy and use of the development) and by donating a 0.14-acre lot in the proposed Gulf Highlands conservation area of the Fort Morgan Peninsula. The lots proposed for development are interior scrub lots that are part of a subdivided larger lot. The lot proposed for mitigation is within the proposed Gulf Highlands conservation area, contains high-quality interior scrub habitat, and will be donated to ACHT. ACHT will either place a conservation easement on the lot or eventually convey it as part of the future Gulf Highlands Conservation Area.
We have made a preliminary determination that the applicants' projects, including the mitigation measures, will individually and cumulatively have a minor or negligible effect on the species covered in the HCPs. Therefore, our proposed issuance of the requested ITPs qualifies as a categorical exclusion under the National Environmental Policy Act (NEPA), as provided by Department of the Interior implementing regulations in part 46 of title 43 of the Code of Federal Regulations (516 DM 8.5C(1)).
We base our determination that issuance of each ITP qualifies as a low-effect action on the following three criteria: (1) Implementation of the project would result in minor or negligible effects on federally listed, proposed, and candidate species and their habitats; (2) implementation of the project would result in minor or negligible effects on other environmental values or resources; and (3) impacts of the plan, considered together with the impacts of other past, present, and reasonably foreseeable similarly situated projects, would not result, over time, in cumulative effects to environmental values or resources that would be considered significant. As more fully explained in our environmental action statement and associated Low-Effect Screening Form, the applicants' proposed projects qualify as “low-effect” projects. This preliminary determination may be revised based on our review of public comments that we receive in response to this notice.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
If you wish to comment, you may submit comments by any one of several methods. Please reference TE11097C-0 (Charles L. Jones), or TE11183C-0 (Duane A. Baker) and TE11182C-0 (Joe Colich) in such comments. You may mail comments to the Fish and Wildlife Service's Alabama Field Office (see
The area encompassed by the HCPs and applications is the 0.779-acre lot located at 22756 Perdido Beach Boulevard, in Orange Beach, Alabama and the two 0.68-acre lots located off Dacus Lane, in Gulf Shores, Alabama.
We will evaluate the ITP applications, including the HCPs and any comments we receive, to determine whether the applications meet the requirements of section 10(a)(1)(B) of the Act. We will also evaluate whether issuance of a section 10(a)(1)(B) ITP complies with section 7 of the Act by conducting an intra-Service section 7 consultation. We will use the results of this consultation, in combination with the above findings, in our final analysis to determine whether or not to issue the ITPs. If we determine that the requirements are met, we will issue the ITPs for the incidental take of ABM habitat.
We provide this notice under section 10 of the Act (16 U.S.C. 1531
Office of the Secretary, Interior.
Notice of public meetings of the Invasive Species Advisory Committee.
Pursuant to the provisions of the Federal Advisory Committee Act, notice is hereby given of meetings of the Invasive Species Advisory Committee (ISAC). Comprised of 25 nonfederal invasive species experts and stakeholders from across the nation, the purpose of the Advisory Committee is to provide advice to the National Invasive Species Council, as authorized by Executive Order 13112, on a broad array of issues related to preventing the introduction of invasive species and providing for their eradication and
Meeting of the Invasive Species Advisory Committee: Tuesday, December 6, 2016: 8:30 a.m. to 5:00 p.m.; Wednesday, December 7, 2016: 8:30 a.m. to 5:30 p.m.; Thursday, December 8, 2016; 8:00 a.m.-12:00 p.m.
Smithsonian Institution National Museum of the American Indian, 4th and Independence Avenue SW., Washington, DC 20560. The general session will be held in the Conference Center (4th Floor).
Kelsey Brantley, National Invasive Species Council Program Specialist and ISAC Coordinator, Phone: (202) 208-4122; Fax: (202) 208-4118, email:
Bureau of Land Management, Interior.
Notice.
The plats of survey of the following described lands are scheduled to be officially filed in the Bureau of Land Management, Oregon State Office, Portland, Oregon, 30 days from the date of this publication.
A copy of the plats may be obtained from the Public Room at the Bureau of Land Management, Oregon State Office, 1220 SW. 3rd Avenue, Portland, Oregon 97204, upon required payment.
Kyle Hensley, (503) 808-6124, Branch of Geographic Sciences, Bureau of Land Management, 1220 SW. 3rd Avenue, Portland, Oregon 97204. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service at 1-800-877-8339 to contact the above individual during normal business hours. The service is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal business hours.
A person or party who wishes to protest against this survey must file a written notice with the Oregon State Director, Bureau of Land Management, stating that they wish to protest. A statement of reasons for a protest may be filed with the notice of protest and must be filed with the Oregon State Director within thirty days after the protest is filed. If a protest against the survey is received prior to the date of official filing, the filing will be stayed pending consideration of the protest. A plat will not be officially filed until the day after all protests have been dismissed or otherwise resolved. Before including your address, phone number, email address, or other personally identifying information in your comment, you should be aware that your entire comment—including your personally identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personally identifying information from public review, we cannot guarantee that we will be able to do so.
Bureau of Land Management, Interior.
Notice.
On behalf of the National Park Service (NPS) and subject to valid existing rights, the Secretary of the Interior proposes to withdraw approximately 22,462 acres of public lands for 20 years from all forms of entry, appropriation, or disposal under the public land laws; from location, entry, and patent under the United States mining laws; and from disposition under all laws pertaining to mineral and geothermal leasing, and mineral materials, and all amendments thereto and to transfer administrative jurisdiction over such lands from the Bureau of Land Management (BLM) to the NPS for administration as part of Joshua Tree National Park (JTNP). This notice temporarily segregates the lands for up to 2 years, gives the public an opportunity to comment on the proposed withdrawal application, and announces the date and time of a public meeting.
Comments must be received by February 16, 2017. A public meeting on the proposed withdrawal will be held on January 18, 2017 from 6:00 to 9:00 p.m. at UC Riverside Palm Desert, 75080 Frank Sinatra Drive, Palm Desert, California 92211.
Comments should be sent to the Superintendent, Joshua Tree National Park, 74485 National Park Drive, Twentynine Palms, California 92277.
David Smith, Superintendent, Joshua Tree National Park, 760-367-5502 or Doug Herrema, Field Manager, Bureau of Land Management, Palm Springs South Coast Field Office, 760-833-7100. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay
The applicant is the NPS and its petition/application requests that the Secretary of the Interior: (i) Withdraw, subject to valid existing rights, the following public lands adjacent to JTNP from all forms of entry, appropriation, or disposal under the public land laws; from location, entry, and patent under the United States mining laws; and from disposition under all laws pertaining to mineral and geothermal leasing, and mineral materials, and all amendments thereto; and, (ii) transfer jurisdiction over such lands to the NPS for administration as part of JTNP.
All that land situated within the Eagle Mountain Area Segregation boundary, located in Townships 3 and 4 South, Ranges 13, 14, and 15 East, San Bernardino Meridian, Riverside County, California; said boundary more particularly described as follows:
Excepting therefrom all privately owned or state school lands with the lands described above.
Said excepted parcels encompass 5,566 acres, more or less.
Also excepting therefrom all the land situated within the project boundary of FERC Project No. 13123 as described in Figure G-1- entitled “Exhibit G-Project Boundary FERC Project No. 13123, Sheet 1, Eagle Mountain Pumped Storage, Eagle Mountain, California, Eagle Crest Energy Company,” dated August 2014 within the sections described below:
Said excepted parcels encompass 627 acres, more or less.
The area described above contains approximately 22,462 acres in Riverside County. Records and maps relating to this application can be examined by interested parties at the following locations: NPS, Pacific West Region, 333 Bush Street, Suite 600, San Francisco, California 94104, and BLM, Palm Springs South Coast Field Office, 1201 Bird Center Drive, Palm Springs, California 92262.
The Deputy Secretary of the Interior approved the NPS's petition/application to withdraw the above-described lands. The Deputy Secretary's approval of the application constitutes his proposal to withdraw the subject lands and transfer administrative jurisdiction over them to the NPS for inclusion in and management as part of JTNP.
The purpose of the proposed withdrawal is to transfer administrative jurisdiction of the described public lands from the BLM to the NPS for administration as part of JTNP. These lands were included within the original boundary of the JTNM in 1936, but were removed from the JTNM in 1950 for iron ore development. Most of the lands within the proposed withdrawal boundary are untrammeled and retain the characteristics that led to their inclusion in the original boundary of the former JTNM. In particular, the area contains valuable habitat for desert species, including important habitat linkages for bighorn sheep, and provides landscape scale conservation opportunities.
If transferred, the lands would be included in an expanded national park boundary and administered as part of the JTNP in accordance with the NPS Organic Act and other applicable laws. The Secretary is authorized by 54 U.S.C. 100506(c)(1)(B) to acquire lands adjacent to units of the NPS by transfer from another Federal agency and to expand the park boundary accordingly.
The NPS is preparing a boundary study for JTNP that is related to the proposed withdrawal. The boundary study will explore whether it would be appropriate and feasible to transfer the segregated lands to JTNP and manage them for national park purposes. As part of that process, the NPS is preparing an environmental assessment under the National Environmental Policy Act that will serve as the environmental analysis of boundary alternatives and the proposed withdrawal. The NPS will coordinate public involvement in the boundary study process with public involvement in the proposed withdrawal process to the extent feasible.
The use of a right-of-way, interagency, or cooperative agreement, or surface management by the BLM instead of withdrawal may not adequately constrain nondiscretionary uses which could result in permanent loss of significant values and irreplaceable
Licenses, permits, cooperative agreements, or other discretionary land use authorizations may be allowed with the approval of an authorized officer of the BLM during the temporary segregative period, after coordination with the NPS. The lands included within FERC Project No. 13123, which is licensed by FERC, are not proposed for withdrawal and the Department does not intend to include any additional lands ultimately included in the associated BLM right-of-way in the final withdrawal, if approved.
Subject to analysis under the NEPA, 42 U.S.C. 4321
Comments, including names and street addresses of respondents, will be available for public review on the following Web site
Notice is hereby given that a public meeting will be held in connection with the proposed withdrawal at the time and location indicated in the
Records relating to the application may be examined by contacting JTNP park superintendent David Smith at 760-367-5502 or BLM Field Manager at 760-833-7100.
For a period until February 16, 2017, all persons who wish to submit comments, suggestions, or objections in connection with the proposed withdrawal may present their views in writing to the JTNP Superintendent or the BLM Field Manager at the
For a period until November 19, 2018, the lands described in this notice will be segregated from all forms of entry, appropriation, or disposal under the public land laws; from location, entry, and patent under the United States mining laws; and from disposition under all laws pertaining to mineral and geothermal leasing, and mineral materials, and all amendments thereto, unless the application is denied or canceled or the withdrawal is approved prior to that date. The 2 years also allows time for the NPS to conduct the necessary analyses under FLPMA, the statutes pertaining to the NPS, and the NEPA. It is intended that these analyses will support a final decision on whether to expand the park boundary to complete the proposed withdrawal and to modify accordingly the boundary of JTNP.
The application will be processed in accordance with the regulations set forth in 43 CFR part 2300.
Bureau of Land Management, Interior.
Notice of realty action.
The Bureau of Land Management (BLM) is processing an application under the Federal Land Policy and Management Act of 1976 (FLPMA), to convey the undivided phosphate mineral interest owned by the United States in 160 acres located in Lee County, Florida, to the surface owner, Stonewater II, LLC, a Michigan Limited Liability Company. The fair market value of the phosphate mineral interest has been determined to be $4,000.
Interested persons may submit written comments to the BLM at the address listed below. Comments must be received no later than January 3, 2017.
Bureau of Land Management, Eastern States State Office, 20 M Street SE., Suite 950, Washington, DC 20003. Detailed information concerning this action is available for review at this address.
Charles Johnson, Land Law Examiner, by telephone at 202-912-7737 or by email at
Stonewater II, LLC, the surface owner, has applied to purchase the undivided federally owned phosphate mineral interest located in Lee County, Florida, in a parcel described as follows:
As required under Section 209(3)(i) of FLPMA, the applicant deposited a sum of money determined sufficient to cover administrative costs, including, but not limited to, the cost for the Mineral Potential Report. The objective of Section 209 is to allow consolidation of the surface and mineral interests when either one of the following conditions exists: (1) There are no known mineral values in the land; or (2) Where continued Federal ownership of the mineral interests interferes with or precludes appropriate non-mineral development and such development is a more beneficial use of the land than mineral development.
Stonewater II, LLC, a Michigan Limited Liability Company, the surface owner, filed an application for the conveyance of federally owned phosphate mineral interests in the above-described tract of land, subject to valid existing rights.
On November 18, 2016 the federally owned mineral interests in the lands described above are hereby segregated from all forms of appropriation under the public land laws, including the mining laws, while the application is being processed to determine if either one of the two specified conditions exists and, if so, to otherwise comply with the procedural requirements of 43 CFR part 2720. The segregation shall terminate: (1) Upon issuance of a patent or other document of conveyance as to such mineral interests; (2) upon final rejection of the application; or (3) on November 19, 2018, whichever occurs first.
Please submit all comments in writing to the address listed above.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that
43 CFR 2720.1-1(b).
Bureau of Land Management, Interior.
Notice.
The purpose of this notice is to inform the public and interested State and local government officials of the filing of Plats of Survey in Nevada.
Michael O. Harmening, Chief, Branch of Geographic Sciences, Bureau of Land Management, Nevada State Office, 1340 Financial Blvd., Reno, NV 89502-7147, phone: 775-861-6490. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 to contact the above individual during normal business hours. The FIRS is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal business hours.
1. The Plat of Survey of the following described lands was officially filed at the Bureau of Land Management (BLM) Nevada State Office, Reno, Nevada on August 25, 2016:
The plat, in 1 sheet, representing the dependent resurvey of a portion of the subdivisional lines, the subdivision or section 24, and a metes-and-bounds survey of a portion of the centerline of Nevada State Route 147 (Lake Mead Blvd.) in section 24, Township 20 South, Range 62 East, Mount Diablo Meridian, Nevada, under Group No. 944, was accepted August 24, 2016. This survey was executed to identify the boundaries for disposal of certain public lands for the Las Vegas Police Shooting Range, authorized under Public Law 113-291.
2. The Plat of Survey of the following described lands was officially filed at the Bureau of Land Management (BLM) Nevada State Office, Reno, Nevada on August 26, 2016:
The plat, in 1 sheet, representing the dependent resurvey of a portion of the north boundary, a portion of the subdivisional lines and portions of Mineral Survey No. 4960, Township 20 South, Range 59 East, Mount Diablo Meridian, Nevada, under Group No. 950, was accepted August 25, 2016. This survey was executed to locate specific high-risk boundaries and to describe additions to the Red Rock Canyon National Conservation Area authorized by Public Law 113-291.
3. The Plat of Survey of the following described lands was officially filed at the Bureau of Land Management (BLM) Nevada State Office, Reno, Nevada on September 12, 2016:
The plat, in 3 sheets, representing the dependent resurvey of a portion of the east boundary and a portion of the subdivisional lines, the subdivision of sections 14, 24 and 25, a metes-and-bounds survey through sections 13 and 14, and a metes-and-bounds survey of a portion of the centerline of Las Vegas Boulevard in section 25, Township 19 South, Range 62 East, Mount Diablo Meridian, Nevada, under Group No. 959, was accepted September 1, 2016. This survey was executed to identify lands to be withdrawn for addition to Nellis Air Force Base, authorized by Public Law 113-291 and shown on the maps entitled “Nellis Dunes OHV Recreation Area”, dated June 26, 2012 and “North Las Vegas Valley Overview”, dated November 5, 2013.
4. The Plat of Survey of the following described lands was officially filed at the Bureau of Land Management (BLM) Nevada State Office, Reno, Nevada on September 30, 2016:
The plat, in 1 sheet, representing the dependent resurvey of a portion of the south boundary, a portion of the subdivisional lines and the subdivision of section 34, Township 43 North, Range 26 East, Mount Diablo Meridian, Nevada, under Group No. 936, was accepted September 28, 2016. This survey was executed to meet certain administrative needs of the Bureau of Land Management.
The surveys listed above are now the basic record for describing the lands for all authorized purposes. These records have been placed in the open files in the BLM Nevada State Office and are available to the public as a matter of information. Copies of the surveys and related field notes may be furnished to the public upon payment of the appropriate fees.
National Park Service, Interior.
Public notice.
The National Park Service hereby gives public notice that it proposes to extend the expiring concession contracts listed below for the period specified, or until the effective date of a new contract, whichever occurs sooner.
Effective January 1, 2017.
Brian Borda, Program Chief, Commercial Services Program, National Park Service, 1201 Eye Street NW., 11th Floor, Washington, DC 20005, Telephone: 202-513-7156.
All of the listed concession authorizations will expire by their terms on or before December 31, 2016. The National Park Service has determined the proposed extensions are necessary to avoid interruption of visitor services and has taken all reasonable and appropriate steps to consider alternatives to avoid such interruption. The publication of this notice merely reflects the intent of the National Park Service and does not bind the National Park Service to extend any of the contracts listed below.
The information in the first table shows concession contracts intended to be extended until December 31, 2017, or until the effective date of a new concession contract, whichever occurs first. The information in the second table shows concession contracts intended to be extended until December 31, 2018, or until the effective date of a new concession contract, whichever occurs first. Under the provisions of current concession contracts, the National Park Service authorizes extension of visitor services for the contracts below under the terms and conditions of the current contract (as amended if applicable). The extension
National Park Service, Interior.
Notice.
The National Park Service intends to award two temporary concession contracts to a qualified person for the conduct of certain visitor services within Acadia National Park for a term not to exceed 3 years. The visitor services include guided bus tours.
Judy Bassett, Northeast Regional Concession Chief, Northeast Region, 200 Chestnut Street, Suite 502, Philadelphia, PA 19106; Telephone (215) 597-4903, by email at
The National Park Service intends to award each contract to a concessioner currently operating under a long-term concessions contract. If the National Park Service is unable to reach acceptable terms, however, it may find other qualified persons for the award of each of the temporary contracts. The National Park Service has determined that the issuance of temporary concession contracts not to exceed 3 years is necessary to avoid interruption of visitor services and has taken all reasonable and appropriate steps to consider alternatives to avoid an interruption of visitor services in accordance with 36 CFR 51.24.
This action is issued pursuant to 36 CFR 51.24(a). This is not a request for proposals.
National Park Service, Interior.
Public notice.
Pursuant to the terms of existing concession contracts, public notice is hereby given that the National Park Service intends to request a continuation of visitor services for a period not to exceed one year.
Effective January 1, 2017.
Brian Borda, Chief, Commercial Services Program, National Park Service, 1201 Eye Street NW., 11th Floor, Washington, DC 20005, Telephone: 202-513-7156.
The contracts listed below have been extended to the maximum allowable under 36 CFR 51.23. Under the provisions of the respective concession contracts and pending the completion of the public solicitation of a prospectus for a new concession contract, the National Park Service authorizes continuation of visitor services for a period not-to-exceed 1 year under the terms and conditions of the current contract as amended. The continuation of operations does not affect any rights with respect to selection for award of a new concession contract. The publication of this notice merely reflects the intent of the National Park Service but does not bind the National Park Service to continue any of the contracts listed below.
United States International Trade Commission.
Notice.
The Commission hereby gives notice of the scheduling of the final phase of antidumping and countervailing duty investigation Nos. 701-TA-558 and 731-TA-1316 (Final) pursuant to the Tariff Act of 1930 (“the Act”) to determine whether an industry in the United States is materially injured or threatened with material injury, or the establishment of an industry in the United States is materially retarded, by reason of imports of 1-hydroxyethylidene-1,1-diphosphonic acid (“HEDP”) from China, provided for in subheading 2931.90.90 of the Harmonized Tariff Schedule of the United States, preliminarily determined by the Department of Commerce to be
November 4, 2016.
Edward Petronzio (202-205-3176), Office of Investigations, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
For further information concerning the conduct of this phase of the investigations, hearing procedures, and rules of general application, consult the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A and C (19 CFR part 207).
Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission's rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigations must be served on all other parties to the investigations (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
These investigations are being conducted under authority of title VII of the
By order of the Commission.
United States International Trade Commission.
November 29, 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. 731-TA-457-A-D (Fourth Review) (Heavy Forged Hand Tools from China). The Commission is currently scheduled to complete and file its determinations and views of the Commission on December 15, 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 a complaint was filed with the U.S. International Trade Commission on October 14, 2016, under section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, on behalf of Qualcomm Incorporated of San Diego, California. The complaint alleges violations of section 337 based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain mobile electronic devices by reason of infringement of certain claims of U.S. Patent No. 8,095,082 (“the '082 patent”); U.S. Patent No. 7,999,384 (“the '384 patent”); U.S. Patent No. 7,548,407 (“the '407 patent”); U.S. Patent No. 8,497,928 (“the '928 patent”) and U.S. Patent No. 7,949,367 (“the '367 patent”). The complaint further alleges that an industry in the United States exists as required by subsection (a)(2) of section 337.
The complainant requests that the Commission institute an investigation and, after the investigation, issue a limited exclusion order and cease and desist orders.
The complaint, except for any confidential information contained therein, is 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., Room 112, Washington, DC 20436, telephone (202) 205-2000. Hearing impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on (202) 205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205-2000. General information concerning the Commission may also be obtained by accessing its internet server at
The Office of the Secretary, U.S. International Trade Commission, telephone (202) 205-2000.
The authority for institution of this investigation is contained in section 337 of the Tariff Act of 1930, as amended, and in section 210.10 of the Commission's Rules of Practice and Procedure, 19 CFR 210.10 (2016).
Having considered the complaint, the U.S. International Trade Commission, on November 14, 2016, ORDERED THAT -
(1) Pursuant to subsection (b) of section 337 of the Tariff Act of 1930, as amended, an investigation be instituted to determine whether there is a violation of subsection (a)(1)(B) of section 337 in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain mobile electronic devices by reason of infringement of one or more of claims 1-4, 7, 8, and 11 of the '082 patent; claims 44, 45, 50, and 53 of the '384 patent; claims 1-13 of the '407 patent; claims 1, 2, 4, and 6 of the '928 patent; and claims 6 and 7 of the '367 patent, and whether an industry in the United States exists as required by subsection (a)(2) of section 337;
(2) For the purpose of the investigation so instituted, the following are hereby named as parties upon which this notice of investigation shall be served:
(a) The complainant is: Qualcomm Incorporated, 5775 Morehouse Drive, San Diego, CA 92121.
(b) The respondents are the following entities alleged to be in violation of section 337, and are the parties upon which the complaint is to be served:
(3) For the investigation so instituted, the Chief Administrative Law Judge, U.S. International Trade Commission, shall designate the presiding Administrative Law Judge.
The Office of Unfair Import Investigations will not be named as a party to this investigation.
Responses to the complaint and the notice of investigation must be submitted by the named respondents in accordance with section 210.13 of the Commission's Rules of Practice and Procedure, 19 CFR 210.13. Pursuant to 19 CFR 201.16(e) and 210.13(a), such responses will be considered by the Commission if received not later than 20 days after the date of service by the Commission of the complaint and the notice of investigation. Extensions of time for submitting responses to the complaint and the notice of investigation will not be granted unless good cause therefor is shown.
Failure of a respondent to file a timely response to each allegation in the complaint and in this notice may be deemed to constitute a waiver of the right to appear and contest the allegations of the complaint and this notice, and to authorize the administrative law judge and the Commission, without further notice to the respondent, to find the facts to be as alleged in the complaint and this notice and to enter an initial determination and a final determination containing such findings, and may result in the issuance of an exclusion order or a cease and desist order or both directed against the respondent.
By order of the Commission.
Federal Bureau of Investigation, Department of Justice.
30-day notice.
The Department of Justice (DOJ), Federal Bureau of Investigation (FBI), Criminal Justice Information Services (CJIS) Division, will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The proposed information collection was published in the
Comments are encouraged and will be accepted for an additional 30 days until December 19, 2016.
If you have additional comments especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact Gerry Lynn Brovey, Supervisory Information Liaison Specialist, FBI, CJIS, Resources Management Section, Administrative Unit, Module C-2, 1000 Custer Hollow Road, Clarksburg, West Virginia 26306 (facsimile: 304-625-5093). Written comments and/or suggestions can also be directed to the Office of Management and Budget, Office of Information and Regulatory Affairs, Attention Department of Justice Desk Officer, Washington, DC 20530 or sent to
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
(1)
(2)
3
(4)
(5)
(6)
If additional information is required contact: Jerri Murray, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE., 3E.405B, Washington, DC 20530.
Drug Enforcement Administration, Department of Justice.
30-Day notice.
The Department of Justice (DOJ), Drug Enforcement Administration, will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. This collection was previously published in the
Comments are encouraged and will be accepted for 30 days until December 19, 2016.
If you have additional comments especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact Catherine J. Cmiel-Acevido, Lead IT Specialist, or Jesus Oswaldo “Waldo” Contreras, IT Specialist, El Paso Intelligence Center, Drug Enforcement Administration, 11339 SSG Sims Blvd., El Paso, TX 79918. Written comments and/or suggestions can also be directed to the Office pf Management and Budget, Office of Information and Regulatory Affairs, Attention Department of Justice Desk Officer, Washington, DC 20530 or sent to
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
(1)
(2)
(3)
(4)
(5)
(6)
If additional information is required contact: Jerri Murray, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE., 3E.405B, Washington, DC 20530.
Federal Bureau of Prisons, U.S. Department of Justice.
Notice of Intent.
Pursuant to the National Environmental Policy Act (NEPA) of 1969, as implemented by the Council on Environmental Quality regulations, the Federal Bureau of Prisons (Bureau) announces its intent to prepare a Supplement to the March 2016 Revised Final Environmental Impact Statement (RFEIS) for “Proposed United States Penitentiary and Federal Prison Camp Letcher County, Kentucky.”
Issac Gaston, Site Selection Specialist; U.S. Department of Justice, Federal Bureau of Prisons, 320 First Street NW., Washington, DC 20534; email:
The Supplemental RFEIS is being prepared to address substantial changes to the proposed action that are relevant to environmental concerns, as required under NEPA [40 CFR 1502.9(c)], and will assess any new circumstances or information relevant to potential environmental impacts.
In March 2016, the Bureau completed the Revised Final EIS for the Proposed United States Penitentiary and Federal Prison Camp, Letcher County, Kentucky, which evaluated the potential environmental impacts from the acquisition of property and construction and operation of a new United States Penitentiary, Federal Prison Camp, ancillary facilities, and access roads in Letcher County. The RFEIS analyzed two potential locations: An approximately 753-acre site in eastern Letcher County (Alternative 1-Payne Gap), and an approximately 700-acre site in western Letcher County (Alternative 2-Roxana). The RFEIS identified Alternative 2-Roxana as the preferred alternative because it best meets the project needs and, on balance, would have fewer impacts to the natural and built environment.
The Bureau was originally considering acquiring approximately 700 acres at the Roxana site for this project. In an effort to reduce potentially impacted property, the Bureau is removing two parcels of land at the Roxana site from acquisition consideration, resulting in a proposed site of approximately 570 acres. This reduction in site size has necessitated modifying the facilities layout evaluated for Alternative 2-Roxana in the RFEIS. The environmental impacts of the modified Alternative 2-Roxana will be analyzed in the Supplemental RFEIS. The alternatives to be evaluated in the Supplemental RFEIS include the No Action Alternative and Alternative 2-Roxana.
The Supplemental RFEIS will analyze potential environmental impacts that may result from the modified alternative, including, but not limited to, land use and zoning; topography, geology, and soils; air quality; noise; cultural resources; water resources; and biological resources. The Supplemental RFEIS analysis will evaluate direct, indirect, and cumulative impacts. Relevant and reasonable measures that could avoid or mitigate environmental impacts will also be analyzed. Additionally, the Bureau will undertake any consultations required by applicable laws or regulations.
The Bureau will issue a Draft Supplemental RFEIS for a 45-day public comment period, during which a public meeting will be held in the community of Whitesburg. A notice of availability of the Draft Supplemental RFEIS and a notice of public meeting will be published in the
The mailing list for the Draft Supplemental RFEIS will be based on the mailing list in the 2016 RFEIS. Those on this list will receive a copy of
Following issuance of the Draft Supplemental RFEIS and completion of the 45-day public comment period on the Draft Supplemental RFEIS, the Bureau will issue a Final Supplemental RFEIS that will include comments received during the public comment period on the Draft Supplemental RFEIS. The Final Supplemental RFEIS will also include the Bureau's response to substantive comments received on the Draft Supplemental RFEIS. Following publication of the Final Supplemental RFEIS, a 30-day review period will be provided. No action will be taken to implement any of the proposed alternatives until completion of the 30-day review period on the Final Supplemental RFEIS and issuance of a Record of Decision on behalf of the Bureau by its Director or Acting Director.
Mine Safety and Health Administration, Labor.
Notice.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and Title 30 of the Code of Federal Regulations Part 44 govern the application, processing, and disposition of petitions for modification. This notice is a summary of petitions for modification submitted to the Mine Safety and Health Administration (MSHA) by the parties listed below.
All comments on the petitions must be received by MSHA's Office of Standards, Regulations, and Variances on or before December 19, 2016.
You may submit your comments, identified by “docket number” on the subject line, by any of the following methods:
1.
2.
3.
MSHA will consider only comments postmarked by the U.S. Postal Service or proof of delivery from another delivery service such as UPS or Federal Express on or before the deadline for comments.
Barbara Barron, Office of Standards, Regulations, and Variances at 202-693-9447 (Voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. That the application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, the regulations at 30 CFR 44.10 and 44.11 establish the requirements and procedures for filing petitions for modification.
(1) The equipment will be operated in the working section's only intake entry (gangway), which is regularly traveled and examined.
(2) The use of drags on less than moderate pitching veins (less than 20 degrees pitch) is the only practical system of mining in use.
(3) Permissible drags are not commercially available, and due in part to their small size, permissible locomotives are not commercially available either.
(4) As a result of low daily production rates and full timbering support, in-rushes of methane due to massive pillar falls are unlikely to occur.
(5) Recovery of the pillars above the first miner heading is usually accomplished on the advance within 150 feet of the section intake (gangway) and the remaining mineable pillars recovered from the deepest point of penetration outby.
(6) The 5,000 cubic feet per minute of required intake airflow is measured just outby the nonpermissible equipment with the ventilating air passing over the equipment to ventilate the pillar being mined.
(7) The electrical equipment is attended during operation and either power to the unit deenergized at the intersection of the working gangway and intake slope or equipment moved to that area when production ceases, minimizing any ignition potential from the pillar recovery area.
(8) Where more than one active line of pillar breasts recovery exists, the locomotive may travel to a point just outby the deepest active chute/breast (room) workings or last open crosscut in a developing set of entries.
The petitioner asserts that the proposed alternative method will at all times guarantee no less than the same
(1) A functional safety catch has not been developed. Makeshift devices, if installed, would be activated on knuckles and curves when no emergency exists causing a tumbling effect on the conveyance, which would increase rather than decrease the hazard to miners.
(2) As an alternative, the petitioner proposes to operate the man-cage or steel gunboat with secondary safety connections securely fastened around the gunboat and to the hoisting rope above the main connecting device, and use hoisting ropes having a factor of safety in excess of the 4 to 8 to 1 as suggested in the American Standards Specifications for Use of Wire Ropes for Mines.
The petitioner asserts that the proposed alternative method will provide no less than the same measure of protection afforded the miners under the existing standard.
(1) The maximum lengths of the 995-volt trailing cables will be 1,000 feet and not smaller than No. 2 American Wire Gauge (AWG).
(2) All circuit breakers used to protect No. 2 AWG trailing cables exceeding 700 feet in length will have instantaneous trip units calibrated to trip at 800 amperes. The trip setting of these circuit breakers will be sealed or locked so that the setting cannot be changed and these circuit breakers will have permanent, legible labels. Each label will identify the circuit breaker as being suitable for protecting No. 2 AWG cables. The labels will be maintained legible.
(3) Replacement instantaneous trip units used to protect No. 2 AWG trailing cables will be calibrated to trip at 800 amperes, and this setting will be sealed and locked.
(4) All components that provide short-circuit protection will have a sufficient interruption rating in accordance with the maximum calculated fault currents available.
(5) Short-circuit settings must not exceed the setting specified in the approval documentation or 70 percent of the maximum available current, whichever is less.
(6) Any trailing cable that is not in safe operating condition will be removed from service immediately and repaired or replaced.
(7) Each splice or repair in the trailing cable will be made in a workmanlike manner and in accordance with the instructions of the manufacturer of the splice or repair kit. The outer jacket of each splice or repair will be vulcanized with flame-resistant material or made with material that has been accepted by MSHA as flame resistant.
(8) In the event the mining methods or operating procedures cause or contribute to the damage of any trailing cable, the trailing cable will be removed from service immediately and repaired or replaced, and additional precautions will be taken to ensure that in the future, the cable is protected and maintained in safe operating condition.
(9) During each production day, persons designated by the mine operator will visually examine the trailing cables to ensure that the cables are in safe operating condition. The instantaneous settings of the specially calibrated circuit breakers will be visually examined to ensure that the seals or locks have not been removed and do not exceed the settings stipulated in items (2) and (3).
(10) Permanent warning labels will be installed and maintained on the cover of the power center identifying the location of each sealed short-circuit protective device. These labels will warn miners not to change or alter these sealed short-circuit settings.
(11) The alternative method will not be implemented until all miners who have been designated to examine the integrity of seals or locks, verify the short-circuit settings, and examine trailing cables for defects have received their training.
(12) Within 60 days after the proposed decision and order becomes final, the petitioner will submit proposed revisions for their approved 30 CFR part 48 training plans to the District Manager for the area in which the mine is located. The training will include the following elements:
(a) Mining methods and operating procedures that will protect the trailing cables against damage;
(b) Proper procedures for examining the trailing cables to ensure that the cables are in safe operating condition;
(c) The hazards of setting the short circuit interrupting device too high to adequately protect the trailing cables; and
(d) How to verify that the circuit interrupting device(s) protecting the trailing cable(s) are properly set and maintained.
The procedures as specified in 30 CFR 48.3 for approval of proposed revisions to already approved training plans will apply.
The petitioner asserts that the proposed alternative method will at all times guarantee no less than the same measure of protection to the miners as would be provided by the existing standard.
(1) Nonpermissible electronic testing and diagnostic equipment to be used includes: Laptop/tablet computers, oscilloscopes, vibration analysis machines, cable fault detectors, point temperature probes, infrared temperature devices, insulation testers (meggers), voltage, current, resistance meters and power testers, and electronic tachometers. Other testing and diagnostic equipment may be used if approved in advance by the MSHA District Manager.
(2) All nonpermissible testing and diagnostic equipment used in or inby
(3) A qualified person as defined in existing 30 CFR 75.151 will continuously monitor for methane immediately before and during the use of nonpermissible electronic testing and diagnostic equipment in or inby the last open crosscut.
(4) Nonpermissible electronic testing and diagnostic equipment will not be used if methane is detected in concentrations at or above 1.0 percent. When 1.0 percent or more methane is detected while the nonpermissible electronic equipment is being used, the equipment will be deenergized immediately and withdrawn outby the last open crosscut.
(5) All hand-held methane detectors will be MSHA-approved and maintained in permissible and proper operating condition as defined in 30 CFR 75.320.
(6) Except for time necessary to troubleshoot under actual mining conditions, coal production on MMU will cease. However, coal may remain in or on the equipment to test and diagnose the equipment under “load.”
(7) All electronic testing and diagnostic equipment will be used in accordance with the manufacturer's recommendations.
(8) Qualified personnel who use electronic testing and diagnostic equipment will be properly trained to recognize the hazards and limitations associated with use of the equipment.
The petitioner asserts that under the terms and conditions of the petition for modification, the use of nonpermissible electronic testing and diagnostic equipment will at all times guarantee no less than the same measure of protection afforded by the existing standard.
(1) Nonpermissible electronic testing and diagnostic equipment to be used includes: Laptop/tablet computers, oscilloscopes, vibration analysis machines, cable fault detectors, point temperature probes, infrared temperature devices, insulation testers (meggers), voltage, current, resistance meters and power testers, and electronic tachometers. Other testing and diagnostic equipment may be used if approved in advance by the MSHA District Manager.
(2) All nonpermissible testing and diagnostic equipment used in return air outby the last open crosscut will be examined by a qualified person (as defined in 30 CFR 75.153) prior to use to ensure the equipment is being maintained in a safe operating condition. The examination results will be recorded weekly in the examination book and will be made available to MSHA and the miners at the mine.
(3) A qualified person as defined in existing 30 CFR 75.151 will continuously monitor for methane immediately before and during the use of nonpermissible electronic testing and diagnostic equipment in return air outby the last open crosscut.
(4) Nonpermissible electronic testing and diagnostic equipment will not be used if methane is detected in concentrations at or above 1.0 percent. When 1.0 percent or more methane is detected while the nonpermissible electronic equipment is being used, the equipment will be deenergized immediately and withdrawn from the return air outby the last open crosscut.
(5) All hand-held methane detectors will be MSHA-approved and maintained in permissible and proper operating condition as defined in 30 CFR 75.320.
(6) All electronic testing and diagnostic equipment will be used in accordance with the manufacturer's recommendations.
(7) Qualified personnel who use electronic testing and diagnostic equipment will be properly trained to recognize the hazards and limitations associated with use of the equipment.
The petitioner asserts that under the terms and conditions of the petition for modification, the use of nonpermissible electronic testing and diagnostic equipment will at all times guarantee no less than the same measure of protection afforded by the existing standard.
Mine Safety and Health Administration, Labor.
Notice.
Section 101(c) of the Federal Mine Safety and Health Act of 1977 and Title 30 of the Code of Federal Regulations Part 44 govern the application, processing, and disposition of petitions for modification. This notice is a summary of petitions for modification submitted to the Mine Safety and Health Administration (MSHA) by the parties listed below.
All comments on the petitions must be received by MSHA's Office of Standards, Regulations, and Variances on or before December 19, 2016.
You may submit your comments, identified by “docket number” on the subject line, by any of the following methods:
1.
2.
3.
MSHA will consider only comments postmarked by the U.S. Postal Service or proof of delivery from another delivery service such as UPS or Federal Express on or before the deadline for comments.
Barbara Barron, Office of Standards, Regulations, and Variances at 202-693-9447 (Voice),
Section 101(c) of the Federal Mine Safety and Health Act of 1977 (Mine Act) allows the mine operator or representative of miners to file a petition to modify the application of any mandatory safety standard to a coal or other mine if the Secretary of Labor determines that:
1. An alternative method of achieving the result of such standard exists which will at all times guarantee no less than the same measure of protection afforded the miners of such mine by such standard; or
2. That the application of such standard to such mine will result in a diminution of safety to the miners in such mine.
In addition, the regulations at 30 CFR 44.10 and 44.11 establish the requirements and procedures for filing petitions for modification.
(1) The compressor industry guidance has shown that the high temperature shutoff switch is not offered as a standard safety feature on an electrically motor-driven reciprocating-type air compressor between 2 horsepower and 30 horsepower. The only time a high temperature shutoff switch is used on a reciprocating-type compressor is when very large compressors (100 horsepower and up) are housed in buildings or containers that could allow intake air to be heated by other environmental influences. However, a high temperature shutoff switch has always been standard for a rotary or screw type compressor that is working off of a combustion engine. When discussing this standard with compressor manufacturers, the first statement that is often made is “are you sure we are referring to a rotary compressor not a reciprocating compressor”.
(2) The petitioner states the following facts related to electric motor-driven reciprocating air compressors:
(a) The electric motor does not affect the temperature of the air in the compressor. The compressor and motor are only connected to sheaves on both sides.
(b) Existing 30 CFR 56.13010 states that the temperature switch must be adjusted to shut down the compressor when the normal operating temperature is exceeded by more than 25 percent. This would be virtually impossible because the normal operating temperature is affected by the intake air temperature which can fluctuate by 30 percent or more depending on the geographic location of the air compressor and the time of the year. According to manufacturers, the temperatures of supplied air can typically range from 32 degrees Fahrenheit to 115 degrees Fahrenheit. Due to the fluctuation in temperature ranges, the system could almost never be set to the actual 25 percent above normal temperature. In addition, the temperature of the intake air affects the density of the air which changes the amount of air being compressed during the process. The phenomenon directly affects the output temperature of the air.
(c) High temperature shutoff switches are considered unreliable in many applications because there is no true way to test whether the switch is actually working. To test a high temperature shutoff switch, the temperature would have to be altered to determine if the switch is working properly, which raises safety concerns.
(d) High temperature switches are also very costly and in cases where it was not provided as standard equipment by the manufacturer, installing a switch could void warranty and UL listing of a compressor if not installed by a certified manufacturer's representative. Not all States have compressor inspection programs, which could potentially allow an unqualified person to install a switch to meet the MSHA standard resulting in potential hazards to persons from a possible faulty installation.
(e) The units included in this petition currently are equipped with multiple safety features that include most of the following:
The petitioner further asserts that industry data suggests that the current safety devices as equipped on the compressors offer equal protection to the standard even if they are not equipped with the automatic temperature actuated shutoff mechanism.
Legal Services Corporation
Change Notice
On November 6, 2016, the Legal Services Corporation (LSC) published a notice in the
Item #2 of the Board of Directors Agenda.
This change is effective November 16, 2016.
Katherine Ward, Executive Assistant to the Vice President for Legal Affairs and General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007; (202) 295-1500;
National Aeronautics and Space Administration.
Notice of meeting.
In accordance with the Federal Advisory Committee Act, Public Law 92-463, as amended, the National Aeronautics and Space Administration (NASA) announces a meeting of the Applied Sciences Advisory Committee (ASAC). This Committee functions in an advisory capacity to the Director, Earth Science Division, in the NASA Science Mission Directorate. The meeting will be held for the purpose of soliciting, from the applied sciences community and other persons, scientific and technical information relevant to program planning.
Wednesday, December 7, 2016, 9:00 a.m. to 5:00 p.m., and Thursday, December 8, 2016, 9:00 a.m. to 5:00 p.m., Local Time.
NASA Headquarters, Room 7Q46, 300 E Street SW., Washington, DC 20546.
Ms. KarShelia Henderson, Science Mission Directorate, NASA Headquarters, Washington, DC 20546, (202) 358-2355, fax (202) 358-2779, or
The meeting will be open to the public up to the capacity of the room. This meeting will also be available telephonically and via WebEx. You must use a touch-tone phone to participate in this meeting. Any interested person may dial the USA toll free conference call number 1-888-324-7118, passcode 7154341, followed by the # sign, to participate in this meeting by telephone, for both days. The WebEx link is
The agenda for the meeting includes the following topics:
Attendees will be requested to sign a register and to comply with NASA Headquarters security requirements, including the presentation of a valid picture ID to Security before access to NASA Headquarters. Due to the Real ID Act, Public Law 109-13, any attendees with drivers licenses issued from non-compliant states/territories must present a second form of ID. [Federal employee badge; passport; active military identification card; enhanced driver's license; U.S. Coast Guard Merchant Mariner card; Native American tribal document; school identification accompanied by an item from LIST C (documents that establish employment authorization) from the “List of the Acceptable Documents” on Form I-9]. Non-compliant states/territories are: Kentucky, Maine, Minnesota, Missouri, Oklahoma, Pennsylvania, South Carolina, and Washington. Foreign nationals attending this meeting will be required to provide a copy of their passport and visa in addition to providing the following information no less than 10 days prior to the meeting: Full name; gender; date/place of birth; citizenship; passport information (number, country, telephone); visa information (number, type, expiration date); employer/affiliation information (name of institution, address, country, telephone); title/position of attendee. To expedite admittance, attendees with U.S. citizens and Permanent Residents (green card holders) can provide full name and citizenship status 3 working days in advance by contacting KarShelia Henderson via email at
It is imperative that the meeting be held on these dates to accommodate the scheduling priorities of the key participants.
National Science Foundation.
Notice of permit applications received under the Antarctic Conservation Act of 1978, Public Law 95-541.
The National Science Foundation (NSF) is required to publish a notice of permit applications received to conduct activities regulated under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act at Title 45 Part 671 of the Code of Federal Regulations. This is the required notice of permit applications received.
Interested parties are invited to submit written data, comments, or views with respect to this permit application by December 19, 2016. This application may be inspected by interested parties at the Permit Office, address below.
Comments should be addressed to Permit Office, Room 755, Division of Polar Programs, National Science Foundation, 4201 Wilson Boulevard, Arlington, Virginia 22230.
Nature McGinn, ACA Permit Officer, at the above address or
The National Science Foundation, as directed by the Antarctic Conservation Act of 1978 (Pub. L. 95-541), as amended by the Antarctic Science, Tourism and Conservation Act of 1996, has developed regulations for the establishment of a permit system for various activities in Antarctica and designation of certain animals and certain geographic areas a requiring special protection. The regulations establish such a permit system to designate Antarctic Specially Protected Areas.
Bob Simpson, Vice President, Expedition Cruising, Abercrombie & Kent USA LLC, 1411 Opus Place, Executive Towers West II, Suite #300, Downers Grove, Illinois 60515-1182.
National Science Foundation.
Notice of permit modification request received and permit issued under the Antarctic Conservation Act of 1978, P.L. 95-541.
The National Science Foundation (NSF) is required to publish a notice of requests to modify permits issued to conduct activities regulated and permits issued under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act at Title 45 Part 671 of the Code of Federal Regulations. This is the required notice of a requested permit modification and permit issued.
Nature McGinn, ACA Permit Officer, Division of Polar Programs, Rm. 755, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230. Or by email:
The Foundation issued a permit (ACA 2016-020) to Laura K.O. Smith, Owner & Operator of Quixote Expeditions, LLC (Quixote), on December 23, 2015. The issued permit allows the applicant to operate the “Ocean Tramp,” a reinforced ketch rigged sailing yacht in the Antarctic Peninsula region. Activities to be conducted by Quixote include: Passenger landings, hiking, photography, wildlife viewing, and possible station visits.
Now the applicant proposes a permit modification to continue permitted activities, including minimization, mitigation, and monitoring of waste, for the 2016-2017 Antarctic season. The Environmental Officer has reviewed the modification request and has determined that the amendment is not a material change to the permit, and it will have a less than a minor or transitory impact.
December 23, 2015 to February 6, 2021
The permit modification was issued on November 9, 2016.
National Science Foundation.
Notice of Permit Modification Request Received and Permit Issued under the Antarctic Conservation Act of 1978, Public Law 95-541.
The National Science Foundation (NSF) is required to publish a notice of requests to modify permits issued to conduct activities regulated and permits issued under the Antarctic Conservation Act of 1978. NSF has published regulations under the Antarctic Conservation Act at Title 45 Part 671 of the Code of Federal Regulations. This is the required notice of a requested permit modification and permit issued.
Nature McGinn, ACA Permit Officer, Division of Polar Programs, Rm. 755, National Science Foundation, 4201 Wilson Boulevard, Arlington, VA 22230. Or by email:
1. The Foundation issued a permit (ACA 2016-014) to Dwayne Stevens, Marine Operations Manager, Lindblad Expeditions on November 1, 2015. The issued permit allows the applicant to operate small, battery-operated, remotely controlled unmanned aerial vehicles (UAVs) equipped with cameras for educational, outreach, and commercial purposes.
Now the applicant proposes a permit modification to update the guidelines regarding the hiring and experience of UAV pilots and to include two additional pilot profiles. The Environmental Officer has reviewed the modification request and has determined that the amendment is not a material change to the permit, and it will have a less than a minor or transitory impact.
The permit modification was issued on November 10, 2016.
2. The Foundation issued a permit (ACA 2014-006) to Eric Strangeland, VP Operations, Quark Expeditions Inc. on September 18, 2013. The issued permit allows the applicant to conduct waste management activities associated with tourism activities including shore excursions, kayaking, camping, cross country skiing, ice climbing and mountaineering in the Antarctic Peninsula region.
A recent modification to this permit, dated November 7, 2014, permitted the applicant to allow for the conduct of waste management activities associated with downhill skiing, polar plunging, and stand-up paddleboarding.
Now the applicant proposes a permit modification to update their schedule of activities for 2016-17, clarify their kayaking and camping procedures, and change the named permit holder to Bill Davis, VP Operations, Quark Expeditions Inc. The Environmental Officer has reviewed the modification request and has determined that the amendment is not a material change to the permit, and it will have a less than a minor or transitory impact.
DATES: November 1, 2013 to March 31, 2017.
The ACRS Subcommittee on Planning and Procedures will hold a meeting on November 30, 2016, Room T-2B3, 11545 Rockville Pike, Rockville, Maryland.
The meeting will be open to public attendance with the exception of a portion that may be closed pursuant to 5 U.S.C. 552b(c)(2) and (6) to discuss organizational and personnel matters that relate solely to the internal personnel rules and practices of the ACRS, and information the release of which would constitute a clearly unwarranted invasion of personal privacy.
The agenda for the subject meeting shall be as follows:
The Subcommittee will discuss proposed ACRS activities and related matters. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the Full Committee.
Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official (DFO), Quynh Nguyen (Telephone 301-415-5844 or Email:
Information regarding changes to the agenda, whether the meeting has been canceled or rescheduled, and the time allotted to present oral statements can be obtained by contacting the identified DFO. Moreover, in view of the possibility that the schedule for ACRS meetings may be adjusted by the Chairman as necessary to facilitate the conduct of the meeting, persons planning to attend should check with the DFO if such rescheduling would result in a major inconvenience.
If attending this meeting, please enter through the One White Flint North building, 11555 Rockville Pike, Rockville, MD. After registering with security, please contact Mr. Theron Brown (240-888-9835) to be escorted to the meeting room.
The ACRS Subcommittee on Fukushima will hold a meeting on November 30, 2016, Room T-2B1, 11545 Rockville Pike, Rockville, Maryland 20852.
The meeting will be open to public attendance.
The agenda for the subject meeting shall be as follows:
The Subcommittee will receive information briefings on the National Academy of Sciences (NAS) Phase 2 study on lessons learned from the Fukushima nuclear accident for improving safety and security of U.S. Nuclear Plants. The Subcommittee will hear presentations by and hold discussions with the NAS Phase 2 study Chair and the NRC staff regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the Full Committee.
Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official (DFO), Christiana Lui (Telephone: 301-415-2492 or Email:
Detailed meeting agendas and meeting transcripts are available on the NRC Web site at
If attending this meeting, please enter through the One White Flint North building, 11555 Rockville Pike, Rockville, Maryland 20852. After registering with Security, please contact Mr. Theron Brown (Telephone: 240-888-9835) to be escorted to the meeting room.
The ACRS Subcommittee on APR 1400 will hold a meeting on November 29, 2016, Room T-2B1, 11545 Rockville Pike, Rockville, Maryland.
The meeting will be open to public attendance with the exception of portions that may be closed to protect information that is proprietary pursuant to 5 U.S.C. 552b(c)(4). The agenda for the subject meeting shall be as follows:
The Subcommittee will review the APR 1400 Safety Evaluation Reports with open items—Chapter 8 (electrical power). The Subcommittee will hear presentations by and hold discussions with the NRC staff and Korea Hydro & Nuclear Power Company regarding this matter. The Subcommittee will gather information, analyze relevant issues and facts, and formulate proposed positions and actions, as appropriate, for deliberation by the Full Committee.
Members of the public desiring to provide oral statements and/or written comments should notify the Designated Federal Official (DFO), Christopher Brown (Telephone 301-415-7111 or Email:
Detailed meeting agendas and meeting transcripts are available on the NRC Web site at
If attending this meeting, please enter through the One White Flint North building, 11555 Rockville Pike, Rockville, MD. After registering with security, please contact Mr. Theron Brown (Telephone 240-888-9835) to be escorted to the meeting room.
November 21, 28, December 5, 12, 19, 26, 2016.
Commissioners' Conference Room, 11555 Rockville Pike, Rockville, Maryland.
Public and closed.
There are no meetings scheduled for the week of November 21, 2016.
This meeting will be webcast live at the Web address—
This meeting will be webcast live at the Web address—
There are no meetings scheduled for the week of December 19, 2016.
There are no meetings scheduled for the week of December 26, 2016.
The schedule for Commission meetings is subject to change on short notice. For more information or to verify the status of meetings, contact Denise McGovern at 301-415-0981 or via email at
The NRC Commission Meeting Schedule can be found on the Internet at:
The NRC provides reasonable accommodation to individuals with disabilities where appropriate. If you need a reasonable accommodation to participate in these public meetings, or need this meeting notice or the transcript or other information from the public meetings in another format (
Members of the public may request to receive this information electronically. If you would like to be added to the distribution, please contact the Nuclear Regulatory Commission, Office of the Secretary, Washington, DC 20555 (301-415-1969), or email
Peace Corps.
60-day notice and request for comments.
The Peace Corps will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval. The purpose of this notice is to allow 60 days for public comment in the
Submit comments on or before January 17, 2017.
Comments should be addressed to Denora Miller, FOIA/Privacy Act Officer. Denora Miller can be contacted by telephone at 202-692-1236 or email at
Denora Miller at Peace Corps address above.
Postal Regulatory Commission.
Notice.
The Commission is noticing recent Postal Service filings for the Commission's consideration concerning negotiated service agreements. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's Web site (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II.
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2.
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This notice will be published in the
Postal Regulatory Commission.
Notice.
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202-789-6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's Web site (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II.
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This notice will be published in the
The Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”),
Section 109(b) of the Sarbanes-Oxley Act directs the PCAOB to establish a budget for each fiscal year in accordance with the PCAOB's internal procedures, subject to approval by the Commission. Rule 190 of Regulation P facilitates the Commission's review and approval of PCAOB budgets and annual accounting support fees.
During 2016, the PCAOB determined that it had under budgeted for inspections related travel for the year, and, on October 14, 2016 it submitted a supplemental budget request to the Commission. The PCAOB's 2016 supplemental budget requests Commission approval to transfer $1 million of FY 2016 funding from certain program areas where the PCAOB has a 2016 underspend to the Inspections program area to cover the projected overspend in inspections related travel costs. The supplemental budget does not request an increase to the PCAOB's previously approved 2016 Budget of $257.7 million.
The Commission has determined that the PCAOB's 2016 supplemental budget is consistent with Section 109 of the Sarbanes-Oxley Act. Accordingly,
By the Commission.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend the fees for NYSE Arca BBO and NYSE Arca Trades to lower the Enterprise Fee. 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 the fees for NYSE Arca BBO and NYSE Arca Trades market data products,
The Exchange currently charges an enterprise fee of $170,000 per month for an unlimited number of professional and non-professional users for each of NYSE Arca BBO and NYSE Arca Trades.
As an example, under the current fee structure for per user fees, if a firm had 40,000 professional users who each received NYSE Arca Trades at $4 per month and NYSE Arca BBO at $4 per month, without the Enterprise Fee, the firm would be subject to $320,000 per month in professional user fees. Under the current pricing structure, the charge would be capped at $170,000 and effective November 1, 2016 it would be capped at $34,500.
Under the proposed enterprise fee, the firm would pay a flat fee of $34,500 for an unlimited number of professional and non-professional users for both products. As is the case currently, a data recipient that pays the enterprise fee would not have to report the number of such users on a monthly basis.
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act,
The proposed fee change is also equitable and not unfairly discriminatory because it would apply to all data recipients that choose to subscribe to NYSE Arca BBO and NYSE Arca Trades.
The proposed enterprise fees for NYSE Arca BBO and NYSE Arca Trades are reasonable because they could result in a fee reduction for data recipients with a large number of professional and non-professional users, as described in the example above. If a data recipient has a smaller number of professional users of NYSE Arca BBO and/or NYSE Arca Trades, then it may continue to use the per user fee structure. By reducing prices for data recipient with a large number of professional and non-professional users, the Exchange believes that more data recipients may choose to offer NYSE Arca BBO and NYSE Arca Trades, thereby expanding the distribution of this market data for the benefit of investors. The Exchange also believes that offering an enterprise fee expands the range of options for offering NYSE Arca BBO and NYSE Arca Trades and allows data recipients greater choice in selecting the most appropriate level of data and fees for the professional and non-professional users they are servicing.
The Exchange notes that NYSE Arca BBO and NYSE Arca Trades are entirely optional. The Exchange is not required to make NYSE Arca BBO and NYSE Arca Trades available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase NYSE Arca BBO and NYSE Arca Trades. Firms that do purchase NYSE Arca BBO and NYSE Arca Trades do so for the primary goals of using them to increase revenues, reduce expenses, and in some instances compete directly with the Exchange (including for order flow); those firms are able to determine for themselves whether NYSE Arca BBO and NYSE Arca Trades or any other similar products are attractively priced or not.
Firms that do not wish to purchase NYSE Arca BBO and NYSE Arca Trades have a variety of alternative market data products from which to choose,
The decision of the United States Court of Appeals for the District of Columbia Circuit in
In fact, the legislative history indicates that the Congress intended that the market system `evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed' and that the SEC wield its regulatory power `in those situations where competition may not be sufficient,' such as in the creation of a `consolidated transactional reporting system.'
As explained below in the Exchange's Statement on Burden on Competition, the Exchange believes that there is substantial evidence of competition in the marketplace for proprietary market data and that the Commission can rely upon such evidence in concluding that the fees established in this filing are the product of competition and therefore satisfy the relevant statutory standards. In addition, the existence of alternatives to these data products, such as consolidated data and proprietary data from other sources, as described below, further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can select such alternatives.
As the
In addition, the Exchange believes that the proposed fees are reasonable when compared to fees for comparable products offered by at least one other exchange. For example, Bats BZX Exchange (“BZX”) charges an enterprise fee of $15,000 per month for each of BZX Top and BZX Last Sale, which includes best bid and offer and last sale data, respectively.
For these reasons, the Exchange believes that the proposed fees are reasonable, equitable, and not unfairly discriminatory.
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. An exchange's ability to price its proprietary market data feed products is constrained by actual competition for the sale of proprietary market data products, the joint product nature of exchange platforms, and the existence of alternatives to the Exchange's proprietary data.
The market for proprietary data products is currently competitive and inherently contestable because there is fierce competition for the inputs necessary for the creation of proprietary data and strict pricing discipline for the proprietary products themselves. Numerous exchanges compete with one another for listings and order flow and sales of market data itself, providing ample opportunities for entrepreneurs who wish to compete in any or all of those areas, including producing and distributing their own market data. Proprietary data products are produced and distributed by each individual exchange, as well as other entities, in a vigorously competitive market. Indeed, the U.S. Department of Justice (“DOJ”) (the primary antitrust regulator) has expressly acknowledged the aggressive actual competition among exchanges, including for the sale of proprietary market data. In 2011, the DOJ stated that exchanges “compete head to head to offer real-time equity data products. These data products include the best bid and offer of every exchange and information on each equity trade, including the last sale.”
Moreover, competitive markets for listings, order flow, executions, and transaction reports provide pricing discipline for the inputs of proprietary data products and therefore constrain markets from overpricing proprietary market data. Broker-dealers send their order flow and transaction reports to multiple venues, rather than providing them all to a single venue, which in turn reinforces this competitive constraint. As a 2010 Commission Concept Release noted, the “current market structure can be described as dispersed and complex” with “trading volume . . . dispersed among many highly automated trading centers that compete for order flow in the same stocks” and “trading centers offer[ing] a wide range of services that are designed to attract different types of market participants with varying trading needs.”
If an exchange succeeds in competing for quotations, order flow, and trade executions, then it earns trading revenues and increases the value of its proprietary market data products because they will contain greater quote and trade information. Conversely, if an exchange is less successful in attracting quotes, order flow, and trade executions, then its market data products may be less desirable to customers in light of the diminished content and data products offered by competing venues may become more attractive. Thus, competition for quotations, order flow, and trade executions puts significant pressure on an exchange to maintain both execution and data fees at reasonable levels.
In addition, in the case of products that are also redistributed through market data vendors, such as Bloomberg and Thompson Reuters, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors will not elect to make available NYSE Arca BBO or NYSE Arca Trades unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE Arca BBO and NYSE Arca Trades can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
Transaction execution and proprietary data products are complementary in that market data is both an input and a byproduct of the execution service. In fact, proprietary market data and trade executions are a paradigmatic example of joint products with joint costs. The decision of whether and on which platform to post an order will depend on the attributes of the platforms where the order can be posted, including the execution fees, data availability and quality, and price and distribution of data products. Without a platform to post quotations, receive orders, and execute trades, exchange data products would not exist.
The costs of producing market data include not only the costs of the data distribution infrastructure, but also the costs of designing, maintaining, and operating the exchange's platform for posting quotes, accepting orders, and executing transactions and the cost of regulating the exchange to ensure its fair operation and maintain investor confidence. The total return that a trading platform earns reflects the revenues it receives from both products and the joint costs it incurs.
Moreover, an exchange's broker-dealer customers generally view the costs of transaction executions and market data as a unified cost of doing business with the exchange. A broker-dealer will only choose to direct orders to an exchange if the revenue from the transaction exceeds its cost, including the cost of any market data that the broker-dealer chooses to buy in support of its order routing and trading decisions. If the costs of the transaction are not offset by its value, then the broker-dealer may choose instead not to purchase the product and trade away from that exchange.
Other market participants have noted that proprietary market data and trade executions are joint products of a joint platform and have common costs.
Analyzing the cost of market data product production and distribution in isolation from the cost of all of the inputs supporting the creation of market data and market data products will inevitably underestimate the cost of the data and data products because it is impossible to obtain the data inputs to create market data products without a fast, technologically robust, and well-regulated execution system, and system and regulatory costs affect the price of both obtaining the market data itself and creating and distributing market data products. It would be equally misleading, however, to attribute all of an exchange's costs to the market data portion of an exchange's joint products. Rather, all of an exchange's costs are incurred for the unified purposes of attracting order flow, executing and/or routing orders, and generating and selling data about market activity. The total return that an exchange earns reflects the revenues it receives from the joint products and the total costs of the joint products.
As noted above, the level of competition and contestability in the market is evident in the numerous alternative venues that compete for order flow, including 13 equities self-regulatory organization (“SRO”) markets, as well as various forms of alternative trading systems (“ATSs”), including dark pools and electronic communication networks (“ECNs”), and internalizing broker-dealers. SRO markets compete to attract order flow and produce transaction reports via trade executions, and two FINRA-regulated Trade Reporting Facilities compete to attract transaction reports from the non-SRO venues.
Competition among trading platforms can be expected to constrain the aggregate return that each platform earns from the sale of its joint products, but different trading platforms may choose from a range of possible, and equally reasonable, pricing strategies as the means of recovering total costs. For example, some platforms may choose to pay rebates to attract orders, charge relatively low prices for market data products (or provide market data products free of charge), and charge relatively high prices for accessing posted liquidity. Other platforms may choose a strategy of paying lower rebates (or no rebates) to attract orders, setting relatively high prices for market data products, and setting relatively low prices for accessing posted liquidity. For
The large number of SROs, ATSs, and internalizing broker-dealers that currently produce proprietary data or are currently capable of producing it provides further pricing discipline for proprietary data products. Each SRO, ATS, and broker-dealer is currently permitted to produce and sell proprietary data products, and many currently do, including but not limited to the Exchange, New York Stock Exchange LLC, NYSE MKT LLC, NASDAQ, Bats, and Direct Edge.
The fact that proprietary data from ATSs, internalizing broker-dealers, and vendors can bypass SROs is significant in two respects. First, non-SROs can compete directly with SROs for the production and sale of proprietary data products. By way of example, Bats and NYSE Arca both published proprietary data on the Internet before registering as exchanges. Second, because a single order or transaction report can appear in an SRO proprietary product, a non-SRO proprietary product, or both, the amount of data available via proprietary products is greater in size than the actual number of orders and transaction reports that exist in the marketplace. Indeed, in the case of NYSE Arca BBO and NYSE Arca Trades, the data provided through these products appears both in (i) real-time core data products offered by the Securities Information Processors (SIPs) for a fee, and (ii) free SIP data products with a 15-minute time delay, and finds a close substitute in similar products of competing venues.
Those competitive pressures imposed by available alternatives are evident in the Exchange's proposed pricing.
In addition to the competition and price discipline described above, the market for proprietary data products is also highly contestable because market entry is rapid and inexpensive. The history of electronic trading is replete with examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, Bloomberg Tradebook, Island, RediBook, Attain, TrackECN, BATS Trading and Direct Edge. A proliferation of dark pools and other ATSs operate profitably with fragmentary share of consolidated market volume.
In determining the proposed changes to the fees for the NYSE Arca BBO and NYSE Arca Trades, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all users. The existence of numerous alternatives to the Exchange's products, including proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives or choose not to purchase a specific proprietary data product if the attendant fees are not justified by the returns that any particular vendor or data recipient would achieve through the purchase.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
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.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Section 12(d)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a) generally prohibits registered investment companies (“funds”), and companies controlled by funds, from purchasing securities issued by a registered investment adviser, broker, dealer, or underwriter (“securities-related businesses”). Rule 12d3-1 (“Exemption of acquisitions of securities issued by persons engaged in securities related businesses” (17 CFR 270.12d3-1)) permits a fund to invest up to five percent of its assets in securities of an issuer deriving more than fifteen percent of its gross revenues from securities-related businesses, but a fund may not rely on rule 12d3-1 to acquire securities of its own investment adviser or any affiliated person of its own investment adviser.
A fund may, however, rely on an exemption in rule 12d3-1 to acquire securities issued by its subadvisers in circumstances in which the subadviser would have little ability to take advantage of the fund, because it is not in a position to direct the fund's securities purchases. The exemption in rule 12d3-1(c)(3) is available if (i) the subadviser is not, and is not an affiliated person of, an investment adviser that provides advice with respect to the portion of the fund that is acquiring the securities, and (ii) the advisory contracts of the subadviser, and any subadviser that is advising the purchasing portion of the fund, prohibit them from consulting with each other concerning securities transactions of the fund, and limit their responsibility in providing advice to providing advice with respect to discrete portions of the fund's portfolio.
Based on an analysis of third-party information, the staff estimates that approximately 319 fund portfolios enter into subadvisory agreements each year.
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, Director/Chief Information Officer, Securities and Exchange Commission, C/O Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email to:
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change would amend the Settlement Service Guide (“Settlement Guide”)
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The standard settlement cycle for certain securities has not changed since 1993, when the Commission adopted the current version of Rule 15c6-1(a) under the Act,
In an effort to reduce counterparty risk, decrease clearing capital requirements, reduce liquidity demands and harmonize the settlement cycle globally, the financial services industry, in coordination with its regulators, has been working on shortening the standard settlement cycle from T+3 to T+2. In connection therewith, the Commission has proposed a rule change to shorten the standard settlement cycle from T+3 to T+2.
DTC provides depository and book-entry services pursuant to its Rules and Procedures, including its service guides and operational arrangements.
DTC processes transactions for settlement, subject to its risk controls, on the same day it receives them. Distributions on securities held at DTC on behalf of its Participants pass through DTC and are credited to the accounts of Participants on the same day that they are paid to DTC. As a result, DTC's Rules and Procedures are not generally affected by the industry's move to T+2.
However, certain provisions in the Settlement Guide and Distributions Guide, respectively, relating to the DTC ID Net Service (“ID Net”)
DTC would modify the Settlement Guide relating to ID Net to accommodate the eventual move to T+2.
First, the deadline for submission of affirmed ID Net trades by a Matching Utility would be changed to 11:30 a.m. eastern time on settlement date minus one (“SD-1”) rather than specifically stating the deadline at 9 p.m. on T+2. The move to T+2 necessitates this change since ID transactions must enter the ID Net processing on the date prior to settlement date to realize processing efficiencies in relation to related CNS transactions settling on settlement date, as set forth in the Settlement Guide.
Second, the Settlement Guide would be revised to state that ID Net Firms may exempt a receive obligation from ID Net before the night of SD-1 rather than before the night of T+2 as is currently stated. The move to T+2 necessitates this change because transactions are staged for ID Net on the night before settlement date.
DTC would also delete a reference in the Settlement Guide that states that ID Net trades must settle in the “regular way” and defines “regular way” as T+3. This provision is obsolete as DTC does not include scheduled settlement date as a criteria for ID Net processing.
DTC would modify the Distributions Guide text relating to the DTC interim accounting process to account for the Shortened Settlement Cycle.
Interim accounting is an important part of the entitlement and allocation process relating to distributions. During the interim accounting period, DTC facilitates the entitlements and allocation process systematically for both the buyer and seller of a transaction conducted in the marketplace and submitted to CNS.
In order to prepare for the migration to T+2 settlement, DTC would modify the interim accounting process to account for the shortened period. In this regard, DTC would revise the Distributions Guide to reflect that the interim accounting period would reflect the anticipated due bill period that would be recognized by the industry, such that the interim accounting period would extend from the record date plus one day up to the ex-date plus one day. The proposed change to the interim accounting period would be reflected in the text of the subsections of the Interim Accounting section of the Distributions Guide.
DTC would also adjust the table in the Distributions Guide which describes the date on which certain stock distributions, the timing for which are tied to the settlement cycle, are allocated. Specifically, the table would be revised for affected distribution types, as follows to account for the shortening of the settlement cycle:
DTC
The proposed rule changes to the Guides would not become effective until DTC has submitted a subsequent proposed rule change under Rule 19b-4.
Section 17A(b)(3)(F) of the Act
DTC does not believe that the proposed rule change have any impact on competition because the proposed rule change consists of conforming and technical changes to the texts of the Guides that would correspond with the industry's transition to a T+2 settlement cycle.
DTC has not solicited and does not intend to solicit comments regarding the proposed rule change. DTC has not received any unsolicited written comments from interested parties. To the extent DTC receives written comments on the proposed rule change, DTC will forward such comments to the Commission.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)
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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the fee schedule applicable to Members
The text of the proposed rule change is available at 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 parts of such statements.
The Exchange proposes to increase the fee for orders yielding fee code Z, which is yielded on orders routed to a non-exchange destination using ROUZ
The Exchange also proposes to amend footnote 5 of its Fee Schedule to increase the fee cap for orders yielding fee code O from $20,000 to $35,000 per month per Member. Fee code O is appended to orders that are touted to participate in the listing market's opening or re-opening cross and are charged a fee of $0.00100 per share for orders in securities priced at or above $1.00 and 0.30% of the transaction dollar value for securities priced below $1.00. When the Exchange routes to a listing exchange's opening cross, such as the Nasdaq Stock Market LLC (“Nasdaq”), the Exchange passes through the tier saving that Bats Trading, Inc. (“Bats Trading”), the Exchange's routing broker-dealer, achieves on an away exchange to its Members. This tier savings takes the form of a cap of Member's fees at $20,000 per month for using fee code O. The proposed increase in the fee cap under footnote 5 is in response to the September 2016 fee cap change by Nasdaq for orders that participate in their opening cross processes.
The Exchange proposes to implement this amendment to its Fee Schedule November 1, 2016.
The Exchange believes that the proposed rule change is consistent with
The Exchange believes that its proposal to increase the fee for orders routed to a non-exchange destination that yield fee code Z represents an equitable allocation of reasonable dues, fees, and other charges among Members and other person using its facilities in that they are designed in part to cover the costs of routing. While Members that route to a non-exchange destination using ROUZ routing strategy will be paying higher fees due to the proposal, the increased revenue received by the Exchange will be used to fund the Exchange generally, including the cost of maintaining and improving the technology used to handle and route orders from the Exchange as well as programs that the Exchange believes help to attract additional liquidity and thus improve the depth of liquidity available on the Exchange. Accordingly, although the cost of routing is increasing, the Exchange believes that the increase is a modest increase and that higher routing fees will benefit Members in other ways. Furthermore, the Exchange notes that routing through the Exchange is voluntary. Lastly the Exchange also believes that the proposed amendment is non-discriminatory because it applies uniformly to all Members.
The Exchange believes that its proposal to amend footnote 5 to increase the fee cap for orders yielding fee code O from $20,000 to $35,000 per month per Member represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities. The proposed increase in the fee cap under footnote 5 is in response to September 2016 fee cap increase by Nasdaq for orders that participate in their opening cross process. Prior to Nasdaq's September 2016 fee cap increase, Nasdaq capped Bats Trading monthly fees for participating in it's opening cross at $30,000. Nasdaq capped Bats Trading monthly fees for participating in its opining cross at $30,000. Nasdaq has now increased that cap to $35,000.
This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that this change represents a significant departure from previous pricing offered by the Exchange or from pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal would not burden intramarket competition because the proposed rates would apply uniformly to all Members.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change by DTC would make technical and clarifying changes to text in the DTC Settlement Service Guide (“Guide”)
In its filing with the Commission, the clearing agency 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 clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
DTC may accept eligible affirmed institutional transactions (“Institutional Transactions”)
Currently, Omgeo Global Joint Venture Matching Services—US, LLC (hereinafter “Omgeo”)
The Commission recently approved two applications by two separate entities, for exemption from registration as a Clearing Agency to provide post-trade matching services for fixed income and equity trades (“Approved Exemptions”).
DTC proposes to revise the Guide to generalize references to Matching Utilities and make other changes, as set forth below.
First, DTC would replace specific references to Omgeo in sections describing procedures for the ID Net Service (“ID Net”) and Shareholder Tracking Service to refer to a “Matching Utility” and delete provisions referencing to Omgeo by name.
Second, text in the ID Net section of the Guide regarding DTC's acceptance of affirmed institutional transactions from Matching Utilities would be moved to a new section describing Affirmed Transactions more generally. The proposed new section would incorporate the definition of Affirmed Transactions, and expressly state DTC's current requirement that in order for a Matching Utility to establish and maintain a connection with DTC the Matching Utility must be able to balance with DTC in an automated way
Third, the Guide would clarify that (i) a Participant that is a counterparty to an Affirmed Transaction, as submitted to DTC by a Matching Utility, is deemed to have authorized the Matching Utility to provide an instruction to DTC, on the Participant's behalf, to process the Affirmed Transaction in accordance with DTC's Rules and Procedures
Fourth, the Guide would state that a Matching Utility that elects to enter into an arrangement to interoperate with another Matching Utility (“Interoperability Arrangement”) maintains the sole responsibility to ensure that its customers, including but not limited to DTC Participants that are customers of the Matching Utility, are operationally prepared to process Affirmed Transactions relating to the Interoperability Arrangement prior to the submission of such Affirmed Transactions to DTC.
Finally, the proposed rule change would make technical and clarifying changes to the Guide to:
(1) Clarify and streamline the text to improve readability;
(2) Add background information regarding the Affirmed Transactions accepted by DTC;
(3) Correct spelling, grammatical and typographical errors throughout and update tenses from future to present with respect to functions of ID Net and the Shareholder Tracking Service; and
(4) Add a title page to the Guide.
The proposed rule change would become effective as of November 3, 2016.
Section 17A(b)(3)(F)
DTC does not believe that the proposed rule change would have any impact or impose any burden on competition because it would merely update the Guide to make technical and clarifying changes and updates with respect to DTC's acceptance of Affirmed Transactions from Matching Utilities.
DTC has not solicited and does not intend to solicit comments regarding the proposed rule change. DTC has not received any unsolicited written comments from interested parties. To the extent DTC receives written comments on the proposed rule change, DTC will forward such comments to the Commission. DTC has discussed the proposed rule change with Matching Utilities that have contacted DTC specifically with respect to establishing a connection with DTC.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)
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.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the fee schedule applicable to Members
The text of the proposed rule change is available at 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 parts of such statements.
The Exchange proposes to amend its Fee Schedule to: (i) Delete references to the ROOC routing strategy, which was previously, removed from the Exchange's rulebook;
The Exchange previously submitted a proposed rule change for immediate effectiveness to discontinue the ROOC routing strategy and to remove references to the ROOC routing strategy from its rulebook.
• Fee code RN and its associate rates, which is appended to orders routed to the Nasdaq Stock Market LLC using the ROOC routing strategy and add liquidity.
• a reference to ROOC in fee code RT, which is appended to orders routed using the ROUT or ROOC routing strategy; and
• a reference to the ROOC routing strategy in footnote 12, which lists the routing strategies eligible for fee code CR.
The Exchange also proposes to increase the fees associated with orders in securities priced at or above $1.00 that yield fee codes RT, RX, or Z.
The Exchange proposes to implement these amendments to its Fee Schedule November 1, 2016.
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,
The Exchange believes it is equitable, reasonable, and not unfairly discriminatory to delete references to the ROOC routing strategy from its Fee Schedule because it is removing reference and rates for a product that the Exchange no longer provides.
The Exchange believes that its proposal to increase the fee for orders that yield fee codes RT, RX, or Z represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities in that they are designed in part to cover the costs of routing. While the affected Members' orders will be charged higher fees due to the proposal, the increased revenue received by the Exchange will be used to fund the Exchange generally, including the cost of maintaining and improving the technology used to handle and route orders from the Exchange as well as programs that the Exchange believes help to attract additional liquidity and thus improve the depth of liquidity available on the Exchange. Accordingly, although the cost of routing is increasing, the Exchange believes that he increase is modest and that higher routing fees will benefit Members in other ways. Furthermore, the Exchange notes that routing through the Exchange is voluntary. Lastly, the Exchange also believes that the proposed amendment is non-discriminatory because it applies uniformly to all Members.
This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that the changes to fee codes RT, RX, and Z represent a significant departure from previous pricing offered by the Exchange or from pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal would not burden intramarket competition because the proposed rates would apply uniformly to all Members.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange is filing with the Securities and Exchange Commission (“Commission”) a proposed rule change to amend the Fee Schedule on the BOX Market LLC (“BOX”) options facility. The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the Fee Schedule for trading on BOX. Specifically, the Exchange proposes to revise certain qualification thresholds in Sections I.B.1 of the BOX Fee Schedule, Primary Improvement Order and I.B.2 of the BOX Fee Schedule, the BOX Volume Rebate (“BVR”).
Under the tiered fee schedule for Primary Improvement Orders, the Exchange assesses a per contract execution fee to all Primary Improvement Order executions where the corresponding PIP or COPIP Order is from the account of a Public Customer. Percentage thresholds are calculated on a monthly basis by totaling the Initiating Participant's Primary Improvement Order volume submitted to BOX, relative to the total national Customer volume in multiply-listed options classes. The Exchange proposes to adjust the percentage thresholds in Tiers 4 and 5. Specifically, the Exchange proposes to change Tier 4 from “0.500% to 0.999%” to “0.500% to 0.949%” and Tier 5 from “1.000% and Above” to “0.950% and Above.” The Exchange notes that it is not proposing any changes to the fees within the Primary Improvement Order fee structure and the quantity submitted will continue to be calculated on a monthly basis by totaling the Initiating Participant's Primary Improvement Order volume submitted to BOX, relative to the total national Customer volume in multiply-listed options classes.
Next, the Exchange proposes to adjust certain percentage thresholds within the BVR. Under the BVR, the Exchange offers a tiered per contract rebate for all Public Customer PIP Orders and COPIP Orders of 100 and under contracts that do not trade solely with their contra order. Percentage thresholds are calculated on a monthly basis by totaling the Participant's PIP and COPIP volume submitted to BOX, relative to the total national Customer volume in multiply-listed options classes. The Exchange proposes to adjust the percentage thresholds in Tiers 3 and 4. Specifically, the Exchange proposes to change Tier 3 from “0.340% to 0.999%” to “0.340% to 0.949%” and Tier 4 from “1.000% and Above” to “0.950% and Above.” The Exchange notes that is it not proposing any changes to the fees within the BVR. The quantity submitted will continue to be calculated on a monthly basis by totaling the Participant's PIP and COPIP volume submitted to BOX, relative to the total national Customer volume in multiply-listed options classes.
The Exchange believes that the proposal is consistent with the requirements of Section 6(b) of the Act, in general, and Section 6(b)(4) and 6(b)(5)of the Act,
BOX believes it is reasonable, equitable and not unfairly discriminatory to adjust the monthly Percentage Thresholds of National Customer Volume in Multiply-Listed Options Classes. The volume thresholds with their tiered fees and rebates are meant to incentivize Participants to direct order flow to the Exchange to obtain the benefit of the lower fee or higher rebate, which in turn benefits all market participants by increasing liquidity on the Exchange.
The Exchange believes the proposed amendments to the Primary Improvement Order percentage thresholds are reasonable, equitable and not unfairly discriminatory. The proposed changes to the thresholds are equitable and not unfairly discriminatory as they are available to all BOX Participants that initiate Auction Transactions, and Participants may choose whether or not to take advantage of the percentage thresholds and their applicable discounted fees. Further, the Exchange believes that the proposed changes are reasonable and competitive as they will further incentivize Participants to direct order flow to the Exchange, benefiting all market participants.
The Exchange also believes the proposed amendments to the BVR in Section I.B.2 of the BOX Fee Schedule are reasonable, equitable and not unfairly discriminatory. The BVR was adopted to attract Public Customer order flow to the Exchange by offering these Participants incentives to submit their PIP and COPIP Orders to the Exchange and the Exchange believes it is appropriate to now amend the BVR. The Exchange believes it is equitable and not unfairly discriminatory to amend the BVR, as all Participants have the ability
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. The Exchange is simply proposing to amend certain percentage thresholds for Auction Transaction fees and rebates in the BOX Fee Schedule. The Exchange believes that the volume based rebates and fees increase intermarket and intramarket competition by incenting Participants to direct their order flow to the exchange, which benefits all participants by providing more trading opportunities and improves competition on the Exchange.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Exchange Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend the rule change if it appears to the Commission that the action is necessary or appropriate in the public interest, for the protection of investors, or would otherwise further the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the fee schedule applicable to Members
The text of the proposed rule change is available at 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 parts of such statements.
The Exchange proposes to increase the fee for orders yielding fee code Z, which results from an order routed to a dark liquidity venue (except through the SLIM
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,
This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that this change represents a significant departure from previous pricing offered by the Exchange or from pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal would not burden intramarket competition because the proposed rate would apply uniformly to all Members.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to 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 Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Exchange Act” or “Act”)
The MSRB filed with the Commission a proposed rule change consisting of (i) proposed amendments to Rule G-10, on delivery of investor brochure, Rule G-8, on books and records to be made by brokers, dealers, and municipal securities dealers and municipal advisors, and Rule G-9, on preservation of records, and (ii) a proposed Board notice regarding electronic delivery and receipt of information by municipal advisors under Rule G-32, on disclosures in connection with primary offerings (collectively, the “proposed rule change”). The MSRB requests that the proposed rule change be approved with an implementation date of six months after the Commission approval date for all changes.
The text of the proposed rule change is available on the MSRB's Web site at
In its filing with the Commission, the MSRB 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 MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
Following the financial crisis of 2008, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
Unless the context otherwise requires or a rule of the Board otherwise specifically provides, the terms “broker,” “dealer,” “municipal securities broker,” “municipal securities dealer,” “bank dealer,” and “municipal advisor” shall refer to and include their respective associated persons. Unless otherwise specified, persons whose functions are solely clerical or ministerial shall not be considered associated persons for purposes of the Board's rules.
Further, and concurrent with its efforts to develop a comprehensive regulatory framework for municipal advisors and their associated persons, the MSRB initiated a review of its rules and related interpretive guidance for brokers, dealers and municipal securities dealers (collectively, “dealers”) and municipal advisors (municipal advisors, together with dealers, “regulated entities”). The MSRB initiated that review in the context of the Board's obligation to protect investors, municipal entities, obligated persons, and the public interest. As part of that review, the MSRB solicited comments from market participants.
To extend its customer complaint and recordkeeping rules to municipal advisors and to modernize those rules, the Board is filing this proposed rule change with the Commission. Specifically, the proposed rule change would (i) extend the Board's customer complaint recordkeeping requirements to all municipal advisors (
In summary, by regulated entity, the proposed rule change would:
• Amend Rule G-8 to exclude municipal advisors from the definition of “customers;”
• amend Rule G-8 to include the definition of “municipal advisory client;”
• amend Rule G-8 to extend the requirements that are similar to the rule's customer complaint recordkeeping requirements to municipal advisory client complaint recordkeeping;
• amend Rule G-8 to provide guidance in supplementary material that would define electronic recordkeeping;
• amend Rule G-8 to provide guidance in supplementary material that would remind a municipal advisor that it may be required to promptly report certain municipal advisory client complaints to other regulatory authorities;
• amend Rule G-9 to require that the records of municipal advisory client complaints be kept for at least six years;
• amend Rule G-10 to extend requirements that are similar to the rule's dealer customer protection and education requirements to municipal advisory client protection and education; and
• extend to municipal advisors, under Rule G-32, the guidance provided by the 1998 Notice, as relevant.
• Amend Rule G-8 to require that dealers keep a standardized complaint log electronically, using product and problem codes tailored for municipal securities, to document the written complaints of customers;
• amend Rule G-8 to define written customer complaints to include complaints received electronically by the dealer;
• amend Rule G-8 to provide guidance in supplementary material that would define electronic recordkeeping;
• amend Rule G-8 to provide guidance in supplementary material that would remind a dealer that it may be required to promptly report certain written customer complaints to other regulatory authorities; and
• amend Rule G-10 in its entirety so that the rule would more clearly focus on customer protection and education.
A detailed rule discussion of the proposed rule change's recordkeeping requirements, customer and municipal advisory client education and protection requirements, and electronic delivery guidance to municipal advisors follows.
Rule G-8 currently requires that a dealer keep a record of all written complaints from customers and what action, if any, has been taken by the dealer in connection with those complaints. Under the proposed rule change, the Board would amend Rule G-8 to enhance its current recordkeeping requirements and then would extend those enhanced recordkeeping requirements to municipal advisors. More specifically, the proposed rule change would require regulated entities to retain additional detailed information about complaints electronically using a standard set of complaint product and problem codes. Supplementary Material would define electronic recordkeeping, and would remind regulated entities of their complaint reporting obligations to other regulatory authorities.
The three major components of the proposed rule change relating to complaint recordkeeping enhancements—namely, the application of those requirements to municipal advisors, the electronic complaint log, and supplementary material—are discussed below.
Under the proposed rule change, the Board would amend Rule G-8 to extend its complaint recordkeeping requirements to all municipal advisors. To accomplish this, the Board would (i) define municipal advisory client and (ii) require that a municipal advisor keep a record of written municipal advisory client complaints similar to the record that would be required for dealers to keep of customer complaints (
A municipal advisory client, as previously noted, would include a municipal entity or obligated person for whom the municipal advisor engages in activities that cause the municipal advisor to be within the definition of a municipal advisor set forth in Section 15B(e)(4) of the Exchange Act.
The definition of a municipal advisor set forth in Section 15B(e)(4)(A)
(A) Means a person (who is not a municipal entity or an employee of a municipal entity) that—
(i) provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues; or
(ii) undertakes a solicitation of a municipal entity . . .
Further, under the proposed rule change, the Board would amend Rule G-9 to extend the record retention period for municipal advisory client complaints to six years. Without such an extension, records of customer complaints would be kept for six years, while records of municipal advisory
Under the proposed rule change, the Board would amend Rule G-8 to require that all regulated entities keep an electronic complaint log of all written complaints of customers or municipal advisory clients and persons acting on behalf of such customers or municipal advisory clients. There would be no option to keep the complaint log in a paper format. The electronic complaint log would include identifying information about the customer or municipal advisory client (
By enhancing the information about customer and municipal advisory client complaints that a regulated entity would be required to keep, as well as by requiring that the regulated entity keep those records electronically using standard codes, the Board would align Rule G-8 with the recordkeeping requirements of other financial regulators. For example, Rule 17a-3(18) under the Exchange Act
A record:
(i) As to each associated person of each written customer complaint received by the member, broker or dealer concerning that associated person. The record shall include the complainant's name, address, and account number; the date the complaint was received; the name of any other associated person identified in the complaint; a description of the nature of the complaint; and the disposition of the complaint . . .
(ii) Indicating that each customer of the member, broker or dealer has been provided with a notice containing the address and telephone number of the department of the member, broker or dealer to which any complaints as to the account may be directed.
[e]ach member shall keep and preserve in each office of supervisory jurisdiction either a separate file of all written customer complaints that relate to that office (including complaints that relate to activities supervised from that office) and action taken by the member, if any, or a separate record of such complaints and a clear reference to the files in that office containing the correspondence connected with such complaints.
In addition, by requiring that customer and municipal advisory client complaint records be kept electronically using standard codes, the Board believes that the proposed rule change would enhance the ability of other financial regulators to conduct more cost-effective and efficient inspections and surveillance of regulated entities. The Board understands that other financial regulators conduct certain portions of their inspections and monitoring of dealers electronically. Under the proposed rule change, the Board would ensure that inspections of certain dealers and municipal advisors that are not members of FINRA also could be accomplished in a more cost-effective and efficient manner.
As noted above, under the proposed rule change, the Board would develop codes for the electronic complaint log that would be based on the product and problem codes required by FINRA Rule 4530, but would be tailored to address municipal securities and municipal advisory activities.
While the electronic complaint log requirement would impose a burden on dealers and municipal advisors, the Board anticipates that the electronic complaint log requirement would impose little additional burden on dealers that are FINRA members. The proposed rule change's complaint log recordkeeping requirements are similar to the requirements relating to customer complaints set forth in Rule 17a-3 under the Exchange Act.
Brokers, dealers and municipal securities dealers other than bank dealers which are in compliance with rule 17a-3 of the Commission will be deemed to be in compliance with the requirements of this rule, provided that the information required by subparagraph (a)(iv)(D) of this rule as it relates to uncompleted transactions involving customers; paragraph (a)(viii); and paragraphs (a)(xi) through (a)(xxvi) shall in any event be maintained.
The proposed rule change would include supplementary material under Rule G-8 that would (i) provide guidance as to the term “electronic format” used in the proposed amendments to Rules G-8(a) and (h) and (ii) remind regulated entities of their reporting obligations to other regulatory authorities. The supplementary material, in .01, would make clear that a regulated entity could use any electronic format,
Under the proposed rule change, the Board would amend and overhaul Rule G-10 to replace the current Rule G-10 with a more modern customer and municipal advisory client education and protection rule. The proposed rule change's amendments to Rule G-10 would apply to dealers and municipal advisors.
At its core, the Board designed Rule G-10 to protect investors by providing investors with the information necessary through the investor brochure to file a complaint about their dealers with the appropriate regulatory authority. That information also includes an overview of the investor protections provided by MSRB rules. However, investors currently do not receive this information until after they have made a complaint to or about the dealer; at that point, the information in the investor brochure may arrive at a point in time that would impede the investor from making the best use of the information provided in the investor brochure. The proposed rule change solves that problem through modernization of the rule.
Under the proposed rule change, Rule G-10 would remain a rule that is focused on investor education and protection. However, instead of an investor receiving the educational material and information about filing a complaint only after he or she has made a complaint, the customer or municipal advisory client would receive more regular notifications from its regulated entity about the availability of such materials. Specifically, a dealer would be required to notify a customer about its registration status and the availability of the educational material annually, and a municipal advisor would be required to notify a municipal advisory client
(1) Advertising by a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser; or
(2) Solicitation of an obligated person, if such person is not acting in the capacity of an obligated person or the solicitation of the obligated person is not in connection with the issuance of municipal securities or with respect to municipal financial products.
By using the narrower definition of solicitation of a municipal entity or obligated person, the Board would be able to better ensure that the notifications are sent to actual solicitor municipal advisory clients and not just to an entity that reviewed an advertisement. For purposes of the proposed amendments to Rule G-10, the set of non-solicitor municipal advisory clients would remain the same as it is for the proposed amendments to Rule G-8.
By requiring these notifications, the Board believes that a customer or municipal advisory client would be able to receive detailed and relevant information about its regulated entity, the protections provided by MSRB rules, and how to make a complaint in a more timely and consistent fashion.
Under the proposed rule change, the Board would not specify, other than in writing, how the customer or municipal advisory client would receive the notifications. The proposed rule change assumes that the regulated entity could include the notifications with other materials. Further, as suggested by commenters to Regulatory Notice 2012-63, unlike with the current Rule G-10, a regulated entity would not be required to deliver an investor brochure to the customer. The notifications would replace that requirement.
The proposed amendments to RuleG-10 would align Rule G-10 with FINRA Rule 2267, Investor Education and Protection. That rule contains similar notification requirements, but the notifications under FINRA Rule 2267 refer the investor to the BrokerCheck Hotline Number and to FINRA's Web site address.
Except as otherwise provided in this Rule, each member shall once every calendar year provide in writing (which may be electronic) to each customer the following items of information:
(1) FINRA BrokerCheck Hotline Number;
(2) FINRA Web site address; and
(3) A statement as to the availability to the customer of an investor brochure that includes information describing FINRA BrokerCheck.
In 1998, the Board published guidance under Rule G-32 regarding the electronic delivery and receipt of information by dealers. The Board, in part, based that guidance on guidance that the SEC had provided about electronic delivery of information. However, since that time, the Dodd-Frank Act has granted the Board with rulemaking authority over municipal advisors.
Section 15B(b)(2) of the Exchange Act
Section 15B(b)(2)(C) of the Exchange Act
The MSRB believes that the proposed rule change is consistent with Sections 15B(b)(2)
The proposed rule change would align the Board's customer and municipal advisory client complaint rules and related recordkeeping requirements with those of other financial regulators. By so doing, the proposed rule change will likely promote compliance with Board rules by providing regulated entities with the opportunity to streamline their compliance procedures, and thus promote compliance with MSRB rules and reduce their compliance costs.
In addition, the proposed amendments to Rules G-8 and G-9 would enhance the ability of other financial regulators to conduct more cost-effective and efficient inspections and surveillance of regulated entities by requiring that all regulated entities keep and maintain their electronic records of written customer or municipal advisory client complaints for six years. The Board believes that the ability to more cost-effectively and efficiently monitor written customer and municipal advisory client complaints will promote compliance with Board rules. Increased compliance with Board rules will likely reduce the frequency and magnitude of compliance issues that could potentially result in harm to investors, municipal entities, or obligated persons, or undermine the public's confidence in the municipal securities market.
Section 15B(b)(2)(L)(iv) of the Exchange Act
The proposed rule change's extension of Rule G-10's customer education and protection requirements and the related Rules G-8 and G-9 recordkeeping requirements to municipal advisors does represent an additional burden on municipal advisors, including small municipal advisors. However, the Board believes that the regulatory burden will be relatively limited and is necessary to protect municipal entity and obligated person clients, and the integrity of the municipal securities and municipal advisory marketplaces.
The MSRB also believes that the proposed rule change is consistent with Section 15B(b)(2)(G) of the Exchange Act,
The proposed rule change would enhance the current customer complaint recordkeeping requirements under Rule G-8 by requiring that dealers keep more detailed information about written customer complaints in an electronic format and then would extend those recordkeeping requirements to municipal advisors. Further, the proposed rule change would extend the six-year record retention period applicable to customer complaints to municipal advisory client complaints. As noted above, the MSRB believes that the proposed amendments to Rule G-8 related to books and records, and Rule G-9 related to the retention of those records, will promote compliance with and facilitate enforcement of MSRB rules, including Rule G-10 and other applicable securities laws and regulations.
Section 15B(b)(2)(C) of the Exchange Act
In determining whether these standards have been met, the MSRB was guided by the Board's Policy on the Use of Economic Analysis in MSRB Rulemaking.
The MSRB does not believe that the proposed rule change will impose any additional burdens on competition, relative to the baseline, that are not necessary or appropriate in furtherance of the purposes of the Exchange Act.
While the MSRB believes that the proposed rule changes represent a reduction in burden compared to the existing Rule G-10, the MSRB recognizes that the recordkeeping requirements associated with the proposed rule change may impose some initial costs on dealers that currently comply with FINRA Rule 4530 but need to adopt a new set of complaint codes. The MSRB also recognizes that dealers that are not currently FINRA members may experience a greater burden as the proposed recordkeeping requirements may constitute a new activity that they have not previously performed. The MSRB does not believe, however, that the potentially greater burden on dealers that are not FINRA members is significant enough to constitute a burden on competition.
The MSRB recognizes that the proposal represents a new requirement on municipal advisors and that the recordkeeping requirements in particular may disproportionately impact small municipal advisors. However, the MSRB does not believe that the overall burden of the proposed rule change is significant or that the impact on small municipal advisors will materially alter the competitive landscape. To the extent the proposed rule changes do lead some firms to exit the market or consolidate, based on the SEC's analysis in its order adopting the municipal advisor rules, the MSRB believes that the market for municipal advisory activities is likely to remain competitive.
Written comments were neither solicited nor received on the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549.
For the Commission, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the fee schedule applicable to Members
The text of the proposed rule change is available at 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 parts of such statements.
The Exchange proposes to increase the fee for orders yielding fee code Z, which results from an order routed to a dark liquidity venue (except through the SLIM
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,
This proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange does not believe that this change represents a significant departure from previous pricing offered by the Exchange or from pricing offered by the Exchange's competitors. Additionally, Members may opt to disfavor the Exchange's pricing if they believe that alternatives offer them better value. Accordingly, the Exchange does not believe that the proposed changes will impair the ability of Members or competing venues to maintain their competitive standing in the financial markets. The Exchange believes that its proposal would not burden intramarket competition because the proposed rate would apply uniformly to all Members.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to 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.
On July 27, 2016, Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The proposed rule change was published for comment in the
In 2004, FINRA implemented an online, web-based arbitration claim notification and filing system that allowed a claimant
In June 2013, FINRA introduced a separate secure, online service called the Dispute Resolution Portal (“DR Portal”) to facilitate interactions among parties, arbitrators, mediators, and FINRA staff on arbitration case-related matters. As further discussed below, the DR Portal includes both a Party Portal and an Arbitrator and Mediator Portal. The Party Portal uses an invitation/registration process that provides a way to send and receive arbitration and mediation case documents. For example, once a party notifies FINRA of the name of the person who should be given access to the arbitration or mediation case file (typically the party's representative), FINRA sends an email to the named person with an invitation to register on the Party Portal via a personalized web address link that provides complete access to the specified case. Once registered, the representative can provide other individuals (such as legal assistants and co-counsel) with access to appropriate cases on the Party Portal.
FINRA initially opened the Party Portal to a small number of firms to gain experience with the technology and to incorporate user feedback. Over time, FINRA expanded access to the Party Portal, and as of July 20, 2015, FINRA allowed all parties to use the Party Portal voluntarily in all arbitration and mediation cases filed as of that date. Through the Party Portal, parties can, among other things, receive documents from and send documents to FINRA, receive service
FINRA has periodically upgraded the Party Portal to allow parties to, among other things, schedule hearings, receive automated messages when new documents are posted, see an indication of received documents not yet viewed, and send documents to other Party Portal case participants. FINRA believes that using the online claim filing system improves the forum by hastening the
The Arbitrator and Mediator Portal is open to all FINRA arbitrators and mediators to use on a voluntary basis. In this portal, arbitrators and mediators can view and update their profile and disclosure information, access information about their assigned cases, schedule hearing dates, and view case documents. FINRA believes that use of the Arbitrator and Mediator Portal has enhanced efficiencies at the forum.
FINRA is proposing to require parties to use the Party Portal to submit documents and view their arbitration case information and documents in most instances. There would be an exception for
FINRA would require parties to use the Party Portal to file and serve correspondence relating to discovery requests, but would not permit parties to file documents produced in response to discovery requests through the Party Portal. FINRA believes that maintaining the correspondence in the Party Portal makes sense because it is part of the case record. However, depending on the subject of a case, discovery production can be voluminous, and FINRA does not believe it would be efficient for the Party Portal to be used as the receptacle for parties' exchanged discovery. FINRA states that this approach is consistent with its current practice.
Finally, under the proposed rule change, because mediation is voluntary in all instances, FINRA would permit parties to a mediation proceeding to use the Party Portal on a voluntary basis to submit and view their mediation case information and documents.
FINRA is proposing to amend each of the rules in the Codes affected by required use of the Party Portal. The changes would update the rule language to reflect how parties comply with the Codes through use of the Party Portal. FINRA Rules 12300 and 13300 describe how parties file pleadings
For reader convenience, the discussion below only details the proposed changes to the FINRA rules in the Customer Code. However, FINRA is proposing to make substantively similar amendments to the Industry Code. The primary difference between the proposed amendments to the Customer Code and the Industry Code is that the Customer Code provides an exemption from required use of the Party Portal for
As a result of the proposed rule change, FINRA would need to update several cross-references in the Codes. The proposed updates are noted as applicable. In addition, FINRA states that its forum users have indicated that for ease of citation, they would prefer that FINRA use numbers and letters instead of bullets. Therefore, FINRA is proposing to replace bullets with numbers or letters in each of the rules affected by the proposed rule change. The proposed replacements are noted where applicable.
In addition to changes in the Codes, FINRA is proposing to amend the Mediation Code to permit parties to agree to use the Party Portal to submit and retrieve all documents and other communications and to view mediation case information. The proposed amendments are discussed below.
FINRA is proposing to amend FINRA Rule 12100 to add new definitions and to amend several definitions in the Customer Code relating to the required use of the Party Portal.
In addition, FINRA would reletter the definitions to reflect the addition of the new terms.
Subject to specified limitations, FINRA allows parties that are represented by counsel to communicate directly with arbitrators during an arbitration proceeding. FINRA Rule 12211, which outlines the procedures that parties and arbitrators must follow when they agree to direct communication, currently indicates that parties may send items by regular mail, overnight courier, facsimile, or email. Under the proposed rule change, because parties would be required to use the Party Portal for transmitting documents to each other, and would continue to use other methods to send items to the arbitrators, FINRA is proposing to: (1) Amend FINRA Rule 12211(e) to specify that parties are allowed to send items to the arbitrators by first-class mail, overnight mail service, overnight delivery service, hand delivery, email, or facsimile as specified in an order issued by the arbitrators; (2) amend Rule 12211(f) to delete the requirement that the parties send copies of the materials they sent to the arbitrators to each other and the Director at the same time and in the same manner, requiring instead that they serve the materials on each other and filed with the Director through the Party Portal; and (3) amend Rule 12211(g) to clarify that parties must file copies of arbitrator orders and decisions with the Director through the Party Portal.
Rule 12211(b) provides that if at some point during an arbitration a party chooses to appear
FINRA is proposing to delete the content in FINRA Rule 12300 (Filing and Serving Documents) in its entirety and replace it with new language which describes how filing and service, among other things, would operate when FINRA requires parties to use the Party Portal.
Rule 12300(a)(2) would provide an exemption for
Concerning
FINRA stated that it does not want parties to use the Party Portal to submit documents they produce during discovery because FINRA does not believe that it would be efficient, particularly in cases where discovery production is voluminous. Therefore, FINRA is proposing to provide in Rule 12300(a)(3) that parties shall not file with FINRA or serve on any other party, through the Party Portal, documents produced during discovery pursuant to the Rule 12500 Series. Available service methods for such documents are first-class mail, overnight mail service, overnight delivery service, hand delivery, email, or facsimile. FINRA states that this approach is consistent with its current practice.
The rule would also provide that parties must file arbitrator ranking lists
Concerning customers, upon receipt of an initial statement of claim, where a customer is a claimant, FINRA states that it would know if the customer is represented by counsel or another person. However, where a customer is a respondent, FINRA states that it would not know if the customer intends to be represented by counsel or any other individual. Therefore, FINRA would serve all customer respondents with the initial statement of claim along with the Claim Notification Letter explaining that parties other than
The Claim Notification Letter would specify that except for
Proposed Rule 12300(d)(2) would provide that a party must serve any change of email or mailing address during an arbitration on all other parties and file this information with the Director. The former rule referred only to “address” changes.
FINRA is proposing to amend FINRA Rule 12301 relating to service on associated persons to delete the reference to the Director serving the initial statement of claim on a respondent associated person. As explained above, under the proposed rule change, associated persons who are parties to an arbitration would be required to use the Party Portal. Therefore, FINRA would serve an associated person with a Claim Notification Letter instead of a statement of claim.
FINRA states that in practice its staff will know if an associated person did not access the Party Portal to view the statement of claim. FINRA states that in such an instance it would contact the associated person and ask if he or she received the Claim Notification Letter. If the associated person indicates that he or she did not receive the letter, FINRA states that its staff would offer to serve the statement of claim in another manner such as by email or regular mail to afford the respondent an additional opportunity to receive the statement of claim and instructions on how to access the Party Portal.
If a member and an associated person who is currently associated with the member are named as respondents in the same arbitration, and the Director cannot complete service directly on the associated person as described above, then the proposed rule would provide that the Director may serve the member with the Claim Notification Letter on behalf of the associated person.
FINRA is proposing to amend FINRA Rule 12302 to reflect how: (1) Parties would file an initial statement of claim; (2) parties would submit required fees; and (3) FINRA would serve the initial statement of claim through the Party Portal.
• Send the Claim Notification Letter to all non-customer respondent(s) pursuant to Rule 12302; and
• Send the Claim Notification Letter along with a copy of the Submission Agreement, the statement of claim, and any additional materials filed by the claimant, to each customer respondent. The Director would inform the customer that if the customer is
• Send a copy of the Submission Agreement, the statement of claim, and any additional materials filed by the claimant to each arbitrator by first-class mail, overnight mail service, overnight delivery service, hand delivery, email, facsimile or through the Arbitrator and Mediator Portal, once the panel has been appointed.
FINRA is proposing to amend FINRA Rule 12303 to reflect how respondents would answer a statement of claim using the Party Portal.
Because most parties would be required to serve each other through the Party Portal, FINRA would eliminate the instruction in Rule 12303(a) for parties to “directly” serve each other with the executed Submission Agreement and answer. FINRA would amend Rule 12303(b) to provide that if an answer contains a third party claim,
FINRA is proposing to amend FINRA Rule 12304(a) relating to answering counterclaims to eliminate the instruction for parties to “directly” serve each other with the answer to a counterclaim, as well as the requirement to file sufficient copies for the Director and arbitrators.
As with answering counterclaims, FINRA is proposing to amend FINRA Rule 12305(a) relating to answering cross claims to eliminate the instruction for parties to “directly” serve each other with the answer to a cross claim, as well as the requirement to file sufficient copies for the Director and arbitrators because filing instructions would be covered by proposed Rule 12300.
FINRA is proposing to amend FINRA Rule 12306 to reflect how FINRA would handle a third party claim in the Party Portal.
As explained in the above discussion on Rule 12303, if a respondent's answer contains a third party claim, the respondent serves the third party with the claim and all documents previously served by the parties or filed with FINRA outside of the Party Portal. FINRA states that once it is notified of the third party claim, it can invite the third party to use the Party Portal.
Because most parties would be using the Party Portal, FINRA would eliminate the instruction in Rule 12306(a) for parties to “directly” serve each other with the executed Submission Agreement and answer. Similarly, FINRA would amend Rule 12306(b) to provide that if an answer to a third party claim also contains a third party claim, a respondent would be required serve the third party with the answer containing the third party claim and all documents previously served by any party, or sent to the parties by the Director, by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile, and must file proof of service with the Director through the Party Portal. In addition, because parties would file their Submission Agreement and answer through the Party Portal, FINRA would amend Rule 12306(c) to delete the instruction for a party to file sufficient copies for the Director and arbitrators. Finally, FINRA is proposing to replace the bullets in Rule 12306(a) with numbers.
The Customer Code provides that the Director will not serve any claim that is deficient. Current FINRA Rule 12307(a) sets forth various reasons that a claim might be deficient. FINRA is proposing to amend Rule 12307(a) to delete a deficiency that would not be applicable in the Party Portal—that the claimant did not file the correct number of copies of the Submission Agreement, statement of claim or supporting documents for service on respondents and for the arbitrators. FINRA is also proposing to amend the rule relating to the deficiency concerning a failure to specify the customer's home address at the time of the events giving rise to the dispute. FINRA would replace home address with “city and state,” to conform to its stated current practice.
FINRA is also proposing to replace the bullets in Rule 12307(a) with numbers and to correct cross-references in the Rule.
Current FINRA Rule 12309 specifies procedures for parties to amend pleadings. Rule 12309(a) applies to amendments made to a statement of claim or any other pleading before FINRA appoints a panel of arbitrators. Rule 12309(c) applies to amendments made to add a party to the case once the ranked arbitrator lists are due to the Director. In both sections, FINRA is proposing to amend the rule to reflect how amendments operate in the Party Portal.
As stated above, Rule 12309(a) describes how parties amend pleadings before FINRA appoints a panel. FINRA is proposing to amend Rule 12309(a) to clarify that panel appointment occurs when the Director sends notice to the parties of the names of the arbitrators on the panel.
FINRA would amend Rule 12309(a)(1) to eliminate the requirement for parties to file sufficient copies of an amended pleading for the arbitrators and other parties, and to provide that the Director
Current Rule 12309(c) explains that after ranked arbitrator lists are due to the Director, parties may not amend the pleadings to add new parties until FINRA appoints a panel and the panel grants a motion to add a new party. Motions to add a party after panel appointment must be served on all parties, including the party that is the subject of the motion. The process for serving the new party under Rule 12309(c) is the same as it is in Rule 12309(a). FINRA is proposing to amend Rule 12309(c) to provide that the party seeking to amend the pleading to add a party may serve the party to be added by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. Service by first-class mail or overnight mail service would be accomplished on the date of mailing. Service by any other means would be accomplished on the date of delivery. FINRA would permit the party to be added to file a response with the Director and serve the response on all other parties by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. Because the arbitrators may ultimately decline the motion to add a new party, FINRA believes it makes sense to allow service by methods other than the Party Portal while the arbitrators consider the motion.
Current FINRA Rule 12310 describes how parties answer amended claims. Rule 12310(b) provides that if a claim is amended after it has been answered, but before a panel has been appointed, the respondent has 20 days from “the time the amended claim is served” to serve an amended answer. Because parties would be serving each other through the Party Portal, FINRA is proposing to amend Rule 12310(b) to delete the phrase “the time the amended claim is served” to provide instead that the respondent has 20 days from “receipt of the amended claim” to serve an amended answer. FINRA uses time of receipt in the rules relating to parties' time to respond to answers, among other matters, and believes consistent language would add clarity to the rule.
FINRA is also proposing to amend Rule 12310(d) relating to serving an amended answer to delete the reference to “directly” serving each other party, and providing copies of the pleading for the arbitrators.
Finally, FINRA is proposing to add clarity to Rule 12310(e) concerning when a new party's answer is due, by stating that the new party's “time to” answer is governed by Rules 12303 or Rule 12306 (which include a 45 day period for answers).
FINRA is proposing to amend FINRA Rule 12400(b) relating to its arbitrator rosters and Rule 12400(c) concerning eligibility for chairperson roster to update cross-references and replace bullets with numbers.
FINRA is proposing to amend FINRA Rules 12402(d)(3) and 12403(c)(3) concerning striking and ranking arbitrators to provide that parties must complete arbitrator ranking through the Party Portal unless a party is a
Current FINRA Rule 12404 describes procedures for newly added parties to rank and strike arbitrators. FINRA is proposing to amend Rule 12404(a) to reflect that because parties would complete the ranking and striking process in the Party Portal, they would no longer “return” lists to the Director. FINRA would also amend this provision to correct a typographical error by adding “(s)” to the term “list” in the paragraph's last sentence because in cases with three arbitrators, parties return three lists of arbitrators, not just one.
Current Rule 12404(b) explains that after ranked arbitrator lists are due to the Director, parties may not amend pleadings to add new parties until FINRA appoints a panel and the panel grants a motion to add a new party. Motions to add a party must be served on all parties. FINRA is proposing to amend Rule 12404(b) to provide that the party seeking to amend the pleading must serve the party to be added by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. Service by first-class mail or overnight mail service would be accomplished on the date of mailing. Service by any other means would be accomplished on the date of delivery. FINRA would permit the party to be added to file a response with the Director and serve the response on all other parties by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. Because the arbitrators may ultimately decline the motion to add a new party, FINRA believes it makes sense to allow service by methods other than the Party Portal while the arbitrators consider the motion.
Current FINRA Rule 12500(c) describes the subject matter of the initial prehearing conference and provides that parties may forgo the conference if they provide certain information (as described in accompanying bullets) in writing to the Director. FINRA is proposing to amend the rule to delete the requirement that parties provide copies of the written submission for the arbitrators. FINRA is also proposing to replace the bullets with numbers.
Current FINRA Rule 12502 provides that FINRA does not record prehearing conferences unless the panel orders a recording, and FINRA Rule 12606(a) specifies that FINRA records hearings. Both rules provide that the Director will provide copies of a tape, digital, or other recording to parties for a nominal fee.
FINRA states that some arbitrators have indicated a preference to review long documents in hard copy. Therefore, FINRA would continue to require parties to provide copies of transcripts for the arbitrators.
Current FINRA Rule 12503 specifies how parties make motions at the forum. Under the proposed rule change, parties would be required to file motions with the Director and serve other parties through the Party Portal. Therefore, FINRA is proposing to amend Rule 12503(a)(2) to delete the requirement that parties serve motions on each other directly, at the same time and in the same manner, and provide FINRA with copies for each arbitrator. FINRA would make the same deletions to Rule 12503(b) relating to responding to motions and Rule 12503(c) concerning replying to responses to motions.
FINRA is also proposing to amend Rule 12503(a)(4) to delete the text specifying how parties make motions to amend a pleading to add a party to a case, because these motions would be addressed in Rule 12309(c) (discussed above). FINRA would add a cross-reference to Rule 12309(c).
Current FINRA Rule 12506(a) provides that when the Director serves respondents with the statement of claim, the Director notifies parties of the location of the FINRA Discovery Guide and Document Production Lists on FINRA's Web site. In view of the Party Portal, FINRA is proposing to amend the rule to delete the reference to “when the Director serves the statement of claim.” The rule would continue to state that the Director will notify parties of the location of the FINRA Discovery Guide and Document Production Lists on FINRA's Web site.
Current FINRA Rule 12506(b) specifies, among other matters, the time for parties to respond to the Document Production Lists. FINRA wants parties to file through the Party Portal their explanations about why they are not timely producing documents and why they are objecting to production. FINRA believes that having this correspondence in the Party Portal would be efficient for FINRA staff and the parties. However, as stated above, FINRA does not want the parties to file with the Director the documents and information that they produce during discovery. Therefore, FINRA is proposing to amend Rule 12506(b) to specify that parties must serve each other with documents produced pursuant to the rule by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile as provided in Rule 12300(a)(3). The proposed rule would also provide that parties are required to file any written responses relating to discovery, such as objections to producing items in the Document Production Lists, with the Director through the Party Portal.
FINRA is also proposing to amend to Rule 12506(b) to replace bullets with letters.
Current FINRA Rule 12507(a) provides that parties may request additional documents from a party by serving the party directly with a written request. The rule requires the requesting party to serve copies of the request on all other parties at the same time. Because parties would be serving each other through the Party Portal, FINRA is proposing to amend the rule to delete the requirement for direct service in Rule 12507(a)(1) and the requirement to serve all other parties at the same time in Rule 12507(a)(2).
Current FINRA Rule 12507(b) specifies how parties may respond to an additional discovery request. The parties can: (1) Produce the documents or information (Rule 12507(b)(1)(A)); (2) identify specific documents that will not be produced within the required time and state when the documents will be produced (Rule 12507(b)(1)(B)); or (3) object to the request (Rule 12507(b)(1)(C)). As explained earlier, FINRA does not want parties to file with the Director the documents and information that they produce during discovery. Therefore, FINRA is proposing to amend Rule 12507(b)(1)(A) to specify that if a party produces documents or information pursuant to a request, the party must serve all other parties with copies of the requested documents or information by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile.
However, FINRA wants to receive party explanations about why they are not timely producing documents and why they are objecting to production. Therefore, FINRA would amend Rule 12507(b)(1)(B) concerning non-production to provide that a party must file a response with the Director and serve it on all other parties (through the Party Portal). FINRA would also amend Rule 12507(b)(1)(C) concerning objections to provide that a party must file the objection with the Director and serve it on all other parties (through the Party Portal).
Finally, FINRA is proposing to replace the bullets in Rule 12507 with numbers.
Current FINRA Rule 12508 addresses party objections to producing documents and information during discovery. To reflect how parties will be serving each other through the Party Portal, FINRA is proposing to amend the rule to delete the requirement that parties serve their objections on each other at the same time and in the same manner. Because FINRA wants to receive party explanations through the Party Portal about why parties object to production, FINRA is proposing to amend the rule to delete the statement that objections should not be filed with the Director.
Current FINRA Rule 12512 specifies that a party may make a written motion requesting that an arbitrator issue subpoenas to parties and non-parties for the production of documents and evidence, and outlines how FINRA handles motions for subpoenas at the forum. To reflect how motion practice would operate through the Party Portal, FINRA is proposing to amend Rule 12512(b) to delete the requirements that parties provide copies of the subpoena to the arbitrator, and serve the motion on each other at the same time and in
Current FINRA Rule 12512(d) addresses service of an executed subpoena. FINRA is proposing to amend the rule to delete the requirement that parties serve the subpoena on each other at the same time and in the same manner. In addition, because non-parties do not have access to the Party Portal, FINRA would amend the rule to specify that when an arbitrator issues a subpoena to a non-party, the party must serve the subpoena on the non-party by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile.
Current FINRA Rule 12512(e) provides for a non-party's objection to a subpoena. If a non-party receiving a subpoena objects to the scope or propriety of the subpoena, FINRA permits the non-party to file written objections with the Director. Under the rule, the party that requested the subpoena may respond to the objection. FINRA is proposing to amend the rule to provide that the non-party may file the objection by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile, and that the party must serve the response on the non-party and file proof of service with the Director.
Current FINRA Rule 12512(f) outlines procedures for parties to follow when they receive subpoenaed documents from non-parties. Specifically, the rule provides that any party that receives documents in response to a subpoena served on a non-party has five days to provide notice of the receipt to the other parties. Other parties to the case may request copies of the documents, and the party in receipt of the documents must provide them within ten (10) calendar days of receipt of the request. FINRA is proposing to amend the rule to specify that a party that receives documents from a non-party in response to a subpoena must serve the other parties with notice that the party received the documents. Other parties to the case may request copies of the subpoenaed documents. Because FINRA does not want the parties to submit the documents to the Director, FINRA would amend the rule to provide that the party must serve the documents on the other parties by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. The proposed rule would also expressly prohibit parties from filing the documents with the Director.
Current FINRA Rule 12513 authorizes arbitrators to order the appearance of firm employees and associated persons, and the production of documents from firms and their employees and associated persons without issuing a subpoena. FINRA is proposing to amend several provisions in the rule to reflect how FINRA would handle a party's motion for an arbitrator order using the Party Portal.
FINRA is proposing to amend Rule 12513(b) concerning filing the motion to delete the requirement that a party provide a copy for the arbitrator and that the party serve the motion on all other parties at the same time and in same manner as on the Director. FINRA is proposing to make the same changes to Rule 12513(c) relating to an opposing party's objection to the motion, and to Rule 12513(d) relating to party service of an order.
In addition, because FINRA will not invite a non-party to use the Party Portal, FINRA is proposing to amend Rule 12513(d) to provide that if a party obtains an arbitrator's order for a non-party's production, then the party must serve the order on the non-party. FINRA would also amend Rule 12513(e) to provide that if the non-party files an objection to the arbitrator's order, and the party requesting the order wants to file a response to the objection, then the party must serve the response on the non-party and provide the Director with proof of service. Finally, FINRA is proposing to amend Rule 12513(f) to provide that any party receiving documents from a non-party must serve notice on all other parties. If any other party requests copies of the documents, the requesting party must serve them by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. The amendments would also specify that parties must not file with the Director the documents produced pursuant to the order.
Current FINRA Rule 12514 sets forth procedures for exchanging documents and witness lists prior to the first scheduled hearing date and for making joint party requests for an explained decision. FINRA is proposing to amend Rule 12514(b) to delete the requirement that parties file their witness lists with the Director at the same time as they notify other parties and provide the Director with enough copies for the arbitrators. Instead, proposed Rule 12514(b) would require that all parties file their witness lists only with the Director. FINRA would also amend Rule 12514(d) to provide that parties must file with the Director requests for an explained decision as opposed to submitting them to the arbitrators.
Current FINRA Rule 12701 requires parties to notify the Director of settlements. FINRA is proposing to amend Rule 12701(a) to reflect use of the Party Portal by replacing “notify” with “file notice with” the Director.
Current FINRA Rule 12800 provides special procedures for the administration of disputes involving $50,000 or less, including procedures for parties to request documents and other information from each other. FINRA is proposing to amend Rule 12800(d) to provide that parties receiving the request must produce the requested documents or information to all other parties by serving the requested documents or information by first-class mail, overnight mail service, overnight delivery service, hand delivery, email or facsimile. The proposed rule would specify that parties must not file the documents with the Director.
Current FINRA Rule 12801 specifies procedures for initiating default proceedings against certain respondents (
Current FINRA Rule 12901 provides that FINRA will assess surcharges against members under specified circumstances. Rule 12901(a)(3) states that if the claim is filed by a member, the surcharge is due when the claim is filed. If the claim is filed against a member, or against an associated person employed by a member at the time of the events giving rise to the dispute, the surcharge is due when the claim is served. FINRA is proposing to amend
Current FINRA Rule 12904 concerns arbitrator awards and includes, among other matters, procedures for the Director to serve awards on parties. The rule provides that the Director serves an award using any method available and convenient to the parties and the Director, and that is reasonably expected to cause the award to be delivered to all parties, or their representative, on the same day. Under the rule, the Director may serve an award by first class, registered or certified mail, hand delivery, and facsimile or other electronic transmission. Because the Director will serve the award through the Party Portal in most instances, FINRA is proposing to amend Rule 12904(c) to provide that only the Director will serve the award on each party, or their representative through the Party Portal.
As explained earlier, while the discussion details the proposed amendments to the FINRA rules in the Customer Code, FINRA is also proposing to make substantively similar amendments to the Industry Code. In addition to the amendments discussed, FINRA is proposing to amend rules in the Industry Code that are unique to intra-industry disputes.
FINRA is proposing to amend FINRA Rule 13802(a) relating to statutory employment discrimination claims to update a cross-reference concerning the definition of statutory employment discrimination. FINRA would also amend Rule 13802(c) to replace bullets with numbers.
The Industry Code has special procedures for handling temporary injunctions with respect to an industry or clearing dispute. FINRA is proposing to amend FINRA Rule 13804(a) to provide that parties seeking temporary injunctive relief from a court must file with the Director a statement of claim requesting permanent injunctive and all other relief with respect to the same dispute through the Party Portal, and must serve the statement of claim requesting permanent injunctive and all other relief on all other parties by overnight delivery service, hand delivery, email or facsimile. The proposed rule would require parties to serve all parties at the same time and in the same manner, unless the parties agree otherwise.
FINRA states that cases involving injunctive relief operate on an accelerated time schedule. FINRA also states, however, that it takes FINRA staff some time to review an initial submission and invite respondent parties to use the Party Portal. In view of the need to expedite these matters, FINRA believes that parties should serve each other outside of the Party Portal until FINRA establishes the identities of all relevant parties and their representatives, and invites them to access the Party Portal.
Under the proposed rule change, FINRA would permit parties to a mediation proceeding to use the Party Portal on a voluntary basis. FINRA is proposing to amend the Mediation Code to reflect use of the Party Portal.
FINRA is proposing to amend FINRA Rule 14100 to define “Arbitrator and Mediator Portal” and “Party Portal.” The definitions would be identical to the definitions in the Codes. FINRA would re-letter the definitions because of the new additions.
FINRA also is proposing to amend FINRA Rule 14109 to provide that the parties may agree to use the Party Portal to submit all documents and other communications to each other, to retrieve all documents and other communications, and view mediation case information.
As noted above, the Commission received five comment letters on the proposed rule change
Two commenters strongly supported the proposal, stating that the proposal “would facilitate interactions among parties, arbitrators, mediators, and FINRA staff on arbitration case-related matters,”
Two additional commenters generally supported the proposal, with both commenters stating their belief that use of the Party Portal would improve efficiency.
In response to these comments, FINRA, although it declined to amend the proposed rule change as suggested by the two commenters, stated that it “is concerned about identity theft” and that it “believes that the Party Portal provides parties with enhanced security over other methods of document transmittal.”
In its response, FINRA stated its belief that “requiring payment through the Party Portal would make case administration more efficient.”
In its response, FINRA clarified that under the proposal,
In its response, FINRA agreed that such a list would be helpful and stated in its response that “[i]f the Commission approves the proposed rule change, FINRA will provide a list of such filings in a Regulatory Notice announcing approval of the proposed rule change as well as in guidance on the FINRA Web site.”
The Commission has carefully considered the proposal, the comments received, and FINRA's response to the comments. Based on its review of the record, the Commission finds that the proposal is consistent with the requirements of the Exchange Act and the rules and regulations thereunder that are applicable to a national
The Commission notes that two commenters strongly supported the proposal, two commenters generally supported the proposal but had some recommended modifications, and one commenter did not appear to address the substance of the proposed rule change. With respect to payment of fees, the Commission recognizes the recommendations by two commenters that FINRA allow payment by personal check, either for parties for damages under $100,000 or for all parties.
With respect to the protection of personal confidential information, the Commission recognizes the concerns expressed by two commenters that, under the proposal, FINRA's exemption of the redaction requirements in current Rule 12300 for parties in Simplified Arbitrations—disputes where the amount at issue is $50,000 or less—will remain unchanged.
With respect to the proposal's requirement that parties file discovery correspondence through the Party Portal, the Commission recognizes one commenter's concern that the “proposal is unclear as to how matters involving
With respect to rules regarding service, the Commission recognizes that one commenter's suggestion that FINRA issue a Notice to Members “setting forth a list of the specific filings which must be made outside of the Party Portal once the rule is implemented” in order to “allow practitioners an opportunity to review all the exceptions to filing via the Portal in one place.”
Finally, the Commission recognizes FINRA's statement that of the 13,562 parties invited to use the portal as of May 11, 2016 (including customers, firms, and associated persons), “76 percent of customers, including
Taking into consideration the comments and FINRA's response, the Commission believes that the proposal is consistent with the Exchange Act. The Commission believes that the proposal will help protect investors and the public interest by enhancing efficiencies for FINRA arbitration forum users and expediting case administration by FINRA staff by, among other things, improving the case intake process and helping ensure better data accuracy.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to the provisions of Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The Exchange is filing a proposal to amend the MIAX Options Fee Schedule (the “Fee Schedule”).
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend the MIAX Select Symbols
The Exchange believes that its proposal to amend its Fee Schedule is consistent with Section 6(b) of the Act
In particular, the proposal to delete the “AA” symbol from the list of MIAX Select Symbols is consistent with Section 6(b)(4) of the Act because the proposed change will allow for continued benefit to investors by providing them an updated list of Select Symbols in the Fee Schedule.
The Exchange believes that the proposal to amend an option class that qualifies for the credit for transactions in MIAX Select Symbols is fair, equitable and not unreasonably discriminatory. The credit for transactions in the select symbols is reasonably designed because it will incent providers of Priority Customer order flow to send that Priority Customer order flow to the Exchange in order to receive a credit in a manner that enables the Exchange to improve its overall competitiveness and strengthen its market quality for all market participants. The Program which provides increased incentives in high volume select symbols is also reasonably designed to increase the competitiveness of the Exchange with other options exchanges that also offer increased incentives to higher volume symbols.
The Exchange also believes that its proposal is consistent with Section 6(b)(5) of the Act because it will apply equally to all Priority Customer orders in the select symbols. All similarly situated Priority Customer orders in the select symbols are subject to the same rebate schedule, and access to the Exchange is offered on terms that are not unfairly discriminatory. In addition, the Program is equitable and not unfairly discriminatory because, while only Priority Customer order flow qualifies for the Program, an increase in Priority Customer order flow will bring greater volume and liquidity, which benefit all market participants by providing more trading opportunities and tighter spreads.
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 proposed rule change is a not a competitive filing but rather is designed to update the list of Select Symbols in order to avoid potential confusion on the part of market participants.
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. 3501-3520), the Securities and Exchange Commission (“Commission”) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval.
Rule 18f-1 (17 CFR 270.18f-1) enables a registered open-end management investment company (“fund”) that may redeem its securities in-kind, by making a one-time election, to commit to make cash redemptions pursuant to certain requirements without violating section 18(f) of the Investment Company Act of 1940 (15 U.S.C. 80a-18(f)). A fund relying on the rule must file Form N-18F-1 (17 CFR 274.51) to notify the Commission of this election. The Commission staff estimates that 38 funds file Form N-18F-1 annually, and that each response takes one hour. Based on these estimates, the total annual burden hours associated with the rule is estimated to be 38 hours.
The estimate of average burden hours is made solely for the purposes of the Paperwork Reduction Act, and is not derived from a comprehensive or even a representative survey or study of the costs of Commission rules. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.
Written comments are invited on: (a) Whether the collection of information is necessary for the proper performance of the functions of the Commission, including whether the information has practical utility; (b) the accuracy of the Commission'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, Director/Chief Information Officer, Securities and Exchange Commission, C/O Remi Pavlik-Simon, 100 F Street NE., Washington, DC 20549; or send an email to:
U.S. Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of North Carolina (FEMA-4285-DR), dated 11/10/2016.
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 President's major disaster declaration on 11/10/2016, Private Non-Profit organizations that provide essential services of governmental nature may file disaster loan applications 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 149708 and for economic injury is 149718.
Pursuant to the authority granted to the United States Small Business Administration by the Final Order of the United States District Court for the District of Connecticut, entered April 29, 2016, the United States Small Business Administration hereby revokes the license of First New England Capital 2, L.P., a Delaware Limited Partnership, to function as a small business investment company under the Small Business Investment Company License No. 01710374 issued to First New England Capital 2, L.P., on March 25, 1988, and said license is hereby declared null and void as of July 19, 2016.
U.S. Small Business Administration.
Amendment 1.
This is an amendment of the Presidential declaration of a major disaster for the Commonwealth of Virginia (FEMA-4291-DR), dated 11/02/2016.
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.
The notice of the President's major disaster declaration for the State of VIRGINIA, dated 11/02/2016 is hereby amended to establish the incident period for this disaster as beginning 10/07/2016 and continuing through 10/15/2016.
All other information in the original declaration remains unchanged.
State Justice Institute.
Notice of meeting.
The SJI Board of Directors will be meeting on Monday, December 5, 2016 at 11:00 a.m. The meeting will be held at the Belmond Hotel in Charleston, South Carolina. The purpose of this meeting is to consider grant applications for the 1st quarter of FY 2017, and other business. All portions of this meeting are open to the public.
Belmond Hotel, 205 Meeting Street, Charleston, South Carolina, 29401.
Jonathan Mattiello, Executive Director, State Justice Institute, 11951 Freedom Drive, Suite 1020, Reston, VA 20190, 571-313-8843,
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Thirteenth RTCA SC-231 TAWS Plenary.
The FAA is issuing this notice to advise the public of a meeting of Thirteenth RTCA SC-231 TAWS Plenary.
The meeting will be held December 08, 2016 10:00 a.m.-11:00 a.m.
The meeting will be held at: RTCA Headquarters, 1150 18th Street NW., Suite 910, Washington, DC 20036.
Rebecca Morrison at
Pursuant to section 10(a) (2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of the Thirteenth RTCA SC-231 TAWS Plenary. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Thirteenth RTCA SC-228 Focused Plenary.
The FAA is issuing this notice to advise the public of a meeting of Thirteenth RTCA SC-228 Focused Plenary.
The meeting will be held December 15, 2016 01:00 p.m.-03:00 p.m.
The meeting will be held at: Virtual Plenary ONLY: Join at the following link:
Al Secen at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of the Thirteenth RTCA SC-228 Focused Plenary. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Ninety Seventh Plenary for RTCA SC-159 Navigation Equipment Using the Global Positioning System.
The FAA is issuing this notice to advise the public of a meeting of Ninety Seventh Plenary for RTCA SC-159 Navigation Equipment Using the Global Positioning System.
The meeting will be held December 13, 2016 10:30 a.m.-12:00 p.m.
The meeting will be held at: RTCA Headquarters, 1150 18th Street NW., Suite 910, Washington, DC 20036.
Rebecca Morrison at
Pursuant to section 10(a) (2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of the Ninety Seventh RTCA SC-159 Navigation Equipment Using the Global Positioning System. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Thirtieth RTCA SC-216 Aeronautical Systems Security Plenary.
The FAA is issuing this notice to advise the public of a meeting of Thirtieth RTCA SC-216 Aeronautical Systems Security Plenary.
The meeting will be held December 12-16, 2016 08:00 a.m.-05:00 p.m.
The meeting will be held at: The Washington Campus, 1150 18th Street NW., Suite 400, Washington, DC 20036.
Karan Hofmann at
Pursuant to section 10(a) (2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of the Thirtieth RTCA SC216 Aeronautical Systems Security. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Forty Sixth RTCA SC-206 Aeronautical Information and Meteorological Data Link Services Plenary.
The FAA is issuing this notice to advise the public of a meeting of Forty Sixth RTCA SC-206 Aeronautical Information and Meteorological Data Link Services Plenary.
The meeting will be held December 12-16, 2016 from 08:30 a.m.-04:30 p.m.
The meeting will be held at: RTCA Headquarters, 1150 18th Street NW., Suite 910, Washington, DC 20036.
Karan Hofmann at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of the Forty Sixth RTCA 206 Aeronautical Information and Meteorological Data Link Services Plenary. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Sixteenth Meeting of the RTCA Tactical Operations Committee.
The FAA is issuing this notice to advise the public of the Sixteenth Meeting of the RTCA Tactical Operations Committee.
The meeting will be held December 13, 2016, 01:00 p.m.-03:00 p.m.
The meeting will be held at: RTCA Headquarters, 1150 18th Street NW., Suite 910, Washington, DC 20036.
Trin Mitra at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for the Fifteenth Meeting of the RTCA Tactical Operations Committee. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. Given limited space on-site, members of the public that wish to participate virtually can request dial-in and online meeting information by contacting Trin Mitra, TOC Secretary, at
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Forty Fifth RTCA SC-224 Airport Security Access Control Systems Plenary.
The FAA is issuing this notice to advise the public of a meeting of Forty Fifth RTCA SC-224 Airport Security Access Control Systems Plenary.
The meeting will be held December 13, 2016 10:00 a.m.-01:00 p.m.
The meeting will be held at: RTCA Headquarters, 1150 18th Street NW., Suite 910, Washington, DC 20036.
Karan Hofmann at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for a meeting of the Forty Fifth RTCA SC224 Airport Security Access Control Systems Plenary. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. With the approval of the chairman, members of the public may present oral statements at the meeting. Persons wishing to present statements or obtain information should contact the person listed in the
Federal Aviation Administration (FAA), U.S. Department of Transportation (DOT).
Sixteenth Meeting of the RTCA Tactical Operations Committee.
The FAA is issuing this notice to advise the public of the Sixteenth Meeting of the RTCA Tactical Operations Committee.
The meeting will be held December 13, 2016, 01:00 p.m.-03:00 p.m.
The meeting will be held at: RTCA Headquarters, 1150 18th Street NW., Suite 910, Washington, DC 20036.
Trin Mitra at
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463, 5 U.S.C., App.), notice is hereby given for the Fifteenth Meeting of the RTCA Tactical Operations Committee. The agenda will include the following:
Attendance is open to the interested public but limited to space availability. Given limited space on-site, members of the public that wish to participate virtually can request dial-in and online meeting information by contacting Trin Mitra, TOC Secretary, at
Maritime Administration, DOT.
Notice of public workshop.
The Maritime Administration (MARAD), in cooperation with Det Norske Veritas-Germanischer Lloyd, American Bureau of Shipping, and The American Society for Testing and Materials, will hold a workshop to share information and gather input related to the application of high-power batteries in maritime transportation. The workshop is being held as part of the Agency's Maritime Environmental and Technical Assistance (META) Program. Information received during the workshop will be used to enhance Agency and maritime industry stakeholders' understanding of the state of technology, potential design requirements for electric powered and hybrid electric vessels, and areas for future research, development and demonstration projects.
The workshop will be held on December 15 and 16, 2016, from 8:30 a.m. to 5:00 p.m.
The event will be held at the Department of Transportation Conference Center, 1200 New Jersey Ave. SE., Washington, DC.
Sujit Ghosh, Maritime Administration, Office of Environment at (202) 366-1839 or via email at
As additional information becomes available, MARAD will release further details on this event, including the agenda, on its Web page at
The meeting will be open to the public and streamed on the web. In order to attend the workshop in-person or to access the Web streaming you must register by emailing us at
1. Attendees are encouraged to arrive at least thirty minutes prior to the meeting for processing through building security. All attendees must enter through the New Jersey Avenue entrance (West Building—at the corner of New Jersey Avenue SE. and M Street SE.). Anyone exiting the building for any reason will be required to re-enter through the security checkpoint at the New Jersey Avenue Entrance.
2. Due to security requirements, all attendees must bring a Government-issued form of identification (
3. Due to space limitations, outside videotaping will not be allowed.
4. The Department of Transportation (DOT) and MARAD are not able to offer visitor parking; we suggest that attendees consider using alternative means of transportation to the building. DOT Headquarters/MARAD is served by Metrorail (Navy Yard station), Metro bus, DC Circulator, and taxi service. There are a number of private parking lots near the DOT building, but MARAD cannot guarantee the availability of parking spaces.
5. For information on facilities or services for persons with disabilities, or to request special assistance at the meeting, please contact Tom Thompson, Office of Environment, Maritime Administration, 1200 New Jersey Avenue SE., Washington, DC 20590; (202) 366-6045 as soon as possible.
49 CFR 1.93
By Order of the Maritime Administrator.
Office of the Comptroller of the Currency (OCC), Treasury.
Notice and request for comment.
The OCC, 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 a revised information
Comments must be submitted on or before December 19, 2016.
Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments by email, if possible. Comments may be sent to: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, Attention: 1557-0334, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219. In addition, comments may be sent by fax to (571) 465-4326 or by electronic mail to
All comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information with your comment, attachment, or supporting materials that you consider confidential or inappropriate for public disclosure.
Additionally, please send a copy of your comments by mail to: OCC Desk Officer, 1557-0334, U.S. Office of Management and Budget, 725 17th Street NW., #10235, Washington, DC 20503 or by email to:
Shaquita Merritt, OCC Clearance Officer, (202) 649-5490 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.
Under the PRA (44 U.S.C. 3501-3520), certain Federal agencies must obtain approval from OMB for each collection of information that they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) (and 5 CFR 1320.3(c) of the PRA implementing regulations) to include agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. The OCC is requesting that OMB approve its proposed revision to the collection of information.
The OCC estimates that use of the Template would reduce the average response time for this collection per respondent from 12 hours to 8 hours. The OCC may use the information submitted by the entities it regulates to monitor progress and trends in the financial services industry with regard to diversity and inclusion in employment and contracting activities and to identify and highlight those policies and practices that have been successful. The OCC will continue to reach out to the regulated entities and other interested parties to discuss diversity and inclusion in the financial services industry and share leading practices. The OCC may also publish information disclosed by the entity, such as any identified leading practices, in any form that does not identify a particular institution or individual or disclose confidential business information.
First, the commenter stated that use of the Template would not reduce a regulated entity's collection burden. We believe, however, that the structured format and layout of the Template is easy to use and thereby simplifies the information collection. We expect that this will reduce the time it takes to complete a self-assessment based on the Joint Standards. Furthermore, similar information currently provided in response to required EEOC and OFCCP annual reports, can be easily recorded on the self-assessment Template.
Second, the commenter stated that the OCC's publication of a Template creates the impression that the Policy Statement and Template set out mandatory, not voluntary, standards. The OCC does not intend to create this impression and notes that the Template itself states that “a self-assessment by the organization is voluntary.” The Policy Statement itself also makes the voluntary nature of a self-assessment clear. Third, the commenter asserted that the Template's yes/no structure is overly simplistic. The OCC notes, however, that while an entity's self-assessment of each standard begins with a yes/no response, the entity also is asked about the relevant successes and/or challenges associated with each standard. In addition, at the end of the Template, respondents are invited to provide any “other important information or comments regarding the self-assessment of their diversity and inclusion policies and practices.”
Finally, the commenter asserts that by publishing the Template, the agency has effectively foreclosed the possibility of a better self-assessment framework. To the contrary, the Template invites a regulated entity to “utilize this Template or its own assessment tool.” In addition, the OCC specifically asked the public in its 60-day notice for “[w]ays to enhance the quality, utility, and clarity of the information to be
In addition, we continue to invite comments on the following:
(a) Whether the collection of information is necessary for the proper performance of the functions of the OCC, including whether the information has practical utility;
(b) The accuracy of the OCC's estimate of the information collection burden;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Office of the Comptroller of the Currency (OCC), Treasury.
Notice and request for comment.
The OCC, 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 a continuing information collection as required by the Paperwork Reduction Act of 1995 (PRA).
In accordance with the requirements of the PRA, the OCC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.
The OCC is soliciting comment concerning renewal of its information collection titled, “Reporting, Recordkeeping, and Disclosure Requirements Associated with Proprietary Trading and Certain Interests in and Relationships with Covered Funds.”
Comments must be submitted on or before January 17, 2017.
Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments by email, if possible. Comments may be sent to: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, Attention: 1557-00309, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219. In addition, comments may be sent by fax to (571) 465-4326 or by electronic mail to
All comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.
Shaquita Merritt, OCC Clearance Officer, (202) 649-5490 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.
Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the OMB for each collection of information that they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) to include 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 title 44 requires Federal agencies to provide a 60-day notice in the
Section 619 of the Dodd-Frank Act added a new section 13 to the Bank Holding Company Act (BHC Act) (codified at 12 U.S.C. 1851) that generally prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a hedge fund or private equity fund, subject to certain exemptions.
Section 44.12(e) states that, upon application by a banking entity, the Board may extend the period of time to meet the requirements on ownership limitations under § 44.12(a)(2)(i) for up to 2 additional years, if the Board finds that an extension would be consistent with safety and soundness and not detrimental to the public interest. An application for extension must: (1) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period; (2) provide the reasons for application including information that addresses the factors in paragraph (e)(2) of § 44.12; and (3) explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution, or other methods as required in § 44.12(a)(2).
Section 44.20(d) provides that a banking entity engaged in proprietary trading activity permitted under subpart
Section 44.3(d)(3) specifies that proprietary trading does not include any purchase or sale of a security by a banking entity for the purpose of liquidity management in accordance with a documented liquidity management plan of the banking entity that: (1) Specifically contemplates and authorizes the particular securities to be used for liquidity management purposes, the amount, types, and risks of these securities that are consistent with liquidity management, and the liquidity circumstances in which the particular securities may or must be used; (2) requires that any purchase or sale of securities contemplated and authorized by the plan be principally for the purpose of managing the liquidity of the banking entity, and not for the purpose of short-term resale, benefitting from actual or expected short-term price movements, realizing short-term arbitrage profits, or hedging a position taken for such short-term purposes; (3) requires that any securities purchased or sold for liquidity management purposes be highly liquid and limited to securities the market, credit, and other risks of which the banking entity does not reasonably expect to give rise to appreciable profits or losses as a result of short-term price movements; (4) limits any securities purchased or sold for liquidity management purposes, together with any other instruments purchased or sold for such purposes, to an amount that is consistent with the banking entity's near-term funding needs, including deviations from normal operations of the banking entity or any affiliate thereof, as estimated and documented pursuant to methods specified in the plan; (5) includes written policies and procedures, internal controls, analysis, and independent testing to ensure that the purchase and sale of securities that are not permitted under § 44.6(a) or § 44.6(b) are for the purpose of liquidity management and in accordance with the liquidity management plan described in this paragraph; and (6) is consistent with the OCC's supervisory requirements, guidance, and expectations regarding liquidity management.
Section 44.4(b)(3)(i)(A) provides that a trading desk or other organizational unit of another entity with $50 billion or more in trading assets and liabilities is not a client, customer, or counterparty unless the trading desk documents how and why a particular trading desk or other organizational unit of the entity should be treated as a client, customer, or counterparty of the trading desk for purposes of § 44.4(b)(2).
Section 44.5(c) requires documentation for any purchase or sale of financial instruments for risk-mitigating hedging purposes that is: (1) Not established by the specific trading desk establishing or responsible for the underlying positions, contracts, or other holdings the risks of which the hedging activity is designed to reduce; (2) established by the specific trading desk establishing or responsible for the underlying positions, contracts, or other holdings the risks of which the purchases or sales are designed to reduce, but that is effected through a financial instrument, exposure, technique, or strategy that is not specifically identified in the trading desk's written policies and procedures established under § 44.5(b)(1) or § 44.4(b)(2)(iii)(B) as a product, instrument, exposure, technique, or strategy such desk may use for hedging; or (3) established to hedge aggregated positions across two or more trading desks. In connection with any purchase or sale that meets these specified circumstances, a banking entity must, at a minimum and contemporaneously with the purchase or sale, document: (1) The specific, identifiable risk(s) of the identified positions, contracts, or other holdings of the banking entity that the purchase or sale is designed to reduce; (2) the specific risk-mitigating strategy that the purchase or sale is designed to fulfill; and (3) the trading desk or other business unit that is establishing and responsible for the hedge. The banking entity must also create and retain records sufficient to demonstrate compliance with § 44.5(c) for at least 5 years in a form that allows the banking entity to promptly produce such records to the OCC on request or such longer period as required under other law or part 44.
Section 44.11(a)(2) requires that covered funds generally must be organized and offered only in connection with the provision of
Section 44.20(b) specifies the contents of the compliance program for a banking
Section 44.20(c) specifies that the compliance program of a banking entity must satisfy the requirements and other standards contained in Appendix B, if: (1) The banking entity engages in proprietary trading permitted under subpart B of part 44 and is required to comply with the reporting requirements of § 44.20(d); (2) the banking entity has reported total consolidated assets as of the previous calendar year end of $50 billion or more or, in the case of a foreign banking entity, has total U.S. assets as of the previous calendar year end of $50 billion or more (including all subsidiaries, affiliates, branches and agencies of the foreign banking entity operating, located or organized in the United States); or (3) the OCC notifies the banking entity in writing that it must satisfy the requirements and other standards contained in Appendix B. Appendix B provides enhanced minimum standards for compliance programs for banking entities that meet any of the thresholds in § 44.20(c) as described above. Appendix B sets forth standards with respect to the establishment, oversight, maintenance, and enforcement by banking entities of the enhanced compliance program for ensuring and monitoring compliance with the prohibitions and restrictions on proprietary trading and covered fund activities and investments set forth in section 13 of the BHC Act and part 44. The program must: (1) Be reasonably designed to identify, document, monitor, and report the permitted trading and covered fund activities and investments; identify, monitor, and promptly address the risk of these covered activities and investments and potential areas of noncompliance; and prevent activities or investments prohibited by, or that do not comply with, section 13 of the BHC Act and part 44; (2) establish and enforce appropriate limits on covered activities and investments, including limits on size, scope, complexity, and risks of individual activities or investments consistent with the requirements of section 13 of the BHC Act and part 44; (3) subject the effectiveness of the compliance program to periodic independent review and testing, and ensure that the entity's internal audit, corporate compliance, and internal control functions involved in review and testing are effective and independent; (4) make senior management and others accountable for effective implementation of compliance program and ensure that the board of directors and chief executive officer (or equivalent) of the banking entity review effectiveness of the compliance program; and (5) facilitate supervision and examination by the OCC of permitted trading and covered fund activities and investments.
Section 44.20(d) provides that a banking entity engaged in certain proprietary trading activity must comply with the reporting requirements described in Appendix A if the banking entity's trading activity meets or exceeds the thresholds set forth in § 44.20(d). A banking entity must also, for any quantitative measurement furnished to the OCC pursuant to § 44.20(d) and Appendix A, create and maintain records documenting the preparation and content of these reports, as well as such information as is necessary to permit the OCC to verify the accuracy of such reports, for a period of 5 years from the end of the calendar year for which the measurement was taken.
Section 44.20(e) specifies additional documentation required for covered funds. Any banking entity that has more than $10 billion in total consolidated assets as reported on December 31 of the previous two calendar years shall maintain records that include: (1) Documentation of the exclusions or exemptions other than sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 relied on by each fund sponsored by the banking entity (including all subsidiaries and affiliates) in determining that such fund is not a covered fund; (2) for each fund sponsored by the banking entity (including all subsidiaries and affiliates) for which the banking entity relies on one or more of the exclusions from the definition of covered fund provided by §§ 44.10(c)(1), 44.10(c)(5), 44.10(c)(8), 44.10(c)(9), or 44.10(c)(10), documentation supporting the banking entity's determination that the fund is not a covered fund pursuant to one or more of those exclusions; (3) for each seeding vehicle described in §§ 44.10(c)(12)(i) or 44.10(c)(12)(iii) that will become a registered investment company or SEC-regulated business development company, a written plan documenting the banking entity's determination that the seeding vehicle will become a registered investment company or SEC-regulated business development company; the period of time during which the vehicle will operate as a seeding vehicle; and the banking entity's plan to market the vehicle to third-party investors and convert it into a registered investment company or SEC-regulated business development company within the time period specified in § 44.12(a)(2)(i)(B); and (4) for any banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State, if the aggregate amount of ownership interests in foreign public funds that are described in § 44.10(c)(1) owned by such banking entity (including ownership interests owned by any affiliate that is controlled directly or indirectly by a banking entity that is located in or organized under the laws of the United States or of any State) exceeds $50 million at the end of two or more consecutive calendar quarters, beginning with the next succeeding calendar quarter, documentation of the value of the ownership interests owned
Section 44.20(f)(1) applies to banking entities with no covered activities. A banking entity that does not engage in activities or investments pursuant to subpart B or subpart C of part 44 (other than trading activities permitted pursuant to § 44.6(a)) may satisfy the requirements of § 44.20 by establishing the required compliance program prior to becoming engaged in such activities or making such investments (other than trading activities permitted pursuant to § 44.6(a)).
Section 44.20(f)(2) applies to banking entities with modest activities. A banking entity with total consolidated assets of $10 billion or less as reported on December 31 of the previous two calendar years that engages in activities or investments pursuant to subpart B or subpart C of part 44 (other than trading activities permitted under § 44.6(a)) may satisfy the requirements of § 44.20 by including in its existing compliance policies and procedures appropriate references to the requirements of section 13 of the BHC Act and part 44 and adjustments as appropriate given the activities, size, scope and complexity of the banking entity.
Section 44.11(a)(8)(i) requires that a banking entity clearly and conspicuously disclose, in writing, to any prospective and actual investor in the covered fund (such as through disclosure in the covered fund's offering documents): (1) That any losses in such covered fund will be borne solely by investors in the covered fund and not by the banking entity or its affiliates; therefore, the banking entity's losses in such covered fund will be limited to losses attributable to the ownership interests in the covered fund held by the banking entity and any affiliate in its capacity as investor in the covered fund or as beneficiary of a restricted profit interest held by the banking entity or any affiliate; (2) that such investor should read the fund offering documents before investing in the covered fund; (3) that the ownership interests in the covered fund are not insured by the FDIC, and are not deposits, obligations of, or endorsed or guaranteed in any way, by any banking entity (unless that happens to be the case); and (4) the role of the banking entity and its affiliates and employees in sponsoring or providing any services to the covered fund.
(a) Whether the collection of information is necessary for the proper performance of the functions of the OCC, including whether the information has practical utility;
(b) The accuracy of the OCC's estimate of the information collection burden;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the collection on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Office of Foreign Assets Control, Treasury.
Notice.
The Treasury Department's Office of Foreign Assets Control (OFAC) is publishing the names of six persons whose property and interests in property are blocked pursuant to Executive Order (E.O.) 13660.
OFAC's actions described in this notice were effective on November 14, 2016, as further specified below.
The Department of the Treasury's Office of Foreign Assets Control: Assistant Director for Licensing, tel.: 202-622-2480, Assistant Director for Regulatory Affairs, tel.: 202-622-4855, Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490; or the Department of the Treasury's Office of the Chief Counsel (Foreign Assets Control), Office of the General Counsel, tel.: 202-622-2410.
The Specially Designated Nationals and Blocked Persons List and additional information concerning OFAC sanctions programs are available on OFAC's Web site (
On November 14, 2016, OFAC blocked the property and interests in property of the following persons pursuant to E.O. 13660, “Blocking Property of Certain Persons Contributing to the Situation in Ukraine”:
1. BAKHAREV, Konstantin Mikhailovich; DOB 20 Oct 1972; POB Ukraine; Gender Male (individual) [UKRAINE-EO13660].
2. BALBEK, Ruslan Ismailovich; DOB 28 Aug 1977; POB Uzbekistan; Gender Male (individual) [UKRAINE-EO13660].
3. BELIK, Dmitry Anatolievich; DOB 17 Oct 1969; POB Russia; Gender Male (individual) [UKRAINE-EO13660].
4. KOZENKO, Andrey Dmitrievich; DOB 03 Aug 1981; POB Ukraine Gender Male (individual) [UKRAINE-EO13660].
5. SAVCHENKO, Svetlana Borisovna; DOB 24 Jun 1965; POB Ukraine Gender Female (individual) [UKRAINE-EO13660].
6. SHPEROV, Pavel Valentinovich; DOB 04 Jul 1971; POB Ukraine; Gender Male (individual) [UKRAINE-EO13660].
The Department of the Treasury will submit the following information collection request(s) to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, Public Law 104-13, on or after the date of publication of this notice.
Comments should be received on or before December 19, 2016 to be assured of consideration.
Send comments regarding the burden estimates, or any other aspect of the information collection(s), including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submissions may be obtained by emailing
The Department of Veterans Affairs (VA) gives notice under the Federal Advisory Committee Act, 5 U.S.C., App. 2, that the National Research Advisory Council will hold a meeting on Wednesday, December 7, 2016, in Conference Room 730 at 810 Vermont Ave NW., Washington, DC. The meeting will convene at 9:00 a.m. and end at 3:00 p.m. This meeting is open to the public.
The agenda will include reviews of the recommendations of the sub-committees on the Air Force Health Study and the Technology Transfer Program. Additionally, a briefing on the Office of Research and Development Communications Strategy will be given.
No time will be allocated at this meeting for receiving oral presentations from the public. Members of the public wanting to attend may contact Pauline Cilladi-Rehrer, Designated Federal Officer, ORD (10P9), Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, at (202) 443-5607, or by email at
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission is adopting new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies. The Commission is adopting new Form N-PORT, which will require certain registered investment companies to report information about their monthly portfolio holdings to the Commission in a structured data format. In addition, the Commission is adopting amendments to Regulation S-X, which will require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The Commission is adopting new Form N-CEN, which will require registered investment companies, other than face-amount certificate companies, to annually report certain census-type information to the Commission in a structured data format. The Commission is adopting amendments to Forms N-1A, N-3, and N-CSR to require certain disclosures regarding securities lending activities. Finally, the Commission is rescinding current Forms N-Q and N-SAR and amending certain other rules and forms. Collectively, these amendments will, among other things, improve the information that the Commission receives from investment companies and assist the Commission, in its role as primary regulator of investment companies, to better fulfill its mission of protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation. Investors and other potential users can also utilize this information to help investors make more informed investment decisions.
• The amendments to 17 CFR 200.800, 232.105, 232.301, 240.10A-1, 240.12b-25, 240.13a-10, 240.13a-11, 240.13a-13, 240.13a-16, 240.15d-10, 240.15d-11, 240.15d-13, 240.15d-16, 249.322, 249.330, 270.8b-16, 270.10f-3, 270.30a-1, 270.30a-4, 270.30b1-1, 270.30b1-2, 270.30b1-3, 274.101, and 274.218, and in Instruction 55 amending § 270.30d-1 are effective June 1, 2018; and
• The amendments to 17 CFR 232.401, 249.332, 270.8b-33, 270.30a-2, 270.30a-3, 270.30b1-5, and 274.130, and in Instruction 54 amending § 270.30d-1, Instruction 57 amending Form N-1A (referenced in §§ 239.15A and 274.11A), Instruction 59 amending Form N-2 (referenced in §§ 239.14 and 274.11a-1), and Instruction 61 amending Form N-3 (referenced in §§ 239.17a and 274.11b) are effective August 1, 2019.
Daniel K. Chang, Senior Counsel, J. Matthew DeLesDernier, Senior Counsel, Jacob D. Krawitz, Senior Counsel, Andrea Ottomanelli Magovern, Senior Counsel, Naseem Nixon, Senior Counsel, Michael C. Pawluk, Senior Special Counsel, or Sara Cortes, Assistant Director, at (202) 551-6792, Investment Company Rulemaking Office, Matt Giordano, Chief Accountant, or Kristy Von Ohlen, Assistant Chief Accountant, Chief Accountant's Office, at (202) 551-6918, Division of Investment Management, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-8549.
The Securities and Exchange Commission (the “Commission”) is adopting new Form N-PORT [referenced in 17 CFR 274.150] and new Form N-CEN [referenced in 17 CFR 274.101] under the Investment Company Act of 1940 [15 U.S.C. 80a-1
As the primary regulator of the asset management industry, the Commission relies on information included in reports filed by registered investment companies (“funds”)
Commission staff estimates that there were approximately 17,052 funds registered with the Commission, as of December 2015.
Form ADV is used by registered investment advisers to register with the Commission and with the states and by exempt reporting advisers to report information to the Commission. Information on Form ADV is available to the public through the Investment Adviser Public Disclosure System, which allows the public to access the most recent Form ADV filing made by an investment adviser and is available at
While these changes have been taking place in the fund industry, there have also been significant advances in the technology that can be used to report and analyze information. We have started to use structured data formats to collect, aggregate, and analyze data reported by registrants and other filers.
As we noted in the Proposing Release, we have historically acted to modernize our forms and the manner in which information is filed with the Commission and disclosed to the public in order to keep up with changes in the industry and technology.
We also note that in December 2014, the Financial Stability Oversight Council (“FSOC”) issued a notice requesting comment on aspects of the asset management industry, including on additional data or information that would be helpful to regulators and market participants.
The proposed reforms were designed to help the Commission, investors, and other market participants better assess different fund products and to assist us in carrying out our mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. These reforms also sought to (1) increase the transparency of fund portfolios and investment practices both to the Commission and to investors, (2) take advantage of technological advances both in terms of the manner in which information is reported to the Commission and how it is provided to investors and other potential users, and (3) where appropriate, reduce duplicative or otherwise unnecessary reporting burdens on the industry.
We received 1,003 comments
Today, after consideration of the comments we received, we are adopting new Forms N-PORT and N-CEN, as well as amendments to Regulation S-X. We continue to believe that with the industry changes and technological advances that have occurred over the years, we need to improve the type and format of the information that funds provide to us and to investors, and the information that the Commission receives from funds in order to improve the Commission's monitoring of the fund industry in its role as the primary regulator of funds and investment advisers. We are not adopting proposed rule 30e-3 at this time as we believe, in light of the comments received, that additional consideration regarding the rule is appropriate. We are adopting amendments to Forms N-1A, N-3, and N-CSR to require certain disclosures regarding securities lending activities.
We are adopting Form N-PORT, largely as proposed, with certain modifications in response to commenters. We are also rescinding, as proposed, Form N-Q. Form N-PORT is a new portfolio holdings reporting form that will be filed by all registered management investment companies, other than money market funds and small business investment companies (“SBICs”),
Form N-PORT requires reporting of a fund's complete portfolio holdings. The form also requires additional information concerning fund portfolio holdings that is not currently required by Forms N-Q and N-CSR, and that will facilitate risk analyses and other Commission oversight. For example, Form N-PORT requires reporting of additional information relating to derivative investments. The form also includes certain risk metric calculations that measure a fund's exposure and sensitivity to changing market conditions, such as changes in asset prices, interest rates, or credit spreads. As was proposed, reports on Form N-PORT will be filed in a structured data format with the Commission on a monthly basis, with every third month available to the public 60 days after the end of the fund's fiscal quarter.
We continue to believe that more timely and frequent reporting of portfolio holdings information to the Commission, as well as the additional information Form N-PORT requires, will enable us to further our mission to protect investors by assisting the Commission and its staff in carrying out its regulatory responsibilities related to the asset management industry. These responsibilities include its examination, enforcement, and monitoring of funds, its formulation of policy, and the staff's review of fund registration statements and disclosures.
While Form N-PORT is primarily designed to assist the Commission and its staff, we also continue to believe that information in Form N-PORT will be beneficial to investors and other potential users. In particular, we believe that both sophisticated institutional investors and third-party users that provide services to investors may find the information required on Form N-PORT useful. For example, Form N-PORT's structured format will allow the Commission, investors, and other potential users to better collect and analyze portfolio holdings information.
In addition, we are adopting, largely as proposed, amendments to Regulation S-X with certain modifications in response to comments. These amendments in large part require standardized enhanced derivatives disclosures in fund financial statements. Currently, Regulation S-X does not prescribe specific information for most types of derivatives, including swaps, futures, and forwards. While many fund groups provide disclosures regarding the terms of their derivatives contracts, the lack of standard disclosure requirements has resulted in inconsistent disclosures in fund financial statements.
We continue to believe that the amendments to Regulation S-X to enhance and standardize derivatives disclosures in financial statements will allow comparability among funds and help all investors better assess funds' use of derivatives. Reports on Form N-PORT will contain similar derivatives disclosures to facilitate analysis of derivatives investments across funds. Because Form N-PORT is not primarily designed for individual investors, the amendments to Regulation S-X require disclosures concerning the fund's investments in derivatives in the financial statements that are provided to investors. We also have endeavored to mitigate burdens on the industry by conforming the derivatives disclosures that are required by both Regulation S-X and Form N-PORT.
We are adopting, substantially as proposed and with certain modifications in response to comments, Form N-CEN, a new form on which funds will report census-type information to the Commission. We are also rescinding, as proposed, Form N-SAR, the current form on which the Commission collects census-type information on management investment companies and UITs.
Form N-CEN includes many of the same data elements as Form N-SAR, but, in order to improve the quality and utility of information reported, replaces those items that are outdated or of limited usefulness with items that we believe to be of greater relevance today. Where possible, we are also eliminating items that are reported on other Commission forms, or are available elsewhere. In addition, reports on Form N-CEN will be filed in a structured XML format, which, we believe, will reduce reporting burdens for current Form N-SAR filers and yield data that can be used more effectively by the Commission and other potential users.
As discussed above, we are adopting a new monthly portfolio reporting form, Form N-PORT. Form N-PORT requires registered management investment companies and ETFs organized as UITs, other than money market funds and SBICs, to electronically file with the
As discussed further in section II.A.4, the Commission does not intend to make public the information reported on Form N-PORT for the first and second months of each fund's fiscal quarter that is identifiable to any particular fund or adviser or any information reported with regard to country of risk and economic exposure, delta, or miscellaneous securities, or explanatory notes related to any of those topics that is identifiable to any particular fund or adviser. However, the Commission may use such information in its regulatory programs, including examinations, investigations, and enforcement actions.
As the primary regulator of the asset management industry, the Commission relies on information that funds file with us, including their registration statements, shareholder reports, and various reporting forms such as Form N-CSR. The Commission and its staff use this information to understand trends in the fund industry and carry out regulatory responsibilities, including formulating policy and guidance, reviewing fund registration statements, and assessing and examining a fund's regulatory compliance with the federal securities laws and Commission rules thereunder.
Information on fund portfolios is currently filed with the Commission quarterly with up to a 70-day delay.
The information we will collect on Form N-PORT will be important to the Commission and its staff in analyzing and understanding the various risks in a particular fund, as well as risks across specific types of funds and the fund industry as a whole. These risks can include the investment risk that the fund is undertaking as part of its investment strategy, such as interest rate risk, credit risk, volatility risk, other market risks, or risks associated with specific types of investments, such as emerging market debt or commodities. Additionally, as we discuss in the Liquidity Adopting Release that we are adopting concurrently Form N-PORT will help the Commission better understand liquidity risks through additional Form N-PORT disclosure requirements discussed in that release.
Many commenters generally agreed with us that the information required on Form N-PORT will assist the Commission in better understanding each of these risks in the fund industry.
In addition to assisting the Commission in its regulatory functions, we believe, and some commenters agreed, that investors and other potential users will benefit from the
We intend to increase transparency of fund investments through Form N-PORT in several ways. First, Form N-PORT will improve reporting of fund derivative usage. As the Commission has previously noted, we have observed a dramatic growth in the volume and complexity of the derivatives markets over the past two decades.
At the end of December 2015, alternative mutual funds and exchange-traded funds had more than $200 billion in assets. Although alternative mutual funds only accounted for 1.23% of the mutual fund market as of December 2015, the almost $17.3 billion of inflows into these funds in 2015 represented 7% of the inflows for the entire mutual fund industry in that year. These statistics were obtained from staff analysis of Morningstar Direct data, and are based on fund categories as defined by Morningstar.
The information and reporting format required by Form N-PORT will create a more detailed, uniform, and structured reporting regime. We believe and several commenters agreed that this will allow the Commission and investors to better analyze and compare funds' derivatives investments and the exposures they create, which can be important to understanding funds' investment strategies, use of leverage, and potential for risk of loss.
Furthermore, as discussed further below, Form N-PORT requires funds to report certain risk metrics that would provide measurements of a fund's exposure to changes in interest rates, credit spreads and asset prices, whether through investments in debt securities or in derivatives. Financial statement information provides historical information over a particular time period (
Form N-PORT will also require information about certain fund transactions and activities such as securities lending, repurchase agreements, and reverse repurchase agreements, including information regarding the counterparties to which the fund is exposed in those transactions, as well as in over-the-counter derivatives transactions. We believe and several commenters agreed that such information will increase transparency concerning these transactions and activities and will
As discussed further below, Form N-PORT will be filed electronically in a structured, XML format. This format will enhance the ability of the Commission, as well as investors and other potential users, to analyze portfolio data both on a fund-by-fund basis and also across funds.
Many commenters were generally supportive of our proposal.
We are adopting, as proposed, the requirement that each registered management investment company and each ETF organized as a UIT file a report on Form N-PORT.
We are adopting, as proposed, the requirement that all ETFs file reports on Form N-PORT, regardless of their form of organization. Although most ETFs today are structured as open-end management investment companies, there are several ETFs that are organized as UITs.
One commenter suggested that reports on Form N-PORT should be filed by all registered investment companies, including UITs, in order to have comparable filing information across registered investment products, although the commenter did suggest that less frequent filing requirements might be appropriate based on the structure of the investment company.
The same commenter also recommended that reports on Form N-PORT be filed by business development companies (“BDCs”).
Another commenter suggested that the Commission and the CFTC should agree on and implement a substituted
Finally, one commenter stated that we should not require funds to directly report information on their own behalf, but instead require other entities such as transfer agents and custodians to report information on behalf of funds.
We are adopting, substantially as proposed, the requirements in Form N-PORT to report certain information about the fund and the fund's portfolio investments as of the close of the preceding month, including: (a) General information about the fund; (b) assets and liabilities; (c) certain portfolio-level metrics, including certain risk metrics; (d) information regarding securities lending counterparties; (e) information regarding monthly returns; (f) flow information; (g) certain information regarding each investment in the portfolio; (h) miscellaneous securities (if any); (i) explanatory notes (if any), and (j) exhibits. We are adopting these information requirements substantially as proposed, although we are making some modifications from the proposal in response to comments. Each of these is discussed in more detail below.
Part A of Form N-PORT requires, as proposed, general identifying information about the fund. This information includes the name of the registrant, name of the series, and relevant file numbers.
As proposed, funds will also provide the Legal Entity Identifier (“LEI”) number of the registrant and series.
Commenters were generally supportive of this aspect of our proposal, with most endorsing the use of LEI for identification of funds, as well as for fund counterparties.
We are adopting the requirement that funds report LEI information for the registrant and for each series, as proposed. We acknowledge that funds will incur some costs to obtain and maintain an LEI, although we believe the cost to obtain and maintain an LEI identifier is modest.
Commenters to the FSOC Notice expressed support for regulatory acceptance of LEI identifiers.
Furthermore, in response to the request that an exhaustive list of the tickers and CUSIPs associated with the fund be reported to help with the identification of entities, we note that Form N-PORT requires funds to report various identifying information, including name of the registrant, Investment Company Act file number of the registrant, CIK number of the registrant, LEI of the registrant, name of each series, EDGAR identifier (if any) for each series, and LEI for each series.
Form N-PORT also includes general filing and reporting instructions, as well as definitions of specific terms referenced in the form.
Proposed Form N-PORT would have required funds to report information about their portfolios as of the last business day, or calendar day, of the month, but did not provide specific instructions on the appropriate basis for reporting such information, such as whether the information should be reported as of the trade date (“T+0”), which is required for financial reporting purposes, or the trade date plus one day (“T+1”), which is currently permitted under rule 2a-4 for the calculation of funds' net asset values (“NAV”). Several commenters requested clarification on this issue and specifically requested that Form N-PORT allow reporting on a T+1 basis.
Many commenters noted that most funds use T+1 accounting to record their day-to-day transactions, and only convert their records to T+0 for quarterly portfolio holdings reporting purposes on Forms N-CSR and N-Q.
As discussed above, the Commission did not specify the appropriate basis for reporting, and we agree with commenters that an explicit instruction on the basis on which to report is appropriate. We are persuaded by commenters that explicitly instructing funds file on the same basis for which they calculate their NAV (generally a T+1 basis) would not be as burdensome as instructing all funds to file on a T+0 basis, and would still maintain the utility of the information reported. As noted by commenters, we acknowledge that reporting monthly information on Form N-PORT on a T+1 basis may result in differences between quarterly portfolio holdings information currently reported on a T+0 basis on Forms N-CSR and N-Q. However, any such differences are unlikely to affect the utility of the information for the Commission and other potential users, because our primary purpose for using the information is to analyze and assess the various risks in a particular fund and monitoring risks and trends in the fund industry as a whole, rather than to align the information reported with the fund's financial statements.
Nonetheless, we do not agree that funds should be permitted to file either on the basis of calculating its NAV (generally T+1) or on the basis of how they prepare financial reports (T+0) at the fund's option, as having funds report their portfolio holdings on different bases would reduce the comparability of the data reported on Form N-PORT among funds and across the industry. Accordingly, we have modified the proposal to add an instruction to Form N-PORT instructing funds that they must report portfolio information on Form N-PORT on the same basis they use to calculate their NAV, which we understand is generally T+1.
Commenters also requested confirmation that different internal methodologies could be applied in responding to certain items on Form N-PORT, such as those that may require subjective judgments on the part of funds.
One commenter recommended that we include a definition of “forward contract,” that references the settlement time of a contract, noting that from their experience, there are several interpretations of what constitutes a forward contract and without a standard definition, funds might categorize products inconsistently.
Similarly, one commenter noted that it is unclear if a credit default swap should be reported as an option or a swap on Form N-PORT since it has the characteristics of both types of investments.
A few commenters also asked for guidance as to what investments would fall within the category of “other derivatives” in Item C.11.g.
We note that definitions related to derivatives have been proposed in other contexts, for example “derivatives transaction” in our recent proposal regarding the use of derivatives by registered investment companies and BDCs.
Several commenters also asked that the definition of “investment grade” be revised to follow standards generally used by the industry by replacing references to liquidity with references to credit quality.
We have also made several changes to certain definitions and instructions related to the way in which funds will provide information on Form N-PORT, largely relating to the formatting of the information reported. Among other things, we have revised the instruction in the proposal that directed funds to respond to every item of the form.
We have also eliminated certain instructions from proposed Form N-PORT relating to the formatting of information reported on the form that, upon further consideration, we believe are unnecessary in Form N-PORT. In particular, we have eliminated instructions requiring the rounding of percentages, monetary values, and other numeric values.
We have also made clarifying revisions to certain definitions. As discussed above, we have revised the proposed definition of “exchange-traded product” to refer instead to “exchange-traded fund” to harmonize the definitions used in Forms N-PORT and N-CEN.
Finally, regarding General Instruction F, which provides information regarding the public availability of the information in Form N-PORT, the final Instruction clarifies, similar to language that is contained in current Form PF, that we do not intend to make public certain information reported on Form N-PORT “that is identifiable to any particular fund or adviser.”
Part B of Form N-PORT seeks certain portfolio level information about the fund. As we proposed, Part B includes questions requiring funds to report their total assets, total liabilities, and net assets.
Second, as we proposed, funds will also report any assets invested in a controlled foreign corporation for the purpose of investing in certain types of investments (“controlled foreign corporation” or “CFC”).
In addition, as discussed further below in section II.D.4, we believe it will be beneficial for the Commission to have certain information about funds' use of CFCs. The information we will be obtaining in Form N-PORT, combined with additional information we are requiring on Form N-CEN regarding CFCs, discussed below, will help the Commission better monitor funds' compliance with the Investment Company Act and assess funds' use of CFCs, including the extent of their use by reporting of total assets in CFCs.
Third, as we proposed, we are requiring that funds report the amounts of certain liabilities, in particular: (1) Borrowings attributable to amounts payable for notes payable, bonds, and similar debt, as reported pursuant to rule 6-04(13)(a) of Regulation S-X [17 CFR 210.6-04(13)(a)]; (2) payables for investments purchased either (i) on a delayed delivery, when-delivered, or other firm commitment basis, or (ii) on a standby commitment basis; and (3) liquidation preference of outstanding
One commenter suggested that certain fee and expense information currently reported on Form N-SAR, and Item 75 of Form N-SAR in particular—which relates to average net assets during the current reporting period—be reported on Form N-PORT.
For these reasons, we are adopting this aspect of Form N-PORT as proposed.
One of the purposes of Form N-PORT is to provide the Commission with information regarding fund portfolios to help us better monitor trends in the fund industry, including investment strategies funds are pursuing, the investment risks that funds undertake, and how different funds might be affected by changes in market conditions. As discussed above, the Commission uses information from fund filings, including a fund's registration statement and reports on Form N-CSR (which includes the fund's shareholder report) and Form N-Q, to inform its understanding and regulation of the fund industry. Additionally our staff reviews fund disclosures—including registration statements, shareholder reports, and other documents—both on an ongoing basis as well as retroactively every three years.
The disclosures in a fund's registration statement about its investment objective, investment strategies, and risks of investing in the fund, as well as the fund's financial statements, are fundamental to understanding a fund's implementation of its investment strategies and the risks in the fund. However, the financial statements and narrative disclosures in fund disclosure documents do not always provide a complete picture of a fund's exposure to changes in asset prices, particularly as fund strategies and fund investments become more complex.
Accordingly, we believe, and some commenters agreed, that it is appropriate to require funds to report quantitative measurements of certain risk metrics that will provide information beyond the narrative, often qualitative disclosures about investment strategies and risks in the fund's registration statement.
Specifically, we proposed to require certain funds to report portfolio-level measures on Form N-PORT that will help Commission staff better understand and monitor funds' exposures to changes in interest rates and credit spreads across the yield curve.
While we received some comments generally supporting our proposal to require portfolio-level risk metrics,
We believe, and some commenters agreed, that institutional investors, as well as entities that provide services to both institutional and individual investors, could use these risk metrics to conduct their own analyses in order to help them better understand fund composition, investment strategy, and interest rate and credit spread risk the fund is undertaking. As discussed further below, however, other commenters, were mixed as to whether this information would be useful for investors and if this information should be made public.
In particular, for funds that invest in debt instruments, or in derivatives that provide exposure to debt or debt instruments, we believe it is important for the Commission staff, investors, and other potential users to have measures that can help them analyze how portfolio values might change in response to changes in interest rates or credit spreads.
The delta-adjusted notional value of options is needed to have an accurate measurement of the exposure that the option creates to the underlying reference asset.
Commenters were generally supportive of our proposal to include a threshold.
We believe that a 25% threshold, as several commenters suggested, will still allow the Commission to receive measurements of duration and spread duration from funds that make investments in debt instruments as a significant part of their investment strategy because we do not believe many, if any, funds that make investments in debt instruments as a significant part of their investment strategy have less than 25% of their NAV invested in such instruments. Commenters persuaded us that some funds that primarily invest in assets other than debt instruments, such as equities, could, at times, have more than 20% of the net asset value of the fund
We agree with commenters that using the same thresholds we use for discussing industry concentration in current prospectuses is appropriate as it will achieve an objective that is similar to the one in Form N-1A of requiring funds to disclose only where such investments are a central part of the fund's investment objectives. We are therefore adopting a 25% threshold for reporting portfolio-level risk metrics.
We are also modifying the rule from the proposal to require funds to calculate this threshold on the
Finally, another commenter opposed requiring risk metrics data for index funds because it believed that this requirement would be unnecessarily burdensome for those funds.
For duration, we proposed to require that a fund calculate, the change in value in the fund's portfolio from a 1 basis point change in interest rates (commonly known as DV01) for each applicable key rate along the risk-free interest rate curve,
One commenter stated that calculating DV01 along key rates of the Treasury curve is “common and intuitive” to analyzing shifts of the yield curve.
We continue to believe that requiring funds to provide further detail about their exposures to interest rate changes along the risk-free rate curve will provide the Commission with a better understanding of the risk profiles of funds with different strategies for achieving debt exposures. For example, funds targeting an effective duration of 5 years could achieve that objective in different ways—one fund could invest predominantly in intermediate-term debt; another fund could create a long position in longer-term bonds, matched with a short position in shorter-term bonds. While both funds would have intermediate-term duration, the risk profiles of these two funds, that is, their exposures to changes in long-term and short-term interest rates, are different. Having DV01 calculations along the risk-free interest rate curve, as opposed to a single measure of duration suggested by one commenter, will clarify this difference. Moreover, as one commenter noted, “DV01 and SD01 [spread duration] are likely the measures that will be least subject to differences based on assumptions within risk models employed by fund companies” and therefore minimizes variation based on the disparate risk metrics models used by funds.
We were, however, persuaded by commenters that reducing the number of key rates that funds must report could reduce the reporting burden, while still
Form N-PORT will also require, as proposed, funds to provide the key rate duration for each applicable currency in a fund. One commenter recommended that we limit the duration to the top 5 currencies.
We continue to believe that funds should generally be required to provide the key rate duration for each applicable currency in the fund in order to understand interest rate risk to funds with significant currency risk. Nonetheless, we were persuaded by commenters that a
For both duration and spread duration, we proposed to require that funds provide the change in value in the fund's portfolio from a 1 basis point change in interest rates or credit spreads, rather than a larger change, such as 5 basis points or 25 basis points. As we noted in the Proposing Release, based on staff outreach, we believed that a 1 basis point change is the methodology that many funds currently use to calculate these risk measures at the position level for internal risk monitoring and would provide sufficient information to assist the Commission in analyzing fund exposures to changes in interest rate or credit spreads.
Additionally, while we did not propose requiring convexity, the Commission also considered and requested comment on whether funds should be required to report convexity, which facilitates more precise measurement of the change in a bond price with larger changes in interest rates because this measure captures changes in the shape of the yield curve.
Commenters suggested that we adopt risk metrics that would provide a better measure of risk over time than just DV01.
We also received several comment letters recommending that we include a measure of convexity as it is a valuable method of measuring the change of the shifting yield curve, as well as a comment to require stress tests of the portfolio of small and large changes in spreads, interest rates, and volatility.
Accordingly we believe that requiring a risk measure that shows the effect of a larger change in interest rates, coupled with DV01 as we proposed, both provides information that commenters said would be useful (
We also proposed to require that funds provide a measure of spread duration (commonly known as SDV01) at the portfolio level for each of the same maturities listed above, aggregated by non-investment grade and investment grade exposures.
One commenter stated that spread duration is a more representative measure of bond fund portfolio risk than duration alone because it “captures both interest rate risk and credit risk” and that staff should therefore use spread duration when analyzing funds.
For the same reasons discussed above for interest rate risk, however, we are limiting the required key rates for credit spread risk to 3-month, 1-year, 5-year, 10-year, and 30-year.
We also proposed to include an instruction to Item B.3 to assist funds with calculating the threshold and to allow better comparability among funds. One commenter recommended that our proposed calculation for the threshold, which the proposal defined as “notional value,” include the “contract value of each futures contract for which the underlying reference asset or assets are debt securities or an interest rate.”
Another commenter noted that non-investment grade portfolios often hold “equity-like securities,” such as convertible bonds and preferred stocks.
While the Commission continues to believe that the methodologies for reporting duration and spread duration will allow for better comparability across funds, as discussed above, we are adopting a new instruction to Form N-PORT, subject to the specific instruction in Item B.3 to calculate value, that funds may use their own internal methodologies and the conventions of their service providers, which should help minimize reporting burdens.
While we proposed that funds provide a calculation of each of these measures at a portfolio level, we also considered whether to require, and requested comment on the alternative that, instead, funds report these risk metrics for each debt instrument or derivative that has an interest rate or credit exposure.
Several commenters supported reporting at the portfolio-level rather than at the position-level.
As discussed in the Proposing Release, we believe that most funds likely calculate these risk metrics at a position-level. However, we recognize that even if such calculations are available at a position-level, reporting these metrics could cause funds to make additional systems changes to collect such position-level data for reporting, as well as potential burdens related to increased review time and quality control in submitting the reports. Therefore, on balance, we continue to believe that requiring funds to provide this information for each maturity at the portfolio level would provide a sufficient level of granularity for purposes of Commission staff analysis. We also believe that there are certain efficiencies for the Commission, its staff, investors, and other potential users to having funds report the portfolio-level calculations relative to reporting position-level calculations, as this could allow for more timely and efficient analysis of the data by not requiring users of the information to calculate the portfolio-level measures from the position-level measures.
In order to allow better comparability among funds, some commenters recommended that the Commission omit risk metrics in favor of more data on the specific investments, stating that raw data would allow the staff, investors, and other potential users to perform their own risk calculations.
Finally, commenters requested that we collect alternative risk metrics, such as the same interest rate and credit risk questions as are required by Form PF in order to improve the interoperability of the data collected for private funds and registered investment companies.
To increase the rate of return on their portfolios, some funds engage in securities lending activities whereby a fund lends certain of its portfolio securities to other financial institutions such as broker-dealers. To protect the fund from the risk of borrower default (
A fund's income from these activities may come from fees paid by the borrowers to the fund and/or from the reinvestment of collateral.
Securities lending may implicate certain provisions of the Investment Company Act, and funds that engage in securities lending do so in reliance on Commission staff no-action letters, and in some circumstances, exemptive orders.
Currently, the information that funds are required to report about securities lending activity, whether in a structured format or otherwise, is limited. For example, funds disclose on Form N-SAR whether they are permitted under their investment policies to, and whether they did engage during the reporting period in, securities lending activities.
As proposed, to address these data gaps and provide additional information to the Commission, investors, and other potential users regarding a fund's securities lending activities, we are requiring funds to report certain borrower information and position-level information monthly on Form N-PORT.
The new reporting requirements we are adopting are intended, in part, to increase the transparency of information available related to the lending of securities by funds as a subset of the universe of market participants engaged in securities lending activities.
As we explained in the Proposing Release, while we believe there is value to having information on borrowers of fund securities to monitor risk, as well as information with which to evaluate compliance with conditions set forth in staff no-action letters and exemptive orders,
Commenters generally supported our proposal to increase reporting relating to securities lending borrowers, although one commenter questioned the usefulness of borrower information given that securities lending agreements are generally indemnified by securities lending agents.
However, many commenters recommended limiting the collection of securities lending information to the top 5 or 10 securities lending borrowers presenting the greatest exposure.
We continue to believe that funds that engage in securities lending should be required to report information for all of its securities lending borrowers. In response to commenters' observations that many funds are indemnified for their securities lending transactions, we note that not all funds are so indemnified. Separately, we believe that information on borrowers is useful even if there is an indemnification by the agent. For example, such information is helpful in generally monitoring the degree to which funds are involved in securities lending transactions and the identities of borrowers engaged in such transactions. Allowing funds to exclude certain borrower information would limit the applicability and completeness of the information reported on Form N-PORT regarding counterparty risk, both to an individual fund and to the fund industry. We are not persuaded by commenters' arguments that reporting of all borrowers would be unduly burdensome or costly, as we believe funds would need to collect this information both to understand its own counterparty risk and for its own oversight of securities lending. For these reasons, we are requiring funds to report aggregate borrower exposure for all securities lending borrowers, as proposed.
Several commenters also suggested that borrower information for securities lending information should be nonpublic. In particular, these commenters expressed concerns that securities lending counterparties (
Second, based on our experience with securities lending, we are not persuaded by commenters claiming that a fund's activities in securities lending would be harmed because certain securities borrowers do not want to be identified. We note that we are not requiring identification of securities borrowers by loan, but rather on an aggregated basis. We also note that certain funds currently publicly identify securities lending borrowers twice per year in the notes to their annual and semi-annual financial statements, as permitted by GAAP.
As discussed in greater detail below, we also received various suggestions regarding how to report non-cash collateral posted by securities lending borrowers.
Several commenters also requested that Form N-PORT collect additional information regarding securities lending activities. One commenter recommended that funds report average monthly aggregate dollar amounts on loan and fee split information, as well as a brief summary of the fund's securities lending program, including risk and strategy.
We are not adopting such additional reporting requirements on Form N-PORT. As discussed further below, the amendments to the Statement of Additional Information (and, for closed-end funds, Form N-CSR) that we are adopting today will require funds to make certain disclosures in connection with their securities lending activities and cash collateral management, and Form N-CEN also requires information about a fund's securities lending program, including the average monthly value of securities on loan. Although the additional information requested by commenters may be useful to certain investors or other users, we are sensitive to the burdens on funds of additional reporting requirements. Some of the information requested by commenters, such as a brief summary of the fund's securities lending program, including risk and strategy, is already disclosed in fund registration statements.
We also received several comments requesting that we revise Form N-PORT to phase in reporting of securities lending borrowers' LEIs. Commenters urged that this requirement be delayed until LEIs have been fully integrated into the global financial system and lending agents and funds have implemented the necessary systems enhancements to facilitate LEI reporting.
For the same reasons discussed above regarding commenters' suggestions not to require disclosure of securities borrowers, we are not persuaded by such arguments. While the Commission is the primary user of the form, the new reporting requirements we are adopting today are intended, in part, to increase the transparency of information available related to the lending and borrowing of securities.
As proposed, we are requiring funds to provide monthly total returns for each of the preceding three months.
We are requiring this information on Form N-PORT because we believe it will be useful to have such information in a structured format to facilitate comparisons across funds. For example, analysis of return information over time among similar funds could reveal outliers that might merit further inquiry by Commission staff, and this type of analysis can be done much more efficiently and timely when the information is reported in a structured format. Additionally, performance that appears to be inconsistent with a fund's investment strategy or other benchmarks can form a basis for further inquiry and monitoring.
Because only quarter-end reports on Form N-PORT will be made public, we are requiring, as proposed, that funds provide return information for each of the preceding three months.
Commenters had mixed reactions regarding the reporting of monthly total returns. Several commenters expressed concern that reporting three months of returns could cause investors to unduly focus on short-term results and recommended that returns for longer periods of time be reported instead.
We are adopting this requirement as proposed. As acknowledged by commenters, many funds and market data providers already generally disclose monthly performance data to investors, and daily performance data is often available as well.
Accordingly, we are not persuaded by commenters' recommendations to require funds to report return information on Form N-PORT over longer time horizons, as opposed to on a monthly basis. We are similarly not persuaded by arguments that reporting fund performance data for three months will “[provide no] direct or indirect value to [fund] investors” as opposed to reporting one month of fund performance information.
We are also requiring, substantially as proposed, that funds report, for each of the preceding three months, monthly net realized gain (or loss) and net change in unrealized appreciation (or depreciation) attributable to derivatives for certain categories. We proposed that this information would be reported by asset category (
Comments on this aspect of the proposal were mixed. Some commenters opposed the reporting requirement, stating that it would not provide a valuable reference point from which to assess whether the derivatives included in a fund's portfolio have contributed to returns, especially when derivatives are used for hedging purposes.
Several commenters, in response to a request for comment, recommended that the Commission require funds to report the monthly net realized gain (or loss) and net change in unrealized appreciation (or depreciation) attributable to derivatives by type of derivative instrument (
We disagree with commenters questioning the utility of reporting gains (or losses) and appreciation (or depreciation) attributable to derivatives. We continue to believe that this information will help Commission staff, investors, and other potential users better understand how a fund is using derivatives in accomplishing its investment strategy and the impact of derivatives on the fund's returns. We recognize that providing this information by asset category is not how funds currently maintain this data in their systems and therefore will involve more systems changes and costs relative to providing this information by type of derivative instrument alone; however, we disagree that such information does not have a benefit that justifies this burden. Providing this information by asset category will be helpful in understanding the relationship between derivatives—and, as discussed further below, the types of derivative instruments—that provide exposure to a particular asset category and direct investments in the same asset category. For example, information attributable to equity derivatives contracts could be compared to returns attributable to direct investments in equities. Further, reporting returns by derivative instrument alone would not provide any information about the market risk factors that had caused the gain or loss.
Although we recognize that there will be some initial burden in modifying systems to provide information by asset category, we note that funds are currently already required to compile this information by asset category twice a year, pursuant to FASB Topic ASC 815.
Additionally, after consideration of the comments, we are modifying this item from the proposal to require funds to report this information by type of derivative instrument within each asset category. We believe that providing both elements—asset category and derivative instrument type—will make this information more informative than by reporting by either asset category or instrument type in isolation. For example, consider a fund that uses derivatives in two asset categories (
Moreover, based on staff review of fund financial statements, we have observed that in compliance with the requirements of FASB Topic ASC 815, upon which this reporting requirement was based, funds generally show gains (losses) and appreciation (depreciation) in tabular format by both asset category and type of derivative instrument. Because, as noted by commenters, many funds already have systems in place to classify derivatives by instrument type, we believe that requiring such information to be reported on Form N-PORT along with asset category will not add a significant incremental burden relative to providing, as proposed, such information by asset category alone.
Regarding comments concerning public disclosure of the information, we disagree with the commenter that argued such disclosures could reveal information that could be used for reverse engineering or predatory trading.
Likewise, we disagree with the commenter that asserted such information would not be meaningful to investors.
As proposed, Form N-PORT will require funds to separately report, for each of the preceding three months, the total net asset value of: (1) Shares sold (including exchanges but excluding reinvestment of dividends and distributions); (2) shares sold in connection with reinvestments of dividends and distributions; and (3) shares redeemed or repurchased (including exchanges).
We believe that having flow information reported to us monthly will help us better monitor trends in the fund industry. For example, it could help us analyze types of funds that are becoming more popular among investors and areas of high growth in the industry. It could help us better examine investor behavior in response to market events. Finally, in combination with other information that will be reported on Form N-PORT regarding liquidity of fund positions pursuant to changes to Form N-PORT set forth in the Liquidity Adopting Release, which we are adopting today, flow information could also help us identify funds that might be at risk of experiencing liquidity stress due to increased redemptions.
Commenters generally supported our proposed reporting requirements for monthly flow information.
One commenter asked the Commission to mandate that transfer agents, distributors, or some other entity (
We acknowledge the merits of helping funds better manage potential redemption risks, and further note that better transparency into intermediary omnibus accounts by each type of underlying investor would help the Commission better understand subscription and redemption activity and how it varies across distribution platforms and market environments. However, the commenter's suggestion is beyond the scope of this rulemaking, although we note that the Commission is currently seeking a range of input with respect to omnibus intermediary account relationships, including through the recently issued advance notice of proposed rulemaking and concept release with respect to transfer agent regulations, which seeks comment in various areas including the processing of book entry securities, broker-dealer recordkeeping for beneficial owners, and the role of transfer agents to mutual funds.
Another commenter recommended that monthly flow information be reported for only the last month of the reporting period, rather than for the three prior months, on the grounds that reporting this information for the three prior months would have “no direct value to investors.”
Part C of Form N-PORT will require, as proposed, funds to report certain information on an investment-by-investment basis about each investment held by the fund and its consolidated subsidiaries as of the close of the preceding month. As proposed, funds will respond to certain questions that will apply to all investments (
Also, as proposed, funds will have the option of identifying any investments that are “miscellaneous securities.”
Form N-PORT will require, as proposed, funds to report certain basic information about each investment held by the fund and its consolidated subsidiaries. In particular, funds will report the name of the issuer and title of issue or description of the investment, as they are currently required to do on their reported schedules of investments.
To address this issue, and as proposed, we are requiring that funds report additional information about the issuer and the security. Funds will report certain securities identifiers, if available.
We received comments regarding the use of unique identifiers generally, and LEI in particular. As discussed above, many commenters expressed support for the use of LEI for identification of funds, registrants, and counterparties.
As discussed above, we are adopting a portfolio-based approach in the securities lending context, including data on counterparties to whom funds have greatest exposures. However, we believe that the uniform reporting of LEIs by fund series and registrants, as well as securities issuers and fund counterparties, will further enhance our monitoring and analytical capabilities by providing a consistent means of identification that will facilitate the linkage of data reported on Form N-PORT with data from other filings and sources that is or will be reported elsewhere. We acknowledge that LEIs have not yet been fully integrated into the global financial system, and accordingly the form contains a qualifier that an LEI be reported, “if any.” We believe, however, that LEIs will become more widely used by regulators and the financial industry and note that our rulemaking will not require funds to report LEIs, if any, until 18 months following the effective date.
However, we understand that funds will in some instances be relying upon service providers and other third-parties who will be providing funds with LEI information to be reported to the Commission and publicly disclosed to investors and other possible users, and we understand that funds may find it difficult to verify such information other than to confirm that it has been generated and reported consistently with the methodologies of the fund's service providers. As discussed above, the fund may generally use its own methodology or the methodology of its service provider, so long as the methodology is consistently applied and is consistent with the way the fund reports internally and to current and prospective investors.
We are also requiring, as proposed, funds to report the amount of each investment as of the end of the reporting period, as is currently required under Regulation S-X.
Also as proposed, we are requiring funds to report the payoff profile of the investment, indicating whether the investment is held long, short, or N/A, which will serve the same purpose as the current requirement in Regulation S-X to disclose investments sold short.
As proposed, funds will also report the asset type for the investment: short-term investment vehicle (
One commenter recommended the use of a well-defined taxonomy for asset and issuer type, such as ISO 10962, or some truncation of the six-character ISO Classification of Financial Instruments code.
Funds will also report, as proposed, for each investment, whether the investment is a restricted security.
Also as proposed, each fund will report whether the investment is categorized by the fund as a Level 1, Level 2, or Level 3 fair value measurement in the fair value hierarchy under GAAP.
Several commenters supported this aspect of our proposal, noting it would enhance portfolio transparency and allow investors, plans, and fund fiduciaries to more accurately evaluate liquidity and valuation risks in funds.
However, one commenter cautioned that different fund families currently employ different accounting practices when classifying similar investments into fair value level hierarchies, and warned that the Commission staff should reconsider expectations that disclosure of these fair value levels would create comparability among different funds with regards to fair value level hierarchy classifications.
Several commenters also recommended that additional related information be reported, such as the uncertainty of valuation for thinly-traded securities and identification of the primary pricing sources used in determining the fair value level hierarchy of the investments.
In response to the last comment, we are revising Form N-PORT to allow funds to report “N/A” to this item if an investment does not have a fair value level hierarchy assigned to it pursuant to FASB Accounting Standards Update 2015-07. This revision will allow funds to report fair value hierarchy information consistently across Form N-PORT and their shareholder reports.
More generally, we acknowledge that there may be differences among fair value level hierarchy classifications between funds, even for the same investments, but believe that reporting of this information could still help Commission staff, investors, and other potential users to identify and monitor investments that may be more susceptible to increased valuation risk and identify potential outliers that warrant additional monitoring or inquiry.
We decline to add the additional information suggested by commenters related to valuation, such as more information regarding thinly-traded securities or position-level information on price sources. We believe that, unlike fair value hierarchy information, which funds already need to track for reporting purposes, this information is not currently reported by funds in any form and could be burdensome to begin reporting relative to the additional value it may provide. Accordingly, we decline to revise Form N-PORT to require funds to report this additional information.
As proposed, Form N-PORT would have required funds to report the country that corresponds to the country of investment or issuer based on the concentrations of the investment's risk and economic exposure, and, if different, the country in which the issuer is organized. As adopted, Form N-PORT will switch the sequence of those disclosures, thus requiring funds to report the country in which the issuer is organized and, if different, the country that corresponds to the country of investment or issuer based on the concentrations of the investment's risk and economic exposure.
We received mixed comments on this aspect of our proposal. Commenters generally supported the requirement to report the country in which the issuer is organized.
Partly in response to these concerns, and as discussed above, we are revising Form N-PORT to include instructions clarifying that in reporting information on Form N-PORT, funds may generally use their own internal methodologies and the conventions of their service providers, provided that the information they report is consistent with information that they report elsewhere (
More generally, several commenters sought confirmation that funds would not be required to look through any entities in its portfolio holdings except as specifically instructed in Form N-PORT.
The proposed form also would have required funds to identify each investment that is “illiquid.”
In addition to the information required above, as proposed, Form N-PORT would require additional information about each debt security held by the fund in order to gain transparency into the payment flows and potential convertibility into equity of such investments, as such information can be used to better understand the payoff profile and credit risk of these investments. First, funds would report the maturity date and coupon (reporting the annualized interest rate and indicating whether fixed, floating, variable, or none).
While commenters were generally supportive of this requirement, they requested that we provide clear standards for reporting or more granular classifications.
As proposed, funds would also indicate whether the security is currently in default, whether interest payments for the security are in arrears or whether any coupon payments have been legally deferred by the issuer, as well as whether any portion of the interest is paid in kind.
Another commenter recommended eliminating the requirements relating to whether a debt security is currently in default or any of the interest payments are in arrears or have been deferred.
As we discuss in more detail in section II.C.3 below, commenters noted that in-kind payments where
Finally, we proposed to require additional information for convertible securities, to indicate whether the conversion is mandatory or contingent.
We received several comments relating to the disclosures of convertible securities. One commenter requested that the securities be consistently reported across funds and include additional instructions for calculating delta.
Another commenter suggested that we eliminate the additional information proposed in Form N-PORT for convertible securities as they do not represent significant data points from which to assess risk.
As we proposed, and in addition to the information required above for all investments, Form N-PORT requires each fund to report additional information for each repurchase and reverse repurchase agreement held by the fund. The fund will report the category that reflects the transaction from the perspective of the fund (repurchase, reverse repurchase), whether the transaction is cleared by a central counterparty—and if so the name of the central counterparty—or if not the name and LEI (if any) of the over-the-counter counterparty, repurchase rate, whether the repurchase agreement is tri-party (to distinguish from bilateral transactions), and the maturity date.
These disclosures will enhance the information currently reported regarding funds' use of repurchase agreements and reverse repurchase agreements. Information regarding repurchase agreements will be comparable to similar disclosures currently required to be made by money market funds on Form N-MFP. The categories used for reporting collateral will track the categories currently used to report tri-party repurchase agreement information to the Federal Reserve Bank of New York. We believe that conforming the categories that will be used in Form N-PORT to categories used in other reporting contexts will ease reporting burdens and enhance comparability.
One commenter agreed with our proposed reporting, but recommended, without further elaboration, that reporting of collateral be done on the basis of aggregate security type rather than at the individual security level.
In contrast, another commenter asserted that funds should apply the same taxonomy when reporting collateral that would be used when reporting the fund's portfolio investments on Form N-PORT, which would result in a more granular disclosure of collateral.
After considering these comments, we are adopting this requirement as proposed. As mentioned above, the information that funds will report is aligned with similar information publicly reported on Form N-MFP by money market funds, reported to the Federal Reserve by banks, and publicly reported by fund companies operating globally and offering managed products in Europe. Uniform reporting of this information under the common taxonomy that has already been developed and is being used by other financial institutions will help facilitate the linkage of data reported on Form N-PORT with data from other filings and sources. For these reasons, we are not persuaded by the suggestions of one commenter to require collateral to be reported on an aggregate level,
We are also not persuaded by assertions by commenters that this type of information could reveal any strategies competitors could use to their advantage. As indicated above, such information is currently routinely publicly disclosed in other contexts, and commenters did not specify how additional disclosure on Form N-PORT could result in harm. More generally, using a different taxonomy for funds with regards to repurchase and reverse repurchase agreements or keeping such information nonpublic or making it available on only an aggregated basis would hinder the ability of Commission
As discussed above and in the Proposing Release, the current reporting regime for derivatives has led to inconsistent approaches to reporting derivatives information and, in some cases, insufficient information concerning the terms and underlying reference assets of derivatives to allow the Commission or investors to understand the investment. Additionally, as discussed further below, for options, warrants, and certain convertible bonds, the Commission believes that it is important to have a measurement of “delta,” a measure not reported in the financial statements or schedule of investments, to better understand the exposure to the underlying reference asset that the options, warrants, and certain convertible bonds produce in the portfolio. Currently, the Commission and investors are sometimes unable to accurately assess funds' derivatives investments and the exposures they create, which can be important to understanding funds' investment strategies, use of leverage, and potential risk of loss.
With this rulemaking, we will increase transparency into funds' derivatives investments by requiring funds to disclose certain characteristics and terms of derivative contracts that are important to understand the payoff profile of a fund's investment in such contracts, as well as the exposures they create or hedge in the fund. This will include, for example, exposures to currency fluctuations, interest rate shifts, prices of the underlying reference asset, and counterparty credit risk. As discussed further below, we are also amending Regulation S-X to make similar changes to the reporting regime for derivatives disclosures in fund financial statements.
While we received comments supporting our proposal to include specific information about position-level derivatives,
As we discuss more fully below in section II.A.4, we continue to believe that it is important that, in addition to the Commission, investors receive enough information in order to evaluate an investment and make appropriate investing decisions. Moreover, much of the information required in Form N-PORT is already reported in fund financial statements, or will be with our amendments to Regulation S-X, albeit in an unstructured format. As we describe more fully in section II.A.4 below, we generally believe that the reporting requirements of Form N-PORT are appropriate given the filer's status as a registered investment company with the Commission. Moreover, we generally believe that investors, directly and indirectly, should have access to portfolio information in a structured data format, to assist them with making more informed investing decisions. We thus believe that certain position-level information should be reported publicly on a quarterly basis.
Consequently, in addition to the information required above for all investments, we proposed to require additional information about each derivative contract in the fund's portfolio. As proposed, funds would report the type of derivative instrument that most closely represents the investment (
As discussed below in section II.C.2, the derivative instrument type categories identified in Form N-PORT are similar to the categories disclosed by funds in amended Regulation S-X. We designed these categories to enable funds to report position-level information on their investments in derivatives, while leaving enough flexibility to allow funds to categorize investments in the future that are not currently traded by funds.
In the case of Form N-PORT, in addition to the categories, the Commission will receive additional position-specific data, which will allow the user of the information to better understand each position, without solely relying on the instrument type. However, we acknowledge the potential for confusion regarding the categorization of different types of
As proposed, funds would also report the name and LEI (if any) of the counterparty (including a central counterparty).
As proposed, Form N-PORT would also require funds to report terms and conditions of each derivative investment that are important to understanding the payoff profile of the derivative.
We recognize that some derivatives have underlying assets that are indexes of securities or other assets or a “custom basket” of assets, the components of which are not always publicly available. We proposed requirements to ensure that the Commission, investors, and other potential users are aware of the components of such indexes or custom baskets. As proposed, if the reference instrument is an index for which the components are publicly available on a Web site and are updated on that Web site no less frequently than quarterly, funds would identify the index and provide the index identifier, if any.
We received a number of comments on our proposal to publicly disclose the components of the underlying index or custom basket. While some commenters agreed with our proposal,
We continue to believe that it is important for the Commission,
Moreover, for purposes of this calculation, we believe that it is appropriate to measure whether such derivative instrument exceeds the 1% threshold based on the derivative's notional value, as opposed to the current market value of the derivative, because derivatives with a small market value could have a much larger potential impact on a fund's performance than the current market value would suggest, and thus believe that a derivative's notional value better measures its potential contribution to the gains or losses of the fund.
We also solicited comment on whether we should limit the required disclosure of index components to the top 50 components and/or components that represent more than 1% of the index. In response to this request for comment commenters suggested that once a nonpublic index crosses the reporting threshold, we limit disclosure to the top 50 components and components that represent more than one percent of the index based on the notional value of the derivatives, as this standard is analogous to the current reporting requirement to identify holdings in the summary schedule of investments. Commenters stated that this would reduce reporting burdens for funds that invest in indexes with a large number of components.
Some commenters also objected to the public disclosure of the components underlying an index as that disclosure could harm the intellectual property rights that index providers might assert and, as a result, harm investors who may lose the benefit of index products that would no longer be available to them, should an index provider choose to no longer do business with a fund, rather than have its index's components made publicly available.
We believe that it is fundamental to the reporting by funds that fund shareholders have access to the information necessary to understand the exposures of their fund's investments.
Moreover, while some commenters noted that obtaining information on the components of an underlying index may be difficult,
For the reasons discussed above, we believe that it is important that the Commission and investors have full transparency into any index or custom basket that significantly contributes to a fund's NAV. However, we were also persuaded by commenters that, in cases of indexes with a large number of components, and where the index only constitutes a small portion of the fund's investments, disclosure of every component could yield information on underlying investments that constitute only a “miniscule” percentage of the fund's NAV.
Accordingly, we are adopting a tiered reporting structure for the reporting of the components of an index or custom basket underlying a derivative. For investments in a non-public index or custom basket that represent more than 1%, but less than 5%, of a fund's net assets, funds will be required to report the top 50 components of the basket and, in addition, those components that exceed 1% of the notional value of the
We developed this tiered threshold in response to commenters, discussed above, that suggested a higher
A commenter also objected to disclosure of unrealized appreciation or depreciation for each component of the index or custom basket arguing that such information would be costly to maintain as the fund would be required to create a record of the value of each underlying security in the index at the time the derivatives contract is entered into.
Thus, if the index's or custom basket's components are not publicly available and the notional amount of the derivative represents more than 1%, but less than 5%, of the net asset value of the fund, the fund will provide the name, identifier, number of shares or notional amount or contract value as of the trade date (all of which would be reported as negative for short positions), and value, for (i) the 50 largest components in the index or custom basket and (ii) any other components where the notional value for that component is over 1% of the notional value of the index or custom basket.
We also proposed to require funds to report the delta of options and warrants, which is the ratio of the change in the value of the option or warrant to the change in the value of the reference instrument.
We requested comment on our proposal to require funds to report the delta for options and warrants. Some commenters supported our proposal to require funds to report delta for options and warrants.
We continue to believe that the reporting of delta for options and warrants will provide the Commission a more accurate measure of a fund's full exposure to the fund's investments in options and warrants. Accordingly, we believe that having the measurement of delta for options is important for the Commission to measure the impact, on a fund or group of funds that holds options on an asset, of a change in such asset's price. Also, as the Commission has previously observed, funds can use written options as a form of obtaining a leveraged position in an underlying reference asset.
As a result, we are adopting the requirement that funds report delta for options and warrants as proposed. While one commenter noted that there are a variety of models to calculate delta and requested a specific approach to calculating delta, based on staff
For futures and forwards (other than foreign exchange forwards, which share similarities with foreign exchange swaps and should be reported accordingly as discussed below), as proposed, Form N-PORT would require funds to report a description of the reference instrument, the payoff profile (
One commenter noted that the terms “foreign exchange swaps” and “foreign exchange forwards” are defined terms under the Commodity Exchange Act, as amended by the Dodd-Frank Act and such terms exclude non-deliverable forwards, which are included in the Commodity Exchange Act's definition of swaps. As the commenter pointed out, such distinctions between deliverable and non-deliverable forwards are not relevant in the context of reporting of forward contracts on Form N-PORT.
We also received no comments relating to our proposed elements for reporting of foreign forward foreign currency contracts and foreign currency swaps (other than the above-mentioned term changes) and are adopting it substantially as proposed with one clarifying instruction with respect to reporting depreciation.
For swaps (other than foreign currency swaps), as proposed, funds would report the description and terms of payments necessary for a user of financial information to understand the nature and terms of payments to be paid and received, including, as applicable: A description of the reference instrument, obligation, or index; financing rate to be paid or received; floating or fixed rates to be paid and received; and payment frequency.
Commenters expressed concern that publicly disclosing financing rates for swaps contracts could harm shareholders as financing rates are commercial terms of a deal that are negotiated between the fund and the counterparty to the swap.
One commenter noted that proposed Form N-PORT did not include certain data elements that relate to the detailed calculations of cash flows, such as inflation index based values and lags associated with principal resets for over-the-counter swaps and caps and floors embedded in swaps.
As we discussed above, as proposed, Form N-PORT would require funds to provide a description and terms necessary for a user of financial information to understand the terms of payments to be paid and received.
Finally, for derivatives that do not fall into the categories enumerated in Form N-PORT, we proposed that funds would provide a description of information sufficient for a user of financial information to understand the nature and terms of the investment.
We received no comments on this aspect of the proposal other than one commenter that noted that the proposed list of derivative “categories” could leave major categories of derivatives to be reported as “other.”
As discussed above, and as we proposed, we will require funds to report on Form N-PORT, for each of their securities lending counterparties as of the reporting date, the full name and LEI of the counterparty (if any), as well as the aggregate value of all securities on loan to the counterparty.
These disclosures will provide information about how funds reinvest the cash collateral received from securities lending activity and should allow for more accurate determination of the value of collateral securing such loans. This information will also allow us to determine whether funds that are relying on exemptive orders or no-action assurances to engage in securities lending are complying with any associated conditions regarding collateral received for such activities. This will improve the ability of Commission staff, as well as investors, brokers, dealers, and other market participants to assess collateral reinvestment risks and associated potential liquidity risk and risk of loss, as well as better understand any potential leverage creation through the reinvestment of collateral.
One commenter suggested that non-cash collateral information should not be publicly disclosed but did not elaborate on why such information should be kept nonpublic.
Several commenters recommended that non-cash collateral be reported in aggregate terms rather than as individual portfolio positions.
In Part D of Form N-PORT, as we proposed, and as currently permitted by Regulation S-X, funds will have the option of identifying and reporting certain investments as “miscellaneous securities.”
Commenters generally supported the separate nonpublic disclosure of individual miscellaneous securities, and noted that the current reporting provisions under Regulation S-X regarding miscellaneous securities have been effective and not abused.
In Part E of Form N-PORT, as was proposed, funds will have the option of providing explanatory notes relating to the filing.
These notes, which will be optional, could be used to explain assumptions that funds made in responding to specific items in Form N-PORT. Funds could also provide context for seemingly anomalous responses that may benefit from further explanation or discuss issues that could not be adequately addressed elsewhere given the constraints of the form. Similar information in other contexts has assisted Commission staff in better understanding the information provided by funds, and we expect that explanatory notes provided on Form N-PORT would do the same.
One commenter supported the proposal to allow funds to report explanatory notes, but requested that the notes remain nonpublic.
As discussed above, funds may generally use their own internal methodologies and the conventions of their service providers in reporting information on Form N-PORT.
In Part F of Form N-PORT, for reports filed for the end of the first and third quarters of the fund's fiscal year, as proposed, a fund will also attach the fund's complete portfolio holdings as of the close of the period covered by the report. These portfolio holdings will be presented in accordance with the schedules set forth in §§ 210.12-12 to 12-14 of Regulation S-X, and will not be required to be reported in a structured data format.
As discussed further below in section II.B, we are rescinding Form N-Q because reports on Form N-PORT for the first and third fiscal quarters will make similar reports on Form N-Q unnecessarily duplicative. While we recognize that the quarterly, publicly disclosed reports on Form N-PORT will provide structured data to investors and other potential users, we also recognize that some individual investors may not want to access the data in an XML format. We believe that such investors might prefer that portfolio holdings schedules for the first and third quarters continue to be presented using the form and content specified by Regulation S-X, which investors are accustomed to viewing in reports on Form N-Q and in shareholder reports. Therefore, as proposed, we are requiring that, for reports on Form N-PORT for the first and third quarters of a fund's fiscal year, the fund will attach its complete portfolio holdings for that fiscal quarter, presented in accordance with the schedules set forth in §§ 210.12-12 to 12-14 of Regulation S-X.
Requiring funds to attach these portfolio holdings schedules to reports on Form N-PORT will provide the Commission, investors, and other potential users with access to funds' current and historical portfolio holdings for those funds' first and third fiscal quarters. This will also consolidate these disclosures in a central location, together with other fund portfolio holdings disclosures in shareholder reports and reports on Form N-CSR for funds' second and fourth fiscal quarters.
Consistent with current practice and our proposal, funds will have until 60 days after the end of their second and fourth fiscal quarters to transmit reports to shareholders containing portfolio holdings schedules prepared in accordance with Regulation S-X for that reporting period.
Several commenters requested that funds be permitted to file Regulation S-X compliant portfolio holdings schedules within 60 days after the end of the reporting period for the first and third fiscal quarters consistent with how Form N-Q is filed today, rather than within 30 days after the end of the reporting period, as we proposed.
As discussed above, we proposed that funds would report information on Form N-PORT in XML, so that Commission staff, investors, and other potential users could download structured data for immediate aggregation and comparison, for example by creating databases of fund portfolio information to be used for data analysis. Forms N-CSR and N-Q are not currently filed in a structured format, which results in reports that are comprehensible to a human reader, but are not suitable for automated processing, and generally require filers to reformat the required information from the way it is stored for normal business uses.
Most commenters generally supported reporting in a structured format. Several commenters supported our proposal to require reports on Form N-PORT in XML,
Based upon our experiences with Forms N-MFP and PF, both of which require filers to report information in an XML format, we believe that requiring funds to report information on Form N-PORT in an XML format is the most appropriate method of structuring this type of data.
We considered, as several commenters suggested, alternative formats to XML, such as XBRL. However, while XBRL allows issuers to capture the rich complexity of financial information presented in accordance with GAAP, we believe that XML is more appropriate for the reporting requirements that we are adopting. Form N-PORT, as well as Form N-CEN, as adopted, will contain a set of relatively simple characteristics of the fund's portfolio- and position-level data, such as fund and class identifying information, that is more suited for XML than XBRL, as explained further in section III.F below.
We also considered, as one commenter suggested, ways to standardize the formatting requirements across all fund reporting. However, based on staff experience reviewing fund filings, we believe that different filing formats (
We proposed that funds report information on Form N-PORT on a monthly basis, no later than 30 days after the close of each month.
Several commenters requested that we instead require quarterly reporting, either permanently or for an initial period, citing to either data security concerns (discussed below), the increased filing burdens of Form N-PORT, or both.
Notwithstanding data security concerns, which are discussed further below, commenters generally supported the proposed requirement for monthly reporting.
We are requiring that funds file reports on Form N-PORT within 30 days of month-end. Based on staff experience with funds and fund filings, we believe that 30 days is sufficient time to report this information. Separately, we believe that requiring funds to file reports more than 30 days after month end will result in less timely data being submitted to the
Several commenters discussed the need for appropriate data security practices for the data on Form N-PORT that will be kept nonpublic.
The Commission recognizes the importance of sound data security practices and protocols for nonpublic information, including information that may be competitively sensitive. The Commission has substantial experience with the storage and use of nonpublic information reported on Form PF, delayed public disclosure of information on Form N-MFP (although the Commission no longer delays public disclosure of reports on Form N-MFP), as well as other nonpublic information that the Commission handles in its course of business. Commission staff is carefully evaluating the data security protocols that will apply to nonpublic data reported on Form N-PORT in light of the specific recommendations and concerns raised by commenters. Drawing on its experience, the staff is working to design controls and systems for the use and handling of Form N-PORT data in a manner that reflects the sensitivity of the data and is consistent with the maintenance of its confidentiality.
As discussed above, we proposed that the information reported on Form N-PORT for the third month of each fund's fiscal quarter be made publicly available 60 days after the end of the Fund's fiscal quarter.
Comments were mixed on this aspect of the proposal. We received a number of comments objecting to the public disclosure of any information on Form N-PORT on a quarterly basis.
Most commenters who addressed this issue did not support the public reporting of all Form N-PORT filings (
As discussed further below, commenters that believed that Form N-PORT should remain nonpublic, or that believed certain information items should remain nonpublic, raised two concerns. First, some commenters argued that some of the information on Form N-PORT could potentially be proprietary, and lead to harm to the fund and its investors if publicly released. For example, for derivatives, payment terms, including financing rates, are negotiated rates; as a result, commenters expressed concern that public disclosure may harm a fund's ability to negotiate favorable terms on behalf of its investors.
Second, some commenters noted that if certain information items, such as the proposed risk metrics, monthly return information, and country of risk are publicly disclosed, it could potentially confuse and mislead investors.
Subject to discrete information items discussed further below, the Commission is adopting as proposed the public disclosure of funds' quarter-end Form N-PORT with a 60-day delay from the reporting period. We decline to adopt the suggestion of some commenters that all reports filed on Form N-PORT remain nonpublic. The Commission believes that the public reporting requirements of Form N-PORT generally are appropriate given the filer's status as a registered investment company with the Commission, which is based on the tenets of disclosure and transparency to fund investors, and not as a private fund.
We believe that, on balance, investors would benefit from the information that will be reported on Form N-PORT. Likewise, the Commission continues to believe that public availability of information, including the types of information that will be collected on Form N-PORT that may not currently be reported or disclosed by funds, can benefit investors and other potential users by assisting them in making more informed investment decisions.
We continue to recognize, however, that more frequent portfolio disclosure than is currently required could potentially harm fund shareholders by expanding the opportunities for professional traders to exploit this information by engaging in predatory trading practices, such as trading ahead of funds, often called “front-running.”
We recognize that some free-riding and front running activity can occur even with quarterly disclosure, with the potential for investor harm.
We have considered both the benefits to the Commission, investors, and other potential users of public portfolio disclosures, including the reporting of such disclosures in a structured format and additional portfolio information that will be required on Form N-PORT, as well as the potential costs associated with making that information available to the public, which could be ultimately borne by investors.
As commenters pointed out, we recognize that we are requiring additional data points in Form N-PORT, as well as requiring the data to be structured, which represents a change regarding the scope of information available to the public. As discussed above, however, we believe that generally this additional information can benefit investors. Additionally, while we recognize that an increase in the amount of publicly available information has the potential to facilitate predatory trading, as discussed in section III.B.3 below, we do not believe that quarterly public disclosure with a 60-day lag will have a significant, additional competitive impact. We discuss commenters' concerns about specific data items below.
Funds are currently required to disclose their portfolio investments quarterly, via public filings with the Commission and semi-annual reports distributed to shareholders, with the exception of “miscellaneous securities” which funds are not required to disclose pursuant to Regulation S-X. Consequently, the Commission will not make public the information reported for the first and second months of each fund's fiscal quarter on Form N-PORT, nor any “miscellaneous securities” reported for the third month of each fund's fiscal quarter.
We continue to believe that maintaining the status quo with regard to the frequency and the time lag of portfolio reporting will allow the Commission, the fund industry, and the marketplace to assess the impact of the structured and more detailed data reported on Form N-PORT on the mix of information available to the public, and the extent to which these changes might affect the potential for predatory trading, before determining whether more frequent or more timely public disclosure would be beneficial to investors in funds.
As noted above, some commenters, while generally supporting quarterly
Similarly, as discussed above, commenters noted that disclosing detailed information on the components of nonpublic indexes could violate the intellectual property rights that index providers might assert. This could result in harm to investors who may lose the benefit of index products that would no longer be available to them, should an index provider choose to no longer do business with a fund, rather than have its index's components made public and open the index to front-running and reverse engineering.
Commenters also objected to the public disclosure of securities lending information, such as the identity of borrowers and the aggregate value of securities on loan to a counterparty, as such disclosures could cause securities lending counterparties, in an attempt to keep their securities lending exposures private, to be less willing to borrow securities from funds.
As we discussed in section II.A.2.g.ii, one commenter noted that public disclosure on default, arrears, or deferred coupon payments raises competitive concerns when a debt security relates to an issuer that is a private company, as private borrowers may avoid registered funds in order to avoid public disclosure if the company becomes distressed. However, as we noted in that section, we believe that it is important that a fund's investors have access to this information so that they can make fully informed decisions regarding their investment.
Finally, some commenters believed that certain items could be misinterpreted by investors, resulting in investors being misled or confused. Specifically, some commenters believed that monthly return data (including monthly returns attributable to derivatives) could cause investors to mistakenly focus on short-term results or otherwise confuse investors.
Several commenters also believed that investors would be unduly confused by the disclosure of the portfolio-level and position-level risk metrics.
For similar reasons, we intend to keep information reported for country of risk and economic exposure nonpublic.
Lastly, as discussed above, we recognize that explanatory notes related to nonpublic items should be nonpublic as well.
Along with our adoption of new Form N-PORT, we are also rescinding Form N-Q, as we proposed. Management companies other than SBICs are currently required to report their complete portfolio holdings as of the end of their first and third fiscal quarters on Form N-Q. Because the data reported on Form N-PORT will include the portfolio holdings information contained in reports on Form N-Q, we believe that Form N-PORT will render reports on Form N-Q unnecessarily duplicative. Therefore, we believe it is appropriate to rescind Form N-Q rather than require funds to report similar information to the Commission on two separate forms.
However, as noted earlier, we believe that individual investors and other potential users might prefer that portfolio holdings schedules for the first and third quarters continue to be presented using the form and content specified by Regulation S-X, which investors are accustomed to viewing in reports on Form N-Q and in shareholder reports. Therefore, and as proposed, we are requiring that, for reports on Form N-PORT for the first and third quarters of a fund's fiscal year, the fund will attach its complete portfolio holdings for that fiscal quarter, presented in accordance with the schedules set forth in §§ 210.12-12 to 12-14 of Regulation S-X [17 CFR 210.12-12—12-14].
We requested comments on our proposed rescission of Form N-Q. One commenter supported our proposed rescission of Form N-Q.
In connection with the Commission's implementation of the Sarbanes-Oxley Act of 2002, Form N-Q and Form N-CSR currently require the principal executive and financial officers of the fund to make quarterly certifications relating to (1) the accuracy of information reported to the Commission, and (2) disclosure controls and procedures and internal control over financial reporting.
Under today's amendments, and as we proposed, the certifications as to the accuracy of the portfolio schedules reported for the second and fourth fiscal quarters on Form N-CSR will remain. However, and as we proposed, we are amending the form of certification in Form N-CSR to require each certifying officer to state that he or she has disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year, rather than the registrant's most recent fiscal quarter as currently required by the form.
Commenters generally agreed with our proposed approach, although several commenters suggested maintaining Form N-Q on the grounds that Form N-PORT may not serve the interests of investors or because of their assertions that reports on Form N-PORT
As part of our larger effort to modernize the manner in which funds report holdings information to investors, we are adopting amendments to Regulation S-X, which prescribes the form and content of financial statements required in registration statements and shareholder reports.
As outlined below, we are adopting amendments to Articles 6 and 12 of Regulation S-X that will: (1) Require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts,
The comments that we received relating to our proposal to amend Regulation S-X were generally supportive of our efforts to improve the information that funds report to shareholders and the Commission.
The rules that we are adopting will renumber the current schedules in Article 12 of Regulation S-X and break out the reporting of derivatives currently on Schedule 12-13 into separate schedules.
We believe, and commenters agreed, that these amendments will assist comparability among funds, and increase transparency for investors regarding a fund's use of derivatives.
In 2011, as part of a wider effort to review the use of derivatives by management investment companies, we issued a concept release and request for comment on a range of issues.
We are adopting rules that will standardize the reporting of certain derivative investments for fund financial statements. While the current rules under Regulation S-X establish general requirements for portfolio holdings disclosures in fund financial statements, they do not prescribe standardized information to be included for derivative instruments other than options. Current rule 12-13 of Regulation S-X (Investments other than securities) requires limited information on the fund's investments other than securities—that is, the investments not disclosed under current rules 12-12, 12-12A, 12-12B, and 12-14.
To address issues of inconsistent disclosures and lack of transparency as to derivative instruments, we are amending Regulation S-X by adopting new schedules for open futures contracts, open forward foreign currency contracts, and open swap contracts. We received several comments generally supporting the Commission's proposals to provide
We are also modifying the current disclosure requirements for purchased and written option contracts. Finally, we are adopting certain instructions regarding the presentation of derivatives contracts that are generally consistent with instructions that are currently included, or that we are adding, in either rule 12-12 (Investments in securities of unaffiliated issuers) or current rule 12-13 (Investments other than securities).
We are amending the current disclosure of written option contracts substantially as proposed.
We received several comments relating to the proposed requirement to disclose notional amounts for open options contracts. Some commenters recommended that the Commission either eliminate the proposed notional amount column for certain options contracts as they believed it was unnecessary because, unlike the notional amount of swaps and futures, which communicates economic exposure, the notional amount of an option, without a delta adjustment, may not represent an equivalent position in the underlying reference asset
We also proposed to add an instruction (proposed instruction 3) to current rule 12-12, which is the schedule by which purchased options are required to be disclosed, that would require funds to provide all information required by proposed rule 12-13 for written option contracts.
For options where the underlying investment would otherwise be presented in accordance with another provision of rule 12-12 or proposed rules 12-13 through 12-13D, we also proposed requiring that the presentation of that underlying investment must include a description, as required by those provisions.
In order to assist investors in identifying and monitoring the counterparty risks associated with a fund's investments in derivatives, we proposed to require funds to disclose
Another commenter suggested that funds should be required to present counterparty exposures net of collateral received or margin posted.
As required in Form N-PORT,
We received a number of comments on our proposal to publicly disclose the components of an underlying index, both with respect to Form N-PORT (discussed above) and Regulation S-X.
As stated in the Proposing Release and in the Form N-PORT discussion above, we continue to believe that it is important for the Commission, investors, and other potential users to have transparency into exposures to assets that the fund has, regardless of whether the fund directly holds investments in those assets or chooses to create those exposures through a derivatives contract.
We also believe that it is appropriate to measure whether such derivative instrument exceeds the 1% threshold based on the derivative's notional value, as opposed to the current market value because derivatives with a small market value and a large notional amount could magnify losses or gains in net assets as compared to derivatives with a smaller notional amount, and thus believe that a derivative's notional value better measures its potential contribution to the gains or losses of the fund. Furthermore, as in Form N-PORT, we believe that providing a 1%
Commenters also suggested that funds should provide narrative disclosures about the components of a referenced index or custom basket, including any applicable industry or sector concentrations.
While, as we discussed above, we believe that it is appropriate to adopt a tiered reporting requirement for reporting on Form N-PORT, we are not adopting a tiered reporting requirement for disclosures under Regulation S-X. Unlike Form N-PORT, which will be reported in a structured XML format, schedules of investments are designed to be investor friendly documents. By requiring the reporting in the schedule of investments of all components of an underlying index or custom basket, we agree with commenters that noted that requiring the potential volume of disclosing components in an index in financial statements could add considerable length to the schedule of investments, rendering them more difficult for investors to review than limiting such disclosures to the most significant components.
As a result, we are making a modification from our proposed amendments to Regulation S-X to require funds to only report the top 50 components of the index or custom basket and any components that represent more than one percent of the notional value of the index or custom basket.
As discussed more fully above, commenters also objected to the public disclosure of the components underlying an index as that disclosure could harm the intellectual property rights that index providers might assert and, as a result, harm investors who may lose the benefit of index products that would no longer be available to them.
We are adopting as proposed new rule 12-13A, which will require standardized reporting of open futures contracts. Under current rule 12-13, many funds currently report for each open futures contracts a description of the futures contract (including its expiration date), the number of contracts held (under the balance held—quantity column), and any unrealized appreciation and depreciation (under the value column).
We proposed a requirement that funds must reconcile the total of Column F (unrealized appreciation/depreciation) to the total variation margin receivable or payable on the related balance sheet.
We received a comment that suggested that the Commission provide specific definitions for the terms “notional amount” and “value” for futures contracts.
We are also adopting, as proposed, but subject to the modifications discussed below,
We are also adopting as proposed new rule 12-13B, which requires standardized disclosures for open forward foreign currency contracts.
One commenter recommended that we include a clear definition of “forward contract” to avoid potential confusion and foster consistent derivatives disclosure under Form N-PORT, Regulation S-X, and Form ADV.
Commenters suggested that open forward foreign currency contracts be grouped by currencies purchased or sold, or more specifically by US dollars when US domiciled funds mark currency to the US dollar within financial statements.
One commenter suggested that since most funds report derivatives on a gross basis, appreciation and depreciation for the disclosures of non-exchange-traded derivatives such as forward foreign currency contracts and swaps contracts should be disclosed in two separate columns or include subtotals, rather than in one column, as was proposed.
We are also adopting, as proposed, but subject to the modifications discussed below,
We are also adopting, substantially as proposed, rule 12-13C, which will standardize reporting of fund positions in open swap contracts.
In addition to the major categories of swaps, commenters also recommended that centrally cleared swaps be grouped separately from over-the-counter swaps, as centrally cleared swaps do not bear the same types of risks as over-the-counter swaps.
We are also adopting instruction 3 of rule 12-13C as proposed, which will provide specific examples of the more common types of swap contracts (
In the context of providing comments on Form N-PORT, one commenter noted that credit default swaps are unique enough instruments that they should be treated separately from other types of swaps.
Consistent with comparable reporting requirements that we proposed in connection with Form N-PORT and rule 12-13 (open options contracts), in the case of a swaps contract with an underlying investment that is an index or basket of investments for which components are publicly available on a Web site as of the fund's balance sheet date,
In a modification from the proposal, and as discussed more fully in the open option contracts
For swaps which pay or receive financing payments, we proposed that funds would disclose variable financing rates in a manner similar to disclosure of variable interest rates on securities in accordance with instruction 4 to proposed rule 12-12.
We are also adopting, as proposed, but subject to the modifications discussed below,
We are also adopting, as proposed, amendments to current rule 12-13 and, for organization and consistency, are renumbering it as rule 12-13D.
While we did not propose changes to the current schedules for rules 12-12, 12-12A, and 12-12C, we proposed certain additional rule instructions that would include new reporting requirements, as well as certain clarifying changes, including renumbering several of the schedules. With the exception of the instructions discussed below, we are adopting the amendments to new rules 12-12 through 12-12B as proposed.
We proposed several modifications to the instructions to rule 12-12, the rule concerning disclosure of investments in securities of unaffiliated issuers. We proposed to modify instruction 2 to rule 12-12 (and the corresponding instructions to proposed rules 12-12A, 12-12B, 12-13D, and 12-14) which would require funds to categorize the schedule by type of investment, the related industry,
One commenter requested that, should we adopt the proposed instructions relating to categorization of both industry and geographic region (which, as discussed in the prior paragraph, we are not adopting), the instructions should be integrated into Regulation S-X that standardize how funds report geographic concentrations.
In order to provide more transparency to a fund's investments in debt securities, we are adopting, with certain modifications discussed below, our proposed instruction to rule 12-12 requiring a fund to indicate the interest rate or preferential dividend rate and maturity date for certain enumerated debt instruments.
We continue to believe that disclosure of the referenced rate and spread will allow investors to better understand the economics of the fund's investments in variable rate debt securities. We are persuaded, however, that the period-end interest rate is also important for investors because it will provide investors with the actual interest rate of the investment at the period end, thereby giving investors both the ability to understand the investment's current return (through period-end rate) and to better understand how interest rate changes could affect the investment's future returns. Therefore, in a modification from the proposal, we are now including in the instruction a requirement that the fund both describe the referenced rate and spread and provide the end of period interest rate for each investment, or include disclosure of each referenced rate at the end of the period.
We also proposed to modify the current instruction to rule 12-12
We proposed to modify current instruction 3 of rule 12-12 (proposed instruction 5 of rule 12-12) concerning the organization of subtotals for each category of investments, making the instructions consistent with those in proposed rule 12-12B (current rule 12-12C), Summary schedule of investments in securities of unaffiliated issuers.
Likewise, we are adopting several modifications to rule 12-12A regarding the presentation of securities sold short, in order to conform the instructions to rule 12-12.
The proposal included an instruction in the schedule, as we proposed in the other schedules, that would require the fund to identify each issue of securities held in connection with open put or call option contracts.
Funds are permitted to include in their reports to shareholders a summary portfolio schedule, in lieu of a complete portfolio schedule, so long as it conforms with current rule 12-12C
We proposed several instructions to the proposed rules in order to maintain consistency with the disclosures required by current rules 12-12 and 12-13. Current rule 12-13 contains an instruction requiring identification of “each investment not readily marketable.”
We received comments generally supporting the disclosure of investments fair valued using significant unobservable inputs.
We received one comment relating to our proposed instruction requiring identification of a derivative that cannot be sold because of restrictions or conditions applicable to the derivative.
Current rules 12-12, 12-12C, and 12-13 each contain an instruction to include tax basis disclosures for investments.
We agree that tax disclosures relating to the portfolio as a whole provides sufficient information for investors. However, current GAAP disclosures do not require funds to report the cost of all investments in an unrealized appreciation and the cost of all assets in an unrealized depreciation on a gross basis, which we believe may be useful to investors to further understand the potential amounts they might receive and on which they could be taxed. As a result, we have determined not to extend the tax basis disclosures currently required by rules 12-12, 12-12B, and 12-13 to our new disclosures of derivative investments (rules 12-13 through 12-13C) and securities sold short (rule 12-12A). For the same reasons, we are removing this disclosure requirement from each of the rules 12-12, 12-12B (current rule 12-12C), and 12-13D (current rule 12-13)
We also proposed to require funds to identify illiquid investments.
We proposed amendments to rule 12-14 (Investments in and advances to affiliates).
Likewise, in instruction 6(e) and (f), we proposed to require disclosure of total realized gain or loss and total net increase or decrease in unrealized appreciation or depreciation for affiliated investments in order to
Additionally, we proposed a new instruction 7 in order to make the categorization of investments in and advances to affiliates consistent with the method of categorization used in rules 12-12, 12-12A, and 12-12B, for which we received no comments and are adopting as proposed.
We proposed several other amendments to the instructions to rule 12-14 in order to, in part, conform the rule to our disclosure requirements in rules 12-12 and 12-13. Subject to the modifications discussed above in section II.C.4, we are adopting as proposed.
Finally, we are adopting substantially as proposed, revisions to Article 6 of Regulation S-X, which prescribes the form and content of financial statements filed for funds. Many of the revisions we are adopting today are intended to conform Article 6 with our changes to Article 12 and update other financial statement requirements.
A BDC is a closed-end fund that is operated for the purpose of making investments in small and developing businesses and financially troubled businesses and that elects to be regulated as a BDC.
In order to allow a more uniform presentation of investment schedules in a fund's financial statements, we proposed to rescind subparagraph (a) of rule 6-10 under Regulation S-X, regarding which schedules are to be filed.
Another commenter requested that we require disclosure of costs associated with the management of controlled foreign corporations (“CFCs”) or expenses embedded in the return being received in the footnotes to the financial statements.
Current rule 6-10(a) also provides that if the information required by any schedule (including the notes thereto) is shown in the related financial statement or in a note thereto without making such statement unclear or confusing, that procedure may be followed and the schedule omitted.
We also proposed changes to rules 6-03 and 6-04 to specifically reference the investments required to be reported on separate schedules in amended Article 12.
We are also adopting, as proposed, an amendment to rule 6-04 to refer individually to our derivatives disclosures in proposed rules 12-13A through 12-13C.
We also proposed, amendments to rule 6-05.3 which would specifically require presentation of items relating to investments other than securities in the notes to financial statements.
We also proposed to add new disclosure requirements that are designed to increase transparency to investors about certain investments and activities. First, we proposed to add new subsection (m) to rule 6-03 that would require funds to make certain disclosures in connection with a fund's securities lending activities and cash collateral management in order to allow investors to better understand the income generated from, as well as the expenses associated with, securities lending activities.
Second, we proposed to amend rule 6-07 to require funds to make a separate disclosure for income from non-cash dividends and payment-in-kind interest on the statement of operations.
Other commenters requested that we define “non-cash dividends” and “payment-in-kind-interest earned.”
We proposed to amend rule 6-07.7(a) in order to conform statement of operations disclosures of the net realized gains or losses from investments to include our additional derivatives disclosures in proposed rules 12-13A through 12-13C.
We also proposed to eliminate Regulation S-X's requirement for specific disclosure of written options activity under current rule 6-07.7(c).
We proposed to eliminate the exception in Schedule II of current rule 6-10 which does not require reporting under current rule 12-13 if the investments, at both the beginning and end of the period, amount to one percent or less of the value of total investments.
We are adopting a new framework by which registered investment companies will report census-type information to the Commission by rescinding Form N-SAR and replacing it with a new form—Form N-CEN.
In recent years, Commission staff has found that the utility of the information reported on Form N-SAR has become increasingly limited. We believe there are two primary reasons for this limited utility. First, in the past two decades, we have not substantively updated the information reported on the form to reflect new market developments, products, investment practices, or risks. Second, the technology by which funds file reports on Form N-SAR has not been updated and limits the Commission staff's ability to extract and analyze the data reported. We believe that by updating the content and format requirements for census reporting through new Form N-CEN, the Commission will be better able to carry out its regulatory functions while at the same time reducing burdens on filers.
Many commenters agreed that Form N-SAR is outdated and commended the Commission's efforts to improve the relevance of information reported to the Commission.
Form N-CEN gathers similar census information about the fund industry that funds currently report on Form N-SAR, which will be able to be aggregated and analyzed by Commission staff to better understand industry trends, inform policy, and assist with the Commission's examination program. To improve the quality and utility of information reported, Form N-CEN streamlines and updates information reported to the Commission to reflect current Commission staff information needs and developments in the industry.
In order to improve the utility of the information reported to the Commission, we are requiring that reports on Form N-CEN be structured in an XML format.
One commenter expressed support for the XML format.
As discussed above in connection with Form N-PORT, based upon our experiences with Forms N-MFP and PF, both of which require filers to report information in an XML format, we believe that requiring funds to report information on Form N-CEN in an XML format will provide the information that we seek in an appropriate manner.
We are adopting, as proposed, the requirement that all registered investment companies, except face-amount certificate companies,
Like Form N-SAR, the sections of Form N-CEN that a fund is required to complete will depend on the type of registrant in order to better tailor the reporting requirements.
• All management companies, other than SBICs, will complete Part C;
• Closed-end funds and SBICs will complete Part D;
• ETFs (including those that are UITs) will complete Part E;
• UITs will complete Part F.
Management investment companies currently file reports on Form N-SAR semi-annually,
We proposed that for all funds, the reporting period for Form N-CEN reports would be based on the fund's fiscal year.
We have also added an instruction to the form to clarify that management investment companies that offer multiple series with different fiscal year ends must file a report as of each fiscal year end that responds to (i) Parts A, B, and G, and (ii) Part C and, if applicable, Part E as to only those series with the fiscal year end covered by the report.
Additionally, we received a number of comments on the proposed 60-day filing period. Some commenters supported this proposed filing period.
We have been persuaded by these comments and are adopting a filing period of 75 days after the fiscal year-end (for management companies) and calendar year-end (for UITs). We believe that a 75-day filing period appropriately balances the staff's need for timely information against the time necessary for a fund to collect, verify, and report the required information to the Commission. Furthermore, the census-type information reported on Form N-CEN, in our experience, does not change frequently, thereby reducing the risk that a longer filing period would cause the information provided to become stale.
Current rule 30b1-3 under the Investment Company Act requires a fund to file a transition report on Form N-SAR when a fund's fiscal year changes.
As proposed, a fund would be able to file an amendment to a previously filed report on Form N-CEN at any time, including an amendment to correct a mistake or error in a previously filed report.
Similar to Form N-PORT,
We are adopting, as proposed, Part A of Form N-CEN. We did not receive comments on Part A. Part A, which will be completed by all funds, will collect information about the reporting period covered by the report. It requires funds to report the fiscal-year end date and indicate if the report covers a period of less than 12 months.
We proposed a number of reporting items under Part B of Form N-CEN to provide information about the registrant. Although commenters did not raise broad objections to the reporting requirements under Part B, many commenters raised concerns with and/or requested clarification on specific reporting items. We are adopting Part B substantially as proposed with some modifications in response to comments on specific reporting items. Where we have received comments on specific reporting requirements, we discuss them in more detail below.
As proposed, Part B of Form N-CEN would have been required to have been completed by all funds and would have required certain background and other identifying information about the funds. Part B of Form N-CEN, as proposed, would have included an instruction that required funds offering multiple series to provide a response for each series when the response to an item in Part B of the form differed between series, and to label the response with the name and series identification number of the series to which a response relates.
As proposed, Part B of the form requires certain background and other identifying information about the fund. This background information will allow the staff to categorize filers by fund type and will assist with our oversight of
We are adopting, as proposed, the requirement that funds include the location of their books and records in reports on Form N-CEN. We note that books and records information is currently required by fund registration forms;
Similar to Form N-SAR,
We are adopting, as proposed, a requirement in Form N-CEN that the fund provide its classification (
We are also adopting, as proposed, the requirement in Form N-CEN that a management company report information about its directors, including each director's name, whether they are an “interested person” (as defined by section 2(a)(19) of the Investment Company Act), and the Investment Company Act file number of any other registered investment company for which they serve as a director.
However, in a modification from the proposal, we have determined to add one additional reporting requirement concerning directors. In the Proposing Release, we solicited comment regarding whether Form N-CEN should require any additional information concerning directors. In response, a commenter stated that, as discussed below, the proposed form would require funds to report CRD numbers for CCOs, as applicable, and suggested that data users could more readily analyze particular directors across funds and over time if a unique identifier were reported for each director.
In addition, as proposed, a fund will be required to provide the CCO's name, CRD number (if any), address, and phone number,
One commenter suggested that the Commission require additional information concerning CCOs, such as “length of service and prior experience in order to aid in assessing the caliber of a fund or a fund company's regulatory practices.”
We are also adopting, substantially as proposed, the requirement in Part B that funds report matters that have been submitted to a vote of security holders during the relevant period.
Form N-CEN, like Form N-SAR, will also include an item relating to material legal proceedings during the reporting period.
Form N-SAR currently requires management companies to report a number of data points relating to fidelity bond and errors and omissions insurance policy coverage.
One item requires funds to report if any claims were filed under the management company's fidelity bond and the aggregate dollar amount of any such claims.
In order to better understand instances when funds receive financial support from an affiliated entity, we are adopting, substantially as proposed but with a modification that is designed to address a commenter's suggestion, a new requirement for information regarding the provision of such financial support.
One commenter suggested that, for purposes of Form N-CEN, the instruction concerning the definition of “financial support” provide additional guidance concerning exclusions from the definition. The proposed instruction regarding the definition of “financial support” provided for certain of the exclusions suggested by the commenter, such as for routine waiver of fees or reimbursement of fund expenses and routine inter-fund lending.
We are also adopting, as proposed, an item in Form N-CEN requiring reporting as to whether the fund relied on orders from the Commission granting the fund an exemption from one or more provisions of the Investment Company Act, Securities Act or Securities Exchange Act during the reporting period.
One commenter expressed support for this new reporting requirement, including the reporting of release numbers applicable to such exemptive orders.
As proposed, Form N-CEN, similar to Form N-SAR,
If the independent public accountant changed since the last filing, under the proposal, the fund would also have been required to provide a detailed narrative attachment to Form N-CEN similar to the exhibit in Form N-SAR reporting a change in independent registered public accountants, along with the predecessor accountant's letter reporting the change in independent registered public accountants also required to be reported on Form N-SAR.
Some commenters expressed concern that because Form N-CEN would be an annual reporting form, rather than a semi-annual reporting form like Form N-SAR, the exhibit may be filed a significant amount of time after an accountant had changed.
We also proposed to include for all funds several other accounting and valuation related items that are currently required for management companies by Form N-SAR, and that provide important information to the Commission regarding possible accounting and valuation issues related to a fund. Commenters generally did not object to these proposed reporting requirements,
One commenter expressed support for this reporting requirement, noting that the information would be sufficient to conduct due diligence on pricing and valuation issues.
In addition, and as proposed, funds will also be required to provide a brief description of the types of investments involved.
We are also adopting, largely as proposed, a requirement in Form N-CEN that management companies other than SBICs, file a copy of their independent public accountant's report on internal control as an attachment to their reports on the form.
We are also adopting, largely as proposed, a requirement in Form N-CEN, not contained in Form N-SAR, to indicate whether, during the reporting period, an open-end fund made any payments to shareholders or reprocessed shareholder accounts as a result of an NAV error.
In addition, one commenter requested that we revise the item to ensure that any errors that “exceeded the registrant's threshold for reprocessing” were captured, even if the reprocessing was paid for by a service provider.
As proposed, Form N-CEN also requires information from management companies regarding payments of dividends or distributions that required a written statement pursuant to section 19(a) of the Investment Company Act and rule 19a-1 thereunder.
We proposed a number of reporting items under Part C of Form N-CEN to provide the Commission and its staff with background information on the fund industry and to assist us in meeting our legal and regulatory requirements, such as requirements under the Paperwork Reduction Act. Additionally, certain demographic information in Part C will allow the Commission to better identify particular types of management companies for monitoring and analysis if, for example, an issue arose with respect to a particular fund type. We are adopting those reporting items substantially as proposed with some modifications in response to comments. Where we have received comments on specific reporting requirements, we discuss them in more detail below.
Part C will be completed by management investment companies other than SBICs. As in the proposal, for management companies offering multiple series, the required information will be reported separately as to each series.
Similar to Form N-SAR and as proposed, Form N-CEN includes general identifying information on management companies and any series thereof, including the full name of the fund, the fund's series identification number and LEI, and whether it is the fund's first time filing the form.
Form N-CEN also requires—substantially as proposed with some modifications in response to public comment—management companies to identify if they are any of the following types of funds:
For purposes of reporting on Form N-CEN, as proposed, “index fund” is defined as an investment company, including an ETF, which seeks to track the performance of a specified index.
As proposed, “interval fund” is defined as a closed-end management company that makes periodic repurchases of its shares pursuant to rule 23c-3 under the Investment Company Act.
For purposes of reporting on Form N-CEN, we also proposed to define “fund of funds” as a fund that acquires securities issued by another investment company in excess of the amounts permitted under section 12(d)(1)(A) of the Investment Company Act.
As proposed, “master-feeder fund” was defined as a two-tiered arrangement in which one or more funds holds shares of a single fund in accordance with section 12(d)(1)(E) of the Investment Company Act.
ETFs and ETMFs, index funds, and master-feeder funds are also required to provide additional information under Part C.
While supporting the inclusion of tracking difference and tracking error reporting items, a couple of commenters suggested alternatives to the calculation methods underlying the reporting requirements, including, for example, measuring tracking error on a weekly or monthly basis rather than a daily basis as proposed.
Specifically, tracking difference will be calculated as the annualized difference between the index fund's total return during the reporting period and the index's return during the reporting period, and tracking error will be calculated as the annualized standard deviation of the daily difference between the index fund's total return and the index's return during the reporting period.
Finally, as proposed, master funds will be required to provide identifying information with respect to each feeder fund, including information on unregistered feeder funds (
We are also adopting, as proposed, the requirement in Form N-CEN that a management company report if it seeks to operate as a non-diversified company, as defined in section 5(b)(2) of the Investment Company Act.
Form N-CEN requires, as proposed, that a management company identify if it invests in a CFC for the purpose of investing in certain types of instruments, such as commodities.
As discussed above, we are adopting requirements that funds provide certain
We proposed, and continue to believe it is appropriate, that some important information concerning securities lending activity by funds should be reported in a structured format, but on a less frequent basis than reports on Form N-PORT. In this regard, we believe that the proposed annual reporting requirement on Form N-CEN yields sufficiently timely data and more appropriately balances the requirements' benefits with their associated costs than would additional monthly reporting requirements on Form N-PORT. Some commenters expressed general support for reporting securities lending information on Form N-CEN.
We acknowledge that the commenter's recommended additions could yield information that may be useful to the Commission as well as to some data users, and recognize that a fund board's consideration of securities lending services may rightfully include consideration of how securities are selected for loan and the other matters raised by the commenter. However, the information required by Form N-CEN is intended primarily for Commission regulatory purposes, and—balancing those purposes against the reporting costs associated with additional requirements—we have determined that the requirements we are adopting today are appropriate. The adopted requirements are meant to yield census-type information that is, to the extent practicable, comparable across reporting funds and that permits the Commission and other potential users to follow up, as appropriate, on patterns and idiosyncrasies in the reported data. We believe, therefore, that the nuanced information the commenter suggests requiring is better provided in a fund's registration statement than in reports on Form N-CEN, to the extent required.
We are therefore adopting, as proposed, a requirement that each management company report annually on new Form N-CEN whether it is authorized to engage in securities lending transactions and whether it loaned securities during the reporting period.
As in the proposal, management companies that loaned any securities during the reporting period will be required to report certain information, with some modifications in response to comments. Specifically, those management companies will be required to report annually whether any borrower of securities failed to return the loaned securities by the contractual deadline with the result that the fund (or its securities lending agent) liquidated collateral pledged to secure the loaned securities or that the fund was otherwise adversely impacted during the reporting period.
However, this reporting requirement has been modified from the proposal, which would have required funds to report whether a borrower defaulted on its obligations to return loaned securities or return them on time in connection with a security on loan during that period. Some commenters requested that the Commission narrow the definition of borrower default to exclude “technical” defaults, citing concerns that the item, as proposed, could be read to require that funds report any default, including defaults that are not likely to result in potential harm to the fund and would not appropriately represent counterparty risk.
We are persuaded by commenters and have modified the reporting requirement regarding borrower default to focus on failures to return loaned
We are also adopting, as proposed, a requirement that management companies report whether a securities lending agent or any other entity indemnifies the fund against borrower default on loans administered by the agent and certain identifying information about the entity providing indemnification if not the securities lending agent.
One commenter recommended that details concerning indemnification protection should be made nonpublic.
Because management companies often engage external service providers as securities lending agents or cash collateral managers, we believe that some of the risks associated with securities lending activities by management companies could be impacted by these service providers and the nature of their relationships with the management companies and the interconnectedness these service providers may have one with another. Accordingly, we are adopting, as proposed, a requirement that management companies report some basic identifying information about each securities lending agent and cash collateral manager.
As proposed, Form N-CEN also requires each management company to report whether it has made any of several specific types of payments, including a revenue sharing split, non-revenue sharing split (other than an administrative fee), administrative fee, cash collateral reinvestment fee, and indemnification fee, to one or more securities lending agents or cash collateral managers during the reporting period.
We believe that the information we proposed about the types of payments relating to securities lending activities will allow the Commission, investors and other management company boards of directors to understand better the nature of fees a management company pays in connection with securities lending activities and whether, for example, the revenue sharing split that the company pays to a securities lending agent includes compensation for other services such as administration or cash collateral management.
Finally, we are also adopting a requirement that funds report the net income from securities lending activities in Form N-CEN.
Together, the data that these requirements will yield will allow the Commission to better understand the interaction of these service providers with management companies. We also believe that the reporting of this data will increase the transparency of information available to the public on the lending and borrowing of securities by funds, a subset of the market participants engaged in securities lending activities.
We are adopting, as proposed, a requirement in Form N-CEN that management companies report whether they relied on certain rules under the Investment Company Act during the reporting period.
One commenter suggested that the Commission specify the name of each rule next to the rule number.
In addition, we are adopting, as proposed, amendments to rule 10f-3 to eliminate the requirement that funds provide the Commission with reports on Form N-SAR regarding any transactions effected pursuant to the rule.
As in Form N-SAR,
Form N-CEN (similar to Form N-SAR)
Unlike Form N-SAR, Form N-CEN will, as proposed, also require the
One commenter recommended that the text of Item C.10 separate the term “transfer agent” from “sub-transfer agents” by including disclosures about the nature of the services rendered by sub-transfer agents to help assess shareholder costs paid.
With respect to custodian information, one commenter suggested that the form should require identification of the primary custodian only, citing that the primary custodian is the primary service provider of the fund, whereas any sub-custodians, depositories, or clearing organizations that provide custodial services will be a function of the specific instruments that the fund invests in during the reporting period.
As proposed, the form would have included two new requirements regarding pricing services. Management companies would have to provide identifying information on persons that provided pricing services during the reporting period,
One commenter expressed support for the new reporting requirements, noting that the information would be sufficient to conduct due diligence on pricing and valuation issues.
As in the proposal, Part C will also require identifying information on the ten entities that, during the reporting period, received the largest dollar amount of brokerage commissions from the management company
In a modification from the proposal, we are now including a requirement that (1) funds other than money market funds report their monthly average net assets during the reporting period,
One commenter suggested that such net asset information (
The Commission recognizes that closed-end funds and SBICs have particular characteristics that warrant questions targeted specifically to them.
Similar to Form N-SAR, we are adopting, as proposed, a reporting requirement in Part D of Form N-CEN for information on the securities that have been issued by the closed-end fund or SBIC, including the type of security issued (common stock, preferred stock, warrants, convertible securities, bonds, or any security considered “other”), title of each class, exchange where listed, and ticker symbol.
Like Form N-SAR,
As proposed, we are also carrying over Form N-SAR's requirements
We are also adopting, as proposed, requirements in Part G of Form N-CEN that closed-end funds or SBICs file attachments regarding material amendments to organizational documents,
Similar to Form N-SAR, we are adopting, as proposed, a requirement for other census-type information relating to management fees and net operating expenses. Closed-end funds will be required to report the fund's advisory fee as of the end of the reporting period as a percentage of net assets.
Additionally, as proposed, closed-end funds and SBICs will both be required to report the fund's net annual operating expenses as of the end of the reporting period (net of any waivers or reimbursements) as a percentage of net assets.
Finally, as proposed, Form N-CEN (like Form N-SAR) will require information regarding an SBIC's investment advisers,
As we proposed, we are adopting a section in Form N-CEN related specifically to ETFs—Part E—which ETFs will complete in addition to Parts A, B, and G, and either Part C (for open-end funds) or Part F (for UITs). For purposes of Form N-CEN, an ETF is a special type of investment company that is registered under the Investment Company Act as either an open-end fund or a UIT. Unlike other open-end funds and UITs, an ETF generally does not sell or redeem its shares except in large blocks (or “creation units”) and with broker-dealers that have contractual arrangements with the ETF (called “authorized participants”).
ETFs currently are subject to the same information reporting requirements on Form N-SAR as are other open-end funds or UITs, and they are not required to report additional, more specialized information because Form N-SAR predates the introduction of ETFs to the market and has not been amended to address ETFs' distinct characteristics. In 2009, the Commission amended its registration statement disclosure requirements for ETFs
Some commenters supported having a distinct section for ETFs.
Some of the new reporting requirements for ETFs that we are adopting today as part of Form N-CEN relate to an ETF's (or its service provider's) interaction with authorized participants. These entities have an important role to play in the orderly distribution and trading of ETF shares and are significant to the ETF marketplace.
Currently, the information we have regarding reliance by ETFs on particular authorized participants is limited, and we believe that collecting information concerning these entities on an annual basis will allow us to understand and better assess the size, capacity, and concentration of the authorized participant framework and also inform the public about certain characteristics of the ETF primary markets. Accordingly, we are adopting, as proposed, a new requirement for each ETF to report identifying information about its authorized participants.
In addition, we are adopting a requirement for each ETF to report the dollar value of the ETF shares that each authorized participant purchased and redeemed from the ETF during the reporting period.
We also proposed, in the Liquidity Proposing Release, to require an ETF to report whether it required that an authorized participant post collateral to the ETF or any of its designated service providers in connection with the purchase or redemption of ETF shares during the reporting period.
Other new reporting requirements relate to certain characteristics of ETF creation units—the large blocks of shares that authorized participants may purchase from or redeem with the ETF. In the primary market, ETF shares, bundled in creation units, are sold or redeemed for consideration composed of some combination of the ETF's constituent portfolio securities (
In order to better understand the capital markets implications of different creation unit requirements, primary market transaction methods, and transaction fees, we proposed requirements that ETFs annually report summary information about these characteristics of creation units and primary market transactions. ETFs are not currently required to report the information discussed below in a structured format, and public availability of many of the new data items is limited and indeterminable. To better understand how common different transaction methods are and the degree to which they vary across ETFs and over time, we proposed to require that ETFs report the total value (i) of creation units that were purchased by authorized participants “primarily” in exchange for portfolio securities on an in-kind basis; (ii) of those that were redeemed “primarily” on an in-kind basis; (iii) of those that were purchased by authorized participants “primarily” in exchange for cash; and (iv) of those that were redeemed “primarily” on a cash basis.
We found this comment persuasive, and we agree with the commenter that it would better achieve the proposed requirement's purpose of better understanding different creation unit requirements, primary market transaction methods, and transaction fees to collect such information in a manner that obviates the need for the “primarily” distinction about which the commenter expressed concern. Therefore, in a modification from the proposal, we have eliminated the proposed distinction between “primarily” in-kind and “primarily” cash transactions. Instead, as adopted, Form N-CEN will require ETFs to report, based on the dollar value paid for each creation unit purchased by authorized participants during the
To better understand the effects of primary market transaction fees on ETF pricing and trading and to better inform the public about such fees, we also proposed a requirement that ETFs report applicable transaction fees—including each of “fixed” and “variable” fees—applicable to the last creation unit purchased and the last creation unit redeemed during the reporting period of which some or all of the creation unit was transacted on a cash basis, as well as the same figures for the last creation unit purchased and the last creation unit redeemed during the reporting period of which some or all of the creation unit was transacted on an in-kind basis.
As discussed above, one commenter expressed concerns about a potential lack of uniformity in how ETFs name and calculate transactional fees and suggested that the Commission provide definitional guidance about the types of fees to be reported in order to receive accurate and standardized information.
We find both of these comments persuasive, and consistent with our overarching objectives of the proposed requirement to collect information that helps data users better understand the effects of primary market transaction fees on ETF pricing and trading and to better inform the public about such fees in a manner that is more representative of the ETF's activity over the course of the reporting period, while being flexible enough to embrace the range of activity in the ETF market today and, to the extent practicable, in the future. Therefore, in a modification from the proposal that we believe will better help us meet these objectives while also responding to commenters' concerns, we are requiring reporting of average fees based on the terms by which they are applied rather than how they are characterized or what purpose they serve. Thus we have modified the proposed requirement in two respects: First, the terms “fixed fee” and “variable fee” have been eliminated, and the fees required to be reported have been specified in a manner that would allow ETFs that today or in the future employ an alternative transaction fee schedule to report those fees consistent with their actual practice. Second, the requirement to report as to the last creation unit purchased or redeemed has been replaced with a requirement to report as to the average creation unit purchased or redeemed during the reporting period, so that the information reported will better reflect the ETF's fees over the course of the reporting period rather than at a specific moment in time. Accordingly, we are adopting a requirement that, as to creation units purchased by authorized participants during the reporting period, ETFs report the average transaction fee (i) charged in dollars per creation unit;
We also are adopting, as proposed, a requirement for ETFs to report the number of ETF shares required to form a creation unit as of the last business day of the reporting period,
Finally, with respect to ETFs that are UITs, we are requiring information regarding whether the index whose performance the fund tracks is constructed by an affiliated person of the fund and/or exclusively constructed for the fund, as requested by a commenter,
As proposed, Part F of Form N-CEN requires information specific to UITs. Like Form N-SAR, Form N-CEN recognizes that UITs have particular characteristics that warrant questions targeted specifically to them.
Form N-CEN (similar to Form N-SAR
As in the proposal and similar to Form N-SAR,
We are also adopting, as proposed, new requirements in Form N-CEN for separate accounts offering variable annuity and variable life insurance contracts. Specifically, if the UIT is a separate account of an insurance company, Form N-CEN requires reporting of its series identification number
With respect to insurance company separate accounts, we are also adopting, as proposed, new requirements in Form N-CEN to identify and provide census information for each security issued through the separate account. These requirements will include the name of the security,
Finally, as proposed, Form N-CEN carries over the Form N-SAR
Like Form N-SAR,
Thus, as proposed, all funds are required, where applicable, to file attachments regarding legal proceedings,
In addition, as in the proposal, all funds will be required, where applicable, to provide attachments relating to information required to be filed pursuant to exemptive orders issued by the Commission and relied on by the registrant,
As noted earlier, all of the attachments required by Form N-CEN, except one, are currently required by Form N-SAR.
As we discussed above and in the Proposing Release, with Form N-CEN, we seek to modernize and improve the information that we collect in order to reflect changes in the fund industry since Form N-SAR's adoption in 1985. Accordingly, and substantially as proposed, we are not carrying forward certain items in Form N-SAR to Form N-CEN that we believe are no longer needed by Commission staff or are outdated in their current form. For example, in Form N-CEN, we are not including Form N-SAR's requirement relating to considerations which affected the participation of brokers or dealers or other entities in commissions or other compensation paid on portfolio transactions.
As proposed, Form N-CEN eliminates a number of Form N-SAR items where the information is (or will be) reported elsewhere—for example, items relating to fees and expenses, including front-end and deferred/contingent sales loads, redemption and account maintenance fees, rule 12b-1 fees, and advisory fees.
One commenter requested that the Commission include certain information required on Form N-SAR that was proposed to be eliminated in Form N-CEN.
We are also eliminating, as proposed, certain information requirements specifically relating to SBICs and UITs that we no longer believe are necessary to collect on a census form because, much like the items discussed above, the benefit of having such information is minimal to the Commission's oversight and examination functions while the burdens to these funds of reporting such information is costly.
The full list of items from Form N-SAR that will be included in Form N-CEN or eliminated is included in Figure 2 below.
The Commission proposed new rule 30e-3 under the Investment Company Act, which would have permitted a fund to satisfy requirements under the Act and rules thereunder to transmit reports to shareholders if the fund made
Proposed rule 30e-3 generated substantial public comment, with over 900 commenters expressing views on the rule. Comments received on the proposal were mixed. Many commenters expressed support for the proposed rule, citing, for example, positive internet access and use trends, consistency with the preferences of many investors, intra- and inter-agency regulatory consistency benefits, and anticipated reduction in printing and mailing expenses for funds and their shareholders.
While the Commission plans to continue to consider how to promote electronic transmission to those who might prefer it, the comments discussed above raised issues with respect to this proposal that merit further consideration. We have, therefore, determined not to adopt proposed rule 30e-3 at this time.
We are also adopting form amendments that require a management investment company to disclose in its registration statement (or, in the case of a closed-end fund, its reports on Form N-CSR) certain disclosures regarding securities lending activities.
We received a number of comments addressing our proposed securities lending disclosures. Comments on the proposed disclosure requirements were mixed. Most of the commenters who addressed the issue expressed support for requiring disclosure of securities lending income and fees, although some specifically opposed or expressed concerns about the proposed requirement to disclose the terms governing the compensation of the securities lending agent.
We continue to believe that because net earnings from securities lending can contribute to the investment performance of a fund, investors and others would benefit from the additional transparency into the impact of securities lending fees on the income from these activities and further believe that the benefits of this additional transparency justify the potential unintended consequences, highlighted by commenters and discussed below, of public disclosure of certain information. We have, however, made certain modifications to the proposed requirements in an effort to mitigate some of these potential consequences.
As proposed, certain disclosures relating to securities lending activities, including income and expenses, would have been required to be included in a fund's financial statements.
As discussed in detail below, the final rules will require funds to disclose gross and net income from securities lending activities, fees and compensation in total and broken out by enumerated types, and a description of the services provided to the fund by the securities lending agent. We proposed to require disclosure of gross income from securities lending, including income from cash collateral reinvestment;
The modifications from the proposed requirements are designed to, among other things, enhance comparability of the disclosed information and potentially ameliorate some concerns commenters expressed about the proposed required public disclosure of the terms governing compensation of the securities lending agent. Several commenters expressed concern that the proposed disclosure requirements could yield information that would suggest, inaptly, that fees and expenses related to securities lending activities among funds are readily compared and contrasted.
The comparability of the disclosed fee and expense information may also depend on the nature of the services provided to a particular fund in connection with its securities lending activities. To that end, we proposed a disclosure requirement for a description of services included in the fund's arrangement with its securities lending agent.
Another commenter expressed concerns that the proposed fee and expense information could be used to evaluate the terms of a fund's lending arrangements and could, without access to additional information, result in potentially inappropriate conclusions that a fund negotiated its arrangements poorly or was otherwise disadvantaged in its negotiations.
Commenters also expressed concerns with the proposed requirements based on the currently nonpublic character of some of the information that would be required to be disclosed publicly, particularly the proposed requirement to disclose the terms governing compensation of the securities lending agent.
In particular, some commenters suggested that, rather than requiring disclosure of the terms governing the compensation of the securities lending agent, as we proposed,
We also proposed to require disclosure of gross income from securities lending, including income from cash collateral reinvestment,
We also proposed to require disclosure of the monthly average of the value of portfolio securities on loan.
As proposed, we are also adopting technical and conforming amendments to various rules and forms. As discussed above, we are rescinding Form N-Q and adopting new Form N-PORT. In order to implement this change, we are revising Forms N-1A, N-2, and N-3 to refer to the availability of portfolio holdings schedules attached to reports on Form N-PORT and posted on fund Web sites rather than on reports on Form N-Q.
We are also rescinding Form N-SAR and replacing it with new Form N-CEN. In order to implement this change, we are revising the following rules and sections to remove references to Form N-SAR and replacing them with references to Form N-CEN: 17 CFR 232.301, 17 CFR 240.10A-1, 17 CFR 240.12b-25, 17 CFR 249.322, 17 CFR 249.330, 17 CFR 270.8b-16, 270.30d-1, 17 CFR 274.101, and Form N-8F.
Currently, reports on Form N-SAR are filed semi-annually by management investment companies as required by 17 CFR 270.30b1-1, and annually by UITs as required by 17 CFR 270.30a-1. Because we are requiring reports on Form N-CEN to be filed annually by all registered investment companies, we are rescinding 17 CFR 270.30b1-1 and revising 17 CFR 270.30a-1 to require all registered investment companies to file reports on Form N-CEN. We are also revising the following rules to remove references to 17 CFR 270.30b1-1 and add references to revised rule 17 CFR 270.30a-1: 17 CFR 240.13a-10, 17 CFR 240.13a-11, 17 CFR 240.13a-13, 17 CFR 240.13a-16, 17 CFR 240.15d-10, 17 CFR 240.15d-11, 17 CFR 240.15d-13, and 17 CFR 240.15d-16.
In addition, as a result of the proposed new annual reporting requirement that would apply to all registered investment companies, we are rescinding 17 CFR 270.30b1-2—which currently permits wholly-owned management investment company subsidiaries of management investment companies to not file Form N-SAR under certain circumstances—and adopting new rule 17 CFR 270.30a-4—which will permit wholly-owned management investment company subsidiaries of management investment companies to not file Form N-CEN under those same circumstances. We are also amending 17 CFR 200.800 to display control numbers assigned to information collection requirements for Forms N-PORT and N-CEN by the Office of Management and Budget pursuant to the Paperwork Reduction Act. As discussed further below, an agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.
Our amendments to Regulation S-X will, among other things, require management investment companies to report new schedules for certain derivatives holdings.
We are also amending Form N-CSR to revise instructions addressing how disclosures and certifications as to the effectiveness and changes in the registrant's internal control over financial reporting should be handled during the transition period when certifications for funds' portfolio holdings for their first and third fiscal quarters will no longer be provided on Form N-Q but instead will provided on Form N-CSR.
We are also removing and reserving paragraph (a) of 17 CFR 232.105, which currently requires electronic filers to submit Forms N-SAR and 13F in ASCII. We are rescinding Form N-SAR, and Form 13F has been submitted by electronic filers in XML, rather than ASCII, since 2013.
We received no comments on these technical and conforming amendments, and are adopting them substantially as proposed, as discussed herein.
We are adopting the following compliance dates for our amendments, as set forth below.
As proposed, given the nature and frequency of filings on Form N-PORT, the Commission is providing a tiered set of compliance dates based on asset size. Specifically, for larger entities—namely, funds that together with other investment companies in the same “group of related investment companies”
For smaller entities (
In the Proposing Release, we stated that we intended to rescind Form N-Q and require implementation of the amendments to the certification requirements of Form N-CSR within a timing that would be consistent with this adoption. We received no comments on this aspect of the proposal. Therefore, consistent with the timing for the implementation of reporting requirements for Form N-PORT, we are also rescinding Form N-Q (referenced in 17 CFR 274.130) and implementing the amendments to the certification requirements of Form N-CSR (referenced in 17 CFR 274.128) with approximately the same time frame. However, we are delaying the rescission of Form N-Q by two additional months to allow funds sufficient time to satisfy Form N-Q's 60-day filing requirements with regard to their final filing on Form N-Q for the reporting period preceding their first filing on Form N-PORT. Thus, the compliance dates for the amendments to the certification requirements of Form N-CSR will be June 1, 2018 for larger entities, and June 1, 2019 (12 months later) for smaller entities. Form N-Q and related rules referencing Form N-Q will be rescinded two months later, on August 1, 2019. In addition, as discussed below, the compliance date for reporting a change in independent public accountant on Form N-CSR will be consistent with the compliance date for other information reported on Form N-CEN.
We understand that certain changes to issuers' and market participants' systems may not be able to occur until the final technical requirements are published in the EDGAR Filer Manual and EDGAR Technical Specifications documents. In order to provide issuers and other filers time to make adjustments to their systems, we anticipate making a draft of the EDGAR Technical Specifications documents available in advance. We believe that test submissions may assist both the Commission and issuers with addressing unknown and unforeseeable issues that may arise with the reporting of information on Form N-PORT. We will permit funds to file test submissions during a trial period.
Additionally, we have determined to maintain as nonpublic all reports filed on Form N-PORT for the first six months following June 1, 2018. We believe that, separate from the voluntary trial, having a time period where all funds are required to file reports on Form N-PORT with the Commission but not have those reports disclosed publicly will allow funds and the Commission to make adjustments to fine-tune the technical specifications and data validation processes. We believe that this process can ultimately improve the data that is reported to the Commission and, as required disclosed to the public. Accordingly, we find that it is neither necessary nor appropriate in the public interest or for the protection of investors to make reports filed on Form N-PORT during the first six months following the compliance date publicly available.
One commenter did not explicitly address compliance dates for Form N-PORT, but suggested that the compliance period for Regulation S-X be changed to 18 months so that Form N-PORT and the amendments to Regulation S-X would have the same compliance date.
We are adopting an initial compliance date for Form N-PORT of June 1, 2018, which is consistent with the 18-month compliance period we proposed. As discussed above, we anticipate that the information that will be reported on Form N-PORT will enable us to further our mission to protect investors by assisting us in carrying out our regulatory responsibilities related to the asset management industry. We believe that it is important for the Commission to obtain and benefit from such information as soon as it is reasonably possible for this information to be reported. Although several commenters recommended extending the compliance period in order to update reporting systems,
Separately, as discussed above, our adoption includes numerous modifications from or clarifications to the proposal that address concerns raised by commenters and that are intended, in part, to decrease reporting and implementation burdens relative to the proposal. For example, we have added an instruction to Form N-PORT specifying that funds must report portfolio information on the same basis used in computing NAV, which is generally a T + 1 basis, rather than on a T + 0 basis, which is currently used for financial statement reporting. Several commenters asked for this clarification, as filing on a T + 0 basis would have required time-intensive conversion of portfolio transactions normally recorded on a T+1 basis.
Several commenters suggested that the Commission should provide for a phase-in period based on a fund's fiscal year-end, such that the Commission would require each fund to first begin filing its Form N-PORT as of its next fiscal year following the compliance date.
One commenter suggested that the Commission should consider limiting liability for Form N-PORT filings for a transition period, similar to what was done with earlier structured data reporting rules.
One commenter suggested raising the asset threshold for determining the larger entities that would be required to comply with Form N-PORT filing
We are adopting a compliance date of June 1, 2018 to comply with the new Form N-CEN reporting requirements. We expect that this compliance period, consistent with the 18 month compliance period that we proposed, will provide an adequate period of time for funds, intermediaries, and other service providers to conduct the requisite operational changes to their systems and to establish internal processes to prepare, validate, and file reports on Form N-CEN with the Commission. We are adopting the same compliance date for the related amendments to other rules and forms we are adopting today, including the rescission of Form N-SAR and related rules referencing Form N-SAR.
We also are adopting a compliance date of June 1, 2018 to comply with the modified reporting requirement for a registrant to file as an exhibit to Form N-CSR the letter reporting a change in independent registered public accountants. This exhibit was already required to be reported semi-annually on Form N-SAR, and as such, we do not expect that registrants will require significant amounts of time to modify systems or establish internal processes to prepare exhibit filings on Form N-CSR in accordance with our amendments.
Unlike Form N-PORT, we are not providing a tiered compliance date based on asset size. We believe that it is less likely that smaller fund complexes will need additional time to comply with the requirements to file Form N-CEN because the requirements are similar to the current requirements to file Form N-SAR, and we expect that filers will prefer the updated, more efficient filing format of Form N-CEN. We are therefore requiring all funds, regardless of size, to file reports on Form N-CEN with the same compliance period.
Furthermore, unlike Form N-PORT, we are not keeping reports filed during a phase in period after the compliance date nonpublic. Much of the information that will be filed on Form N-CEN is currently already reported by funds on Form N-SAR, and thus funds should already have processes and procedures in place to reduce the risk of inadvertent errors. In addition, filings on Form N-CEN are not expected to be as technically complex nor present comparable challenges in terms of reporting and data validation as filings on Form N-PORT. However, as with Form N-PORT, we anticipate allowing funds to file test submissions on Form N-CEN on a voluntary basis for a period of time before the compliance date.
Some commenters suggested that the compliance period be extended to the later of 30 months after the adoption of Form N-CEN, or 18 months after the effective date of amendments requiring funds to report liquidity information on Form N-CEN.
As discussed above, our amendments to Regulation S-X are largely consistent with existing fund disclosure practices. As such, we do not expect that funds, intermediaries, or service providers will require significant amounts of time to modify systems or establish internal processes to prepare financial statements in accordance with our proposed amendments to Regulation S-X. Accordingly, we are adopting a compliance date for our amendments to Regulation S-X of August 1, 2017. This is consistent with our proposed compliance period of eight months. The same compliance date will apply to conforming amendments related to our amendments to Regulation S-X, including the related amendments to the Statement of Additional Information (and Form N-CSR for closed-end funds) we are adopting today.
One commenter supported the proposed compliance date for the amendments to Regulation to S-X, although the commenter suggested that implementation be required for each fund with its next fiscal year end following the proposed compliance date.
Many other commenters requested that the compliance date be extended, with four commenters suggesting a compliance period of 18 months after the effective date of the amendments, one commenter recommending 24 months, and another commenter recommending 36 months.
We decline to adopt these suggestions. Although some of the information that will be reported pursuant to the amendments to Regulation S-X overlaps with the information that will be reported on Form N-PORT, many of the amendments to Regulation S-X are unrelated to what will be reported in Form N-PORT. More significantly, as discussed above, our amendments to Regulation S-X are generally consistent with existing disclosure practices of many funds. As such, we do not expect that funds, intermediaries, or service providers will require significant amounts of time to modify systems or establish internal processes to prepare financial statements in accordance with our final amendments to Regulation S-X.
Additionally, some of the amendments we are adopting to Form N-CEN and the Statement of Additional Information (and Form N-CSR for closed-end funds) were originally proposed as part of our amendments to Regulation S-X, and we received no objections to our proposed timeframe for compliance for those portions of the amendments to Regulation S-X. Furthermore, the amendments to the Statement of Additional Information and Form N-CSR, like the amendments to Regulation S-X, do not entail the complications of having to develop and test an XML schema or EDGAR validation behaviors, as is the case for our reporting requirements regarding information that will be reported on Form N-PORT and Form N-CEN.
The Commission is sensitive to the economic effects, including the benefits and costs and the effects on efficiency, competition, and capital formation that will result from the adopted changes to the current reporting regime. Changes to the current reporting regime include new Form N-PORT, the rescission of Form N-Q, amendments to the certification and exhibit filing requirements for Form N-CSR, amendments to Regulation S-X, new Form N-CEN, and the rescission of Form N-SAR. The economic effects of the adopted changes are discussed below.
The Commission is modernizing the content and format requirements of reports and disclosures by funds, and the manner in which information is filed with the Commission and disclosed to the public. The amendments are designed to enhance the Commission's ability to effectively oversee and monitor the activities of investment companies in order to better carry out its regulatory functions and to aid investors and other market participants to better assess the benefits, costs, and risks of investing in different fund products. In summary, and as discussed in greater detail in section II above, the Commission is adopting the following changes to its rules and forms:
• We are requiring registered management investment companies and ETFs organized as UITs, other than money market funds and SBICs, to report monthly portfolio information in a structured data format on a new form, Form N-PORT.
• We are rescinding Form N-Q. We are also lengthening the look-back for Sarbanes-Oxley certifications on Form N-CSR to six months to cover the gap in certification coverage that would otherwise occur once Form N-Q is rescinded.
• We are revising Regulation S-X to require new, standardized enhanced disclosures regarding fund holdings in derivatives instruments; update the disclosures for other investments; and amend the rules regarding the general form and content of fund financial statements.
• We are rescinding Form N-SAR and replacing it with new Form N-CEN, which will require the annual reporting of similar and additional census information in an updated, structured data format.
• We are adopting amendments to Forms N-1A, N-3, and N-CSR (for closed-end funds) to require certain disclosures in fund Statements of Additional Information regarding securities lending activities.
The current disclosure of information by funds serves as the baseline against which the costs and benefits as well as the impact on efficiency, competition, and capital formation are discussed. The baseline includes the current set of requirements for funds to file reports on Forms N-CSR, N-Q, and N-SAR with the Commission and the content of such reports, including Regulation S-X, and in particular, its schedule of investments. The baseline also includes guidance from Commission staff and other industry groups that have established industry practices for the disclosure of a fund's schedule of investments and financial statements. Lastly, the baseline includes the current practice of some funds to voluntarily disclose additional information, and the requirement that actively managed ETFs, and many index ETFs, disclose their portfolios on a daily basis. For example, some funds disclose monthly or quarterly portfolio investment information on their Web sites or to third-party information providers, and disclose additional information (
We discuss separately below the economic effects of each of the following new rules, forms, and amendments: The introduction of Form N-PORT, the rescission of Form N-Q, the amendments to Form N-CSR, the amendments to Regulation S-X, the introduction of Form N-CEN, the rescission of Form N-SAR, and the amendments to multiple registration statement forms. We identify for each of the new rules, forms, and amendments the baseline from which the economic effects will be discussed and the parties most likely to be affected.
As noted above, the assets of registered investment companies exceeded $18 trillion at year-end 2015, having grown from about $5.8 trillion at the end of 1998.
The Commission relies on information included in reports filed by funds to monitor trends, identify risks, inform policy and rulemaking, and assist Commission staff in examination and enforcement efforts of the asset management industry. An essential factor to the Commission's ability to carry out its regulatory functions is regular, timely information about portfolio holdings and general, census information about funds. In general, the new rules, forms, and amendments will modernize the fund reporting regime and, among other effects, will result in an increased transparency of fund portfolios and investment practices. The increased transparency will improve the ability of the Commission to fulfill its regulatory functions. These functions include the development of policy and guidance, the staff's review of fund registration statements and disclosures, and the Commission's examination and enforcement programs. We believe that the increase in transparency will also improve the ability of investors to select funds for investment, and therefore improve their ability to allocate capital across funds and other investments to more closely reflect their investment risk preferences. We also believe that the increase in transparency will enhance competition among funds to attract investors.
At the outset, the Commission notes that, where possible, it has sought to quantify the costs, benefits, and effects on efficiency, competition, and capital formation expected to result from each of the new rules, forms, and amendments and its reasonable alternatives. As discussed in further detail below, in many cases the Commission is unable to quantify the economic effects because it lacks the information necessary to provide a reasonable estimate.
The economic effects depend upon a number of factors that we cannot estimate or quantify. Factors include the extent to which investor protection would increase along with the ability of the Commission to oversee the fund industry; the amount of new information that would become available as a result of requiring such information in regulatory filings (as opposed to information that is provided voluntarily); the change in the availability of fund information to all investors, institutional and individual; and the extent to which investors are able to use the information to make more informed investment decisions either through direct use or through third-party service providers. Therefore, much of the discussion below is qualitative in nature although we
In the Proposing Release, we requested general comment on the feasible alternatives to the information we proposed to require funds to report that would minimize the reporting burdens on funds while maintaining the anticipated benefits of the reporting and disclosure, as well as the utility of the information proposed to be included in reports to the Commission, investors, and the public in relation to the costs to funds of providing the reports.
Form N-PORT will require registered management investment companies and ETFs organized as UITs, other than money market funds and SBICs, to report portfolio investment information to the Commission on a monthly basis. As discussed, only information reported for the last month of each fiscal quarter will be made available to the public in order to minimize potential costs associated with making the information public, including front-running or reverse engineering of a fund's investment strategies. Reports will be filed in a structured data format using XML to allow for easier aggregation and manipulation of the data. As discussed above, we are also rescinding Form N-Q but requiring that funds attach their complete portfolio holdings to Form N-PORT for the first and third fiscal quarters in accordance with Regulation S-X. We are also amending the form of certification in Form N-CSR to require each certifying officer to state that he or she has disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year to fill the gap in certification coverage that would otherwise occur once Form N-Q is rescinded.
The current set of requirements under which registered management investment companies (other than money market funds and SBICs) and ETFs organized as UITs publicly report their complete portfolio investments to the Commission on a quarterly basis and certain other information on a semi-annual basis,
The baseline also includes the current obligation of Form N-Q filers to make certifications regarding (1) the accuracy of the portfolio holdings information reported on that form, and (2) the fund's disclosure controls and procedures and internal control over financial reporting.
Currently, the Commission requires registered management investment companies (other than money market funds and SBICs) to report their complete portfolio investments to the Commission on a quarterly basis.
Forms N-CSR and N-Q are required to be filed in HTML or ASCII/SGML format.
We received no comments that specifically addressed the baseline described in the Proposing Release. We believe that the economic effects from the introduction of new Form N-PORT will largely result from the disclosure of portfolio investment information in a structured data format, as well as the additional information that investment companies will report relative to current reporting practices. We also believe that the economic effects will depend on the extent to which the portfolios and investment activities of investment
The new rules, forms, and amendments will increase the amount of portfolio investment information available for some investment companies more so than others. For example, investment companies that utilize derivatives as part of their investment strategy, or that otherwise engage in alternative strategies, will provide more information about their businesses than other investment companies. Information from Form N-SAR provides some indication as to the current use of derivatives by investment companies. Form N-SAR requires investment companies to identify permitted investment policies, and if permitted, investment policies engaged in during the reporting period. As of the second half of 2015, on average 76.5% of investment companies reported as permitted investment policies involving the writing or investing in options or futures, and on average 5.3% of investment companies reported engaging in each one of these policies during the report period.
Information from a White Paper prepared by staff in the Division of Economic and Risk Analysis also describes current fund use of derivatives.
As discussed, Form N-PORT will improve the information that registered management investment companies and ETFs organized as UITs (other than money market funds and SBICs) disclose to the Commission. The increase in the reporting frequency, the update to the structure of the information that reporting funds will disclose, and the additional information that reporting funds do not currently disclose, discussed in further detail below, will improve the ability of the Commission to understand, analyze, and monitor the fund industry. We believe that the information we receive on these reports will facilitate the oversight of reporting funds and will assist the Commission, as the primary regulator of such funds, to better effectuate its mission to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation, through better informed policy decisions, more specific guidance and comments in the disclosure review process, and more targeted examination and enforcement efforts.
To the extent that monthly portfolio investment information is not currently available, the requirement that funds make available monthly portfolio investment information to the Commission on Form N-PORT will improve the ability of the Commission to oversee reporting funds by increasing the timeliness of the information available, and by providing a larger number of data points. The expanded reporting also will increase the ability of Commission staff to identify trends in investment strategies and fund products as well as industry outliers.
The ability of Commission staff to effectively use the information reported
The usefulness of structured data depends on the care with which filers report the data. If filers were to report data that did not conform to the Commission's XML schema, data quality would be diminished and would impair the Commission's and the public's ability to aggregate, compare, and analyze the data. As a result, the Commission's XML schema also incorporates certain validations to help ensure consistent formatting among all filings, in other words, to help ensure data quality. Validations are restrictions placed on the formatting for each data element so that comparable data is presented comparably. However, these formatting validations are not designed to ensure the underlying accuracy of the data; they can only help ensure data quality. These validations cannot exist in the current reporting formats for Form N-CSR and Form N-Q.
XML is an open standard
As we discussed above in section II.A.3, we considered, as several commenters suggested, alternative formats to XML, such as XBRL.
In light of the benefits of structured data, we acknowledge that Form N-PORT duplicates some information filed in other forms, while also requiring funds to report information that is not currently required to be reported to the Commission, including portfolio- and position-level risk metrics and additional information describing debt securities and derivatives, securities lending activities, repurchase and reverse repurchase agreements, the pricing of securities, and fund flows and returns. Requesting data in a structured format may promote additional efficiency among investment companies to the extent that the new, standardized reporting requirements facilitate more automated report assembly, validation, and review processes for the disclosure and transmission of filings. Furthermore, filing this information in an XML format will allow the Commission staff to more efficiently review and analyze data for industry trends, and to better understand the risks of a particular fund (in the context of the fund's investment strategy), a group of funds, and the fund industry by being able to conduct large-scale analysis more easily, which will help in identifying outliers or trends that could warrant further investigation in a more immediate fashion.
The requirement to report portfolio- and position-level risk metrics will provide Commission staff with a set of quantitative measurements that provide information about the risk exposures of a fund. The risk metrics will improve the ability of Commission staff to efficiently analyze information for all reporting funds based on exposure to certain risks, and to determine whether additional guidance or policy measures are appropriate to improve disclosures. We are requiring funds to report risk measures, rather than the raw inputs used to calculate risk measures, because the calculation of position-level measures of risk for some derivatives, including derivatives with unique or complicated payoff structures, sometimes requires time-intensive computational methods or additional information that Form N-PORT will not require.
The requirement for investment companies to provide risk metrics at the position-level and at the portfolio-level will improve the ability of staff to efficiently identify the risk exposures of funds regardless of the types of investments held or that could be introduced to the marketplace. The portfolio-level measures of risk will also improve the ability of staff to efficiently identify interest rate and credit spread exposures at the fund level and conduct analyses without first aggregating position-level measures. Also, staff could use the risk measures in combination to conduct additional analyses. For example, Commission staff can use the two measures of interest rate duration (
We have, however, made certain modifications to the proposed reporting requirements regarding the reporting of risk metrics in response to comments received. For example, as discussed in detail above, we are requiring the reporting of fewer key rates to reduce the reporting burden for funds, adopting a 1%
Form N-PORT will require reporting funds to provide the contractual terms for debt securities and many of the more common derivatives including options, futures, forwards, and swaps; the reference instrument for convertible debt securities and derivatives; and information describing the size of the position. This information will provide Commission staff the ability to identify funds with interest rate risk exposure or exposure to other risks such as those pertaining to a company, industry, or region.
As discussed, for securities lending activities and reverse repurchase agreements, Form N-PORT will require counterparty identification information, contractual terms, and information describing the collateral and reinvestment of the collateral. The additional information could improve the ability of Commission staff to assess fund compliance with the conditions that they must meet to engage in securities lending, as well as better analyze the extent to which funds are exposed to the creditworthiness of counterparties, the loss of principal of the reinvested collateral, and leverage creation through the reinvestment of collateral.
Form N-PORT will also require additional identification information regarding the reporting fund, the issuers of the fund's portfolio investments, and the investments themselves, including the reference instruments for convertible debt securities and derivatives investments. The adopting release differs from the proposal with respect to the treatment of reference assets that are custom baskets or nonpublic indexes of securities in that for those that represent more than 1%, but less than 5%, of the fund's NAV, funds will be required to disclose the top 50 components of the basket and, in addition, those components that exceed 1% of the notional value of the index. For nonpublic indexes or custom baskets that represent greater than 5% of the fund's NAV, all components will be required to be disclosed. For nonpublic custom baskets or indexes that represent less than 1% of the fund's NAV, no disclosure is required. Although this modification will provide the Commission, investors, and other users with less than complete transparency into any such derivative investment that represents between 1% and 5% of a fund's NAV, given that this modification will still allow the Commission to collect information on a large portion of the significant reference assets for these investments, we do not believe this change will significantly impact the benefits derived relative to those discussed in the proposal. The additional identification information will benefit the Commission by improving the ability of staff to link the information from Form N-PORT to information from other sources that identify market participants and investments using these same identifiers, such as Form N-CEN. The additional identification information will improve upon the current requirement for funds to provide just the issuer name, and as such will aid the Commission in identifying both the issuers of fund portfolio investments and the investments themselves. As a result, Commission staff will be better able to identify and compare funds that have exposures to particular investments or issuers regardless of the whether the exposure is direct or indirect such as through a derivative security.
Investors, third-party information providers, and other potential users will also experience benefits from the
Form N-PORT will benefit investors, to the extent that they use the information, to better differentiate investment companies based on their investment strategies and other activities. For example, investors will be able to more efficiently identify funds that use derivatives and the extent to which they use derivatives as part of their investment strategies.
We received a number of comments supporting quarterly public disclosure of Form N-PORT, but requesting that certain information items be kept nonpublic.
One clarifying change that has been made from the proposing release in response to commenters is the addition of an instruction that funds may use their own methodologies in General Instruction G. General Instruction G now provides that funds may respond to Form N-PORT using their own internal methodologies and the conventions of their service providers, provided the information is consistent with information that they report internally and to current and prospective investors, and the Fund's methodologies and conventions are consistently applied and the Fund's responses are consistent with any instructions or other guidance relating to the Form. To the extent this instruction decreases the comparability of the data collected, there could be some reduction in benefit relative to the proposal, although funds will likely benefit from the decreased reporting burden associated with explicitly allowing them to rely on their existing practices.
The portfolio investment information that investment companies report to the Commission is informative in describing the investment strategy funds implement,
Rescission of Form N-Q, along with its certifications of the accuracy of the portfolio schedules reported for each fund's first and third fiscal quarters, may result in some cost savings by funds in terms of administrative or filing costs. However, we expect any such savings, if any, to be minimal, because each fund will still be required to file portfolio schedules prepared in accordance with §§ 210.12-12 to 12-14 of Regulation S-X for the fund's first and third fiscal quarters, by attaching those schedules as attachments to its reports on Form N-PORT for those reporting periods.
Form N-PORT will require registered management investment companies and ETFs organized as UITs, other than money market funds and SBICs, to incur one-time and ongoing costs to comply with the new filing requirements. Funds will incur additional ongoing costs to report portfolio investment information on a monthly basis on Form N-PORT instead of a quarterly basis as currently reported on Forms N-Q and N-CSR. Funds that voluntarily provide information to third-party information providers and on fund Web sites, including monthly portfolio investments, and additional information in fund financial statements, including additional information regarding derivatives similar to the requirements that we are adopting today, will bear
Funds will incur costs to file reports on Form N-PORT in a structured data format. Based on staff experience with other XML filings, however, these costs are expected to be minimal given the technology that will be used to structure the data.
Form N-PORT will also require the disclosure of certain information that is not currently required by the Commission. To the extent that the new form will require information to be reported that is not currently contained in fund accounting or financial reporting systems, funds will bear one-time costs to update systems to adhere to the new filing requirements. The one-time costs will depend on the extent to which investment companies currently report the information required to be disclosed. The one-time costs will also depend on whether and to what extent an investment company would need to implement new systems and to integrate information maintained in separate internal systems or by third parties to comply with the new requirements. For example, based on staff outreach to funds, we believe that funds will incur systems or licensing costs to obtain a software solution or to retain a service provider in order to report data on risk metrics, as risk metrics are not currently required to be reported on the fund financial statements. Our experience with and outreach to funds indicates that the types of systems funds use for warehousing and aggregating data, including data on risk metrics, varies widely.
In some instances, such as in the case of increased disclosures regarding derivatives investments and information concerning the pricing of investments, the Commission is requiring parallel disclosures in the fund's schedule of investments prepared pursuant to Regulation S-X; accordingly, we expect funds will generally incur one set of costs to adhere to the reporting of new information on Form N-PORT and in its schedule of investments. For other information, such as the reporting of particular asset classifications, identification of investments and reference instruments, and risk measures, the information will be disclosed on Form N-PORT only.
The Commission is sensitive to the costs that funds will incur to prepare, review, and file reports on Form N-PORT. Relative to the proposal, the Commission is making modifications to these final rules that should reduce the burden on investment companies to file reports on Form N-PORT. In particular, and in response to commenters,
To the extent possible, we have attempted to quantify these costs. Based on updated industry statistics, we estimate that 11,382 funds will file Form N-PORT.
Although there will be no change to the frequency or time-lag for which investment company security position information is publicly disclosed, the increase in the amount of publicly available information and the greater ability to analyze the information as a result of its structure may facilitate activities such as “front-running,” “predatory trading,” and “copycatting/reverse engineering of trading strategies” by other investors.
A trading strategy that follows the publicly reported holdings of actively managed funds can also earn similar if not higher after expense returns.
A comparison can be made between the economic effects from the introduction of Form N-PORT and the economic effects from the introduction of Form N-Q in May 2004 which increased the reporting frequency of portfolio investment information to the Commission from semiannual to quarterly. The introduction of Form N-Q resulted in an increase in the amount
Form N-PORT will require the disclosure of information that is currently nonpublic and could result in additional or other costs to funds and to market participants. For example, we proposed that Form N-PORT would require a fund to report the identities and weights of all of the individual components in custom baskets or indexes comprising the reference instruments underlying the fund's derivative investments, as well as each component that represents more than one percent of the reference asset based on the notional value of the derivatives, unless the reference instrument is an index or custom basket whose components are publicly available on a Web site and are updated on that Web site no less frequently than quarterly, or the notional amount of the derivative represents 1% or less of the net asset value of the fund.
Although our determination to keep certain items nonpublic was based on factors other than competitive concerns,
Form N-PORT also requires funds to disclose the variable financing rates for swaps that pay or receive financing payments.
Finally, some commenters noted that reporting of distressed debt issued by private companies could affect the private company's relationship with the fund. For example, one commenter argued that the public disclosure of default, arrears, or deferred coupon payments raises competitive concerns when a debt security is issued by a borrower that is a private company, as private borrowers may avoid registered funds in order to limit public disclosure if the company becomes distressed.
As discussed, we expect that institutional investors and other market participants will directly use the information from Form N-PORT more so than individual investors as a result of the format and associated readability.
For funds that invest in debt instruments or derivatives we are modifying our requirements from the proposing release in several ways that may affect the costs borne by affected filers. For example, as discussed in detail above, we are requiring the reporting of fewer key rates in order to reduce the reporting burden for funds, adding
As discussed above, although Form N-Q would be rescinded, it would also require funds to file portfolio schedules prepared in accordance with §§ 210.12-12 to 12-14 of Regulation S-X for the fund's first and third fiscal quarters, by attaching those schedules to its reports on Form N-PORT for those reporting periods. The schedules attached to Form N-PORT would be largely identical to the information currently reported on Form N-Q to ensure that such information continues to be presented using the form and content which investors are accustomed to viewing in reports on Form N-Q, and we have modified this requirement from the Proposing Release to allow funds 60 days from the end of the reporting period to file this attachment, as opposed to 30 days as proposed. This should lower the burden of preparing such attachments relative to the proposal, without any change in benefit, as the attachment is intended for investors and quarter-end Form N-PORT filings are made public 60 days after the end of the reporting period.
Rescission of Form N-Q would eliminate certifications of the accuracy of the portfolio schedules reported for the first and third fiscal quarters. Rescission would also result in funds certifying their disclosure controls and procedures and internal control over financial reporting semi-annually (at the end of the second and fourth quarters) rather than quarterly. To the extent that such certifications improve the accuracy of the data reported, removing such certifications could have negative effects on the quality of the data reported. Likewise, if the reduced frequency of the certifications affects the process by which controls and procedures are assessed, requiring such certifications semi-annually rather than quarterly could reduce the effectiveness of the fund's disclosure controls and
Lastly, registrants also will be required to file the management's statement regarding a change in independent public accountant as an exhibit to reports on Form N-CSR. This exhibit filing requirement originated in Form N-SAR. Commission staff believes that moving this reporting requirement from Form N-SAR to Form N-CSR does not have new economic implications from the proposal. We have, however, attributed an annual burden of an additional one-tenth of an hour per registrant
The Commission has explored other ways to modernize and improve the utility and the quality of the portfolio investment information that funds provide to the Commission and to investors.
Funds will file reports on Form N-PORT no later than 30 days after the close of each month. The monthly reporting and the 30-day reporting lag will increase the timeliness of the information and improve the ability of the Commission to oversee investment companies. Alternatives include extending the filing period from thirty days, as recommended by many commenters, or shortening the filing period, which no commenters specifically recommended,
As discussed above in section II.A.2.a and in response to comments received, the final amendments now include an instruction that funds report portfolio information on Form N-PORT on the same basis used in calculating NAV under rule 2a-4 (generally a T+1 basis). Alternatives include requiring all funds to file reports on Form N-PORT on a T+0 basis or, providing the reporting fund the explicit option to file reports on Form N-PORT on either a T+0 basis or a T+1 basis, as recommended by a commenter.
Funds will have 18 to 30 months after the effective date to comply with the new reporting requirements for Form N-PORT. The compliance period varies with fund size, with smaller fund entities having an additional 12 months to comply with the new reporting requirements. An alternative would be to not allow for tiered compliance and require all investment companies to begin filing reports on Form N-PORT within 18 months. Other alternatives would be to extend the compliance period for all investment companies, as recommended by many commenters.
Another alternative for tiered compliance would be to set the threshold at a level different than $1 billion. A higher threshold, such as $20 billion, as recommended by one commenter,
The information that funds report on Form N-PORT for the last month of each fiscal quarter will be made publicly available (with the exception of delta, country of risk, and associated explanatory notes) 60 days after month-end (thirty days after the filing deadline). Additional alternatives include making more of the portfolio and other information reported on the form either nonpublic or public, including making all or none of the information reported on Form N-PORT each month publicly available, as discussed above in section II.A.3.
In response to comments received we have removed delta, country of risk, and the associated explanatory notes from the public reporting requirements, but we believe that making more of the portfolio and other information reported on Form N-PORT nonpublic would reduce the amount of information investors have access to when making investment decisions. However, as discussed above, making more of the portfolio and other information reported on the form public, including making all of the information reported on Form N-PORT each month publicly available, could increase the risk of front-running, predatory trading, and copycatting/reverse engineering of trading strategies by other investors, as well as the public disclosure of proprietary or sensitive information.
Form N-PORT will require funds to report additional portfolio investment information relative to what is currently reported in Form N-CSR and Form N-Q. Alternatives include not requiring some of this additional information, or requiring information in addition to what will be required to be reported as currently adopted. Other alternatives would be to request information that is more granular, information that is more aggregate, and information that is more consistent with other current regulatory forms or that substitutes compliance with other current regulatory regimes.
As discussed above, the Commission is requiring funds to report risk metrics at the portfolio and position level on Form N-PORT. In response to commenters' suggestions, we are now requiring the disclosure of measures of duration for a smaller number of key interest rates than we had originally proposed. However, an alternative would be to request those key rates detailed in the proposing release, or even additional measures. As discussed above, we believe that the number of key rates that we are adopting today will provide us with sufficient information and flexibility while also reducing the reporting burden. Other alternatives that would increase the reporting of risk-sensitivity measures include requiring funds to report additional portfolio level measures that describe the sensitivity of a reporting fund at additional basis point changes in interest rates and credit spreads, and a measure (or measures) of convexity, and include requiring funds to report additional position level measures such as vega, as requested by one commenter.
As discussed above and in response to commenters' suggestions, we have made
Other alternatives to the reporting of portfolio level risk-sensitivity measures relate to the allocation thresholds for funds to report portfolio interest rate risk exposures and currency risk exposures. Given commenters' recommendations, we are raising the threshold for fixed income allocation for risk reporting from 20% to 25%, and providing a
Form N-PORT will also require funds to report terms and conditions of each derivative investment that are important to understanding the payoff profile of the derivative, including the reference instrument.
Lastly, funds will no longer be required to file reports on Form N-Q. An alternative is for funds to continue reporting Form N-Q along with Form N-PORT at the end of first and third fiscal quarters. Commission staff believes, however, that the new reporting requirements for portfolio investment information, including the amendments to the certification requirements of Form N-CSR, would cause Form N-Q to become redundant if not outdated, and therefore impose costs on funds to file reports that would result in little benefit. Although requiring that certifying officers state that they have disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year will increase the burden of filing Form N-CSR, these certifications will fill the gap in certification coverage regarding the registrant's internal control over financial reporting that would otherwise exist once Form N-Q is rescinded.
Regulation S-X prescribes the form and content required in financial statements. The amendments to Regulation S-X will require new disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts, and additional disclosures regarding fund holdings of written and purchased option contracts; update the disclosures for other investments with conforming amendments, as well as reorganize the order in which some investments are presented; and amend the rules regarding the general form and content of fund financial statements, including requiring prominent placement of investments in derivative investments in a fund's financial statements, rather than allowing such schedules to be placed in the notes to the financial statements.
The current set of requirements under Regulation S-X, as well as the current practice of many funds
Previously, Regulation S-X did not prescribe specific information to be disclosed for many investments in derivatives, which could result in inconsistent reporting between funds and reduced transparency of the information reported, and in some cases could result in insufficient information concerning the terms and underlying reference assets of derivatives to allow investors to understand the investment.
We expect that many of the economic effects from the amendments to Regulation S-X will largely result from an increase in investor ability to make investment decisions dependent on the more transparent disclosure in financial statements, as noted by commenters.
The amendments to Regulation S-X will benefit investors by updating the information funds disclose in the financial statements of registration statements and shareholder reports. Several commenters noted that the amendments will benefit investors through increased transparency and comparability of fund financial statements, particularly for individual investors that we would not expect to use the information in Form N-PORT because of its structured data format.
Other amendments will also improve the transparency into the fund's investments. For example, we are requiring funds to identify each investment whose value was determined using significant unobservable inputs.
In a change from the proposal and Form N-PORT, we are requiring funds to separately list the top 50 components and the components that represent more than 1% of the notional value of the referenced assets underlying swap and option contracts, rather than separately listing every component. We believe that this alteration benefits investors by making it easy for them to understand and evaluate the specific risk exposures of a fund from certain swap and option contracts, while simultaneously reducing the reporting burden for funds.
We believe that the changes to the form and content of financial statements in Article 6 of Regulation S-X will similarly benefit investors, particularly individual investors who in general may not have the tools and resources possessed by institutional investors, through greater transparency in a fund's financial statements. For example, we are requiring funds to disclose their investments in derivatives in the financial statements, as opposed to in the notes to the financial statements.
Commission staff believes that a large number of funds currently adhere to industry practices from which the amendments to Regulation S-X are derived. The amendments to Regulation S-X, therefore, will effectively standardize the information that all funds disclose on financial statements, and make the schedule of investments and financial statement disclosures consistent and thus more comparable
We believe that registrants on average will likely incur minimal costs from our amendments to Regulation S-X because, as discussed above, based upon staff experience, we believe that a majority of funds are already providing the information that will be required by the amendments to Regulation S-X in their financial statements.
For example, as discussed above in section II.C.2.a, in response to commenters' concerns relating to the burdens associated with our proposed requirement that funds list all components underlying a nonpublic index or custom basket,
We further believe this change provides the necessary benefit without being unduly burdensome. We understand that index providers might assert intellectual property rights to certain indexes, and these may be subject to licensing agreements between the index provider and the fund.
As another example, the amendments include an instruction to disclose the variable financing rates for swaps that pay or receive financing payments.
In response to commenters concerns, we also made changes from the proposal to eliminate several disclosures. For example, we are amending our proposed instruction which would require funds to categorize the schedule by type of investment, the related industry,
We similarly determined to eliminate an instruction in Regulation S-X requiring funds to include tax basis disclosures. As discussed above in section II.C.4, this instruction is contained in current rules 12-12, 12-12C, and 12-13 and we proposed to extend the instruction to proposed rules 12-12A, 12-13A, 12-13B, 12-13C, and 12-13D. We were, however, persuaded by commenters that this disclosure of tax basis by investment type would not provide meaningful disclosure to investors, while increasing the volume and complexity of financial statements.
We also proposed to require funds to identify illiquid investments.
Finally, in order to provide more transparency to a fund's investments in debt securities, we had proposed an instruction requiring a fund to disclose, for its investment in variable rate securities, the referenced rate and spread.
Funds will incur one-time and ongoing costs to comply with the amendments to Regulation S-X in addition to the costs attributable to new Form N-PORT. For the amendments to Regulation S-X, funds will incur one-time and ongoing costs to obtain the additional information that will be disclosed on shareholder reports and registration statements, and that will also not be disclosed on Form N-PORT; and funds will also incur one-time costs to format for presentation all additional information that will be reported in financial statements. In addition, we will require funds, to the extent they do not already do so, to present the schedules associated with rules 12-13 through 12-13D and 12-14 in the financial statements, as opposed to in the notes to the financial statements.
Additionally, we proposed to add a new disclosure requirement that was designed to increase transparency into a fund's securities lending and cash collateral management activities.
To the extent possible, we have attempted to quantify these costs. As discussed below in section IV.C, we estimate that management investment companies will incur certain one-time additional paperwork and other costs
The Commission has also explored other ways to modernize and improve the utility, quality, and consistency of the information that funds report to the Commission and to investors in the financial statements required in shareholder reports and other registration statements. Commission staff examined how the information funds provide to the Commission and to investors could be made more informative and more consistent across funds. Alternatives to the amendments to Regulation S-X relate to the compliance period to adhere to the new amendments and to the information that funds report in the financial statements.
Funds will have 8 months after the effective date to comply with the amendments to Regulation S-X. An alternative would be to extend the compliance period, as suggested by several commenters.
The amendments to Regulation S-X will update the information funds disclose in financial statements. Alternatives to the amendments to Regulation S-X include the disclosures of different information. For example, the amendments to Regulation S-X will require funds to report information describing derivative contracts including, in some instances, the components of reference indexes that surpass certain materiality thresholds. As alternatives, we could require funds to only disclose a brief description of the index, require a different threshold for identifying the components of the swap or options contract, or require the reporting of all components. Although the alternatives that would increase the reporting of the components of reference indexes would increase the transparency for investors into the assets underlying a swap or options contract including the underlying risks of the fund, these alternatives would increase the costs of funds to report the information. However, although the alternatives that would decrease the reporting of the components of reference indexes would decrease the costs to funds to report the information, these alternatives would decrease the ability of investors to understand fund portfolio investments. We believe that the amendments to Regulation S-X adopted today provide investors with sufficient information to broadly understand funds' investments without unduly burdening funds.
Amendments to Regulation S-X will also not require funds to report information describing their securities lending activities in the financial statements, as proposed, but will instead require funds to report the information in the Statement of Additional Information (or, for closed-end funds, their reports on Form N-CSR). An alternative, similar to proposed rule 6.03(m), would be for funds to report information describing their securities lending activities as part of the financial statements. However, the requirement that securities lending information would be disclosed as part of financial statements would increase the costs to audit and report the information.
Similarly, amendments to Regulation S-X will also not require funds in their financial statements to identify illiquid securities, as was initially proposed. An alternative is to adopt the proposed approach and require funds in their financial statements to identify illiquid securities. The disclosure of the liquidity of securities on financial statements, however, could increase the costs to audit financial statements.
Lastly, amendments to Regulation S-X will include instructions to funds to make a separate disclosure for income from non-cash dividends and payment-in-kind interest on the statement of operations. Funds will report income from payment-in-kind interest or non-cash dividends only if the income exceeds 5 percent of the fund's investment income, as suggested by commenters who requested a materiality threshold, which is consistent with the other income disclosures under rule 6-07.1.
Form N-CEN requires funds to report census information to the Commission on an annual basis. Although Form N-CEN includes many of the same data elements as the current census-type reporting form, Form N-SAR, it replaces items that are outdated or no longer informative with items of greater importance for the oversight and examination of investment companies, and eliminates certain items that are also reported to the Commission in other forms. Investment companies will file reports on Form N-CEN in a structured, XML format to allow for easier aggregation and manipulation of the data. Form N-SAR will be rescinded.
The current set of requirements for funds to file reports on Form N-SAR is the baseline from which we discuss the economic effects of Form N-CEN.
At the time it was adopted, Form N-SAR was intended to reduce reporting burdens and better align the information reported with the characteristics of the fund industry. As the fund industry has developed, including the development of new products, so has the need to update the information the Commission requires in order to improve its ability to monitor the compliance and risks of reporting funds. The format in which information is reported in Form N-SAR is also outdated, which reduces the ability of Commission staff to obtain and aggregate the information. Likewise, the technology in which Form N-SAR is filed does not allow for certain validation checks, reducing the data quality of the information (
The economic effects from the introduction of new Form N-CEN and the rescission of Form N-SAR will largely result from an update to the format of the information reported, as well as the update to the census information that investment companies will report. The economic effects will therefore depend on the extent to which investment companies become more transparent, and the ability of Commission staff and investors to utilize the updated disclosures. Form N-CEN requires census information about the fund industry reported in a structured data format. However, while Form N-SAR information is also reported in a structured data format, Form N-CEN information will be reported in XML format, a much more modern and useful data format, and one that allows for more efficient data collection than does the baseline format, aggregation, manipulation, and rendering. Therefore, although the introduction of Form N-CEN will increase the transparency of the fund industry by making the information reported therein more readily available, more easily shared or retrieved, and more relevant, we cannot quantify the significance of its economic implications.
The Commission is rescinding Form N-SAR and replacing it with new Form N-CEN to improve the quality and the utility of the information investment companies report to the Commission. The improvement in the quality and utility of the information will allow Commission staff to better understand industry trends, inform policy, and assist with the Commission's examination program.
Similar to Form N-PORT, the ability of the Commission to most effectively use the information is dependent on the ability of staff to compile and aggregate the information into a single database. The structuring of the information in an XML format will improve the ability and efficiency of Commission staff to obtain and analyze the information. An improved structured data format could also promote additional efficiency to the extent that the new standardized reporting requirements encourage more automated report assembly, validation, and review processes for the disclosure and transmission of information.
Form N-CEN also modernizes the census information that funds provide and increases its utility to Commission staff, investors, and other interested parties by reflecting the changes to the fund industry in a structured data format. The Commission will use the information in Form N-CEN to improve its understanding of fund industry trends and practices, and assist with the Commission's examination program. Commission staff has identified specific information that could improve its ability to effectively oversee funds.
Along with the other information, Form N-CEN adds new requirements for information specifically relating to the ETF primary markets, including more detailed information on authorized participants and creation unit requirements.
Form N-CEN also adds new requirements for information relating to a management company's securities lending activities, including information concerning the management company's securities lending agents and cash collateral managers.
We expect funds will also benefit from replacing Form N-SAR with Form N-CEN through reduced expenses. First, we estimate that Form N-CEN has a lower cost per filing than Form N-SAR, as a result of filing in an XML format, as opposed to the outdated format of Form N-SAR, and the elimination of certain items on Form N-SAR that funds will not report on Form N-CEN. Second, funds that are management companies will experience a decrease in paperwork-related expenses from the decrease in the reporting frequency of census information from semi-annual to annual.
The rescission of Form N-SAR and the introduction of Form N-CEN, to the extent relevant, could provide benefits to investors, to third-party information providers, and to other potential users from an update to the census information that investment companies report and from an update to its structured data format. Similar to Form N-PORT, we expect that institutional investors and other market participants could use the information from Form N-CEN more so than individual investors. However, individual investors may indirectly benefit from the increase in information to the extent that it becomes available through third-party information providers, as these information providers will likely have the capabilities to efficiently collect the data from Form N-CEN and present it for investors in user-friendly format. For certain investors and other potential users that would obtain and use the information that funds report in Form N-CEN directly, the update to the structure of the information should improve their ability to efficiently aggregate the information across all investment companies given the difficulty associated with extracting information from reports on Form N-SAR, due to its idiosyncratic reporting format.
The changes to the reporting of census information, including the reporting of the information in a modern structured data format, could improve the ability of investors to differentiate investment companies and could therefore lead to an increase in competition among funds for investor capital. In addition, these changes could enhance the ability of investors to understand the investment risks and practices (for example, securities lending activities) of investment companies, and therefore could improve the ability of investors to efficiently allocate capital. Consequently, the reporting changes could promote capital formation.
As discussed above, we expect the new Form N-CEN will be less costly to file than Form N-SAR has been, because Form N-CEN will be filed annually while Form N-SAR is filed semi-annually.
As discussed above, some commenters objected to the inclusion of the requirement for each ETF to report the dollar value of the ETF shares that each authorized participant purchased and redeemed from the ETF during the reporting period, expressing concerns that reporting authorized participant activities on Form N-CEN could discourage authorized participants from participating in the ETF market, leading to further concentration in the authorized participant community or authorized participants moving their ETF-related trading activities to banks or “clearing” authorized participants.
Form N-CEN could impose costs on investors and other potential users of the information to obtain the information from a new or additional source, including the information that
Similar to Form N-PORT, the Commission has explored other ways to modernize and improve the utility and the quality of the census information that funds provide to the Commission and to investors. Commission staff examined how census information reported to the Commission could be improved to assist the Commission in its oversight activities, as well as how the information could benefit investors and other potential users of the information. Alternatives to the filing of Form N-CEN and the reporting of census information relate to the timing and frequency of the reports, the public disclosure of the information, the information that Form N-PORT would request, and the rescission of Form N-SAR.
Unlike Form N-SAR, on which management companies file reports on a semi-annual basis, management companies will report information on Form N-CEN on an annual basis. An alternative to the annual reporting of census information in Form N-CEN is a semi-annual reporting of the information similar to Form N-SAR. However, as we discussed above, the census-type nature of the information that we will collect from funds in Form N-CEN should not change as frequently as, for example, portfolio holdings information.
We also considered alternatives to extend or shorten the filing period of Form N-CEN from 75 days. While a shorter filing period, such as 60 days (similar to the proposal) would provide more timely information to the Commission,
Funds will have 18 months after the effective date to comply with the new reporting requirements for Form N-CEN. An alternative would be to tier the compliance period, similar to the compliance period for Form N-PORT, dependent on entity size. However, as discussed above, we believe that it is less likely that smaller entities would need additional time to file Form N-CEN because the requirement to file Form N-CEN is similar to the current requirement to file Form N-SAR, and we expect that filers will prefer the updated, more efficient filing format of Form N-CEN.
Funds will be required to report to the Commission information in Form N-CEN that will provide staff an ability to identify investment risks and engage in further outreach as necessary. Not requiring the information would substantially reduce the ability of the Commission to oversee the fund industry. In addition, the information reported on Form N-CEN could be important to investors to differentiate investment companies. An alternative to adopting Form N-CEN would be to revise Form N-SAR. The Commission believes, however, that the outdated technology associated with Form N-SAR requires the introduction of a new form in order to increase the benefits from the changes made to the reporting of census information. In addition, there were no commenters who explicitly stated that Form N-SAR should not be replaced by Form N-CEN.
The information that funds report on Form N-CEN will be made publicly available. Additional alternatives include making some or all of the
One set of alternatives is to require funds to report additional information on Form N-CEN, including additional new information that is not currently reported on Form N-SAR.
We are also adopting amendments to Forms N-1A and N-3 to require certain disclosures in fund Statements of Additional Information regarding securities lending activities, as well as amendments to Form N-CSR to require the same information from closed-end funds.
The final rules will require funds to disclose gross and net income from securities lending activities, fees and compensation in total and broken out by enumerated types, and a description of the services provided to the fund by the securities lending agent. The quantitative disclosure requirements are discussed above in section II.F and also illustrated in Table 2 below.
Modifications from the proposed rule include, for example, replacing the proposed requirement that funds disclose the terms governing the compensation of the securities lending agent—including any revenue split—with a requirement to report actual fees paid during the fund's prior fiscal year,
The current set of fund registration statement and reporting requirements under Forms N-1A, N-3, and N-CSR (for closed-end funds) is the baseline from which we discuss the economic effects of today's amendments. The parties that could be affected by these amendments include funds that file or will file or update registration statements with the Commission (and closed-end funds that file or will file reports on Form N-CSR), the Commission itself, current and future investors of investment companies, and other market participants that could be affected by the increase in the disclosure of fund securities lending activity information.
We expect that many of the economic effects from the amendments to Forms N-1A, N-3, and N-CSR will largely result from an increase in investor ability to make investment decisions dependent on the more transparent disclosure in fund Statements of Additional Information (or in Form N-CSR for closed-end funds), and the extent to which this transparency enhances the ability of the Commission to utilize the updated disclosures. As discussed above, the economic effects will depend on the extent to which the securities lending practices of all investment companies become more transparent, and the ability of investors—and, in particular, individual investors—to utilize Statements of Additional Information (and reports on Form N-CSR for closed-end funds) to compare funds and to make investment decisions. As a result of these factors, some of which are unquantifiable, the discussion below is largely qualitative.
The amendments to Forms N-1A, and N-3, and N-CSR will benefit investors by enhancing the information funds disclose in the Statements of Additional Information (and reports on Form N-CSR for closed-end funds). We continue to believe that because net earnings from securities lending can contribute to the investment performance of a fund, the Commission, investors and others would benefit from the additional transparency of securities lending fees on the income from these activities. We further believe that the benefits of this additional transparency justify the potential unintended consequences, highlighted by commenters and discussed above, of public disclosure of certain information.
We have made modifications from the proposed requirements designed to, among other things, enhance comparability of the disclosed information and potentially ameliorate some concerns commenters expressed about the proposed required public disclosure of the terms governing compensation of the securities lending agent. A commenter suggested that we could facilitate comparability by specifying the fees for particular services that must be disclosed,
The comparability of the disclosed fee and expense information may also depend on the nature of the services provided to a particular fund in connection with its securities lending activities. Accordingly, to further enhance the comparability of the disclosed information and allow users to better assess fee and expense information, we have determined to specify that this information should be provided on the basis of the services actually provided to the fund in its most recent fiscal year and the discussion above provides some examples of the types of services that could be enumerated to illustrate such services.
As mentioned above, we are persuaded that backward-looking dollar-based requirements would yield clearer disclosure than would the proposed requirements and may also enhance disclosure comparability across funds for investors and reduce preparation complexity for funds. This change from the proposal allows investors and others to derive the informational benefit from the disclosure without any potentially sensitive negotiated contractual terms being made public.
We believe that registrants on average will likely incur minimal costs from our amendments to Forms N-1A and N-3, including certain paperwork and other expenses discussed below.
Several commenters expressed concern that the proposed disclosure requirements could yield information that would suggest, inaptly, that fees and expenses related to securities lending activities among funds are readily compared and contrasted.
Another commenter expressed concerns that the proposed fee and expense information could be used to evaluate the terms of a fund's lending arrangements and could, without access to additional information, result in potentially inappropriate conclusions that a fund negotiated its arrangements poorly or was otherwise disadvantaged in its negotiations.
Commenters also expressed concerns with the proposed requirements based on the currently nonpublic character of some of the information that would be required to be disclosed publicly, particularly the proposed requirement to disclose the terms governing compensation of the securities lending agent.
As mentioned above, we are persuaded that backward-looking dollar-based requirements would yield clearer disclosure than would the proposed requirements, thus mitigating potential costs related to misinterpretation or a false sense of precision by investors. In addition, this switch from terms of compensation to backward-looking dollar-based requirements could yield a cost savings for filers by possibly reducing preparation complexity relative to the proposal.
We expect that funds would incur certain paperwork and other expenses in connection with the new requirements. For funds that file registration statements on Forms N-1A and N-3, as discussed in detail below, we estimate that these paperwork expenses would be, in the aggregate, about $1.3 million each year.
The Commission has also explored other ways to modernize and improve the utility, quality, and consistency of the information that funds report to the Commission and to investors in the financial statements required in shareholder reports and other registration statements. Commission staff examined how the information funds provide to the Commission and to investors could be made more informative and more consistent across funds. Alternatives to the amendments to Forms N-1A, N-3, and N-CSR to require certain disclosures relate to information that funds report and the location in which the information is reported.
One alternative would be simply to not adopt any new securities lending disclosure amendments. We believe, however, that information regarding securities lending activities can provide investors with insights into fund activities, foster comparability across funds, and contribute to investors making informed investment decisions.
We are adopting amendments to Forms N-1A, N-3, and Form N-CSR to require certain disclosures regarding securities lending activities. Alternatively, we could require these disclosures to be made in the financial statements, in Form N-PORT, or in Form N-CEN. Given that our objective was to make this information available to investors and other users of the data, after consideration of comments we have decided that the Statement of Additional Information (and, with respect to closed-end funds, reports on Form N-CSR) is an appropriate place for funds to be required to disclose this information.
Finally, we could adopt different reporting requirements. For example, we could, as proposed, have required funds to disclose the terms of compensation in securities lending agreements rather than the backward-looking, dollar-based values. However, as discussed previously, commenters suggested, that doing so could result in the loss of privately negotiated competitive advantages or a decrease in the number of counterparties willing to participate in the securities lending market, and we believe that the requirements, as adopted eliminate the disclosures from the proposed requirements that commenters indicated could be the most sensitive while retaining the required information that we think will be most useful to investors in understanding the expenses associated with fund securities lending activities. Hence, we have decided against such an alternative.
The Commission has explored additional ways to modernize and improve the utility and the quality of the information that funds provide to the Commission and to investors. The Commission has considered many alternatives to the individual elements contained in new Form N-PORT, amendments to Regulation S-X, and new Form N-CEN; alternatives specific to each of the new reporting requirements are discussed above. The following discussion addresses other significant alternatives which involve aspects of fund reporting that pertain to more than one of the new reporting requirements.
The Commission considered the information that will be required on Form N-PORT as compared to the information on Form N-CEN. Commission staff considered the benefits to having the information more frequently updated as well as the cost to funds to report the information. Although the reporting of information on a more frequent basis imposes additional costs on funds, Commission staff believes the information that will be reported more frequently on Form N-PORT, relative to the annual reporting on Form N-CEN, is necessary for the Commission's oversight activities and could be important to other interested third-parties. Commission staff also considered the benefits of identification information to link information between forms and with other sources of information, with the costs to funds to obtain and report the identification information on the new forms.
The Commission is requiring that investment companies file Form N-PORT and Form N-CEN in an XML structured data format. One alternative is to not structure the information. As discussed, the ability of Commission staff, investors, third-party information providers, and other potential users to utilize the information is dependent on the efficiency with which the information investment companies provide can be compiled and aggregated. Commission staff believes that the affected parties would experience substantially less benefit from the reporting of investment company information if the information is not structured because of the time it would take to parse the information and the potential for errors in data due to the fact that unstructured data cannot be validated during the filing process. In addition, based on the Commission's understanding of current practices, it is likely that many investment companies and third party service providers have systems in place to accommodate the use of XML. Furthermore, based on our experiences with Forms N-MFP and PF, both of which require filers to report information in an XML format, we continue to believe that requiring funds to report information on Forms N-PORT and N-CEN in an XML format will provide the information that we seek in a timely and cost-effective manner. Therefore, requiring information in a format such as XML should impose minimal costs. The Commission will require funds to file certain attachments to their reports on Form N-PORT and Form N-CEN, and these attachments would not be required in a structured data format. The Commission believes that only marginal benefits would result from requiring funds to file these attachments in a structured, XML format due to the narrative format of the information provided.
The technology used to structure the data could affect the benefits and costs associated with the adopted rules, and we have therefore considered alternative formats for structuring the data.
Finally, one commenter stated that we should not require funds to directly report information on their own behalf, but instead require other entities such as transfer agents and custodians to report information on behalf of funds.
New forms Form N-CEN and Form N-PORT contain “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The titles for the existing collections of information are: “Form N-Q—Quarterly Schedule of Portfolio Holdings of Registered Management Investment Company” (OMB Control No. 3235-0578);
We published notice soliciting comments on the collection of information requirements in the Proposing Release and submitted the proposed collections of information to the Office of Management and Budget (“OMB”) for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. 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 Commission is adopting new forms Form N-CEN and Form N-PORT and amendments to Regulation S-X and the relevant registration forms, as well as the rescission of Forms N-Q and Form N-SAR, as part of a set of reporting and disclosure reforms. These
Certain funds will be required to file an electronic monthly report on Form N-PORT within thirty days after the end of each month. Form N-PORT is intended to improve transparency of information about funds' portfolio holdings and facilitate oversight of funds. The information required by Form N-PORT will be data-tagged in XML format. The respondents to Form N-PORT will be management investment companies (other than money market funds and small business investment companies) and UITs that operate as ETFs. Compliance with Form N-PORT will be mandatory for all such funds. Responses to the reporting requirements will be kept confidential for reports filed with respect to the first two months of each quarter; the third month of the quarter will not be kept confidential, but made public sixty days after the quarter end.
In the Proposing Release, we estimated that 10,710 funds
In the Proposing Release, we further estimated that 65% of funds (6,962 funds) would retain the services of a third party to provide data aggregation, validation and/or filing services as part of the preparation and filing of reports on proposed Form N-PORT on the fund's behalf.
In sum, we estimated that filing reports on proposed Form N-PORT would impose an average total annual hour burden of 1,537,572 on applicable funds.
In the Proposing Release, we noted that in addition to the costs associated with the hour burdens discussed above, funds would also incur other external costs in connection with reports on proposed Form N-PORT. Based on our experience with other structured data filings, we estimated that funds that would file reports on proposed Form N-PORT in house would license a third-party software solution to assist in filing their reports at an average cost of $4,805 per fund per year.
We received two comments on proposed Form N-PORT's estimated hour and costs burdens. One commenter, who submitted a comment letter on behalf of certain asset management firms focused on alternative investment strategies, stated that the proposed estimates of hours and costs were not realistic.
Another commenter suggested that complying with Form N-PORT reporting requirements could cost $800,000 to $1,500,000 for the fund complex (of approximately 250 funds).
As discussed above, our adoption includes some modifications from the proposal that address concerns raised by commenters and that are intended, in part, to decrease reporting and implementation burdens relative to the proposal.
We have revised our estimate of the number of funds that will file Form N-PORT upward from 10,710 funds to 11,382 funds to reflect updates to the industry data figures that were utilized in the Proposing Release.
We further estimate the total annual external cost burden of compliance with the information collection requirements of Form N-PORT will be $103,787,680, or $9,118 per fund.
In connection with our adoption of Form N-PORT, and as proposed, our reforms will rescind Form N-Q in order to eliminate unnecessarily duplicative reporting requirements. The rescission of Form N-Q will affect all management investment companies required to file reports on the form.
In our proposal, we estimated that each fund requires an average of approximately 21 hours per year to prepare and file two reports on Form N-Q annually, for a total estimated annual burden of 219,513 hours.
We have revised our estimate of the number of funds that would file Form N-Q upward from 10,453 funds to 11,863 funds to reflect updates to the industry data figures that were utilized in the Proposing Release.
As amended, rule 30a-1 will require all funds to file reports on Form N-CEN with the Commission on an annual basis.
In the Proposing Release, we estimated that the Commission would receive an average of 3,146 reports per year, based on the number of existing Form N-SAR filers.
As discussed below, we estimated that management investment companies each spend as much as 15.35 hours preparing and filing each report on Form N-SAR. We noted that we generally sought with proposed Form N-CEN, where appropriate, to simplify and decrease the census-type reporting burdens placed on registrants by current Form N-SAR. For example, we noted that proposed Form N-CEN would reduce the number of attachments that may need to be filed with the reports and largely eliminate financial statement-type information from the reports. Additionally, we noted our belief that reports in XML on proposed Form N-CEN would be less burdensome to produce than the reports on Form N-SAR currently required to be filed using outdated technology. Accordingly, for management investment companies we believe the estimated hour burden for filing reports on proposed Form N-CEN should be a reduced burden from the hour burden associated with Form N-SAR.
In the Proposing Release, we also noted that UITs may, however, experience an increase in the hour burden associated with census-type reporting if proposed Form N-CEN were adopted because UITs would be required to respond to more items in the form than they are currently required to respond to under Form N-SAR. For example, UITs would be required to provide certain background information and attachments in their reports on proposed Form N-CEN, which they are not currently required to provide in their reports on Form N-SAR. As a result, we increased the estimated annual hour burden for each UIT from 7.11 hours in the currently approved collection for Form N-SAR to 9.11 hours for proposed Form N-CEN.
We also noted our belief that, in the first year reports on the form are filed, funds may require additional time to prepare and file reports. We estimated that, for the first year, each fund would each require 20 additional hours.
In the Proposing Release, we further estimated that the average annual hour burden per response for proposed Form N-CEN for the first year would be 32.37 hours
With respect to the initial filing of a report on Form N-CEN, we estimated an external cost of $220 per fund and, with respect to subsequent filings, we estimated an annual external cost of $120 per fund.
One commenter expressed the general belief that requiring census-type data on Form N-CEN on an annual basis, rather than on a semi-annual basis on Form N-SAR, would significantly lessen reporting burdens for funds and lower costs for fund shareholders when compared to the status quo.
As discussed above, our adoption of Form N-CEN includes a number of modifications or clarifications from the proposal that address concerns raised by commenters and that are intended, in part, to decrease reporting and implementation burdens relative to the proposal. For example, we have extended the filing period for Form N-CEN from 60 days, as proposed, to 75 days to, in part, respond to commenters' concerns that 60 days would not provide funds the time necessary to collect, verify, and report information on Form N-CEN.
We believe that certain of the modifications from and clarifications to the proposal that we are adopting today will generally reduce the estimated burden hours and costs associated with implementation of Form N-CEN reporting requirements relative to the proposal, while a few others will increase those estimates. For these reasons, we believe that the net effect of such modifications from the proposal will not have a net impact on the estimated burden hours and costs stated in the Proposing Release. Accordingly, we are not estimating a change to the proposed per-fund estimates as a result of the modifications we have made to the proposed requirements. The Commission, however, has modified the estimated increase in aggregate annual burden hours and external costs that will result from reporting requirements on Form N-CEN in light of updated data regarding the number of management investment companies and UITs.
We have revised our estimate of the number of reports on Form N-CEN per year downward from 3,146 reports to 3,113 reports to reflect updates to the industry data figures that were utilized
We continue to estimate that management investment companies currently spend as much as 15.35 hours preparing and filing each report on Form N-SAR, and note that we generally have sought to simplify and decrease the census-type reporting burdens placed on registrants by current Form N-SAR in adopting Form N-CEN. For example, Form N-CEN, as adopted, will reduce the number of attachments that may need to be filed with the reports and largely eliminate financial statement-type information from the reports. Additionally, we continue to believe that reports in XML on Form N-CEN will be less burdensome to produce than the reports on Form N-SAR currently required to be filed using outdated technology. Accordingly, for management investment companies we continue to believe that the estimated hour burden for filing reports on Form N-CEN should be a reduced burden from the hour burden associated with Form N-SAR.
We continue to believe that UITs may, however, experience an increase in the hour burden associated with census-type reporting on Form N-CEN because UITs will be required to respond to more items in the form than they are currently required to respond to under Form N-SAR. For example, UITs will be required to provide certain background information and attachments in their reports on Form N-CEN, which they are not currently required to provide in their reports on Form N-SAR. As a result, we continue to estimate an increase in the annual hour burden for UITs from 7.11 hours in the currently approved collection for Form N-SAR to 9.11 hours for Form N-CEN.
In addition, we continue to believe that, in the first year reports on the form are filed, funds may require additional time to prepare and file reports. Therefore, we continue to estimate that, for the first year, each fund will require 20 additional hours.
We also continue to estimate (after rounding to the nearest hundredth of an hour) that the average annual hour burden per response for Form N-CEN for the first year will be 32.37 hours
External costs include the cost of goods and services, which with respect to reports on Form N-CEN, will include the costs of registering and maintaining an LEI for the registrant/funds.
In connection with our adoption of new Form N-CEN, we are rescinding Form N-SAR in order to eliminate unnecessarily duplicative reporting requirements. This rescission will affect all management investment companies and UITs.
We received no comments on the estimates put forward in our proposal. Thus, as proposed, we estimate that the average annual hour burden per response for Form N-SAR is 15.35 hours for a management investment company and 7.11 hours for a UIT, since a UIT is required to answer fewer items.
Accordingly, we estimate that, in the aggregate, the rescission will eliminate the 78,561 annual burden hours that would be associated with filing Form N-SAR. Additionally, we estimate that there are no external costs associated with preparation of reports on Form N-SAR.
As discussed above, we are adopting certain amendments to Articles 6 and 12 of Regulation S-X. As outlined in section II.C. above, the amendments would: (1) Require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts, and additional disclosures regarding fund holdings of written and purchased options contracts; (2) update the disclosures for other investments and investments in and advances to affiliates, as well as reorganize the order in which some investments are presented; and (3) amend the rules regarding the general form and content of fund financial statements.
Section 30(e) of the Investment Company Act requires every registered investment company to transmit to its stockholders, at least semiannually, reports containing such information and financial statements or their equivalent, as of a reasonably current date, as the Commission may prescribe by rules and regulations.
Rule 30e-1 also permits, under certain conditions, delivery of a single shareholder report to investors who share an address (“householding”).
Compliance with the disclosure requirements of rule 30e-1 is mandatory. Responses to the disclosure requirements are not kept confidential.
Based on staff conversations with fund representatives, we previously estimated that it takes approximately 84 hours per fund to comply with the collection of information associated with rule 30e-1, including the householding requirements. This time is spent, for example, preparing, reviewing, and certifying the reports. The previously total estimated annual hour burden of responding to rule 30e-1 was approximately 898,968 hours.
In the Proposing Release, we estimated that 11,230 management companies would have to comply with these amendments.
With respect to the amendments to Article 12 of Regulation S-X, we estimated each fund would spend an average of four hours to initially comply with the amendments. For example, while accounting guidance already requires funds to identify the level of each security (such as Level 3 securities), we estimated there will be an increased burden in adding another note to the financial statements. This increased burden would vary depending on the information already reported by funds in their financial statements. Likewise, while many funds voluntarily identify illiquid securities in their schedule of investments, the funds that do not make this disclosure would bear an initial burden to comply with these amendments.
We also estimated an annual external cost burden of compliance with the information collection requirements of rule 30e-1, which is currently $31,061 per fund, would not change as a result of the proposed amendments to
We did not receive any comments on the estimated hour and costs burdens relating to our proposed amendments to Regulation S-X. As discussed above, our adoption includes numerous modifications or clarifications from the proposal that address concerns raised by commenters and that are intended, in part, to decrease reporting and implementation burdens relative to the proposal. For example, we are limiting the requirement for nonpublic indexes to require funds to only report the top 50 components of the index or custom basket and any components that represent more than one percent of the notional value of the index or custom basket.
However, for variable rate securities, we are now requiring funds to provide disclosure of both a description of reference rate and spread and the end of period interest rate, rather than just the reference rate that we proposed, which may add additional burdens on funds.
For these and other reasons, we believe that our modifications from and clarifications to the proposal will, on a net basis, generally reduce the burden hours and costs associated with implementation of Regulations-X's reporting requirements relative to the proposal. However, although we did not receive any comments specifically addressing the burden estimates for our proposed amendments to Regulation S-X, we recognize that several commenters, although they did not provide quantitative estimates, suggested that implementation of the proposed new reporting requirements, generally would be costly.
The Commission has also modified the estimated increase in annual burden hours and total time costs that will result from the amendments based on updated industry data. We have revised our estimate of the number of management companies that will have to comply with the amendments to Regulation S-X upward from 11,230 management companies to 11,859 management companies to reflect updates to the industry data figures that were utilized in the Proposing Release.
We continue to estimate an annual external cost burden of compliance with the information collection requirements of rule 30e-1, which is currently $31,061 per fund, will not change as a result of the proposed amendments to Regulation S-X.
Rule 30e-2 requires registered UITs that invest substantially all of their assets in shares of a management investment company to send their unitholders annual and semiannual reports containing financial information on the underlying company.
Compliance with the disclosure requirements of rule 30e-2 is mandatory. Responses to the disclosure requirements are not kept confidential.
As noted in the Proposing Release, the Commission previously estimates that the annual burden associated with rule 30e-2, including the householding requirements, was 121 hours per respondent. The Commission further estimated the total annual hour burden was approximately 91,960 hours.
As discussed above, we are adopting certain amendments to Articles 6 and 12
In the Proposing Release, we estimated that there were 727 UITs that may be subject to the proposed amendments.
In addition, we estimated that the annual external cost burden of compliance with the information collection requirements of rule 30e-2, which are currently $20,000 per respondent, would not change as a result of the proposed amendments to Regulation S-X.
We did not receive any comments on the estimated hour and costs burdens. For the reasons discussed above, we now estimate that funds will incur a reduction of 2 burden hours in the first year and a reduction of .5 hours for filings in subsequent years from our proposed costs. The Commission has also modified the estimated increase in annual burden hours and total time costs that will result from the amendments based on updated industry data. We have revised our estimate of the number of UITs that will have to comply with the amendments to Regulation S-X downward from 727 UITs to 721 UITs to reflect updates to the industry data figures that were utilized in the Proposing.
In addition, we estimate that the annual external cost burden of compliance with the information collection requirements of rule 30e-2, which are currently $20,000 per respondent, will not change as a result of the amendments to Regulation S-X.
As discussed above, we are amending Forms N-1A, N-2, N-3, N-4, and N-6.
Form N-1A is the form used by open-end management investment companies to register under the Investment Company Act and/or register their securities under the Securities Act. Form N-2 is the form used by closed-end management investment companies to register under the Investment Company act and register their securities under the Securities Act. Form N-3 is the form used by separate accounts offering variable annuity contracts which are organized as management investment companies to register under the Investment Company Act and/or register their securities under the Securities Act. Form N-4 is the form used by insurance company separate accounts organized as unit investment trusts that offer variable annuity contracts to register under the Investment Company Act and/or register their securities under the Securities Act. Form N-6 is the form used by insurance company separate accounts organized as unit investment trusts that offer variable life insurance policies to register under the Investment Company Act and/or register their securities under the Securities Act. Compliance with the disclosure requirements of Forms N-1A, N-2, N-3, N-4, and N-6 is mandatory. Responses to the disclosure requirements are not kept confidential.
Currently, we estimate the following total hour burden for each of the relevant forms:
In the Proposing Release, we estimated that 11,957 funds would have to comply with the proposed amendments to Regulation S-X, including, among other things, the proposed new disclosure in the notes to financial statements relating to a fund's securities lending activities.
In the Proposing Release, we estimated that the total hour burden for each respective form would not change as a result of the proposed amendments concerning books and records disclosures.
We continue to estimate no change in burden hours as a result of the books and records disclosures. However, we now estimate that those forms—
In the Proposing Release, for both the books and records amendments and the Regulation S-X requirement, of which the securities lending requirements were a part, we estimated that there would be no changes to the annual external cost burden per fund as a result of the amendments, and accordingly estimated no change to the current estimated total external cost burden associated with the forms.
As previously discussed above, we are adopting, as proposed, the rescission of Form N-Q.
Form N-CSR requires similar certification with respect to the fund's second and fourth fiscal quarters. As a result of the rescission of Form N-Q adopted today, we are also adopting amendments to the form of certification in Form N-CSR to require each certifying officer to state that he or she has disclosed in the report any change in the registrant's internal control over financial reporting that occurred during the most recent fiscal half-year, rather than the registrant's most recent fiscal quarter as currently required by the form.
In addition, as discussed above, we are moving the change in independent public accountant attachment proposed on Form N-CEN to Form N-CSR so that an accountant's letter regarding a change in accountant will become available to the public semi-annually rather than annually.
In the Proposing Release, we estimated that the current annual burden associated with Form N-CSR is 14.42 hours per fund
In addition, in the Proposing Release, we also estimated that the current annual cost of outside services associated with Form N-CSR is approximately $129 per fund.
We did not receive any comments on the estimated hour and cost burdens associated with our proposed amendments to the certification requirements of Form N-CSR. As discussed above, we are adopting amendments to modify Form N-CSR so that an accountant's letter regarding a change in accountant will become available to the public semi-annually pursuant to an exhibit filing on Form N-CSR rather than annually as an attachment to Form N-CEN, as proposed.
For purposes of the PRA analysis, we estimate that the annual burden associated with Form N-CSR is 14.52 hours per fund.
In addition, as stated in the Proposing Release, we continue to estimate that the annual cost of outside services associated with Form N-CSR is approximately $129 per fund.
This Final Regulatory Flexibility Analysis (“FRFA”) has been prepared in accordance with section 4(a) of the Regulatory Flexibility Act (“RFA”).
The Commission collects certain information about the funds that it regulates. The Commission is adopting new rules, rule amendments, and new forms and form amendments that will improve the quality of information that funds report to the Commission, benefitting the Commission's risk monitoring and oversight, examination, and enforcement programs.
We believe that these new rules, rule amendments, and new forms and form amendments will improve the information that funds report to their shareholders and the Commission. In addition, the new forms will require reports be filed in a structured data format (XML) to allow for easier collection and analysis of data by Commission staff and the public. This is the format used by Form N-MFP, Form 13F, and Form D, which greatly improves the ability of Commission staff and other potential users to aggregate and analyze the data reported.
The Commission's objective is to gain more timely and useful information about funds' operations and portfolio holdings. The Commission also believes that its risk monitoring and oversight, examination, and enforcement programs will be improved by requiring enhanced information from funds.
In the Proposing Release, we requested comment on every aspect of the IRFA, including the number of small entities that would be affected by the proposed amendments, the existence or nature of the potential impact of the proposals on small entities discussed in the analysis and how to quantify the impact of the proposed rules.
One commenter noted that the rulemaking will place an “undue work and financial burden” on small closed-end funds.
As we noted above,
Apart from commenter concerns discussed above regarding the costs and financial burdens associated with the overall rulemaking, commenters did not raise specific concerns about the impact of new Form N-CEN or the rescission of Form N-SAR on small entities. One commenter expressed the belief that annual filings on Form N-CEN would be appropriate but that some of the requested information on the form probably would not be applicable to small closed-end funds with certain characteristics.
An investment company is a small entity if, together with other investment companies in the same group of related investment companies, it has net assets of $50 million or less as of the end of its most recent fiscal year.
The amendments would create, amend, or eliminate current reporting requirements for small entities.
Funds currently report portfolio holdings information quarterly on Form N-Q (first and third fiscal quarters) and Form N-CSR (second and fourth fiscal quarters). The Commission is adopting new Form N-PORT on which funds, other than MMFs, UITs, and SBICs, will be required to report portfolio holdings information and information related to liquidity, derivatives, securities lending, purchases and redemptions, and counterparty exposure each month. Funds will be required to file reports on Form N-PORT within 30 days after the end of the monthly period using a structured format. Only information reported for the third month of each quarter will be available to the public and such information would not be made public until 60 days after the end of the third month of the fund's fiscal quarter. For smaller funds and fund groups (
We received no comments on the IRFA analysis of new Form N-PORT or the estimated costs discussed above in sections III.B.3 and IV.A.1. Therefore, based on our experience with other structured data filings, we estimate that funds will prepare and file their reports on proposed Form N-PORT by either (1) licensing a software solution and preparing and filing the reports in house, or (2) retaining a service provider to provide data aggregation and validation services as part of the preparation and filing of reports on Form N-PORT on behalf of the fund. We estimate that approximately 117 open and closed-end funds (other than money market funds and SBICs), are small entities that will file, on a monthly basis, a complete report on Form N-PORT reporting certain information regarding the fund and its portfolio holdings. As discussed above, we estimate, for funds that choose to license a software solution to file reports on Form N-PORT, that completing, reviewing, and filing Form N-PORT will cost $56,682 for each fund, including small entities, in its first year of reporting and $47,465 per year for each subsequent year.
Our proposal will rescind Form N-Q in order to eliminate unnecessarily duplicative reporting requirements. The rescission of Form N-Q will affect all management investment companies required to file reports on the form. We expect that approximately 117 open and closed-end funds are small entities that will be affected by the rescission of Form N-Q.
We received no comments on the IRFA analysis of the rescission of Form N-Q or the projected costs savings from rescinding Form N-Q. As discussed above, we estimate that the rescission of Form N-Q will save $6,804 per year for each fund, including small entities.
Funds currently report census type information relating to the fund's organization, service providers, fees and expenses, portfolio strategies and investments, portfolio transactions, and share transactions on Form N-SAR. Funds file this form semi-annually with the Commission, except for UITs, which must file such reports annually.
Because of these limitations, the Commission is replacing Form N-SAR with new Form N-CEN. This new form will streamline and update the required data items to reflect current Commission staff needs. Where possible, we have endeavored to exclude items from Form N-CEN that are disclosed or reported pursuant to other Commission forms, or are otherwise available; however, in some limited cases, we are collecting information on Form N-CEN that may be similarly disclosed or reported elsewhere because we believe it will be useful to have such information in a structured format to facilitate comparisons across funds. We also believe this format will allow for easier data analysis and use in the Commission's rulemaking, inspection, and risk monitoring functions and reduce burdens on filers. Finally, the Commission is requiring that funds file reports on Form N-CEN annually, opposed to semi-annually, which is currently required for Form N-SAR (except UITs, which currently must file reports annually).
We received no comments on the IRFA analysis of Form N-CEN, but discuss in detail comments received on our cost estimates in sections III.D.2, III.D.3, and IV.B.1, above. Therefore, we estimate that approximately 129 registered investment companies, including 117 open and closed-end funds (including one SBIC) and 12 UITs, are small entities that will be required to file a complete report on Form N-CEN. Although UITs are required to complete fewer items on Form N-CEN than other registered investment companies, the burden on UITs will increase because UITs will be required to respond to more items in Form N-CEN than they are currently required to respond to under Form N-SAR.
As discussed above, the Commission estimates that Form N-CEN filers, including small entities, would incur additional costs of $14.6 million each year and $20.2 million in one-time costs as a result of the form's reporting requirements.
Our proposal will rescind Form N-SAR in order to eliminate unnecessarily duplicative reporting requirements. We estimate that approximately 129 registered investment companies that are small entities, including 117 open and closed-end funds (including one SBIC) and 12 UITs would be affected by the rescission of Form N-SAR.
As discussed above, the Commission estimates that rescinding Form N-SAR will save current Form N-SAR filers, including small entities, about $25.5 million per year.
The Commission is also amending Regulation S-X to require new, standardized disclosures regarding fund holdings in open futures contracts, open forward foreign currency contracts, and open swap contracts, and additional disclosures regarding fund holdings of written and purchased options, update the disclosures for other investments with conforming amendments, and amend the rules regarding the form and content of fund financial statements. We believe that the amendments we are adopting today are generally consistent with how many funds are currently reporting investments (including derivatives), and other information according to current industry practices. The Commission believes investors will benefit from our amendments because increased disclosure and standardization of fund holdings will improve comparability among funds including transparency for investors regarding a fund's use of derivatives and the liquidity of certain investments. The Commission also believes that greater clarity will benefit the industry, while any additional burdens will be reduced since similar disclosures will be required on Form N-PORT.
We received no comments on the IRFA analysis of the Regulation S-X amendments, which included the proposed securities lending activity disclosures, or on the estimated costs discussed above in section III.C.3
We therefore expect that approximately 129 registered investment companies, including 117 open and closed-end funds (including one SBIC) and 12 UITs and, approximately 34 BDCs, are small entities that will be affected by the amendments to Regulation S-X. As discussed above, we estimate that amending Regulation S-X will cost $1,911 for each fund, including small entities, in its first year of reporting, and $683 per year for each subsequent year.
We are amending Forms N-1A, N-2, N-3, N-4, and N-6 to exempt funds from those forms' respective books and records disclosures if the information is provided in a fund's most recent report on Form N-CEN.
As discussed above, in sections III.E and IV.D, we did not receive any comments on the estimated hour and cost burdens or quantitatively estimated economic benefits or costs associated with our amendments to fund registration statement forms, or on their IRFA analysis or our IRFA analysis of securities lending disclosures. We expect that approximately 90 registered investment companies, including 78 open-end funds and 12 UITs, and approximately 34 BDCs, are small entities that would be required to file registration statements on the amended forms. As discussed above, the Commission estimates that Form N-1A and N-3 filers, including small entities, would incur additional costs of $1.3 million each year and $3.9 million in
Form N-Q and Form N-CSR currently require a quarterly SOX certification relating to the accuracy of information reported to the Commission and disclosure controls and procedures and internal control over financial reporting. To facilitate the elimination of Form N-Q, we are expanding the SOX certification for Form N-CSR to six months to maintain coverage for the entire fiscal year. As discussed above, in section IV.E, we did not receive any comments on the estimated hour and cost burdens associated with our proposed amendments to the certification requirements of Form N-CSR. In addition, we also are moving the change in independent public accountant attachment proposed on Form N-CEN to Form N-CSR so that an accountant's letter regarding a change in accountant will become available to the public semi-annually rather than annually.
As discussed above, in sections III.B.3 and IV.E, we did not receive any comments on the estimated hour and cost burdens associated with our amendments to Form N-CSR or its IRFA analysis.
Therefore, we expect that approximately 129 registered investment companies, including 78 open-end funds, 39 closed-end funds (including one SBIC) and 12 UITs, are small entities that will be affected by the amendments to Form N-CSR. As discussed above, the Commission does not believe that the costs associated with reporting on Form N-CSR will change for funds, including small entities, as a result of the amendments to the certification requirements associated with Form N-CSR adopted today.
The RFA directs the Commission to consider significant alternatives that would accomplish our stated objective, while minimizing any significant economic impact on small entities. The Commission considered the following alternatives for small entities in relation our forms and form amendments and rules and rule amendments: (i) Establishing different reporting requirements or frequency to account for resources available to small entities; (ii) using performance rather than design standards; and (iii) exempting small entities from all or part of the proposal.
Small entities currently follow the same requirements that large entities do when filing reports on Form N-SAR, Form N-CSR, and Form N-Q. The Commission believes that establishing different reporting requirements or frequency for small entities would not be consistent with the Commission's goal of industry oversight and investor protection. However, as discussed above, we are adopting a delayed compliance period for small entities that will file reports on Form N-PORT.
We are adopting the rules and forms contained in this document under the authority set forth in the Securities Act, particularly, section 19 thereof [15 U.S.C.
Administrative practice and procedure, Organization and functions (Government agencies).
Accounting, Investment companies, Reporting and recordkeeping requirements, Securities.
Administrative practice and procedure, Incorporation by reference, Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
For reasons set forth in the preamble, title 17, chapter II of the Code of Federal Regulations is amended as follows:
44 U.S.C. 3506; 44 U.S.C. 3507.
(b) * * *
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78
Sections 210.6-01 to 210.6-10 shall be applicable to financial statements filed for registered investment companies and business development companies.
The financial statements filed for persons to which §§ 210.6-01 to 210.6-10 are applicable shall be prepared in accordance with the following special rules in addition to the general rules in §§ 210.1-01 to 210.4-10 (Articles 1, 2, 3, and 4). Where the requirements of a special rule differ from those prescribed in a general rule, the requirements of the special rule shall be met.
(a)
(b)
(c)
(i) Statements of the registrant may be consolidated only with the statements of subsidiaries which are investment companies;
(ii) A consolidated statement of the registrant and any of its investment company subsidiaries shall not be filed unless accompanied by a consolidating statement which sets forth the individual statements of each significant subsidiary included in the consolidated statement:
(iii) Consolidated or combined statements filed for subsidiaries not consolidated with the registrant shall not include any investment companies unless accompanied by consolidating or combining statements which set forth the individual statements of each included investment company which is a significant subsidiary.
(2) If consolidating or combining statements are filed, the amounts included under each caption in which financial data pertaining to affiliates is required to be furnished shall be subdivided to show separately the amounts:
(i) Eliminated in consolidation; and
(ii) Not eliminated in consolidation.
(d)
(e)
(f)
(1) The policy of the person with regard to acquisition of restricted securities.
(2) The policy of the person with regard to valuation of restricted securities. Specific comments shall be given as to the valuation of an investment in one or more issues of securities of a company or group of affiliated companies if any part of such investment is restricted and the aggregate value of the investment in all
(3) A description of the person's rights with regard to demanding registration of any restricted securities held at the date of the latest balance sheet.
(g)
(h)
(2) State the following amounts based on cost for Federal income tax purposes:
(i) Aggregate gross unrealized appreciation for all investments in which there is an excess of value over tax cost;
(ii) The aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost over value;
(iii) The net unrealized appreciation or depreciation; and
(iv) The aggregate cost of investments for Federal income tax purposes.
(i)
(1) The number of shares, units, or principal amount of bonds sold during the period of report, the amount received therefor, and, in the case of shares sold by closed-end management investment companies, the difference, if any, between the amount received and the net asset value or preference in involuntary liquidation (whichever is appropriate) of securities of the same class prior to such sale; and
(2) The number of shares, units, or principal amount of bonds repurchased during the period of report and the cost thereof. Closed-end management investment companies shall furnish the following additional information as to securities repurchased during the period of report:
(i) As to bonds and preferred shares, the aggregate difference between cost and the face amount or preference in involuntary liquidation and, if applicable net assets taken at value as of the date of repurchase were less than such face amount or preference, the aggregate difference between cost and such net asset value;
(ii) As to common shares, the weighted average discount per share, expressed as a percentage, between cost of repurchase and the net asset value applicable to such shares at the date of repurchases.
Note to paragraphs (h)(2)(i) and (ii): The information required by paragraphs (h)(2)(i) and (ii) of this section may be based on reasonable estimates if it is impracticable to determine the exact amounts involved.
(j)
(2) If the particular class or series for which information is provided may be affected by other classes or series of such investment company, such as by the offset of realized gains in one series with realized losses in another, or through contingent liabilities, such situation shall be disclosed.
(k)
(2) For other companies, balance sheets shall reflect reserves for outstanding certificates determined as follows:
(i) For certificates of the installment type, such amount which, together with the lesser of future payments by certificate holders as and when accumulated at a rate not to exceed 3
(ii) For certificates of the fully-paid type, such amount which, as and when accumulated at a rate not to exceed 3
(iii) Such amount or accrual therefor, as shall have been credited to the account of any certificate holder in the form of any credit, or any dividend, or any interest in addition to the minimum maturity or face amount specified in the certificate, plus any accumulations on any amount so credited or accrued at rates required under the terms of the certificate.
(iv) An amount equal to all advance payments made by certificate holders, plus any accumulations thereon at rates required under the terms of the certificate.
(v) Amounts for other appropriate contingency reserves, for death and disability benefits or for reinstatement rights on any certificate providing for such benefits or rights.
(l)
This section is applicable to balance sheets filed by registered investment companies and business development companies except for persons who substitute a statement of net assets in accordance with the requirements specified in § 210.6-05, and issuers of face-amount certificates which are subject to the special provisions of § 210.6-06. Balance sheets filed under this rule shall comply with the following provisions:
1.
2.
3.
4.
5.
(b) If the aggregate amount of notes receivable exceeds 10 percent of the aggregate amount of receivables, the above information shall be set forth separately, in the balance sheet or in a note thereto, for accounts receivable and notes receivable.
6.
7.
8.
9.
10.
11.
12.
13.
(b) Provide in a note the information required under § 210.5-02.19(b) regarding unused lines of credit for short-term financing and § 210.5-02.22(b) regarding unused commitments for long-term financing arrangements.
14.
15.
16.
(b) Unit investment trusts, including those which are issuers of periodic payment plan certificates, also shall state in a note to the financial statements: (1) The total cost to the investors of each class of units or shares; (2) the adjustment for market depreciation or appreciation; (3) other deductions from the total cost to the investors for fees, loads and other charges, including an explanation of such deductions; and (4) the net amount applicable to the investors.
17.
(a) The accumulated undistributed investment income-net,
(b) accumulated undistributed net realized gains (losses) on investment transactions, and (c) net unrealized appreciation (depreciation) in value of investments at the balance sheet date.
18.
19.
In lieu of the balance sheet otherwise required by § 210.6-04, persons may substitute a statement of net assets if at least 95 percent of the amount of the person's total assets are represented by investments in securities of unaffiliated issuers. If presented in such instances, a statement of net assets shall consist of the following:
1. A schedule of investments in securities of unaffiliated issuers as prescribed in § 210.12-12.
2. The excess (or deficiency) of other assets over (under) total liabilities stated in one amount, except that any amounts due from or to officers, directors, controlled persons, or other affiliates, excluding any amounts owing to noncontrolled affiliates which arose in the ordinary course of business and which are subject to usual trade terms, shall be stated separately.
3. Disclosure shall be provided in the notes to the financial statements for any item required under § 210.6-04.3 and §§ 210.6-04.9 to 210.6-04.13.
4. The balance of the amounts captioned as
5. The information required by (i) § 210.6-04.16, (ii) § 210.6-04.17 and (iii) § 210.6-04.18 shall be furnished in a note to the financial statements.
Statements of operations filed by registered investment companies, other than issuers of face-amount certificates, subject to the special provisions of § 210.6-08, and business development companies, shall comply with the following provisions:
1.
2.
(b) State separately any other expense item the amount of which exceeds five percent of the total expenses shown under this caption.
(c) A note to the financial statements shall include information concerning management and service fees, the rate of fee, and the base and method of computation. State separately the amount and a description of any fee reductions or reimbursements representing: (1) Expense limitation agreements or commitments; and (2) offsets received from broker-dealers showing separately for each amount received or due from (i) unaffiliated persons; and (ii) affiliated persons. If no management or service fees were incurred for a period, state the reason therefor.
(d) If any expenses were paid otherwise than in cash, state the details in a note.
(e) State in a note to the financial statements the amount of brokerage commissions (including dealer markups) paid to affiliated broker-dealers in connection with purchase and sale of investment securities. Open-end management companies shall state in a note the net amounts of sales charges deducted from the proceeds of sale of capital shares which were retained by any affiliated principal underwriter or other affiliated broker-dealer.
(f) State separately all amounts paid in accordance with a plan adopted under 17 CFR 270.12b-1 of this chapter. Reimbursement to the fund of expenses incurred under such plan (12b-1 expense reimbursement) shall be shown as a negative amount and deducted from current 12b-1 expenses. If 12b-1 expense reimbursements exceed current 12b-1 costs, such excess shall be shown as a negative amount used in the calculation of total expenses under this caption.
(g)(1)
(2)
(3)
3.
4.
5.
6.
7.
(b) Distributions of realized gains by other investment companies shall be shown separately under this caption.
(c) State separately the amount of the net increase or decrease during the period in the unrealized appreciation or depreciation in the value of: (1) Investment securities of unaffiliated issuers, (2) investment securities of affiliated issuers, (3) option contracts written, (4) short positions in securities, (5) futures contracts, (6) forward foreign currency contracts, (7) swap contracts, and (8) other investments held at the end of the period.
(d) State separately any: (1) Federal income taxes and (2) other income taxes applicable to realized and unrealized gain (loss) on investments, distinguishing taxes payable currently from deferred income taxes.
8.
9.
(a) When information is required in schedules for both the person and its subsidiaries consolidated, it may be presented in the form of a single schedule, provided that items pertaining to the registrant are separately shown and that such single schedule affords a properly summarized presentation of the facts.
(b) The schedules shall be examined by an independent accountant if the related financial statements are so examined.
(c)
(2) When permitted by the applicable form, the schedule specified in this paragraph may be filed for management investment companies as of the dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for each person or group.
(d)
(1) Schedules I and II, specified below in this section, shall be filed for unit investment trusts as of the dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for each person or group.
(2) Schedule III, specified below in this section, shall be filed for unit investment trusts for each period for which a statement of operations is required to be filed for each person or group.
(e)
(1) Schedules I, V and X, specified below, shall be filed for face-amount certificate investment companies as of the dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for each person or group.
(2) All other schedules specified below in this section shall be filed for face-amount certificate investment companies for each period for which a statement of operations is filed, except as indicated for Schedules III and IV.
15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s(a), 77z-3, 77sss(a), 78c(b), 78
15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78l, 78m, 78n, 78o(d), 78o-7, 78o-7 note, 78u-5, 78w(a), 78
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
15 U.S.C. 78a
This form shall be used by registered unit investment trusts and small business investment companies for annual reports to be filed pursuant to § 270.30a-1 of this chapter in satisfaction of the requirement of section 30(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-29(a)) that every registered investment company must file annually with the Commission such information, documents, and reports as investment companies having securities registered on a national securities exchange are required to file annually pursuant to section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a)) and the rules and regulations thereunder.
The text of Form N-CEN will not appear in the
15 U.S.C. 80a-1
Every management investment company must file an annual report on Form N-CEN (§ 274.101 of this chapter) at least every twelve months and not
Notwithstanding the provisions of § 270.30a-1, a registered management investment company that is a wholly-owned subsidiary of a registered management investment company need not file an annual report on Form N-CEN if financial information with respect to that subsidiary is reported in the parent's annual report on Form N-CEN.
Each registered management investment company or exchange-traded fund organized as a unit investment trust, or series thereof, other than a registered open-end management investment company that is regulated as a money market fund under § 270.2a-7 or a small business investment company registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), must file a monthly report of portfolio holdings on Form N-PORT (§ 274.150 of this chapter), current as of the last business day, or last calendar day, of the month. A registered investment company that has filed a registration statement with the Commission registering its securities for the first time under the Securities Act of 1933 is relieved of this reporting obligation with respect to any reporting period or portion thereof prior to the date on which that registration statement becomes effective or is withdrawn. Reports on Form N-PORT must be filed with the Commission no later than 30 days after the end of each month.
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78
The additions and revisions read as follows:
(d) * * *
(1) * * *
* * *
4. “
The additions and revisions read as follows:
The text of Form N-1A does not, and this amendment will not, appear in the
(i)
(1) Provide the following dollar amounts of income and fees/compensation related to the securities lending activities of each Series during its most recent fiscal year:
(i) Gross income from securities lending activities, including income from cash collateral reinvestment;
(ii) All fees and/or compensation for each of the following securities lending activities and related services: Any share of revenue generated by the securities lending program paid to the securities lending agent(s) (“revenue split”); fees paid for cash collateral management services (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split; administrative fees that are not included in the revenue split; fees for indemnification that are not included in the revenue split; rebates paid to borrowers; and any other fees relating to the securities lending program that are not included in the revenue split, including a description of those other fees;
(iii) The aggregate fees/compensation disclosed pursuant to paragraph (ii); and
(iv) Net income from securities lending activities (
(2) Describe the services provided to the Series by the securities lending agent in the Series' most recent fiscal year.
* * *
3. A Fund may omit this information to the extent it is provided in its most recent report on Form N-CEN [17 CFR 274.101].
The additions and revisions read as follows:
The text of Form N-2 does not, and this amendment will not, appear in the
6. * * *
(b) “
The additions and revisions read as follows:
The text of Form N-2 does not, and this amendment will not, appear in the
The additions and revisions read as follows:
The text of Form N-3 does not, and this amendment will not, appear in the
(a) * * *
6. * * *
(ii)
The additions and revisions read as follows:
The text of Form N-3 does not, and this amendment will not, appear in the
(j) Securities Lending.
(i) Provide the following dollar amounts of income and fees/compensation related to the securities lending activities of each series of the Registrant during its most recent fiscal year:
(A) Gross income from securities lending activities;
(B) All fees and/or compensation for each of the following securities lending activities and related services: Any share of revenue generated by the securities lending program paid to the securities lending agent(s) (“revenue split”); fees paid for cash collateral management services (including fees
(C) The aggregate fees/compensation disclosed pursuant to paragraph (B); and
(D) Net income from securities lending activities (
(ii) Describe the services provided to the series of the Registrant by the securities lending agent in the series of the Registrant's most recent fiscal year.
This form shall be used by registered investment companies for annual reports to be filed pursuant to 17 CFR 270.30a-1.
The text of Form N-CEN will not appear in the
The additions and revisions read as follows:
The text of Form N-CSR does not, and these amendments will not, appear in the
(b) * * *
(a) If the registrant is a closed-end management investment company, provide the following dollar amounts of income and fees/compensation related to the securities lending activities of the registrant during its most recent fiscal year:
(1) Gross income from securities lending activities;
(2) All fees and/or compensation for each of the following securities lending activities and related services: Any share of revenue generated by the securities lending program paid to the securities lending agent(s) (“revenue split”); fees paid for cash collateral management services (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue split; administrative fees that are not included in the revenue split; fees for indemnification that are not included in the revenue split; rebates paid to borrowers; and any other fees relating to the securities lending program that are not included in the revenue split, including a description of those other fees;
(3) The aggregate fees/compensation disclosed pursuant to paragraph (2); and
(4) Net income from securities lending activities (
(b) If the registrant is a closed-end management investment company, describe the services provided to the registrant by the securities lending agent in the registrant's most recent fiscal year.
(a) * * *
(2) * * *
(4) Change in the registrant's independent public accountant. Provide the information called for by Item 4 of Form 8-K under the Exchange Act (17 CFR 249.308). Unless otherwise specified by Item 4, or related to and necessary for a complete understanding of information not previously disclosed, the information should relate to events occurring during the reporting period.
(a) Except as provided in paragraph (b) of this section, this form shall be used by registered management investment companies or exchange-traded funds organized as unit investment trusts, or series thereof, to file reports pursuant to § 270.30b1-9 of this chapter not later than 30 days after the end of each month.
(b) Form N-PORT shall not be filed by a registered open-end management investment company that is regulated as a money market fund under § 270.2a-7 of this chapter or a small business investment company registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), or series thereof.
The text of Form N-PORT will not appear in the
6. Funds are reminded of the requirement to timely file a final Form N-CEN with the Commission.
By the Commission.
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission is adopting amendments to rule 22c-1 under the Investment Company Act to permit a registered open-end management investment company (“open-end fund” or “fund”) (except a money market fund or exchange-traded fund), under certain circumstances, to use “swing pricing,” the process of adjusting the fund's net asset value (“NAV”) per share to effectively pass on the costs stemming from shareholder purchase or redemption activity to the shareholders associated with that activity, and amendments to rule 31a-2 to require funds to preserve certain records related to swing pricing. The Commission is also adopting amendments to Form N-1A and Regulation S-X and a new item in Form N-CEN, all of which address a fund's use of swing pricing.
Zeena Abdul-Rahman, John Foley, Andrea Ottomanelli Magovern, Naseem Nixon, Amanda Hollander Wagner, Senior Counsels; Thoreau Bartmann, Melissa Gainor, Senior Special Counsels; or Kathleen Joaquin, Senior Financial Analyst, Investment Company Rulemaking Office, at (202) 551-6792; Ryan Moore, Assistant Chief Accountant, or Matt Giordano, Chief Accountant, Office of the Chief Accountant, at (202) 551-6918, Division of Investment Management, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-8549.
The Securities and Exchange Commission (the “Commission”) is adopting amendments to rules 22c-1 [17 CFR 270.22c-1] and 31a-2 [17 CFR 270.31a-2] under the Investment Company Act of 1940 [15 U.S.C. 80a-1
Avoiding shareholder dilution is a key concern of the Investment Company Act.
Section 22(c) of the Act authorizes the Commission to make rules and regulations applicable to registered investment companies and to principal underwriters of, and dealers in, the redeemable securities of any registered investment company, whether or not members of any securities association, to the same extent, covering the same subject matter, and for the accomplishment of the same ends as are prescribed in section 22(a) in respect of the rules which may be made by a registered securities association governing its members.
We sought to address the risk of shareholder dilution that can result from such transaction costs, along with the risk that a fund would be unable to meet its obligations to redeeming shareholders or other obligations under applicable law (while mitigating investor dilution) as a result of liquidity risk, with the proposal on fund liquidity risk management that we published in 2015.
We received more than 70 comment letters on the proposal,
We are also adopting amendments to rule 31a-2 to require funds to maintain records evidencing and supporting each computation of an adjustment to the fund's NAV based on the fund's swing pricing policies and procedures. Finally, we are adopting amendments to Form N-1A and Regulation S-X and adopting a new item in Form N-CEN to require a fund to publicly disclose certain information regarding its use of swing pricing.
Under rule 22c-1, all investors who submit requests to redeem from an open-end fund on any particular day must receive the NAV next calculated by the fund after receipt of such redemption request.
Nevertheless, we recognize that trading activity and other changes in portfolio holdings associated with meeting redemptions may occur over multiple business days following the redemption request. If these activities occur (and their associated costs are reflected in NAV) in days following redemption requests, the costs of providing liquidity to redeeming investors could be borne by the remaining investors in the fund, thus potentially diluting the interests of non-redeeming shareholders.
As we discuss more broadly in the Liquidity Risk Management Programs Adopting Release, these factors in fund redemptions can create incentives, at least in theory, in times of liquidity stress in the markets for shareholders to redeem quickly to avoid further losses (or a “first-mover advantage”).
As a means of addressing potential shareholder dilution from redemptions, the Commission adopted in 2005 rule 22c-2 under the Investment Company Act, which permits funds to impose redemption fees under certain circumstances.
Fund boards have flexibility under rule 22c-2 to adopt redemption fees that address the needs of their funds.
While we believe redemption fees may be an effective anti-dilution tool, we acknowledge that these fees are viewed as unpopular with investors and intermediaries
Funds may also attempt to address potential shareholder dilution by reserving the right to redeem in kind instead of with cash.
Funds may still mitigate shareholder dilution using redemption fees and redemptions in kind, but each has downsides (as described above) and they are not broadly utilized by funds. Therefore, for the reasons discussed throughout this section, we believe that providing funds the option to use swing pricing as another anti-dilution tool is likely to benefit investors and may complement or be an alternative to the tools currently available to funds.
Finding efficient and cost-effective ways to protect fund shareholders from the dilutive impacts of trading activity and related costs is challenging, and many tools have been used in different jurisdictions to address these issues.
Against this background, today we are adopting amendments to rule 22c-1 that will enable funds to choose to use “swing pricing” as a tool to mitigate shareholder dilution. After further consideration and after evaluating comments, we have modified several aspects of the final rule from the proposal, including eliminating the consideration of “market impact” when setting a fund's swing factor; requiring funds to establish and disclose an upper limit on the fund's swing factor, which may not exceed two percent of the fund's NAV per share; and refining certain financial statement and performance reporting requirements related to swing pricing. The amendments as adopted also incorporate certain modifications to the board's approval and oversight role associated with swing pricing. The fund's board does not have to specifically approve changes to the fund's swing pricing policies and procedures. However, under the final rule, the fund's board will be required to approve the fund's swing pricing policies and procedures and periodically review a written report prepared by the persons responsible for administering swing pricing that describes, among other things, the swing pricing administrator's review of the adequacy of the fund's swing pricing policies and procedures and the effectiveness of their implementation, including the impact on mitigating dilution. This report also must describe the administrator's review and assessment of the fund's swing threshold(s), swing factor(s), and swing factor upper limit considering the requirements of the rule, including the information and data supporting these determinations. The board-approved policies and procedures must specify the process for setting the swing threshold, swing factor, and swing factor upper limit. In addition, the board will be required to approve the swing threshold(s) and the upper limit on the swing factor(s) used by the fund, and any changes thereto. We are also providing for an extended effective date to help alleviate concerns raised by commenters regarding operational changes that will be necessary before this new pricing method becomes available in the marketplace, because we believe that efficient, coordinated efforts to implement such operational changes will ultimately benefit investors. We have directed our staff to review, two years after the rule's effective date, market practices associated with funds' use of swing pricing under rule 22c-1(a)(3) to mitigate dilution and to provide the Commission with the results of this review.
We proposed amendments to rule 22c-1 that would permit a registered open-end fund (but not a money market fund or ETF) to choose to establish and implement swing pricing.
Nearly all commenters supported the goals of swing pricing, and the ability of swing pricing in theory to achieve these goals.
In response to commenters' concerns regarding swing pricing's operational challenges and costs and to help facilitate efficient implementation of swing pricing, the Commission is adopting amendments to rule 22c-1 permitting swing pricing with a two-year extended effective date. Delaying the effective date should provide funds, intermediaries, and service providers a reasonable amount of time to evaluate and implement in an orderly and more cost-effective manner the necessary operational changes to conduct swing pricing, regardless of the unique operational hurdles a particular entity may face.
As discussed in section II.A.3.b. below, commenters highlighted the various benefits of swing pricing for investors, including how the tool may be used to address the dilutive effect of shareholder transaction activity effectively and efficiently, and with observable performance benefits to the non-transacting shareholders in such funds.
With respect to the more detailed elements of the proposed swing pricing rules, multiple commenters raised various additional concerns, and in some cases provided suggestions on the processes for determining the swing threshold, calculating the swing factor, estimating net shareholder flows, pricing errors and materiality, impacts on financial statement presentation and other disclosures, and board approval and oversight, all of which are discussed in the sections below.
Under the final rule, all registered open-end management investment companies, with the exception of money market funds and ETFs, may choose to use swing pricing.
A fund may decide to adopt swing pricing policies and procedures as part of the liquidity risk management program it is required to implement under rule 22e-4.
Closed-end funds do not issue redeemable securities and therefore do not incur the same costs as open-end funds, associated with shareholder purchase and redemption activity, that swing pricing is intended to address.
Certain closed-end funds (“closed-end interval funds”) do elect to repurchase their shares at
Although UITs issue redeemable securities, we are not permitting UITs to utilize swing pricing for a number of reasons. First, most assets currently held in UITs serve as separate account vehicles used to fund variable annuity and variable life insurance products, and these UITs essentially function as pass-through vehicles, investing principally in securities of one or more open-end funds that could implement swing pricing.
As proposed, we are not permitting ETFs to use swing pricing because, unlike mutual funds, which typically internalize the costs associated with purchases and redemptions of shares, ETFs typically externalize these costs by redeeming in kind and by charging a fixed and/or variable fee to authorized participants who purchase creation units from, and sell creation units to, an ETF to cover liquidity and transaction costs.
Under the final rule, like under the proposal, money market funds would not be able to use swing pricing. No commenters suggested that money market funds be allowed to use swing pricing. Money market funds are subject to extensive requirements concerning the liquidity of their portfolio investments. Also, a money market fund is permitted to impose a liquidity fee on redemptions if its weekly liquid investments fall below a certain threshold, and these fees serve a similar purpose as the NAV adjustments contemplated by swing pricing.
We also believe that the liquidity fee regime permitted under rule 2a-7 is a more appropriate tool for money market funds to manage the allocation of liquidity costs than swing pricing.
We note that some foreign jurisdictions have a similar conception of liquidity fees as a distinct tool separate from swing pricing. For example, in Europe, UCITS may use swing pricing and apply “dilution levies,” which are in many respects similar to liquidity fees.
As highlighted above, most commenters expressed general support for the goals of swing pricing, as well as the ability of swing pricing to achieve these goals if successfully implemented.
Several commenters suggested that, in addition to mitigating potential dilution arising from purchase and redemption activity, swing pricing also could help deter redemptions motivated by any first-mover advantage.
As discussed in more detail in section II.A.3.d. below, swing pricing would require a fund, in determining whether the fund's level of net purchases or net redemptions has exceeded the swing threshold, to make such a determination based on receipt of sufficient information about the fund's net shareholder flows to allow the fund to reasonably estimate whether it has crossed the swing threshold with high confidence. We understand that, to the extent that funds engage in swing pricing, funds may be able to use the earlier receipt of net flow information in other ways, in particular, receiving net flow data earlier than current practice may provide valuable and improved information to fund managers for portfolio management and liquidity risk management, allowing them to better manage the portfolio. For example, the receipt of earlier net flow data will enable a more timely analysis of potential portfolio adjustments.
Some commenters also suggested that swing pricing and redemption fees can accomplish many of the same goals.
We have noted that performance benefits have been identified in UCITs that use swing pricing, which suggests that it is consistent with swing pricing having the effect of mitigating dilution costs for the non-transacting shareholders in some funds, thus providing observable benefits to those investors.
A few commenters advocated for the Commission to require all funds to adopt swing pricing policies and procedures.
We appreciate the commenters' concerns that swing pricing may have costs that, for some funds, may not be justified by the benefits.
While most commenters supported swing pricing in concept, a few opposed swing pricing outright, arguing that it may have negative effects on certain shareholders and may add to fund performance volatility.
Commenters raised a variety of operational challenges with respect to the implementation of swing pricing.
Several commenters noted that many current systems for processing fund orders are not set up to provide data on shareholder flows until well after a fund's NAV has already been struck, and that some of these systems depend on receiving the fund's NAV before the processing of shareholder purchase and redemptions transactions can begin.
We recognize that most current systems for funds and intermediaries are not set up to accommodate swing pricing, and that certain changes would need to be made before swing pricing can be adopted in the U.S. We also anticipate that certain funds are better positioned to reasonably estimate their net flows, and thus could be ready to implement swing pricing sooner than other funds.
As mentioned above, the operational difficulties associated with swing pricing are not uniform among all funds. Certain funds that may have more direct relationships with shareholders, instead of being heavily intermediated, and funds that may have more transparency into shareholder flows due to different shareholder bases, or affiliate relationships, or more up-to-date systems may be more easily able to implement swing pricing. We believe, however, that an extended effective date can help ease the overall burden incurred by funds, intermediaries and service providers (and ultimately, the burden incurred by investors) by allowing sufficient time for the development and implementation of efficient and cost effective industry-wide operational solutions.
Several commenters voiced reservations about whether the swung NAV could appropriately be viewed as a fund's current NAV (particularly in light of the use of estimates to determine whether the fund has crossed the swing threshold and the swing factor) and may raise questions about the accuracy of the fund's NAV.
Commenters also noted concerns that swing pricing could lead to increased performance volatility.
We recognize the desire to balance performance volatility with a fairer allocation of transaction costs. We believe that the use of swing pricing above a swing threshold, which we are permitting as proposed, may reduce the performance volatility potentially
A number of commenters suggested that swing pricing could raise shareholder fairness concerns, as the proposed swing pricing rules would apply a single adjusted NAV per share to all shareholder orders, regardless of order size. These commenters maintained that swing pricing could thus penalize certain investors disproportionately or give other investors inappropriate “windfalls.”
We also observe that transaction costs of purchasing and redeeming investors are today allocated to all non-transacting investors in a mutual fund, and as a result, long-term investors may incur a more substantial burden of such costs than purchasing and redeeming shareholders.
Several commenters raised concerns regarding investor confusion to the extent that a fund's swing threshold and swing factor are not made transparent.
Other commenters expressed concern that swing pricing could give rise to gaming behavior if certain shareholders were to attempt to time their trading activity to avoid (or take advantage of) pricing adjustments.
For a shareholder to effectively game swing pricing, the shareholder would have to know the fund's swing threshold and net flow information on the day that the shareholder was purchasing or redeeming and that flow information would have to not materially change after the shareholder placed its order. Accordingly, without disclosure of this information, it will be difficult for shareholders to determine when the fund's net purchases or net redemptions exceed the swing threshold. After weighing these considerations, we are not requiring a fund to disclose its swing threshold or swing factor under the final rule, and we believe that a fund generally should not disclose its swing threshold unless it has determined that it is in the best interests of the fund to do so. In making this assessment, the fund should consider the nature of the fund's shareholders and whether disclosure of the swing threshold would result in significant shareholder harm. We note that, to the extent a fund does decide to disclose its swing threshold, we believe it would not be appropriate for a fund to disclose it selectively to certain investors (
With respect to market timing concerns, we note that a fund's market timing policies and procedures should address and seek to resolve such issues for a fund that uses swing pricing. We note that funds have a variety of tools to prevent any such market timing should it occur, such as redemption fees, purchase blocks, and roundtrip restrictions, which we believe should mitigate this risk. In addition, investors will not be able to purposefully take advantage of swing pricing to obtain a better price without knowledge of contemporaneous intraday flows and a fund's swing thresholds, neither of which funds are required to publicly disclose under the rule.
Under the final rule, as under the proposed rule, a fund's swing pricing policies and procedures must provide that the fund is required to adjust its NAV once the level of net purchases or net redemptions from the fund has exceeded a set, specified percentage of the fund's net asset value known as the “swing threshold.”
In determining whether the fund's level of net purchases or net redemptions has exceeded the swing threshold, the person(s) responsible for administering the fund's swing pricing policies and procedures will be permitted to make this determination based on receipt of sufficient information about the fund shareholders' daily purchase and redemption activity to allow the fund to reasonably estimate whether it has crossed the swing threshold with high confidence.
• The size, frequency, and volatility of historical net purchases or net redemptions of fund shares during normal and stressed periods;
• The fund's investment strategy and the liquidity of the fund's portfolio investments;
• The fund's holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources; and
• The costs associated with transactions in the markets in which the fund invests.
These factors overlap significantly with factors that we understand are commonly considered by funds that use swing pricing in other jurisdictions, in order to determine a fund's swing threshold. For example, the Luxembourg Swing Pricing Survey, Reports & Guidelines provides that factors influencing the determination of the swing threshold ordinarily include: (i) Fund size; (ii) type and liquidity of securities in which the fund invests; (iii) costs (and hence, the dilution impact) associated with the markets in which the fund invests; and (iv) investment manager's investment policy and the extent to which the fund can retain cash (or near cash) as opposed to always being fully invested).
We requested comment on the process a fund would use to determine its swing threshold, including the factors that a fund would be required to consider, and also requested comment on whether there were certain procedures that we should require a fund to use when reviewing its swing threshold. Commenters on the proposed rule expressed a variety of views regarding the factors a fund must consider in specifying the fund's swing threshold. Some commenters indicated that the Commission should be less prescriptive in establishing the factors, arguing that not all of the factors are equally applicable to all funds, that requiring funds to consider all these factors may lead funds to create overly mechanistic checklists, and that a principles-based approach would better allow funds to
We recognize the potential dangers of being overly prescriptive in this area, but believe that the factors reflect common areas that a fund would consider in establishing its swing pricing process and are consistent with factors that are considered by funds that use swing pricing in other jurisdictions.
We continue to believe that evaluating all four factors will assist a fund in determining what level of net purchases or net redemptions would generally lead to the trading of portfolio assets that would result in material costs to the fund, and thus they are relevant to setting a fund's swing threshold.
In order to effectively mitigate possible dilution arising in connection with shareholder purchase and redemption activity, a fund's swing threshold should generally reflect the estimated point at which net purchases or net redemptions would trigger the fund's investment adviser to trade portfolio assets in the near term, to a degree or of a type that may generate material liquidity or transaction costs for the fund. We believe that a consideration of the factors set forth above will promote a fund estimating this threshold point.
Like the proposal, the final rule does not impose a minimum “floor” for a fund's swing threshold. We believe that different levels of net purchases and net redemptions would create different risks of dilution for funds with different strategies, shareholder bases, and other liquidity-related characteristics, and thus we do not believe that it would be appropriate to determine a single swing threshold floor to apply to all funds that elect to use swing pricing.
Commenters generally supported the approach taken under the proposal of not setting a minimum threshold for swing pricing. Some commenters indicated that the Commission should permit full swing pricing because a fund may find it more appropriate for its particular circumstances
On balance, we continue to believe that setting a minimum threshold for all funds would not be appropriate, and that funds should be provided the flexibility to implement swing pricing at a threshold level that best fits their particular circumstances based on the required factors and the guidance set forth herein. We expect that as part of the process of determining whether the benefits of implementing swing pricing are justified given the costs, funds will evaluate the appropriate threshold level and select a level that is suitable for the fund, considering the required factors. We believe that this approach strikes an appropriate balance between competing considerations by allowing tailored choices to be made for each fund but constrained by the factors that the fund must consider in setting the threshold. Therefore, we are adopting the threshold requirements as proposed.
We are also requiring the fund's board to approve a fund's swing threshold as proposed. Several commenters opposed the proposed requirement for a fund's board to approve the fund's swing threshold, stating that the determination of swing thresholds is more appropriately a management function.
After considering commenters' concerns, we believe that board approval of a fund's swing threshold (and any changes thereto) is an important element of board oversight of a fund's swing pricing process. A fund's swing threshold(s) represents the trigger point at which the fund's NAV will be adjusted and thus the point at which swing pricing begins to affect fund shareholders. We believe board review and approval of this determination will help ensure that the fund's swing threshold(s)—and the point at which swing pricing begins to affect shareholders in the fund—is in the best interests of fund shareholders. While requiring board approval of changes to a fund's swing threshold may constrain a fund's ability to immediately or frequently change a fund's swing threshold, we believe that this requirement acts as an important check on the discretion afforded to the fund's swing pricing administrator. Moreover, under the final rule, a fund is permitted to set multiple swing threshold(s), which we believe may allow a fund to prepare for some changes in market conditions.
As described further below, we are also requiring that the board be provided with a written report from the fund's swing pricing administrator that describes, among other things, the administrator's review and assessment of the fund's swing threshold(s), including information and data supporting this determination.
Under the proposal, a fund that adopted swing pricing policies and procedures would have been required to adjust the fund's NAV whenever net redemptions or net subscriptions exceeded the swing threshold. In other words, a fund could not apply swing pricing only when it received net redemptions beyond the threshold. The
While we agree with commenters that the impact of subscriptions may be different from that of redemptions and that funds have other tools to manage inflows over time,
In response to a comment request in the Proposing Release, a number of commenters suggested that we should permit a fund to set multiple escalating swing thresholds (wherein each threshold could be associated with a different swing factor) instead of only a single threshold.
We agree that permitting such multiple thresholds may allow funds to more precisely target the costs of managing shareholder activity and better mitigate shareholder dilution effects of such transactions. Accordingly, the final rule permits (but does not require) a fund to set multiple escalating swing thresholds, each associated with a different swing factor.
The proposed rule would have required a fund's swing pricing policies and procedures to provide for a periodic review, no less frequently than annually, of the fund's swing threshold. Beyond specifying certain factors that a fund would be required to consider in reviewing its swing threshold, the proposed rule did not include prescribed review procedures, nor did it specify the changes in a fund's circumstances over the course of the review period that a fund must consider as part of its review. One commenter suggested that the final rule make clear that the required review should be similar in nature to the review that led to the determination of a fund's swing threshold in the first place.
We agree that the review requirement should be more robust, and instead of requiring a fund to periodically review the fund's swing threshold, we have adopted in the final rule a requirement that the fund's board of directors, must review, no less frequently than annually, a written report prepared by the person(s) responsible for administering swing pricing for a fund that describes, among other things: (i) The swing pricing administrator's review of the adequacy of the fund's swing pricing policies and procedures and the effectiveness of their implementation, including the impact on mitigating dilution; and (ii) its review and assessment of the swing threshold(s), swing factor(s), and swing factor upper limit considering the requirements in rule 22c-1(a)(3)(i)(B) and (C), including the information and data supporting these determinations.
A fund may consider whether to review and assess its swing threshold more frequently than annually (
The net purchase or net redemption activity of all share classes of a fund with multiple share classes is part of the determination of whether a fund has crossed its swing threshold. If a fund were to only include the transaction activity of a single share class, and were to swing one share class and not another, this would have the effect of having one share class pay transaction expenses incurred in the management of the fund's portfolio as a whole, expenses that are borne by all share classes and thus would generally be inconsistent with rule 18f-3.
Critically important to the adoption of swing pricing is a fund's ability to obtain sufficient information about purchase and redemption activity that took place prior to striking the fund's NAV on a particular day in order to reasonably estimate whether it has crossed the swing threshold with high confidence, to determine whether swing pricing should be in effect that day. If the fund's applicable swing factor varies depending on the level of its net investor flows, sufficient investor flow information is also needed to determine the applicable swing factor that the fund will use to adjust its NAV. A fund using swing pricing will need to obtain reasonable estimates of investor flows daily, or the aggregate flows of money being invested in and redeemed out of the fund, for purposes of reasonably estimating with high confidence whether the fund's net purchases or net redemptions have crossed the swing threshold, thus resulting in an NAV adjustment under its swing pricing policies and procedures.
We understand that the deadline by which a fund must strike its NAV may precede the time that a fund (or its pricing agent) receives final information concerning daily net investor transaction flows from the fund's transfer agent. As a result, funds engaging in swing pricing will likely need to develop processes and procedures to gather sufficient investor flow information from transfer agents that include transactions being conducted by intermediaries on behalf of fund investors.
Several commenters asked for additional guidance regarding a fund's use of estimates in determining its net flows in order to determine whether a fund has crossed its swing threshold.
As discussed below, we recognize in some cases, it may not currently be feasible for certain intermediaries to provide their actual orders (even in an aggregated or netted format) promptly enough for the fund to conduct swing pricing. However, we understand that a fund's reasonably estimated shareholder flows could include estimates for certain intermediary flows that are based on actual transaction orders received from investors prior to the fund's cut-off time, which would subsequently be submitted by intermediaries to the fund's principal underwriter and/or transfer agent for processing after receipt of the fund's final NAV. For example, in the European fund sector, swing pricing is feasible operationally as “actual” trade flows based on estimated prices (typically the prior day's NAV) and orders occurring on the trade date are available on a timely basis. Trading platforms collect all of that day's activity and supply it to the fund's transfer agent. An estimated fund price is then applied to generate estimated trade values for that trading day. We also note that where transaction orders are NAV dependent, the application of estimated fund prices (such as the prior day's NAV) to the current day's orders to derive estimated shareholder flow information could be conducted by intermediaries or fund transfer agents.
Funds should consider utilizing policies and procedures to make the necessary estimates.
We recognize that funds may take different approaches in determining whether they have sufficient flow data to make a reasonable high confidence estimate,
Many commenters on the swing pricing proposal discussed the operational difficulties that exist today for funds in obtaining timely enough information from intermediaries about shareholder flow data to determine whether or not a swing threshold has been crossed.
Some commenters provided specific ideas about initiatives the Commission could pursue to mitigate operational challenges and help facilitate implementation of swing pricing for funds and investors. For example, they stated that the Commission could require (or encourage) intermediaries to provide shareholder flow estimates prior to the deadline by which a fund must strike its NAV.
The Commission acknowledges the operational challenges noted by commenters that will need to be addressed by industry participants. Because of these concerns, we believe the adoption of swing pricing in the U.S. as a new (optional) anti-dilution tool will likely require considerable lead time for many funds that will need to coordinate and implement the necessary operational changes with intermediaries and service providers in order to effectively conduct swing pricing for new or existing funds. Additionally, as noted by commenters, we understand that certain funds, intermediaries and service providers may incur substantial costs in doing so.
We recognize that U.S. fund complexes differ widely in terms of their size, the types of funds they offer, the types of investors they serve (
We understand that in order to implement swing pricing in an efficient manner, many funds will need time to develop the infrastructure needed to obtain shareholder flow information for investors transacting through intermediaries (including banks, broker-dealers, retirement plan administrators, or insurance companies or platforms), whose shares are held in omnibus accounts registered in the name of such intermediaries on fund transfer agent recordkeeping systems.
As noted above, we recognize that because the fund industry is diverse, it may take longer for certain funds to implement swing pricing than others. We also acknowledge that funds, intermediaries, and service providers use complex, integrated systems and technology, which supports the daily processing of shareholder transactions. We expect that implementing swing pricing will lead to process and systems changes to accommodate the additional processing that will be needed to support the provision of estimated shareholder flows to funds where necessary, and that such improvements may require additional capital investments to permit the implementation of swing pricing for funds that may choose to use it.
As discussed above, a number of commenters requested that we provide a delayed effective date of two years for implementation of swing pricing, to allow the industry to address the necessary changes to operations and systems and, as a consequence, help alleviate competitive concerns by allowing all funds time to become familiar with swing pricing.
We acknowledge that, if swing pricing were to be effective immediately, a limited number of funds might have the ability (
As discussed above and in section II.C. below, we agree with these commenters and believe it is appropriate to adopt an extended effective date for swing pricing. We expect that the extended effective date will allow funds, intermediaries and service providers to work towards orderly, efficient, industry-wide solutions to the operational challenges swing pricing presents,
As discussed above, a number of commenters pointed to a variety of competitive concerns and operational challenges in implementing swing pricing, and several suggested that the Commission take additional actions to facilitate its adoption. We recognize the challenges associated with implementing swing pricing in the U.S., but continue to believe that swing pricing may provide significant benefits to investors for funds that choose to use it. As discussed above, some commenters urged the Commission to adopt rules that would require intermediaries to provide timely estimates of shareholder flows to funds that chose to implement swing pricing, or to encourage such action through non-regulatory means.
Other commenters suggested that the Commission could take action to require funds and intermediaries to implement earlier cut-off times to buy and sell fund shares (either through adoption of new rules or other means).
Considering the diverse and varied recommendations on potential Commission action that we might take, as well as the potential limitations and downsides of the approaches that have been suggested to us, we are not proposing any further regulatory requirements to facilitate implementation of swing pricing at this time. As discussed previously, on balance, we believe that it is appropriate to permit usage of swing pricing as an optional tool subject to a two-year extended effective date at this time. We believe permitting this optional tool to be implemented for those funds that choose to do so may result in benefits for those funds and their investors if they believe the challenges of implementing swing pricing can be overcome and are justified by the resulting anti-dilution and other benefits associated with swing pricing. In addition, permitting the use of swing pricing encourages funds to begin working with intermediaries to overcome the operational challenges associated with swing pricing and may spur the development of efficient solutions that might not otherwise be created if swing pricing were not allowed.
We are adopting a requirement that a fund's swing pricing policies and procedures provide that, once the fund's level of net purchases or net redemptions has exceeded a swing threshold, the fund must adjust its NAV by an amount designated as the “swing factor” for that threshold.
A fund's swing pricing policies and procedures also must include an upper limit on the swing factor used, which may not exceed two percent of the fund's NAV per share.
The policies and procedures shall also include the determination that the swing factor(s) used are reasonable in relationship to the fund's costs in meeting net shareholder subscriptions and redemptions.
Under the proposal, when setting its swing factor a fund would have been required to take into account two specific sets of considerations. Under the final rule amendments, a fund must take into account only one set of considerations in determining its swing factor(s), which has been modified in response to commenters. Under the final rule, the swing pricing administrator must take into account only the near-term costs expected to be incurred by the fund as a result of net purchases or net redemptions that occur on the day the swing factor is used, including spread costs, transaction fees and charges arising from asset purchases or asset sales to satisfy those purchases or redemptions, and borrowing-related costs associated with satisfying redemptions when determining the fund's swing factor(s).
As noted above, as originally proposed, both sets of considerations were mandatory for setting a swing factor. In the Proposing Release, we requested comment on each of the considerations that a fund would be required to take into account in determining the swing factor, and specifically requested comment on whether any aspect of the proposed considerations should not be required. In response, some commenters argued that the proposed considerations for calculating a fund's swing factor should be guidance only.
We continue to believe that mandating funds to take into account certain near-term costs when setting the swing factor strikes an appropriate balance between providing funds an appropriate amount of discretion and requiring that relevant costs be considered when setting the swing factor. However, in response to commenter concerns, we have eliminated certain of the proposed considerations and have clarified that a fund may only take into account those considerations set forth in the rule.
The final rule specifies that the determination of a fund's swing factor must take into account only the
The near-term costs required to be considered are limited to spread costs,
Under the proposal, the costs a fund would have been required to consider would have included market impact costs
Under the proposed rule, a fund's policies and procedures for determining the swing factor would have been required to consider information about the value of assets purchased or sold by the fund as a result of the net purchases or net redemptions that occur on the day the swing factor is used to adjust the fund's NAV, if that information would not be reflected in the current NAV of the fund computed that day.
This consideration was meant to reflect the fact that a fund's NAV will generally not reflect changes in holdings of the fund's portfolio assets and changes in the number of the fund's outstanding shares until the first business day following the fund's receipt of the shareholder's purchase or redemption requests.
The final rule now includes an explicit requirement that any swing factor used be reasonable in relation to the costs incurred by the fund. One commenter objected that as proposed, the swing pricing rule did not assign an explicit duty to fund sponsors or boards to limit NAV adjustments to amounts that are reasonable in relation to the estimated fund costs associated with the capital activity giving rise to the adjustment.
We believe that as required under the proposal, by requiring the swing factor be set based on the considerations discussed above, funds would have necessarily been evaluating the reasonableness of the swing factor and its relationship to costs (and their boards will provide oversight over this process, including through the approval of swing pricing policies and procedures).
Under the final rule, the fund must establish an upper limit for the fund's swing factor, which may not exceed two percent of NAV per share. This swing factor upper limit (and any changes thereto) must be approved by the fund's board of directors. The proposal did not prescribe an upper limit or “cap” on the swing factor that a fund would be permitted to use, nor did it mandate that funds' swing policies and procedures establish such an upper limit. Instead, the proposed rule would have permitted a fund to adopt an upper limit on the swing factor as part of its swing pricing policies and procedures, and the fund's board would have been required to approve any such upper limit. We requested comment on whether the Commission should require an upper limit on the swing factor that a fund would be permitted to use and whether two percent or some other limit would be appropriate.
Commenter responses in this area were mixed. One commenter agreed that it was appropriate for the proposed swing pricing rules to permit, but not require, funds to adopt a swing factor cap.
We are persuaded that the final rule must allow enough flexibility in the determination of a swing factor to keep the factor reasonably related to transaction costs. At the same time, however, we believe that it is appropriate to limit the swing factor that may be used to avoid placing an undue restriction or de facto gate on shareholders' ability to redeem their shares and to prevent potentially unfair treatment of shareholders and abusive practices. The Commission has limited redemption fees under rule 22c-2 to no more than two percent of the amount redeemed,
Based on these considerations, we believe it is appropriate for the Commission to set a maximum amount for the swing factor, as we have done with redemption fees on funds and liquidity fees on money market funds, given our desire to balance the fair allocation of fund costs created by shareholder transaction activity with the redeemable nature of open-end funds. Nevertheless, we still consider it appropriate to require funds to establish an upper limit on the swing factor(s) the fund will use as part of their swing pricing policies and procedures, within the two percent of NAV per share confines, because for some funds a swing factor upper limit of less than two percent may be appropriate given that fund's redemption history and investment strategy.
We acknowledge that certain foreign jurisdictions that permit swing pricing do not place an upper limit on the swing factor that a fund may set. Instead, funds that use swing pricing within those jurisdictions may voluntarily limit the level of the swing factor to be applied, with such limits generally ranging from 1%-3%.
The final rule requires the fund's board to approve the fund's swing factor upper limit and any changes thereto.
After considering comments, we believe board approval of a fund's swing factor upper limit (and any changes thereto), combined with required review of a written report from the administrator describing, among other things, the administrator's review and assessment of the fund's swing factor upper limit, including information and data supporting this determination, will serve to limit the degree of discretion granted to fund management, while providing management with the flexibility to manage the day-to-day administration of swing pricing. Obtaining board oversight of the swing factor upper limit will help ensure that a fund establishes a swing factor upper limit that is in the best interests of the fund's shareholders. We also believe it is appropriate for the fund board to approve the fund's specific upper limit given the important balancing that it effects between the redeemable nature of the fund's shares against the fair allocation of fund costs from shareholder transaction activity—a balance between various shareholder interests that we believe the board is best situated to judge. Requiring board oversight of the swing factor upper limit is also consistent with the approach the Commission took in rule 22c-2 under the Act, where the fund board is required to approve any redemption fee that the fund establishes.
Finally, we are also requiring funds to disclose the swing factor upper limit on Form N-1A and Form N-CEN. We believe that an adequate level of transparency about swing pricing is critical for investors to understand the risks associated with investing in a particular fund, and that requiring disclosure of a fund's swing factor upper limit will provide important transparency to fund shareholders regarding the maximum amount that a shareholder could expect the share price to be adjusted on account of swing pricing. We also believe that this transparency could serve as a check on funds that may seek to employ swing pricing overly aggressively.
A fund could take a variety of approaches to determining its swing factor, so long as the fund's process for how the swing factor is determined includes the considerations set forth in rule 22c-1(a)(3)(i)(C). For example, a fund may wish to set a “base” swing factor, and adjust it as appropriate if certain aspects required to be considered in determining the swing factor deviate from a range of pre-determined norms (for example, if spread costs generally exceed a certain pre-determined level). Alternatively or additionally, a fund that uses swing pricing may wish to incorporate into its policies and procedures a formula or algorithm that includes the required considerations for determining the swing factor.
With respect to the process for determining the swing factor, one commenter opined that the swing factor must be “quantitative and automatable,”
Although the final rule requires a fund that uses swing pricing to obtain approval of its swing pricing policies and procedures from the fund's board, including a majority of independent directors, in a change from the proposal, the final rule does not require the board to approve material changes to the policies and procedures. The rule provides that a fund's board-approved swing pricing policies and procedures must specify the process for how the fund's swing threshold(s), swing factor(s), and swing factor upper limit are determined. In addition, the final rule requires that the fund board approve the fund's swing threshold(s) and the upper limit on the swing factor(s) used by the fund, as well as any changes thereto. The rule requires that a fund's board designate the fund's investment adviser, officer or officers responsible for administering the fund's swing pricing policies and procedures.
As described above, consistent with the proposal, a fund's board of directors must approve two core elements of a fund's swing pricing program—the swing threshold(s) and the swing factor upper limit. The swing threshold establishes the point at which swing pricing begins to affect fund shareholders, and thus involves an important balancing of various shareholder interests. Similarly, the swing factor upper limit reflects a balancing of the redeemable nature of the fund's shares against the fair allocation of fund costs from shareholder transaction activity. In both cases, the board has an important role in balancing shareholder interests. This is consistent with the board's role in other contexts under the Act. For example, a fund's board has significant responsibility regarding valuation- and pricing-related matters.
In addition, we believe that ongoing oversight of a fund's swing pricing program, which necessarily involves addressing a diverse range of issues, some technical, requires a calibrated balance between the role of the board and the role of management. Accordingly, under the final rule, a fund's board of directors must approve the fund's initial swing pricing policies and procedures, as proposed. However, in a change from the proposal, instead of the board approving any material changes to the swing pricing policies and procedures and instead of the fund performing a periodic review of the fund's swing threshold,
In the proposal, we asked comment on the extent to which the board oversight requirements we proposed would ensure that a fund establishes policies and procedures that are in the interest of all fund shareholders.
However, a number of commenters objected to the particular methods we proposed for ongoing board oversight of swing pricing, including the proposed requirement that the board specifically approve the fund's swing threshold and any swing factor cap that that the fund adopts.
As discussed above, after considering comments, we believe requiring the board to approve a fund's swing threshold(s) and swing factor upper limit (and any changes thereto) is an important, targeted means to help ensure that a fund's swing pricing policies and procedures are in the best interests of fund shareholders. In addition, with respect to oversight beyond these discrete elements, we believe that board approval of swing pricing policies and procedures combined with required review of a report laying out information and analyses supporting how the important components of swing pricing are determined—the swing factor(s), swing threshold(s), and swing factor upper limit—appropriately balances the concerns of some commenters that the board should not be involved in the day-to-day administration of swing pricing with the concerns of other commenters that the rule should prevent excessive discretion granted to fund management and inappropriate treatment of fund shareholders. Although we consider the adviser better suited to administering the fund's swing pricing policies and procedures, we believe that requiring board approval of the policies and procedures and requiring board review of the administrator's report that includes certain required information are integral to an effective ongoing assessment of swing pricing. We also believe these requirements will help ensure that a fund establishes and implements swing pricing policies and procedures that are in the best interests of the fund's shareholders. As noted above, a fund's board has significant responsibility regarding valuation- and pricing-related matters,
The report the board must review contains several important elements. These elements are designed to provide the board with the types of information that the board would consider relevant and likely request if required to approve material changes to the fund's swing pricing policies and procedures. As noted above, in light of comments, we are replacing the proposed requirement that the board approve all material changes to the swing pricing policies and procedures and the proposed requirement of a fund review of the swing threshold with required board review of the swing pricing administrator's report. First, the report must describe the swing pricing administrator's review of the adequacy of the fund's swing pricing policies and procedures and the effectiveness of their implementation, including the impact on mitigating dilution. This will help the board satisfy its fiduciary role that the fund pricing process is operating in the best interest of fund shareholders. It also is similar to the requirements of rule 38a-1
We note that this report must include an assessment of the information and data supporting the fund's swing threshold(s), swing factor(s), and swing factor upper limit. We believe that the inclusion of this information in the board report should help provide the board sufficient information about the inputs used in swing pricing to provide proper oversight of the fund's swing pricing processes and further address the concerns of commenters noted
Overall, we believe that the board approval and oversight requirements in the final rule will help a fund establish and implement swing pricing policies and procedures that are in the best interests of the fund and its shareholders. Because fund directors have an obligation to act in the best interests of the fund,
As under the proposal, the board will be required to designate the fund's adviser, officer, or officers responsible for the administration of the fund's swing pricing policies and procedures. As discussed above, multiple commenters supported the proposal's approach that the fund's board should not be required to administer the fund's swing pricing policies and procedures,
We note that it is currently common industry practice for foreign domiciled funds that use swing pricing to appoint a committee to administer the fund's swing pricing operations.
As proposed, the swing pricing rule would have required that the determination of the swing factor must be reasonably segregated from the portfolio management function of the fund. The final rule as adopted, is similar to the proposed requirement; however, it has been modified to provide that administration of a fund's swing pricing policies and procedures must be reasonably segregated from portfolio management of the fund and “may not include portfolio managers.”
We believe that, because of the potential conflict of interest that a portfolio manager who may be compensated based on fund performance may have if they are involved in setting the swing factor (which if not set properly, may have the effect of increasing fund performance inappropriately rather than recouping the transaction costs associated with purchasing and redeeming shareholders' capital activity), portfolio managers should not be a part of the swing pricing administration.
Several commenters expressed support for the determination of the swing factor being reasonably segregated
We stated in the Proposing Release that, when funds merge, and at least one of the merging funds uses swing pricing, there are a number of considerations relating to swing pricing that the funds generally should consider when determining the terms of the merger.
Like under the proposal, the final rule requires a fund to maintain the swing pricing policies and procedures adopted by the fund that are in effect, or at any time within the past six years were in effect, in an easily accessible place.
In addition, and based on the same rationale as that of the other aforementioned swing pricing-related recordkeeping requirements, the final rule requires a fund to maintain all written periodic reports provided to the board under rule 22c-1(a)(3)(ii)(D) relating to swing pricing for six years, the first two years in an easily accessible place.
The application of swing pricing will impact a fund's financial statements and disclosures in a number of areas, including a fund's statement of assets and liabilities, statement of changes in net assets, financial highlights, and the notes to the financial statements. While commenters were generally supportive of the swing pricing disclosures in the notes to the financial statements required by the proposal,
Today we are clarifying, after consideration of the comments received, that for funds that utilize swing pricing the statement of assets and liabilities would continue to be presented as currently required by Regulation S-X rule 6-04.19
One commenter also noted that, under the proposal, there would be a difference between the Swung NAV per share disclosed in accordance with proposed rule 6-04.19 and the GAAP NAV per share.
To further clarify, for funds that implement swing pricing, the GAAP NAV would include any of the effects of swing pricing throughout the entire period (if applicable), and the Swung NAV (if it swings at period end) would represent the transactional NAV on the last day of the period, which has been adjusted by the swing factor.
Commenters questioned whether the GAAP NAV per share or the Swung NAV per share would be more meaningful to users of the financial statements.
Furthermore, users of the financial statements can easily recalculate the GAAP NAV per share on the statement of assets and liabilities by dividing the net assets of the fund (or share class) by the outstanding shares of the fund (or share class) as presented on the statement of assets and liabilities. As proposed, users of the financial statements would not have been able to recalculate the Swung NAV disclosed based on the information on the statement of assets and liabilities. Therefore, we are not adopting the proposed amendment to Regulation S-X rule 6-04.19 to require funds to disclose the Swung NAV on the Statement of Assets and Liabilities in lieu of or in addition to the GAAP NAV on the balance sheet, and funds will continue to disclose the GAAP NAV as currently required.
However, as we discuss below in the financial highlights section, we believe that transparency of the Swung NAV is still meaningful for investors and should be disclosed in the financial highlights section of the financial statements in addition to the GAAP NAV. Furthermore, while we are not
As we noted in the Proposing Release, swing pricing also impacts disclosures of capital share transactions included in a fund's statement of changes in net assets.
We continue to believe, as we discussed in the proposal,
We proposed to require funds to calculate total return within the financial highlights and performance information based on the Swung NAV.
After further consideration, we still believe that it is important for investors to understand the impact of swing pricing on the return they would have
Therefore, we believe presenting the total return based on the GAAP NAV in the financial highlights, which will include the cumulative effects of swing pricing, if applicable, is more meaningful to shareholders that remain in the fund as of the end of the reporting period. Thus, we are not adopting the proposed amendments to Form N-1A with respect to the calculation of total return within Instructions 3(a) and 3(d) to Item 13, and to Item 26, which also would have required disclosure of the total return based on the Swung NAV.
However, we are including an additional disclosure requirement related to performance data presented in the prospectus, if a fund's swing pricing policies and procedures were applied during any of the periods presented. This new disclosure would require a fund to include a general description of the effects of swing pricing on a fund's annual and average total returns for the applicable periods presented in a footnote.
Furthermore, while we are not requiring total return to be presented based on the Swung NAV within the financial statements, we are not prohibiting funds from disclosing the total return based on the Swung NAV outside of the financial statements in other performance information. We also acknowledge that presenting total return based on an unadjusted NAV could be useful for comparative purposes, but we note that it is a hypothetical measure not derived from the NAV that shareholders would have transacted at or the GAAP NAV as presented in the financial statements which is attributable to the fund's remaining shareholders. Therefore, while we do not believe an unadjusted NAV should be disclosed in the audited financial statements, we are not prohibiting funds from disclosing an unadjusted NAV outside of the financial statements in other performance information.
Commenters were generally supportive of the swing pricing disclosures in the notes to the fund's financial statements that would have been required by the proposal.
Commenters noted that certain components of the swing pricing process will be based on estimates. Commenters were concerned that swing pricing could introduce a new source of pricing errors and potentially cause a fund to misstate its NAV if these estimates were materially incorrect. These concerns primarily relate to estimating daily net investor transaction flows that would be used to determine whether a fund's swing threshold has been exceeded, which would require adjusting the fund's NAV in accordance with the fund's swing pricing policies and procedures.
We believe fund management with oversight by the fund's board of directors is in the best position to tailor and oversee any error correction policies that may relate to conducting swing pricing for a fund. Accordingly, we believe funds should consider how their error correction policies and procedures will address swing pricing to the extent necessary to address the use of reasonable estimates related to swing pricing,
Funds should consider making any estimates with respect to the different swing pricing components (
We acknowledge the concerns expressed above about the use of estimates, including that a fund following its swing pricing policies and procedures could gather sufficient information in order to make a reasonable estimate of investor flows in good faith in determining whether or not it has crossed the swing threshold with high confidence, which subsequently is determined to differ from its actual fund flows. For example, differences in actual versus estimated net flows could arise from adjustments subsequently made to certain transactions processed, or because certain fund flows were not included in the estimates received at the point the fund decided to swing or not swing the fund's NAV, or by using the prior day's NAV to estimate certain price-dependent transaction orders.
A fund should follow its error correction policies, which likely would include a quantitative and qualitative analysis of the facts and circumstances of a particular scenario to determine whether a pricing error has occurred. In the context of swing pricing, such errors may result from inputs used, or the application of the decision to swing price or not, or when applying a factor in calculating the swung NAV. For example, differences in estimated net investor flows versus final flow data could result from a processing error, such as inadvertent exclusion of significant estimated flow data provided to the fund's transfer agent by an intermediary, impacting the fund's decision to swing or not on a particular day (or days). Or an error could occur in applying an incorrect swing factor to a fund's NAV, for example, if a fund's swing pricing policies and procedures incorporate multiple thresholds and factors. As with any other NAV calculation or processing error, the fund generally should consider these types of errors and whether it would be appropriate to adjust the fund's NAV and reprocess in accordance with their error correction policies.
Certain commenters also expressed concerns with the auditor's role in evaluating the application of swing pricing, including that auditors do not have the expertise to assess the reasonableness of the swing threshold and the swing factor that are being used by a fund.
Receiving relevant information about the operations of a fund and its principal investment risks is important to investors in choosing the appropriate fund for their risk tolerances. We are adopting, substantially as proposed, with some modifications in response to comments, amendments to Form N-1A that require funds that use swing pricing to provide an explanation of the fund's use of swing pricing; including what it is, the circumstances under which the fund will use swing pricing, and the effects of using swing pricing.
Form N-1A is used by open-end funds, including money market funds and ETFs, to register under the Investment Company Act and to register offerings of their securities under the Securities Act. Form N-1A currently requires a fund to describe its procedures for pricing fund shares, including an explanation that the price of fund shares is based on the fund's NAV and the method used to value fund shares.
We are adopting, with some modifications from what was proposed, amendments to Item 6 of Form N-1A to account for this swing pricing procedure. Specifically, Item 6, as amended, requires a fund that uses swing pricing to explain the fund's use of swing pricing; including its meaning, the circumstances under which the fund will use it, and the effects of swing pricing on the fund and investors. Item 6, as amended, will also require a fund that uses swing pricing to disclose the swing factor upper limit it has set with respect to the fund's use of swing pricing.
Together with the changes described above regarding financial and performance reporting on Form N-1A,
Some commenters expressed general support for the proposed swing pricing prospectus disclosure requirements, explaining that swing pricing disclosures would provide investors with important general information about why and under what circumstances a fund would adjust its NAV and would complement existing Form N-1A disclosure requirements on how fund shares are priced.
As we proposed, we have determined not to require funds to disclose their swing pricing threshold or swing factor in their prospectus disclosures on Form N-1A. Some commenters supported this determination and, for example, expressed concerns that public disclosures of a fund's swing pricing threshold or swing factor could result in unfair trading practices, thereby creating a new type of material non-public information (
We proposed a new reporting item under Part C of Form N-CEN to allow the Commission and other users to track a fund's use of swing pricing.
Rule 22c-1(a)(3) permits (but does not require) a fund (with the exception of a money market fund or ETF) to adopt swing pricing policies and procedures. The Commission is delaying the effective date of rule 22c-1(a)(3) until 24 months after the date this release is published in the
In the Proposing Release, the Commission expected to require all initial registration statements on Form N-1A, and all post-effective amendments that are annual updates to effective registration statements on Form N-1A, filed six months or more after the effective date, to comply with the proposed amendments to Form N-1A.
For Form N-CEN, we proposed a compliance date of 18 months after the effective date to comply with the new reporting requirements.
As discussed above, the Commission is adopting regulatory changes to permit funds to use swing pricing under rule 22c-1(a)(3) and to require new disclosures regarding swing pricing (collectively, the “swing pricing regulations”). In summary, and as discussed in greater detail in section II above, the swing pricing regulations include:
○ Final rule 22c-1(a)(3) will permit (but not require) a fund (except a money market fund or ETF) to establish and implement swing pricing policies and procedures that would, under certain circumstances, require the fund to use swing pricing to adjust its current NAV to lessen potential dilution of the value of outstanding redeemable securities caused by shareholder purchase and redemption activity. A fund that engages in swing pricing will be subject to certain disclosure and reporting requirements. Relative to the proposed rule, the final rule provides funds greater flexibility in setting multiple swing thresholds and threshold-specific swing factors, but imposes certain additional conditions, primarily a cap for the swing factor and limitations on how the swing factor can be set.
○ Amendments to Form N-1A and Regulation S-X and an item on new Form N-CEN will require enhanced fund disclosure and reporting regarding swing pricing.
○ Amendments to rule 31a-2 will require a fund that chooses to use swing pricing to create and maintain a record of support for each computation of an adjustment to the NAV of the fund's shares based on the fund's swing policies and procedures.
The Commission is sensitive to the economic effects of the swing pricing regulations, including the benefits and costs as well as the effects on efficiency, competition, and capital formation. The economic effects are discussed below in the context of the primary goals of the swing pricing regulations.
The primary goals of the swing pricing regulations are to promote investor protection by allowing a fund, if it chooses, to use swing pricing to mitigate potential dilution of non-transacting shareholders' interests that could occur when the fund incurs costs as a result of other investors' purchase or redemption activity.
Swing pricing regulations also are meant to address the significant growth in the assets managed by funds with strategies that focus on holding relatively less liquid investments (such as fixed income funds, including emerging market debt funds, open-end funds with alternative strategies, and emerging market equity funds), which could incur significant trading costs and hence could give rise to increased dilution effects from redeeming and subscribing shareholders in those funds.
The swing pricing regulations will affect, directly or indirectly, all funds and their investors, investment advisers and other service providers, all issuers of the portfolio securities in which funds invest, and other market participants potentially affected by fund and investor behavior. The economic baseline of the swing pricing regulations includes funds' current practices regarding swing pricing as well as the recent development of the fund industry.
Commission rules and guidance do not currently address the ability of an open-end fund to use swing pricing to mitigate potential dilution of fund shareholders, and U.S. registered funds do not currently use swing pricing. However, as discussed above, certain foreign funds currently do use swing pricing.
Below we discuss the size and growth of the U.S. fund industry generally, as well as the growth of various investment strategies within the industry. We show that the fund industry has grown significantly in the past two decades, and, during this period, funds with international strategies, fixed income funds, and funds with alternative strategies have grown particularly quickly. Generally, funds with these strategies are more likely to invest in assets that are less liquid, for example, when compared to domestic large capitalization equity, and therefore redeeming and subscribing investors are more likely to dilute non-transacting investors' interests. We also examine trends regarding the volatility of fund flows, discussing in particular those types of funds that demonstrate notably volatile flows. Because funds with larger flow volatility can experience higher levels of redemptions and subscriptions, which can dilute the interests of non-transacting shareholders, assessing trends regarding flow volatility can provide information about sectors of the fund industry that could be particularly susceptible to dilution effects.
Open-end funds and ETFs manage a significant and growing amount of assets in U.S. financial markets. As of the end of 2015, there were 10,633 open-end funds (excluding money market funds, but including ETFs), as compared to 5,279 at the end of 1996.
U.S. equity funds represent the greatest percentage of U.S. open-end fund industry assets.
While the overall growth rate of funds' assets has been generally high (about 7.2% per year, between the years 2000 and 2015
These investment subclasses represent a small portion of the U.S. mutual fund industry (the combined assets of these investment subclasses as a percentage of the U.S. fund industry was 2.3% at the end of 2015).
The assets of funds with alternative strategies
The industry developments discussed above are notable for several reasons. The growth of funds generally over the past few decades demonstrates that investors have increasingly come to rely on investments in funds to meet their financial needs.
One commenter has argued that flow volatility, which staff economists have used as a measure of liquidity risk, does not necessarily translate into liquidity risk.
Taking into account the goals of the final swing pricing regulations and the economic baseline, as discussed above, this section discusses the benefits and costs of the swing pricing regulations, as well as the potential effects of the swing pricing regulations on efficiency, competition, and capital formation. This section also discusses the disclosure,
Under rule 22c-1(a)(3), a fund (with the exception of a money market fund or ETF) would be permitted to establish and implement swing pricing policies and procedures that would, under certain circumstances, require the fund to use swing pricing to adjust its current NAV as an additional tool to lessen potential dilution of the value of outstanding redeemable securities caused by shareholder purchase or redemption activity. In order to use swing pricing under the rule, a fund would be required to establish and implement swing pricing policies and procedures.
A fund's board, including a majority of the fund's independent directors, will be required to approve the fund's swing pricing policies and procedures, which policies and procedures must specify the process for setting swing thresholds, swing factor(s), and swing factor upper limits.
A fund that adopts swing pricing policies and procedures will be required to keep certain records, including its swing pricing policies and procedures and a written copy of the periodic report provided to the board,
The final rule modifies the proposal's swing pricing provisions in several ways that may have economic consequences, including: (1) Funds may establish multiple swing thresholds, each with a separate corresponding swing factor, and these factors can differ for subscriptions and redemptions; (2) a fund's board is still required to approve the fund's swing pricing policies and procedures, but the final rule also requires that the policies and procedures specify the process for determining a swing threshold(s), factor(s), and swing factor upper limit; (3) funds must report the upper limit of the swing factor(s)—but not swing factor(s) or threshold(s)—on FormN-CEN and in their prospectus, along with disclosure of the effects of swing pricing; (4) the fund board must approve the fund's swing threshold(s) and an upper limit on the swing factor(s) that are used by a fund (which may not exceed two percent of NAV per share), and any changes to the swing threshold or swing factor upper limit; and (5) the board must periodically review a written report from the swing pricing administrator that describes: (a) The swing pricing administrator's review of the adequacy of the fund's swing pricing policies and procedures and the effectiveness of their implementation, including the impact on mitigating dilution; (b) any material changes to the fund's swing pricing policies and procedures since the date of the last report; and (c) the swing pricing administrator's review and assessment of the fund's swing threshold(s), swing factor(s), and swing factor upper limit considering the requirements of the rule, including the information and data supporting these determinations.
We believe rule 22c-1(a)(3) will promote investor protection by providing funds with a tool to reduce the potentially dilutive effects of shareholder purchase or redemption activity. Rule 22c-1 under the Investment Company Act, the “forward pricing” rule, requires a fund to price its shares based on the current market prices of its portfolio assets next computed after receipt of an order to buy or redeem shares.
While swing pricing does not eliminate non-transacting investors' exposure to this dilution risk—for example, it is possible the swung adjusted NAV on a given day under or overestimates the costs incurred by the fund, or that the fund would not be able to swing in an amount sufficient to recoup all transactions costs because of
Commission rules and guidance do not currently address the ability of a fund to use swing pricing to mitigate potential dilution of fund shareholders, and the Commission's current valuation guidance could raise questions about making such a NAV adjustment. The swing pricing rule provides the regulatory framework that a fund can optionally apply to adjust its NAV in order to effectively pass on estimated trading costs to purchasing or redeeming shareholders, and requires a fund that conducts swing pricing to do so in accordance with policies, procedures, and other restrictions designed to promote all shareholders' interests. Because we cannot prospectively measure the extent to which the swing pricing policies and procedures that a fund may adopt would mitigate potential dilution, we are unable to quantify the total potential benefits discussed in this section.
Relative to the proposal, the final rule's additional flexibility in defining swing pricing policies—the options to employ multiple swing thresholds with attendant swing factors—should allow a fund to more accurately reflect its estimated trading costs when the fund chooses to swing its NAV, and may encourage funds that otherwise would not have employed swing pricing to use it, potentially reducing investor dilution further.
Requiring the fund to set an upper limit (which may not exceed two percent of NAV per share) on the swing factor(s), as the final rule does, could reduce the benefits of swing pricing to non-transacting investors in that funds are less able to use swing pricing to reallocate all of the costs of transactions to redeeming or subscribing shareholders, because costs would exceed the upper limit. However, transacting investors could benefit from an upper limit (and the required disclosure of an upper limit), in that there would be a maximum cost that they could face were they to purchase or redeem shares on a day when the fund swings its NAV and hence reduce some of the uncertainty when making the decision to enter or exit a fund.
The final rule's limitation on the types of costs that can be considered in setting a swing factor has similar trade-offs: The benefits of swing pricing to non-transacting shareholders are constrained, given that certain costs that are incurred as a result of the redemption or subscription activity could not be allocated to transacting investors. However, transacting shareholders could benefit from the limitation, in that the fund would have less flexibility to allocate to transacting investors costs that are less directly related to the fund's actual transaction costs. Constraining a fund's flexibility in this manner could limit potential abusive uses of swing pricing (
Finally, investors should benefit from the increased accountability that the final rule provides in requiring a fund's board to approve swing pricing policies and procedures, approve the fund's swing factor upper limit (which may not exceed two percent of NAV per share), approve the fund's swing threshold(s), and approve any changes to a fund's swing factor upper limit or swing threshold(s). The final rule also requires the fund board to periodically review a written report from the swing pricing administrator describing: (i) Its review of the adequacy of the swing pricing policies and procedures and the effectiveness of their implementation, including the impact on mitigating dilution; (ii) any material changes to the fund's swing pricing policies and procedures since the date of the last report; and (iii) its review and assessment of the fund's swing threshold(s), swing factor(s), and swing factor upper limit considering the requirements of the rule, including the information and data supporting these determinations. Given that our rule permits the use of swing pricing for the first time in the U.S., additional board attention to the fund's swing pricing practices could be beneficial. Similarly, board review of a report that reviews and assesses the fund's swing threshold(s), swing factor(s), and swing factor upper limit considering the requirements of the rule, including the information and data supporting these determinations, could raise the quality and rigor of funds' formulating these important determinations, which also benefits investors.
Commenters generally agreed with the proposal's assessment of swing pricing's potential benefits, but they also brought up technological and operational hurdles that could impede its implementation by most funds, which we discuss below. Without a change in industry practice, the operational issues cited by commenters may prevent the benefits of swing pricing from being achieved by some funds, but it is still likely that a small fraction of funds will be able to implement it, and the rule does not require funds to use swing pricing (it is a discretionary tool). Additionally, sufficiently high investor demand for implementing swing pricing after the rule is adopted may spur market-wide operational innovations which reduce these operational hurdles.
One commenter stated that the nature by which swing pricing reallocates costs was a “zero-sum game” across different investors (subscribing, redeeming, and non-transacting) and that in aggregate swing pricing reduces shareholder value after incurring the costs of operating the policy.
Generally, implementing swing pricing may increase a fund's return volatility and could increase the tracking error relative to a fund's benchmark. However, the impact of swing pricing on volatility and tracking error should decrease as a function of the time over which returns and tracking errors are measured: For example, the impact of swing pricing on daily return volatility and tracking error will likely be much greater than the impact on monthly volatility and tracking error. Enabling funds to have multiple swing thresholds and factors, as well as limiting swing factors to be at most 2% of the funds NAV, also potentially lessens swing pricing's impact on volatility and tracking error.
In addition, swing pricing exposes transacting investors to additional uncertainty about the price at which their fund shares will ultimately be purchased or redeemed relative to the economic baseline. For example, under existing regulations, investors who submit purchase or redemption orders on a given date face uncertainty about the price they will transact at until the NAV is next struck. Under the adopted rule, investors face an additional source of uncertainty surrounding the eventual price they will transact at because this price will also depend on net fund flows on the trade date and any resultant NAV adjustment via swing pricing protocols. They may end up transacting at a better (
If a fund's swing threshold(s) and factor(s) are accurately calibrated to reflect the costs incurred as a result of significant net subscriptions and redemptions, the increased execution price risk faced by investors who transact in a fund should be offset by a decrease in the dilution that non-transacting investors would otherwise face if the fund's NAV was never adjusted. The rule's limitation on a swing factor's maximum size may reduce the extent to which funds that face higher trading costs are able to reflect those costs in their swing factor(s), but it also reduces the execution risk faced by investors who transact in these funds. We acknowledge commenter concerns that estimating the trading costs associated with various redemption levels is not trivial, and swing pricing programs are unlikely to anticipate trading costs perfectly, so a given fund's swing factor may overstate or understate the expected transaction costs associated with a given transaction.
Several of the provisions of the final rule could mitigate any incentive a fund has to overestimate its swing factor: (i) Requiring board approval of a fund's swing pricing policies and procedures, which must specify the processes used to determine the swing threshold(s), swing factor(s), and swing factor upper limit; (ii) requiring board approval of the swing threshold(s) and swing factor upper limit, as well as any changes to these quantities; (iii) adding an express requirement that swing factors be reasonably related to the near-term costs resulting from subscriptions and redemptions and limiting the near-term costs that may be considered in determining the swing factor(s); (iv) requiring the establishment of an upper limit on the swing factor(s) used, which may not exceed two percent of NAV per share; (v) requiring that the investment adviser, officer, or officers responsible for administrating a fund's swing pricing policies and procedures must be reasonably segregated from portfolio management of the fund, and may not include portfolio managers; and (vi) requiring the board to periodically review a written report prepared by the swing pricing administrator that describes: (a) Its review of the adequacy of the fund's swing pricing policies and procedures and the effectiveness of their implementation, including the impact on mitigating dilution; (b) any material changes to the fund's swing pricing policies and procedures since the date of the last report; and (c) its review and assessment of the fund's swing threshold(s), swing factor(s), and swing factor upper limit considering the requirements of the rule, including the information and data supporting these determinations.
Each fund that chooses to adopt swing pricing policies and procedures pursuant to rule 22c-1(a)(3) will incur one-time costs to develop and implement the policies and procedures, as well as ongoing costs relating to administration of the policies and procedures, as will intermediaries and third party service providers. To the extent that fund advisers, intermediaries, and other service providers are able to pass their costs along to funds, we believe it is likely that these costs will also be passed on,
Commenters also expressed concern that the analysis of costs did not consider the substantial costs and technology and operational hurdles that must be resolved for intermediaries to provide the net flow information necessary to perform swing pricing.
The final rule's swing pricing provisions are being adopted with a two-year extended effective date, which, as discussed above, several commenters requested. With respect to costs, the extended effective date may result in more efficient industry-wide approaches to providing funds with timely flow estimates in determining whether and by how much their NAVs will be adjusted on a given date. For example, if funds and intermediaries are able to coordinate with each other to develop standards and timing conventions for how data is transmitted to enable the timely estimation of flows instead of developing ad-hoc individual processes, the aggregate costs of implementing swing pricing are likely to be lower on a per fund basis. However, to the extent individual funds or intermediaries do not participate on a coordinated approach, progress on a more efficient collective solution to swing pricing's operational challenges may be hindered and the extended effective date may simply postpone the adoption of swing pricing relative to an immediate effective date. On the other hand, if swing pricing were made effective immediately and a significant portion of funds wanted to adopt it, market pressures could spur industry-wide solutions and innovations that reduce implementation costs and make swing pricing operationally feasible for a broader group of funds.
The costs of implementing swing pricing policies and procedures could vary depending on the level of liquidity risk facing the fund, as well as the sources of the fund's liquidity risk. To determine a fund's swing threshold, rule 22c-1(a)(3) would require a fund to consider certain of the factors required to be considered as part of the liquidity risk assessment required under rule 22e-4.
As noted above, commenters suggested the proposal underestimated the activities required for a fund, in conjunction with its intermediaries, to implement swing pricing. We acknowledge that the adoption of swing pricing could cause significant costs to be incurred by intermediaries (which are discussed below) and by funds in terms of the systems and processes they need to develop to receive timely flow data from intermediaries. A fund that adopts swing pricing will incur costs associated with the following activities: (i) Developing swing pricing policies and procedures that include all of the elements required under the rule,
The proposal estimated the one-time costs of implementing a swing pricing program as being in the range of $1.3 million to $2.25 million per fund complex by assuming costs were similar to those associated with the fees and
In the proposal, we estimated that the ongoing costs of adopting a swing policy would range from 5% to 15% of the one-time costs. We recognize that, relative to our discussion of costs in the proposal, funds will have to maintain substantial systems and procedures to estimate fund flows, and believe it's reasonable to increase this range from 5% to 32.5%.
While the proposal incorporated the costs to intermediaries and other third-party service providers into its estimates at the fund complex level, we recognize, based on the operational issues raised by commenters, that these parties will incur significant separate costs to make swing pricing feasible. Specifically, new processes and procedures will need to be established across a wide variety of intermediaries and service providers to gather and transmit sufficient flow information prior to the striking of the fund's NAV. Costs will be incurred by fund transfer agents, pricing agents, intermediaries and service providers to facilitate the movement of flow data to funds earlier in the evening. This will include new estimated flow data that will need to be generated by retirement plans and third-party administrators as intermediaries that will likely be sent via new files and processing cycles through the NSCC. Further changes to transaction processing and nightly processing may occur if the delivery of fund NAVs is pushed to later in the evening to accommodate swing pricing. Compressing processing times could increase risk and costs if there is less time for intermediaries to confirm transactions with funds and update shareholder records on a timely basis.
Commenters did not provide estimates for the costs that swing pricing will cause intermediaries to incur, which are likely to vary widely depending on the specific role each intermediary plays in the process of providing funds with the flow information swing pricing policies are dependent upon. For example, a small retirement plan that only needs to transmit data in a more timely fashion as a result of swing pricing might incur one-time costs in the tens of thousands of dollars to upgrade its systems, while a central fund transaction processing utility such as the NSCC might incur costs similar in magnitude to the largest fund complexes (in the tens of millions of dollars) to build systems that reliably process flow data for a broad range of their participants. Intermediaries such as broker-dealers and retirement plan administrators that use the services of the utility may incur costs in the middle of this range (in the hundreds of thousands to the millions of dollars) to enable the processing of flow data from any smaller intermediaries or clients they service in addition to any share of
Commenters also emphasized that those costs went beyond needing to create systems, policies, and procedures. They suggested that total costs include potential damage to investors, investment advisers, and service providers that would occur if operational requirements are not able to be effectively implemented because of current practices in the U.S. fund market.
Relative to the proposal, the final rule also changes the role of a fund's board in its oversight of any swing pricing program. Under the final rule, the board is required to approve the swing pricing policies and procedures, which must specify the process for determining swing threshold(s), swing factor(s) and their upper limits, but is not required to approve all material changes to the fund's swing pricing policies and procedures. The fund board is also required to approve a fund's swing factor upper limit and its swing threshold(s). In order to facilitate these obligations, the final rule also requires the board to periodically review a written report prepared by the swing pricing administrator that includes certain required information. The revised cost estimates above use a commenter's cost estimates of adopting swing pricing under the proposal, which we assume included the board's obligations to approve swing threshold(s), any swing factor upper limit, swing pricing policies and procedures, and any material changes to those policies and procedures. The final rule's inclusion of a requirement that the fund's board periodically review a written report from the swing pricing administrator will impose certain additional costs: (i) The costs incurred by the administrator in performing the analysis underlying the written report, including a review of the reasonableness of the swing threshold(s), swing factor(s), and upper limit; (ii) the cost of preparing the report itself; and (iii) the cost of the board's time to review the written report. While these activities are more explicitly required by the final rule, some of their associated costs, such as those associated with any analysis and document preparation as part of the proposal's periodic review requirements, as well as any time associated with board review of material changes, would have been incurred under the proposal. In addition, the final rule does not require board approval of all material changes to a fund's swing pricing policies and procedures, reducing costs relative to the proposal. On balance, we therefore believe that the revised costs estimates of the proposal above, which incorporate commenter feedback, are still reasonable estimates of the final rule's costs.
Rule 22c-1(a)(3) permits a fund, under certain circumstances, to adjust its NAV to effectively pass on the estimated costs stemming from shareholder purchase or redemption activity to the shareholders associated with that activity. Adjusting a fund's NAV in this way could reduce dilution to non-transacting shareholders arising from trading costs. We therefore believe that the rule could increase the efficiency of cost allocation among shareholders of funds that adopt swing pricing policies and procedures, provided that a fund's swing thresholds and swing factors are appropriately calculated.
If investors believe swing pricing to be valuable, funds that decide to implement swing pricing will be at a competitive advantage. Fund complexes currently using swing pricing in other jurisdictions may be at a slight advantage due to their familiarity with swing pricing procedures, but, as noted above, they will still face the same operational hurdles as other funds in obtaining timely fund flow information in the U.S. Similarly, funds that are predominantly sold directly or primarily through an affiliated broker-dealer may not be as impacted by these operational difficulties, and may be able to implement swing pricing more quickly. In addition, some funds may decide to forgo using swing pricing due to concerns that some intermediaries will not offer their funds due to the increased operational burden swing pricing places on those intermediaries.
The extended effective date reduces these competitive effects and provides funds not currently using swing pricing in other jurisdictions and funds that are not sold directly sufficient time to develop and implement their own swing pricing programs in conjunction with any broad industry efforts to provide fund flow data on a timely basis. Alternatively, if the rule's swing pricing provisions became effective immediately, while some funds would have an initial competitive advantage, if a significant portion of funds wanted to adopt swing pricing, market pressures could spur innovations that made swing pricing feasible for a broader groups of funds. We are unable to assess the relative likelihoods of these two potential outcomes.
Commenters also suggested that smaller fund complexes are less likely to have the resources necessary to implement swing pricing, may have less leverage in obtaining flow information from their distribution partners, and that if investors prefer funds that use swing pricing, smaller fund complexes would be at a competitive disadvantage.
We anticipate that rule 22c-1(a)(3) could indirectly foster capital formation by bolstering investor confidence. Investors may be more inclined to invest in funds if they understand that funds will be able to use swing pricing to prevent the purchase or redemption activity of certain investors from diluting the interests of other investors (particularly long-term investors, who represent the majority of fund shareholders). To the extent that swing pricing increases investment returns to investors, particularly long-term investors, this could incentivize investment in funds that use swing pricing. If rule 22c-1(a)(3) enhances investor confidence in funds, investors are more likely to invest in funds, so to the extent that investors are not already invested in the capital markets (
To the extent that investors care about short-term volatility, they may be discouraged from investing in funds that use swing pricing because it will generally increase daily volatility and benchmark tracking error on those days when the NAV is swung. However, if a fund's swing thresholds and factors are properly calibrated, long-term tracking error relative to the fund's benchmark should improve. Additionally, as discussed above, investors might be slightly less inclined to transact in funds that use swing pricing because of the additional uncertainty it introduces surrounding the NAV at which their shares will ultimately be purchased or redeemed, as this NAV now depends on that day's net fund flows in addition to variations in the prices of the fund's portfolio positions. Investors also may be less inclined to invest in funds that use swing pricing if they are not confident that the fund's swing factors and thresholds appropriately reflect costs associated with transacting in the fund; specifically, a fund that uses a swing pricing program which overstates trading costs will effectively impose the equivalent of hidden purchase and redemption fees on transacting investors, which will increase the fund's NAV and benefit non-transacting shareholders at their expense. Investors will not be able to directly evaluate whether a fund's swing pricing policy is reasonably linked to its costs, and will only be able to determine how much of a fund's performance is attributable to swing pricing if funds voluntarily choose to publicly disclose both their swung and unswung NAVs on a daily basis. However, the additional restrictions in the final rule that are designed to reduce the ability of funds to overestimate swing factors to increase observed fund performance, should reduce such concerns and have a positive effect on capital formation. Because we do not have the information necessary to determine how investors will perceive swing pricing, or how they will evaluate the relative benefits or detriments of investing in funds that use swing pricing, we are unable to draw conclusions about the precise effects of rule 22c-1(a)(3) on capital formation. Moreover, the requirement for funds that use swing pricing to disclose the swing factor upper limit will provide transparency to investors regarding the maximum amount that a shareholder could expect the share price that he or she receives upon purchase or redemption to be adjusted on account of swing pricing.
The final rule enables funds to use multiple swing thresholds, and allows for different swing factors corresponding to each threshold, subject to a swing factor upper limit that may not exceed two percent of NAV per share, which increases a fund's ability to tailor swing pricing to the specific trading costs it anticipates incurring when facing significant net fund flows. To the extent that funds accurately reflect these costs in their swing pricing programs, and that the expense of operating a swing pricing program does not significantly increase fund expenses, this should improve the efficiency of trading cost allocation between transacting and non-transacting investors. The final rule's increased flexibility could, at the margin, lead to an increase in the use of swing pricing by funds that would not have otherwise employed it under the proposed rule's provisions; to the extent that investors perceive swing pricing as being a desirable feature of certain funds, and the extent to which they have assets that are not already invested in the capital markets, this could enhance capital formation relative to the proposed rule.
We are adopting amendments to Form N-1A and Regulation S-X as well as adopting a new item to Form N-CEN to enhance fund disclosure and reporting regarding swing pricing. Specifically, amendments to Form N-1A will require a fund to explain the fund's use of swing pricing, including an explanation of what swing pricing is, the circumstances under which it will use swing pricing, and the effects of using swing pricing.
The final form amendments differ from the proposal in several ways that may have potential economic consequences. Specifically, funds that use swing pricing will be required to disclose the swing factor upper limit on
The disclosure and reporting requirements will increase shareholders' understanding of particular funds' swing pricing policies, which should assist investors in making investment choices that better match their risk tolerances. For example, disclosure of the swing factor upper limit will inform investors as to the maximum amount of costs they could be charged if they were to redeem or subscribe on a day where the fund is swinging its NAV in response to redemptions or subscriptions, respectively. Similarly, disclosures about the effects of swing pricing on a fund's annual and average total returns should help investors understand the extent to which fund performance may have been impacted by the fund's use of swing pricing. However, as discussed above, while we are not requiring disclosure in the financial statements of the fund's total return based on the Swung NAV, we are not prohibiting funds from disclosing this information along with the total return based on the unswung NAV outside of the financial statements.
Because we cannot predict the extent to which the requirements will enhance investors' awareness of funds' swing pricing and its impact on investors, we are unable to quantify the potential benefits discussed in this section.
Funds will incur costs to comply with the disclosure and reporting requirements regarding swing pricing. Commenters' responses to the estimates of these costs are discussed in the PRA discussion below, and we have updated all estimates in this section to reflect changes in the PRA.
We estimate that the one-time costs to comply with the amendments to Form N-1A for funds that choose to employ swing pricing will be approximately $648 per fund (plus printing costs).
We estimate compliance with the new item of Form N-CEN related to swing pricing will involve an annual hourly burden which is discussed in the PRA discussion below.
We believe the disclosure and reporting requirements on Form N-1A and Form N-CEN could increase informational efficiency by providing additional information about a fund's use of swing pricing. To the extent that investors better understand a fund's swing pricing, including the upper limit of the swing factor, they can trade off the benefit from dilution protection with the increase in return volatility, as discussed above, when deciding on investing in a fund that choses to use swing pricing. To the extent that investors invest in funds that adopt swing pricing because of these disclosure and reporting requirements, the new disclosure and reporting requirements will also increase capital formation. However, we do not believe that this effect will be significant because such investors are more likely already investing in other funds and hence any reallocation will be a “zero-sum game.”
Increased investor awareness of funds' swing pricing policies, including swing factor upper limits, improve the investors' ability to compare funds that elect to use swing pricing with each other as well as with funds that do not elect to implement swing pricing. Such a comparison could improve competition among funds, which could benefit investors. While this competition could unintentionally increase incentives for funds to overestimate the swing factors to improve and compete on performance, the additional safeguards required by the final rule should prevent such a negative impact.
The following discussion addresses significant alternatives to the final swing pricing regulations. More detailed alternatives to the individual elements of the swing pricing regulations are discussed in detail above.
Instead of permitting, but not requiring, funds to adopt swing pricing policies and procedures under rule 22c-1(a)(3), the Commission could have
While rule 22c-1(a)(3) enables partial swing pricing (that is, a NAV adjustment would not be permitted unless net purchases or redemptions exceed a positive threshold set by the fund), the Commission instead could have adopted a rule that would permit full swing pricing (that is, a NAV adjustment would occur any time the fund experiences net purchases or net redemptions, or equivalently allowed zero percent thresholds). Full swing pricing would result in
We considered permitting funds to use swing pricing only to adjust their NAV downward in the event that net redemptions exceeded a particular threshold, as there may be more significant issues regarding potential dilution for non-transacting shareholders in connection with shareholder redemptions, because funds are obligated to satisfy redemption requests pursuant to section 22(e) of the Act. In this regard, we note that unlike redemptions, funds may reserve the right to decline purchase requests. For example, a fund may decline purchase requests from shareholders who engaged in frequent trading, and it also may decline large purchase requests that would negatively impact the fund. However, the final rule contemplates that funds will use swing pricing to adjust their NAV upward or downward because we believe that swing pricing could be a useful tool in mitigating dilution associated with shareholder purchase activity as well as shareholder redemption activity.
We considered exempting investors with small investments in a fund from the NAV adjustments permitted under rule 22c-1(a)(3). However, we believe that the costs of exempting those investors from the NAV adjustment could be significant, particularly the operational costs that could result from the relatively complex process of applying the NAV adjustment only to some investors and not to others. Exempting small investors from the NAV adjustment also may not be beneficial to a fund because such exemption could lead to large investors engaging in gaming behavior—that is, structuring their investments in funds using multiple small accounts—in order to use the exemption. This could contravene the purpose of the exemption and be costly for funds to detect. In addition, while small investors' trading activity might not incur significant costs individually, their aggregate trading in the fund could incur costs, just as it would if they were trading directly in, for example, the stock market, and it would not be fair to impose those collectively generated costs on non-transacting shareholders.
Some commenters suggested that redemption fees may have a better combination of potential cost and benefits compared to swing pricing.
The key characteristic of a redemption or purchase fee, relative to swing pricing, is that it is imposed on a given investor's transaction independent of other investors' transactions in a fund, which means, for example, that investors may pay a fee even when their transactions do not result in significant net flows or any corresponding dilution for the fund's non-transacting investors. On the other hand, swing pricing allows funds to condition when they recover costs from transacting investors on the net flows to their fund on a given trading date, which could allow funds to more fairly allocate the actual costs created by investor flows and prevent shareholder dilution. As with redemption and purchase fees, it is still possible that investors pay a cost via the swing factor that ends up being larger
If purchase or redemption fees are made contingent on the size of a transaction, a fund may be able to tailor these fees to transactions that are more likely to impose costs on non-transacting investors. For example, a large redemption may make it more likely that a fund experiences significant net redemptions on a given day. Targeting purchase and redemption fees in this manner could allow a fund to achieve some of the benefits of swing pricing without its potentially redistributive effects.
In terms of direct costs, redemption fees may require more coordination with a fund's service providers because these fees need to be imposed on an investor-by-investor basis—which may be particularly difficult with respect to omnibus accounts. While there are funds that currently utilize redemption fees and have built systems to support them, these redemption fees are generally constant fees that are not tailored to the costs of a given redemption. Swing pricing, on the other hand, will require some funds and intermediaries to create new systems and operational procedures (discussed above), but once those are in place swing pricing will be incorporated in the process by which a fund strikes its NAV, and will not require any additional investor-specific infrastructure to assess trading costs to them.
Finally, a closely related alternative to swing pricing that the Commission could have adopted would be to permit funds to employ dual pricing, which has been used in certain European funds.
The amendments to rule 22c-1 contain “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The titles for the existing collections of information are: “Rule 31a-2 Records to be preserved by registered investment companies, certain majority-owned subsidiaries thereof, and other persons having transactions with registered investment companies” (OMB Control No. 3235-0179); and “Form N-1A under the Securities Act of 1933 and under the Investment Company Act of 1940, Registration Statement of Open-End Management Investment Companies” (OMB Control No. 3235-0307). In the Investment Company Reporting Modernization Adopting Release, we submitted new collections of information for Form N-CEN.
We are submitting new collections of information for the amendments to rule 22c-1 under the Investment Company Act of 1940. The title for the new collections of information will be: “Rule 22c-1 Under the Investment Company Act of 1940, Pricing of redeemable securities for distribution, redemption and repurchase.” The Commission is submitting these collections of information to the OMB for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. An agency may not conduct or sponsor, and a person is not
The Commission is adopting amendments to rule 22c-1, rule 31a-2, Regulation S-X, and Form N-1A. The Commission also is adopting a new item to Form N-CEN. The amendments are designed to prevent potential dilution of interests of fund shareholders in light of shareholder purchase and redemption activity and enhance disclosure and Commission oversight of funds' use of swing pricing. We discuss below the collection of information burdens associated with these reforms. In the Proposing Release, the Commission solicited comment on the collection of information requirements and the accuracy of the Commission's statements in the Proposing Release.
We are adopting, largely as proposed, amendments to rule 22c-1 that will enable a fund (with the exception of a money market fund or ETF) to choose to use “swing pricing” as a tool to mitigate shareholder dilution.
In order to use swing pricing under rule 22c-1, as amended, a fund is required to establish and implement swing pricing policies and procedures that meet certain requirements.
In the Proposing Release, we estimated that 167 fund complexes include funds that would adopt swing pricing policies and procedures pursuant to the rule.
As discussed above, many commenters expressed general concerns about the operational and technology costs associated with swing pricing and recommended that the Commission consider the substantial costs and technology challenges that need to be overcome to implement swing pricing.
The Commission has modified the estimated increase in burden hours associated with a fund documenting its swing pricing policies and procedures in consideration of commenters' concerns that such burdens were underestimated as well as modifications made to the proposal and updates to data figures that were utilized in the Proposing Release. We estimate that 84 fund complexes, rather than 167 fund complexes (half as many fund complexes as estimated in the proposal), include funds that will adopt swing pricing policies and procedures pursuant to the rule.
Amortized over a 3-year period, we estimate that this will be an annual burden per fund complex of about 19 hours, rather than 10 hours.
We are adopting, as proposed, amendments to rule 22c-1 to require a fund that uses swing pricing to maintain the fund's swing policies and procedures that are in effect, or at any time within the past six years were in effect, in an easily accessible place.
In the Proposing Release, we estimated that the burden would be three hours per fund complex to retain the proposed swing pricing records, with 1.5 hours spent by a general clerk and 1.5 hours spent by a senior computer operator. We estimated a time cost per fund complex of $216.
We did not receive any comments on the estimated hour and cost burdens for this record retention requirement. The Commission has modified the estimated increase in annual burden hours and total time costs that will result from the amendments based on the modification to the proposal to require funds to retain a written copy of the annual report provided to the board from the swing pricing administrator. We have also modified the estimated increase in annual burden hours and total time costs in light of updated data concerning funds and fund personnel salaries. We estimate that the burden will be four hours, rather than three hours, per fund complex to retain these records, with 2 hours, rather than 1.5 hours, spent by a general clerk and 2 hours, rather than 1.5 hours, spent by a senior computer operator. Based on updates to the industry data figures that were utilized in the Proposing Release, we estimate a time cost per fund complex of $292, rather than $216.
Amortized over a three-year period, we believe that the hour burdens and time costs associated with the amendments to rule 22c-1, including the burden associated with the requirements that funds adopt policies and procedures, obtain board approval, and periodic review of an annual written report from the swing pricing administrator, and retain certain records and written reports related to swing pricing, will result in an average aggregate annual burden of 1,932 hours, rather than 2,115 hours, and average aggregate time costs of $1,018,416, rather than $1,244,595.
Section 31(a)(1) of the Investment Company Act requires registered investment companies and certain of their majority-owned subsidiaries to maintain and preserve records as prescribed by Commission rules. Rule 31a-1 under the Act specifies the books and records that must be maintained. Rule 31a-2 under the Act specifies the time periods that entities must retain certain books and records, including those required to be maintained under rule 31a-1. The retention of records, as required by rule 31a-2, is necessary to ensure access by Commission staff to material business and financial information about funds and certain related entities. This information is used by the staff to evaluate fund compliance with the Investment Company Act and regulations thereunder. The Commission currently estimates that the annual burden associated with rule 31a-2 is 220 hours per fund, with 110 hours spent by a general clerk at a rate of $52 per hour and 110 hours spent by a senior computer operator at a rate of $81 per hour.
We are adopting amendments to rule 31a-2 to require a fund that chooses to use swing pricing to create and maintain a record of support for each computation of an adjustment to the NAV of the fund's shares based on the fund's swing policies and procedures.
In the proposal, we estimated that approximately 947 funds would use swing pricing and that each fund that uses swing pricing generally would incur an additional burden of 1 hour per year in order to comply with the proposed amendments to rule 31a-2.
Based on updates to industry data figures that were utilized in the Proposing Release and the reduction in our estimate of the number of funds in fund complexes that will choose to use swing pricing, for purposes of the PRA analysis, we estimate that approximately 474 funds (half as many funds as proposed) will use swing pricing.
The Commission currently estimates that the average external cost of preserving books and records required by rule 31a-2 is approximately $70,000 per fund at a total cost of approximately $243,880,000 per year,
On May 20, 2015, we proposed to amend rule 30a-1 to require all funds to file reports with certain census-type
In the Investment Company Reporting Modernization Proposing Release, we estimated that the average annual hour burden per response for proposed Form N-CEN for the first year would be 32.37 hours and 12.37 hours in subsequent years.
We are adopting, substantially as proposed, a new reporting item on Form N-CEN to require funds to report information regarding swing pricing.
In the Proposing Release, we estimated that 8,734 funds would be required to file responses on Form N-CEN. We estimated that the average annual hour burden per additional response to Form N-CEN as a result of the proposed new reporting requirements would be 0.5 hour per fund per year for a total average annual hour burden of 4,367 hours.
We did not receive any comments on these estimated hour and cost burdens. The Commission has modified the estimated increase in annual burden hours and total time costs based on the modification to the proposal to address separately in this Release the requirement to report whether a fund used swing pricing during the reporting period and require funds report the swing factor upper limit if swing pricing was used during the reporting period. The estimated increase in annual burden hours and total time costs also has been modified in light of updated data concerning funds and fund personnel salaries. We estimate that 9,039 funds will be required to file responses to Item C.21 of Form N-CEN regarding swing pricing.
Form N-1A is the registration form used by open-end investment companies. The respondents to the amendments to Form N-1A adopted today are open-end management investment companies registered or registering with the Commission. Compliance with the disclosure requirements of Form N-1A is mandatory, and the responses to the disclosure requirements are not confidential. We currently estimate for Form N-1A a total hour burden of 1,579,974 hours, and the total annual external cost burden is $124,820,197.
We are adopting amendments to Form N-1A that require funds that use swing pricing to disclose that they use swing pricing, and, if applicable, an explanation of what swing pricing is, the circumstances under which swing pricing is used, and the effects of using swing pricing.
We believe that requiring funds to provide this additional disclosure regarding swing pricing will provide Commission staff, investors, and market participants with improved information about the conditions under which swing pricing procedures will be used to mitigate the effects of dilution as a result of shareholder purchase or redemption activity.
Form N-1A generally imposes two types of reporting burdens on investment companies: (i) The burden of preparing and filing the initial registration statement; and (ii) the burden of preparing and filing post-effective amendments to a previously effective registration statement (including post-effective amendments filed pursuant to rule 485(a) or 485(b) under the Securities Act, as applicable). In the Proposing Release, we estimated that each fund would incur a one-time burden of an additional 2 hours,
In the Proposing Release, we also estimated that each fund would incur an ongoing burden of an additional 0.25 hours, at a time cost of an additional $80,
In the Proposing Release, we further estimated that amortizing these one-time and ongoing hour and cost burdens over three years would result in an average annual increased burden of approximately 0.50 hours per fund,
In total, we estimated in the Proposing Release that funds would incur an average annual increased burden of approximately 8,007 hours,
One commenter stated that the cost estimates under the proposal were overly optimistic, including as an example our estimated $637 cost per fund to implement the proposed Form N-1A disclosure requirements.
The Commission has modified the estimated increase in annual burden hours and total time costs that will result from the amendments to Form N-1A based on the modifications to the proposal discussed in this Release. Furthermore, we have considered the concern expressed by one commenter that the burdens and costs estimated in the proposal were overly optimistic. We also have estimated an increase in the aggregate annual burden hours that will result from the amendments to Form N-1A in light of updated data regarding the number of funds subject to the disclosure requirements.
In the Proposing Release, we estimated that approximately 947 funds would use swing pricing.
In addition, we estimate that each fund will incur an ongoing burden of an additional one hour, but at a time cost of an additional $324,
Furthermore, we estimate that amortizing these one-time and ongoing hour and cost burdens over three years will result in an average annual increased burden of approximately 1.33 hours per fund,
In total, we estimate that funds will incur an average annual increased burden of approximately 790 hours,
This Final Regulatory Flexibility Analysis has been prepared in accordance with section 3 of the Regulatory Flexibility Act (“RFA”).
Under current pricing methods, shareholder purchase and redemption activity could dilute the value of non-transacting shareholders' interests in some funds. The Commission is adopting amendments to rule 22c-1 to permit a fund to use “swing pricing,” the process of adjusting a fund's NAV to effectively pass on to purchasing and redeeming shareholders more of the costs stemming from their trading activity. We believe that rule 22c-1 will promote investor protection by providing funds with an additional tool to mitigate the potentially dilutive effects of shareholder purchase or redemption activity and provide a set of operational standards that will allow funds to gain comfort using swing pricing as a new means of mitigating potential dilution. Swing pricing may also provide funds with an additional tool to manage liquidity risks. In addition, the Commission is adopting related recordkeeping and disclosure requirements to enhance disclosure and Commission oversight of funds' use of swing pricing. Each of these objectives is discussed in detail in section III above.
In the Proposing Release, we requested comment on the IRFA, requesting in particular comment on the number of small entities that would be subject to the proposed swing pricing rules and whether the proposed swing pricing rules would have any effects that have not been discussed. We requested that commenters describe the nature of any effects on small entities subject to the proposed swing pricing rules and provide empirical data to support the nature and extent of such effects. We also requested comment on the estimated compliance burdens of the proposed swing pricing rules and how they would affect small entities. We received a number of comments related to the impact of our proposal on small entities, with some commenters expressing concern that certain large fund complexes with more influence over their distribution partners (or with more resources/internal processes in place to support swing pricing) would be more successful than small fund complexes in obtaining intraday flow information and implementing swing pricing.
An investment company is a small entity if, together with other investment companies in the same group of related investment companies, it has net assets of $50 million or less as of the end of its most recent fiscal year.
Amendments to rule 22c-1 permit, but do not require, all registered open-end funds (except money market funds and ETFs), including small entities, to use swing pricing, provided that it adopts policies and procedures that include certain elements and are approved by the fund's board.
As discussed above, we estimate that, on average, a fund complex would incur one-time costs ranging from $2.4 million to $48.5 million, depending on the fund complex's particular circumstances, to adopt swing pricing policies and procedures and comply with related record retention requirements, as well as ongoing annual costs ranging from $120,000 to $15.8 million per year associated with the new swing pricing (and related recordkeeping) regulations.
The swing pricing rules include amendments to Form N-1A and additions to Form N-CEN that are intended to enhance fund disclosure and reporting regarding a fund's use of swing pricing. In particular, the amendments to Form N-1A require funds that use swing pricing to disclose that they use swing pricing, and, if applicable, an explanation of what swing pricing is, the circumstances under which swing pricing is used, the effects of using swing pricing, and the upper limit the fund has set on the swing factor.
As discussed above, we estimate that each fund, including funds that are small entities, will incur a one-time burden of an additional 2 hours,
As discussed above, we also estimate that the average annual hour burden per additional response to Form N-CEN as a result of the adopted swing pricing additions to Form N-CEN will be 0.5 hour per fund per year.
The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant impact on small entities. Alternatives in this category would include: (i) Establishing different compliance or reporting standards that take into account the resources available to small entities; (ii) clarifying, consolidating, or simplifying the compliance requirements under the rules and amendments for small entities; (iii) using performance rather than design standards; and (iv) exempting small entities from coverage of the rules and amendments, or any part of the rules and amendments.
The Commission does not presently believe that the swing pricing rules would require the establishment of special compliance requirements or timetables for small entities. The swing pricing rules are specifically designed to reduce any unnecessary burdens on all funds (including small funds). To establish special compliance requirements or timetables for small entities may in fact disadvantage small entities by encouraging larger market participants to focus primarily on the needs of larger entities when making the operational changes envisioned by the swing pricing rules, and possibly ignoring the needs of smaller funds.
With respect to further clarifying, consolidating, or simplifying the compliance requirements of the swing pricing rules, using performance rather than design standards, and exempting small entities from coverage of the swing pricing rules or any part of the swing pricing rules, we believe additional such changes would be impracticable. Small entities are as vulnerable to the risk of dilution of the interests of fund shareholders as larger funds. We believe that the swing pricing rules are necessary to help mitigate these risks. Exempting small funds from coverage under the swing pricing rules or any part of the swing pricing rules could compromise the effectiveness of the swing pricing rules or any part of the swing pricing rules.
The Commission is adopting amendments to rule 22c-1 under the authority set forth in sections 22(c) and 38(a) of the Investment Company Act [15 U.S.C. 80a-22(c) and 80a-37(a)]. The Commission is adopting amendments to rule 31a-2 under the authority set forth in section 31(a) of the Investment Company Act [15 U.S.C. 80a-31(a)]. The Commission is adopting amendments to Form N-1A, Regulation S-X, and proposed Form N-CEN under the authority set forth in the Securities Act, particularly section 19 thereof [15 U.S.C. 77a
Accounting, Investment companies, Reporting and recordkeeping requirements, Securities.
Investment companies, Reporting and recordkeeping requirements, Securities.
For the reasons set out in the preamble, title 17, chapter II of the Code of Federal Regulations is amended as follows:
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78
(e)
(m)
(1) The general methods used in determining whether the company's net asset value per share will swing;
(2) Whether the company's net asset value per share has swung during the year; and
(3) A general description of the effects of swing pricing.
15 U.S.C. 80a-1
(a) * * *
(3) Notwithstanding this paragraph (a), a registered open-end management investment company (but not a registered open-end management investment company that is regulated as a money market fund under § 270.2a-7 or an exchange-traded fund as defined in paragraph (a)(3)(v)(A) of this section) (a “fund”) may use swing pricing to adjust its current net asset value per share to mitigate dilution of the value of its outstanding redeemable securities as a result of shareholder purchase or redemption activity, provided that it has established and implemented swing pricing policies and procedures in compliance with the paragraphs (a)(3)(i) through (v) of this section.
(i) The fund's swing pricing policies and procedures must:
(A) Provide that the fund must adjust its net asset value per share by a single swing factor or multiple factors that may vary based on the swing threshold(s) crossed once the level of net purchases into or net redemptions from such fund has exceeded the applicable swing threshold for the fund. In determining whether the fund's level of net purchases or net redemptions has exceeded the applicable swing threshold(s), the person(s) responsible for administering swing pricing shall be permitted to make such determination based on receipt of sufficient information about the fund investors' daily purchase and redemption activity (“investor flow”) to allow the fund to reasonably estimate whether it has crossed the swing threshold(s) with high confidence, and shall exclude any purchases or redemptions that are made in kind and not in cash. This investor flow information may consist of individual, aggregated, or netted orders, and may include reasonable estimates where necessary.
(B) Specify the process for how the fund's swing threshold(s) shall be determined, considering:
(C) Specify the process for how the swing factor(s) shall be determined, which must include: The establishment of an upper limit on the swing factor(s) used, which may not exceed two percent of net asset value per share; and the determination that the factor(s) used are reasonable in relationship to the costs discussed in this paragraph. In determining the swing factor(s) and the upper limit, the person(s) responsible for administering swing pricing may take into account only the near-term costs expected to be incurred by the fund as a result of net purchases or net redemptions that occur on the day the swing factor(s) is used, including spread costs, transaction fees and charges arising from asset purchases or asset sales resulting from those purchases or redemptions, and borrowing-related costs associated with satisfying redemptions.
(ii) The fund's board of directors, including a majority of directors who are not interested persons of the fund must:
(A) Approve the fund's swing pricing policies and procedures;
(B) Approve the fund's swing threshold(s) and the upper limit on the swing factor(s) used, and any changes to the swing threshold(s) or the upper limit on the swing factor(s) used;
(C) Designate the fund's investment adviser, officer, or officers responsible for administering the swing pricing policies and procedures (“person(s) responsible for administering swing pricing”). The administration of swing pricing must be reasonably segregated from portfolio management of the fund and may not include portfolio managers; and
(D) Review, no less frequently than annually, a written report prepared by the person(s) responsible for administering swing pricing that describes:
(
(
(iii) The fund shall maintain the policies and procedures adopted by the fund under this paragraph (a)(3) that are in effect, or at any time within the past six years were in effect, in an easily accessible place, and shall maintain a written copy of the report provided to the board under paragraph (a)(3)(ii)(C) of this section for six years, the first two in an easily accessible place.
(iv) Any fund (a “feeder fund”) that invests, pursuant to section 12(d)(1)(E) of the Act (15 U.S.C. 80a-12(d)(1)(E)), in another fund (a “master fund”) may not use swing pricing to adjust the feeder fund's net asset value per share; however, a master fund may use swing pricing to adjust the master fund's net asset value per share, pursuant to the requirements set forth in this paragraph (a)(3).
(v) For purposes of this paragraph (a)(3):
(A)
(B)
(C)
(D)
(E)
(a) * * *
(2) Preserve for a period not less than six years from the end of the fiscal year in which any transactions occurred, the first two years in an easily accessible place, all books and records required to be made pursuant to paragraphs (b)(5) through (12) of § 270.31a-1 and all vouchers, memoranda, correspondence, checkbooks, bank statements, cancelled checks, cash reconciliations, cancelled stock certificates, and all schedules evidencing and supporting each computation of net asset value of the investment company shares, including schedules evidencing and supporting each computation of an adjustment to net asset value of the investment company shares based on swing pricing policies and procedures established and implemented pursuant to § 270.22c-1(a)(3), and other documents required to be maintained by § 270.31a-1(a) and not enumerated in § 270.31a-1(b).
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78
The additions read as follows:
The text of Form N-1A does not, and this amendment will not, appear in the Code of Federal Regulations.
(b) * * *
(2) * * *
(ii) If swing pricing policies and procedures were applied during any of the periods, include a general description of the effects of swing pricing on the Fund's annual total returns for the applicable period(s) presented in a footnote to the bar chart.
(b) * * *
(2) * * *
(iv) * * *
(E) If swing pricing policies and procedures were applied during any of the periods, include a general description of the effects of swing pricing on the Fund's average annual total returns for the applicable period(s) presented.
(d) If the Fund uses swing pricing, explain the Fund's use of swing pricing; including what swing pricing is, the circumstances under which the Fund will use it, the effects of swing pricing on the Fund and investors, and provide the upper limit it has set on the swing factor. With respect to any portion of a Fund's assets that is invested in one or more open-end management investment companies that are registered under the Investment Company Act, the Fund shall include a statement that the Fund's net asset value is calculated based upon the net asset values of the registered open-end management investment companies in which the Fund invests, and, if applicable, state that the prospectuses for those companies explain the circumstances under which they will use swing pricing and the effects of using swing pricing.
Instructions * * *
2.
(d) The amount shown at the Capital Adjustments Due to Swing Pricing caption should include the per share impact of any amounts retained by the Fund pursuant to its swing pricing policies and procedures, if applicable.
(e) The amounts shown at the Net Asset Value, as adjusted pursuant to swing pricing, End of Period caption should be the Fund's net asset value per share as adjusted pursuant to its swing pricing policies and procedures on the last day of the reporting period, if applicable.
The addition read as follows:
Item C.21. Swing pricing. For open-end management investment companies, respond to the following:
d. Did the Fund (if not a Money Market Fund, Exchange-Traded Fund, or Exchange-Traded Managed Fund) engage in swing pricing? [Yes/No]
i. If so, what was the swing factor upper limit?
By the Commission.
Securities and Exchange Commission.
Final rule.
The Securities and Exchange Commission is adopting new rules, a new form and amendments to a rule and forms designed to promote effective liquidity risk management throughout the open-end investment company industry, thereby reducing the risk that funds will be unable to meet their redemption obligations and mitigating dilution of the interests of fund shareholders. The amendments also seek to enhance disclosure regarding fund liquidity and redemption practices. The Commission is adopting new rule 22e-4, which requires each registered open-end management investment company, including open-end exchange-traded funds (“ETFs”) but not including money market funds, to establish a liquidity risk management program. Rule 22e-4 also requires principal underwriters and depositors of unit investment trusts (“UITs”) to engage in a limited liquidity review. The Commission is also adopting amendments to Form N-1A regarding the disclosure of fund policies concerning the redemption of fund shares. The Commission also is adopting new rule 30b1-10 and Form N-LIQUID that generally will require a fund to confidentially notify the Commission when the fund's level of illiquid investments that are assets exceeds 15% of its net assets or when its highly liquid investments that are assets fall below its minimum for more than a specified period of time. The Commission also is adopting certain sections of Forms N-PORT and N-CEN that will require disclosure of certain information regarding the liquidity of a fund's holdings and the fund's liquidity risk management practices.
Zeena Abdul-Rahman, John Foley, Andrea Ottomanelli Magovern, Naseem Nixon, Amanda Hollander Wagner, Senior Counsels; Thoreau Bartmann, Melissa Gainor, Senior Special Counsels; or Kathleen Joaquin, Senior Financial Analyst, Investment Company Rulemaking Office, at (202) 551-6792, Ryan Moore, Assistant Chief Accountant, or Matt Giordano, Chief Accountant at (202) 551-6918, Office of the Chief Accountant, Division of Investment Management, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-8549.
The Securities and Exchange Commission (the “Commission”) is adopting new rules 22e-4 [17 CFR 270.22e-4] and 30b1-10 [17 CFR 270.223], under the Investment Company Act of 1940 [15 U.S.C. 80a-1
Redeemability is a defining feature of open-end investment companies.
Although the Investment Company Act provides funds with a seven-day window to pay proceeds upon an investor's redemption, the settlement period for open-end fund redemptions has shortened considerably over the years. There are several reasons for shorter settlement periods, including broker-dealer settlement cycle requirements,
We remain committed, as the primary regulator of open-end funds, to designing regulatory programs that respond to the risks associated with the increasingly complex portfolio composition and operations of the asset management industry. In developing the proposed rules, Commission staff engaged with large and small fund complexes to better understand funds' management of liquidity risk. Through these outreach efforts our staff has learned that, while some funds and their managers have developed extensive liquidity risk management programs, others have dedicated significantly fewer resources, attention and focus to managing liquidity risk in a formalized way. We believe that it is in the interest of funds and fund investors to create a regulatory framework that would reduce the risk that a fund will be unable to meet its redemption obligations and minimize dilution of shareholder interests by promoting stronger and more effective liquidity risk management across open-end funds.
We sought to address these goals with the proposal on fund liquidity risk management that we published in late 2015.
We received more than 70 comment letters on the proposal.
Today, after consideration of the many comments we received, we are adopting the proposal with a number of modifications to enhance the effectiveness and workability of the rule's liquidity risk management requirements. The Commission is adopting new rule 22e-4, which will require each fund to adopt and implement a written liquidity risk management program designed to assess and manage the fund's liquidity risk, which will be overseen by the fund's board. As discussed in more detail below, the Commission is modifying from the proposal some of the liquidity risk management program elements, including reducing the liquidity classification categories from six to four, providing tailored program requirements for ETFs, and revising the fund board oversight requirements.
The new rule contains a highly liquid investment minimum requirement, which is similar to the proposed three-day liquid asset minimum. However, instead of barring a fund from purchasing securities other than highly liquid investments if the fund falls below its minimum as proposed for the three-day liquid asset minimum, under the adopted rules, if the fund falls below its highly liquid investment minimum, it would: (1) Report that occurrence to the fund board at its next scheduled meeting; (2) if it is below the minimum for more than a brief period of time, report the occurrence to the board and, on Form N-LIQUID, to the Commission within one business day; and (3) develop and provide to the board a plan for restoring the minimum within a reasonable period of time.
We also are adopting a 15% limitation on funds' purchases of illiquid investments, largely as proposed, but the definition of investments considered illiquid and subject to this 15% limit has been enhanced and substantially harmonized with the classification system we are adopting today. Additionally, the Commission is adopting new reporting Form N-LIQUID, which will require a fund to confidentially notify the Commission within one business day if the fund's illiquid investment holdings exceed 15% of its net assets or if its highly liquid investments fall below its minimum for more than a brief period of time. Furthermore, much as proposed, the Commission is adopting reporting and disclosure requirements under Form N-CEN, Form N-PORT, and Form N-1A regarding liquidity risk and liquidity risk management. In response to commenters' concerns, a number of the additional reporting items on Form N-PORT will be non-public.
Taken together, these reforms are designed to provide investors with increased protection regarding how liquidity in their open-end funds is managed, thereby reducing the risk that funds will be unable to meet redemption or other legal obligations, and mitigating dilution of the interests of fund shareholders. These reforms also are intended to give investors better information to make investment decisions, and to give the Commission better information to conduct comprehensive monitoring and oversight of an ever-evolving fund industry.
As we discussed in the Proposing Release, individual and institutional investors increasingly have come to rely on investments in open-end funds to meet their financial needs and access the capital markets. At the end of 2015, 54.9 million households, or 44.1 percent of all U.S. households owned funds.
As noted above, investors in mutual funds can redeem their shares on each business day and, by law, must receive approximately their
ETFs also offer investors an undivided interest in a pool of assets.
ETMFs are a hybrid between a traditional mutual fund and an ETF.
A hallmark of open-end funds is that they must be able to convert some portion of their portfolio holdings into cash on a frequent basis because they issue redeemable securities, and are required by section 22(e) of the Investment Company Act to make payment to shareholders for securities tendered for redemption within seven days of their tender (although some funds may reserve the right to make redemptions in kind for certain redemption requests). As a practical matter, many investors expect to receive redemption proceeds in fewer than seven days as some mutual funds represent in their prospectuses that they will generally pay redemption proceeds on a next business day basis.
Sufficient liquidity of ETF portfolio positions also is important. Many ETFs typically make in-kind redemptions of creation units, which can mitigate the need for ETFs to maintain cash compared to mutual funds, particularly if the in-kind redemptions are of a representative basket of the ETF's
In addition, all ETFs reserve the right to satisfy redemption requests in cash rather than in kind, but the extent to which ETFs satisfy redemption requests in cash varies. While many ETFs redeem in cash only rarely, some ETFs ordinarily redeem authorized participants in cash. ETFs that elect to redeem authorized participants in cash in more than a
As noted above, ETMFs have features of both mutual funds and ETFs. As ETMFs would redeem their shares on a daily basis from authorized participants, ETMFs would need to hold sufficiently liquid assets to meet such redemptions to the extent that the ETMFs satisfy the redemption requests in cash. As with ETFs, however, the ETMFs' practice of making in-kind redemptions could mitigate the need to maintain cash. Further, as ETMF market makers would not engage in the same kind of arbitrage as ETF market makers because the pricing of the ETMF shares is linked to the fund's NAV (subject to execution costs), the liquidity of an ETMF's portfolio is more relevant to an ETMF's ability to meet redemptions and the amount of execution costs than to an arbitrage function.
An open-end fund's failure to maintain sufficiently liquid assets or otherwise manage liquidity implicates multiple provisions of the Act, as well as other federal securities laws and regulations. Section 2(a)(32) of the Act,
For decades, the Commission has recognized that because open-end funds hold themselves out at all times as being prepared to meet these statutory redemption requirements, they have a responsibility to manage the liquidity of their investment portfolios in a manner consistent with those obligations and any other related representations.
Relatedly, the Commission has recognized that the liquidity management practices of open-end funds implicate certain antifraud provisions of the securities laws.
In addition, section 206(4)
As the Commission has previously noted, an open-end fund “represents to investors, in its prospectus, that it will, as required by section 22(e) of the Act, redeem its securities at approximate net asset value within seven days after tender.”
In addition to the foregoing concerns, an insufficiently liquid portfolio implicates provisions of the Act and regulations thereunder concerning fund valuation.
A separate and independent issue arising from the failure to maintain a sufficiently liquid portfolio is the risk of shareholder dilution associated with improper fund pricing. Thus, section 22(a),
As previously discussed, in addition to the seven-day redemption requirement in section 22(e), rule 15c6-1 under the Exchange Act also affects the timing of open-end fund redemptions because the rule requires broker-dealers to settle securities transactions, including transactions in open-end fund shares, within three business days after the trade date. Furthermore, rule 22c-1 under the Act, the “forward pricing” rule, requires funds, their principal underwriters, and dealers to sell and redeem fund shares
With the exception of money market funds subject to rule 2a-7 under the Act,
Registered investment companies and their investment advisers are subject to rules under the Act and the Advisers Act requiring them to adopt and implement written compliance policies and procedures reasonably designed to prevent various violations of laws and regulations. Rule 38a-1 under the Act requires registered investment companies to adopt and implement written policies and procedures reasonably designed to prevent violations of the federal securities laws by the fund, including policies and procedures that provide for the oversight of compliance by certain of the fund's service providers, including the fund's investment adviser; the rule also requires board approval and review of the service providers' compliance policies and procedures. Additionally, rule 206(4)-7 under the Advisers Act requires registered investment advisers to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder by the adviser or any of its supervised persons. Such compliance policies and procedures should be appropriately tailored to reflect each firm's particular compliance risks.
Thus, funds and their advisers already are required to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of various provisions implicated by fund liquidity, including those provisions identified above. The liquidity risk management program requirements of rule 22e-4, which we are adopting here, in effect will provide more specific and enhanced requirements in certain areas already generally covered by the compliance program rules.
In short, there are a number of statutory and regulatory provisions across the federal securities laws that bear on redemptions and the potential dilution of shareholders' interests. New rule 22e-4 advances the purposes of the Act by enhancing the ability of funds to meet their redemption obligations, reducing the risk of shareholder dilution, and reducing the potential for antifraud violations.
Portfolio managers consider a variety of factors in addition to liquidity when constructing a fund's portfolio, including but not limited to the fund's investment strategies, economic and market trends, portfolio asset credit quality, and tax considerations. Nevertheless, meeting redemption obligations is fundamental for open-end funds, and funds must manage liquidity in order to meet these obligations.
First, it is important to consider how a fund meets redemptions. When a fund receives redemption requests from shareholders, and the fund does not have cash on hand to meet those redemptions,
Second, the effect of redemptions on shareholders is determined by how and when those redemptions affect the price of the fund's shares. Under rule 22c-1, all investors who redeem from an open-end fund on any particular day must receive the NAV next calculated by the fund after receipt of such redemption request.
Nevertheless, we recognize that trading activity and other changes in portfolio holdings associated with meeting redemptions may occur over multiple business days following the redemption request. If these activities occur (and their associated costs are reflected in NAV) in days following redemption requests, the costs of providing liquidity to redeeming investors could be borne by the remaining investors in the fund, thus potentially diluting the interests of non-redeeming shareholders.
There can be significant adverse consequences to remaining investors in a fund that does not adequately manage liquidity.
These factors in fund redemptions—either individually or in combination—can create incentives in times of liquidity stress in the markets for shareholders to redeem quickly to avoid further losses (or a “first-mover advantage”).
There also is a potential for adverse effects on the markets when open-end funds fail to adequately manage
Recent industry developments have underlined our focus on the importance of sufficient liquidity and liquidity risk management practices in open-end funds.
We have observed significant growth in cash flows into, and assets of, fixed income mutual funds and fixed income ETFs (excluding ETMFs).
We also have observed significant growth in alternative mutual funds over the last decade.
Unlike alternative mutual funds and ETFs, private funds (such as hedge funds and private equity funds) and closed-end funds pursuing similar alternative strategies can invest in portfolio assets that are relatively illiquid without generating the same degree of redemption risk for the fund because investor redemption rights are often limited.
In contrast, alternative strategy mutual funds and ETFs have no such ability to tailor investor redemption rights based on the liquidity profile of the funds' portfolios. Yet some of these funds seek to pursue similar investment strategies as hedge funds and other private funds, while still being bound
Practices relating to securities trade settlement periods and the timing of the payment of redemption proceeds to investors also have evolved considerably over the decades since the Commission last addressed liquidity needs in open-end funds.
Overall, the evolution of the market towards shorter settlement periods—and corresponding fund disclosures—combined with open-end funds holding certain securities with longer settlement periods have raised concerns for us about whether fund portfolios are sufficiently liquid to support a fund's ability to meet its redemption and other legal obligations.
Over the last several years, Commission staff has observed through a variety of different events the current liquidity risk management practices at a cross-section of fund complexes with varied investment strategies. The staff has observed that liquidity risk management techniques may vary across funds, including funds within the same fund complex, in light of unique fund characteristics, including, for example, the nature of a fund's investment objectives or strategies, the composition of the fund's investor base, and historical fund flows. These observations collectively have shown the staff that, even with various unique characteristics, many open-end funds and fund complexes have implemented procedures for assessing and managing the liquidity of their portfolio assets.
Specifically, some of the funds observed by the staff assess their ability to sell particular assets within various time periods (typically focusing on one-, three-, and/or seven-day periods).
Funds observed by the staff that have implemented procedures for assessing the liquidity of their portfolio assets also often have developed controls to manage fund portfolio liquidity risk and the risk of changing levels of shareholder redemptions, such as holding certain amounts of the fund's portfolio in highly liquid investments, setting minimum cash reserves, and establishing committed back-up lines of credit or interfund lending facilities.
Conversely, the Commission is concerned that some funds employ liquidity risk management practices that are substantially less rigorous. Some funds observed by the staff do not take different market conditions into account when evaluating portfolio asset liquidity, and do not conduct any ongoing liquidity monitoring. Some funds do not incorporate any independent oversight of fund liquidity risk management outside of the portfolio management process.
Finally, the Commission learned through staff outreach that many funds treat their risk management process for assessing the liquidity profile of portfolio assets, and the incorporation of market and trading information, as entirely separate from their assessment of assets under the 15% guideline. The former process is typically conducted on an ongoing basis through the fund's risk management function, through the fund's portfolio management function, or through the fund's trading function (or a combination of the foregoing), while assessment of assets under the 15% guideline is more typically conducted upon purchase of an asset through the fund's compliance or “back-office” functions, with little indication that information generated from the risk management or trading functions informs the compliance determinations. This functional divide may be a by-product of the limitations of the 15% guideline as a stand-alone method for comprehensive liquidity risk management, a situation that our final liquidity risk management program framework is meant to address.
Overall, our staff outreach has increased our understanding of some of the valuable liquidity risk management practices employed by some firms as a matter of prudent risk management. This outreach also has shown us the great diversity in liquidity risk management practices that raises concerns regarding various funds' ability to meet their redemption and other legal obligations and minimize the effects of dilution under certain conditions. Collectively, these observations have informed our understanding of the need for an enhanced minimum baseline requirement for fund management of liquidity risk.
Against this background, today we are adopting a set of reforms designed to promote effective liquidity risk management throughout the open-end fund industry and thereby reduce the risk that funds will not be able to meet redemption or other legal obligations and mitigate potential dilution of the interests of fund shareholders. We believe that limitations on illiquid holdings and more effective liquidity risk management among funds would, in turn, result in significant investor protection benefits and enhance the fair and orderly operation of the markets.
First, we are adopting new rule 22e-4, which requires each registered open-end fund, including open-end ETFs but not including money market funds, to adopt and implement a written liquidity risk management program reasonably designed to assess and manage the fund's liquidity risk.
The liquidity risk assessment requirement generally provides a broad, principles-based foundational framework for a fund's liquidity risk management program, including a requirement that the fund assess whether its investment strategy is appropriate for an open-end fund. The final rule also provides for a tailored program for ETFs, requiring them to consider additional factors as part of their liquidity risk assessment and management that reflect potential liquidity-related concerns that could arise from the structure and operation of ETFs, and excepting ETFs that redeem in kind (“In-Kind ETFs”) from the classification and highly liquid investment minimum requirements.
Rule 22e-4 includes board oversight provisions related to the liquidity risk management program. Specifically, a fund's board will approve, but not design, the fund's liquidity risk management program, as well as the fund's designation of the fund's investment adviser or officers as responsible for administering the day-to-day aspects of the fund's liquidity risk management program.
Rule 22e-4, by requiring funds to limit illiquidity and manage liquidity, should reduce the potential likelihood and extent of dilution of non-transacting shareholders that otherwise could result from redemptions effected at prices determined in accordance with rules 22c-1 and 2a-4. Thus, rule 22e-4, although it is numbered with reference to section 22(e), has a broader scope and also should separately help rule 22c-1 operate so as to reduce dilution, as contemplated by sections 22(a) and (c).
Second, we are adopting certain public disclosure- and confidential reporting-related rules and amendments to provide shareholders and other users with additional information with respect to funds' liquidity risk profile as well as assist the Commission in its monitoring efforts. Specifically, we are adopting reporting requirements on Form N-PORT that will require a fund to report monthly position-level liquidity classification information and its highly liquid investment minimum to the Commission on a confidential basis.
We are adopting new rule 30b1-10 and Form N-LIQUID to require a fund to confidentially notify the Commission when the fund's illiquid investment holdings exceed 15% of its net assets or if its amount of highly liquid investments declines below its highly liquid investment minimum for more than a brief period of time. We also are adopting amendments to Form N-1A to require a fund to publicly disclose certain information regarding the fund's redemption procedures. Finally, we are adopting requirements for funds to provide information on Form N-CEN about funds' use of lines of credit and interfund lending.
We anticipate that these new requirements will facilitate the Commission's risk and compliance monitoring efforts by providing greater transparency regarding the liquidity characteristics of fund portfolio holdings, as well as its ability to monitor and assess compliance with rule 22e-4. While Form N-PORT and Form N-CEN are primarily designed to assist the Commission, we believe that the requirements to publicly disclose certain information will also help investors and other potential users utilize information on particular funds' liquidity-related risks and redemption policies, which in turn may assist investors in making more informed investment choices.
Today the Commission is adopting rule 22e-4 under the Investment Company Act. This rule will require each registered open-end management investment company, including open-end ETFs but not including money market funds, to establish a written liquidity risk management program. Rule 22e-4 will not apply to closed-end funds, and will apply to UITs only to a limited degree, as discussed further below.
Rule 22e-4 generally will require each registered open-end management investment company to establish a written liquidity risk management program. The majority of commenters generally supported the proposed requirement for each fund to adopt a formal, written liquidity risk management program,
A fund may, as it determines appropriate, expand its liquidity risk management procedures and related disclosure concerning liquidity risk beyond the required program elements.
The liquidity risk management program requirements of rule 22e-4, as well as related disclosure and reporting requirements, will apply to all registered open-end funds, except money market funds.
We are not excluding funds with any particular strategies from the scope of rule 22e-4.
Some commenters expressed concern about the costs of some of the proposed requirements relative to the liquidity risks typically associated with certain investment strategies,
As noted above, rule 22e-4 will apply to open-end ETFs, although we are adopting certain tailored program requirements for ETFs.
Also, as proposed, we are not excluding any fund from the scope of rule 22e-4 on the basis of size or adopting different liquidity requirements for relatively small funds. As discussed in the Economic Analysis section below, smaller funds tend to demonstrate relatively high flow volatility, and thus we believe they should be subject to the same liquidity risk management requirements as other funds.
As proposed, rule 22e-4 would have excluded closed-end investment companies from the scope of rule 22e-4. As discussed in detail in the Proposing Release, closed-end funds' liquidity needs are different from those of open-end funds, because closed-end funds generally do not issue redeemable securities and are not subject to sections 22(c) and 22(e) of the Investment Company Act.
As proposed, the scope of rule 22e-4 did not include UITs.
While one commenter supported excluding UITs from the scope of rule 22e-4,
Finally, as proposed, money market funds are excluded from the scope of rule 22e-4. Money market funds are currently subject to extensive requirements concerning the liquidity of their portfolio assets that are more stringent in many respects than the requirements of rule 22e-4, due to the historical redemption patterns of money market fund investors and the characteristics of the assets held by money market funds.
Section 22(e) of the Investment Company Act requires a registered investment company
Today we are adopting a new liquidity risk assessment and management framework for funds. Specifically, rule 22e-4 requires a fund to assess, manage, and periodically review its liquidity risk, considering certain factors as applicable. As discussed in more detail below, the requirements we are adopting incorporate a definition of “liquidity risk” that focuses on whether a fund can meet redemption requests without significant dilution of remaining investors' interests rather than, as proposed, whether the fund can meet redemption requests without materially
We proposed liquidity risk assessment and management program requirements with the primary goals of reducing the risk that funds would be unable to meet redemption and other legal obligations, minimizing dilution, and elevating the overall quality of liquidity risk management across the fund industry while at the same time providing funds with reasonable flexibility to adopt policies and procedures that would be most appropriate to assess and manage their liquidity risk.
Rule 22e-4, as adopted today, defines “liquidity risk” as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests in the fund.
Multiple commenters objected to the proposed inclusion of any NAV-impact standard in the definition of “liquidity risk.” One commenter argued that including the concept of “without materially affecting the fund's net asset value” in the definition of liquidity risk would inappropriately merge liquidity and valuation, which are subject to different regulatory and compliance controls.
While we agree that liquidity and valuation are distinct concepts, we consider these concepts as having certain inter-relationships. First, liquidity risk in an open-end fund inherently involves an assessment of the liquidity of the fund's investments. Common definitions of investment liquidity include consideration of the value impact or costs from trading that investment.
In addition, we note that many funds disclose liquidity risk as a principal investment risk in their prospectuses, and these disclosures often reference possible adverse value impacts from selling fund investments under certain conditions.
We note as well that U.S. banking regulators have defined “liquidity” as “a financial institution's capacity to meet its cash and collateral obligations at a reasonable cost.” Interagency Policy Statement on Funding and Liquidity Risk Management, 75 FR 13656 (Mar. 22, 2010),
We believe a definition of “liquidity risk” that includes a reference to the value impact from trading portfolio investments should not imply that mutual fund shareholders are guaranteed a protected NAV or that the fund cannot sell investments at a loss due to market risk, credit deterioration, or liquidity risk. Indeed, funds' narrative risk disclosure in their registration statements and other shareholder communications generally should make clear those risks that could adversely affect the fund's NAV, yield, and total return, including liquidity-related risks.
Nonetheless, we agree with commenters that using the proposed specific standard of “materially affecting the fund's NAV” may pose certain challenges. We recognize that it may be difficult to calculate the particular market impact that a fund's transactions in an investment will have on that investment's price, which some commenters suggested was inherent to the proposed standard. There could be other reasons for a fund's NAV fluctuating, separate from the fund's sales of portfolio investments to meet redemption requests as well.
Accordingly, in the final rule we have modified the NAV-impact standard in the definition of “liquidity risk” to substitute the phrase “without significant dilution of remaining investors' interests in the fund” for the phrase “without materially affecting the fund's net asset value.” This revised standard more directly corresponds to the concerns of the Act
We also note that commenter interpretations of the term “materially” varied, with some commenters adopting very narrow interpretations
Under rule 22e-4, a fund would be required to adopt a liquidity risk management program that is “reasonably designed to assess and manage the fund's liquidity risk.” A fund's liquidity risk management program should be appropriately tailored to reflect that fund's particular liquidity risks. Therefore, while a fund is required to consider certain liquidity risk factors specified in rule 22e-4 as applicable, a fund may also, as it determines appropriate, expand its liquidity risk management program beyond the required program elements, and must do so to the extent it would be necessary to effectively assess and manage its liquidity risk.
As proposed, the definition of “liquidity risk” would have required funds to consider redemption requests that are expected under normal conditions, as well as those that are reasonably foreseeable under stressed conditions. Some commenters stated that the concept of redemption requests that are reasonably foreseeable under stressed conditions was vague and could subject funds to ex-post second guessing.
The final definition of liquidity risk eliminates references to redemption requests that are expected under normal conditions or reasonably foreseeable under stressed conditions. The final definition simply refers to “requests to redeem.” We believe our modifications to the liquidity risk factors used to assess a fund's liquidity risk, including the clarification that a fund must consider certain liquidity risk factors both during normal and reasonably foreseeable stressed conditions, makes any reference to market conditions within the definition of liquidity risk unnecessary, confusing and duplicative. We believe the revised definition also addresses commenters' concerns that the proposed definition was unclear. We have provided guidance below regarding each liquidity risk factor and the need to consider normal and reasonably foreseeable stressed market conditions.
Rule 22e-4 will require each fund to assess, manage, and periodically review (with such review occurring no less frequently than annually) its liquidity risk, considering the following factors as applicable:
• Investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions (including whether the investment strategy is appropriate for an open-end fund, the extent to which the strategy involves a relatively concentrated portfolio or large positions in particular issuers, and the use of borrowings for investment purposes and derivatives);
• Short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions; and
• Holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources.
A fund may incorporate other considerations, in addition to these factors, in evaluating its liquidity risk.
Like the rule we are adopting today, rule 22e-4 as proposed would have required each fund to assess its liquidity risk, taking certain specified factors into account.
We continue to believe that the factors are central to evaluating and managing a fund's liquidity risk and that requiring each fund to consider, as a baseline, a standard set of factors for assessing and managing liquidity risk would promote effective and thorough liquidity risk management across the fund industry. However, we recognize that some of the proposed factors may not be applicable in assessing and managing the liquidity risk of certain funds or types of funds.
As noted above, this list of liquidity risk factors is not meant to be exhaustive. In assessing, managing, and periodically reviewing its liquidity risk, a fund may take into account considerations in addition to the factors set forth in rule 22e-4 and must do so to the extent necessary to adequately assess and manage the fund's liquidity risk.
Below we provide guidance on specific issues associated with each of the liquidity risk factors and also discuss the Commission's decision to adopt each of these factors (some with modifications).
We are adopting the proposed requirement for a fund to consider its investment strategy and portfolio liquidity in assessing, managing, and periodically reviewing its liquidity risk, but with certain modifications in response to commenters.
We continue to believe that various aspects of a fund's investment strategy—including whether the fund is actively or passively managed
We are adopting several modifications to the proposed requirement to consider a fund's investment strategy and portfolio liquidity in assessing, managing, and periodically reviewing its liquidity risk. First, we clarify in final rule 22e-4 that consideration of investment strategy must take into account whether the fund's strategy is appropriate for an open-end fund. This clarification reflects several commenters' suggestions that a fund's liquidity risk management program could (or should) involve a consideration of whether the fund's investment strategy and permissible holdings are suitable for the open-end structure.
We agree with this suggestion raised by commenters. As discussed above, all open-end funds are subject to section 22(e) of the Investment Company Act, which requires a fund to pay redemption proceeds within seven days after receipt of a redemption request, and hold themselves out at all times as being able to meet redemptions (in many cases within an even shorter period of time).
We believe that specifically requiring an open-end fund to consider whether its investment strategy is appropriate for the open-end structure would supplement existing practices and provide an important additional layer of shareholder protection. For example, this requirement will likely cause funds to evaluate the suitability of investment strategies that will be permitted under the 15% illiquid investment requirement, but still could entail significant liquidity risk—such as strategies involving highly concentrated portfolios, or strategies involving investment in portfolio investments that are so sensitive to stressed conditions that funds may not be able to find purchasers for those investments during stressed periods.
Because a fund will be required to consider the liquidity risk factors (as applicable) in periodically reviewing its liquidity risk, the final rule requires a fund's periodic liquidity risk review to include a consideration of whether the fund's investment strategy is appropriate for an open-end fund.
We also are adopting a modification to the proposed liquidity risk factors to clarify that consideration of a fund's investment strategy must include an evaluation of whether the strategy involves a relatively concentrated portfolio or large positions in particular issuers. Some commenters suggested that funds with extraordinarily concentrated portfolios may have particular liquidity risks that could make redeemability from these funds especially challenging.
We believe that this component of a fund's investment strategy is a particularly significant factor in evaluating the extent to which investment strategy contributes to liquidity risk. As we noted in the Proposing Release, while a fund with a relatively more diversified portfolio that needs to sell portfolio investments to build liquidity may be able to select investments for sale based on whether the markets for those investments are favorable, a relatively less diversified fund may have fewer options (
However, as also discussed above, the extent to which a fund is required to be diversified, including a fund's status as a regulated investment company under Subchapter M of the Internal Revenue Code, could affect its liquidity risk in that the fund could be limited by its diversification obligations in its ability to sell certain portfolio securities.
We have incorporated the proposed requirement to consider a fund's use of borrowings for investment purposes and derivatives within the requirement to consider investment strategy in assessing, managing, and periodically reviewing a fund's liquidity risk.
We continue to believe that the potential effects of the use of borrowings for investment purposes and derivatives are relevant to assessing, managing, and periodically reviewing a fund's liquidity risk.
Segregated assets are considered to be unavailable for sale or disposition, including for redemptions, unless replaced by other appropriate non-segregated assets of equal value.
Finally, we also are modifying the proposed liquidity risk assessment requirement to clarify that certain liquidity risk factors must be considered during both normal and reasonably foreseeable stressed conditions. As proposed, rule 22e-4 did not specify whether a consideration of these factors should consider normal conditions, stressed conditions, or both. One commenter stated that the proposed rule's treatment of stressed conditions was unclear,
We note that “stressed” conditions will likely entail different scenarios for different types of funds. For example, differing levels of changes in interest rates and/or interest rates' implied volatility could affect two bond funds very differently, depending on factors such as the maturity, coupon rates and other characteristics of the funds' portfolio holdings. Assessment of stressed conditions also should take into account stresses originating outside of market stress. For example, certain funds could be significantly affected by geopolitical stresses, such as an emerging markets debt fund whose holdings' liquidity is affected by factors such as economic uncertainty in the holdings' countries of issuance. The extent to which stressed conditions are reasonably foreseeable will vary depending on the fund's facts and circumstances.
We are adopting the requirement for a fund to consider its short-term and long-term cash flow projections, during both normal and reasonably foreseeable stressed conditions, in assessing and managing its liquidity risk.
We continue to believe, as discussed in the Proposing Release, that understanding a fund's cash flows is important in determining whether the fund will have sufficient cash to satisfy redemption requests.
We also are revising the rule to require a fund to consider its short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions.
As discussed above, rule 22e-4 as adopted today requires a fund to consider its short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions in assessing, managing, and periodically reviewing liquidity risk. This liquidity risk factor simplifies the rule as proposed, which would have codified five separate considerations that would comprise a fund's consideration of its cash flow projections—namely, (i) the size, frequency, and volatility of historical purchases and redemptions of fund shares during normal and reasonably foreseeable stressed periods, (ii) the fund's redemption policies, (iii) the fund's shareholder ownership concentration, (iv) the fund's distribution channels, and (v) the degree of certainty associated with the fund's short-term and long-term cash flow projections. Instead of enumerating these five considerations in the text of rule 22e-4, we are discussing each of them as guidance in this Release (together, the “cash flow guidance considerations”).
We are not codifying the cash flow guidance considerations to simplify the rule 22e-4 liquidity risk factors and to alleviate certain commenter concerns about the complexity of the proposed factors. Commenters argued that the requirement to consider a specified list of multiple liquidity risk factors is overly complex—making compliance more difficult for funds, and oversight more difficult for the Commission.
With respect to the size, frequency, and volatility of historical purchases and redemptions of fund shares, we continue to believe, as discussed in the Proposing Release, that funds whose historical net flows are relatively less volatile in terms of size and frequency will likely entail less liquidity risk than similar funds with more volatile net flows.
We also continue to believe that a fund generally should consider its normal redemption policies and practices in evaluating the extent to which its cash flow projections may contribute to its liquidity risk. Specifically, as discussed in the Proposing Release, a fund should generally consider its disclosed or advertised time period for paying (or endeavoring to pay) redemption proceeds and whether this time period varies based on the payment method the fund employs.
A fund's shareholder ownership concentration also could affect its cash flow projections, as a fund that has a concentrated set of beneficial owners could experience considerable cash outflows from redemptions by a single or small number of shareholders, or by the decisions of an intermediary that has discretionary power over a significant number of shareholder accounts.
We also continue to believe that a fund should consider how its distribution channels could affect its cash flows, including the predictability of its cash flows. For example, a fund may wish to consider the extent to which its redemption practices could depend on its distribution channels,
Finally, we continue to believe that a fund should consider the degree of certainty surrounding its short-term and long-term cash flow projections. A fund could consider the length of its operating history (including the fund's experience during points of market instability, illiquidity, or volatility) and any purchase and redemption patterns. A fund may use ranges in considering cash flow projections and their relationship to liquidity risk. If a fund has implemented policies to encourage certain shareholders (
We are adopting the requirement for a fund to consider its holdings of cash and cash equivalents, as well as its borrowing arrangements and other funding sources, in assessing, managing, and periodically reviewing its liquidity risk, as proposed.
Several commenters discussed the extent to which a fund's borrowing arrangements and other funding sources could shape the fund's liquidity risk. Some commenters strongly supported the use of borrowing arrangements to help mitigate liquidity risk, asserting that funds historically have generally succeeded in managing liquidity risk, partly due to lines of credit and interfund lending.
We continue to believe that entering into borrowing or other funding arrangements could assist a fund in meeting redemption requests in certain cases (for example, by bridging any timing mismatches between when a fund is required to pay redeeming shareholders and when any asset sales that the fund has executed in order to pay redemptions will settle).
In evaluating the extent to which a fund's borrowing arrangements could help the fund manage its liquidity risk, a fund may wish to consider any aspects of those arrangements that could limit the fund's ability to borrow. For instance, a fund generally may wish to consider the terms of the credit facility (
Funds may only engage in interfund lending when it is in the best interests of both the lending and the borrowing fund. The exemptive relief anticipates a fund family's interfund lending arrangements include an assessment of: (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 obligation to repay the loan along with its other liquidity needs.
Rule 22e-4 as adopted includes the requirement for a fund to periodically review the fund's liquidity risk, taking into account the same liquidity risk factors a fund would have to consider in initially assessing and managing its liquidity risk.
We are adopting a periodic review requirement substantially as proposed. As discussed above, we have revised the liquidity risk factors that a fund must consider in assessing, managing, and periodically reviewing its liquidity risk. A fund will not have to consider any factor that is not applicable to a particular fund.
After evaluating commenters' concerns about the liquidity risk assessment factors, we continue to believe that these factors, modified as discussed above, are central to reviewing a fund's liquidity risk. We also continue to believe that requiring each fund to consider a baseline set of factors, as applicable, in reviewing liquidity risk would promote effective liquidity risk management across the fund industry. As discussed above,
We considered a commenter's suggestion that the Commission adopt a minimum frequency for funds' liquidity risk review, and we have modified the proposed rule to clarify that a fund's periodic review of its liquidity risk must occur no less frequently than annually.
Today we are adopting requirements for each fund, with the exception of In-Kind ETFs, to classify the liquidity of its portfolio investments. Rule 22e-4 as adopted today requires a fund to classify the liquidity of each portfolio investment based on the number of days within which it determined that it reasonably expects an investment would be convertible to cash (or, in the case of the less-liquid and illiquid categories, sold or disposed of) without the conversion (or, in the case of the less-
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This determination must be based on information obtained after reasonable inquiry; the term “convertible to cash” in the category definitions refers to the ability to be sold, with the sale settled. The final rule requires a fund to take into account relevant “market, trading, and investment-specific considerations” in classifying its portfolio investments' liquidity, but the rule does not detail a list of factors comprising these considerations.
Rule 22e-4 as proposed would have required each fund to classify the liquidity of its portfolio positions (or portions of a position in a particular asset) and review the liquidity classification of each position on an ongoing basis.
Although some commenters acknowledged potential benefits to the proposed classification requirement, most commenters were generally opposed to the proposed six-category liquidity classification framework. As discussed further below, commenters' primary objections were concerns that the proposed classification framework would: (i) Not reflect current liquidity risk management practices or industry “best practices”; (ii) require funds to make overly subjective projections about asset liquidity, particularly to the extent that they would have to project a fund's ability to sell and settle a position well into the future; (iii) place undue reliance on third-party data vendors and analysts; (iv) incorporate a materiality standard that is unclear and impractical to apply; and (v) inappropriately require funds to take position size and settlement timing into account when classifying the liquidity of a portfolio position.
Commenters suggested many alternatives to the proposed classification requirement—both changes to the structure of the proposed classification requirement, as well as suggestions about more granular aspects of the proposed requirement. Although the details vary, commenters raised three primary structural alternatives to the proposed classification requirement: (i) A “principles-based” liquidity classification approach, where each fund would have to classify the liquidity of its portfolio assets, but the Commission would not require any
Our adopted liquidity classification requirement most closely resembles the second alternative described above and is designed to respond to commenters' concerns while also continuing to advance the Commission's goals. As discussed in the Proposing Release, we understand that funds today employ different practices for assessing the liquidity of their portfolios.
While we agree that the suggested “principles-based” alternative approach would have benefits in terms of flexibility and funds' ability to leverage their existing procedures for assessing portfolio liquidity,
We likewise believe the third alternative classification system, based on liquidity characteristics of different asset classes—as opposed to a days-to-cash framework—may not provide clear distinctions between each liquidity category without the Commission assigning specific asset classes to each classification category. Given the size of the fund industry and the wide variety and types of asset classes held by funds, we believe that it would be impractical for the Commission or its staff to attempt to prescriptively categorize every asset class by liquidity. Further, the classification requirement is designed to provide information regarding the liquidity of portfolio investments under
Relatedly, some commenters suggested an alternative classification system could be based on notions of liquidity other than “days-to-cash,” including, in whole or in part, on the fraction of average daily trading volume that each position size corresponds to, the expected behavior of bid-ask spreads in a given asset, or more qualitative liquidity buckets (
Similar to the proposed classification requirement, the final classification requirement is generally based on a framework that would require a fund to determine the number of days in which each portfolio investment is convertible to cash. However, the final classification framework reduces the number of classification categories from six (as proposed) to four. In addition, a fund may classify portfolio investments based on asset class under the final classification requirement, so long as the fund or its adviser does not have information about any market, trading, or investment-specific considerations that are reasonably expected to significantly affect the liquidity characteristics of an investment and that would require a different classification for that investment. When we proposed the rule 22e-4 classification requirement, we noted that the framework was meant to promote a more nuanced approach than a classification requirement under which a fund would simply designate assets as liquid or illiquid.
Multiple commenters expressed concerns about the proposed six-category classification framework. Many argued that the proposed classification method would require funds to make overly subjective projections about asset liquidity because predicting the time to liquidate a position for cash at a given price—particularly well into the future—is limited by required assumptions and market data availability, even for sophisticated asset managers.
After considering these comments, we agree that the level of precision implied by the proposed six-category classification system could have unintended negative consequences. We also agree that the six liquidity classification categories that we proposed could lead to varying liquidity assessments and could give rise to an appearance of a level of precision about liquidity determinations that may not be achievable for some funds or asset classes. However, we continue to believe that a classification approach that involves funds evaluating investments' liquidity across a liquidity spectrum (as opposed to making a binary determination of whether an investment is liquid or illiquid) provides a basis for more meaningful reporting and disclosure about funds' portfolio liquidity. Our opinion corresponds with many commenters' views that there are significant benefits associated with evaluating portfolio assets' liquidity across a spectrum.
We believe that condensing the six proposed categories into four categories should decrease the variability in funds' liquidity assessments, since funds will not be required to make liquidity distinctions that are as detailed as would have been required under the proposal. The adopted categories also should reduce inconsistency in funds' liquidity assessments because the new categories do not include time periods in the least-liquid categories that are as granular or projected as far in the future as under the proposal. Furthermore, we believe that the adopted categories could decrease variability in some funds' liquidity assessments because we understand that the four adopted categories may correspond more closely than the proposed categories with classification methods and categories that some funds currently use in evaluating their portfolio liquidity.
We recognize that, although we are providing a uniform classification framework, different funds may still classify the liquidity of similar investments differently, based on the facts and circumstances informing their analyses. This simply reflects the fact that different funds likely have different views on liquidity based on considerations such as their assessment of various market, trading, and investment-specific factors, and the size of their position in a particular investment. We acknowledge that liquidity can be difficult to estimate and that there is no agreed-upon measure of liquidity for all asset classes.
Rule 22e-4 as adopted today requires a fund to take into account “relevant market, trading, and investment-specific considerations” in classifying and reviewing its portfolio investments' liquidity.
After considering commenters' suggestions and concerns, we are not including the classification factors in the rule as proposed because we are concerned that including this list in rule 22e-4 could lead funds to focus too heavily on evaluating certain factors that may not be particularly relevant to the liquidity of a specific fund's portfolio investments, the evaluation of which may not help produce meaningful outcomes in terms of effective classification. This could operate to the detriment of efficient and appropriate liquidity assessments that focus on the liquidity characteristics most directly affecting a particular asset class or investment.
We are instead adopting a principles-based requirement that a fund take into account relevant market, trading, and investment-specific considerations in classifying its portfolio investments. We understand based on staff outreach that it is common for some funds, in assessing the liquidity of their portfolio investments, to look only at basic structural characteristics of an investment (such as asset class or restrictions on transfer) and not to supplement this analysis with market information or other potentially relevant factors.
We understand that some third-party service providers currently provide data and analyses assessing the relative liquidity of a fund's portfolio investments, and that many of these service providers assess certain market, trading, and investment-specific considerations in doing so. We believe that a fund could appropriately use this type of data to inform or supplement its own consideration of the liquidity of an asset class or investment. However, a fund would not be required to do so.
As discussed further below, in a modification to the proposed standard, each of the liquidity categories included in the classification requirement we are adopting requires a fund to determine the time period in which an investment would be reasonably expected to be converted to cash (or in some cases, sold or disposed of) in current market conditions without the conversion to cash (or in some cases, sale or disposition) significantly changing the market value of the investment.
Many commenters opposed the value impact standard incorporated in the proposed liquidity classification requirement—that the asset was convertible to cash “at a price that does not materially affect the value of that asset immediately prior to sale.”
As we noted when discussing the definition of “liquidity risk,” we continue to believe that incorporating a value impact analysis into liquidity considerations is appropriate because it indicates that liquidity risk for a fund captures not just the risk of being unable to meet redemption requests, but also the risk that a fund could only meet redemption requests in a manner that significantly dilutes the funds' non-redeeming shareholders. Separately, as we noted above, the inclusion of some consideration of value impact is common in regulators' characterization of portfolio liquidity and fund liquidity risk.
Nevertheless, we have determined that certain modifications to the proposed value impact standard are warranted to address certain concerns raised by commenters. First, we recognize that in complying with the value impact standard, funds will be making assessments about the trading behavior of certain asset classes (and individual investments, for investments that need to be treated on an exception basis in the final classification framework we are adopting today). Accordingly, funds should be able to rely on their reasonable expectations at the time they make these assessments, and we do not expect them to estimate to a precise degree the market impact of trading that investment or the value of that investment as the trades occur.
We also changed the standard to capture only value impacts that
Finally, we note that the final value impact standard does not require the fund to incorporate general market movements in liquidity determinations. We recognize that there can be many reasons for the market value of a particular investment to fluctuate, separate from the fund's transactions in those investments. We do not intend for the value impact standard to capture movements in an investment's value due to market events. For this reason, we are not adopting a value impact standard based on the fund's most recent valuation of that investment as suggested by some commenters.
We recognize that the value impact standard incorporated in the “illiquid investment” definition is slightly different from the standard used in the definition of “illiquid asset” under the Commission's current guidelines, as the latter is based on whether a fund could sell an asset at “approximately the value at which the fund has valued the investment.”
With respect to commenters' concerns that the inclusion of a value impact standard in the rule 22e-4 classification categories could give fund shareholders the false impression that the fund guarantees a protected NAV, we do not believe that the final rule's classification categories imply a protected NAV. As noted in our discussion of the rule 22e-4 definition of “liquidity risk,” we believe that funds' narrative risk disclosure in their registration statements and other shareholder communications generally should make clear those risks that could adversely affect the fund's NAV, yield, and total return, including liquidity-related risks. All open-end funds are required to disclose that loss of money is a risk of investing in the fund.
The definition of each liquidity category in the classification requirement we are adopting today specifically requires a fund to consider the time period in which an investment can be converted to cash (or, in some cases, sold or disposed of) in current market conditions.
Multiple commenters requested guidance and provided suggestions regarding the market conditions a fund should consider in classifying its portfolio assets' liquidity. Some commenters requested clarity on whether a fund would be required to classify the liquidity of its portfolio assets based on an assessment of normal market conditions or stressed market conditions.
In addition to the commenters who requested clarification or made suggestions about the market conditions referenced in the proposed liquidity classification framework, multiple commenters suggested alternative classification schemes that would more explicitly define liquidity categories based on distinctions in how a particular asset would trade under normal versus stressed market
After considering commenters' suggestions and concerns, we are adopting liquidity classification categories that reflect current market conditions. We appreciate commenters' concerns that liquidity classifications based on current market conditions capture only a moment-in-time picture of a fund's portfolio liquidity, which may not accurately reflect liquidity in changing market conditions. We also appreciate commenters' concerns that investments that are relatively liquid under normal conditions may exhibit significantly reduced liquidity during times of stress.
We believe that it would be informative to Commission staff to understand how the same set of market conditions could disparately affect different funds' assessments of their liquidity and that of different asset classes. Also, we note that, to the extent that the markets in which funds' portfolio investments trade are currently stressed, consideration of current market conditions would de facto reflect consideration of stressed market conditions. Therefore, the requirement to consider current market conditions, along with the requirement for funds to review the liquidity of their portfolio investments at least monthly
Finally, we note that while we are not incorporating a requirement to evaluate potential future stressed market conditions in the portfolio investment liquidity
The classification requirement we are adopting today requires a fund to identify its “highly liquid investments,” that is, cash held by a fund and investments that the fund reasonably expects to be convertible to cash in current market conditions in three business days or less without the conversion to cash significantly changing the market value of the investment. This category condenses the first two liquidity classification categories in the proposed classification requirement (assets convertible to cash within one business day, as well as two-to-three business days) to simplify the proposed classification framework. Multiple commenters who suggested simplified alternatives to the proposed approach suggested including a classification category based on portfolio assets' convertibility to cash within three days.
We continue to believe, as discussed in the Proposing Release, that it is important for funds to determine what percentage of their portfolio is convertible to cash—that is, available to meet redemptions—within the relatively short term. We understand that most funds typically pay redemption proceeds within a fairly short period (typically, one to three days) after receiving a shareholder's redemption request, even though a fund may disclose that it reserves the right to delay payment for up to seven calendar days, as permitted by section 22(e) of the Act.
We also understand that funds often consider which portfolio investments can be sold and settled on a T + 1 to T + 3 basis when determining their very liquid investments.
In addition, we emphasize that the highly liquid investment category (and the related highly liquid investment minimum) should not be interpreted as the Commission suggesting that a fund should, as a matter of routine practice, meet redemptions first by selling its highly liquid investments. Rather, we believe part of a thorough understanding of a fund's liquidity profile includes an understanding of the nature and level of the fund's highly liquid holdings.
We note that, as with the proposal, the highly liquid investment category measures the time period in which an investment could be converted to cash in business days, as opposed to the other liquidity categories, which use calendar days. Some commenters suggested that, instead of the references to both business days and calendar days, the categories that the Commission adopts should only reference business days.
After considering these comments, we are continuing to reference business days in the highly liquid investment definition we are adopting, while referencing calendar days in the other liquidity classification categories. We appreciate commenters' concerns that classification categories that reference both business days and calendar days could add some complexity in the assumptions and models that funds may use in classifying the liquidity of their portfolio investments. However, as discussed below, we believe it is important to tie the time frames referenced in the moderately liquid, less liquid, and illiquid classification categories to the seven-calendar-day period in which funds are required to pay redeeming shareholders under section 22(e) of the Investment Company Act.
A fund also will be required to identify its “moderately liquid investments,” that is, those investments the fund reasonably expects to be convertible into cash in current market conditions in more than three calendar days, but in seven calendar days or less, without the conversion to cash significantly changing the market value of the investment. These investments are those that are not immediately or very quickly convertible to cash, but that nevertheless may be converted to cash in a time frame that would permit funds to pay redeeming shareholders within the seven-day period established by section 22(e) of the Investment Company Act. We expect that this classification category will be an important component of the Form N-PORT reporting obligations because it will provide the Commission with information regarding the portion of a fund's portfolio that is not on the most liquid end of the spectrum, but still is sufficiently liquid to meet redemption requests within the statutory seven-day period without causing significant dilution. We also anticipate that the public will have an interest in gaining transparency into this information on an aggregate basis.
We understand that circumstances could arise in which the sale and settlement period for a particular portfolio position could be viewed as within three business days or four-to-seven calendar days. For example, if a sale were to occur on a Thursday and be settled on a Monday, the sale and settlement period could be viewed either as within three business days or four calendar days. This situation could cause ambiguity for reporting purposes. Thus, rule 22e-4, similar to the proposed rule, includes a note stating that a fund should classify the portfolio position based on the shorter period (
Additionally, a fund will be required to identify its “less liquid investments,” that is, those investments that the fund reasonably expects to be able to sell or dispose of in current market conditions in seven calendar days or less a without the sale or disposition significantly changing the market value of the investment, but where the sale or disposition is reasonably expected to settle in more than seven calendar days. Thus, the less liquid investments category focuses on investments whose sale cannot be settled quickly. For example, transactions in certain types of securities—such as certain foreign securities
The “less liquid investments” category, like the “moderately liquid investments” category and the “illiquid investments” category, directly reflects the statutorily required seven-day period for meeting redemption requests. The “less liquid investments” category is meant to identify for the Commission and its staff, as well as investors and other potential users, the portion of a fund's portfolio investments that may be available to meet redemption requests within seven days, but only to the extent that the fund addresses the lengthier settlement period associated with these investments. Because less liquid investments are those that may be sold, but not settled, within seven days, a fund generally could use less liquid investments to meet redemptions within seven days only if the fund obtained an additional source of financing (for example, a line of credit) to bridge the period until the sales would settle, or if the fund used its cash holdings to meet the redemptions while simultaneously selling the less liquid investment and then replenishing its cash holdings upon settlement.
Transparency regarding the portion of a fund's portfolio held in less liquid investments also could demonstrate those investments that could be liquidated in order to meet redemptions that would occur more than a week in the future, if a fund were to enter into a period of extended redemptions that it anticipates would last for multiple days. Because an open-end fund has an obligation to meet redemption requests within seven days, we believe it is important for funds to identify those investments that could pose certain challenges in being used to meet redemption requests within that time period, for purposes of the fund's own liquidity risk assessment and management,
A fund also will be required to identify those investments that it
Rule 22e-4 as proposed would have included a limit on funds' ability to acquire “15% standard assets,” or any asset that may not be sold or disposed of in the ordinary course of business within seven calendar days at approximately the value ascribed to it by the fund.
We understand, however, that funds have engaged in a variety of practices in determining the illiquidity of investments. It has been our staff's experience that some of these practices are less robust than others. We believe that the definition of illiquid investments we are adopting today will provide a clear standard for determining the illiquidity of investments and will better ensure that all funds are determining the illiquidity of investments more consistently. We recognize, however, that as a result of this new definition, some funds may take into account relevant market, trading, and investment-specific considerations, as well as market depth, for the first time and therefore, as discussed below, some funds may determine that a greater percentage of holdings are illiquid.
We note that some commenters suggested strengthening the current illiquid asset guidelines.
We have determined to incorporate an illiquid investment category into rule 22e-4's broader classification requirement for several reasons. Specifically, harmonizing funds' illiquid investment determinations with the general liquidity classification framework will create consistency in the value impact standards across liquidity categories.
Significantly, in harmonizing features of the illiquid investment category with other categories in the liquidity classification framework, we also are replacing existing Commission guidance on identifying illiquid assets with new regulatory requirements regarding the process for determining that certain investments are illiquid.
We agree with those commenters that suggested the Commission's current guidelines, together with many funds' interpretation of these guidelines today,
For these reasons, rule 22e-4 as adopted today, requires a fund to incorporate certain additional considerations in determining whether an investment is illiquid. We are withdrawing existing guidance and replacing it with new regulatory requirements and guidance regarding the process for determining whether a portfolio investment is illiquid.
The guidance the Commission provides below on matters funds might consider in assessing market, trading, and investment-specific considerations reflects factors that the Commission has previously said are reasonable examples of factors to evaluate in determining whether a rule 144A security is liquid and makes them more generally applicable to assessing liquidity of other investments.
As with other liquidity classification categories and as discussed in more detail in section III.C.3.a below, funds can determine illiquid investments on an asset-class basis, with exceptions for investments whose liquidity characteristics significantly differ from the class. For example, a fund could employ procedures whereby certain asset classes are initially considered liquid, and then further evaluated to decide whether relevant market, trading, and investment-specific considerations should result in a particular investment being treated as an exception and a change to the initial liquidity determination.
We also understand, based on staff outreach, that some fund complexes make determinations of whether a portfolio investment is liquid (or illiquid) under the current Commission guidelines based on whether a single trading lot for the investment can be sold within seven days under normal market circumstances. Certain funds interpret this to allow them to declare an entire holding to be liquid even if they could only sell a very small portion of it without a significant value impact. Staff has observed that these fund practices and interpretations of current
Given the practices described above when funds did not consider market depth in making liquidity determinations and considering the comments discussed above regarding the proposed illiquid asset limit, under the final rule, a fund will be required to consider market depth in determining whether to classify portfolio investments as illiquid investments. To the extent that the fund determines that trading varying portions of a position is reasonably expected to significantly affect the liquidity characteristics of that investment—that is, the market depth for the investment is reasonably expected to significantly affect its liquidity—the fund would need to take this into account in classifying the investment as illiquid.
Members of the fund industry have argued that because a fund will not likely need to sell its entire position in a particular investment under normal market circumstances, liquidity determinations should be based on the sale of a single trading lot for that investment, except in unusual circumstances.
As discussed above, one commenter suggested extending the definition of illiquid assets to encompass not only those assets that are not able to be sold within seven days at approximately the value ascribed by the fund, but also those assets where the sale cannot be settled within this same period, taking into account the same value impact standard.
However, we note that trades in certain investments may take an extended period of time to settle. Trades in some low quality loans, for example, may not settle for a number of months.
We believe that the new requirement to take into account market, trading, and investment-specific considerations, as well as to consider market depth, in identifying illiquid investments responds to the concern that the way illiquid investments are currently defined has only limited effects on funds' liquidity risk management and the liquidity of their portfolios.
Rule 22e-4, as adopted today, generally permits a fund to, as a starting point, classify the liquidity of its portfolio investments according to their asset class.
Rule 22e-4 as proposed would not have allowed a fund to, as a starting point, classify its portfolio investments according to asset class. The proposed rule instead would have required a fund to classify each of its positions in a portfolio asset (or portions of a position) according to the liquidity categories included in the rule.
Many commenters objected to the proposed position-level classification requirement, arguing that it does not reflect recognized liquidity risk management practices and does not reflect industry best practices.
Commenters stated that considering portfolio liquidity on the basis of asset class, at least as a starting point, has practical, operational, and conceptual benefits compared to considering the liquidity of each portfolio position individually.
Relatedly, multiple commenters suggested alternative liquidity classification schemes that would be based on an “asset-type mapping with exceptions” analysis.
We believe that this approach strikes an appropriate balance between lessening operational burdens associated with classification and recognizing that many investments within an asset class may be considered interchangeable from a liquidity perspective, on one hand, and providing reasonably precise liquidity classifications that appropriately reflect investments' liquidity characteristics, on the other hand. This approach also should leverage fund managers' current practices to a greater degree than under the proposal. A fund's asset-class-based classification procedures should incorporate sufficient detail to meaningfully distinguish between asset
A fund would be required to separately classify any investment within an asset class if the fund or its adviser were to have information about any market, trading, or investment specific considerations that are reasonably expected to significantly affect the liquidity characteristics of that investment as compared to the fund's other portfolio holdings within that asset class (its “exception processes”).
Under rule 22e-4 as adopted today, a fund would be required to determine whether trading varying portions of a position in a particular portfolio investment, in sizes that the fund would reasonably anticipate trading, is reasonably expected to significantly affect the liquidity characteristics of that investment.
These market depth-related requirements are meant to substitute for, and modify, the language of proposed rule 22e-4 that would have effectively required a fund to consider position size in classifying the liquidity of its portfolio investments. As discussed above, proposed rule 22e-4 would have had a fund consider, for each portfolio position, the amount of time it would take to convert the entire position, or portions thereof, to cash.
This aspect of the proposed requirement arose from our belief that a fund should consider its ability to trade larger portions of a portfolio asset than a single trading lot in assessing its portfolio investments' liquidity. The ability to quickly trade larger portions of a particular position is a reflection of market depth for a particular asset, which is a well-recognized aspect of assessing liquidity.
Multiple commenters expressed concern about the proposed requirement to consider full position size in classifying the liquidity of a fund's portfolio assets.
The market depth approach we are adopting takes commenters' concerns into account, although as discussed above we continue to believe that an investment strategy involving large positions in particular issuers—particularly if the fund's portfolio is relatively concentrated—is relevant to assessing liquidity risk.
We believe that if a fund reasonably anticipates trading sizeable portions of its portfolio positions, the fund's portfolio liquidity could be adversely affected by a lack of market depth for its portfolio investments. A fund could reasonably anticipate trading sizeable portions of its portfolio positions if it often trades relatively large portions of its portfolio positions. Likewise, a fund may not trade larger portions of its portfolio positions on a regular basis, but could reasonably anticipate, based on past flow patterns or current market conditions that it could encounter larger-than-typical redemptions that would necessitate larger portfolio trades. In both of these examples, such a fund could conclude that it may be difficult to find trading partners for a particular portfolio investment, or may be difficult to sell the investment within a particular time frame without this sale causing a significant value impact. For this reason, rule 22e-4 requires a fund to consider the sizes of a particular investment that the fund would reasonably anticipate trading and whether trading in such sizes could significantly affect the investment's liquidity. If so, the fund would be required to take this into account in classifying the liquidity of that portfolio investment.
Rule 22e-4 directs a fund to consider sizes that the fund would reasonably anticipate trading in assessing the impact of market depth on an investment's liquidity.
Rule 22e-4 requires that the liquidity classification and review requirements cover each of the fund's investments, including derivatives transactions, and that a fund take into account relevant market, trading, and investment-specific considerations in classifying the liquidity of its investments.
These requirements replace the proposed requirement for a fund to consider the “relationship of [an] asset to another portfolio asset” in classifying and reviewing the liquidity of its portfolio assets,
In the Proposing Release, we noted that when funds enter into certain transactions that implicate section 18 of the Investment Company Act, they generally will maintain, in a segregated account, certain liquid assets in order to “cover” the fund's obligation under the transactions.
Thus, we noted in the Proposing Release that, although assets used by a fund to cover derivatives and other transactions should be liquid when considered in isolation, when evaluating their liquidity for purposes of proposed rule 22e-4, the fund would have to consider that they are being used to cover other transactions and, consistent with our position in Release 10666, are “frozen” and “unavailable for sale or other disposition.”
The Proposing Release included a request for comment on the proposed “relationship of [an] asset to another portfolio asset” liquidity classification factor, which included asking whether rule 22e-4 should explicitly require a fund to classify the liquidity of a position (or portions of a position in a particular asset) used to cover a derivative position using the same liquidity classification category as it assigned to the derivative, and whether the Commission should provide additional guidance regarding the circumstances in which a fund should consider the liquidity of a particular portfolio asset in relation to the liquidity of another asset.
Some commenters also argued that the guidance provided in the proposal could make an otherwise liquid but segregated asset appear to be less liquid than it actually is when considered in isolation.
Finally, commenters generally discussed features of derivatives transactions informing the way that their liquidity would be classified under proposed rule 22e-4. One commenter noted that the proposal seemed to suggest that derivatives are inherently more risky and present greater liquidity risk than other, more traditional assets.
The requirements in rule 22e-4 regarding the classification of a fund's derivatives transactions are meant to clarify and simplify the application of the classification requirements to derivatives transactions and respond to commenters' concerns. First, rule 22e-4 specifies that the liquidity classification and review requirements apply to each of the fund's investment transactions (including derivatives) and requires a fund to take into account relevant market, trading, and investment-specific considerations in classifying derivatives' liquidity.
Besides specifying that the liquidity of a derivatives transaction must be classified taking into account relevant market, trading, and investment-specific considerations, rule 22e-4 provides no derivatives-specific factors that a fund would have to evaluate in classifying a derivatives transactions' liquidity. We generally agree with commenters' suggestions that the liquidity of a derivatives transaction may depend on market demand for that kind of derivative, as well as the liquidity of the derivative's underlying reference asset.
Along with classifying the liquidity of each of its derivative transactions, final rule 22e-4 requires a fund to identify, for derivatives transactions that a fund has classified as moderately liquid investments, less liquid investments, and illiquid investments, the percentage of the fund's highly liquid investments that are segregated to cover, or pledged to satisfy margin requirements in connection with, the transactions in each of these classification categories.
We believe that requiring a fund to determine the percentage of highly liquid investments that are segregated to cover, or pledged to satisfy margin requirements in connection with, its derivatives transactions classified in each of the “moderately liquid,” “less liquid,” and “illiquid” classification categories strikes an appropriate balance between providing this transparency and reducing burdens on funds. Under this approach, a fund generally would not need to specifically identify particular assets that are segregated or pledged to cover specific derivatives transactions, but instead a fund will calculate the percentage of highly liquid investments segregated or pledged to cover derivatives transactions that include derivatives transactions classified in each of the other three classification categories. For purposes of calculating these percentages, a fund that has segregated or pledged non-highly liquid investments as well as highly liquid investments to cover derivatives transactions, should first use segregated or pledged assets that are highly liquid investments to cover derivatives transactions classified in the three lower liquidity classification categories.
The approach in the final rule responds to commenters' concerns that funds rarely identify and segregate a specific liquid asset against an individual derivative on a one-for-one relationship,
While a fund will not need to identify which of its particular assets are segregated in connection with particular derivatives transactions, it will need to identify the percentage of its highly liquid investments that are segregated or pledged with respect to derivatives transactions classified in each of the moderately liquid, less liquid, and illiquid classification categories. We recognize that these requirements will likely entail additional evaluation of the liquidity character of a fund's segregated assets compared to what a fund might do today as part of its current asset segregation procedures.
We also note that these burdens are further reduced because under the rule a fund need not identify the percentage of segregated or pledged assets covering derivatives that are highly liquid investments, or the percentage of segregated or pledged assets that are moderately liquid investments or less liquid investments.
Unlike rule 22e-4 as proposed, final rule 22e-4 does not include an enumerated list of factors that a fund would be specifically required to consider in classifying and reviewing the liquidity of its portfolio investments. The rule instead generally requires a fund to take into account “relevant market, trading, and investment-specific considerations” in classifying and reviewing its portfolio investments' liquidity.
• Existence of an active market for the asset, including whether the asset is listed on an exchange, as well as the number, diversity, and quality of market participants;
• Frequency of trades or quotes for the asset and average daily trading volume of the asset (regardless of whether the asset is a security traded on an exchange);
• Volatility of trading prices for the asset;
• Bid-ask spreads for the asset;
• Whether the asset has a relatively standardized and simple structure;
• For fixed income securities, maturity and date of issue;
• Restrictions on trading of the asset and limitations on transfer of the asset;
• The size of the fund's position in the asset relative to the asset's average daily trading volume and, as applicable, the number of units of the asset outstanding; and
• Relationship of the asset to another portfolio asset.
The Proposing Release requested comment generally on whether the Commission should codify a list of liquidity classification factors (as discussed above)
Commenters also expressed concerns about this proposed factor in the context of assets used for hedging or risk mitigation purposes. In the Proposing Release, we stated that, when a fund purchases an asset (a “hedging asset”) in order to hedge or mitigate the risks associated with another asset (a “hedged asset”), the fund should consider the liquidity of the hedged asset when evaluating the liquidity of the hedging asset. Commenters stated that current industry practice often involves hedging aggregate portfolio exposures, not specific securities.
Unlike in the context of derivatives transactions, in which we have stated that a fund must segregate assets to cover derivatives transactions, and this renders the segregated assets “frozen” and “unavailable for sale or other disposition” (
As discussed above, we are not codifying the proposed factors in part because we understand that certain factors would be more informative to some funds than others, depending on the fund's investment strategy and liquidity risk profile. We also are concerned that codifying the factors, particularly if applied in a “check-the-box” fashion, could lead funds to adopt classification processes that do not reflect the extent of a fund's ability to sell its portfolio investments to meet redemptions within a given time period without a market impact, or do not otherwise result in an accurate picture of a fund's liquidity profile.
We acknowledge, as stated by some commenters, that certain of these factors may involve consideration of backward-looking data and thus may not account for ways in which changing market conditions could affect the liquidity of certain asset classes or investments.
As discussed above, a fund generally is permitted to classify the liquidity of its portfolio investments according to their asset class. Thus, a fund may wish to consider the guidance discussed below in assessing the general liquidity characteristics of the asset classes in which it invests. For investments that the fund determines must be treated as an “exception” and classified separate from their asset class,
The guidance we provide below is not meant to cover an exhaustive list of considerations that a fund may take into account in evaluating its portfolio investments' liquidity. Also, we recognize that specific liquidity concerns appropriate for consideration could vary depending on the issuer and the particular investment.
In the following sections, we discuss certain factors that a fund could consider in assessing the liquidity of its portfolio investments and provide guidance on specific issues associated with each of these factors. We also discuss comments we received on the proposed classification factors.
We continue to believe that the manner in which a fund may sell an asset class (or particular portfolio investment), including whether an asset class or investment is generally listed on an exchange, may affect the liquidity of that asset class or investment.
In assessing the effect that being traded on an exchange could have on an asset class's or investment's liquidity, a fund generally should evaluate how this consideration informs the liquidity characteristics of any ETF shares in which it invests. We understand that certain funds, particularly funds with
The Commission's 2015 Request for Comment on Exchange-Traded Products requested comment on whether investors' expectations of the nature of the liquidity of an exchange-traded product (including an ETF) holding relatively less liquid portfolio securities differ from their expectations of the liquidity of the underlying portfolio securities.
While we appreciate that ETFs' exchange-traded nature could make these instruments useful to funds in managing purchases and redemptions under certain conditions (for example, ETFs' settlement times could more closely reflect the time in which a fund has disclosed that it will typically redeem fund shares), funds should consider the extent to which relying substantially on ETFs to manage liquidity risk is appropriate. The liquidity of an ETF, particularly in times of declining market liquidity, is limited by the liquidity of the market for the ETF's underlying securities and, in fact, may be impaired based on factors not directly related to the liquidity of the underlying securities.
The means of trading a particular asset class or investment can affect its liquidity regardless of whether the investment is a security traded on an exchange. For example, whether an asset class or investment is generally traded in a bilateral transaction with a single dealer, or through an electronic auction mechanism where a trader can simultaneously contact multiple counterparties, can have different effects on its liquidity.
In addition, the diversity and quality of market participants for a particular asset class or investment also could contribute to the liquidity of that asset class or investment. A fund may wish to consider the number of market makers on both the buying and selling sides of transactions. A fund also may wish to consider the quality of market participants purchasing and selling a particular asset class or investment, and may wish to assess, in particular: The market participant's capitalization; the reliability of the market participant's trading platform(s); and the market participant's experience and reputation transacting in various types of assets. We believe that the diversity and quality of market participants may be meaningful in assessing a portfolio investment's liquidity because it is common for relatively liquid asset classes and investments to have active sale or repurchase markets at all times with diverse market participants.
In general, we continue to believe that a high frequency of trades or quotes for a particular asset class or investment tends to indicate that a particular asset class or investment has relatively high liquidity.
High average trading volume also tends to be correlated with greater liquidity, particularly for exchange-traded asset classes and investment. In general, high average daily trading volume for a particular asset class or investment indicates a deep market for that asset class or investment, which in turn indicates that a fund may be able to convert its holdings in that asset class or investment to cash without the conversion (or in some cases, sale or disposition) significantly changing the market value.
We note that double-counting of trades is a potential issue to consider when assessing average trading volume. Double-counting occurs because of differences between dealer and auction markets. In a dealer market, trades are “double-counted” because the dealer buys from person A and then sells to person B. In an auction market, person A and B trade directly.
Multiple commenters stressed that, particularly for fixed income and other typically OTC asset classes and assets, relatively low trading volume does not necessarily correlate with low liquidity. For example, many commenters discussed the low turnover of the corporate bond market, which is driven by factors such as the buy-and-hold nature of bond investing, the distribution of an issuer's borrowing across many different bond issues, and the fact that portfolio managers may deem many bonds to be substitutes for one another based on common characteristics such as issuer, sector, credit quality, and maturity.
We continue to believe that trading price volatility is potentially a valuable metric to consider in evaluating an asset class's or investment's liquidity.
Bid-ask spreads—the difference between bid and offer prices for a particular investment—have historically been viewed as a useful measure for assessing the liquidity of assets,
We continue to believe that whether an asset class or investment has a relatively standardized and simple structure is generally relevant to a fund's evaluation of an asset class's or investment's liquidity.
We continue to believe that, with respect to the fixed income investments a fund holds in its portfolio, those investments' maturity, as well as their date of issue, are significant indicators of their liquidity.
We continue to believe that restrictions on trading certain investments, as well as limitations on an investment's transfer, may adversely affect those investments' liquidity.
Under rule 22e-4 as adopted today, a fund would be required to review its portfolio investments' classifications at least monthly in connection with reporting the liquidity classification for each portfolio investment on Form N-PORT, as well as more frequently if changes in relevant market, trading, and investment-specific considerations are reasonably expected to materially affect one or more of its investments' classifications.
As discussed in the Proposing Release, the Commission has previously stated that it “expects funds to monitor portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained.”
As proposed, rule 22e-4 would have required a fund to review its liquidity classifications on an ongoing basis.
We sought comment in the Proposing Release about the proposed ongoing review requirement. Several commenters suggested that the Commission adopt a general liquidity classification review requirement, without incorporating specific factors that a fund would be required to consider during the course of its review.
We believe that the review requirement we are adopting, together with the rule provision specifying that a fund would generally be permitted to review its liquidity classifications with reference to its holdings' asset classes, advances our goal of requiring funds to appropriately re-evaluate the liquidity of their portfolio holdings, while responding to commenters' concerns. As discussed in the Proposing Release, we understand that some funds currently may not review the liquidity of their portfolio investments on a continuing basis after they are acquired.
Rule 22e-4 as adopted requires a fund to review its liquidity classifications at least monthly, in connection with reporting its liquidity classifications monthly on Form N-PORT.
We believe that the review requirement we are adopting, as opposed to the proposed ongoing review requirement, permits funds to tailor their review of liquidity classifications in light of the liquidity character of a fund's portfolio investments. The modifications to rule 22e-4 clarify that we do not expect a fund to constantly reassess all of its portfolio investments' liquidity. Also, the review requirement that we are adopting would not require a fund to consider a detailed list of specific factors in the course of conducting its liquidity classification reviews. Instead, as discussed above, it would require a fund to take into account “relevant market, trading, and investment-specific considerations” in reviewing its investments' liquidity.
Finally, the review requirement that we are adopting, like the rule 22e-4 classification requirement, would permit a fund to generally review its portfolio investments' liquidity according to their asset class (provided that the fund must identify, and separately review, any investment within an asset class that the fund determines should be reviewed separately based on its liquidity characteristics).
In connection with the liquidity classification requirement of rule 22e-4, we are requiring, largely as proposed and with certain modifications in response to comments, a fund to report the liquidity classification assigned to each of the fund's portfolio investments on Form N-PORT.
As part of this public disclosure, a fund would publicly disclose the percentages of its highly liquid investments that are segregated to cover, or pledged to satisfy margin requirements in connection with, the fund's derivatives transactions that the fund has classified in the moderately liquid, less liquid, and illiquid investments classification categories in light of the requirement in rule 22e-4 that the liquidity classification cover each of the fund's derivatives transactions, discussed above.
Most commenters opposed the proposed Form N-PORT reporting requirement, and particularly objected to having position-level liquidity information reported on Form N-PORT made public.
We proposed to require a fund to report on Form N-PORT the liquidity classification of each of the fund's positions (or portions of a position) in a portfolio asset using the proposed classification system of rule 22e-4.
A number of commenters supported reporting liquidity classifications to the Commission on Form N-PORT, provided that it was not publicly disclosed.
On the other hand, a few commenters objected to reporting liquidity classifications, as proposed, even if such information is disclosed only to the Commission.
We continue to believe that requiring funds to report the liquidity classification of their portfolio investments is vital to our ongoing monitoring and oversight efforts. A key goal of the rulemaking is to allow us to monitor funds' liquidity profiles (both on a fund-by-fund basis and across funds) over time, and respond as appropriate. Absent the required reporting on Form N-PORT, our ability to engage in such efforts would be limited and less efficient. We believe that the changes made to the classification system discussed above should serve to mitigate commenters' concerns about the difficulties of making comparisons across the industry, in light of the reduced number of categories for classification. We recognize that there is still likely to be variation between funds in how they classify certain asset classes and investments, and believe that despite any variations, this liquidity information will be useful and valuable to us. We will be able to identify different fund liquidity classification practices, and use that information to gain insight into how different funds view liquidity in the market, and whether there are any identifiable liquidity concerns. We also note that despite any concerns about variation of practices across funds limiting comparability, we expect that the reported information will allow us to generally monitor specific funds' liquidity on a consistent basis across time, and identify how their views of the liquidity of their investments change.
We believe that such information will assist us in better assessing liquidity risk in the open-end fund industry, which can inform our policy and guidance. We also believe that this information will assist us in monitoring for compliance with rule 22e-4 and identifying potential outliers in fund liquidity classifications for further inquiry, as appropriate. We recognize that liquidity classifications, similar to valuation- and pricing-related matters, inherently involve judgment and estimations by funds. We also understand that the liquidity classification of an asset class or investments may vary across funds depending on the facts and circumstances relating to the funds and their trading practices.
In sum, we believe that the modified reporting requirements on Form N-PORT will provide the Commission with meaningful data concerning the liquidity of portfolio investments across the fund industry and at the same time lessen burdens on funds classifying and reporting liquidity information (compared to the proposal). Accordingly, we are adopting the requirement for funds to report the liquidity classification of their portfolio investments to the Commission.
We proposed that liquidity classification information reported on Form N-PORT at the portfolio position level be disclosed to the public for the third month of each fiscal quarter with a 60-day delay. One commenter expressed general support for regulatory initiatives aimed at improving transparency.
On the other hand, most commenters opposed the proposed public disclosure of the liquidity classification. Some commenters expressed concerns that the value to the public of the position-level liquidity classification information on Form N-PORT, as proposed, would be limited.
Many commenters also expressed concerns that public disclosure of the proposed position-level liquidity classification information would ultimately harm fund shareholders and the fund market for a variety of reasons. Some commenters argued that public reporting would facilitate predatory trading practices, particularly during periods of liquidity stress, ultimately harming fund investors.
While many of these commenters objected to the proposed position-level public disclosure of liquidity classifications, several commenters did not object to making more aggregated portfolio-level disclosure of liquidity data available to the public.
We recognize that the level of position-level detail necessary for the Commission and our staff to effectively monitor fund liquidity may not be necessary for other users. We understand that some data collectors would prefer to use information reported on Form N-PORT proposed under the Investment Company Reporting Modernization proposal (which we are adopting concurrently), such as monthly portfolio holdings data, rather than the classification information proposed in the liquidity proposal.
We also appreciate the limitations and subjectivity of the liquidity classification process, and thus understand the risks of investors potentially giving too much weight to a fund manager's individual liquidity classification choices. The classification of portfolio investments at the position-level under the days-to-cash framework involves a number of assumptions and methodologies that could result in classifications that vary from fund to fund. As a result, the liquidity classification information reported for the same or similar asset classes and investments could vary because of complex differences in methodologies and assumptions that may not be reported on Form N-PORT nor easily explained to investors but would be available to the Commission in inspections.
We appreciate the concerns raised by commenters that reporting publicly position-level data could imply a false sense of precision about the liquidity profile of a fund and that, given the delay in the public reporting of portfolio-level classification information (60 days after quarter-end), the position-level information will likely be out of date when reviewed by investors. While we can take these potential variances in liquidity classifications of assets into account in evaluating and using the data for the Commission's purposes in observing potential trends in liquidity profiles across the fund industry, it may be more difficult to explain them to investors. Furthermore, the Commission would receive portfolio-level classification information within 30 days of month-end, thereby increasing the utility of the classification information for Commission purposes. We expect that providing only aggregated liquidity classification information on the funds' portfolio assets publicly may mitigate some of these concerns. This level of detail should appropriately focus investors on the fund's general liquidity profile and general trends in fund liquidity rather than individual security-level liquidity decisions, in light of the concerns discussed above.
Some commenters also raised concerns that public reporting of
For these reasons, we find that it is neither necessary nor appropriate in the public interest or for the protection of investors to make liquidity classification information for each portfolio investment publicly available.
In addition, the Commission recognizes the importance of sound data security practices and protocols for non-public information, including information that may be competitively sensitive. The Commission has substantial experience with storage and use of non-public information reported on Form PF and delayed public disclosure of information on Form N-MFP (although the Commission no longer delays public disclosure of reports on Form N-MFP), as well as other non-public information that the Commission handles in its ordinary course of business. Commission staff is carefully evaluating the data security protocols that will apply to non-public data reported on Form N-PORT in light of the specific recommendations and concerns raised by commenters. Drawing on its experience, the staff is working to design controls and systems for the use and handling of Form N-PORT data in a manner that reflects the sensitivity of the data and is consistent with the maintenance of its confidentiality.
As previously discussed, we are adopting, with modifications, the proposed requirement that funds report to the Commission on a non-public basis the liquidity classification assigned to each portfolio position on Form N-PORT. Some commenters expressed concerns that the value to the public of the position-level liquidity classification information on Form N-PORT, as proposed, would be limited.
We appreciate these comments and recognize that position-level liquidity classification data, while valuable for Commission purposes, may be of limited use for everyday investors. We find persuasive commenters' recommendations to provide the public with a general assessment of the liquidity of a portfolio at the fund level as an approach to provide everyday investors useful information on fund liquidity. As a result, we are adopting amendments to Form N-PORT to require a fund to publicly report for the third month of each fiscal quarter with a 60-day delay the aggregate percentage of its portfolio representing each of the four classification categories outlined in Form N-PORT and related rule 22e-4.
In order to avoid misleading investors about the actual availability of highly liquid investments to meet redemptions, a fund also will be required to publicly report on Form N-PORT the percentage of its highly liquid investments that it has segregated to cover, or pledged to satisfy margin requirements in connection with, derivatives transactions that are classified as moderately liquid, less liquid, or illiquid investments.
In consideration of the commenters' recommendations, we believe that our modification to the proposal to require a fund to report publicly the percentage of the fund's highly liquid investments that are segregated to cover, or pledged to satisfy margin requirements in connection with, the fund's derivatives
Overall, we continue to believe that investors currently have limited information about the liquidity of fund investments and would benefit from enhanced information to evaluate funds and assess the potential for returns and risks of a particular fund. We expect that many investors will use liquidity reporting information to better understand the liquidity risks associated with a particular fund for purposes of making more informed investment decisions and will benefit from aggregate information about a fund's overall liquidity. Moreover, we believe that requiring a fund to publicly disclose only the aggregate percentage of its portfolio assets representing each of the four classification categories balances commenters' concerns about certain adverse effects that could arise from public reporting of detailed portfolio liquidity information with investors' need for improved information about funds' liquidity risk profiles.
As discussed above, rule 22e-4, as adopted, combines a fund's illiquid investment determinations with the general liquidity classification framework reported on Form N-PORT.
After considering these comments, we agree that presenting to the public liquidity classification information and the 15% standard asset designation separately could potentially confuse investors. As discussed in more detail in section III.C previously, we believe that it is more appropriate to harmonize the rule 22e-4 limit on illiquid investments, referred to as 15% standard assets under the proposal, with the rule's broader liquidity classification requirement by incorporating an illiquid investment category into the classification requirement. Likewise, we believe that this harmonization should be reflected in reports on Form N-PORT. Thus, we are adopting, modified from the proposal, an illiquid investment category into Form N-PORT that corresponds with rule 22e-4's broader classification requirement.
We expect to use this information to monitor fund compliance with the prohibition of acquiring illiquid investments if the fund would have invested more than 15% of its net assets in illiquid investments that are assets and analyze liquidity trends in the fund industry. Overall, we believe that maintaining this information on illiquid investments as part of the liquidity classification information reported on Form N-PORT will provide the Commission with meaningful data, including information regarding exposure to illiquid investments across the fund industry.
Today we are adopting a requirement that each fund determine its “highly liquid investment minimum,” or the minimum amount of the fund's net assets that the fund invests in highly liquid investments that are assets.
As described in more detail below, this requirement is a modification of the proposed “three-day liquid asset minimum,” which also would have required a fund to determine the percentage of the fund's net assets to be invested in relatively liquid assets (under the proposal, “three-day liquid assets,” or cash and any asset convertible to cash within three business days at a price that does not materially affect the value of that asset immediately prior to sale).
The goal of the proposed three-day liquid asset minimum requirement was to increase the likelihood that a fund would hold adequate liquid assets to meet redemption requests without materially affecting the fund's NAV.
Many commenters agreed that a requirement for a fund to determine a minimum—or, per some commenters' suggestions, a target—amount of relatively liquid assets would assist funds in effectively meeting redemption requests under a variety of market conditions.
Some commenters also suggested alternatives to the proposed three-day liquid asset minimum. As discussed further below, a number of commenters suggested requiring funds to maintain a “target” or threshold amount of certain liquid assets.
Like the proposed three-day liquid asset requirement, we believe that the highly liquid investment minimum requirement will increase the likelihood that a fund would be prepared to meet redemption requests without significant dilution of remaining investors' interests in the fund. Some commenters noted that it is common for funds to assess how much liquidity they may need under various market conditions in order to meet redemptions over a relatively short time horizon and suggested that targeting a certain level of relatively liquid assets is an appropriate way for a fund to manage its liquidity
As with the proposal, we believe that the final highly liquid investment minimum requirement will help encourage consistency in funds' consideration of certain factors relevant to their liquidity risk management procedures. This is an important benefit compared to some commenters' suggestions that funds simply be required to have policies and procedures to address shareholder redemptions (which could include liquid asset minimums or targets), but not to specify any particular procedures within this general requirement.
As noted above, some commenters suggested that a minimum requirement would not necessarily enhance funds' ability to meet shareholder redemptions. We agree that the highly liquid investment minimum requirement we are adopting, standing alone, may not be a sufficient safeguard for funds to manage liquidity risk under all market conditions. However, we believe that, together with the rest of the liquidity risk management program requirements we are adopting, it is a central tool to help put a fund in a solid position to meet redemption requests without significant dilution of remaining investors' interests. The highly liquid investment minimum requirement, together with the classification requirement and the 15% limitation on a fund's investments in illiquid investments that are assets, is meant to be a primary component of a fund's overall approach to liquidity risk management. While the classification requirement would illustrate the spectrum of a fund's portfolio liquidity, the highly liquid investment minimum requirement and the 15% limitation on illiquid investments would focus the fund's attention on each end of that liquidity spectrum—the fund's most liquid and least liquid investments, respectively.
Based on a fund's liquidity risk assessment, the fund could determine what additional liquidity risk management tools, if any, together with the highly liquid investment minimum requirement and the 15% limitation on illiquid investments, would best permit the fund to meet redemptions and help prevent significant investor dilution. We also believe that the highly liquid investment minimum requirement will be a useful liquidity risk management tool because we understand, based on staff outreach and comments that we received on the proposal, that the requirement we are adopting is similar to liquidity risk management strategies that many funds currently use.
While certain commenters expressed concern that the proposed three-day liquid asset minimum requirement could unduly encourage funds to use only their most liquid assets in meeting redemptions (which commenters argued could lead to additional redemptions from funds in stressed periods),
As with the proposed three-day liquid asset minimum requirement, we believe an important feature of the highly liquid investment minimum requirement we are adopting is the flexibility it provides for a fund to determine an appropriate highly liquid investment minimum considering its particular risk factors, as well as (within a fairly broad range) the assets it will hold to satisfy its minimum. We acknowledge that, for certain funds that currently have relatively less liquid portfolios, the highly liquid investment minimum requirement could cause a fund to modify its investment strategy if, after consideration of the required factors, the fund were to determine it is appropriate to invest in higher amounts of highly liquid investments. In these circumstances, we believe such a modification would be appropriate. We discuss the costs associated with any modifications to funds' investment strategies that could result from the final highly liquid investment minimum requirement in the Economic Analysis section below.
Rule 22e-4 requires a fund to consider the liquidity risk factors set forth in the rule, as applicable, in determining its highly liquid investment minimum.
We continue to believe it is appropriate for a fund to be required—not only permitted—to consider a specified set of liquidity risk factors in determining its highly liquid investment minimum. We believe requiring every fund to consider multiple aspects of its history, policies, strategy, and operations in determining its highly liquid investment minimum will lead to a general industry-wide baseline for the minimum requirement. However, we are making certain modifications to the proposed liquidity risk factors, including only requiring funds to consider applicable factors, to respond to commenters' concerns about this aspect of the requirement.
As discussed above, the liquidity risk factors we are adopting today incorporate certain modifications to the proposed factors,
Some commenters recommended that the Commission confirm that funds may consider and weigh the factors as they deem appropriate and relevant for purposes of the proposed minimum requirement,
We continue to believe that a fund should consider both normal and reasonably foreseeable stressed conditions in determining the amount of highly liquid investments it will hold, based on the liquidity risk assessment factors. However, in a change from the proposal, the rule specifies that only those stressed conditions that are reasonably foreseeable
This change also responds to commenters' concerns about perceived ambiguity in the length of time over which the proposed rule would have required funds to forecast the effect of stressed conditions on the liquidity risk factors.
As noted above, rule 22e-4 requires a fund to consider the liquidity risk factors set forth in the rule, as applicable, in determining its highly liquid investment minimum. In summary, a fund must consider, as applicable, its: (i) Investment strategy and portfolio liquidity during normal conditions, and during stressed conditions to the extent such conditions are reasonably foreseeable during the period until the next review of the highly liquid investment minimum; (ii) short-term and long-term cash flow projections during normal conditions, and during stressed conditions to the extent such conditions are reasonably foreseeable during the period until the next review of the highly liquid investment minimum; and (iii) holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources.
With respect to a fund's consideration of its investment strategy and portfolio liquidity in determining its highly liquid investment minimum, we continue to believe that the less liquid a fund's overall portfolio investments are, the higher a fund may want to establish its highly liquid investment minimum. Similarly, funds with certain investment strategies that typically have had greater volatility of flows than other investment strategies—such as alternative funds and emerging market debt funds—would generally need highly liquid investment minimums that are higher than funds whose strategies tend to entail less flow volatility. For funds that use borrowings for investment purposes and derivatives, we continue to believe that, all else equal, a fund with a leveraged strategy (
Similarly, a fund that has significant fixed obligations to derivatives counterparties (for example, from a total return swap or writing credit default swaps) must pay out on these obligations when due, even if it means selling the fund's more liquid, high quality assets to raise cash.
Regarding a fund's cash flow projections, we continue to believe that the Commission's cash flow guidance considerations could be useful to a fund in setting its highly liquid investment minimum.
Each of the cash flow guidance considerations—either standing alone, but especially viewed in combination with one another—are potentially significant features that could materially affect the risk of significant redemptions and thus could influence a fund's determination of its highly liquid investment minimum. For example, a fund with a concentrated shareholder base has a high risk that only one or two shareholders deciding to redeem can cause the fund to sell a significant amount of assets, which depending on the liquidity of the fund's portfolio and how it meets those redemptions, can dilute remaining shareholders. Similarly, a fund whose redemption policy is to satisfy all redemptions on a next business day basis (T + 1) or that is sold through distribution channels that historically attract investors with more volatile and/or unpredictable flows also should consider setting a higher minimum level for its assets that are highly liquid investments than a fund that, all else equal, does not face these risks.
In setting a highly liquid investment minimum, a fund should consider the degree of certainty associated with the fund's short-term and long-term cash flow projections. Projections may only be as good as the extent and quality of information that informs them. For example, if a fund does not have substantial visibility into its shareholder base (
One commenter objected that shareholder ownership concentration, which is discussed in this Release as a guidance factor that could be used in evaluating cash flows (but in the proposal would have been
With respect to a fund's consideration of its holdings of cash and cash equivalents in determining its highly liquid investment minimum, we continue to believe that these holdings may provide funds with important flexibility to manage their liquidity risks. Our staff has observed that it is relatively common for fund complexes to target a minimum amount of cash or cash equivalent holdings in the fund, with the assumption that cash and cash equivalent holdings would allow the fund to meet redemptions in a stressed period without realizing significant discounts to its holdings' carrying values when they are sold. Holding cash or cash equivalents also could readily permit funds to rebalance or otherwise adjust a portfolio's composition in order to manage liquidity risk. Similarly, the availability of a line of credit or other funding sources to meet redemptions could assist a fund in managing liquidity risk, although as discussed below, depending on the nature of use, the use of a line of credit could raise other issues.
Certain commenters indicated that the Commission should permit a fund to reduce its required holdings of relatively liquid assets by the amount of other sources of liquidity available to the fund, such as a committed line of credit.
As with the proposed three-day liquid asset minimum requirement, a fund would be required to maintain a written record of how its highly liquid investment minimum was determined, including an assessment of each of the factors.
Under rule 22e-4, a fund will be required to adopt specific policies and procedures for responding to a shortfall in the fund's assets that are highly liquid investments below its highly liquid investment minimum (for purposes of this section, a fund's “shortfall policies and procedures”). A fund's shortfall policies and procedures, as described in more detail below, must include reporting to the fund's board of directors no later than the board's next regularly scheduled meeting with a brief explanation of the causes of the shortfall, the extent of the shortfall, and any actions taken in response.
Rule 22e-4 as proposed did not include the requirement for a fund to adopt shortfall policies and procedures. This requirement replaces the proposed prohibition against acquiring any asset
In addition, commenters argued that the proposed acquisition limit could effectively prevent funds from holding or acquiring favorable, but relatively less liquid, assets under certain circumstances, which could intensify market stress as well as adversely affect a fund's NAV.
A significant number of commenters suggested that the Commission adopt a liquid asset target in lieu of the proposed three-day liquid asset minimum requirement—indeed, this was the most common alternative suggestion to the proposed three-day liquid asset minimum requirement.
We continue to believe that fund shareholders' interests are generally best served when the percentage of a fund's assets invested in relatively liquid investments is at (or above) the level deemed appropriate by the fund.
Additionally, we believe that the shortfall policies and procedures requirement responds appropriately to commenters' concerns that there could be appropriate reasons for a fund to acquire an investment other than a highly liquid investment if a fund were to fall below its minimum. The final highly liquid investment minimum requirement will require that funds determine a level of assets that are highly liquid investments designed to help them manage the fund through stressed conditions or opportunistically readjust their portfolios, while permitting a fund's portfolio liquidity to fall below this level when determined appropriate from a risk management perspective or on account of extenuating circumstances. The shortfall policies and procedures requirement, including the reporting requirement, is meant to foster discussion among the fund's management (and board) if its assets that are highly liquid investments fall below the level the fund determined to be an appropriate minimum. We further believe that the final highly liquid investment minimum requirement appropriately responds to commenters' concerns that the proposed acquisition limit could restrict funds' ability to meet their principal investment strategies, to the detriment of fund investors. The final requirement provides fund managers more leeway than the proposed requirement to structure and modify their portfolios because—as would be the case in the target requirement commenters suggested—fund managers would not be prevented from purchasing certain assets when a fund's holdings of assets that are highly liquid investments drop below its highly liquid investment minimum.
The highly liquid investment minimum requirement we are adopting, together with the shortfall policies and
Finally, we believe that the final highly liquid investment minimum requirement, in conjunction with the shortfall policies and procedures requirement, will help to mitigate some of the operational burdens that commenters argued would accompany the proposal,
Rule 22e-4 provides flexibility as to the particular shortfall policies and procedures a fund may adopt because we believe that different facts and circumstances could result in different funds taking different approaches to address a decline in assets that are highly liquid investments.
Similarly, as part of its shortfall policies and procedures, a fund could set forth how it would set out a time frame by which it plans to bring its assets that are highly liquid investments back up to the level of its highly liquid investment minimum.
As discussed below, although we are not requiring a fund's board to specifically approve its highly liquid investment minimum, we continue to believe that the board should play an oversight role with respect to the minimum.
As fund boards are charged with oversight and not day-to-day management of funds' liquidity risk, we
However, we believe that when a fund's assets that are highly liquid investments are below its minimum for an extended period of time, this could indicate especially heightened liquidity risk, and thus under these circumstances it is appropriate to report a highly liquid investment minimum shortfall to the board within a shorter time frame. We are therefore adopting the requirement for a fund to report to its board of directors within one business day if its shortfall lasts longer than seven consecutive calendar days. Rule 22e-4 requires that this accelerated reporting include an explanation of how the fund plans to restore the fund's highly liquid investment minimum within a “reasonable” period of time. Fund management generally should take into account the fund's level of liquidity risk, as well as the facts and circumstances leading to the highly liquid investment minimum shortfall, in determining a reasonable time for returning the fund's assets that are highly liquid investments to the fund's minimum level.
Rule 22e-4 requires a fund to periodically review, no less frequently than annually, the fund's highly liquid investment minimum.
We continue to believe, as discussed in the Proposing Release, that a periodic review is a central component of the highly liquid investment minimum requirement we are adopting.
We also do not believe that extending the highly liquid investment minimum review period from a minimum of semi-annually to annually will adversely affect funds or investors as a fund generally should review its highly liquid investment minimum more frequently if circumstances warrant. Additionally, as discussed above, a fund's board will be regularly informed of any highly liquid investment minimum shortfalls. Thus, the board will be aware of any liquidity risk management issues that might warrant reconsideration of the fund's risk management procedures or its highly liquid investment minimum.
Like the requirement for a fund to periodically review its liquidity risk, the highly liquid investment minimum review requirement will permit each fund to develop and adopt its own procedures for conducting this review, taking into account the fund's particular facts and circumstances. Additionally, we believe that in developing comprehensive review procedures, a fund should generally consider including procedures for evaluating regulatory, market-wide, and fund-specific developments affecting the fund's liquidity risk. A fund also may wish to adopt procedures specifying any circumstances that would prompt more frequent review of the fund's highly liquid investment minimum in addition to the annual minimum review required by the rule (as well as the process for conducting more frequent reviews).
Rule 22e-4, as adopted, excludes a fund that primarily holds assets that are highly liquid investments (a “primarily highly liquid fund”) from the requirements to determine and review a highly liquid investment minimum, and to adopt shortfall policies and procedures.
Under rule 22e-4, a fund whose portfolio consists primarily of assets that are highly liquid investments would be excluded from the highly liquid investment minimum requirement.
For purposes of determining whether a fund primarily holds assets that are highly liquid investments, a fund must exclude from its calculations the percentage of the fund's assets that are highly liquid investments that it has segregated to cover derivatives transactions that the fund has classified as moderately liquid investments, less liquid investments, and illiquid investments, or pledged to satisfy margin requirements in connection with those derivatives transactions, as determined pursuant to rule 22e-4(b)(1)(ii)(C).
We proposed to amend Form N-PORT to add a new item that would require each fund to disclose its three-day liquid asset minimum, as such term was proposed to be defined in proposed rule 22e-4. One commenter supported reporting the three-day liquid asset minimum in a structured data format to the public as proposed.
Some commenters, however, opposed public disclosure of both the three-day liquid asset minimum as proposed and recommended alternatives to the three-day liquid asset minimum. Commenters expressed concerns that public disclosure could be misleading to investors, arguing that any minimum reported on Form N-PORT would be subjective, presented without context, and may not reflect a fund's actual portfolio management approach at the time the data is being relied upon by investors.
We are persuaded by some of the concerns expressed by commenters regarding the potential risks to funds and fund investors of public reporting of a fund's three-day liquid asset minimum, as proposed, or any alternative formulation, including a fund's highly liquid investment minimum, as adopted today. In response to comments, we are adopting amendments to require a fund to report its highly liquid investment minimum on Form N-PORT to the Commission on a non-public basis.
In light of the changes we are making to the way the highly liquid investment minimum is established, the final modifications to Form N-PORT require that if a fund's minimum has changed during the reporting period, any prior minimums established by the fund during the reporting period also be reported.
Overall, we believe that such board oversight together with confidential reporting to the Commission is a regulatory approach that balances commenters' concerns about certain adverse effects that could arise from public reporting of liquid investment minimums with the need for enhanced investor protections and meaningful information for Commission regulatory oversight responsibilities. We believe that it is neither necessary nor appropriate in the public interest or for the protection of investors to make information regarding a fund's highly liquid investment minimum publicly available at this time.
Rule 22e-4 includes a limit on a fund's ability to acquire illiquid investments. Specifically, the rule prohibits a fund from acquiring any illiquid investment if, immediately after the acquisition, the fund would have invested more than 15% of its net assets in illiquid investments that are assets.
The limitation on funds' illiquid investments is similar to the limitation on “15% standard assets” in proposed rule 22e-4,
We note that, as proposed, the text of rule 22e-4 would have limited the acquisition of 15% standard assets if, immediately after the acquisition, the fund would have invested more than 15% of its
The majority of commenters supported the codification of the Commission's 15% guideline as proposed. Many commenters stated that the 15% guideline is an important investor protection measure and posited that the guideline has proven to be a highly effective safeguard against liquidity risk.
In addition, several commenters supported a limit on the amount of illiquid assets that can be held by a fund generally, but suggested alternatives to how the 15% standard would operate or the proposed definition of 15% standard assets.
We agree with commenters who stated that codifying a limit on funds' illiquid investments should be a central element of managing open-end funds' liquidity risk, which in turn would further the protection of investors. While we believe that the highly liquid investment minimum requirement will increase the likelihood that each fund holds adequate liquid assets to meet redemption requests without significant dilution of remaining investors' interests in the fund, the limit on illiquid investments also should increase the likelihood that a fund's portfolio is not concentrated in investments whose liquidity is extremely limited, and thus will serve as an across-the-board limit on fund illiquidity. As discussed above, the Commission and staff have in the past provided guidance in connection with the 15% guideline. Today we are withdrawing this guidance along with the 15% guideline and replacing it with new requirements for determining that an investment is illiquid, as well as new guidance in this Release regarding these requirements. We believe that the limit on illiquid investments that are assets that we are adopting, together with the new definition of “illiquid investments” that encompasses additional elements for determining that an investment is illiquid,
We also agree, as discussed in more detail in section III.C.2.d above, that it is appropriate to harmonize the rule 22e-4 limit on illiquid investments with the rule's broader liquidity classification requirement by incorporating an illiquid investment category into the classification requirement. We believe that this harmonization will reduce confusion that could arise if we were to adopt requirements for identifying illiquid investments that differed from the requirements for classifying the liquidity of investments that are not illiquid.
One commenter suggested that, if the Commission adopts requirements that would expand the set of assets that is subject to the 15% limit on illiquid assets, it could consider extending the limit beyond 15%, or extending the time-to-sale period associated with the definition of “illiquid asset” beyond seven days, in order to limit market disruptions.
In the proposal, we requested comment as to whether we should require a fund to divest its assets in excess of the 15% limit or whether we should limit the time period in which a fund can exceed the 15% limit. As noted above, some commenters suggested that the 15% limit should be a maintenance test, rather than an acquisition test, requiring the fund to adjust its portfolio if it exceeds the 15%
We believe that
We further believe, however, that a fund should not be permitted to exceed the 15% limit on illiquid investments for an extended period of time without board oversight. Therefore, because we believe that if a fund's illiquid investments that are assets exceed the 15% limit it could indicate that the fund is encountering harmful liquidity pressures, the final rule requires, as suggested by commenters,
We acknowledge that requiring a board assessment of the appropriateness of the fund's plan to decrease its level of illiquid investments every 30 days a fund holds illiquid assets in excess of 15% of its net assets may impose burdens on boards and funds. Nonetheless, we believe that such a requirement is appropriate in light of the serious consequences that can result when a fund's liquidity becomes impaired or further deteriorates, particularly for extended periods of time.
Additionally, as discussed in section III.M.2 below, a fund will be required to confidentially notify the Commission when its illiquid investments that are assets exceed 15% of its net assets. As discussed below, reporting of this information will assist Commission staff in its monitoring efforts of liquidity, including monitoring not only the reporting fund but also funds that may have comparable characteristics to the reporting fund and may be similarly affected by market events. The percentage of the fund's holdings invested in illiquid investments that are assets also will be disclosed on Form N-PORT to the public on a quarterly basis, with a 60-day delay, as discussed in section III.C.6 above, which will lead to increased transparency of the fund's profile regarding holdings of illiquid investments at particular points in time.
Many funds reserve the right to redeem their shares in-kind instead of with cash.
Multiple commenters welcomed efforts by the Commission to facilitate funds' ability to use redemptions in kind and stated that they considered redemptions in kind an important liquidity risk management tool for allocating the cost of selling securities to meet redemptions to redeeming investors.
Commenters also suggested that the Commission provide guidance on the appropriate use of in-kind redemptions for funds.
Funds may also wish to consider having policies and procedures that address the ability of investors to receive in-kind redemptions, potentially including different procedures for different shareholder types. For example, the policies and procedures might provide that retail shareholders (who may not be operationally equipped to receive in-kind redemptions) may be provided cash redemptions, but that institutional investors who may be able to receive such securities, would be paid out in-kind under certain circumstances. These procedures may also consider whether holdings through omnibus accounts pose any unique issues that should be addressed. Well-designed policies and procedures would likely also address potential operational issues with providing in-kind redemptions to various kinds of investors, and plan out methods for addressing such operational issues. These might include notifying large shareholders that may be subject to redemptions in kind and setting up securities transfer processes for those shareholders in advance.
Effective policies and procedures would also likely address how the fund would determine which securities it would use in an in-kind redemption (for example would it use illiquid or restricted securities), or whether it plans to redeem securities in kind as a
If a fund chooses not to redeem in a
Because the management and personnel capacity of funds facing heavy redemptions and other liquidity stresses will likely be strained as funds attempt to manage these pressures, the Commission believes that requiring funds to have policies and procedures
Today, under rule 17a-7, funds may make certain affiliated securities transactions between funds and certain affiliates (“cross trades”), provided they meet certain protective conditions.
Accordingly, rule 17a-7 requires that any cross-trades satisfy certain conditions designed to prevent such abuses, including the requirement that market quotations be readily available for each traded security and that if the security is only traded over the counter, the cross-trade be conducted at the average of the highest current independent bid and lowest current independent offer determined on the basis of reasonable inquiry.
We noted in the Proposing Release that less liquid assets are less likely to satisfy rule 17a-7 than highly liquid investments.
We note that less liquid assets, by definition, are less likely to trade in highly active markets that produce readily available market quotations, which may make it more difficult to ensure that the terms of a cross-trade transaction are fair and reasonable to each participating investment company or other advisory client and do not involve overreaching. As one commenter noted, “rule 17a-7 broadly requires the availability of accurate valuation information with respect to any security proposed to be traded from one adviser-directed account to another. This effectively requires such securities to be relatively liquid.”
We agree that an assessment of an asset's liquidity, without more, would not determine whether the asset is eligible for a cross-trade transaction under rule 17a-7. However, as noted above, we believe that any assets used in a cross-trade transaction should be scrutinized to ensure that they satisfy all of rule 17a-7's requirements. Due to the particular risks associated with cross-trading less liquid assets, it may be
We note that cross trading also implicates a fund's adviser's duty to seek best execution for each fund or other advisory client, as well as its duty of loyalty to each fund or other advisory client.
Under rule 38a-1, a fund's compliance policies and procedures related to rule 17a-7 generally should contemplate how the fund meets the rule's requirements with regard to less liquid assets. For example, as part of these policies and procedures, a fund might consider conducting a review of less liquid assets before cross-trading them to ensure that “market quotations are readily available,” that a “current market price” is available, that the transaction is in line with each participating investment company's or other advisory client's investment objective, investment strategies and risk profile, and that the cross-trade satisfies all other requirements set forth in rule 17a-7. Reasonably designed policies and procedures thus would likely specifically address how a fund would determine that such less liquid securities are appropriately used when meeting the requirements of rule 17a-7. The specific review of a less liquid asset would likely vary depending on the characteristics of the market or markets in which the asset transacts, the characteristics of the asset itself, and the nature of the funds potentially involved in the cross trade.
In crafting policies and procedures reasonably designed to address the particular risks of cross-trading less liquid assets, a fund could consider specifying the sources of the readily available market quotations to be used to value the assets and establish specific criteria for determining whether market quotations are current and readily available, and include potential back-up sources if the primary sources are not available. Funds should consider including in their policies and procedures periodic reviews of the continuing appropriateness of those sources of readily available market quotations.
In addition, a fund's policies and procedures might also provide for assessing the quality of quotations provided by dealers. The quality of dealer quotations may vary depending upon, among other things, the extent to which a dealer makes a market in or retains an inventory in the particular security, or in similar securities, such that the dealer maintains an awareness of changes in market factors affecting the value of the security.
In addition, reasonably designed policies and procedures likely would also include compliance monitoring to help ensure that the investment objective, investment strategies and risk profile of each participating investment company or other advisory client are scrutinized in conjunction with the characteristics of any cross-traded asset to evaluate whether the asset transfer is not in line with any objective or strategy or inappropriately shifts risk from one investment company or other advisory client to another. Whether a cross-trade is in the best interest of an investment company or other client purchasing an asset may depend, in part, on the relative liquidity of the purchaser's existing portfolio assets and the level of redemptions that may be reasonably anticipated by the purchaser.
Directors, and particularly independent directors, play a critical role in overseeing fund operations, although they generally may delegate day-to-day management to a fund's adviser.
We believe the role of the board under the rule is one of general oversight, and consistent with that obligation we expect that directors will exercise their reasonable business judgment in overseeing the program on behalf of the fund's investors. As discussed in the Proposing Release, directors may satisfy their obligations with respect to this initial approval by reviewing summaries of the liquidity risk management program prepared by the fund's investment adviser, officer, or officers administering the program, legal counsel, or other persons familiar with the liquidity risk management
Many commenters expressed general support for board oversight of the liquidity risk management program, although several objected to certain of the board's specific responsibilities required under the rule, in particular their approval of the three-day highly liquid asset minimum and of material changes to the program.
Several commenters asked that the final rule include an express standard of care (
We are adopting substantially as proposed the requirements that the fund's board of directors approve the designation of the fund's investment adviser, officer, or officers (which could not be solely portfolio managers of the fund) responsible for administering the fund's liquidity risk management program.
We received little comment on this aspect of the proposal. A few commenters agreed with the proposal that the board's responsibilities should include approval of the program's administrator.
One commenter argued that portfolio managers should administer the program, contending that liquidity risk management requires investment skills and swiftness during stress to manage redemptions.
The Commission recognizes that, in certain circumstances, a fund's service providers might assist a fund and its investment adviser by providing information relevant to a fund's assessing and managing liquidity
One commenter requested further guidance on what responsibilities the administrator could delegate and to what extent the administrator could rely upon third parties.
Under the final rule, a fund will be required to obtain initial approval of its written liquidity risk management program from the fund's board of directors, including a majority of its independent directors.
Commenters raised concerns that the proposed rule imposed management responsibilities on the fund's board of directors and suggested that the Commission clarify that the board's role is to provide oversight through approval of policies and procedures, whereas management's role is to devise the specific details of the program.
We agree with commenters that requiring funds to obtain approval from fund boards before making material changes to a liquidity risk management program risks the program becoming stale and outdated as market changes occur, and is not consistent with the approach taken under rule 38a-1. Accordingly, the final rule does not require prior approval of material changes to the fund's liquidity risk management program from the fund's board of directors. However, under the final rule, the board is still required to approve the program initially and to provide oversight of it, as well as review a report on the adequacy and effectiveness of the program's implementation, which must include a description of any material changes made to the program during the period. We believe that this oversight role is consistent with the board's historical responsibilities with respect to overseeing fund operations.
In a change from the proposal, under the final rule, boards will not be required to approve the highly liquid investment minimum, nor approve changes to it, except in the limited circumstances where a fund seeks to change the minimum while the fund is below the pre-established minimum. Commenters argued that because liquidity risk management, including management of three day-liquid assets, is both technical and fact-intensive and often requires day-to-day judgments, fund managers should develop and administer the program, subject to board review.
We agree with commenters that requiring boards to approve the highly liquid investment minimum may reduce its utility, as the minimum may need to be revised on a more timely basis so that it can best reflect the liquidity management needs of the fund under current market conditions. In addition, we understand commenters' concerns that requiring mutual fund boards to make day-to-day determinations regarding the minimum amount of cash or liquid assets the fund should hold may lead to a more detailed managerial role for the board.
However, in the limited circumstances where the program administrator seeks to change the fund's highly liquid investment minimum while the fund is below the pre-established minimum, the final rules require the board to approve such a change. In the absence of such a requirement, the administrator could simply change the minimum if the fund dropped below it, avoiding the accountability of the board approval requirements as well as reducing the minimum's utility as a liquidity risk management tool. The final rule also requires the board to receive a report whenever the fund falls below its highly liquid investment minimum at its next regularly scheduled meeting and a report of such a shortfall if the fund is below its highly liquid investment minimum for more than 7 consecutive calendar days, within one business day thereafter. The Commission believes these requirements properly balance the ability of funds to move quickly in response to shifting environments with
In a change from the proposal, the final rule will also require that a fund board be informed within one business day if the fund's holdings of illiquid investments exceed 15% of its net assets. In the proposal, we requested comment as to whether additional aspects of a fund's liquidity management program should be reported to a fund's board. For the reasons discussed in the section on Form N-LIQUID, if a fund's holdings of illiquid investments exceed 15% for any reason (for example, if a fund experiences net redemptions leading to increased holdings of illiquid investments) it may raise significant concerns regarding the fund's management of its liquidity and ability to continue to meet its redemption obligations. Accordingly, we believe that such an event should be reported to the board immediately, as it may have significant impacts on the ability of the fund to meet its redemption obligations, and may compromise its liquidity risk management.
As discussed in the section on Form N-LIQUID below, a number of commenters also expressed support for the addition of an early warning notification provision, under which funds would be required to notify the Commission (or take other action) when illiquid investments held at the end of a business day exceed 15% of net assets and continue to exceed 15% of net assets three business days after the threshold was first exceeded.
Under the final rules, and as we proposed, each fund will be required to maintain a written copy of the policies and procedures adopted as part of its liquidity risk management program for five years, in an easily accessible place.
One commenter found the recordkeeping requirements consistent with similar recordkeeping requirements that funds are currently required to maintain.
The Commission continues to believe that the rule appropriately balances recordkeeping-related burdens on funds and our examination staff's ability to evaluate a fund's liquidity risk management program in light of the requirements of rule 22e-4. We are therefore adopting this aspect of the rule substantially as proposed.
We are adopting certain tailored liquidity risk management program requirements for ETFs.
A number of commenters on the proposal highlighted how ETFs differ from mutual funds, and stated in particular that In-Kind ETFs do not present the same type of liquidity risks as other funds.
As noted above, we believe that ETFs, like mutual funds, face liquidity risks.
We decline to exempt all ETFs from the rule entirely, because we believe ETFs that redeem more than a
Over the years, the Commission and staff have explored the structural and operational differences between ETFs (including those that redeem in kind) and other open-end funds (that redeem in cash), solicited public comment, including on issues related to the potential effects of illiquidity on the operation of ETFs and evaluated the trading of ETFs in times of market stress.
Under the final rule, all ETFs must consider certain additional liquidity risk assessment factors, if applicable, but only In-Kind ETFs will be excluded from the classification and highly liquid investment minimum requirements.
Consistent with our exemptive orders, we recognize that there may be circumstances under which an In-Kind ETF may use cash to meet redemptions (in addition to securities and other non-cash assets). For example, today an ETF that typically redeems in-kind may use cash to: (i) Make up any difference between the NAV attributable to a creation unit and the aggregate market value of the creation basket exchanged for the creation unit (generally referred to as the “balancing amount” in an ETF's exemptive order); (ii) correspond to uninvested cash in the fund's portfolio (which, to the extent that this amount of cash equals the fund's cash position in the portfolio, would be an “in-kind” redemption); or (iii) substitute for a portfolio position or asset that is not eligible to be transferred in kind (
An In-Kind ETF generally should describe in its written policies and procedures for its liquidity risk management program,
As discussed above, in-kind redemptions mitigate certain liquidity risks, but only to the extent that the fund can use in-kind redemptions. This factor is particularly important for an In-Kind ETF because such a fund may only include in its redemption basket a
By adopting certain tailored liquidity risk management program requirements for ETFs, we recognize, consistent with comments received, that both ETFs that redeem in cash and In-Kind ETFs present unique liquidity risks as compared to other funds. Some of these unique risks were not specifically addressed in the generally applicable liquidity risk management program as proposed, while still other aspects of the general program were less applicable to the actual operation of In-Kind ETFs, particularly those that offer daily transparency of holdings. Our final rule is designed to address both issues. Accordingly, an ETF will be required to adopt and implement a tailored liquidity risk management program that has the unique elements discussed below, in addition to the elements discussed elsewhere in this Release.
An ETF, like other open-end funds, will be required to assess and manage the fund's “liquidity risk”—defined as the risk that a fund could not meet requests to redeem shares issued by the fund without significant dilution of remaining investors' interests in the fund.
Illiquidity in an ETF's portfolio or its basket assets can adversely impact investors by imposing costs on market participants that could then potentially be reflected in a widening of the bid-ask spread of the ETF shares. This widening could result in shareholders transacting in an ETF's shares at market prices that do not maintain a “close tie” to the NAV per share of the ETF. As we have previously stated, a close tie between ETF share market prices and the ETF's NAV per share is important because section 22(d) and rule 22c-1 under the Act are designed to require that all fund shareholders be treated equitably.
Under the final rule, ETFs will be required to assess, manage, and periodically review the fund's liquidity risk and needs, taking into account, as applicable, the liquidity risk factors for all funds (as modified from the proposal) discussed previously.
• The relationship between the ETF's portfolio liquidity and the way in which, and the prices and spreads at which, ETF shares trade, including the efficiency of the arbitrage function and the level of active participation by market participants (including authorized participants);
• The effect of the composition of baskets on the overall liquidity of the ETF's portfolio.
We considered, in establishing these factors, comments received on the Proposing Release and the 2015 ETP Request for Comment, as well as the unique structure and operation of ETFs. We discuss these factors in more detail below. As we noted with regard to other open-end funds, the list of liquidity risk assessment factors for ETFs is not meant to be exhaustive. Rather, an ETF generally should incorporate other considerations in assessing its liquidity risk that it considers appropriate.
As discussed above, the ETF structure permits only authorized participants to purchase or redeem shares from an ETF and to transact in the ETF's shares at the NAV per share. The combination of the creation and redemption process with secondary market trading in ETF shares provides arbitrage opportunities that, if effective, keep the market price of the ETF's shares at or close to the NAV per share of the ETF.
Commenters to the 2015 ETP Request for Comment also highlighted the importance of portfolio liquidity on the efficiency of the ETF arbitrage mechanism. During an extraordinary period of market volatility on August 24, 2015 (“the August 24th Market Events”), for example, many ETFs traded at prices materially different from the NAV of the funds' underlying
In-Kind ETFs create and redeem using baskets of securities and other assets. These baskets may be highly correlated to the ETF's overall portfolio. As we noted in the Proposing Release, the composition of the basket can affect the liquidity of the ETF's portfolio.
A few commenters also suggested that increasing ETF basket flexibility and eliminating the two percent limitation on redemption fees for ETFs would help enhance ETF liquidity and the orderly and efficient operation of the arbitrage function.
Under the final rule, an open-end fund (other than an In-Kind ETF) will be required to classify each of the fund's portfolio investments (generally by asset class) into one of four categories: Highly liquid investments; moderately liquid investments; less liquid investments; and illiquid investments. A number of commenters noted, as the Commission recognized in the Proposing Release and as we reiterate above, that an open-end fund (including an open-end ETF) that redeems in cash has a different nature of liquidity risk than an ETF that redeems through in-kind transfers of securities, positions, and other assets.
We note, for example, that when a mutual fund experiences daily net redemptions, the fund will likely be required to sell its portfolio holdings in order to generate cash to meet redemptions. To the extent that a fund must sell a less liquid security in order to generate the cash proceeds required, there is enhanced liquidity risk—that is, risk that a fund cannot meet redemptions without significant dilution of remaining investors. Therefore, we believe that it is appropriate for such a fund to assess its liquidity risk by analyzing the amount of time it will take, in current market conditions, to convert its portfolio assets (without the conversion (or in some cases, sale or disposition) significantly changing the market value of the investments).
As discussed above, an In-Kind ETF's liquidity risk is different from the liquidity risk of a fund that generally meets redemptions in cash. Rather than liquidity risk affecting investors directly in their ability to receive cash redemption proceeds, illiquidity in an ETF's portfolio or its basket assets can adversely impact investors by contributing to a widening of the bid-ask spread of the ETF shares. This widening could result in shareholders transacting in an ETF's shares at market prices that do not maintain a “close tie” to the NAV per share of the ETF. The declining liquidity in an ETF's portfolio also could affect the arbitrage function related to the ETF, as discussed above.
Despite our concern about the specific liquidity-related risks in ETFs described above, we view the liquidity classification information for In-Kind ETFs as less necessary for the Commission, investors, and other potential users of this information because, unlike for mutual funds, the daily identity and weightings of ETF portfolio holdings are well known to authorized participants and other ETF liquidity providers, and would be required to be disclosed daily under our final rules to qualify for the exemption from the classification requirement.
We continue to believe that it is important that an In-Kind ETF maintain sufficient liquidity in its portfolio. Accordingly, the final rule requires that an In-Kind ETF, in assessing liquidity risk, take into account certain factors that are more tailored to the way in which such funds operate and the resulting liquidity risks. For example, those factors include considering the relationship between portfolio liquidity and the arbitrage function, as well as the effect of the composition of in-kind baskets on the overall liquidity of the fund's portfolio. However, given the more limited utility of this classification information for the reasons described above, and considering the burdens of tracking and reporting it to us, we do not believe that it is appropriate to require an In-Kind ETF to classify its portfolio investments into liquidity categories based on a “days-to-cash” framework and report that information to the Commission.
Under the final rule, an open-end fund (other than an In-Kind ETF) will be required to determine a percentage of the fund's net assets that it will invest in assets that are highly liquid investments. The fund will determine its highly liquid investment minimum using the first category in the liquidity classification requirement (
In determining to adopt a highly liquid investment minimum for certain open-end funds, we considered comments received on proposed rule 22e-4, which would have required a “three-day liquid asset minimum.”
Consistent with the comments received, we are not requiring that an In-Kind ETF adopt a highly liquid investment minimum. First, an open-end fund will be required to establish its highly liquid investment minimum using its “highly liquid investment” portfolio classification. As discussed earlier, we have determined that it is not necessary to require that an In-Kind ETF classify its portfolio liquidity (
Second, the highly liquid investment minimum, as discussed above, is intended to increase the likelihood that an open-end fund meets redemption requests without significant dilution of remaining investors. Open-end funds that redeem in cash and In-Kind ETFs operate differently, and therefore evaluate liquidity risk differently. We believe, for example, that it is necessary for an open-end fund that meets redemptions in cash (including an ETF) to manage its liquidity risk by establishing a minimum amount of highly liquid investments that, as defined in the final rule, are quickly convertible to cash (within 3 business days). In this way, the highly liquid investment minimum increases the likelihood that the fund will be able to meet redemption requests in cash without significant dilution of remaining investors. Conversely, we believe, for example, that it is more appropriate for an In-Kind ETF that meets redemptions through in-kind transfers of securities, positions, and other assets (and no more than a
We discussed above the requirement that funds (including ETFs) other than In-Kind ETFs establish a highly liquid investment minimum.
As noted above, the proposed scope of rule 22e4 did not include UITs, although we requested comment on whether UITs should be included within its scope, and whether we should include specific limitations on UIT's holdings of illiquid assets at inception.
As discussed in detail in the Proposing Release, most UITs serve as separate account vehicles used to fund variable annuity and variable life insurance contracts,
Several commenters argued (in the context of ETFs organized as UITs) that UITs may be subject to liquidity risk comparable to other funds.
Accordingly, today we are adopting a limited liquidity review requirement for UITs to require that a UIT's principal underwriter or depositor determine upon initial deposit of a registered UIT that the level of illiquid investments it will hold is consistent with the redeemable nature of the securities it issues.
We expect that this initial review requirement would in many respects be similar to the process for determining whether a fund's holding of illiquid investments is consistent with rule 22e-4's 15% limitation on illiquid investments, taking into account the unique structure and purpose of UITs. If a UIT were to hold or planned to hold more than 15% of its investments in illiquid investments at the time of initial deposit, such a level of illiquid investments is unlikely to be consistent with the nature of the redeemable securities it issues. Thus, if a UIT planned to hold significant amounts of illiquid securities (in excess of 15%), its principal underwriter or depositor would be unlikely to be able to make the determination that its investment's liquidity is consistent with its issuance of redeemable securities.
Due to the unmanaged structure of UITs and the fixed nature of their portfolios, it would be inconsistent with their structure and portfolios to require UITs to re-evaluate the securities they hold based on their liquidity characteristics and change their investments accordingly over time. Therefore, the requirement only applies at the time of the UIT's creation. Although this is a one-time determination at the time of the UIT's initial deposit, it should take into
As discussed above, because of the unmanaged nature of an UIT, we recognize that depending on its particular circumstances, after initial deposit, an UIT might potentially hold a higher level of illiquid investments due to redemptions or changes in the liquidity of the investments it holds. Nonetheless, we expect that the requirement for the depositor or principal underwriter to determine that the liquidity of the investments the UIT holds is consistent with the nature of the redeemable securities it issues at the time of initial deposit should help enhance UIT liquidity.
Receiving relevant information about the operations of a fund and its principal investment risks is important to investors in choosing the appropriate fund for their risk tolerances. Investors in open-end funds generally expect funds to pay redemption proceeds promptly following their redemption requests based, in part, on representations made by funds in their disclosure documents. Currently, funds are not expressly required to disclose how they manage the liquidity of their investments, and limited information is available regarding fund liquidity and whether the liquidity of a fund's portfolio securities corresponds with its anticipated liquidity needs.
We are adopting, substantially as proposed with some modifications in response to comment, amendments to Form N-1A that will require a fund to further describe its procedures for redeeming the fund's shares including the number of days following receipt of shareholder redemption requests in which the fund typically expects to pay redemption proceeds to redeeming shareholders and the methods the fund typically uses to meet redemption requests, including whether those methods are used regularly or only in stressed market conditions.
In addition, we are adopting new Form N-LIQUID to incorporate information that would have previously been reported on Form N-PORT under the proposal concerning a fund's investments in illiquid investments, but with some modifications in response to comments. Under this new reporting form, a fund is required to notify the Commission when more than 15% of the fund's net assets are, or become, illiquid investments that are assets as defined in rule 22e-4 and report information about the investments affected.
We are adopting, as proposed, the requirement that a fund report on Form N-CEN information regarding the use of lines of credit, interfund lending, and interfund borrowing.
Many commenters expressed general support for enhanced disclosures regarding fund liquidity risk management practices.
Form N-1A is used by open-end funds, including money market funds and ETFs, to register under the Investment Company Act and to register offerings of their securities under the Securities Act. We are adopting, substantially as proposed, amendments to Form N-1A that will require a fund to further describe its procedures for redeeming the fund's shares including the number of days following receipt of shareholder redemption requests in which the fund typically expects to pay redemption proceeds to redeeming shareholders.
In addition, we are adopting an amendment to General Instruction A of Form N-1A to conform the definition of “exchange-traded fund,” which currently defines an ETF to mean, in part, a fund or class, “the shares of which are
Many commenters generally supported enhancing prospectus disclosure requirements,
Form N-1A requires funds to describe their procedures for redeeming fund shares.
We proposed amendments to Item 11 of Form N-1A that would require a fund to disclose the number of days in which the fund would pay redemption proceeds to redeeming shareholders.
Some commenters expressed general support for these new disclosure requirements under the proposal, stating that this information will improve shareholder and market participant knowledge regarding fund redemption procedures and liquidity risk management
Some commenters also expressed concerns with the proposed requirement that funds disclose the number of days in which a fund will pay redemption proceeds for each distribution channel, stating that the disclosure could present undue complexity to the prospectus and may lead to shareholder confusion.
We understand that in most cases, the distribution channel through which a shareholder transacts in fund shares is unlikely to have a material effect on the timing of the payment of redemption proceeds, but instead that the choice of
Thus, under the final amendments, if the number of days a fund expects to pay redemption proceeds differs by method of payment (
Other commenters expressed concerns about specific aspects of the proposed disclosure amendments. For example, some commenters stated that requiring funds to disclose the number of days in which the fund will pay redemption proceeds to redeeming shareholders would pressure funds to disclose shorter redemption payment periods, thereby limiting funds from exercising discretion in stressed markets.
In consideration of these comments, and in a modification to the proposal, we are adopting amendments to Item 11 of Form N-1A to require a fund to disclose the number of days following receipt of shareholder redemption requests in which the fund
We appreciate commenters' concerns, and believe that this adjustment to the language in Form N-1A will give funds flexibility to provide disclosures about redemption procedures that do not inappropriately limit a fund's ability to meet redemptions to the exact timing previously disclosed in its prospectus. We continue to believe that requiring this disclosure will inform the public about a critical aspect of a shareholder's relationship with a fund—when the shareholder can expect redemption proceeds. Funds generally should disclose timing that reflects their actual operational procedures for meeting redemption rather than generic disclosures about fund redemptions, regardless of what other funds in the industry may disclose. We continue to believe that it is in the public interest to inform investors on the timing of when fund shareholders should expect redemption proceeds. We believe that this disclosure requirement will also enhance consistency in fund disclosures regarding the timing in which a fund will pay redemption proceeds, thereby improving the information provided to shareholders and the ability of investors to compare redemption procedures across funds.
As noted above, some commenters opposed a requirement to disclose the methods used (and number of days) to pay redemption proceeds, arguing, for example, that the disclosure requirement would inappropriately limit the flexibility of a fund to meet redemptions to timing and methods previously disclosed in its prospectus or would cause generic disclosures because of the variety of methods available to funds to meet redemptions.
In light of these comments, in a modification to the proposal, we are adopting amendments to Item 11 of Form N-1A to require a fund to disclose the methods that the fund
We believe that requiring specific disclosure on the methods a fund uses to pay redemption proceeds could improve investor knowledge on how a fund manages liquidity and its redemption obligations to shareholders. At the foundation of the prospectus
Methods to meet redemption obligations may include, for example, sales of portfolio assets, holdings of cash or cash equivalents, the use of lines of credit and/or interfund lending, and in-kind redemptions.
As noted above, Form N-1A requires funds to disclose whether they reserve the right to redeem their shares in kind instead of in cash and to describe the procedures for such redemptions.
One commenter expressed concerns that the proposed additional disclosure requirements in Form N-1A runs against the Commission's goal of clear and concise, user-friendly disclosures.
We also proposed to amend Item 28 of Form N-1A to require a fund to file as an exhibit to its registration statement any agreements related to lines of credit for the benefit of the fund to increase Commission, investor, and market participant knowledge concerning the arrangements funds have made in order to strengthen their ability to meet shareholder redemption requests and manage liquidity risk and the terms of those arrangements.
Many commenters objected to the credit agreements exhibit requirement,
Rather than include line of credit agreements as exhibits, other commenters suggested including a narrative discussion of lines of credit information, similar to the data required to be disclosed in Form N-CEN, in a fund's statement of additional information.
We find the concerns expressed by commenters persuasive and have determined to not adopt this amendment to Form N-1A. We acknowledge that credit agreements can be lengthy, complex documents that may be of limited value to retail investors and that the information provided in the proposed exhibits could be, in part, duplicative of information provided in a fund's statement of additional information and financial statements. We believe that requiring funds to report the use of lines of credit in response to reporting requirements in Form N-CEN is an appropriate means to increase Commission, investor, and market participant knowledge concerning the arrangements funds have made in order to strengthen their ability to meet shareholder redemption
Some commenters recommended that the Commission require additional disclosures in a fund's registration statement about a fund's specific liquidity risk management policies and procedures
We support commenters' goals of providing useful information about a fund's liquidity risk management practices to investors but also remain committed to encouraging statutory prospectuses that are simple, clear, and useful to investors
We are also adopting a new requirement that open-end investment companies, including In-Kind ETFs to the extent applicable
First, a registrant is required to file Form N-LIQUID within one business day when more than 15% of its net assets are, or become, illiquid investments that are assets as defined in rule 22e-4.
Second, if a registrant whose illiquid investments that are assets previously exceeded 15% of net assets determines that its holdings in illiquid investments that are assets have changed to be less than or equal to 15% of the registrant's net assets, then the registrant also is required to report within one business day (1) the date(s) on which its illiquid investments that are assets fell to or below 15% of net assets and (2) the current percentage of the registrant's net assets that are illiquid investments that are assets.
Lastly, a registrant also is required to notify the Commission on Form N-LIQUID within one business day if its holdings in highly liquid investments that are assets fall to or below the registrant's highly liquid investment minimum for more than 7 consecutive calendar days.
As discussed above, we are modifying the 15% standard asset-reporting requirement originally proposed by incorporating this information into the fourth “illiquid investment” classification category reported on Form N-PORT.
Some commenters recommended that the Commission require more detailed reporting data from funds that hold a larger percentage of securities that are
We appreciate the concerns and suggestions raised by commenters and agree that the Commission should be notified promptly when a fund encounters indications of increased liquidity risk and believe that new Form N-LIQUID addresses some concerns expressed by commenters that certain liquidity events that could affect the liquidity of a particular fund and/or indicate potential liquidity risks across the fund industry require particular attention by Commission staff. Pursuant to Part B of Form N-LIQUID, registrants will now be required to report to the Commission within one business day of when their percentage of illiquid investments that are assets exceeds (and subsequently falls to or below) 15% of their net assets.
Form N-LIQUID also includes general filing and reporting instructions, as well as definitions of specific terms referenced in the form.
We proposed several reporting items under Part C of Form N-CEN to allow the Commission and other users to track certain liquidity risk management practices that we expect funds to use on a less frequent basis than the day-to-day portfolio construction techniques captured by Form N-PORT.
We are adopting, largely as proposed, but with a modification in response to comment, the requirement in Form N-CEN that a management company report information regarding the use of lines of credit, interfund lending, and interfund borrowing.
The Proposing Release included a request for comment on whether funds should be required to report information on uncommitted lines of credit on Form N-CEN.
In consideration of these comments, we are including in Form N-CEN a requirement for funds to report the availability and use of committed and uncommitted lines of credit.
We are adopting, as proposed, the requirement that a fund report whether it engaged in interfund lending or interfund borrowing during the reporting period, and, if so, the average amount of the interfund loan when the loan was outstanding and the number of days that the interfund loan was outstanding.
In a modification to the proposal, we are requiring that each ETF that complies with rule 22e-4 as an “In-Kind ETF” under the rule, identify itself accordingly in reports on Form N-CEN.
Some commenters suggested that the Commission should include a safe harbor and/or protection from liability as part of the final rule for proposed liquidity-related disclosures.
We are adopting the following effective and compliance dates, as set forth below.
The compliance date for our liquidity risk management program requirement is December 1, 2018 for larger entities, and June 1, 2019 for smaller entities. Thus all registered open-end management investment companies, including open-end ETFs, that are not smaller entities, will be required to adopt and implement a written liquidity risk management program, approved by a fund's board of directors on December 1, 2018, while smaller entities will be required to do so six months later, on June 1, 2019.
In the Proposing Release, the Commission stated that it expected to provide a tiered set of compliance dates based on asset size.
Most of the commenters who discussed the proposed liquidity risk management program compliance
After evaluating the comments received, we believe that larger entities would benefit from an additional period of time to come into compliance with the rules over the 18 months that was proposed. Therefore, we are providing an additional 6 months for these entities, for a total of 24 months (
In the Proposing Release, the Commission expected to require all initial registration statements on Form N-1A, and all post-effective amendments that are annual updates to effective registration statements on Form N-1A, filed six months or more after the effective date, to comply with the proposed amendments to Form N-1A.
Similar to the tiered compliance dates for the liquidity classification requirements (discussed above), we are providing a tiered set of compliance dates based on asset size for the additions to Form N-PORT and Form N-CEN.
As discussed above, we are persuaded that larger entities would benefit from extra time to comply and are therefore providing a compliance date of December 1, 2018 for larger entities to come into compliance with the additional liquidity-related reporting requirements of Form N-PORT and Form N-CEN. This will result in larger funds filing their first reports with additional liquidity-related information on Form N-PORT, reflecting data as of December 31, no later than January 31. For smaller entities, the compliance date will be June 1, 2019. This will provide smaller entities an additional six months to comply with the new liquidity-related reporting requirements.
As discussed above, the Commission is adopting regulatory changes to require a liquidity risk management program, and to require new disclosures regarding liquidity risk and liquidity risk management (collectively, the “final liquidity regulations”). Because of the significant diversity in liquidity risk management practices that we have observed in the fund industry, there exists the need for enhanced comprehensive baseline regulations instead of only guidance for fund liquidity risk management. In summary, and as discussed in greater detail in section III above, the final liquidity regulations include the following:
• New rule 22e-4 will require that each fund stablish a written liquidity risk management program. A fund's liquidity risk management program broadly requires a fund to assess, manage and review the fund's liquidity risk; to classify the liquidity of each of the fund's portfolio investments; to determine a highly liquid investment minimum (except for funds that hold primarily highly liquid investments); and to limit illiquid investments to 15% of fund investments. The final rule also provides for a tailored program for all ETFs, but offers some exemptions for In-Kind ETFs. Finally, the rule requires for board oversight of the liquidity risk management program.
• Amendments to Form N-1A and additional elements of new Form N-PORT and Form N-CEN will require enhanced fund disclosure and reporting regarding position liquidity and shareholder redemption practices. New Form N-LIQUID will require more prompt, non-public notification to the Commission when a fund's holdings of assets that are illiquid investments exceed 15% of net assets, or when a fund's holdings of highly liquid investments that are assets fall below the fund's highly liquid investment minimum for more than 7 consecutive calendar days.
The Commission is sensitive to the economic effects of the final liquidity regulations, including the benefits and costs as well as the effects on efficiency, competition, and capital formation. The economic effects are discussed below in the context of the primary goals of the final liquidity regulations.
The primary goals of the final liquidity regulations are to promote
The final liquidity regulations are also intended to lessen the possibility of early redemption incentives (and investor dilution) created by insufficient liquidity risk management, as well as the possibility that investors' share value will be diluted by costs incurred by a fund as a result of other investors' purchase or redemption activity. When a fund experiences significant redemption requests, it may sell portfolio securities or borrow funds in order to obtain sufficient cash to meet redemptions.
Finally, the final liquidity regulations are meant to address recent industry developments that have underscored the significance of funds' liquidity risk management practices. In recent years, there has been significant growth in the assets managed by funds with strategies that focus on holding relatively less liquid investments, such as fixed income funds (including emerging market debt funds), open-end funds with alternative strategies, and emerging market equity funds.
The final liquidity regulations will affect all funds and their investors, investment advisers and other service providers, all issuers of the portfolio securities in which funds invest, and other market participants potentially affected by fund and investor behavior. The economic baseline of the final liquidity regulations includes funds' current practices regarding liquidity risk management and liquidity risk disclosure, as well as the economic attributes of funds that affect their portfolio liquidity and liquidity risk. These economic attributes include industry-wide trends regarding funds' liquidity and liquidity risk management, as well as industry developments highlighting the importance of robust liquidity risk management by funds.
Under section 22(e) of the Investment Company Act, a registered investment company is required to make payment to shareholders for redeemable securities tendered for redemption within seven days of their tender.
With the exception of money market funds subject to rule 2a-7 under the Act, the Commission has not promulgated rules requiring open-end funds to hold a minimum level of liquid investments.
Additionally, long-standing Commission guidelines generally limit an open-end fund's aggregate investment in “illiquid assets” to no more than 15% of the fund's net assets (the “15% guideline”).
As noted in the Proposing Release, staff outreach has shown that funds currently employ a diversity of practices with respect to assessing portfolio investments' liquidity, as well as managing liquidity risk. Section II.D.3 above provides an overview of these practices, which include, among others: Assessing the ability to sell particular investments within various time periods, taking into account relevant market, trading, and other factors; monitoring initial liquidity determinations for portfolio investments (and modifying these determinations, as appropriate); holding certain amounts of the fund's portfolio in highly liquid investments or cash equivalents; establishing committed back-up lines of credit or interfund lending facilities; and conducting stress testing relating to the extent the fund has liquid investments to cover possible levels of redemptions.
A fund may meet redemption requests in a variety of ways, including by using cash, borrowing under a line of credit, or by selling portfolio investments. The fund's portfolio liquidity as well as its value will be affected by the choice of which investments are sold. Subsequent portfolio transactions after redemptions are met will also affect portfolio liquidity and value. For example, a fund facing a large redemption request might lessen the impact on portfolio value of selling investments by selling the most liquid portion of the portfolio or using some of its cash or a line of credit.
Staff analysis of the impact of large redemptions on U.S. equity fund portfolio liquidity is consistent with the hypothesis that the average U.S. equity fund does not sell a strip of its portfolio investments to meet large redemptions, but instead appears—based on changes in funds' portfolio liquidity following net outflows—to disproportionately sell the more liquid portion of its portfolio for this purpose.
Items 4 and 9 of Form N-1A require a fund to disclose the principal risks of investing in the fund.
Item 11 of Form N-1A requires a fund to describe its procedure for redeeming fund shares, including restrictions on redemptions, any redemption charges, and whether the fund has reserved the right to redeem in kind.
Funds are not currently required to disclose information about the liquidity of their portfolio investments. However, some funds voluntarily disclose in their registration statements any specific limitations applicable to the fund's investment in 15% guideline assets, as well as types of assets considered by the fund to be subject to the 15% guideline.
Form N-1A does not currently require funds to disclose information about liquidity risk management practices such as the establishment (or use) of committed back-up lines of credit. A fund is, however, required to disclose information regarding the amount and terms of unused lines of credit for short-term financing, as well as information regarding related party transactions in its financial statements or notes thereto.
Below we discuss the size and growth of the U.S. fund industry generally, as well as the growth of various investment strategies within the industry. We show that the fund industry has grown significantly in the past two decades, and during this period, funds with international strategies, fixed income funds, and funds with alternative strategies have grown particularly quickly. We also determine the types of funds that demonstrate notably volatile and unpredictable flows. Because volatility and predictability in a fund's flows can affect the extent to which the fund is able to meet expected and reasonably foreseeable redemption requests without diluting the interests of fund shareholders, assessing trends regarding these factors can provide information about sectors of the fund industry that could be particularly susceptible to liquidity risk.
While we believe that these trends are relevant from the perspective of addressing potential liquidity risk in the fund industry (and in funds' underlying portfolio investments), we emphasize
Open-end funds and ETFs manage a significant and growing amount of assets in U.S. financial markets. As of the end of 2015, there were 10,633 open-end funds (excluding money market funds, but including ETFs), as compared to 5,279 at the end of 1996.
U.S. equity funds represent the greatest percentage of U.S. open-end fund industry assets.
While the overall growth rate of funds' assets has been generally high (about 7.2% per year, between the years 2000 and 2015
These investment subclasses represent a small portion of the U.S. mutual fund industry (the combined assets of these investment subclasses as a percentage of the U.S. fund industry was 2.3% at the end of 2015).
The assets of funds with alternative strategies
The industry developments discussed above are notable for several reasons. The growth of funds generally over the past few decades demonstrates that investors have increasingly come to rely on investments in funds to meet their financial needs.
One commenter has argued that flow volatility, which staff economists have used as a measure of liquidity risk, does not necessarily translate into liquidity risk.
The same commenter has also suggested that the same approach of measuring liquidity risk does not consider the usage of derivatives in managing volatile flows, noting that they are often more liquid than their underlying assets.
Taking into account the goals of the final liquidity regulations and the economic baseline, as discussed above, this section discusses the benefits and costs of the final liquidity regulations, as well as the potential effects of the final liquidity regulations on efficiency, competition, and capital formation. This section also discusses reasonable alternatives to rule 22e-4 and the disclosure and reporting requirements regarding funds' liquidity risk and liquidity risk management.
Rule 22e-4 will require each fund to establish a written liquidity risk management program. The rule specifies that a fund's liquidity risk management program shall include the following required program elements: (i) Assessment, management, and periodic review of the fund's liquidity risk; (ii) classification of the liquidity of each of the fund's portfolio investments based on asset class, so long as the fund or its adviser does not have information about any market, trading, or investment-specific considerations that are reasonably expected to significantly affect the liquidity characteristics of an investment that would suggest a different classification for that investment;
Rule 22e-4 also includes certain recordkeeping requirements. A fund will be required to keep a written copy of its liquidity risk management policies and procedures, as well as copies of any materials provided to the fund's board in connection with the approval of the initial liquidity risk management program and annual board reporting requirement.
In addition, two types of funds are subject to tailored requirements by the final rule. First, funds that primarily hold highly liquid assets do not have to establish a highly liquid investment minimum as part of their liquidity risk management programs.
In addition to the special treatment of In-Kind ETFs and primarily highly liquid funds, the final rules differ from the proposed version in several ways that may have economic consequences: (1) It integrates the definition of illiquid investments subject to the 15% illiquid investment limit as a part of the portfolio classification process, requiring the consideration of market, trading, and investment-specific factors and market depth in determining whether an investment is illiquid, as well as the periodic review of this assessment at least monthly; (2) it reduces the number of categories used to classify portfolio investment liquidity from six to four and requires fewer long-term liquidity projections; (3) it simplifies portfolio position classification by allowing them to be based on asset classes, with customized exceptions for individual positions where necessary;
Rule 22e-4, as adopted, should produce the same broad benefits for current and potential fund investors as discussed in the proposal. Where appropriate, we discuss below any changes in these benefits due to differences between the proposed and final rules. Specifically, the liquidity risk management program requirements are likely to improve investor protection by decreasing the chance that some funds may be unable to meet their redemption obligations, would meet such obligations by diluting the fund's shares, or would meet such obligations through methods that would have other adverse impacts on non-redeeming investors (
We believe that the liquidity risk management program requirement should promote improved alignment of the liquidity of the fund's portfolio with the fund's expected (and reasonably foreseeable) levels of redemptions. As discussed above, rule 22e-4 will require each fund to classify the liquidity of its portfolio investments in assessing its liquidity risk, and to determine a highly liquid investment minimum to increase the likelihood that the fund will hold adequate liquid investments to meet redemption requests without significant dilution. Each fund will have flexibility to determine the particular investments that it holds in connection with its highly liquid investment minimum. Assets eligible for inclusion in a fund's highly liquid investment minimum could include a broad variety of securities, as well as cash and cash equivalents. While one fund may conclude that it is appropriate to hold a significant portion of its assets that are highly liquid investments in cash and cash equivalents, another could decide it is appropriate to hold assets that are convertible to cash within longer periods (but not exceeding three business days) as the majority of its highly liquid investments. The highly liquid investment minimum requirement should allow funds to continue to meet a wide variety of investors' investment needs by obliging funds to maintain appropriate liquidity in their portfolios. The proposed rule would have required funds to set a firm three-day liquid asset minimum, prohibiting the acquisition of relatively less liquid assets until a fund was back above its minimum, instead of allowing them to operate below the minimum with board notification, so the final rule should mitigate any unfavorable market effects related to the systematic purchase or sale of investments once a strict minimum was exceeded. In extreme cases—for example, if investments that the fund sought to purchase were trading at fire sale prices due to a market event—a fund could go below its minimum to trade opportunistically. However, that might cause the fund to operate below its highly liquid investment minimum for more than 7 consecutive calendar days, requiring reporting to the fund's board and the Commission within one business day, so funds may be hesitant to take advantage of attractive market prices when they are close to their minimum under the final rule. The ability to deviate from the minimum for up to 7 consecutive calendar days with required reporting at the next regular board meeting, or for longer periods provided the fund reports to the board and the Commission, could also reduce the likelihood that funds set artificially low minimums, which would be less protective of investors than a minimum with some flexibility built in such as the one we are adopting. The limitation on the acquisition of assets that are illiquid investments to no more than 15% of net assets, along with the corresponding enhancements to how investment illiquidity is assessed, complements the
We believe that the rule also will decrease the probability that a fund will need to meet redemption requests through activities that can materially affect the fund's NAV or risk profile or dilute the interests of fund shareholders. For example, when a fund is insufficiently liquid or does not effectively manage liquidity and is faced with significant redemptions, or both, it may be forced to sell portfolio investments under unfavorable circumstances, which could create significant negative price pressure on those investments.
The potential negative consequences of asset sales undertaken to pay fund redemptions could create early redemption incentives in times of liquidity stress, or a “first-mover advantage.”
The program requirement aims to promote a minimum baseline for liquidity risk management in the fund industry. This should promote investor protection by elevating the overall quality of liquidity risk management across the fund industry, reducing the likelihood that funds will meet redemption obligations only through activities that could significantly dilute shareholders or adversely affect fund risk profiles. Shareholders in funds that already engage in strong liquidity risk management practices may be less likely to benefit from the program requirement, or may benefit less, than shareholders in funds that do not employ equally rigorous practices. We cannot quantify the total benefits to fund operations and investor protection that we discuss above, but to the extent that staff outreach has noted that some funds currently have no (or very limited) formal liquidity risk management programs in place, rule 22e-4 would enhance current liquidity risk management practices.
Finally, to the extent that the program requirement results in funds less frequently needing to sell portfolio investments in unfavorable market conditions in order to meet redemptions, the requirement also could lower potential spillover risks that funds could pose to the financial markets generally. If, as a result of the program requirement, a fund was prepared to meet redemption requests in other ways, the rule could decrease the
Commenters generally did not disagree with the benefits of the proposed rule, with any exceptions noted in the above discussion of rule 22e-4's benefits. As discussed above, the final rule differs from the proposal in several key respects, but it largely preserves the proposed rule's benefits. First, funds that primarily hold assets that are highly liquid investments are not required to establish a highly liquid investment minimum, so any benefits that might have accrued to shareholders of these funds under the proposed rule may be diminished. However, these funds are less likely to be exposed to the liquidity risks discussed above to the same degree as other funds, so any loss in benefits should be negligible and is likely to be less than the costs of establishing a minimum. Similarly, In-Kind ETFs are exempt from certain aspects of the final rule, because the benefits of those aspects of the final rule would have been insignificant for In-Kind ETFs. The final rule instead achieves benefits with respect to ETFs by replacing these less-apposite requirements with new tailored requirements for ETFs that are designed to promote the proper management of ETF liquidity, focused on preventing the arbitrage mechanism that keeps ETFs priced properly from being adversely impacted by a lack of liquidity. In addition, the new requirement for daily transparency will permit the sophisticated authorized participants that directly interact with the ETF to effectively evaluate the liquidity of the ETF's holdings. Since nearly all In-Kind ETFs already provide daily transparency as a matter of course, we believe no additional costs arise for In-Kind ETFs.
Second, modifications to the proposal allow funds to classify portfolio investments via assignments to asset classes as a default, but require them to classify specific investments separately if they merit special attention,
Changes to the final rule could also provide additional benefits relative to the proposal. While the final rule clarifies that the factors a fund should consider in devising a liquidity risk management program may be considered as appropriate, it also requires that funds consider two additional factors—whether a given strategy is appropriate in an open-ended fund or involves a concentrated portfolio or concentrated positions in particular issuers—which could improve the risk management program's effectiveness for funds that do not already consider these factors. The final rule also more precisely specifies criteria for both the initial and ongoing assessment of whether investments should be classified as illiquid under the 15% illiquid investment limit by tying it to the same criteria used in assigning investments to other liquidity categories (including considering relevant market, trading, and investment-specific considerations, and market depth), which should reduce a firm's compliance burdens relative to the proposed rule while at the same time providing a more precise picture of how exposed to illiquid investments a given fund is. Finally, while UITs were not subject to rule 22e-4 under the proposal, the final rule requires that the principal underwriter or depositor of a UIT will be required to determine, on or before the date of the initial deposit of portfolio securities into the UIT, that the portion of illiquid investments the UIT holds or will hold at the date of deposit that are assets is consistent with the redeemable nature of the securities it issues. This enhancement of the final rule over the proposal could benefit investors by reducing the likelihood that a UIT could be created that holds an excessive amount of illiquid securities, which in turn would reduce the liquidity risk associated with UITs.
Funds will incur one-time costs to establish and implement a liquidity risk management program in compliance with rule 22e-4, as well as ongoing program-related costs. As discussed above, funds today employ a range of different practices, with varying levels of quality, for assessing the liquidity of their portfolio investments and managing fund liquidity risk. Accordingly, funds whose practices regarding portfolio investment liquidity classification and liquidity risk assessment and management most closely align with the liquidity risk management program requirements would incur relatively lower costs to comply with rule 22e-4. Funds whose practices for classifying the liquidity of their portfolio investments and for assessing and managing liquidity risk are less thorough or not closely aligned with the rule, on the other hand, may incur relatively higher initial compliance costs.
Some commenters suggested that the estimates of costs in the rule proposal were significantly understated and that the true costs of compliance with the rule requirements would likely exceed the expected benefits.
Staff estimates of the one-time costs in the proposal, which ranged from $1.3 million to $2.25 million per fund complex, were partly based on estimates from another Commission rulemaking.
These estimated one-time costs are attributable to the following activities, as applicable to each of the funds within the complex: (i) Developing policies and procedures relating to each of the required program elements,
We have also revised our estimates of the ongoing costs of complying with rule 22e-4 using the same approach and based on the same commenter's estimate as above for one-time costs. While our analysis in the proposal assumed ongoing costs ranged from 10% to 25% of the one-time costs resulting from the rule, we've reduced the low end of the range to 5% to reflect changes from the Proposing Release, discussed below, that should lower some funds' compliance burdens, and increased the high end of the range to 32.5% to reflect the commenter's estimate that ongoing costs for their fund under the proposed rule would be $0.65 million (compared to one-time costs of $2 million). We again extrapolate from the commenter's estimate as above to arrive at a minimum and maximum cost estimate for each fund, which implies a range of ongoing costs across all funds of $40,000 to $3.3 million per fund complex. These costs are attributable to the following activities, as applicable to each of the funds within the complex: (i) Classification of the liquidity of each of the fund's portfolio investments, as well as at-least-monthly reviews of the fund's liquidity classifications (rule 22e-4(b)(1)(ii)); (ii) periodic review of the fund's liquidity risk (rule 22e-4(b)(1)(i)); (iii) periodic review of the adequacy of the fund's highly liquid investment minimum (rule 22e-4(b)(1)(iii)(A)(2)); (iv) systems maintenance; (v) additional staff training; (vi) approval, annual review, and general oversight by the board of the fund's liquidity risk management program (rule 22e-4(b)(2)); and (viii) recordkeeping relating to the fund's liquidity risk management program (rule 22e-4(b)(3)).
The original classification scheme would have mandated significant micro-level analysis of instruments not currently conducted by fund advisers according to many commenters.
Specifically with respect to position size, commenters argued that evaluating “days-to-cash” was inherently biased against large funds and could lead to “plain vanilla” funds that generally invest in only highly-liquid securities (
The classification process has also been revised in response to commenter concerns about the need to evaluate whether an investment can be sold for cash without materially affecting the security's price, which investors could interpret as an indication that they can redeem out of funds at a known or protected NAV.
Commenters also expressed concern about the use of third-party vendors in the process of liquidity classification.
If all funds use a small number of third-party vendors, there could be other indirect, but potentially large, costs. According to one commenter, the vendors could become de facto liquidity “rating agencies” and their “upgrades” and “downgrades” of asset liquidity could have systemic effects on the market.
Several additional components of the final rule will affect costs relative to the proposal. First, by excluding any fund that primarily holds assets that are highly liquid investments from the requirement to have a highly liquid investment minimum, the final rule avoids imposing any potential costs related to the minimum on some funds that would benefit less from having a minimum. It is possible that some funds that do not qualify as primarily highly liquid funds will incur the costs of establishing a minimum without a significant benefit. Second, whereas funds may currently use back-office operations to limit their acquisition of illiquid assets under exiting Commission guidelines, the final rule's enhanced illiquid investment standard may require funds to incur direct costs associated with a shift of these operations to other business functions (we also discuss indirect costs associated with the enhanced illiquid investment limit below).
Depending on the personnel (and/or third-party service providers) involved with respect to the activities associated with establishing and implementing a liquidity risk management program, certain of the estimated one-time costs could be borne by the fund, and others could be borne by the fund's adviser or other service providers. This cost allocation would be dependent on the facts and circumstances of a particular fund's liquidity risk management program, and thus we cannot specify the extent to which the estimated costs would typically be allocated to the fund as opposed to the adviser. Estimated costs that are allocated to the fund would likely be borne by fund shareholders in the form of fund operating expenses.
Certain elements of the program requirement may entail marked variability in related compliance costs, depending on a fund's particular circumstances and sources of potential liquidity risk. The process of classifying the liquidity of each of a fund's portfolio investments could give rise to varying costs depending on the fund's particular investment strategy. For example, a U.S. large cap equity fund would likely incur relatively few costs to obtain the data necessary to classify its portfolio positions, specifically given that, relative to the proposed rule, the final rule allows such a fund to generally classify its positions based on asset classes (subject to an exception process). On the other hand, funds that hold investments for which relevant market,
Certain factors that the rule's guidance suggests a fund should consider in assessing its liquidity risk also could entail relatively greater costs, depending on the fund's circumstances. For instance, a fund with a relatively short operating history could incur greater costs in assessing the fund's cash flow projections than a similarly situated fund with a relatively long operating history. This is because the newer fund could find it appropriate to assess redemption activity in similar funds during normal and stressed periods (to predict its future cash flow patterns), which could entail additional costs to gather and analyze relevant data about these comparison funds. Also, a fund whose shares are held largely through omnibus accounts may wish to periodically request shareholder information from financial intermediaries in order to determine how the fund's ownership concentration may affect its cash flow projections. These data requests, and related analyses, could cause a fund to incur costs that another fund, whose shares are largely held directly, would not. A fund that deems it appropriate to establish and implement additional liquidity risk management policies and procedures beyond those specifically required under the rule also would incur additional related costs. While we recognize that, as described above, the costs to establish and implement a liquidity risk management program in compliance with rule 22e-4 will depend to some degree on the level of liquidity risk facing the fund, we are unable to quantify the various ways in which a fund's individual risks and circumstances could affect the costs associated with establishing a liquidity risk management program.
Commenters suggested that the proposed three-day liquid asset minimum requirement could have had a number of unintended consequences. As discussed above, if third-party vendors become de facto “rating agencies” for liquidity, then a liquidity minimum could force many funds to sell the same investments simultaneously after a liquidity “downgrade,” which could have a systemic impact on funds and the overall market.
One commenter suggested that investor choice could be negatively impacted because of the implementation and on-going costs of the liquidity risk management program.
A fund may incur costs if it reallocates its portfolio to correspond with its initial or subsequently modified highly liquid investment minimum, or if the rule's definition of an illiquid investment results in the fund holding more than 15% of its net assets in assets that are illiquid investments. While we are unable to anticipate how many funds may reallocate their portfolios for these two reasons, or the extent of such reallocation by any fund that does so, we anticipate that the transaction-related costs of any such reallocation will not be significant for most funds. This is because some funds may not need to reallocate their portfolios at all to correspond with their highly liquid investment minimum or the 15% illiquid investment limit, and those that do so would be able to gradually adjust their portfolios in order to buy and sell portfolio positions during times that are financially advantageous given the delayed compliance date. Thus, while a fund may reallocate its portfolio to comply with its highly liquid investment minimum and the 15% illiquid investment limit by the time of the compliance date, a fund would not be required to conduct transactions in portfolio investments in any particular timeframe prior to the compliance date. If a fund wishes to reallocate its portfolio by the compliance date, we anticipate that the compliance date would provide sufficient time to do so with relatively few associated transaction costs. Along with the transaction-related costs associated with any portfolio reallocation, we recognize that this reallocation in turn could affect
We recognize that the rule requires a fund to determine the liquidity profile of its current portfolio and evaluate its potential liquidity needs, which could result in a fund concluding that its current portfolio lacks sufficient liquidity. This could lead a fund to modify its portfolio composition to meet its appropriate highly liquid investment minimum (
We cannot quantify the number of funds that would need to significantly modify their portfolios' risk profile as a result of the rule because we lack the information necessary to provide a reasonable estimate. Such an estimate would depend on the number of funds that might need to modify their current portfolio composition as a result of the rule, as well as the availability of relatively liquid investments that can act as adequate substitutes to existing investments for those affected funds. We are unable to quantify the total potential costs discussed in this section because: (1) We cannot anticipate the highly liquid investment minimum that each fund would determine to be appropriate based on its liquidity risk or the extent to which fund holdings exceed the rule's more specific 15% illiquid investment limit relative to the current 15% guideline; (2) we cannot determine what relatively more liquid investments funds would purchase as substitutes; (3) we are unable to estimate the resulting changes to funds' yields and risk profiles, nor how investors would react to these changes. In-Kind ETFs and funds that primarily hold assets that are highly liquid investments will not be subject to the highly liquid investment minimum, so this may reduce the aggregate costs associated with decreased investment options relative to the proposed rule. Commenters did not specifically object to our assessment of the rule's impact on investment options in the proposed rule.
As discussed above, the rule could result in certain funds increasing their investments in relatively more liquid investments, which would effectively mean that these funds would decrease their investments in relatively less liquid investments. If funds decrease their investments in relatively less liquid investments, the market for those investments could become even less liquid. This could discourage new issuances of similar investments and decrease the liquidity of relatively less liquid investments that are still outstanding. The impact of decreased investment by funds in relatively less liquid markets will depend on how much current investment in those markets is driven by the funds, which varies between markets. Further, these market effects could be partially offset if other opportunistic investors with greater capacity to hold less liquid investments are attracted to the market by any lower prices for these investments that result if funds decrease their holdings of less liquid investments.
The liquidity risk management program requirement would require a fund to assess its liquidity risk and to determine its highly liquid investment minimum based on this risk assessment. For funds that do not already engage in liquidity risk management practices that meet the rule's requirements, the requirements should improve the
By enhancing funds' liquidity risk assessment and risk management, the program requirement also could promote pricing efficiency in the sense that it could decrease the likelihood that a fund would be forced to sell portfolio investments under unfavorable circumstances in order to meet redemptions, potentially creating significant negative price pressure on those investments. If a fund's asset sales were to cause temporary changes in market prices unrelated to an investment's fundamentals, this could create a temporary pricing inefficiency. By decreasing the likelihood that these types of price movements would occur, the program requirement could decrease pricing inefficiency. However, the program requirement could negatively affect the efficient pricing of investments with lower liquidity if it indirectly discourages funds from investing in them (for example, if a fund were to decrease its holdings in investments that have lower liquidity if it determines, as a result of the fund's liquidity risk assessment, that its appropriate highly liquid investment minimum or the more specific 15% illiquid investment limit do not correspond with the fund's current portfolio composition). But as discussed above, this market effect could be partially offset if other investors are incentivized to buy relatively less liquid investments on account of any lower prices for these investments that result if funds decrease their holdings of these investments.
If the liquidity risk management program requirement results in a material decrease in funds' investment in relatively less liquid investments, competition for these investments would initially be negatively affected. Under this scenario, the relatively less liquid investments in which funds formerly would have invested may become less liquid, since the number of current or potential market participants would be reduced. However, because this reduction in demand and liquidity results in larger illiquidity discounts and higher expected returns, some investors might become willing to invest in these assets, which in turn would partially offset the initial reduction in competition. As a corollary, if the liquidity risk management program requirement results in a material increase in funds' investment in highly liquid investments, competition for these investments would be positively affected. However, as funds increase their investments, the liquidity of those investments should increase and their liquidity premium decrease, which in turn could lead some investors to reduce their demand for these investments, partially offsetting the initial increase in competition. Relative to the proposal, the competitive effects of fund demand for highly liquid investments relative to lower liquidity investments should, if anything, be reduced because the rule only requires a fund to consider stressed conditions that are reasonably foreseeable in determining its minimum.
The size of a fund, or the family of funds to which a fund belongs, could have certain competitive effects with respect to the fund's implementation of its liquidity risk management program. If there are economies of scale in creating and administering multiple liquidity risk management programs, funds in large families would have a competitive advantage. For a fund in a smaller complex, however, a greater portion of the fund's (and/or adviser's
Any changes in certain investments' or asset classes' liquidity that could indirectly result from the liquidity risk management program requirement (for example, as discussed above, if the number of buyers and sellers for certain investments becomes significantly reduced as a result of the program requirement) could also affect capital formation among issuers of these investments. Because lower asset liquidity implies higher illiquidity premiums and larger asset price discounts some firms and other issuers of securities could be discouraged from issuing new securities in asset classes that are associated with lower liquidity. If changes in liquidity are not equal across all asset classes, firms and other entities may begin to shift their capital structure (
Commenters did not specifically object to our assessment of the proposed rule's effects on efficiency, competition, and capital formation. With the exception of the potential efficiency changes due to modifications reflected in the adoption of a highly liquid investment minimum and the more specific 15% illiquid investment limit discussed above, our assessment of the
The Commission considered various alternatives to the individual elements of rule 22e-4. Those alternatives are outlined above in the sections discussing the rule elements.
The Commission considered, but ultimately decided against, excluding certain types of funds from rule 22e-4.
Instead of adopting rule 22e-4, the Commission could issue guidance surrounding the assessment and management of liquidity risk, which would give funds more flexibility in managing liquidity risk and could reduce costs relative to the requirements of the rule. However, on account of the significant diversity in liquidity risk management practices that we have observed in the fund industry, we believe that the need exists for an enhanced comprehensive baseline requirement instead of only guidance for fund liquidity risk management.
Commenters suggested the rule could have also taken a purely principles-based approach instead of a prescriptive approach.
The Commission considered proposing liquidity requirements similar to those imposed on money market funds—that is, the requirement to hold a specified minimum level of highly liquid investment holdings, and the ability to impose redemption fees and gates.
The Commission considered multiple alternatives to the rule's requirement that funds classify the liquidity of their portfolio investments, which establishes one component of a uniform baseline for fund liquidity risk management. As discussed above, commenters raised three primary structural alternatives to the proposed classification requirement: (i) A “principles-based” liquidity classification approach, where each fund would have to classify the liquidity of its portfolio assets, but the Commission would not require any specific classification scheme;
A purely principles-based approach to classifying assets, as suggested by several commenters, would have the benefit of allowing each fund to tailor its classification scheme to the liquidity factors most relevant to the assets it invests in rather than imposing a one-size-fits-all approach that may be less applicable to some funds. However, as discussed above, this approach would not provide a uniform methodology for funds' liquidity assessment procedures and would not promote reasonably comparable reporting to the Commission and disclosure to the public about funds' portfolio liquidity.
The Commission considered but is not adopting commenters' alternative of having the Commission establish a fixed classification schema to which all funds must adhere—for example, an enumeration of asset classes and a mapping of those classes to a liquidity classification.
Relatedly, some commenters also suggested classification categories based on alternatives to the “days-to-cash” criterion of the proposed and final rule, including, in whole or in part, on the fraction of average daily trading volume (“ADTV”) that each position size corresponds to, the expected behavior of bid-ask spreads in a given asset, or more qualitative liquidity buckets (
The final rules require funds that do not primarily hold assets that are highly liquid investments to establish a highly liquid investment minimum as part of their liquidity risk management program and provides some flexibility by not prohibiting the acquisition of less liquid investments, but instead requiring a fund to report to the board and, in some cases, the Commission if it goes below its minimum. The first type of alternative the Commission considered with respect to this requirement concerns which investments satisfy a minimum, which could have varied along a spectrum from more liquid (
The Commission also considered whether to make the highly liquid investment minimum purely a target instead of a minimum. The proposed rule would have precluded funds from acquiring less liquid investments anytime they were below their highly liquid investment minimum. Commenters suggested this could lead to several potential costs, as discussed above regarding the rule's costs and benefits, including the possibility that it could lead to herding behavior among funds.
Some commenters were generally opposed to a highly liquid investment minimum,
The Commission also considered requiring a uniform highly liquid investment minimum for all funds. This alternative approach would have the advantage of being simple for investors to understand, easy for funds to apply, and simple for our examination staff to verify. However, this alternative would fail to account for notable differences between funds with respect to investment strategy, fund flow patterns, and other characteristics that contribute to funds' liquidity risk, which in turn would make it reasonable for funds' portfolios to have varying liquidity profiles. We believe that the fund-specific highly liquid investment minimum requirement will promote alignment of a fund's liquidity needs with the liquidity of fund investments, while still permitting funds reasonable flexibility in implementation. In light of the significant diversity within the fund industry, we believe that flexibility is appropriate to help minimize the potential costs to investors of the requirement. This approach still includes elements that will help our staff to assess whether funds are holding an appropriate level of assets that are highly liquid investments. Each fund will be required to maintain a written record of how its highly liquid investment minimum was determined, as well as copies of materials submitted to the fund's board in connection with the highly liquid investment minimum.
Instead of requiring funds to determine and invest their assets in compliance with a highly liquid investment minimum, we could require funds to conduct stress tests of their own design assessing the extent to which the fund has a level of highly liquid investments necessary to cover possible levels of redemptions. This would have the benefit of granting a fund flexibility in determining whether its portfolio liquidity profile is appropriate given its liquidity needs. However, because the quality and comprehensiveness of funds' liquidity risk management currently varies significantly, we believe that requiring funds to have a highly liquid investment minimum is important in reducing the risk that funds will be unable to meet their redemption obligations, in minimizing dilution, and in elevating the overall quality of liquidity risk management across the fund industry. Also, we believe that it would be difficult to determine, depending on the level of discretion a fund would have in developing stress scenarios, whether these scenarios would accurately depict liquidity risk and lead funds to determine the appropriate level of portfolio liquidity they should hold. For example, if a fund's liquidity needs were generally high during normal periods, but were not correspondingly extreme during stress events, basing this fund's portfolio liquidity on the results of stress testing alone could cause a fund to hold too little liquidity during non-stressed periods. Therefore, we do not believe that a general stress testing requirement would be an adequate substitute for the highly liquid investment minimum requirement.
Instead of the adopted illiquid investment definition, the Commission could have codified a definition of illiquid investments that reflects the current 15% guideline. This approach would have had the benefit of already being accepted and understood by the industry, and would have entailed few additional implementation costs for funds. However, it would not have been harmonized with the rule's requirements with respect to other liquidity classifications, particularly the requirement that funds review at least monthly whether their investments are illiquid with respect to relevant market, trading, and investment-specific factors, and also incorporate market depth considerations into this process.
We received substantial comments on the DERA Study from one commenter. The Commission has carefully considered these comments and adjusted our analysis where appropriate. In terms of broader concerns, the commenter suggested that the analysis in the DERA Study does not provide a strong basis for the specifics
With respect to the proposal's interpretation of the DERA Study's results, the commenter expressed the concern that the results in the DERA Study provide only indirect evidence on the selling behavior of funds in response to redemptions. While a direct test would be preferable, such a test would require data on both daily fund flows and fund daily transactions, neither of which are available in sufficient detail for analysis. The commenter states that the DERA Study itself only shows that fund liquidity tends to decrease following outflows and that other endogenous factors, such as broad changes in market conditions due to macroeconomic events, could be causing changes in both fund liquidity and fund flows.
The commenter concludes that the analysis in the DERA Study does not demonstrate that funds are managing portfolios and redemptions in a manner that harms the interests of non-redeeming shareholders.
The commenter makes several statements regarding results related to the volatility of fund flows. First, the commenter provides evidence that flow volatility declines with fund size, notes that the DERA Study's use of simple averages to calculate average flow volatility in a given fund category overstates the highly volatile flows of small funds, and shows that asset-weighted flow volatility measures are significantly smaller for all fund categories.
The commenter also provides evidence on the relationship between fund flows and holdings of short-term
With respect to the liquidity measure used in the DERA Study, the commenter points out that it only uses a single measure of market liquidity (Amihud illiquidity) and claims that the measure is not sufficient to support the interpretations the proposal draws from the study.
The commenter stated that the academic studies used in support of the DERA Study and the proposal are either (1) theoretical and ignore important institutional details or (2) based on empirical fund-level results which by their design cannot provide any commentary on market-wide concerns. With respect to the theoretical study cited in the proposal, it shows one mechanism by which mutual fund shareholders may have a first-mover incentive using a simplified model of the world for tractability; it is possible that in a model which captures more institutional details as proposed by the commenter—taxes, longer investor horizons, and reinvestment risk—this incentive is reduced or eliminated, but we are not aware of any other studies that reach such a conclusion. With respect to any empirical studies, the primary goal of the rule is to improve the fund-level management of liquidity and redemptions, which makes the cited fund-level academic studies relevant for the discussion. The commenter also points out that one of the empirical studies (Coval and Stafford), which provides evidence of negative price pressure due to forced selling by mutual funds, also states that the ex-ante probability of an equity mutual fund being affected by this risk is small because less than one percent of stocks are affected in a given quarter. The proposal did not claim that forced selling by mutual funds was a pervasive phenomenon, but did highlight that it is a possible risk that funds and their shareholders face.
We are adopting amendments to Form N-1A as well as adopting new items to Form N-PORT, Form N-CEN, and adopting Form N-LIQUID, to enhance fund disclosure and reporting regarding liquidity and redemption practices. Specifically, amendments to Form N-1A will require a fund to disclose: (i) The number of days in which the fund typically expects to pay redemption proceeds to redeeming shareholders
New items on Form N-PORT will require a fund to confidentially disclose monthly: (i) The fund's highly liquid investment minimum and the number of days a fund's holdings in assets that are highly liquid investments fell below that minimum during a given reporting period;
New items on Form N-CEN will require a fund to disclose certain information regarding the use of committed lines of credit and interfund borrowing and lending.
The final form amendments differ from the proposal in several ways that may have potential economic consequences. In response to commenters' suggestions, the rule does not require funds to file credit agreements as part of Form N-1A. While Form N-PORT requires funds to report position-level liquidity classifications to the Commission, these classifications will not be publicly released. Instead, a fund will only be required to publicly disclose the aggregate percentage of the fund's holdings invested in each of the four liquidity classification categories and the percentage in each of the four liquidity classification categories of the fund's highly liquid investments that are segregated to cover derivatives transactions. The adopted rule also incorporates commenters' suggestions that the Commission be notified more quickly if a fund's assets that are illiquid investments exceed 15% of its net assets by requiring funds to file Form N-LIQUID indicating such a breach immediately after it occurs. With respect to the highly liquid investment minimum, a fund is required to report any decline below the minimum that lasts more than 7 consecutive calendar days to the Commission by filing Form N-LIQUID, whereas the proposal would have required that a fund not purchase
The disclosure and reporting requirements will promote investor protection by improving the availability of information regarding funds' liquidity risks and risk management practices, as well as funds' redemption practices. As discussed above, funds' disclosures to shareholders regarding their redemption practices are currently varied in content and comprehensiveness.
While some funds voluntarily include disclosure regarding fund limitations on illiquid asset holdings that track the 15% guideline, a fund is not currently required to disclose information about the liquidity of its portfolio investments. In light of the relatively few disclosure requirements regarding funds' liquidity risks, liquidity risk management practices, and redemption practices, as well as the current inconsistency in funds' liquidity-related disclosures, we believe that the disclosure and reporting requirements would increase shareholders' and the Commission's understanding of particular funds' liquidity-related risks and redemption policies. This in turn should assist investors in making investment choices that better match their risk tolerances.
We note that, while Form N-PORT and Form N-CEN are designed primarily to assist the Commission and its staff, we believe that the information in these forms (including the liquidity-related information to be included in these forms) also will be valuable to investors and other potential users.
The liquidity-related information that funds will be required to provide on Form N-PORT and Form N-CEN will enhance investor protection by improving the Commission's ability to monitor funds' liquidity using relevant and targeted data. This monitoring will permit us to analyze liquidity trends in individual funds, and, to the extent that liquidity profiles are comparable across funds, among certain types of funds and the fund industry as a whole, as well as to better understand funds' liquidity risk management practices. As discussed in our release adopting rules and forms to modernize investment company reporting, the information we receive on these reports will facilitate the oversight of funds and will assist the Commission, as the primary regulator of such funds, to better effectuate its mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
Form N-LIQUID will complement rule 22e-4's enhanced focus on the limits on illiquid investments and the highly liquid investment minimum discussed above by requiring reporting to the SEC every time: (1) A fund's assets that are illiquid investments exceed 15% of its net assets (as well as additional reporting when the fund's assets that are illiquid investments fall back to or below 15% of its net assets); and (2) a fund's investments in highly liquid investments that are assets fall below its highly liquid investment minimum for more than 7 consecutive calendar days. This enhanced reporting could produce significant benefits. For example, the SEC's market monitoring capacity could be enhanced, in that multiple close-in-time filings by similar types of funds may be an indication of market stress in a market segment. Similarly, multiple close-in-time filings by the same fund may be an indication that the fund is failing to adequately manage its liquidity.
Form N-PORT as adopted does not require that the asset-level liquidity classifications be publicly disclosed in order to address commenter concerns about the potential costs of such disclosure (which are discussed in the costs section below). This change reduces some of the proposal's potential public disclosure benefits. Under the proposal, investors—by their own efforts or via third-party products—could have compared how assets were classified according to different funds' subjective approaches and resolved discrepancies across funds to arrive at more directly comparable fund liquidity profiles. Under the form as adopted, a fund will publicly disclose a new aggregate liquidity profile by reporting the percentage of its portfolio assigned to each of the four liquidity classification categories on Form N-PORT. This will provide a useful snapshot of fund liquidity to investors and will increase the amount of information available to investors about fund liquidity, but this snapshot may not be as informative as liquidity profiles under the proposed rule. The final form requires funds to confidentially report their investment liquidity classifications to the Commission via Form N-PORT. This maintains a major benefit of the proposal, allowing the Commission to monitor funds' liquidity levels and take action when significant aberrations are discovered.
Similarly, the final form amendments do not require the public disclosure of a fund's highly liquid investment minimum in order to address commenter concerns, but it is not likely that this change will significantly reduce the benefits of reporting this minimum: The primary investor protection benefit of reporting the minimum via Form N-PORT is to encourage funds' holding of highly liquid investments that correspond to the liquidity risks of their strategies. By confidentially reporting the minimum, a fund will give the Commission the capability to monitor whether the minimum is an outlier relative to other funds with similar investment strategies. The oversight role of the fund's board under rule 22e-4 is yet another safeguard in this respect.
Finally, Form N-PORT's requirement that funds disclose the percentage of the fund's highly liquid investments that it
Because we cannot predict the extent to which the requirements will enhance investors' awareness of funds' portfolio liquidity and liquidity risk, influence investors' investments in certain funds, or increase the Commission's ability to protect investors, we are unable to quantify the potential benefits discussed in this section.
Funds will incur one-time and ongoing annual costs to comply with the disclosure and reporting requirements regarding liquidity and shareholder redemption practices. Commenters' responses to the estimates of these costs are discussed in the PRA discussion below, and we have updated all estimates in this section to reflect changes in the PRA.
We estimate that the one-time costs to comply with the amendments to Form N-1A will be approximately $324 per fund (plus printing costs).
The amendments to Form N-PORT will require funds to report on Form N-PORT the liquidity classification of each portfolio investment, and we estimate that the average one-time compliance costs associated with this reporting will be $15,576 per fund.
Likewise, compliance with the amendments to Form N-CEN will involve ongoing costs as well as one-time costs. We estimate that 10,633 funds will be required to file responses on Form N-CEN as a result of the amendments to the form. We estimate that the one-time and ongoing annual compliance costs associated with providing additional responses to Form N-CEN as a result of the amendments will be approximately $162 per fund.
Based on these estimates, staff further estimates that the total one-time costs to comply with the disclosure and reporting requirements will be approximately $55 million for all funds that would file reports on Form N-PORT in house
Commenters expressed concern that it was not appropriate to require public disclosure of liquidity classifications by position via Form N-PORT, arguing that reporting position-level liquidity classifications creates significant costs which outweigh the potential benefits. For example, they suggested this disclosure could create potential litigation exposures, create investor confusion surrounding the perceived precision of the classifications, stifle innovation in liquidity risk management, or facilitate predatory trading and/or first-mover incentives, particularly during times of stress.
The costs of the adopted form amendments differ from the proposal in several ways. First, as discussed above, the Form N-PORT only requires that funds publicly disclose an aggregate liquidity profile, which should significantly mitigate many of the potential costs associated with the potential front running of mutual funds by sophisticated investors. Second, Form N-PORT requires a fund to disclose the percentage of the fund's highly liquid investments that it has segregated to cover or pledged to satisfy margin requirements in connection with derivatives transactions that are classified as moderately liquid investments, less liquid investments, and illiquid investments. By contrast, the proposed rules required a fund to pair each segregated asset with the derivative it was covering. The final rule's approach should lower costs relative to the proposal. We also are not requiring funds to file credit agreements as exhibits to Form N-1A. Many commenters objected to the proposed requirement to file line of credit agreements
The requirement to file Form N-LIQUID in three circumstances—if more than 15% of a fund's net assets are, or become, illiquid investments that are assets; if the fund's illiquid investments that are assets previously exceeded 15% of net assets and the fund determines that its illiquid investments that are assets have changed to be less than or equal to 15% of net assets; or if a fund's holdings in highly liquid investments that are assets fall below the fund's highly liquid investment minimum for more than 7 consecutive calendar days—may impose small incremental costs on funds. The adopted rule's liquidity risk management framework should help encourage funds to avoid exceeding the 15% illiquid investment limit, but in cases where they must file Form N-LIQUID, there will be incidental costs associated with filing the form itself. There will be similar incidental costs associated with filing Form N-LIQUID should a fund breach its highly liquid investment minimum for more than 7 consecutive calendar days. We estimate these costs as $1,745 per filing, and estimate the total number of filings to be roughly 90 per year, for an aggregate cost of $157,050.
We believe the final rules' disclosure requirements could increase informational efficiency by providing additional information about the aggregate liquidity profile of funds' portfolios to investors and third-party service providers. To the extent that aggregate liquidity profiles—the percentages a fund holds in each of the four liquidity classification categories—are comparable across funds, this could assist investors in evaluating the risks associated with certain funds, which could increase allocative efficiency by assisting investors in making more informed investment choices that better match their risk tolerances. However, because each fund has discretion in how it defines both the asset type and liquidity classification of its portfolio positions, the publicly disclosed aggregation of these classifications may not be directly comparable across funds; in this case, allocative efficiency may not be enhanced, and, if fund liquidity profiles are misinterpreted as being comparable, efficiency could be reduced. Enhanced disclosure regarding funds' liquidity and liquidity risk
Increased investor awareness of funds' portfolio liquidity and liquidity risk management practices also could promote capital formation if investors find certain funds' liquidity profiles or risk management practices, or both, attractive, and this awareness promotes increased investment in these funds (assuming these investments consist of assets that were not otherwise invested in the capital markets) and in turn in the assets in which the funds invest. On the other hand, disclosure which reveals liquidity risk could negatively impact capital formation if the disclosure causes investors to perceive that some funds pose too great an investment risk. Investors could consequently decide not to invest in these funds or to decrease their investment in these funds. If these foregone investments are not reinvested elsewhere in capital markets, capital formation would be negatively affected. Conversely, to the extent that investors assume that funds investing in relatively less liquid investments could obtain a liquidity risk premium in the form of higher returns over some period of time, the potential for higher returns could draw certain investors to funds investing in relatively less liquid asset classes, which could positively affect capital formation. If investors shift their invested investments between funds based on liquidity, there could be capital formation effects stemming from increased (or decreased) investment in the funds' portfolio investments, even if the total capital invested in funds remains constant. For example, if fund investors move assets from an investment strategy that entails relatively high liquidity risk to one whose investment strategy involves relatively low liquidity risk, less liquid portfolio asset classes could experience an adverse impact on capital formation while the more liquid portfolio asset classes could experience a positive impact on capital formation, although the total capital invested in funds would remain constant.
Relative to the proposal, the final disclosure and reporting requirements do not significantly alter our assessment of the requirements' impact on efficiency, competition, and capital formation. The exclusion of individual portfolio position classification from public disclosure requirements reduces the potential efficiency and capital formation gains that might accrue from better informed investors: position-level data could have been used (directly or via third-party vendor applications) to construct a detailed breakdown of a fund's liquidity profile, but any public analysis is now limited to an aggregate liquidity profile for each fund to address the concerns of commenters regarding the potential costs of disclosing position-level liquidity data publicly. At the same time, to the extent position-level liquidity classifications could be valuable to professional traders, requiring less public disclosure may reduce any potential inefficiencies that could have resulted from predatory trading or front running associated with the disclosure of individual investment classifications.
In addition, while we are also imposing a new filing requirement via Form N-LIQUID, this form will be filed confidentially with the Commission and will only be necessary when a fund breaches the 15% illiquid investment limit, returns to compliance with the 15% illiquid investment limit, or breaches its highly liquid investment minimum for longer than 7 consecutive calendar days. Requiring notice to the Commission of these events may itself provide an incentive for funds to manage their liquidity in such a way as to avoid triggering the reporting obligation; where a reporting obligation is triggered, Form N-LIQUID will provide the Commission with timely information that may prompt the Commission to inquire further into the circumstances that gave rise to the requirement to file Form N-LIQUID. As discussed above, for example, if a number of similarly-situated funds each file a report in close temporal proximity to one another, or if a single fund files a series of reports, such information is likely to be of value to the Commission in taking appropriate action to protect investors, if required. If Form N-LIQUID provides an early warning of potential fund liquidity issues that is sufficiently timely and clear to permit Commission involvement when needed to respond to the potential for disruptive fund closures and associated negative consequences, including fund shareholder dilution and any spillover effects, Form N-LIQUID could enhance efficiency to the extent that negative price pressure on investments due to fire sales is avoided and, to the extent mutual fund investors associate this with lower liquidity risk in the mutual fund industry, Form N-LIQUID may promote capital formation.
The following discussion addresses significant alternatives to the disclosure and reporting requirements. More detailed alternatives to the individual elements of the requirements are discussed in detail above.
The Commission considered requiring each fund to disclose information about the liquidity of its portfolio positions in the fund's prospectus or on the fund's Web site, in addition to in reports filed on Form N-PORT. For example, we could have required a fund to disclose its highly liquid investment minimum, or the percentage of the fund's portfolio invested in each of the liquidity categories specified under rule 22e-4(b)(2)(i), in its prospectus or on its Web site. This additional disclosure could further increase transparency with respect to funds' portfolio liquidity and liquidity-related risks. But this additional disclosure could inappropriately emphasize risks relating to a fund's portfolio liquidity over other significant risks associated with an investment in the fund. In addition, funds are not precluded from voluntarily disclosing any of the information contained in the rule's required disclosure forms on their Web sites, so it is likely more efficient to allow investor demand for this information to drive whether or not funds publicly disclose this information of their own volition.
Conversely, the Commission also considered both limiting and expanding the enhancements to funds' liquidity-related disclosures on Form N-PORT. As discussed above, we are sensitive to the possibility that any amendments to the form could facilitate front-running, predatory trading, and other activities that could be detrimental to a fund and its investors. We likewise carefully considered costs and benefits with respect to the new liquidity-related disclosures required under Form N-PORT and concluded that these disclosures appropriately balance related costs with the benefits that could arise from the ability of the Commission, and members of the public, to monitor and analyze the liquidity of individual funds, as well as liquidity trends within the fund industry.
In response to the proposal, which would have required that certain position-level data be reported publicly (albeit with a 60 day delay) commenters suggested that the Commission require (1) no reporting of any kind, or (2) no public disclosure, in light of potential negative competitive effects of public reporting and the limited benefits of stale data in understanding current fund liquidity levels.
New rule 22e-4 contains “collections of information” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).
The titles for the existing collections of information are: “Form N-1A under the Securities Act of 1933 and under the Investment Company Act of 1940, Registration Statement of Open-End Management Investment Companies” (OMB Control No. 3235-0307). In the Investment Company Reporting Modernization Adopting Release, we submitted new collections of information for Form N-CEN and Form N-PORT.
We are submitting new collections of information for new rule 22e-4, new rule 30b1-10, and new Form N-LIQUID under the Investment Company Act of 1940. The titles for these new collections of information will be: “Rule 22e-4 Under the Investment Company Act of 1940, Liquidity risk management programs,” “Rule 30b1-10 Under the Investment Company Act of 1940, Current report for open-end management investment companies,” and “Form N-LIQUID, Current Report, Open-end Management Investment Company Liquidity.” The Commission is submitting these collections of information to the OMB for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. 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 Commission is adopting new rule 22e-4, new rule 30b1-10, new Form N-LIQUID, and amendments to Form N-1A. The Commission also is adopting new items to Form N-CEN and Form N-PORT. The new rules and amendments are designed to promote effective liquidity risk management throughout the open-end fund industry and enhance disclosure and Commission oversight of fund liquidity and shareholder redemption practices. We discuss below the collection of information burdens associated with these reforms. In the Proposing Release, the Commission solicited comment on the collection of information requirements and the accuracy of the Commission's statements in the Proposing Release.
Rule 22e-4 requires a “fund” and an In-Kind ETF, each within the meaning of rule 22e-4,
The requirements under rule 22e-4 that a fund and In-Kind ETF adopt a written liquidity risk management program, report to the board, maintain a written record of how the highly liquid investment minimum was determined and written policies and procedures for responding to a shortfall of the fund's highly liquid investment
We believe that some open-end funds regularly monitor the liquidity of their portfolios as part of the portfolio management function, but they may not have written policies and procedures regarding liquidity management. Rule 22e-4 requires funds and In-Kind ETFs to have a written liquidity risk management program. We believe such a program will minimize dilution of shareholder interests by promoting stronger and more effective liquidity risk management across open-end funds and will reduce the risk that a fund or In-Kind ETF will be unable to meet redemption obligations.
In the Proposing Release, we estimated that funds within 867 fund complexes would be subject to rule 22e-4.
We did not receive any comments on the estimated hour and costs burdens associated with the overall preparation of written liquidity risk management programs under rule 22e-4 discussed above. We did, however, receive comments on the costs associated with the classification of the liquidity of a fund's portfolio positions, which we address below in connection with Form N-PORT. The Commission has modified the estimated increase in annual burden hours and total time costs that will result from the new written liquidity risk management requirements of rule 22e-4 based on certain modifications made to rule 22e-4 and updates to the industry data figures that were utilized in the Proposing Release. Based upon our review of industry data, we estimate that funds within 873 fund complexes would be subject to rule 22e-4,
The Commission continues to estimate that a fund complex will incur a one-time average burden of 40 hours associated with documenting the liquidity risk management programs adopted by each fund within a fund complex. In light of the requirement that a fund subject to the highly liquid investment minimum requirement adopt and implement policies and procedures for responding to a shortfall of the fund's highly liquid investment minimum, and responding to any potential excesses of the 15% illiquid asset limit, both of which include reporting to the fund's board of directors, we estimate a one-time burden of 10 hours, rather than 9 hours, per fund complex associated with fund boards' review and approval of the funds' liquidity risk management programs and preparation of board materials. Amortized over a 3-year period, we estimate this will be an annual burden per fund complex of about 16.67 hours. Accordingly, we estimate that the total burden for initial documentation and review of funds' written liquidity risk management program will be 43,650 hours.
Rule 22e-4 requires any fund that does not primarily hold assets that are highly liquid investments to determine
Similar to the highly liquid investment minimum, in the Proposing Release, we proposed that funds be required to establish a three-day liquid asset minimum as part of a fund's liquidity risk management program, subject to board review, and we estimated that, for each fund complex, compliance with this reporting requirement would entail: (i) Five hours of portfolio management time, (ii) five hours of compliance time, (iii) five hours of professional legal time and (iv) 2.5 hours of support staff time, requiring an additional 17.5 burden hours at a time cost of approximately $5,193 per fund complex to draft the required report to the board.
Because, under the proposal, each fund within a fund complex would be required to determine its own three-day liquid asset minimum, this estimate assumed that the report at issue would incorporate an assessment of the three-day liquid asset minimum for each fund within the fund complex.
We received several comments addressing, in general, the potential costs associated with a fund establishing and implementing a liquid asset minimum. To minimize the costs of implementing a liquid asset minimum, one commenter recommended that funds that have demonstrated a history of investing in only three-day liquid assets be excluded from the proposed three-day liquid asset minimum requirements and thus not incur the costs of related board reporting requirements.
As discussed above, the Commission has modified the proposed three-day liquid asset minimum requirement to a highly liquid investment minimum requirement that is tailored to apply only to funds that do not primarily hold highly liquid investments, thereby potentially reducing the number of funds required to establish, maintain, and report a highly liquid investment minimum. In addition, the final rule retains a role for the board in overseeing the fund's liquidity risk management program, but eliminates certain of the more specific and detailed approval requirements originally proposed.
In light of these modifications, we estimate that the burdens associated with board reporting will decrease overall in comparison to the proposal due to the elimination of certain board oversight requirements originally proposed and the potential reduction in the number of funds that would require board oversight of a highly liquid investment minimum. Therefore, we have modified the estimated annual burden hours and total costs that will result from the highly liquid investment minimum requirement under rule 22e-4.
Final rule 22e-4 requires a fund or In-Kind ETF to maintain a written copy of the policies and procedures adopted pursuant to its liquidity risk management program for five years in
Under the proposal, the recordkeeping requirements were substantially similar to those being adopted. In the Proposing Release, we estimated that the burden to retain these records would be five hours per fund complex, with 2.5 hours spent by a general clerk and 2.5 hours spent by a senior computer operator, with an estimated time cost per fund complex of $361.
We did not receive any comments on the estimated hour and cost burdens associated with the recordkeeping requirements of rule 22e-4. The Commission has modified the estimated increase in annual burden hours and total time costs that will result from these requirements in light of modifications to change those subject to the requirements to funds and In-Kind ETFs and to require them to maintain reports to boards concerning a shortfall of the fund's highly liquid investment minimum and the new requirement to retain records submitted to the board related to shortfalls of the minimum. We believe that, on an annual basis, the burden to retain records in connection with rule 22e-4 will be four hours, rather than five hours per fund complex, with 2 hours, rather than 2.5 hours, spent by a general clerk, and 2 hours, rather than 2.5 hours, spent by a senior computer operator, with an estimated time cost per fund complex of $292, rather than $361, based on updated data concerning funds and fund personnel salaries.
Amortized over a three-year period, we estimate that the hour burdens and time costs associated with rule 22e-4 for open-end funds, including the burden associated with (1) funds' initial documentation and review of the required written liquidity risk management program, (2) reporting to a fund's board regarding the fund's highly liquid investment minimum, and (3) recordkeeping requirements will result in an average aggregate annual burden of 26,190 hours, rather than 28,611 hours as proposed, and average aggregate time costs of $14,780,326.5, rather than $14,431,215 as proposed.
As discussed above, we recognize that UITs may in some circumstances be subject to liquidity risk (particularly where the UIT is not a pass-through vehicle and the sponsor does not maintain an active secondary market for UIT shares). We believe that UITs may not have written policies and procedures regarding liquidity management and are adopting a new requirement under rule 22e-4 with respect to UITs. On or before the date of initial deposit of portfolio securities into a registered UIT, the UIT's principal underwriter or depositor is required to determine that the portion of the illiquid investments that the UIT holds or will hold at the date of deposit that are assets is consistent with the redeemable nature of the securities it issues, and maintain a record of that determination for the life of the UIT and for five years thereafter. The retention of these records would be necessary to allow the staff during examinations to determine whether a UIT is in compliance with the liquidity risk assessment required under rule 22e-4. This assessment would occur on or before the initial deposit of portfolio securities of a new UIT and thus would only need to occur once. Maintenance of the records would be required for the life of the UIT and for five years thereafter.
We estimate that 1615 newly registered UITs will be subject to the UIT liquidity determination requirement under rule 22e-4 each year.
We estimate that the burden to retain these records will be two hours per UIT, with 1 hour spent by a general clerk and 1 hour spent by a senior computer operator, with an estimated time cost
Today, the Commission is adopting Form N-PORT, which will require funds to report information within thirty days after the end of each month about their monthly portfolio holdings to the Commission in a structured data format.
In the Investment Company Reporting Modernization Adopting Release, we estimate that, for the 35% of funds that would file reports on Form N-PORT in house, the per fund average aggregate annual hour burden will be 144 hours per fund, and the average cost to license a third-party software solution will be $4,805 per fund per year.
Today, we are also adopting amendments to Form N-PORT concerning liquidity information that require a fund to report information about the fund's highly liquid investment minimum (if applicable),
Under rule 22e-4(b)(1)(ii), an open-end management investment company (other than a money market fund or an In-Kind ETF) is required as part of its liquidity risk management program to classify the liquidity of each of its portfolio investments (including each of the fund's derivatives transactions) as a highly liquid investment, moderately liquid investment, less liquid investment, or illiquid investment.
Under the proposal, all open-end funds would be required to classify portfolio assets under a days-to-cash framework and report such classifications on Form N-PORT.
Many commenters expressed concerns over the operational costs associated with the assignment of liquidity classifications and the reporting of this information on Form N-PORT. Several commenters expressed the belief that the liquidity classification requirement could impose significant direct costs to a fund and its shareholders (
As discussed above, we are adopting a liquidity classification requirement under rule 22e-4 with a number of modifications to address commenters' concerns. Unlike the proposal which would have applied to all open-end funds, In-Kind ETFs are not subject to the classification requirements under rule 22e-4(b)(ii). The classification categories have been reduced from six to four and the timeframe for projections substantially reduced, with the fourth category designated for those investments that qualify as “illiquid investments” harmonized with the codified 15% illiquid investment limit. Furthermore, a fund may classify portfolio investments based on asset class, rather than position-by-position, so long as the fund or its adviser does not have information about any market, trading, or investment-specific considerations that are reasonably expected to significantly affect the liquidity characteristics of an investment and would suggest a different classification for that investment.
We believe that these modifications to the liquidity classification requirements will reduce the number of funds subject to the liquidity classification requirements and will address some of the costs commenters anticipate funds and fund shareholders would bear to establish new operational, trade, and other systems to process and report fund liquidity classification information. However, we recognize, as discussed above, that several commenters suggested that implementation of liquidity classification systems would be more costly than we estimated. Accordingly, we believe, on balance, that the per fund estimates that we proposed are reasonable and are not reducing them, despite having adopted some modifications to rule 22e-4 that we believe reduce the burden relative to the proposal.
We estimate that 9,347 funds, rather than 8,734 funds, will be required to file, on a monthly basis, additional information on Form N-PORT as a result of the modifications to Form N-PORT to require additional liquidity information.
In addition to the classification and review of securities, we estimated in the Proposing Release that 8,734
In the Proposing Release, we also estimated that 65% of funds (5,677) would retain the services of a third party to provide data aggregation, validation and/or filing services as part of the preparation and filing of reports on proposed Form N-PORT on the fund's behalf.
Therefore, in the Proposing Release, we estimated that the per-fund average annual hour burden associated with the incremental changes to proposed Form N-PORT as a result of the proposed additions related to liquidity information for these funds would be an additional 9.5 hours for the first year
As discussed in section V.E.2 above, many commenters expressed concerns over the operational costs associated with the assignment of liquidity classifications and the reporting of this information on Form N-PORT. In addition, one commenter recommended that estimated costs to purchase third-party liquidity assessment data be included in the total estimated costs to comply with proposed rule given the
The Commission has modified the estimated increase in annual burden hours and total time costs that will result from Form N-PORT and the liquidity related amendments to Form N-PORT in consideration of commenters' concerns that the Commission underestimated the operational requirements for reporting and to reflect updates to the industry data figures that were utilized in the Proposing Release. We estimate that 9,347 funds would be required to file, on a monthly basis, additional information on Form N-PORT as a result of the additional liquidity-related reporting items adopted today.
We estimate that each fund that files reports on Form N-PORT in house (35%, or 3,271) will require an average of approximately 6 burden hours, rather than 3 burden hours, to compile (including review of the information), tag, and electronically file the additional liquidity information required on Form N-PORT for the first time and an average of approximately 2 burden hours, rather than 1 burden hour, for subsequent filings. Therefore, we estimate the per fund average annual hour burden associated with the incremental changes to Form N-PORT as a result of the added liquidity information for these funds would be an additional 28 hours, rather than 14 hours for the first year
We further estimate that 65% of funds (9,076) will retain the services of a third party to provide data aggregation, validation and/or filing services as part of the preparation and filing of reports on Form N-PORT on the fund's behalf. For these funds, we estimate that each fund will require an average of approximately 8 hours, rather than 4 hours, to compile and review the added liquidity-related information with the service provider prior to electronically filing the report for the first time and an average of 1 burden hour, rather than 0.5 burden hours, for subsequent filings. Therefore, we estimate the per fund average annual hour burden associated with the liquidity-related changes to Form N-PORT for these funds would be an additional 19 hours, rather than 9.5 hours, for the first year
In sum, we estimate that the adopted additional liquidity reporting information on Form N-PORT will impose an average total annual hour burden of an additional 169,923.51 hours, rather than 79,436.28 hours, on applicable funds.
As discussed above, we are adopting a new requirement that open-end investment companies, including In-Kind ETFs but not including money market funds, file a current report on Form N-LIQUID on a non-public basis when certain events related to their liquidity occur.
This reporting requirement on Form N-LIQUID is a collection of information under the PRA. The information provided on Form N-LIQUID will enable the Commission to receive information on fund liquidity events more uniformly and efficiently and will enhance the Commission's oversight of funds when significant liquidity events occur and its ability to respond to market events. The Commission will be able to use the information provided on Form N-LIQUID in its regulatory, disclosure review, inspection, and policymaking roles. This collection of information will be kept confidential.
The staff estimates that the Commission will receive, in the aggregate, an average of 30 reports
When filing a report on Form N-LIQUID,
On May 20, 2015, we proposed to amend rule 30a-1 to require all funds to file reports with certain census-type information on proposed Form N-CEN with the Commission on an annual basis. Proposed Form N-CEN would have been a collection of information under the PRA, and was designed to facilitate the Commission's oversight of funds and its ability to monitor trends and risks. The collection of information under Form N-CEN would be mandatory for all funds, and responses would not be kept confidential.
In the Investment Company Reporting Modernization Proposing Release, we estimated that the average annual hour burden per response for proposed Form N-CEN for the first year would be 32.37 hours and 12.37 hours in subsequent years.
We are adopting, substantially as proposed, amendments to Form N-CEN to enhance the reporting of a fund's liquidity risk management practices. Specifically, the amendments to Form N-CEN will require a fund to report information about lines of credit, but in a modification to the proposal, funds will report about both committed
In the Proposing Release, we estimated that 8,734 funds would be required to file responses on Form N-CEN as a result of the proposed amendments to the form. We estimated that the average annual hour burden per additional response to Form N-CEN as a result of the proposed amendments would be 0.5 hour per fund per year for a total average annual hour burden of 4,367 hours.
We did not receive any comments on these estimated hour and cost burdens. The Commission has modified the estimated increase in annual burden hours and total time costs that will result from the amendments based on the modifications to the proposal to require funds to report information on uncommitted lines of credit in addition to committed lines of credit as well as in light of updated data concerning funds and fund personnel salaries. We estimate that 10,633 funds, rather than 8,734 funds will be required to file responses on Form N-CEN as a result of the amendments to the form based on updates to the industry data figures that were utilized in the Proposing Release.
Form N-1A is the registration form used by open-end investment companies. The respondents to the amendments to Form N-1A adopted today are open-end management investment companies registered or registering with the Commission. Compliance with the disclosure requirements of Form N-1A is mandatory, and the responses to the disclosure requirements are not confidential. We currently estimate for Form N-1A a total hour burden of 1,579,974 hours, and the total annual external cost burden is $124,820,197.
We are adopting amendments to Form N-1A that require funds to disclose additional information concerning the procedures for redeeming a fund's shares. Funds will be required to describe the number of days following receipt of shareholder redemption requests in which the fund reasonably
Form N-1A generally imposes two types of reporting burdens on investment companies: (i) The burden of preparing and filing the initial registration statement; and (ii) the burden of preparing and filing post-effective amendments to a previously effective registration statement (including post-effective amendments filed pursuant to rule 485(a) or 485(b) under the Securities Act, as applicable). In the Proposing Release, we estimated that each fund would incur a one-time burden of an additional 2 hours,
In the Proposing Release, we also estimated that each fund would incur an ongoing burden of an additional 0.25 hours, at a time cost of an additional $80,
In the Proposing Release, we further estimated that amortizing these one-time and ongoing hour and cost burdens over three years would result in an average annual increased burden of approximately 0.50 hours per fund,
In total, we estimated in the Proposing Release that funds would incur an average annual increased burden of approximately 8,007 hours,
One commenter stated that the cost estimates under the proposal were overly optimistic, including as an example our estimated $637 cost per fund to implement the proposed Form N-1A disclosure requirements.
We believe that certain modifications from and clarifications to the proposal that we are adopting today as well as the removal of the swing pricing disclosure requirements from this Release will generally reduce the estimated burden hours and costs associated with the adopted amendments to Form N-1A relative to the proposal. Furthermore, we have considered the concern expressed by one commenter that the burdens and costs estimated in the proposal were overly optimistic and believe that any possible underestimates in burdens and costs expressed in the proposal have been offset by the adopted modifications that reduce such burdens. For these reasons, we believe that the amendments to Form N-1A adopted today, including modifications from the proposal, will reduce the estimated burden hours and costs stated in the Proposing Release.
We estimate that each fund will incur a one-time burden of an additional hour, rather than 2 hours, to draft and finalize the required disclosure and amend its registration statement,
In addition, we estimate that each fund will incur an ongoing burden of an additional 0.25 hours, but at a time cost of an additional $81,
Furthermore, we estimate that amortizing these one-time and ongoing hour and cost burdens over three years will result in an average annual increased burden of approximately 0.50 hours per fund,
In total, we estimate that funds will incur an average annual increased burden of approximately 6,483.17 hours,
This Final Regulatory Flexibility Analysis has been prepared in accordance with section 3 of the Regulatory Flexibility Act (“RFA”).
With the exception of money market funds, open-end funds (including both in-kind and other ETFs) and UITs are not currently subject to requirements under the federal securities laws or Commission rules that specifically require them to manage their liquidity risk,
The Commission is adopting a new rule, amendments to current rules, a new form and amendments to current forms to promote effective liquidity risk management throughout the open-end fund industry and thereby reduce the risk that funds will be unable to meet redemption obligations and mitigate dilution of the interests of fund shareholders. The changes also seek to enhance disclosure regarding fund liquidity and redemption practices. Specifically, a primary objective of these liquidity regulations is to promote shareholder protection by elevating the overall quality of liquidity risk management across the fund industry, as well as by increasing transparency of funds' liquidity risks and risk management. The liquidity regulations are also intended to lessen the possibility of investor dilution created by insufficient liquidity risk management. Finally, the liquidity regulations are meant to address recent industry developments that have underscored the significance of funds' liquidity risk management practices. Each of these objectives is discussed in detail in section III above.
In the Proposing Release, we requested comment on the IRFA, requesting in particular comment on the number of small entities that would be subject to the proposed liquidity regulations and whether the proposed liquidity regulations would have any effects that have not been discussed. We requested that commenters describe the nature of any effects on small entities subject to the proposed liquidity regulations and provide empirical data to support the nature and extent of such effects. We also requested comment on the estimated compliance burdens of the proposed liquidity regulations and how they would affect small entities. We received a number of comments related to the impact of our proposal on small entities, with some commenters expressing concern that liquidity risk management programs, as proposed, would require building entirely new systems and/or maintaining parallel system, which certain of the commenters believed could generate disproportionate burdens on small funds.
An investment company is a small entity if, together with other investment companies in the same group of related investment companies, it has net assets of $50 million or less as of the end of its most recent fiscal year.
Rule 22e-4 generally requires each registered open-end fund (but not including money market funds), including each small entity, to establish a written liquidity risk management program.
New Form N-LIQUID, along with amendments to Form N-1A, Form N-PORT, and Form N-CEN are intended to enhance fund disclosure and reporting regarding a fund's redemption practices, portfolio liquidity, and certain liquidity risk management practices. New Form N-LIQUID will require a fund to confidentially notify the Commission if the fund's illiquid investment holdings exceed 15% of its net assets or if its highly liquid investments decline below its minimum for more than a brief period of time.
As discussed above, for each fund, including a fund that is a small entity, when filing a report on Form N-LIQUID, staff estimates that a fund will spend on average approximately 4 hours
As discussed above, we estimate that each fund, including funds that are small entities, would incur a one-time burden of an additional 1 hour,
We also estimate that each fund that files reports on Form N-PORT (35% of funds) in house will require an average of approximately 6 burden hours to compile (including review of the information), tag, and electronically file the additional liquidity information required on Form N-PORT for the first time and an average of approximately 2 burden hours, rather than 1 burden hour, for subsequent filings. Therefore, we estimate the per fund average annual hour burden associated with the incremental changes to Form N-PORT as a result of the added liquidity information for these funds would be an additional 28 hours for the first year and an additional 24 hours for each subsequent year.
As discussed above, we also estimate that the average annual hour burden per additional response to Form N-CEN as a result of the adopted additions to Form N-CEN will be one hour per fund per year.
The Regulatory Flexibility Act directs the Commission to consider significant alternatives that would accomplish the stated objective, while minimizing any significant impact on small entities. Alternatives in this category would include: (i) Establishing different compliance or reporting standards that take into account the resources available to small entities; (ii) clarifying, consolidating, or simplifying the compliance requirements under the rules and amendments for small entities; (iii) using performance rather than design standards; and (iv) exempting small entities from coverage of the rules and amendments, or any part of the rules and amendments.
The Commission does not presently believe that these rules and amendments would require the establishment of special compliance requirements or timetables for small entities. These rules and amendments are specifically designed to reduce any unnecessary burdens on all funds (including small funds). To establish special compliance requirements or timetables for small entities may in fact disadvantage small entities by encouraging larger market participants to focus primarily on the needs of larger entities when making the operational changes envisioned by certain of the rules and amendments, and possibly ignoring the needs of smaller funds.
With respect to further clarifying, consolidating, or simplifying the compliance requirements of the rules and amendments, using performance rather than design standards, and exempting small entities from coverage of these rules and amendments or any part of the rules and amendments, we believe additional such changes would be impracticable. Small entities are as vulnerable to the risks of being unable to meet redemption obligations and of dilution of the interests of fund shareholders as larger funds. We believe that the rules and amendments are necessary to help mitigate these risks. Exempting small funds from coverage under these rules and amendments or any part of the rules and amendments could compromise the effectiveness of the rules and amendments or any part of the rules and amendments.
The Commission is adopting new rule 22e-4 under the authority set forth in sections 22(c), 22(e), 34(b) and 38(a) of the Investment Company Act [15 U.S.C. 80a-22(c), 80a-22(e), 80a-35(b), and 80a-37(a)], the Investment Advisers Act, particularly, section 206(4) thereof [15 U.S.C. 80b-6(4)], the Exchange Act, particularly section 10(b) thereof [15 U.S.C. 78a
Investment companies, Reporting and recordkeeping requirements, Securities.
For the reasons set out in the preamble, title 17, chapter II of the Code of Federal Regulations is amended as follows:
15 U.S.C. 80a-1
(a)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(b)
(1)
(i)
(A) The fund or In-Kind ETF's investment strategy and liquidity of portfolio investments during both normal and reasonably foreseeable stressed conditions, including whether the investment strategy is appropriate for an open-end fund, the extent to which the strategy involves a relatively concentrated portfolio or large positions in particular issuers, and the use of borrowings for investment purposes and derivatives;
(B) Short-term and long-term cash flow projections during both normal and reasonably foreseeable stressed conditions;
(C) Holdings of cash and cash equivalents, as well as borrowing arrangements and other funding sources; and
(D) For an ETF:
(ii)
(A) The fund may generally classify and review its portfolio investments (including the fund's derivatives transactions) according to their asset class, provided, however, that the fund must separately classify and review any investment within an asset class if the fund or its adviser has information about any market, trading, or investment-specific considerations that are reasonably expected to significantly affect the liquidity characteristics of that investment as compared to the fund's other portfolio holdings within that asset class.
(B) In classifying and reviewing its portfolio investments or asset classes (as applicable), the fund must determine whether trading varying portions of a position in a particular portfolio investment or asset class, in sizes that the fund would reasonably anticipate trading, is reasonably expected to significantly affect its liquidity, and if so, the fund must take this determination into account when classifying the liquidity of that investment or asset class.
(C) For derivatives transactions that the fund has classified as moderately liquid investments, less liquid investments, and illiquid investments, identify the percentage of the fund's highly liquid investments that it has segregated to cover, or pledged to satisfy margin requirements in connection with, derivatives transactions in each of these classification categories.
(iii)
(B) For purposes of determining whether a fund primarily holds assets that are highly liquid investments, a fund must exclude from its calculations the percentage of the fund's assets that are highly liquid investments that it has segregated to cover all derivatives transactions that the fund has classified as moderately liquid investments, less liquid investments, and illiquid investments, or pledged to satisfy margin requirements in connection with those derivatives transactions, as determined pursuant to paragraph (b)(1)(ii)(C) of this section.
(iv)
(A) It must cause the person(s) designated to administer the program to report such an occurrence to the fund's or In-Kind ETF's board of directors within one business day of the occurrence, with an explanation of the extent and causes of the occurrence, and how the fund or In-Kind ETF plans to bring its illiquid investments that are assets to or below 15% of its net assets within a reasonable period of time; and
(B) If the amount of the fund's or In-Kind ETF's illiquid investments that are assets is still above 15% of its net assets 30 days from the occurrence (and at each consecutive 30 day period thereafter), the fund or In-Kind ETF's board of directors, including a majority of directors who are not interested persons of the fund or In-Kind ETF, must assess whether the plan presented to it pursuant to paragraph (b)(1)(iv)(A) continues to be in the best interest of the fund or In-Kind ETF.
(v)
(2)
(i) Initially approve the liquidity risk management program;
(ii) Approve the designation of the person(s) designated to administer the program; and
(iii) Review, no less frequently than annually, a written report prepared by the person(s) designated to administer the program that addresses the operation of the program and assesses its adequacy and effectiveness of implementation, including, if applicable, the operation of the highly liquid investment minimum, and any material changes to the program.
(3)
(i) A written copy of the program and any associated policies and procedures adopted pursuant to paragraphs (b)(1) through (b)(2) of this section that are in effect, or at any time within the past five years were in effect, in an easily accessible place;
(ii) Copies of any materials provided to the board of directors in connection with its approval under paragraph (b)(2)(i) of this section, and materials provided to the board of directors under paragraph (b)(2)(iii) of this section, for at least five years after the end of the fiscal year in which the documents were provided, the first two years in an easily accessible place; and
(iii) If applicable, a written record of the policies and procedures related to how the highly liquid investment minimum, and any adjustments thereto, were determined, including assessment of the factors incorporated in paragraphs (b)(1)(iii)(A) through (B) of this section and any materials provided to the board pursuant to paragraph (b)(1)(iii)(A)(
(c)
Every registered open-end management investment company, or series thereof but not a fund that is regulated as a money market fund under § 270.2a-7, that experiences any event specified on Form N-LIQUID, must file with the Commission a current report on Form N-LIQUID within the period specified in that form.
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 78c(b), 78
The revisions and additions read as follows:
The text of Form N-1A does not, and this amendment will not, appear in the Code of Federal Regulations.
“Exchange-Traded Fund” means a Fund or Class, the shares of which are listed and traded on a national securities exchange, and that has formed and operates under an exemptive order granted by the Commission or in reliance on an exemptive rule adopted by the Commission.
(a) * * *
(c) * * *
(7) The number of days following receipt of shareholder redemption requests in which the fund typically expects to pay out redemption proceeds to redeeming shareholders. If the number of days differs by method of payment (
(8) The methods that the fund typically expects to use to meet redemption requests, and whether those methods are used regularly, or only in stressed market conditions (
The additions read as follows:
* * *
The revisions and additions read as follows:
“Highly Liquid Investment Minimum” has the meaning defined in rule 22e-4(a)(7).
“Illiquid Investment” has the meaning defined in rule 22e-4(a)(8).
The SEC does not intend to make public the information reported on Form N-PORT for the first and second months of each Fund's fiscal quarter that is identifiable to any particular Fund or adviser, or any information reported with regards to a Fund's Highly Liquid Investment Minimum (Item B.7 of this Form), country of risk and economic exposure (Item C.5.b), delta (Items C.9.f.5, C.11.c.vii, or C.11.g.iv), liquidity classification for portfolio investments (Item C.7), or miscellaneous securities (Part D of this Form), or explanatory notes related to any of those topics (Part E) that is identifiable to any particular Fund or adviser. However, the SEC may use information reported on this Form in its regulatory programs, including examinations, investigations, and enforcement actions.
a. The aggregate percentage of investments that are assets (excluding any investments that are reflected as liabilities on the Fund's balance sheet) compared to total investments that are assets of the Fund for each of the following categories as specified in rule 22e-4:
This form shall be used by registered open-end management investment companies, or series thereof, but not including a company or series thereof that is regulated as a money market fund under § 270.2a-7 of this chapter, to file reports pursuant to § 270.30b1-10 of this chapter.
The text of Form N-LIQUID will not appear in the
Form N-LIQUID is to be used by a registered open-end management investment company, or series thereof (“fund”), under the Investment Company Act of 1940 [15 U.S.C. 80a] (“Act”) but not including a fund that is regulated as a money market fund under rule 2a-7 under the Act (17 CFR 270.2A-7), to file current reports with the Commission pursuant to [rule 30b1-10] under the Act [(17 CFR 270.30b1-10)]. The Commission may use the information provided on Form N-LIQUID in its regulatory, disclosure review, inspection, and policymaking roles.
(1) Form N-LIQUID is the reporting form that is to be used for current reports of open-end management investment companies (“registrants”) required by section 30(b) of the Act and rule 30b1-10 under the Act. The Commission does not intend to make public information reported on Form N-LIQUID that is identifiable to any particular registrant, although the Commission may use Form N-LIQUID information in an enforcement action.
(2) Unless otherwise specified, a report on this Form N-LIQUID is required to be filed, as applicable, within one business day of the occurrence of the event specified in Parts B-D of this form. If the event occurs on a Saturday, Sunday, or holiday on which the Commission is not open for business, then the one business day period shall begin to run on, and include, the first business day thereafter.
The General Rules and Regulations under the Act contain certain general requirements that are applicable to reporting on any form under the Act. These general requirements should be carefully read and observed in the preparation and filing of reports on this form, except that any provision in the form or in these instructions shall be controlling.
Upon the occurrence of the event specified in Parts B-D of Form N-LIQUID, a registrant must file a report on Form N-LIQUID that includes information in response to each of the items in Part A of the form, as well as each of the items in the applicable Parts B-D of the Form.
A fund must file Form N-LIQUID in accordance with rule 232.13 of Regulation S-T (17 CFR part 232). Form N-LIQUID must be filed electronically using the Commission's Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”).
A registrant is not required to respond to the collection of information contained in Form N-LIQUID unless the form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. 3507.
References to sections and rules in this Form N-LIQUID are to the Investment Company Act (15 U.S.C. 80a), unless otherwise indicated. Terms used in this Form N-LIQUID have the same meaning as in the Investment Company Act or rule 22e-4 under the Investment Company Act, unless otherwise indicated. In addition, as used in this Form N-LIQUID, the term registrant means the registrant or a separate series of the registrant.
If more than 15 percent of the registrant's net assets are, or become, illiquid investments that are assets as defined in rule 22e-4, then report the following information:
If a registrant that has filed part B of Form N-LIQUID determines that its holdings in illiquid investments that are assets have changed to be less than or equal to 15 percent of the registrant's net assets, then report the following information:
If a registrant's holdings in assets that are highly liquid investments fall below its highly liquid investment minimum for more than 7 consecutive calendar days, then report the following information:
Pursuant to the requirements of the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
* Print name and title of the signing officer under his/her signature.
By the Commission.
Environmental Protection Agency (EPA).
Final rule.
The Clean Air Act prohibits the knowing release of ozone-depleting and substitute refrigerants during the course of maintaining, servicing, repairing, or disposing of appliances or industrial process refrigeration. The existing regulations require that persons maintaining, servicing, repairing, or disposing of air-conditioning and refrigeration equipment containing more than 50 pounds of refrigerant observe certain service practices that reduce emissions of ozone-depleting refrigerant. This rule updates those existing requirements as well as extends them, as appropriate, to non-ozone depleting substitute refrigerants, such as hydrofluorocarbons. Updates include strengthened leak repair requirements, recordkeeping requirements for the disposal of appliances containing more than five and less than 50 pounds of refrigerant, revisions to the technician certification program, and revisions for improved readability and compliance. As a result, this action reduces emissions of ozone-depleting substances and gases with high global warming potentials.
This final rule is effective on January 1, 2017. The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of on January 1, 2017. This rule contains information collection activities that have been submitted for approval to the Office of Management and Budget (OMB) under the Paperwork Reduction Act (PRA). Under the PRA, comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before December 19, 2016.
The EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2015-0453. All documents in the docket are listed on the
Jeremy Arling, Stratospheric Protection Division, Office of Atmospheric Programs, Mail Code 6205T, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone number (202) 343-9055; email address
Categories and entities potentially regulated by this action include those who own, operate, maintain, service, repair, recycle, or dispose of refrigeration and air-conditioning appliances and refrigerants, as well as entities that manufacture or sell refrigerants, products and services for the refrigeration and air-conditioning industry, including motor vehicle air conditioning. Regulated entities include, but are not limited to, the following:
This table is not intended to be exhaustive, but rather provides a guide for readers regarding the types of entities that could potentially be regulated by this action. Other types of entities not listed in the table could also be affected. To determine whether your facility, company, business organization, or other entity is regulated by this action, you should carefully examine the regulations in subpart F and this rule. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the
The regulations in 40 CFR part 82, subpart F (subpart F) that are in effect before this final action takes effect (often referred to in this notice as the “prior” or “previous” regulations) require that persons servicing, maintaining, repairing, or disposing of air-conditioning and refrigeration equipment observe certain service practices that reduce emissions of ozone-depleting refrigerant. Specifically, these provisions include: Restricting the servicing of appliances and the sale of refrigerant to certified technicians; specifying the proper evacuation levels before opening an appliance; requiring the use of certified refrigerant recovery and/or recycling equipment; requiring the maintenance and repair of appliances that meet size and leak rate thresholds; requiring that refrigerant be removed from appliances prior to disposal; requiring that appliances have a servicing aperture or process stub to facilitate refrigerant recovery; requiring that refrigerant reclaimers be certified in order to reclaim and sell used refrigerant; and establishing standards for technician certification programs, recovery equipment, and quality of reclaimed refrigerant.
This rule updates the prior refrigerant management requirements in subpart F that apply to ozone-depleting refrigerants. It also extends those requirements, as appropriate, to non-ozone depleting substitute refrigerants that are not exempt from the venting prohibition, including but not limited to hydrofluorocarbons (HFCs), in order to interpret, explain, and enforce the venting prohibition.
Section 608 of the CAA provides EPA authority for these revisions to the regulations found at 40 CFR part 82, subpart F. EPA's authority for this rulemaking is supplemented by section 301(a), which provides authority to “prescribe such regulations as are necessary to carry out [the EPA Administrator's] functions under this Act,” and section 114, which provides authority for the EPA Administrator to require recordkeeping and reporting in carrying out any provision of the CAA (with certain exceptions that do not apply here). More detail on EPA's authority for this action is provided in subsequent sections.
The revisions in this rule require certain businesses to take actions that have associated costs, such as conducting leak inspections, repairing leaks, and keeping records. Total annual incremental compliance costs associated with this rule are estimated to be $24.5 million per year in 2014 dollars using a 7 percent discount rate. Costs were modeled for a single typical year in which all the requirements were in effect, based on the appliance distribution modeled for 2015. Total annual operating savings associated with reduced refrigerant use are estimated to be $44 million; thus incremental compliance costs and refrigerant savings combined are estimated to be approximately $19.5 million per year. A detailed description of the comments received on the proposed analysis can be found in Section VI of this preamble as well as the response to comments document found in the docket. A full description of the technical analysis can be found in the document
EPA estimates that this rule will prevent damage to the stratospheric ozone layer by reducing emissions of ozone-depleting refrigerants by approximately 114 metric tons per year, weighted by the ozone-depletion potential (ODP) of the gases emitted. Avoided emissions of ozone-depleting refrigerants and non-ozone depleting substitutes will also reduce climate impacts because most of these refrigerants are potent greenhouse gases. Weighted by their global warming potentials (GWP)
Details of the methods used to estimate the benefits are discussed in Section VI of this notice and the
Under CAA section 307(b)(1), judicial review of this final action is available only by filing a petition for review in the U.S. Court of Appeals for the District of Columbia Circuit by January 17, 2017. This final action is a nationally applicable regulation and has nationwide scope and effect because it makes revisions to the EPA's regulations for the National Recycling and Emission Reduction Program found at 40 CFR part 82, subpart F, which are nationally applicable regulations that have nationwide scope and effect. Under CAA section 307(d)(7)(B), only an objection to this final action that was raised with reasonable specificity during the period for public comment can be raised during judicial review. This section also provides a mechanism for EPA to convene a proceeding for reconsideration, “[i]f the person raising an objection can demonstrate to [EPA] that it was impracticable to raise such objection within [the period for public comment] or if the grounds for such objection arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of this rule.” Any person seeking to make such a demonstration to us should submit a Petition for Reconsideration to the Office of the Administrator, Environmental Protection Agency, Room 3000, William Jefferson Clinton Building, 1200 Pennsylvania Ave. NW., Washington, DC 20460, with a copy to the person listed in the preceding
The stratospheric ozone layer protects life on Earth from the sun's harmful ultraviolet (UV) radiation. ODS are generally man-made chemicals that, when transported by winds into the stratosphere, release chlorine or bromine and damage that protective ozone layer. ODS are used as refrigerants, solvents, foam blowing
The initial concern about the ozone layer in the 1970s led to a ban on the use of CFCs as aerosol propellants in several countries, including the United States. In 1985, the Vienna Convention on the Protection of the Ozone Layer was adopted to formalize international cooperation on this issue. Additional efforts resulted in the adoption of the Montreal Protocol on Substances that Deplete the Ozone Layer in 1987. Today, all Parties to the Montreal Protocol have agreed to phase out the production and consumption of ODS controlled by the Protocol.
Section 608 of the CAA bears the title “National Recycling and Emissions Reduction Program.” Under the structure of section 608, this program has three main components. First, section 608(a) requires EPA to establish standards and requirements regarding use and disposal of class I and II substances, including a comprehensive refrigerant management program to limit emissions of ozone-depleting refrigerants. This program is to include regulations that reduce the use and emissions of class I and II substances to the lowest achievable level and that maximize the recapture and recycling of such substances. The second component, section 608(b), requires that the regulations issued pursuant to subsection (a) contain requirements for the safe disposal of class I and class II substances. The third component, section 608(c), prohibits the knowing venting, release, or disposal of ozone-depleting refrigerants and their substitutes during the maintenance, service, repair, or disposal of air-conditioning and refrigeration appliances or IPR. This prohibition is also referred to as the “venting prohibition” in this action. Section 608 is described in greater detail in Section III.
EPA first issued regulations under section 608 of the CAA on May 14, 1993 (58 FR 28660, “1993 Rule”), to establish the national refrigerant management program for ozone-depleting refrigerants recovered during the maintenance, service, repair, and disposal of air-conditioning and refrigeration appliances. These regulations were intended to substantially reduce the use and emissions of ozone-depleting refrigerants.
The regulations first established in the 1993 Rule require that persons servicing air-conditioning and refrigeration equipment containing an ozone-depleting refrigerant observe certain practices that reduce emissions. They also established requirements for refrigerant recovery equipment, reclaimer certification, and technician certification, and restricted the sale of refrigerant so that only certified technicians could purchase it. In addition, they required the removal of ODS from appliances prior to disposal, and that all air-conditioning and refrigeration equipment using an ODS be provided with a servicing aperture or process stub to facilitate refrigerant recovery.
The 1993 Rule also established a requirement to repair leaking appliances containing 50 or more pounds of ODS refrigerant. The rule set an annual leak rate of 35 percent for commercial refrigeration appliances and IPR and 15 percent for comfort cooling appliances. If the applicable leak rate was exceeded, the appliance must be repaired within 30 days.
EPA revised these regulations through subsequent rulemakings published on August 19, 1994 (59 FR 42950), November 9, 1994 (59 FR 55912), August 8, 1995 (60 FR 40420), July 24, 2003 (68 FR 43786), March 12, 2004 (69 FR 11946), January 11, 2005 (70 FR 1972), May 23, 2014 (79 FR 29682), and April 10, 2015 (80 FR 19453). EPA also issued proposed rules to revise the regulations in subpart F on June 11, 1998 (63 FR 32044), elements of which were not finalized, and on December 15, 2010 (75 FR 78558), which was also not finalized. EPA is withdrawing and therefore not finalizing the 2010 proposed rule. Instead, EPA re-proposed elements of both the 1998 and the 2010 proposed rules in the notice of proposed rulemaking (80 FR 19453) for this rule.
The August 19, 1994, rule amended specific definitions, required practices, and reporting and recordkeeping requirements, as well as adopted industry standards for reclaimed ODS refrigerants.
The November 9, 1994, rule clarified the conditions under which technician certification programs were grandfathered, allowing technicians who had participated in voluntary technician training and certification programs prior to the publication of the 1993 Rule to receive formal certification. The rule also clarified the scope of the technician certification requirement and provided a limited exemption from certification requirements for apprentices.
The August 8, 1995, rule responded to a settlement agreement between EPA and the Chemical Manufacturers Association to give additional flexibility to repair or retrofit IPR appliances containing ODS. EPA allowed owners or operators additional time beyond 30 days to complete repairs and more than one year to retrofit appliances where certain conditions applied (
The July 24, 2003, rule finalized portions of a proposed rulemaking (61 FR 7858; February 29, 1996) that amended the recordkeeping aspects of the section 608 technician certification program, refined aspects of the refrigerant sales restriction, adopted updated versions of ARI Standards 700
The March 12, 2004, rule exempted from the venting prohibition under section 608(c)(2) specific non-ozone depleting substances that the Agency found did not pose a threat to the environment (69 FR 11946). Notably, EPA did not exempt HFC or perfluorocarbon (PFC) refrigerants from the venting prohibition. The rule clarified that regulations affecting the handling and sales of ozone-depleting refrigerants apply to blends that contain an ODS.
The January 11, 2005, rule clarified that the leak repair requirements also apply to blends that contain an ODS (70
On December 15, 2010 (75 FR 78558, “proposed 2010 Leak Repair Rule”), EPA proposed to create a streamlined set of leak repair requirements that are applicable to all types of appliances containing 50 or more pounds of ozone-depleting refrigerant. The rule also proposed to reduce the leak repair rates. EPA did not finalize that rule and EPA has withdrawn that proposal through this rulemaking, although, as noted above, EPA also re-proposed elements of that proposal in the notice of proposed rulemaking for this rule.
Finally, on May 23, 2014 (79 FR 29682), and April 10, 2015 (80 FR 19453), EPA expanded the list of substitute refrigerants that EPA has exempted from the CAA venting prohibition to include certain hydrocarbons in specific end-uses.
In 1993, when EPA established the refrigerant management requirements of subpart F, CFCs and HCFCs were the most commonly used refrigerants, depending on the specific application. Just six months prior, in November 1992, the Parties to the Montreal Protocol accelerated the phaseout schedule for CFCs through the Copenhagen Amendment, so that there would be a complete phaseout by 1996. The Copenhagen Amendment also established a phaseout schedule for HCFCs. The schedule for HCFCs was later amended and now calls for a 35 percent reduction in production and consumption from each Article 2 Party's (developed country's) cap by 2004, followed by a 75 percent reduction by 2010, a 90 percent reduction by 2015, a 99.5 percent reduction by 2020, and a total phaseout by 2030. From 2020 to 2030, production and consumption at only 0.5 percent of baseline is allowed solely for servicing existing air-conditioning and refrigeration equipment.
The United States chose to implement the Montreal Protocol phaseout schedule on a chemical-by-chemical basis. In 1993, as authorized by section 606 of the CAA, EPA established a phaseout schedule that eliminated HCFC-141b first and would greatly restrict HCFC-142b and HCFC-22 next, due to their high ozone depletion potentials (ODPs), followed by restrictions on all other HCFCs, and ultimately a complete phaseout (58 FR 15014, March 18, 1993, and 58 FR 65018, December 10, 1993). EPA continues to issue allowances for the production and consumption of HCFCs that have not yet been phased out. The allowance levels reflect not only phaseout schedules but also use restrictions under section 605(a) of the CAA. The phaseout schedule and allowance levels can be found at 40 CFR part 82, subpart A.
EPA established the refrigerant management program shortly before the CFC phaseout. Similarly, today's rule to update those regulations closely precedes the phaseout of HCFCs. In 2020, production and consumption of HCFCs will be limited to 0.5% of baseline, and may not include HCFC-22, the most commonly used HCFC refrigerant. The reasons for encouraging a viable CFC recycling program support the same approach for HCFCs. The 1993 Rule discussed a 1990 advance notice of proposed rulemaking regarding a national CFC recycling program. As the 1993 Rule discussed, that 1990 notice emphasized that recycling is important because it would allow the continued use of equipment requiring CFCs for service past the year in which CFC production is phased out, thereby eliminating or deferring the cost of early retirement or retrofit of such equipment. Because of the continued use of these substances in existing equipment, recycling can serve as a useful bridge to alternative products while minimizing disruption of the current capital stock of equipment. (58 FR 28661).
More than twenty years later, with the experience gained through the phaseout of CFCs, reducing emissions of HCFCs and maximizing their recovery and reclamation remains just as important for ensuring the continued viability of the current stock of equipment. The transition out of CFC and now HCFC refrigerants is one reason that it is important to update the refrigerant management regulations in subpart F.
The universe of available refrigerants has expanded dramatically since EPA first established the refrigerant management regulations in subpart F. Under the Significant New Alternatives Policy (SNAP) program (CAA section 612), EPA identifies substitutes that pose lower overall risks to human health and the environment and must prohibit the use of substitutes for which there are other available or potentially available alternatives posing lower overall risk to human health and the environment for the same use. Thus, EPA's SNAP program does not provide a static list of alternatives. Instead, the SNAP list evolves as EPA makes decisions informed by our overall understanding of the environmental and human health impacts as well as our current knowledge about available substitutes. Under SNAP, EPA has reviewed over 400 substitutes in the refrigeration and air-conditioning; fire suppression; foam blowing; solvent cleaning; aerosols; adhesives, coatings, and inks; sterilants; and tobacco expansion sectors. To date, SNAP has issued 31 notices and 20 rulemakings listing alternatives as acceptable, acceptable subject to use conditions, acceptable subject to narrowed use limits, or unacceptable for those various end-uses.
For example, on April 10, 2015, the SNAP Program listed as acceptable, subject to use conditions, three hydrocarbons, one hydrocarbon blend, and HFC-32 as substitute refrigerants in a number of refrigeration and air-conditioning end-uses (80 FR 19454). The SNAP program has also recently listed a number of additional refrigerant options, including blends of hydrofluoroolefins (HFOs) and HFCs that have lower global warming potentials (GWPs) (October 21, 2014, 79 FR 62863; July 20, 2015, 80 FR 42870). EPA anticipates that industry will continue to develop safer alternatives and that EPA will continue to review information concerning additional refrigerant options and determine the appropriate action needed to safeguard human health and the environment.
Due to the change in the suite of acceptable refrigerants available for some end-uses, EPA anticipates that the relative amounts of different refrigerants in stocks in the United States will change, and thus that the universe of refrigerants subject to the refrigerant management program will continue to evolve. The diversity of refrigerants and the potential for cross-contamination are two reasons why it is important to clarify how all refrigerants, including non-exempt substitute refrigerants, should be handled under the refrigerant management regulations in subpart F.
Domestic and international efforts to protect the ozone layer have also helped to protect the global climate, because in addition to damaging ozone in the stratosphere, CFCs and HCFCs are also potent GHGs. HFCs, which are the predominant class of compounds being used as replacements for ODS, also can
On December 7, 2009, (74 FR 66496) the Administrator issued an Endangerment Finding regarding GHGs under section 202(a) of the CAA. As part of this finding, EPA concluded that the current and projected concentrations of six key well-mixed GHGs in the atmosphere—carbon dioxide (CO
In June 2013, the President announced the Climate Action Plan.
The President's Climate Action Plan also calls on the federal government to reduce emissions of HFCs by purchasing alternatives whenever feasible and transitioning to equipment that uses safer and more sustainable alternatives to HFCs. To implement the Climate Action Plan, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration recently amended the Federal Acquisition Regulation to encourage the purchase of alternatives to high GWP HFCs (81 FR 30429; May 16, 2016). This rule is designed to promote the use of safer chemical alternatives to HFCs by service and vendor contractors. To help agencies monitor progress, the amendment requires contractors to keep records of and report on the amounts of HFCs added or removed during the routine maintenance, repair, or disposal of appliances with a full charge of 50 or more pounds of HFC or HFC blend refrigerant.
Minimizing the emissions and maximizing the recovery and reuse of ODS and HFC refrigerants are consistent with the Climate Action Plan. EPA estimates that the revisions finalized in this action will prevent annual emissions of refrigerant equivalent to 7.3 MMTCO
Although HFCs represent a small fraction of current GHG emissions by weight, their warming impact per kilogram is very strong. The most commonly used HFC, HFC-134a, has a GWP of 1,430, which means it traps 1,430 times as much heat per kilogram as carbon dioxide does over 100 years. The majority of global, and U.S., HFC use is in the refrigeration and air conditioning sector. HFC emissions are projected to increase substantially and at an increasing rate over the next several decades if their production is left uncontrolled. In the United States, emissions of HFCs are increasing more quickly than those of any other group of GHGs, and globally they are increasing 10 to 15 percent annually. At that rate, emissions are projected to double by 2020 and triple by 2030.
HFCs are also rapidly accumulating in the atmosphere. The atmospheric concentration of HFC-134a has increased by about 10 percent per year from 2006 to 2012, and the concentrations of HFC-143a and HFC-125, which are components of commonly used refrigerant blends, have risen over 13 and 16 percent per year from 2007 to 2011, respectively. Without action, annual global emissions of HFCs are projected to rise to about 6,400 to 9,900 MMTCO
As these HFCs accumulate in the atmosphere, they change the balance between energy entering the Earth's climate from the sun and energy escaping the Earth into space. The change in the net rate at which energy enters the atmosphere is called radiative forcing. By 2050, the buildup of HFCs in the atmosphere is projected to increase radiative forcing to 0.22-0.25 W m
For the past six years, the United States, Canada, and Mexico have proposed an amendment to the Montreal Protocol to phase down the production and consumption of HFCs. The United States seeks adoption of an amendment that is acceptable to all Parties. Global benefits of the amendment proposal would yield significant reductions of over 90 gigatons of carbon dioxide equivalent (CO
On January 31, 2014, the Alliance for Responsible Atmospheric Policy (the Alliance) petitioned the Agency to initiate a rulemaking to apply the section 608 refrigerant management regulations to HFCs and other substitute refrigerants. In that petition, the Alliance requested that EPA extend the section 608 regulations relating to refrigerant sales and distribution restrictions, and the evacuation, certification, reclamation and recovery, leak repair, reporting and recordkeeping
The Agency has two goals for this rulemaking. The first is to promote the proper handling and use of ozone-depleting and substitute refrigerants. Doing so will protect the stratospheric ozone layer by reducing emissions of ODS refrigerants and protect the climate system by reducing emissions of refrigerant gases with high GWPs. High-GWP refrigerants include both ODS refrigerants and most substitute refrigerants, including HFCs, that EPA has not exempted from the venting prohibition under CAA section 608. The second goal of this rulemaking is to harmonize the requirements across all major refrigerant types and update the regulations in plain language to reduce uncertainty and complexity for the regulated community, as well as increase clarity, encourage compliance, and facilitate enforcement.
Today's rule will reduce the use and emission of refrigerants, maximize the recapture and recycling of such substances, and further interpret, explain, and enforce the prohibition on knowingly venting or releasing refrigerants during the maintenance, service, repair, or disposal of appliances.
EPA estimates that this rule will result in annual reductions in emissions of approximately 114 ODP-weighted metric tons. A separate support document
Stratospheric ozone depletion decreases the atmosphere's ability to shield life on the Earth's surface from the sun's UV radiation. The links between stratospheric ozone depletion and public health concerns are well established. Emissions of ODS lead to chemical reactions that reduce the amount of ozone in the stratosphere. Less ozone in the stratosphere means that more UVA and UVB radiation reaches the earth's surface and is incident on exposed organisms, including humans. Adverse health effects associated with exposure to UV radiation include skin cancer, cataracts, and immune suppression. The
The most common forms of skin cancer are strongly associated with UV radiation, and UV exposure is the most preventable cause of skin cancer (U.S. Department of Health and Human Services. The Surgeon General's Call to Action to Prevent Skin Cancer. Washington, DC: U.S. Department of Health and Human Services, Office of the Surgeon General; 2014). Skin cancer is the most common form of cancer in the United States, with more than 3.5 million new cases diagnosed annually (American Cancer Society, Cancer Facts and Figures, 2015). Rates for new cases of melanoma, the most serious form of skin cancer, have been rising on average 1.4 percent each year over the last 10 years (National Cancer Institute, SEER Stat Fact Sheets: Melanoma of the Skin, available at
Non-melanoma skin cancers are less deadly than melanomas, but if left untreated they can spread, causing disfigurement and more serious health problems. There are two primary types of non-melanoma skin cancers. Basal cell carcinomas are the most common type of skin cancer tumors. Basal cell carcinoma grows slowly, and rarely spreads to other parts of the body. It can, however, penetrate to the bone and cause considerable damage. Squamous cell carcinomas are tumors that may appear as nodules or as red, scaly patches. This cancer can develop into large masses and can spread to other parts of the body.
Other UV-related skin disorders include actinic keratoses and premature aging of the skin. Actinic keratoses are skin growths that occur on body areas exposed to the sun. The face, hands, forearms, and neck are especially susceptible to this type of lesion. Although premalignant, actinic keratoses are a risk factor for squamous cell carcinoma. Chronic exposure to the sun also causes premature aging, which over time can make the skin become thick, wrinkled, and leathery.
Research has shown that UV radiation increases the likelihood of certain cataracts. (Taylor, H.R.,
Another benefit of reducing refrigerant emissions is protection of the climate system. Many refrigerants, including ODS and substitutes for ODS, are potent GHGs, having GWPs thousands of times higher than that of carbon dioxide (CO
To briefly summarize, GHGs cause climate change by trapping heat on Earth. The Earth is constantly receiving energy from the sun in the form of radiation, while at the same time, energy is radiating away into space, mostly as infrared radiation. By absorbing and scattering radiation that otherwise would escape into space, GHGs throw off the balance between incoming and escaping radiation, resulting in more energy in the Earth's climate system.
As described in the EPA's 2009 Endangerment Finding (74 FR 66496) and subsequent reports by the IPCC, the United States Global Change Research Program, and the National Research Council, climate change impacts threaten the health of Americans in multiple ways and touch on nearly every aspect of public welfare. For more information on GHGs and climate change in the United States, visit
The second goal of today's rule is to improve the clarity and effectiveness of the subpart F regulations. Achieving the health and environmental benefits of these rules depends on widespread compliance, and understanding of the regulations by the regulated community enhances compliance.
EPA has begun an initiative to improve the effectiveness of its rules called Next Generation Compliance. The vision for this initiative is to make it easier for the regulated community to understand and comply with environmental laws and inform the public about their performance. Most importantly, this initiative will help ensure that all Americans are protected from significant risks to human health and the environment and have access to information that allows them to more fully engage in environmental protection efforts.
The Agency has identified several interconnected components in the Office of Enforcement and Compliance Assurance's 2014-2017 strategic plan for its Next Generation Compliance initiative that can improve the effectiveness of rules:
• Effective Regulations: Design regulations that are clear, as easy to implement as possible, and that contain self-reinforcing drivers. For example, where possible, design regulations such that regulated facilities can take steps to monitor their own performance to prevent violations, or be certified by an independent 3rd party.
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EPA is finalizing most of the proposed revisions to the regulations for the National Recycling and Emission Reduction Program. Some of these revisions strengthen the existing program, in particular by requiring owners and operators to repair systems
EPA is finalizing the proposed extension of the requirements of the National Recycling and Emission Reduction Program to substitute refrigerants that have not been exempted from the venting prohibition (also referred to in this action as “non-exempt substitutes”).
Prior to this rule, the leak rates for ODS equipment were 35 percent for IPR and commercial refrigeration appliances, and 15 percent for comfort cooling and other appliances. EPA proposed leak rates of 20 percent for IPR and commercial refrigeration and 10 percent for comfort cooling and other appliances. Based in part on comments received on the proposal, EPA is finalizing leak rates for ODS equipment as follows: 30 percent for IPR, 20 percent for commercial refrigeration appliances, and 10 percent for comfort cooling and other appliances. EPA is also extending the new leak rates to equipment using HFCs and other substitute refrigerants that are not exempt from the venting prohibition.
After considering public comments, EPA is modifying the proposed leak inspection requirements in this final rule. EPA proposed to require quarterly or annual leak inspections for all appliances with a full charge of 50 pounds or greater, with the more frequent inspections applying to larger systems. In the revisions finalized in this rule, EPA is requiring quarterly or annual leak inspections only for appliances that have exceeded the applicable leak rate. Similar to the proposal, owners or operators can forgo leak inspections if they install, continuously operate, and maintain automatic leak detection systems.
Based on comments, EPA has given particular attention to situations where the proposed regulations would have required the retrofit or retirement of an appliance. EPA has modified the final rule in numerous places to support the proper repair of leaking systems. Most notably, EPA is modifying the proposed chronic leaker provision. EPA proposed that appliances containing 50 or more pounds of ODS or substitute refrigerant that leak more than 75 percent of the appliance's full charge in each of two consecutive 12-month periods would have to be retired or mothballed. EPA is finalizing a requirement that owners or operators of appliances that leak 125 percent of their full charge in a calendar year must submit a report to EPA detailing their repair efforts. The report must be submitted no later than March 1 following the calendar year of the ≥125 percent leak.
EPA is finalizing the proposed restriction that non-exempt substitute refrigerants may only be sold to technicians certified under sections 608 or 609 of the CAA. In the case of MVAC refrigerant, EPA is exempting the sale of small cans of non-ODS substitutes to allow the do-it-yourself (DIY) community to continue servicing their personal vehicles. EPA is requiring that small cans of non-exempt substitute refrigerant be outfitted with self-sealing valves by January 1, 2018. Based on comments, EPA is not finalizing the proposal to prohibit the sale of small cans that do not contain self-sealing valves that were manufactured or imported prior to that requirement taking effect.
EPA is finalizing revisions to the regulations that require that technicians, or the company employing technicians, keep records when disposing of appliances containing more than five and less than 50 pounds of refrigerant. These records include the company name, location of the appliance, date of recovery, and type of refrigerant recovered for each appliance. EPA is also finalizing, with some modification, the revision to the regulations requiring that technicians keep records of the amounts of ODS and non-exempt substitute refrigerant transferred for reclamation by refrigerant type.
EPA is reducing the burden in this final rule by only requiring maintaining records typically generated in the field during the normal disposal of appliances. Therefore, EPA is not finalizing the proposed requirement to keep records indicating the amount of refrigerant recovered from each appliance. Instead, EPA is finalizing a requirement to record the total amount of refrigerant, by type, recovered from all appliances they disposed of over a calendar month. This tally can be performed less frequently and at a central location.
EPA is finalizing the requirement that technicians be certified to handle HFCs and other non-exempt substitutes, as proposed. EPA is also finalizing the proposed requirement for certifying organizations to publish lists or create online databases of technicians that they certify.
EPA is finalizing the extensive revisions to the regulations in subpart F to more clearly state the requirements of the National Recycling and Emission Reduction Program and to remove potentially ambiguous language, with minor changes from the proposal. EPA is modifying some of the proposed revisions to address additional suggestions raised by commenters. EPA's intent with these edits is to improve readability, not to change the substantive content or requirements of the regulations. For edits to the regulations that are intended to be substantive, EPA is discussing those revisions in this notice. EPA is adding to the docket a red-line version of the final regulatory text from subpart F that shows the final revisions to the prior regulations to assist the regulated community in identifying the differences.
Subpart F regulations must be enforced to realize their full environmental and human health benefit. This section briefly presents examples of recent actions that EPA has taken to enforce the venting prohibition, leak repair, and safe disposal provisions of subpart F. Several provisions that EPA is finalizing in this rule are based on lessons learned in taking these enforcement actions. These revisions are intended to encourage compliance and facilitate potential future enforcement of
Some commenters stated that EPA should seek better ways to enforce the pre-existing regulations for Class I and II ODS. One commenter encouraged EPA to continue to identify cost-effective means of ensuring that the entire regulated community supports and follows lawful policies and regulations. Another commenter wrote that venting of HFCs above
EPA responds that the Agency has enforced and continues to enforce these regulations in actions that range from civil fines to criminal prosecutions. EPA encourages anyone who suspects or witnesses unlawful releases of refrigerants or other violations of CAA regulations to report an environmental violation to EPA (
EPA entered into consent decrees with the supermarket chains Safeway in 2013, Costco in 2015, and Trader Joe's in 2016 for violations of the leak repair provisions of subpart F for their commercial refrigeration units. In 2015, EPA obtained corrective action with the United States Navy to resolve allegations of failing to perform leak rate calculations when servicing comfort cooling equipment, and with DuPont for improper maintenance and repair of two large IPR units. In 2012, EPA executed consent decrees with Icicle Seafoods, American Seafoods Co. LLC, and Pacific Longline Co. LLC for failure to repair refrigerant leaks at chilling units aboard its fishing vessels and failure to verify the adequacy of repairs before resuming operations, among other violations. In March of 2016, Ocean Gold Seafoods, Inc. and Ocean Cold, LLC entered into a consent decree with EPA that resolved alleged violations for failing to promptly repair refrigerant leaks and failing to keep adequate records of the servicing of their IPR equipment necessary to prevent leaks.
EPA has executed consent decrees to resolve alleged violations of the safe disposal regulations in subpart F. These include decrees in 2016 with Parkway Iron and Metal, and in 2015 with Metal Dynamics and Basic Recycling, as well as at least forty-five non-judicial settlements against scrap recyclers in 2014 and 2015.
EPA also continues to take steps to maintain the integrity of the certification programs under subpart F. EPA recently revoked over a dozen technician certification programs that had failed to submit the required biannual activity report (81 FR 28864). EPA is also ensuring that certified refrigerant reclaimers continue to operate in accordance with § 82.164 and maintain records and submit reports in accordance with § 82.166. EPA recently published a notice announcing the previous revocation of the certification of eight refrigerant reclaimers and giving a ninth reclaimer notice of impending revocation (80 FR 75455).
This action involves technical standards. In some instances, EPA is deciding to use a modified version of an industry standard for purposes of this rule; in others, EPA is deciding to use an industry standard by incorporating it by reference exactly as written. This section summarizes the technical standards that EPA is incorporating by reference and describes how interested parties can access those standards. Sections IV.C (small cans of MVAC refrigerant), Section IV.G (recovery and/or recycling equipment), and IV.K (reclamation requirements) contain further discussion of these technical standards including comments received on EPA's proposal to incorporate certain standards by reference.
EPA is incorporating by reference UL 1963,
EPA is not incorporating by reference AHRI Standard 700-2016,
EPA is not incorporating by reference AHRI Standard 740-2016,
EPA is not incorporating by reference California Air Resources Board,
The authority for this action is provided primarily by section 608 of the CAA. Section 608 is divided into three subsections, which together comprise the “National Recycling and Emission Reduction Program.” Among other things, section 608 of the CAA requires EPA to establish a comprehensive program to limit emissions of ozone-depleting refrigerants. It also prohibits the knowing release or disposal of ozone-depleting refrigerants and their substitutes in the course of maintaining, servicing, repairing, or disposing of air-conditioning and refrigeration equipment in a manner which permits such a substance to enter the environment. The three subsections of section 608 are described in more detail in the following paragraphs.
Section 608(a) requires EPA to establish standards and requirements regarding use and disposal of class I and II substances. With regard to refrigerants, EPA is to promulgate regulations establishing standards and requirements for the use and disposal of class I and class II substances during the maintenance, service, repair, or disposal of air-conditioning and refrigeration appliances or IPR. Regulations under section 608(a) are to include requirements to reduce the use and emission of ODS to the lowest achievable level, and to maximize the recapture and recycling of such substances. Section 608(a) further provides that “such regulations may include requirements to use alternative substances (including substances which are not class I or class II substances) or to minimize use of class I or class II substances, or to promote the use of safe alternatives pursuant to section [612] or any combination of the foregoing.”
Section 608(b) requires that the regulations issued pursuant to section 608(a) contain requirements for the safe disposal of class I and class II substances, including requirements that such substances shall be removed from such appliances, machines, or other goods prior to the disposal of such items or their delivery for recycling.
Section 608(c) establishes a self-effectuating prohibition, commonly called the “venting prohibition,” that generally speaking, makes it unlawful to knowingly release ODS and substitute refrigerants in a way that allows the refrigerant to enter the environment
The statutory standards under section 608(a) against which the regulations concerning the use and disposal of ozone-depleting substances are to be measured are whether they “reduce the use and emission of such substances to the lowest achievable level” and “maximize the recapture and recycling of such substances.” These standards are often complementary in the context of maintenance, service, repair, and disposal of air conditioning and refrigerant equipment. For example, in the context of recycling, maximizing recycling will also help reduce the use and emission of these substances to the lowest achievable level. These statutory standards also bear a relationship to the
On May 14, 1993, EPA published the original regulations implementing subsections (a), (b), and (c)(1) for ODS refrigerants (58 FR 28660). These regulations include evacuation requirements for appliances being serviced or disposed of, standards and testing requirements for recovery and/or recycling equipment, certification requirements for technicians, purity standards and testing requirements for used refrigerant sold to a new owner, certification requirements for refrigerant reclaimers, leak repair requirements, and requirements for the safe disposal of appliances that enter the waste stream with the charge intact. This rule also stated that the Agency interprets “
In this rule, EPA is extending, as appropriate, provisions of the refrigerant recovery and/or recycling regulations, which previously had only applied to ODS refrigerants, to non-exempt substitute refrigerants. To summarize briefly, EPA's authority for this action rests largely on section 608(c), which EPA interprets to provide it authority to promulgate regulations that interpret, explain, and enforce the venting prohibition and the
Section 608 of the CAA is ambiguous with regard to EPA's authority to establish refrigerant management regulations for substitute refrigerants. As Congress has not precisely spoken to this issue, EPA has the discretion to adopt a permissible interpretation of the CAA.
Moreover, some amount of refrigerant, whether ODS or substitute, is inevitably released during the maintenance, servicing, repair, and disposal of air-conditioning or refrigeration appliances or equipment. Without a clear regulatory framework for determining what requirements apply during the maintenance, servicing, repair, and disposal of such equipment containing a non-exempt substitute refrigerant, the regulated community and the public would not have the same measure of certainty as to whether such releases violate the venting prohibition or fall within the
Consistent with the language of sections 608(c)(1) and (2), this rule aims to avoid knowing releases of non-exempt substitute refrigerants into the environment in the course of maintaining, servicing, repairing, or disposing of an appliance or IPR, unless those releases meet the criteria for the
In particular, EPA has incorporated both the venting prohibition and the
EPA interprets section 608(c) such that the statutory
Consistent with the interpretation of section 608(c)(2) as incorporating the
EPA has discussed this issue in previous notices. On June 11, 1998, EPA proposed to apply the
In the final rule issued March 12, 2004 (69 FR 11946), EPA extended the regulations interpreting and enforcing the 608(c)(1)
[V]enting of all substitute refrigerants, including HFC and PFC refrigerants (and
EPA believes that regulatory clarification is necessary to define such `
This interpretation that the statutory
Following the March 12, 2004, rulemaking, the Administrator promulgated a direct final rule to amend the regulatory definitions of
In accordance with section 608(c)(2) of Title VI of the Clean Air Act (as amended in 1990),
In order to emphasize that the knowing venting of HFC and PFC substitutes remains illegal during the maintenance, service, repair, and disposal of appliances and to make certain that the
In that action, EPA added the phrase “[d]e minimis releases associated with good faith attempts to recycle or recover refrigerants
These regulations establish standards and requirements related to the maintenance, servicing, repair, or disposal of appliances and IPR that use ODS or non-exempt substitutes as refrigerants. They are designed to minimize or avoid knowing releases or disposal, in the course of those activities, of ODS and non-exempt substitute refrigerants in a manner which allows that substance to enter the environment. For example, the regulations establish requirements to minimize emissions during appliance maintenance, servicing, or repair (
EPA is also adopting a broader interpretation of the venting prohibition under CAA sections 608(c)(1) and (2) in this action. As discussed in more detail in the proposal for this action (80 FR 69486), in the 1993 Rule EPA stated that the venting prohibition did not “prohibit `topping off' systems, which leads to emissions during the use of equipment” but explained that the “provision on knowing releases does however, include the situation in which a technician is practically certain that his or her conduct will cause a release of refrigerant during the maintenance, service, repair, or disposal of equipment” or fails to appropriately investigate facts that demand investigation (58 FR 28672). The proposal also explained that EPA had subsequently moved toward a broader interpretation of the venting prohibition in the proposed 2010 Leak Repair Rule (80 FR 69486, quoting 75 FR 78570). EPA concludes that its statements in the 1993 Rule presented an overly narrow interpretation of the statutory venting prohibition. Consistent with the direction articulated in the proposed 2010 Leak Repair Rule, EPA is adopting a broader interpretation. When refrigerant must be added to an existing appliance, other than when originally charging the system or for a seasonal variance, the owner or operator necessarily knows that the system has leaks. At that point the owner or operator is required to calculate the leak rate. If the leaks exceed the applicable leak rate for that particular type of appliance, the owner or operator will know that absent repairs, subsequent additions of refrigerant will be released in a manner that will permit the refrigerant to enter the environment. Therefore, EPA interprets section 608(c) such that if a person adds refrigerant to an appliance that he or she knows is leaking, he or she also violates the venting prohibition unless he or she has complied with the applicable practices
This action extending the regulations under subpart F to non-exempt substitutes is additionally supported by the authority in section 608(a) because regulations that minimize the release and maximize the recapture and recovery of non-exempt substitutes will also reduce the release and increase the recovery of ozone-depleting substances. Improper handling of substitute refrigerants is likely to contaminate appliances and recovery cylinders with mixtures of ODS and non-ODS substitutes, which can lead to illegal venting because such mixtures are difficult or expensive to reclaim or appropriately dispose of. Under the prior definition of
In this action, EPA is also establishing new recordkeeping requirements, as well as extending existing recordkeeping requirements to non-exempt substitutes. EPA's authority to establish and extend these requirements is supported by CAA sections 608(a), 608(c), and 114, consistent with the description of these authorities offered above. These new recordkeeping requirements are an important part of EPA's efforts to address illegal venting of refrigerants, improve accounting of refrigerants in affected appliances, and facilitate enforcement of requirements under section 608. For example, EPA is establishing a new recordkeeping requirement for the disposal of appliances containing more than five and less than 50 pounds of refrigerant. Section 608(a) gives EPA explicit authority to implement requirements that reduce ODS refrigerant emissions to the lowest achievable level. This recordkeeping requirement, along with other recordkeeping requirements in this rule, further the recovery, reclamation, and/or destruction of ODS refrigerants and discourages the illegal venting of such refrigerants from affected appliances. Because it minimizes the emission of ODS refrigerant, EPA has authority for this requirement as it relates to ODS appliances under 608(a). Additionally, providing a consistent standard for ODS and non-exempt substitute refrigerants will facilitate the recovery, reclamation, and/or destruction of both ODS and non-ODS refrigerants and, accordingly, will reduce the emission of such refrigerants. EPA will continue to evaluate how best to use the information to promote the recovery of refrigerants and compliance with these provisions.
EPA also has authority under section 114 of the CAA to require that technicians document that appliances containing an ODS refrigerant or a non-exempt substitute refrigerant have been properly evacuated prior to disposal. Section 114 of the CAA provides the primary authority to establish these recordkeeping and reporting requirements because it provides EPA authority to require recordkeeping and reporting in carrying out provisions of the CAA, including the venting prohibition under CAA sections 608(c) and the requirements under 608(a). Because these records will help EPA determine whether requirements under sections 608(c) and 608(a) are being complied with, this requirement falls within the scope of section 114.
In addition to extending the existing regulations in subpart F to non-exempt substitute refrigerants, EPA is also revising and augmenting the existing requirements that apply to ozone-depleting substances, including: Lowered leak rates, periodic leak inspections for equipment that has leaked above the leak threshold, leak repair verification tests, and recordkeeping requirements for the disposal of appliances containing more than five and less than 50 pounds of refrigerant. EPA is also finalizing its proposal to update and revise subpart F to improve clarity and enforceability. EPA's authority for these amendments is based primarily on section 608(a), which requires EPA to promulgate regulations regarding the use and disposal of class I and II substances to “reduce the use and emission of such substances to the lowest achievable level” and “maximize the recapture and recycling of such substances.” In addition, because EPA is further elaborating the requirements and practices that regulated parties must follow to qualify for the
While section 608 covers all appliances,
A motor vehicle is defined under subpart B as “any vehicle which is self-propelled and designed for transporting persons or property on a street or highway, including but not limited to passenger cars, light duty vehicles, and heavy duty vehicles. This definition does not include a vehicle where final assembly of the vehicle has not been completed by the original equipment manufacturer.” 40 CFR 82.32(c).
Under section 609, no person repairing or servicing motor vehicles for consideration may perform any service on an MVAC that involves the refrigerant without properly using approved refrigerant recovery or recovery and recycling equipment and no such person may perform such service unless such person has been properly trained and certified. Refrigerant handling equipment must be certified by EPA or an independent organization approved by EPA. Section 609 also prohibits the sale or distribution of any class I or class II MVAC refrigerant in a container of less
Regulations issued under section 609 are in 40 CFR part 82, subpart B, and include information on prohibitions and required practices (§ 82.34), approved refrigerant handling equipment (§ 82.36), approved independent standards testing organizations (§ 82.38), requirements for technician certification and training programs (§ 82.40), and certification, recordkeeping, and public notification requirements (§ 82.42). Appendices A-F of subpart B provide standards for minimum operating requirements for MVAC servicing equipment.
Because MVACs are defined in subpart F as an “appliance” (§ 82.152), the section 608 regulations found in subpart F are generally applicable to MVAC systems. However, because servicing and technician training and certification are regulated under section 609, EPA's section 608 regulations in subpart F defer to those requirements in subpart B. Procedures involving MVACs that are not regulated under section 609, such as the disposal of MVACs and the purchase of refrigerant for use in MVACs besides ODS refrigerant in containers less than 20 pounds, are covered by section 608. The prohibition in section 608 against venting ODS and substitute refrigerants is also applicable to refrigerants used in MVAC systems.
EPA also regulates MVAC-like appliances under subpart B. MVAC-like appliances are used to cool the driver's or passenger's compartment of off-road vehicles, including agricultural and construction vehicles.
Through this rulemaking EPA is finalizing its proposal to apply the provisions of section 608 to non-exempt ODS substitutes, including those used in MVAC and MVAC-like appliances. EPA is not extending the regulations under section 609 as part of this rulemaking because the 609 regulations have been applicable to all substitute substances since 1995.
Section 608 of the CAA does not explicitly address whether costs or benefits should be considered in developing regulations under that section. The statutory standards under section 608(a) against which the regulations concerning the use and disposal of ozone-depleting substances are to be measured are whether they “reduce the use and emission of such substances to the lowest achievable level” and “maximize the recapture and recycling of such substances.” The phrase “lowest achievable level” as used in section 608(a)(3) is not clear on its face as to whether economic factors should be considered in determining what is the “lowest achievable level.” Title VI does not further explain or define the term nor does it expressly state whether economic factors may or must be considered. Thus, EPA has discretion to adopt a reasonable interpretation. EPA has previously interpreted this phrase to allow the consideration of economic factors.
The phrase “de minimis releases associated with good faith attempts to recapture and recycle or safely dispose of any such substance” as used in section 608(c)(1) and as applied to substitutes through section 608(c)(2) is similarly not clear on its face as to whether economic factors may be considered in determining what is
Because the statutory language does not dictate a particular means of taking economic factors into account, if at all, EPA has discretion to adopt a reasonable method for doing so. In developing this rule, EPA has not applied a strict cost-benefit test, but rather has focused primarily on the state of air conditioning and refrigeration best practices and recovery technology, while also giving consideration to costs and benefits. The fact that industry has identified and uses these best practices indicates they are affordable.
EPA considered cost for many specific aspects of this rule. For instance, as discussed in the leak repair section (Section IV.F of this notice), EPA considered what is achievable from a technical perspective, while also considering the costs of those practices and technologies and the benefits from their use, when determining whether to establish new requirements and extending existing requirements to non-exempt substitute refrigerants. See the technical support document
As another example, EPA considered the costs of extending the refrigerant sales restriction to small cans of non-exempt substitutes used for MVAC servicing. EPA decided a more cost effective method of reducing emissions is requiring that manufacturers install self-sealing valves on small cans rather than limiting the sale of small cans to certified technicians only. As a final example of how EPA considered costs in this rulemaking, EPA relied heavily on the existing program and requirements already in place for ODS refrigerants rather than developing a new and separate set of requirements for non-exempt substitutes. This will allow the regulated community to in many instances use or adapt existing compliance procedures for non-exempt substitutes rather than having to develop wholly new approaches to managing compliance. This approach should help regulated entities to better predict and manage compliance costs.
This section summarizes many comments related to EPA's authority under the Clean Air Act to issue this rule and EPA's responses. Other comments related to EPA's authority for this action are addressed in the response to comments document found in the docket for this action.
Some comments asserted that EPA does not have the authority to extend the existing refrigerant management provisions in subpart F to non-ozone depleting refrigerants. Some commenters stated that under a plain language reading of section 608(a) it is clear that regulations to reduce use and emissions apply only to class I and class II substances and not substitutes. These comments said the language of section 608 as a whole authorizes a wide range of prescriptive regulations to reduce the use and emissions of class I and class II refrigerants but mentions substitutes only twice: That their use be promoted and the general requirement that their knowing venting is prohibited.
On the contrary, other comments agreed that EPA had authority to extend these regulations to substitutes. One such comment stated: “We believe that both the language of section 608 and the Agency's discretionary authority allow the extension of section 608's requirements to substitutes for ODS in the regulations.”
EPA disagrees that its regulatory authority under CAA section 608 extends only to class I and class II (ODS) substances and not to substitutes. EPA also disagrees with comments contending that, as a factual matter, extension of the refrigerant management regulations to substitutes would not reduce emissions of ODS and maximize the recapturing and recycling of ODS. Section 608 expressly addresses substitute refrigerants in the venting prohibition in section 608(c)(2). As explained previously in this notice, EPA's authority for extending the refrigerant management regulations to substitute refrigerants is based primarily on section 608(c)(2) (via interpretation, explanation, and enforcement of the venting prohibition for substitutes) and secondarily on section 608(a) (via the corresponding reductions in ODS emissions and increases in ODS recapture and recycling that are expected to result from requiring consistent practices for ODS and substitute refrigerants), with additional support from CAA sections 301 and 114.
More specifically with respect to section 608(a), that section states that the regulations under that section shall include requirements that reduce the use and emission of ODS to the lowest achievable level and that maximize their recapture and recycling. EPA's interpretation that section 608(a) supports the extension of the refrigerant management regulations to substitutes is based on reducing emissions of ODS and maximizing recapturing and recycling of ODS. This is because requiring practices that are consistent for both ODS and for substitutes reduces the likelihood that a person maintaining, servicing, repairing, or disposing of an appliance that uses ODS as a refrigerant mistakenly believes that it contains a substitute refrigerant and fails to apply the proper procedures for ODS, leading to increased ODS emissions or failure to recover or reclaim ODS. It is also because in the course of servicing, repairing, or maintaining appliances there is a potential for mixing ODS and substitute refrigerants, which may lead to venting or release of the mixture due to the difficulty of reclamation. EPA has explained that the venting prohibition applies to all refrigerants consisting in whole or in part of an ODS, such as a blend with an HFC component. (See 69 FR 11949). Accordingly, the commenters' statements that section 608(a) only applies to class I and class II substances fail to recognize that regulation of substitutes can help effectuate the statutory purposes mentioned in section 608(a). EPA is relying in part on section 608(a) for the extension of regulatory requirements to substitutes because it interprets this provision to support regulation of substitutes when such regulations can help achieve the purposes listed in section 608(a). The extension of regulatory requirements to substitutes in this action is supported by section 608(a) because that extension of requirements to substitutes is expected to reduce ODS emissions and further maximize the recovery and reclamation of ODS. After consideration of all the comments, EPA concludes that it has authority to extend the refrigerant management regulations to substitutes, and that section 608(a) is a relevant source of authority because applying a consistent and coherent regulatory regime to both ODS and substitute refrigerants improves the application of the requirements to ODS, promoting the recovery and reclamation of ODS and reducing ODS emissions. Such ODS-focused goals are well within EPA's authority under CAA section 608(a).
Commenters also disagreed with EPA's statement that there is ambiguity in the CAA regarding the Agency's authority to create a comprehensive regulatory program akin to that
EPA recognizes that Congress expressly mentioned substitutes in certain sections of Title VI of the CAA, such as section 608(c)(2). In EPA's interpretation of section 608, the fact that Congress expressly applied the venting prohibition to substitutes in section 608(c)(2) supports this action because this action clarifies how EPA interprets that venting prohibition and explains what actions must be taken during the maintenance, servicing, repair, or disposal of appliances and IPR to avoid violating the venting prohibition. The inclusion of substitutes in section 608(c)(2) also indicates that Congress contemplated that regulation of substitutes would play a role in implementing section 608. The ambiguity in section 608 is that Congress created an explicit prohibition on venting substitute refrigerants in the course of maintaining, servicing, repairing, or disposing of appliances or IPR, and also provided an exception to that prohibition for “de minimis releases associated with good faith attempts to recapture and recycle or safely dispose” of such substances. CAA section 608(c)(1); see also CAA section 608(c)(2) (applying paragraph (c)(1) to the venting, release, or disposal of substitute refrigerants). Congress, however, did not define what releases would be considered “
In addition to the statutory interpretation and the principle of
While EPA acknowledges that section 608(a) does not explicitly mention substitutes, we disagree with the conclusion that the comment draws from that. The fact that Congress required EPA to address ODS in a certain manner under section 608(a) is not the same as prohibiting EPA from addressing other refrigerants in the same manner. EPA has explained in the preceding response to comments how it interprets section 608(a) to support this rulemaking.
Some commenters contend that Congress specifically listed class I and class II substances for coverage under the regulations and under the principle of
Commenters stated that section 608(c) is self-implementing and no promulgation of regulations by EPA is required or contemplated to implement such prohibition. In contrast, 608(a) and (b) require EPA to promulgate regulations to establish “standards and requirements.” These standards and requirements are different in kind and broader than the 608(c) statutory prohibition. EPA cannot merge the distinct requirements of 608(a) and (b) with the statutory prohibition of 608(c). Another commenter stated that in trying to apply section 608(b) to any substitute substance, EPA is inferring authority that is not there.
EPA agrees that the prohibition under 608(c) as it applies to the knowing venting or releasing of ODS and substitutes is itself self-implementing. However, that fact does not preclude EPA from establishing regulations to include the prohibition in the overall context of the regulatory scheme and to promulgate rules to further interpret, explain, and enforce it, including by
Similarly, as discussed in the preceding response, the legislative history indicates that in establishing the venting prohibition, Congress expected EPA to promulgate regulatory “provisions to foster implementation of this prohibition, including guidance on what constitutes `de minimis' and `good faith'.”
While Congress did not establish specific rulemaking authority under section 608(c)(2), Congress did provide a general grant of authority in CAA section 301(a)(1) to “prescribe such regulations as are necessary to carry out [the Administrator's] functions under” the CAA. This rulemaking authority supplements EPA's authority under section 608 by authorizing EPA to promulgate regulations necessary to carry out its functions under section 608, including regulations necessary to interpret the venting prohibition and exceptions to it.
EPA disagrees with the commenter that it is impermissibly merging the distinct requirements of CAA sections 608(a) and (b) with section 608(c). While EPA's regulations under section 608(b) are simply one part of the regulations required under section 608(a), EPA is not relying on section 608(b) to justify its extension of the section 608 regulations to substitutes in this rulemaking. The role of EPA's section 608(a) authority in this rulemaking has been discussed above, in a prior response to comment. Moreover, as noted above, the fact that Congress required EPA to address ODS refrigerants in specific way under section 608(a), or section 608(b) for that matter, is not the same as precluding EPA from addressing other refrigerants in a similar fashion. Likewise, where EPA has authority to establish regulations for non-exempt substitute refrigerants, the fact that it has exercised its authority to establish similar regulations for other refrigerants does not prevent it from exercising its authority to regulate non-exempt substitute refrigerants in a similar manner.
One commenter stated that using section 608(c) to establish the same requirements as authorized under section 608(a) renders section 608(a) null and stated that statutory language should not be read in a manner that renders other provisions of the statute inconsistent, meaningless or superfluous.
EPA disagrees with this comment. Unlike section 608(c), section 608(a) is not limited to refrigerants. EPA has applied its authority under section 608(a) to establish or consider regulations for ODS in non-refrigerant applications. As an example, in 1998, EPA issued a rule on halon management under the authority of section 608(a)(2) (63 FR 11084, March 5, 1998). In that action, EPA noted that section 608(a)(2) “directs EPA to establish standards and requirements regarding the use and disposal of class I and II substances other than refrigerants.” 63 FR 11085. Similarly, EPA considered whether to establish a requirement to use gas impermeable tarps to reduce emissions of methyl bromide under section 608(a)(2), ultimately determining not to do so for technological and economic reasons. 63 FR 6008 (February 5, 1998). In that action, EPA noted: “[s]ection 608(a)(1) of the Act provides for a national recycling and emission reduction program with respect to the use and disposal of Class I substances used as refrigerants. Section 608(a)(2) provides for such a program with respect to Class I and Class II substances not covered by section 608(a)(1).” 63 FR 6008. Accordingly, this interpretation of section 608(c)(2) to allow EPA to establish requirements for non-exempt substitute refrigerants similar to those established under section 608(a) for ODS refrigerants does not render section 608(a) null or superfluous. Although EPA interprets its substantive authority under both sections 608(a) and 608(c) to support application of the refrigerant management requirements to both ODS and non-exempt substitute refrigerants, that is different from asserting that its section 608(c) authority would extend to any requirement that could be imposed under section 608(a). EPA was required to establish certain regulations for ODS refrigerants under section 608(a) and then decided to use those provisions to interpret and explain the venting prohibition for ODS under section 608(c). The fact that EPA is now electing to use the same requirements under section 608(c) for substitutes does not render 608(a) a nullity. EPA could have established different requirements to interpret and explain the venting prohibition, but for the reasons discussed above, decided to make the requirements consistent for both ODS and substitutes.
One commenter asserted that applying detailed refrigerant management requirements to substitutes discourages the development of substitutes as it eliminates the incentive to operate with fewer regulatory requirements. Another commenter stated that the current regulations provide an opt-out incentive to owners that voluntarily retrofit to a non-ozone depleting substitute and suggested that EPA should seek to revise the proposed rule so that it continues to provide similar incentives.
EPA disagrees that applying the refrigerant management requirements to non-exempt substitute refrigerants will discourage the development of substitutes. At this point in time, there are other incentives to either retrofit or
In addition, while some provisions of the statute indicate Congressional intent to encourage companies to use safer alternatives, other provisions indicate that Congress was also concerned about the potential impacts of unregulated releases of these substitute refrigerants. Section 608(c)(2) is in the latter category, as it extends the venting prohibition to substitute refrigerants, unless EPA determines that such releases do not pose a threat to the environment. Accordingly, the application of these regulatory requirements to non-exempt substitute refrigerants provides clarity and certainty to owners, operators, and people servicing, maintaining, repairing, or disposing of air conditioning and refrigeration equipment of how they can avoid violating the venting prohibition. Such clarity and certainty is consistent with EPA's efforts through other regulatory programs to facilitate and encourage the use of substitute refrigerants.
Other commenters stated that Congress did not extend the refrigerant management requirements to substitutes, likely because it wanted to create incentives for companies to switch to safer alternatives.
EPA responds that Congress did extend the venting prohibition to substitute refrigerants and left to EPA's discretion how to interpret and enforce that prohibition. While Congress did not require EPA to interpret and enforce the venting prohibition by regulating substitute refrigerants in the same manner as ODS, neither did it prevent EPA from doing so.
Commenters also stated that 608(a)(3) encourages EPA to use the regulations under that provision to promote the use of safe alternatives. EPA responds that while section 608(a)(3) provides that the regulations that are required under section 608(a) “may include requirements . . . to promote the use of safe alternatives pursuant to section [612],” whether to include such provisions is discretionary, not mandatory. While Congress left such regulations to EPA's discretion, Congress directly applied the venting prohibition to substitute refrigerants under section 608. Moreover, the legislative history for section 608 recognizes the distinctions between sections 612 and 608, stating: “The fact that a particular substance has been identified by the Administrator as a `safe substitute' for purposes of section 612, does not affect the requirement for a separate determination under [section 608]. The purposes of section 612 and of this section are different and substances approved under section 612 will not automatically qualify for exclusion from the prohibition on venting that is included in this section.” Statement of Senate Managers, S. 1630, The Clean Air Act Amendments of 1990,
Commenters stated that EPA's authority under section 608 is limited to regulating actions taken during servicing, repair, or disposal of refrigeration equipment, or class I and II refrigerants evacuated during such servicing and repair. These comments further stated that EPA's authority extends only to technicians and that nothing in section 608 would enable EPA to impose liability on the equipment owner or operator.
With regard to the actions that are within the scope of section 608(c), as explained earlier in this notice, EPA interprets section 608(c) to convey authority to interpret, explain, and enforce the venting prohibition for both ODS and substitute refrigerants, and that prohibition applies to the maintenance, service, repair, or disposal of appliances and IPR. As explained elsewhere in this rulemaking, this action applies regulations to non-exempt substitute refrigerants that are related to the maintenance, service, repair, or disposal of such appliances or to providing persons engaged in such activities with additional clarity and certainty on how to ensure that their actions comport with the venting prohibition and the
EPA noted in a prior response that section 608(c) is limited to refrigerants while section 608(a) is not. However, the comment is incorrect that section 608(c) is limited to the activities of a technician. Section 608(c)(2) refers to “any person,” and “person” is defined broadly in CAA section 302, as well as in subpart F to 40 CFR part 82. More specifically, section 302(e) defines “person” to “include[ ] an individual, corporation, partnership, association, State, municipality, political subdivision of a State, and any agency, department, or instrumentality of the United States and any officer, agent or employee thereof.” Thus, the definition clearly is not limited to technicians. Furthermore, the current statement of purpose and scope in subpart F, § 82.150, lists appliance owners and operators as one of the persons to which the subpart applies.
When EPA initially promulgated the subpart F regulations, it explained that these rules applied to owners. For example, in the preamble to the 1993 Rule, EPA explained that it had made “additions to the scope section to clarify that the rule covers refrigerant reclaimers,
Some comments on the proposed rule stated that section 608(c) cannot be used to require that an equipment owner undertake repairs. EPA disagrees with this comment. As explained above, owners are within the scope of “person” as defined in CAA section 302(e) and subpart F. An owner's failure to undertake repairs of leaky appliances or IPR could lead directly to a violation of the venting prohibition. As one example, if in the course of a normal maintenance check, a technician discovers that the appliance is releasing refrigerant above the threshold leak rate but the owner does not authorize the repairs as required by the rules, and instead decides to add refrigerant and continue operating the equipment, the owner would be participating in a knowing release.
Many commenters also disagreed with EPA's interpretation of the venting prohibition, as articulated in the proposed rule that “when a person adds refrigerant to an appliance that he or she knows is leaking, without repairing the appliance consistent with the leak repair requirements, he or she also violates the venting prohibition.” One commenter stated that this could prohibit technicians from filling any leaking appliance. Another commenter noted that that it appears to cover failed repairs and verification tests during the repair period allowed by § 82.156(i)(9) and § 82.157(e). Commenters requested that EPA clarify that leaks that occur within an applicable repair window or retrofit/retirement schedule, even though the facility may be aware of the leak, do not violate the venting prohibition, where the leak repair procedures prescribed in subpart F are followed. To clarify EPA's statement in the proposed rule and to respond to these comments, EPA's position is that while the addition of refrigerant to an appliance known to be leaking above the threshold rate is a knowing release, that release does not violate the venting prohibition so long as the applicable practices referenced in § 82.154(a)(2), as revised, are complied with, including the leak repair requirements, as applicable.
Multiple commenters stated that EPA cannot use Title VI to control substances based on their GWPs. These commenters referred to section 602(e), which states that EPA's required publication of the GWP of a class I or class II substance “shall not be construed to be the basis of any additional regulation under this chapter.” EPA responds that section 602(e) relates to the GWPs of ODS, and says nothing regarding the GWPs of substitutes. In any event, EPA is not relying on section 602 as authority for the action being taken in this rulemaking. Rather, EPA is relying on section 608 for the substantive requirements contained in this rule. Section 608(c) prohibits the knowing venting or release of a substitute refrigerant unless the Administrator determines that such venting, release, or disposal does not pose a threat to the environment. While it is true that EPA anticipates a significant GHG emissions reduction as a result of this rule, EPA is extending the subpart F regulations to all substitute refrigerants that are not exempt from the venting prohibition irrespective of their GWPs. The GWPs of the non-exempt substitutes addressed in this rulemaking range from 4 to over 14,000.
One commenter stated that the legislative history demonstrates that Congress considered and rejected regulating GHGs under Title VI of the CAA. Congress does not intend
EPA responds that while Congress chose not to include certain potential measures regarding regulation of GHGs unrelated to ODS, Congress nonetheless included multiple provisions regarding ODS substitutes. The legislative history of section 608(c) indicates that Congress specifically recognized that substitutes could pose a threat to the environment because they could include greenhouse gases. In discussing the venting prohibition, as it applies to substitute refrigerants, the statement of the Senate Managers included the following:
Effective 5 years after enactment, the prohibition on venting or release shall also apply to all substances that are used as refrigerants as substitutes for class I or class II refrigerants. By its terms, this provision applies to substances that are not listed as class I or class II substances. This is an important provision because many of the substitutes being developed do not have ozone depleting properties but they are `greenhouse gases' and have radiative properties that are expected to exacerbate the problem of global climate change. The prohibition shall apply to all such substitute substances except where the Administrator determines that the venting, release or disposal of a particular substitute substance does not pose a threat to the environment.
The Administrator shall consider long term threats, such as global warming, as well as acute threats. The fact that a particular substance has been identified by the Administrator as a `safe substitute' for purposes of section 612 does not affect the requirement for a separate determination under this section. The purposes of section 612 and of this section are different and substances approved under section 612 will not automatically qualify for exclusion from the prohibition on venting that is included in this section.
It is therefore clear that Congress understood that substitute refrigerants could be greenhouse gases, specifically sought to apply the venting prohibition to such gases, and specifically contemplated that climate risks would be considered in carrying out the venting prohibition. The removal of a provision related to methane within Title VI does not indicate that Congress did not intend to address greenhouse gases in the venting prohibition.
One commenter stated that EPA has not undertaken an endangerment finding to support regulation of HFCs from IPR as a greenhouse gas which can be regulated under the CAA. EPA responds that under section 608(c), the venting prohibition applies to substitutes unless EPA exempts them. EPA is not required to take any affirmative action, let alone an endangerment finding, for the venting prohibition to apply.
One commenter stated that the purpose of Title VI is to implement the Montreal Protocol, whose sole goal is to protect the stratospheric ozone layer from ODS. EPA responds that while certain sections of Title VI do in fact implement the Montreal Protocol, several sections of Title VI call on EPA to take measures that are not required by the Montreal Protocol but are complementary to the ODS phaseout. These sections include, in addition to
One commenter stated that the proposed rule would drive owners and operators of IPR from HFCs to exempt substitutes in order to remove themselves from the regulatory requirements of subpart F. The commenter stated that some of these exempt substitutes are not safer for human health. HFCs are non-ozone depleting, non-flammable, and non-toxic whereas ammonia, chlorine, and hydrocarbons are either toxic or flammable. By encouraging the use of these non-exempt but riskier substitutes, the commenter states that EPA is violating section 612(a) of the CAA.
EPA responds that the commenter is quoting the policy statement that appears in section 612(a). The Agency is not acting under section 612. Rather, EPA is acting under section 608. This action under section 608 is consistent with decisions made under section 612 and does not alter those decisions. Specifically, it does not preclude use of any substitute listed as acceptable or acceptable subject to use restrictions under section 612(c) for the specified end-use. Under section 612(c), EPA compares substitutes not only to ODS but also to other available substitutes. When reviewing substitute refrigerants, EPA considers a variety of risks, including toxicity and flammability. In some instances, EPA lists substitutes as acceptable subject to use conditions that mitigate such risk. EPA does not dictate that a particular user choose a specific substitute from among those listed as acceptable for that end-use. Whether an owner or operator of an IPR facility chooses to transition to an exempt substitute is a decision that must be made weighing the advantages and disadvantages of the specific refrigerant.
Two commenters stated that section 301 grants EPA general rulemaking authority but does not authorize the Agency to act where a specific statutory provision already has addressed an issue. They further stated that section 608(a) does address the issue of whether the refrigerant management regulations apply to substitutes and therefore EPA cannot use section 301 to create that authority.
As discussed above, nothing in Title VI says what refrigerant management requirements should apply to substitutes: Therefore, this is not a situation where a specific statutory provision has already addressed the issue. EPA is issuing regulations to interpret, explain, and enforce the venting prohibition in section 608(c)(2) with regard to non-exempt substitutes. EPA is not deriving substantive authority from section 301. Rather, EPA is relying on section 608 for its substantive authority and is looking to section 301 as supplemental authority to issue regulations to carry out its functions under section 608. Similarly, EPA is looking to section 114 not for the substantive refrigerant management requirements being finalized today but rather as authority to require recordkeeping and reporting in carrying out the venting prohibition for non-exempt substitutes.
EPA proposed to update and clarify many of the definitions in subpart F. EPA also proposed to add new definitions and remove definitions that solely restated the required practice. In general, these revisions are to improve readability, increase consistency with how the term is used in the regulatory text, and specifically incorporate substitute refrigerants as appropriate.
EPA received comment on the proposed revisions to definitions of
EPA proposed to define
The prior definitions in subpart F are written to separate ozone-depleting substances from non-ozone depleting substitutes. EPA's prior regulations defined an
Defining these terms in this manner was appropriate before section 608(c)(2) took effect on November 15, 1995. Under section 608(c)(2), the venting prohibition applies to substitutes for ODS refrigerants and, accordingly, it states that “[f]or purposes of this paragraph”
In this action, EPA is revising the definition of
One commenter stated that EPA should not add “substitutes” to the definition of
EPA also proposed and is finalizing the addition of “motor vehicle air conditioner” to the list of example appliances. Two commenters objected to this proposal, stating that neither definition of
A plain reading of the Clean Air Act would include motor vehicle air conditioning under
The Act defines `appliance' as `any device which contains and uses a class I or class II substance as a refrigerant and which is used for household or commercial purposes, including any air conditioner, refrigerator, chiller, or freezer.' EPA interprets this definition to include all air-conditioning and refrigeration equipment except that designed and used exclusively for military applications. Thus, the term includes all the sectors of air-conditioning and refrigeration equipment described under Section III.A above, including household refrigerators and freezers (which may be used outside the home), other refrigerated appliances, residential and light commercial air-conditioning, transport refrigeration, retail food refrigeration, cold storage warehouses, commercial comfort air-conditioning,
In that same final rule, EPA established the definition of MVAC in subpart F as “
Comments from the auto industry also expressed concern that adding motor vehicle air conditioners to the list of examples in the definition of
The addition of motor vehicle air conditioners as an example within the definition of
EPA believes the repair of newly manufactured units is not likely to be a common occurrence and when it does occur, the manufacturing facilities clearly use equipment to recover and recycle the refrigerant so that it may be reintroduced once the motor vehicle air conditioner is repaired. The equipment is significantly different from the kind of equipment covered by EPA's definition of approved equipment, yet serves the purpose of such equipment equally well. In addition, the technicians performing this operation are typically manufacturing employees, not service technicians. For all these reasons, the Agency believes it is not necessary at this time to extend the requirements of this servicing regulation into the assembly operation. . . EPA wants to be clear that this exclusion is limited to final assembly activities conducted by the vehicle's original manufacturer, and does not include service or repair activities conducted, for example, by a dealer. (57 FR 31245, July 14, 1992)
One commenter further stated that it is not necessary to impose new technician training and certification requirements, or other regulatory requirements, for the automobile company and component supplier employees and contractors engaged in these activities. EPA agrees and reiterates that because the venting prohibition already applied to ODS and substitutes, this final action will not have any new effect on the automotive manufacturing process or individuals employed in the automotive and/or MVAC manufacturing process prior to the vehicle leaving the manufacturing plant. EPA's regulations under both sections 608 and 609 are intended, and will continue, to apply only to MVACs that are fully manufactured.
A few commenters requested that EPA clarify that for systems containing multiple circuits, each independent circuit is considered a separate appliance for the purposes of subpart F. This is the position that EPA has taken in the
Many commenters from the supermarket industry believe that the Agency's interpretation of the term
EPA responds that the Agency interprets an
As proposed, EPA is amending the definition of
EPA proposed a requirement that each batch of reclaimed refrigerant be tested. EPA did not propose to define “batch” but is doing so in this final rule based on requests by commenters to clarify the term. EPA agrees with the comment that adding a definition of
As proposed, EPA is removing the defined term
EPA is finalizing as proposed regulatory definitions for
EPA is finalizing the addition of a definition for
For purposes of the leak repair requirements, EPA proposed to define
Commenters suggested that EPA remove the reference to equipment and computer rooms as this is beyond the scope of comfort cooling. One commenter suggested that comfort cooling only include computer rooms set to above 68 degrees F to align the definition with CARB-32. That commenter also suggested that appliances used to cool computer rooms would fall under the category of “other appliances.” Another commenter believes that such appliances are currently considered as IPR. EPA responds that the intent was to apply the term
EPA notes here that
As proposed, EPA is finalizing the amendment to the definition of
As proposed, EPA is removing the defined term
EPA proposed to define
As proposed, EPA is amending the definition of
EPA proposed to amend the definition of
One commenter stated that the regulatory definition of
EPA responds that the Agency addresses the recycling and disposal (or reclamation) of refrigerant elsewhere in subpart F. The safe disposal provisions at § 82.155 relate to the disposal of appliances. The Clean Air Act in 608(a) refers to the “service, repair, and
Furthermore, EPA's intent is to address the various actions taken upon an existing and operational system that will effectively end its useful life and potentially release refrigerant. Both recycling and vandalizing a fully charged appliance would have that effect, though EPA recognizes the distinctions between those two actions. This revision is also consistent with a recent court decision-which found that cutting a functioning condenser unit and releasing refrigerant into the environment constituted disposal of an appliance within the meaning of CAA section 608 and its implementing regulations, even if the underlying intent was to steal and sell the metal piping.
EPA is amending the definition of
One commenter suggested that EPA modify the name of this test to
EPA is amending the definition of
EPA is allowing owners or operators to account for seasonal variances by measuring the actual amount of refrigerant added to or evacuated from the appliance. EPA is defining
(1) Use of the equipment manufacturer's determination of the full charge;
(2) Use of appropriate calculations based on component sizes, density of refrigerant, volume of piping, and other relevant considerations;
(3) Use of actual measurements of the amount of refrigerant added to or evacuated from the appliance, including for seasonal variances; and/or
(4) Use of an established range based on the best available data regarding the normal operating characteristics and conditions for the appliance, where the midpoint of the range will serve as the full charge.
To further explain the definition of
EPA received several comments on the proposed definition of
Four commenters suggested that the amount added and removed does not always have to be equal, as was proposed. EPA agrees that as long as the amount added is less than or equal to the amount removed in the prior season, the addition will be considered a seasonal variance.
One commenter requested that EPA clarify whether the added refrigerant amount is to be included in the full charge amount. The commenter is concerned that not reflecting the seasonal variance could affect what is considered normal operating characteristics and conditions, which would in turn affect when verification tests can be conducted. Another commenter proposed that the maximum charge be used at all times when calculating the leak rate, regardless of what is actually in the appliance at the time of repair.
Given the concerns raised by the commenter about including seasonal variances in the appliance's full charge to prevent problems with compliance with normal operating characteristics and conditions, the full charge must be adjusted to account for the amount of refrigerant removed or added for a seasonal variance if the full charge was calculated using any method other than method four, since that method inherently includes a range. To be clear, verification tests should be conducted regardless of whether the appliance contains extra refrigerant to account for a seasonal variance. This could result in two “full charges,” one for each season. EPA does not agree that it would be appropriate to use the maximum charge or the higher of the two full charge calculations because some seasonal variances are large enough that adjusting the full charge would make significant difference in the leaks that would exceed the applicable leak rate. Since this is an added flexibility, requiring slightly more recordkeeping is warranted.
One commenter indicated that refrigerant charge should never be added or removed throughout the year. While this may be true for some types of equipment, there are legitimate situations where such additions or removals are appropriate, typically in larger commercial refrigeration and industrial process refrigeration appliances. For example, one commenter cited the instance of a seafood packer who may need to add refrigerant during crab season when the refrigeration or freezing load spikes.
Finally, the Agency is allowing an owner or operator to choose a combination of methods to determine full charge. There are instances where multiple methods may be necessary to accurately determine the full charge. Further EPA is providing flexibility by not requiring that owners or operators commit to the same method for the life of the appliance. EPA is requiring in this final rule that owners or operators maintain a written record of the full charge, the method(s) used to determine the full charge, and any changes to that amount.
EPA is amending the definition of
EPA is amending the definition of
EPA is amending the definition of
EPA is amending the definition of
EPA is creating a new defined term
Some commenters recommended additional leak detection methods including: Standing pressure/vacuum decay tests, ultrasonic tests, periodic evacuations, gas-imaging cameras, sight glass checks, viewing receiver levels, pressure checks, charging charts, and the sub-cooling method (for expansion systems).
In general, leak detection methods fall into two categories: Ones that indicate that an appliance is leaking; and ones that can identify the location of a leak. EPA stated in the proposal that the proposed definition covers the techniques currently used to detect the location of leaks, not activities that would assist only in determining whether a system is leaking generally without providing information that would allow detection of the location of the leak. One commenter stated that limiting leak inspections in such a manner increases the costs of conducting leak inspections.
EPA responds that the purpose of a leak inspection is to determine the location of a leak, not to determine whether an appliance is leaking. As discussed in Section IV.F.4 of this notice, EPA is modifying the leak inspection requirement so that it is only required on appliances that have exceeded the applicable leak rate. To repair a leak, the technician must be able to locate it. Therefore, inspection methods that only indicate that the appliance is releasing refrigerant do not provide the necessary information for a technician to repair leaks. Further leak inspections on the repaired system may benefit from using a combination of methods to determine whether the system continues to leak refrigerant, and if so, where.
Commenters also recommended that EPA remove some of the proposed inspection methods. Multiple commenters recommended that EPA not include a visual inspection for oil residue, as that is not a reliable indicator of a refrigerant leak. Similarly, some commenters noted that the bubble test should be used in conjunction with another leak detection method due to its low sensitivity or potential unreliability when performed outdoors. EPA agrees that a visual inspection for oil residue is not dispositive and has removed that method from the list of leak inspection methods included in the definition as finalized. EPA is including bubble tests in that list because it may be appropriate in some circumstances. EPA is also strengthening the leak inspection by requiring under § 82.157(g)(2) that it be performed by a certified technician, while providing discretion for the technician to determine which methods are appropriate.
Some commenters also recommended that EPA remove the word “calibrated” because some electronic leak detectors are self-calibrating while others do not require calibration. Instead, these commenters suggested that EPA require that the devices be operated and maintained according to manufacturer guidelines. Another commenter recommended that EPA maintain the requirement that leak detection devices be calibrated. Given the variability of equipment, EPA agrees with the comments suggesting that it is preferable to follow the manufacturer guidelines. Thus, in this final definition EPA is replacing “calibrated leak detection device” with “leak detection device operated and maintained according to manufacturer guidelines” based on public comment.
In this final rule, EPA is providing a non-exhaustive list of methods for leak inspections, and clarifying that techniques that only determine whether the appliance is leaking must be used in combination with another method that can identify the location of the leak. In general, commenters encouraged EPA to allow for or require multiple methods due to the limitations of individual techniques in different circumstances. This approach is consistent with those comments.
EPA proposed, and is now finalizing, one substantive change to the definition of
EPA is also renaming the two methods from Method 1 and Method 2 to “Annualizing Method” and “Rolling Average Method” to improve readability. EPA is also finalizing the proposed change to clarify that while the same leak rate calculation must be used for all appliances at the same facility, this only refers to the appliances subject to the leak repair provisions (
EPA received three comments on this proposed definition. One commenter recommended that EPA remove the Rolling Average Method for simplicity and change the Annualizing Method such that the calculation is based on the time since the last successful follow-up verification test instead of the last refrigerant addition. The commenter further recommended changes to the Rolling Average Method, if EPA keeps it in the regulation, to better express the amount of refrigerant that would be lost if that leak continued for a full year.
EPA responds that while reducing the number of leak rate calculation methods could simplify the regulations, numerous appliance owners and operators have used the Rolling Average method for years and they continue to seek flexibility. EPA does not see an environmental benefit in reducing this flexibility. On the suggestions to change the Annualizing and Rolling Average Methods, EPA is not adopting the suggestions. Broadly speaking, EPA
The strength of the Annualizing Method is that it is future-oriented. It allows an owner or operator to “close out” each leak event so long as the requirements are followed and does not lump past leak events with the current leak event. It considers the amount of time since the last refrigerant addition and then scales that up to provide a leak rate that projects the amount lost over a whole year if not fixed. As a result, this formula will yield a higher leak rate for smaller leaks if the amount of time since the last repair was shorter. This can have significant environmental benefits by requiring more thorough leak inspections and verified repairs sooner. The commenter's suggested change would make this method too similar to the Rolling Average Method for minimal, if any, benefit and could potentially increase the amount of time included in each leak rate calculation. Stretching out the period of time covered could result in lower leak rates depending on the situation.
The Rolling Average Method also has its strengths. It accounts for all refrigerant additions over the past 365 days or since the last successful follow-up verification test showing that all identified leaks were successfully repaired (if less than 365 days). If an owner or operator verifies all identified leaks are repaired, this method would also allow an owner or operator to “close out” a leak event. If there is no follow-up verification test showing that all identified leaks were successfully repaired within the last year, the leak rate would be based completely on actual leaks in the past year. This retrospective approach measures actual performance and if leaks are identified and fixed quickly, an appliance may never reach the applicable leak rate.
Two other commenters questioned the rationale for the change given the need to update tracking software and provide staff training. EPA explained its rationale in the proposed rule and earlier in this notice. Specifically, the change is needed to provide clarity that repairs must be successful and verified in order to be considered in the calculation and to improve effectiveness of the rule.
In this action, EPA is requiring that owners or operators use a prospective approach (the Annualizing Method), that focuses on the current leak event rather than the size of past leaks, or a retrospective approach (the Rolling Average Method), where past performance is key. If an owner or operator repairs all identified leaks and verifies that the repairs have been successful, then the Agency considers that a sufficient clearing event in that the leak rate has been brought as close to zero as possible. We recognize that these changes may require modification to software and technician training with the new requirements. For that reason, EPA intends to develop several compliance assistance tools that will help technicians and owners/operators to better understand the requirements. EPA has also delayed the compliance date for the appliance maintenance and leak repair requirements to January 1, 2019, to allow time for the industry to prepare for these changes.
EPA is amending the definition of
EPA is amending the definition of
EPA proposed to revise the defined term
One commenter recommended that EPA allow the system to be filled with nitrogen or another inert gas to protect the system while repair is in process. EPA responds that the regulations in subpart F do not prohibit or address this action, as long as the holding charge is an inert gas and not a refrigerant as defined in this subpart. However, EPA is not making revisions to address this point specifically, as the regulations in subpart F are concerned with refrigerants and the nitrogen or other inert gas in this example is not being used as a refrigerant.
As proposed, EPA is changing the defined term
As proposed, EPA is removing the defined term
EPA is amending the definition of
EPA proposed to amend the definition of
As proposed, EPA is changing the defined term
As proposed, EPA is changing the defined term
In the context of recycling refrigerant, EPA is finalizing revisions to the defined term
EPA is amending the definition of
One commenter stated that EPA does not have authority to regulate substitutes to the same extent as class I and class II ODS and thus the Agency is prohibited from redefining
EPA is creating a defined term
One commenter recommended that retire not include the phrase “such that the retired appliance as a whole cannot be used by any person in the future.” The commenter is concerned that this could prevent the reuse of certain equipment parts. Furthermore, the owner/operator has no means to determine the ultimate fate of the retired appliance or components. Another commenter stated that the requirement to render the appliance unfit for use by the current or future owner is unnecessary because retired appliances typically use an older refrigerant and are not economical to purchase. Requiring that the owner do something to render the unit unfit for use would impose an unnecessary burden. EPA responds that the term
Another commenter stated that appliances may be retired without being completely disassembled. This comment stated that often, especially for IPR, appliances can be abandoned in place for a considerable length of time; so long as an appliance is made inoperable and permanently shut down it should be considered retired. This commenter provided recommended language which accurately describes the necessary state of the appliance “rendered unusable” and notes that any remaining refrigerant would be recovered from the appliance. EPA is finalizing the definition of
As discussed in the proposed rule, retirement differs from
EPA is creating a defined term
EPA is finalizing this definition as proposed. EPA uses
EPA is finalizing its proposal to create a defined term
EPA is finalizing proposed amendments to the definition of
One commenter requested that EPA specifically exclude MVACs and MVAC-like appliances from this definition. The commenter believes that without such an exclusion those types of appliances would be included in the revised definition of
Another commenter noted that EPA has specifically granted an exemption for the manufacture of small appliances in subpart B and urged EPA to preserve that exclusion in subpart F for MVACs. The commenter points to the definition of
EPA is finalizing proposed amendments to the definition of
Under the revised definition, any chemical or product, whether existing or new, that is used by any person as a replacement refrigerant for a class I or II ozone-depleting substance would be considered a substitute, even if it has been recently listed as unacceptable under SNAP in some end-uses or has not been submitted to or reviewed by the SNAP program. One commenter stated that by limiting the definition of
EPA responds that in 2004, the Agency affirmed an inclusive view of the scope of substitutes under subpart F. In that rule, it stated:
Under section 608, EPA considers a SNAP-approved refrigerant a `substitute' for CFC or HCFC refrigerants under section 608 if any of the following is the case: (1) The substitute refrigerant immediately replaced a CFC or HCFC in a specific instance, (2) the substitute refrigerant replaced another substitute that replaced a CFC or HCFC in a specific instance (
Other commenters recommended that EPA explicitly state the types of refrigerants that are considered substitutes. The proposal stated that EPA intends to apply the requirements in subpart F to all substances that are functionally refrigerants, including but not limited to HFCs, PFCs, HFOs, hydrofluoroethers, and hydrocarbons, as long as those substances have not been exempted from the venting prohibition. To the extent these comments are suggesting that EPA should provide some examples as a non-exhaustive list in the definition, EPA agrees that this increases clarity and EPA has added a non-exhaustive list of examples of substances that would be included in this definition, as well as clarifying that blends of such substances are also included. This approach also matches other definitions in subpart F that have similar lists of examples. To the extent the commenters are suggesting that EPA establish an exhaustive list of substances that would qualify as substitutes, EPA does not agree such a list is needed or would be feasible to include. Including such a list would also be unadvisable given the continued development of new substitutes. Therefore, the definition provides an illustrative list of substances that are included.
To provide clarity, EPA is adding mention of the venting prohibition in the definition of substitute. While EPA is finalizing its interpretation that carbon dioxide, nitrogen, water, ammonia, chlorine, hydrocarbons, and R-441A are substitutes, the regulations as finalized make clear that when these substitutes are used as refrigerants in
One commenter requested that the regulations include the phrase “non-exempt refrigerants” more frequently so that the reader does not have to understand that the regulatory definition of refrigerants excludes substitutes that are exempted from the venting prohibition. EPA responds that while exempt substitutes are included in the regulatory definition of refrigerant, the regulatory text has been revised to clarify that the obligations under subpart F do not apply to exempt substitutes. EPA has included in the definition of substitute a description of the terms “exempt substitutes” and “non-exempt substitutes” with reference to § 82.154(a)(1), which provides that exempt substitutes are exempt from the requirements of this subpart, so that readers of the regulation can follow EPA's intent from the definition. EPA has also added references in the regulation to class I, class II, and non-exempt substitute refrigerants, where applicable, to be clear which refrigerants are subject to the provisions.
EPA is removing the defined term
EPA is finalizing the creation of a defined term
EPA is amending the definition of
The exception to that general statement is that persons maintaining, servicing, or repairing MVACs and persons disposing of small appliances, MVACs, or MVAC-like appliances do not need to be technicians, as defined within subpart F. This exception is explicitly included in the definition finalized in this action. This revision is not intended to affect the scope of the existing requirements but rather to respond to requests from stakeholders prior to the publication of the proposed rule that the Agency clarify which activities must be conducted by technicians and which need not be. EPA received comments stating that the proposed revision would require persons maintaining, servicing, or repairing MVACs to be technicians. EPA did not intend to impose that requirement and has corrected that in the final rule. EPA also edited the regulations in the sales restriction in § 82.154(c) to ensure that
The prior definition of
EPA is finalizing amendments to the definition of
EPA is finalizing the proposed removal of the defined term
As explained in Section III of this notice, under the revisions finalized in this rule, § 82.154(a) prohibits the venting of ODS refrigerants and non-ODS substitute refrigerants to the environment by persons maintaining, servicing, repairing, or disposing of an appliance. This provision provides an exemption to the venting prohibition for certain substitutes in specific end-uses based on a determination that the listed substitutes in the listed end-uses do not pose a threat to the environment when released. As revised, this section also exempts from the venting prohibition
As explained in more detail earlier in this notice, the knowing venting, release, or disposal of substitutes for class I and class II refrigerants in the course of maintaining, servicing, repairing, or disposing of an appliance or IPR is expressly prohibited by section 608(c)(1) and (2) of the CAA, effective November 15, 1995, unless the Administrator determines that such
Prior to this rulemaking, for class I and II substances EPA had interpreted as
EPA interprets the phrase “good faith attempts to recapture and recycle or safely dispose” similarly when it applies to substitute refrigerants under section 608(c)(2) as when it applies to ODS refrigerants under section 608(c)(1). Thus, compliance with the provisions regarding the evacuation of equipment, use of certified equipment, and technician certification in any instance where a person is opening (or otherwise violating the refrigerant circuit) or disposing of an appliance would represent “good faith attempts to recapture and recycle or safely dispose” of non-exempt substitute refrigerants. EPA considers these provisions to appropriately represent good faith attempts to recapture and recycle or safely dispose of such substitute refrigerants. For example, the proper use of certified recovery equipment and the evacuation of refrigerant to prescribed standards would be considered a good faith attempt to recapture and recycle or safely dispose of non-exempt substitute refrigerants when maintaining, servicing, repairing, or disposing of an appliance.
Under this approach, releases are only considered
It is impossible to open an appliance (or otherwise violate the refrigerant circuit) or dispose of an appliance without emitting some of the refrigerant in the circuit. Even after the appliance has been evacuated, some refrigerant remains, which is released to the environment when the appliance is opened or disposed of. Other activities that fall short of opening or disposing of the appliance but that involve violation of the refrigerant circuit also release refrigerant, albeit in very small quantities, because connectors (
One commenter stated that it fails to see why it would be unclear to the regulated community that the same
EPA agrees with the comment that the statute applies the
Another commenter stated that EPA must distinguish between provisions interpreting and enforcing the venting prohibition and other provisions implementing the statutory requirements to “minimize the use and emission” and “maximize the recapture and recycling” of class I and class II substances. In the commenter's view, the leak repair program is clearly related to the latter requirements. In addition, to the extent that a regulatory violation such as recordkeeping does not cause a release, EPA cannot use that as a violation of the venting prohibition. The comment concludes that all
EPA disagrees that there is a subset of the provisions finalized in this action that does not interpret, explain, or enforce the venting prohibition and is only aimed at minimizing the use and emission or maximizing the recapture and recycling of refrigerants. Under the prior regulations with regard to ODS, the regulatory text has long used the required practices under subpart F, including the leak repair provisions under the prior § 82.156(i), to clarify which emissions will qualify for the
In addition, EPA does not agree with the comment's implication that the leak repair program relates only to minimizing the use and emission or maximizing the recapture and recycling of refrigerants. For example, leak repair is a type of servicing and releases of non-exempt substitutes that occur in the course of repairing leaks as required by the leak repair program could violate the venting prohibition. As such, it is reasonable to clarify in the regulations that releases of non-exempt substitutes that are incidental to repairing leaks as required by the regulations will not be considered to violate the venting prohibition. In establishing the recordkeeping requirements in this rule, EPA is not suggesting that every failure to comply with a recordkeeping requirement would necessarily result in a violation of the venting prohibition. But in any event a failure to comply with a recordkeeping requirement would certainly be a violation of section 114.
Another commenter stated that there is no basis in the text of the CAA to assert that the venting prohibition is self-effectuating but that the
While the prohibition on venting under section 608(c) is self-effectuating, meaning the prohibition itself is legally binding even without implementing regulations, the statutory terms contain ambiguity. For example, the terms “
Further, even if we agreed with the comment that the term
EPA proposed to explicitly state in the regulatory text that the substitutes exempted from the venting prohibition in § 82.154(a)(1) are also exempt from the other provisions of subpart F. EPA also proposed to reorganize the list of exempt substitutes by refrigerant type for readability. EPA did not propose to revise the listed end-uses or propose to add or remove any substitutes from the list.
Multiple commenters supported EPA's proposal to extend the existing regulations to HFCs and other non-exempt substitutes for the clarity it would provide to manufacturers and technicians. Other commenters recommended that EPA treat all refrigerants (including exempt substitutes like hydrocarbons, ammonia, and carbon dioxide) equally in all aspects of the subpart F regulations, including recovery and reclamation, technician certification, leak detection, and recordkeeping. Consistent application of the regulations to all refrigerants, the commenters say, would reinforce essential refrigerant management practices for all systems, reduce leaks, improve safety, and improve the operating efficiency of equipment. The commenters say that all refrigerants, other than water and some HFOs, have either flammability properties, higher GWP properties, or properties hazardous to human health (toxicity, risk of asphyxiation, frostbite, etc). Another commenter was opposed to exempting refrigerants that may be vented from the broader subpart F
EPA agrees with the comments that the extension of the subpart F regulations increases clarity. EPA disagrees that its clarification that exempt substitutes are not subject to the subpart F requirements is an expansion of the exemption since the service practices and requirements in subpart F had previously only applied to ODS refrigerant. There are a couple of reasons for EPA's present view that it is appropriate not to extend the provisions of subpart F to refrigerants that have been exempted from the venting prohibition. First, EPA has previously determined that the release of these substances do not pose a threat to the environment or are already controlled by other authorities. (See 69 FR 11949, 80 FR 19454, and 81 FR 22810). Given those decisions, it would generally not make sense to require all procedures for recovery or safe disposal, or to apply all other provisions of subpart F to those exempt refrigerants. This is consistent with the intent of section 608(c)(2), which states that substitutes may be exempted from the venting prohibition if the Administrator determines that not just the venting but also the “releasing, or disposing” of such substance does not pose a threat to the environment.
Second, the refrigerant management practices in subpart F may be inappropriate for some of the exempted refrigerants. For example, the venting of exempt hydrocarbon refrigerants in certain end-uses may be the safest option for technicians at this time, considering that such refrigerants are flammable but most existing recovery equipment were not designed and constructed,
EPA is moving the previous regulatory provision in § 82.154(a)(2) that states that the venting prohibition applies to the release of refrigerant (both ODS and non-exempt substitute refrigerants) after its recovery from an appliance. EPA is moving this provision to a separate paragraph (§ 82.154(a)(3)) rather than its previous location in the description of a
Under the prior regulations at § 82.154(m), the sale or distribution of a refrigerant containing a class I or class II substance, such as R-12 or refrigerant blends that include HCFCs, is restricted to technicians certified under sections 608 or 609 of the CAA. The sale or distribution of any class I or class II substance suitable for use in an MVAC that is in a container of less than 20 pounds may only be sold to technicians certified under section 609.
The prior regulations at § 82.154(g) also restricted the sale of used ODS refrigerant sold for reuse unless certain conditions are met, the most important of which is that the refrigerant has been reclaimed. Sections 82.154(j) and (k) prohibited the sale of appliances containing an ODS refrigerant unless the appliance has a servicing aperture or process stub to facilitate the removal of refrigerant at servicing and disposal. Section 82.154(p) prohibited the manufacture or import of one-time expansion devices that contain any refrigerant (ODS or non-ODS), other than exempted refrigerants.
Through today's rule, EPA is extending the sales restriction to HFCs and other non-exempt substitute refrigerants. This sales restriction applies to non-exempt substitute refrigerants sold in all sizes of containers for use in all types of appliances, including MVACs. EPA is creating an exception for small cans (two pounds or less) of refrigerant intended to service MVACs, so long as the cans are equipped with a self-sealing valve. EPA is also restricting the sale of used non-exempt substitute refrigerants.
Since 1993, EPA has restricted the sale of ODS refrigerant to certified technicians as a means of ensuring that only qualified individuals—those who have sufficient knowledge of the safe handling regulations—actually handle refrigerant. EPA considers the restriction on the sale of ODS refrigerant to be important for ensuring compliance with and aiding enforcement of the regulations issued under sections 608 and 609 of the CAA. This requirement also relates to EPA's Next Generation Compliance strategy since compliance with this requirement is largely carried out by distributors who sell refrigerant to technicians. In this rulemaking, EPA is choosing to apply the same requirements for sales of ODS and non-exempt substitutes. Limiting the sale of non-exempt substitute refrigerants to technicians who have demonstrated knowledge of safe handling practices helps minimize the release of refrigerants during the maintenance, servicing, and repair of appliances containing such substitute refrigerants. A sales restriction for non-exempt substitute refrigerants also provides important support to the extension of the technician certification requirements to individuals working with non-exempt substitute refrigerants.
Generally, commenters are supportive of EPA's proposal and agree with EPA's rationale. Commenters who are generally opposed to extending EPA's regulations under section 608 to substitutes did not specifically raise the issue of whether EPA had authority to extend the sales restriction to HFCs and other non-exempt substitute refrigerants. EPA addresses the general comments about its authority for extending the refrigerant management regulations, as appropriate, to non-exempt substitute refrigerants in Section III of this notice. Some commenters stated that the sales restriction should be extended to hydrocarbons. These commenters noted that the flammability of these refrigerants poses far greater risks than that of R-22 when handling it and servicing equipment. Because the sales restriction is an element of the broader technician certification provisions of subpart F, EPA responds to comments concerning the sale and
Historically, individuals have been able to purchase small cans of non-ODS refrigerant to service their own vehicles. This do-it-yourself (DIY) servicing is unique in the air-conditioning and refrigeration sector to the MVAC end-use. As mentioned previously in this notice, EPA is finalizing the extension of the sales restriction to non-exempt substitutes. EPA is also finalizing an exemption from the sales restriction for small cans of MVAC refrigerant that are manufactured with a self-sealing valve to minimize the release of refrigerant during servicing because the Agency has concluded that restricting the sale of small cans of refrigerant for use in servicing MVAC would be unnecessarily burdensome. If EPA extended the sales restriction to substitute refrigerants without exempting small cans, the sale of both small containers of refrigerant, which are used for DIY servicing of MVAC systems, and typical size (
In the United States, HFC-134a has been used in all newly manufactured vehicles with air-conditioning systems since 1994 and almost all small cans of refrigerant sold for MVAC DIY use are cans of HFC-134a.
Based on the NPD Automotive Aftermarket Industry Monitor, 2008, approximately 14 million small cans are sold each year. If EPA were to extend the sales restriction to small cans without the exemption for small cans with self-sealing valves, individuals who normally service their own MVAC would be required to either seek certification under section 609 or take their car to a technician to be serviced. EPA estimates that the cost associated with those two actions could be as much as $1.5 billion per year. For more details, see
EPA's proposal to exempt small cans of refrigerant for use in MVAC systems that are equipped with a self-sealing valve was informed by input from the Auto Care Association and the Automotive Refrigeration Products Institute, two associations that represent the vast majority of manufacturers of small cans in the United States. EPA also reached out to CARB and other industry representatives as discussed in the NPRM. Based on California's experience, EPA proposed the exemption for small cans equipped with self-sealing valves as an effective way to reduce emissions of HFCs used to service MVACs without limiting sales to certified technicians. These valves reduce the release of refrigerant during servicing and reduce releases from the can after the servicing is complete.
Manufacturers already produce small cans with self-sealing valves to meet California's requirements. According to industry representatives and CARB, self-sealing valves are estimated to cost $0.25 per can. In light of that information, EPA does not find it to be unduly burdensome to add self-sealing valves to all small cans produced for sale in the United States, especially as compared to an extension of the sales restriction that would prohibit the sale of small cans to non-certified persons. Because they are incorporated into the product, consistent with EPA's Next Generation Compliance principles, the individual servicing her or his personal MVAC would reduce emissions without any additional effort or training, as compared to using small cans of refrigerant on the market today that do not employ a self-sealing valve. Thus, EPA has determined that self-sealing valves are an effective mechanism for controlling the release of non-exempt substitute refrigerants to the atmosphere, making it unnecessary to impose burdensome training and/or certification requirements more broadly at this time.
As described in
EPA is finalizing a new appendix E establishing a standard for self-sealing valves that is based largely on CARB's
EPA received comments from several manufacturers, distributors, and retailers of automotive refrigerant, and associations representing them, in support of requiring that the small cans be outfitted with self-sealing valves and not restricting the sale of small cans to certified technicians. EPA also received comments from multiple industry associations and CARB supporting these provisions.
Two environmental organizations were opposed to the proposed exemption for small cans equipped with self-sealing valves. The commenters recommend that only certified technicians be allowed to purchase MVAC refrigerant, regardless of the container size. The commenters believe that the DIY community is a large source of emissions of automotive refrigerant. Specifically, they claimed that emissions occur because DIYers are untrained in the use of the product, they
EPA responds that DIY servicing is unique to the MVAC end-use, as discussed previously in this notice. EPA did not propose to restrict the sale of small cans of MVAC refrigerant to certified technicians, explaining its concerns that such a requirement could be unnecessarily burdensome (80 FR 69479; Nov. 9, 2015). If EPA were to prohibit DIY servicing, individuals who normally service their own MVAC would be required to either seek certification under section 609 or take their car to a technician to be serviced. EPA estimates that the cost associated with those two actions could be as much as $1.5 billion per year. In the short term, EPA has concluded that requiring small cans of refrigerant to have self-sealing valves is an effective mechanism for controlling the release of refrigerant to the atmosphere by DIYers from the can of refrigerant. In the longer term, the transition to new MVAC refrigerants will reduce emissions of high GWP refrigerants from DIY servicing at little to no cost for DIYers.
EPA has estimated that the requirement for self-sealing valves on small cans of refrigerant will reduce refrigerant emissions by 0.657 MMTCO
EPA received one comment from a chemical manufacturer stating that they would support the continued sale of small cans without self-sealing valves but limit those sales to certified technicians under section 609. EPA does not see the benefit of restricting the sale of small cans to people certified under section 609 since small cans of refrigerant that do not have self-sealing valves are inherently emissive. Being certified under section 609 would not prevent the emission of the refrigerant from the heel of the can.
Commenters who oppose the sale of small cans generally do support the requirement to use self-sealing valves if there is not a total ban on sales. One commenter also strongly recommended that EPA allow the sale of small cans of HFO-1234yf and HFC-152a so that DIY consumers will not be enticed to recharge their HFO-1234yf system with HFC-134a for the lack of any alternative. EPA responds that the regulations at § 82.154(c)(1)(x) as revised in this action include any non-exempt substitute refrigerant that is intended for use in an MVAC. Therefore, small cans of HFO-1234yf and HFC-152a would be exempt from the sales restriction but also have the same requirements for unique fittings and self-sealing valves under section 608. As discussed previously in this notice, HFO-1234yf cannot currently be sold in small cans because a submission has not yet been made to SNAP for a unique fitting for small cans of HFO-1234yf. This action under section 608 does not prohibit the sale of any MVAC refrigerant alternative in a small can; however, refrigerants must be listed as acceptable or acceptable subject to use conditions for MVAC and unique fittings for small cans must be established under section 612 of the CAA prior to use
Small cans of refrigerant sold for MVAC servicing are different from containers of refrigerant sold for stationary refrigeration and air-conditioning in that the small cans for MVAC are required to have unique fittings. The SNAP program requires as a use condition for MVAC refrigerants that the container and the MVAC system use unique fittings to prevent cross-contamination. If used properly, the unique fittings will not allow for the introduction of HFC-134a refrigerant into a system using any other refrigerant, including CFC-12, HFO-1234yf, or another approved substitute refrigerant. Using an adapter or deliberately modifying a fitting to use a different refrigerant is a violation of the SNAP use conditions. Unique fittings will also reduce the likelihood that a small can will be used to service appliances other than MVACs that use non-exempt substitute refrigerants, which would be in contravention of the sales restriction.
Refrigerant sold for MVAC servicing is also different than other refrigerant because of the limited types of equipment that could be serviced with a small can. First, many household appliances that use refrigerants are hermetically sealed, like a refrigerator. Someone who wanted to open that appliance would need greater skill and specialized equipment to service the appliance since there would not be a servicing port to access. This makes it less likely that homeowners would attempt to use a small can to service other small household appliances. Larger appliances that use HFC-134a that are not hermetically sealed, like a reach-in cooler, would need more than one small can to fully charge the appliance. Because of the cost and the added effort to use multiple small cans to charge a larger appliance, it is not practical for someone to use a small can. This would likely lead the person to purchase a larger container of refrigerant, which would require that the person be a certified technician.
Commenters, including CARB, supported the use of CARB's standards. One commenter representing the manufacturers of small cans noted that this standard was developed in a cooperative effort between CARB and the refrigerant industry and that the procedures described in the standard have been used since 2010 to certify small cans sold in the California market. The commenter also stated that adopting the California standard would also allow for a quicker transition to cans with self-sealing valves, while development and adoption of a new standard would require a longer transition time and therefore, EPA should provide a later compliance date.
EPA agrees with the commenters and has determined that the establishment of the standard in appendix E, which is based on CARB's
EPA requested comment on whether the final rule should exempt the sale of
EPA is finalizing revisions that require that new appliances containing a non-exempt substitute refrigerant (including a used non-exempt substitute refrigerant) have a servicing aperture or process stub to facilitate the recovery of refrigerant at servicing and disposal. Including these design features on appliances containing such substitutes facilitates compliance with the section 608(c) prohibition against the venting, release, or disposal of substitute refrigerants into the environment. These access points allow for the proper evacuation or recovery of substitute refrigerant, preventing releases to the atmosphere in the course of maintaining, servicing, repairing, or disposing of the appliance. Without these access points, it would be harder for persons maintaining, servicing, repairing, or disposing of such appliances to properly evacuate the refrigerant in accordance with § 82.156(b). For example, these access points provide the person disposing of an appliance the opportunity to properly remove the refrigerant prior to crushing or shredding and thus avoid a knowing release. EPA did not receive comments on this provision. The manufacture or import of one-time expansion devices that contain any refrigerant (ODS or non-ODS), other than exempted refrigerants, was prohibited under the prior regulations. One-time expansion devices, by design, release their refrigerant charge to the environment in order to provide a cooling effect. Examples include self-chilled beverage containers that must be disposed of or recycled after each use, as well as reusable containers. EPA is finalizing minor edits to this prohibition that reference the list of exempt refrigerants as proposed. EPA did not receive any comments on this provision.
In the 1993 Rule, EPA established specific requirements for the safe disposal of small appliances, MVACs, and MVAC-like appliances containing ODS refrigerant since they typically enter the waste stream with the refrigerant charge intact. Under the prior rules at § 82.156(f), persons who took the final step in the disposal process of such appliances had to either recover any remaining refrigerant in the appliance or verify that the refrigerant has previously been recovered from the appliance or shipment of appliances. If they verified that the refrigerant has been recovered previously, they had to retain a signed statement attesting to this or a contract from the supplier of the appliances for three years. While recovery equipment used to remove the refrigerant had to be certified under § 82.158, persons recovering the refrigerant at disposal did not need to be certified technicians.
EPA is extending the preexisting safe disposal provisions previously found at § 82.156(f) for small appliances, MVACs, and MVAC-like appliances containing ODS refrigerants to the same types of appliances that contain non-exempt substitute refrigerants. Generally, commenters support EPA's proposal and agree with EPA's rationale. Commenters who stated that EPA does not have authority to extend section 608 regulations to substitutes were silent on the specific issue of the safe disposal provisions. A fuller and more general discussion of the authority for this action is found in Section III of this notice.
Safely disposing of both ODS and substitute refrigerant in small appliances, MVACs, and MVAC-like appliances is important for the environment and public health. According to EPA's Vintaging Model,
One commenter approves of the clear signal that the rule sends for appliances containing exempt refrigerants. However, this commenter asks how a recipient of a component of such an appliance for disposal would be aware that the subpart F requirements do not apply to that component. EPA responds that the only likely exempt refrigerant in that scenario is a small appliance containing a flammable refrigerant. As required under the SNAP use conditions, the component would have markings such as red tubing or a warning label that would distinguish that component from other components. The labels must be placed on the outside of the appliance, on the inside of the appliance near the compressor, on or near any evaporators that can be contacted by the consumer, near the machine compartment, and near any and all exposed refrigerant tubing.
The safe disposal regulations require actions of three separate groups of people: The final processor, the supplier of appliances for disposal, and the person who recovers the refrigerant. The final processor is the person who takes the final step in the disposal process,
Refrigerant may be recovered at any stage in the disposal process, even prior to the supplier taking possession. As EPA stated in the 1993 Rule, “the supplier to the final processor does not have to remove the refrigerant but then must assure, through an accompanying certification, that refrigerant has been removed earlier in the disposal chain. Any copies of the certificate of removal provided to the supplier could be passed on to the final processor.” (58 FR 28704-28705). EPA's intent has been to provide the flexibility needed to permit the recovery of refrigerant by the entity in the disposal chain that can accomplish that task most efficiently while at the same time establishing a mechanism to help ensure that the refrigerant has not simply been illegally vented. This flexibility is important for the disposal sector, which is highly diverse and decentralized. This signed certification serves both goals.
EPA is revising the regulations to clarify what must be in the contract stating that refrigerant will be removed prior to delivery. EPA is replacing the word “remove” which appears repeatedly in these provisions with “properly recover.” These revisions clarify the provisions' intent that the refrigerant is recovered to the required evacuation levels using the appropriate equipment. EPA is also stating explicitly that the contract should provide that the supplier of the appliances is responsible for recovering any remaining refrigerant or verifying that the refrigerant has already been evacuated. As discussed in the 1993 Rule, the supplier to the final processor does not have to remove the refrigerant but must assure, through accompanying certifications, that the refrigerant has been removed earlier in the disposal chain.
EPA notes here that a contract is appropriate for businesses to streamline transactions in cases where they maintain long-standing business relationships. A contract would be entered into prior to the transaction, such as during the set-up of a customer account, not simultaneously with the transaction. A signed statement is more appropriate for one-off transactions between the supplier and the final processor.
EPA is also clarifying the format that the records required under this section may take. In general, where the regulations in subpart F require an individual to maintain records, the Agency intends for them to do so either in an electronic or paper format, preferably in an electronic system. EPA is clarifying this point explicitly in the recordkeeping provision at § 82.155(c).
One commenter stated that the new § 82.155 will remain unclear if EPA does not review the relevant applicability determinations for potential inclusion in the regulatory text. EPA responds that applicability determinations are only applicable to the person requesting the determination from EPA. However, in response to the comment, EPA has reviewed and is incorporating information from specific applicability determinations into the regulatory text where the Agency finds it will increase clarity to the industry as a whole.
Two applicability determinations address the situation where refrigerant has leaked out of an appliance prior to arriving at the final disposer. Applicability determination number 608-8 addresses whether a verification statement is needed where all of the refrigerant has already leaked out due to a break in the refrigerant circuit. Applicability determination number 608-9 addresses whether the term
Two applicability determinations address whether the verification statements are needed for appliances that arrive at the final processor in various conditions. Applicability determination number 608-8 pertains to the situation where the entire refrigeration circuit has been removed from the appliance prior to delivery. Applicability determination number C040001 pertains to (1) receipt of an appliance in which some components of the refrigerant circuit have been removed; (2) receipt of portions of the refrigerant circuit (
EPA's determinations in 1993 and 1996 were that the first two situations would be subject to the safe disposal regulations and the third and fourth situations would not be. Any equipment that contained refrigerant is subject to the safe disposal requirements. This includes a complete appliance with an intact refrigerant circuit, an appliance with a broken refrigerant circuit such as one with a component removed, or a single component that would contain refrigerant in an appliance. In all such instances the intent of the safe disposal program—to verify that the refrigerant was recovered properly—still applies.
Consistent with these determinations, EPA interprets its regulations such that items that have had the entire refrigerant circuit removed, such as the outer housing of an air conditioner or the structural shell of a refrigerator, are not subject to the safe disposal regulations, as these items do not meet the definition of appliance. Similarly, shredded material, baled scrap, or crushed cars are not subject to the safe disposal regulations. The person responsible for compliance with the safe disposal regulations is the entity upstream that conducted the final processing where the appliance was shredded, crushed, flattened, baled, or otherwise demolished and where the refrigerant would have been previously recovered in accordance with the regulations.
One commenter requested that EPA exclude hydrocarbon refrigerants that are vented from the definition of hazardous waste. The commenter reacted to a discussion in the proposed rule that household appliances containing a hydrocarbon refrigerant would be exempt as a household hazardous waste under the federal hazardous waste regulations at 40 CFR 261.4(b)(1) (although States may have more stringent regulations) and therefore, could generally be vented upon disposal under both RCRA and CAA regulations. The commenter notes
EPA responds that these refrigerants may be subject to regulation as hazardous waste, with the exception of refrigerants that are directly reused. The Agency did not propose to amend the regulations issued under RCRA in the proposal to this final action and has not undertaken the analysis to do so at this time. This comment is also outside the scope of this rulemaking, which relates to regulations under section 608 of the CAA, not to regulations under RCRA.
EPA is creating a single section, § 82.155, for all safe disposal provisions, including the recordkeeping and reporting requirements. One commenter supported moving the refrigerant recovery requirements for small appliances, MVACs, and MVAC-like appliances into a single section. The commenter suggested the section be titled “Safe Disposal of Refrigerant” rather than “Safe Disposal of Appliances” as they stated that the CAA does not contain the concept of safe disposal of appliances. While it is true that section 608(c) is concerned with the entry of refrigerants into the environment, it addresses such releases in the context of “disposing of an appliance.” EPA disagrees that it is necessary to change the name of the section. However, EPA has reorganized the section to put up front the general requirement that refrigerant be evacuated from appliances before describing the requirements of the final processor.
Under EPA's existing regulations at § 82.156(a), ODS refrigerant must be transferred to a system receiver or to a certified recovery and/or recycling machine before appliances are opened for maintenance, service, or repair. The same requirement applies to appliances that are to be disposed of, except for small appliances, MVACs, and MVAC-like appliances which were subject to separate requirements under § 82.156(g) and (h). To ensure that the maximum amount of refrigerant is captured rather than released, EPA requires that air-conditioning and refrigeration appliances be evacuated to specified levels of vacuum.
EPA is finalizing revisions in this action that extend the existing requirements at § 82.156 to appliances containing non-exempt substitute refrigerants. Therefore, before appliances containing non-exempt substitute refrigerants are opened for maintenance, service, or repair, the refrigerant in either the entire appliance or the affected part (when it can be isolated) must be transferred to a system receiver or to a certified recovery and/or recycling machine. The same requirements apply to appliances that are to be disposed of, except for small appliances, MVACs, and MVAC-like appliances, which have separate requirements.
Generally, commenters were supportive of EPA's proposal and agreed with EPA's rationale. Commenters who stated that EPA does not have authority to extend section 608 regulations to substitutes were silent on the specific issue of evacuation requirements. EPA addresses general comments about its authority for this action in Section III of this notice.
EPA is finalizing revisions to § 82.156(a) such that appliances other than small appliances, MVACs, and MVAC-like appliances containing non-exempt substitute refrigerants must be evacuated to the levels established for CFCs and HCFCs with similar saturation pressures. These levels are based on the saturation pressures of the refrigerant, which is a characteristic independent of whether or not the refrigerant is an ozone-depleting substance. As is the case for CFCs and HCFCs, the appropriate evacuation levels for HFCs and other substitutes depends upon the size of the appliance and the date of manufacture of the recovery and/or recycling equipment. EPA did not receive comment expressing any technical concerns with extending the evacuation requirements to substitute refrigerants. Some commenters stated that they currently treat ODS and HFC appliances in the same manner, including the level of evacuation.
EPA is finalizing revisions to § 82.156(b) to establish the same evacuation requirements for servicing small appliances charged with non-exempt substitute refrigerants as had previously existed only for small appliances charged with ODS refrigerants. Technicians opening small appliances for service, maintenance, or repair are required to use equipment certified either under appendix B, based on AHRI 740, or under appendix C, Method for Testing Recovery Devices for Use with Small Appliances, to recover the refrigerant.
Technicians using equipment certified under appendix B have to pull a four-inch vacuum. Technicians using equipment certified under appendix C have to capture 90 percent of the refrigerant in the appliance if the compressor is operational, and 80 percent of the refrigerant if the compressor is not operational. Because the percentage of refrigerant recovered is very difficult to measure on any given job, technicians would have to adhere to the servicing procedure certified for that recovery system under appendix C to ensure that they achieve the required recovery efficiencies.
One commenter specifically expressed support for extending the evacuation requirements to small appliances charged with non-exempt substitutes but not to small appliances containing exempt refrigerants. The commenter notes that the technician would be required to use appropriately certified equipment to recover the refrigerant. EPA did not propose to require the recovery of exempt refrigerants and agrees that it would not be appropriate to finalize such a requirement in this rule, as the venting prohibition does not apply to these substances.
EPA is also revising § 82.156(b) to establish the same evacuation requirements for disposing of small appliances that are charged with non-exempt substitute refrigerants as currently exist for small appliances charged with ODS refrigerants. Small appliances must have 80 or 90 percent of the refrigerant in them recovered (depending on whether or not the compressor was operational) or be evacuated to four inches of mercury vacuum.
EPA is also finalizing revisions to the regulations to simplify the evacuation requirements for small appliances so that they are the same for both servicing and disposal. This new provision applies to both ODS and non-exempt substitute refrigerants. Prior to this rulemaking, a technician servicing a small appliance containing an ODS needed to only recover 80 percent of the refrigerant when using recovery equipment manufactured before November 15, 1993. At the same time, there was no established level of evacuation in the disposal requirements when using pre-1993 recovery
One commenter stated that there should not continue to be separate evacuation levels for recovery equipment manufactured before 1993. This commenter saw such equipment being used only rarely and only to avoid the deeper evacuation requirements. This commenter also stated that pulling a 4-inch vacuum on a small appliance is not equal to 80 percent refrigerant recovery. EPA responds that the proposal explicitly stated that EPA was not proposing to amend the required levels of evacuation in Table 1, change the circumstances that would allow for alternate evacuation levels, or to revise those alternate levels. EPA understands the concerns raised by the commenter, but removing the older evacuation levels at this time is beyond the scope of this rulemaking.
Technicians repairing or servicing MVACs for consideration and MVAC-like appliances containing an ODS or a non-exempt substitute refrigerant are subject to the requirement to “properly use” (as defined at § 82.32(e)) servicing equipment approved pursuant to § 82.36(a). All persons recovering refrigerant from MVACs and MVAC-like appliances for purposes of disposal of these appliances must reduce the system pressure to or below 102 mm of mercury vacuum or use refrigerant recycling equipment dedicated for use with MVAC and MVAC-like appliances approved pursuant to § 82.36(a). The proposed rule incorrectly extended the MVAC servicing requirement to all persons, not just those servicing MVACs for consideration. EPA has revised the final rule to properly distinguish between the two.
EPA received a comment that section 608 of the CAA does not apply to MVACs. As discussed above in Section III of this notice, section 608(c) provides EPA authority to regulate the disposal of MVACs, which are a type of appliance. With respect to disposal of MVACs, this final rule, like the prior regulations, only specifies evacuation levels for such appliances when they are disposed.
EPA is adding new recordkeeping requirements at § 82.156(a)(3) for the disposal of appliances with a full charge of more than five and less than 50 pounds of either ODS or non-exempt substitute refrigerant. Most appliances this size are disassembled in the field and as such must have the refrigerant recovered in the field. EPA is requiring records that document the name of the company that employs the technician, the location of the appliance being disposed of, the date of recovery, and the type of refrigerant removed from each appliance prior to disposal. The technician who evacuated the refrigerant, or the company employing that technician, must also maintain records indicating the quantity and type of refrigerant transferred for reclamation, the company that they transferred the gas to, and the date of the transfer. The technician, or the company employing the technician, would be required to maintain these records for three years. By company employing the technician, EPA means the person paying the technician's salary or wage, not the appliance owner or operator who has hired the technician for that specific service. The finalized regulations have one change compared to the proposal: EPA is not requiring records indicating the amount and type of refrigerant recovered from each separate appliance but rather the total amount and types recovered from all appliances disposed of in each calendar month. As described in more detail below, this modification from the proposed revision was made after consideration of public comments.
Comments in support of this proposed recordkeeping requirement agreed with EPA's goal of improving the enforceability of the venting prohibition. One commenter stated that EPA's rationale to improve compliance with the venting prohibition and facilitate enforcement against those who do vent is insufficient and not adequately supported in the record. Another commenter believes that venting is not as prevalent as EPA thinks it is and that to the extent that it does occur, it is done by individuals who are not certified technicians.
EPA responds that the Agency has heard from people throughout the HVAC/R industry that venting regularly happens in appliances with more than 5 and less than 50 pounds of refrigerant. One commenter to this rule who regularly addresses contractor and service technician groups hears from them that the venting prohibition is widely disregarded. At a recent meeting EPA attended with air-conditioning and refrigeration contractors, an industry speaker asked attendees what percentage of technicians recover refrigerant. The estimates individuals offered were generally between 10 to 30 percent, with the caveat that recovery is much more common in the refrigeration industry than the air-conditioning industry. EPA also receives numerous tips each year of someone cutting refrigerant lines to quickly and illegally dispose of appliances of this size. This feedback indicates a likelihood that venting regularly occurs.
At times, including in public fora such as the public meeting in November 2014, stakeholders have requested that EPA increase enforcement of the venting prohibition. At that meeting, some stakeholders indicated that technicians will knowingly and illegally vent refrigerant if they think EPA will not bring an enforcement action. Multiple commenters urged the Agency to do a better job of enforcing the venting prohibition. This request came from a broad cross section of the air conditioning and refrigeration community including refrigerant reclaimers, recycling and recovery equipment certifiers, and appliance manufacturers and distributors. Some of these comments stated that good actors who comply with the law are placed at a competitive disadvantage by entities who can operate more cheaply by skipping the required recovery practices and choose instead to illegally vent refrigerant.
The Agency has recently brought successful cases against individuals who have illegally vented refrigerant. However, the availability of the records required under this provision would enhance the Agency's ability to enforce the venting prohibition because these records could be used to demonstrate whether or not refrigerant has been recovered and sent for reclamation. If refrigerant cannot be accounted for, a company or technician may not be able to show that they complied with the venting prohibition.
Some commenters who objected to this proposal stated that EPA did not provide sufficient justification and that EPA underestimated the burden to technicians. EPA responds that it is reasonable to require technicians and the companies employing technicians to maintain records of the amount of refrigerant that they recover and send for reclamation to enhance compliance with and enforceability of the venting prohibition. There is a significant environmental benefit to ensuring that ODS and HFC refrigerant are recovered from existing appliances of this size at the time of disposal. Using EPA's Vintaging Model, EPA estimated the number of appliances in this size category that are disposed of annually,
EPA's benefits assessment for the proposed rule did not calculate any additional emissions reductions because the existing regulations already require recovery when appliances are disposed. However, in practical terms, requiring a record from each disposal event may drive more technicians to comply with the venting prohibition because the recordkeeping requirement places extra emphasis on the prohibition and on the risks of violating it. Even slight improvements to compliance could produce substantial environmental benefits.
Another commenter stated that some IPR facilities may have hundreds or even a thousand of these smaller 5-50 pound appliances and that requiring additional tracking or recordkeeping would be unnecessary and overly burdensome. Furthermore, the commenter continued, because industry has the burden of proof that it is in compliance with the venting prohibition, industry has established basic recordkeeping that can meet the intent of this rule without requiring additional or duplicative information. A couple of commenters similarly noted that it is good business practice to recover refrigerant from such units prior to disposal.
EPA responds that the incentive to illegally vent may be less if the owner has hundreds of appliances or uses in-house technicians. In that situation, it may be good business practice to recover refrigerant from a system being disposed of because that refrigerant can be reused in that owner's other appliances. The desire to fit more service calls into a day is also perhaps less when using in-house personnel. However, in cases where a technician is getting paid by the job, there is an economic incentive to minimize the time spent at each job-site which could include venting refrigerant. EPA disagrees that such facilities will require burdensome new tracking and recordkeeping. While a facility may have many appliances, the records that EPA is requiring in this rule are only necessary once—upon disposal—and only a small subset of the total number of appliances is likely to be disposed of in a given year.
EPA has considered ways to minimize the burden to technicians in light of commenters' concerns. EPA is modifying the final rule so as to require records that are generated through normal operations in the field. Therefore, EPA is removing the requirement to determine the amount of refrigerant recovered from each appliance. Entities would not be required to weigh cylinders or otherwise calculate how much refrigerant they recovered at each and every site, which was the most time consuming element of the proposed recordkeeping requirements. Instead, EPA's goals can be achieved by requiring records of the amount recovered in each calendar month. This way, recovery cylinders can be weighed less frequently and at a centralized location or recovery cylinders can simply be tallied if the amount of refrigerant in them is known.
One commenter encouraged EPA to consider exempting residential systems from the recordkeeping requirements due to the nature of their servicing. EPA responds that this recordkeeping requirement does not apply to regular servicing, only disposal, which occurs much less frequently.
A couple of commenters requested clarification of who must maintain records. One commenter did not support this requirement because they believed it would require records be kept by homeowners. Another commenter suggested that third-party collection sites not have recordkeeping requirements so as to not discourage wholesalers and storefronts from serving in the collection chain.
EPA responds that the recordkeeping requirements finalized for this provision apply solely to the company employing the technician (or to the technician, if operating independently) who is disposing of the appliance in both commercial and residential settings. This could be the owner or operator of the appliances or it could be a contractor who is hired to dispose of the appliance. When that company transfers the refrigerant for reclamation they may have to receive records from other entities (such as reclaimers or third-party collection sites) but those receiving refrigerant are not obligated to maintain any records themselves. EPA is not requiring any recordkeeping by the owners of the appliance unless the owner of the appliance and the employer of the technician are the same entity.
One commenter suggested that EPA extend the proposed recordkeeping requirements to those who collect at least 100 pounds of refrigerant per year from small appliances. This commenter also suggested less detailed records be kept in such instance, specifically (1) the quantity of refrigerant recovered monthly, (2) the number of units disposed of, and (3) the name of the certified reclaimer to whom they transferred the recovered refrigerant. EPA disagrees that extending this requirement to small appliances is necessary. Certification and recordkeeping requirements currently exist for the disposal of small appliances. These records are held by the final disposer, who is best suited to maintain them. In addition, EPA does not require that small appliances be evacuated by a certified technician when being disposed of.
Two commenters suggested that EPA extend the recordkeeping requirement to appliances containing more than 50 pounds as well. One of the commenters was concerned that contractors who collect from both smaller 5-50 pound and larger 50-plus pound appliances would have to separate or otherwise distinguish between what was recovered from each when transferring their refrigerant to a reclaimer. EPA finds that it would not be necessary to distinguish between these two size categories. A single record of all refrigerant transferred for reclamation is sufficient because EPA is not requiring an accounting of all recovered refrigerant as it moves through the market.
After consideration of these comments, EPA is requiring records that are regularly generated by technicians or companies recovering refrigerant while disposing of appliances as a practical way to improve the Agency's ability to enforce the venting prohibition without imposing an undue burden on regulated entities that are already complying fully with the venting prohibition. To avoid imposing an undue burden on good actors, especially out in the field where there may already be pressure to cut corners, EPA is not finalizing the proposed requirement that records be kept of how much refrigerant is recovered from each appliance. Weighing or otherwise calculating the amount of refrigerant recovered at each job site could increase burden of these requirements by consuming additional time.
As proposed, EPA is moving the provisions that were found in § 82.156 “Required Practices” in the prior rules into three separate sections: § 82.155 to address the safe disposal of small appliances, MVACs, and MVAC-like
A central component of EPA's longstanding program to properly manage ODS refrigerants is the requirement to repair leaking appliances within 30 days of determining that a certain leak rate has been exceeded. Owners and operators of appliances normally containing 50 or more pounds of ODS refrigerant must repair their appliances if they leak above a certain rate or take other actions to reduce the emissions such as retrofitting, retiring, or mothballing the appliance. Under the prior regulations, the leak rate at or above which action was required was 35 percent for commercial refrigeration appliances and IPR and 15 percent for comfort cooling and other appliances. If the attempt to repair failed to bring the appliance's leak rate below the applicable leak rate within that time frame, the owner or operator must develop a retrofit or retirement plan and implement it within one year of the plan's date. Owners or operators also had the option of developing a retrofit or retirement plan within thirty days of identifying that the leak rate has been exceeded. Owners or operators of IPR or federally owned appliances may have more than 30 days to complete repairs and more than one year to retrofit appliances where certain conditions applied (
EPA recognizes that refrigeration and air-conditioning equipment often do leak. This is particularly likely for larger and more complicated appliances like those subject to the subpart F leak repair provisions. However, leaks from such appliances can be significantly reduced. Multiple factors support this conclusion. Concrete evidence that leaks can be significantly reduced include experience with the GreenChill program, an EPA partnership designed to encourage supermarkets to reduce emissions of refrigerants and transition to low-GWP and low-charge refrigeration appliances; reports from facilities regulated under California's Refrigerant Management Program; and feedback from stakeholders prior to publishing the proposed rule. The revised leak repair provisions in this action will reduce refrigerant releases of ODS and non-exempt substitute refrigerants by ensuring effective repairs and ongoing monitoring of leaking systems.
The regulatory text has been modified several times since EPA first established the program in 1993. The regulation now contains numerous cross-references to other provisions in § 82.156(i), making the requirements difficult to follow and in some places potentially leading to differing interpretations. Many important provisions are not readily apparent, such as the primary requirement that repairs must occur within 30 days, which appears explicitly only at the end of the leak repair requirements at § 82.156(i)(9). Therefore, EPA has rewritten the regulation and moved the provisions to a single new section of the Code of Federal Regulations (CFR) to make it easier for stakeholders to locate and understand the requirements.
EPA recognizes that changing the text so significantly may make stakeholders who are familiar with the existing requirements wonder how these revisions affect their current compliance monitoring systems and protocols. EPA emphasizes that the Agency did not intend to alter the substance of the requirements while restructuring except where specified. EPA discusses the intended amendments to the requirements in this section of the notice. In general, commenters were supportive of EPA's efforts to rewrite and simplify the leak repair provisions.
To avoid both ambiguity and cumbersome language throughout, EPA establishes from the outset in § 82.157(a) that the provisions of § 82.157 apply to owners and operators of all appliances containing 50 or more pounds of refrigerant, unless otherwise specified. One commenter stated that EPA should clarify throughout the rule whether the owner/operator or the technician is responsible. EPA responds that the final rule makes clearer that the owner or operator is responsible for conducting the leak inspection or repairing the appliance even when it is the technician who will be performing those actions. When a provision applies to technicians or people servicing equipment, the provision so specifies.
Multiple commenters requested that EPA define owner/operator and one commenter requested that EPA clarify who is responsible if the owner is different from the operator. EPA responds that the Agency is not defining
The existing regulations also inconsistently described the leak repair requirements as applying to appliances with “50 or more pounds” or “more than 50 pounds” of refrigerant. The proposed revisions consistently use “50 or more pounds of refrigerant.” EPA received a comment from CARB that the California regulations are based on EPA's “more than 50 pounds,” but CARB stated they can address any potential inconsistencies created by this revision. As such, EPA is finalizing consistent use of the phrase “50 or more pounds of refrigerant” in the revised regulations.
EPA proposed to extend the leak repair provisions previously found at § 82.156(i) to appliances containing non-exempt substitute refrigerants. EPA is finalizing this extension in the revised leak repair regulations (now found at § 82.157). As such, the other provisions related to leak repair and maintenance finalized in this rule (
Extending the leak repair requirements to non-exempt substitute refrigerants will lead to significant environmental benefits because these substances pose a threat to the environment when released. Like ODS, HFCs and PFCs also have the ability to trap heat that would otherwise be radiated from the Earth back to space. This ability gives both HFCs and PFCs relatively high GWPs. The 100-year GWPs of saturated HFCs used as refrigerants range from 124 (for HFC- 152a) to 14,800 (for HFC-23), and the GWPs of PFCs used as refrigerants range from 7,390 (for PFC-14) and higher. HFC-134a, the most common individual HFC used in air-conditioning and refrigeration equipment, has a GWP of 1,430. See Section II.C.2 of this notice for further discussion related to the environmental effects of greenhouse gases.
In determining whether to exempt HFC and PFC refrigerants from the venting prohibition in 2004, EPA examined the potential effects of the refrigerant from the moment of release to its breakdown in the environment, considering possible effects on workers, building occupants, and the environment. EPA concluded that the release of HFCs and PFCs poses a threat to the environment due to their high GWPs. For that reason, and because of a lack of regulation governing the release of such refrigerants, EPA did not exempt the release of HFC or PFC refrigerants from the statutory venting prohibition. Therefore, knowingly venting or otherwise releasing into the environment of HFC and PFC refrigerants during the maintenance, service, repair, or disposal of appliances remains illegal. The venting prohibition focuses on knowing venting or release during the maintenance, service, repair, or disposal of appliances and thus does not account for all HFC (and PFC) refrigerant emissions. For instance, in previous rules we have not assumed that emissions of HFCs that occur due to appliance leaks constitute knowing releases. However, as discussed elsewhere in this rulemaking, EPA is broadening its interpretation of what is considered a knowing release under section 608(c) for purposes of appliance leaks. In addition, the requirements to calculate leak rates and monitor leaking systems that EPA is finalizing in this action provide knowledge to appliance owners and operators and thereby broaden the set of refrigerant releases for which they would be liable for a knowing release.
Based on the evidence discussed later, the reported leak rate performance of today's comfort cooling, commercial refrigeration, and IPR appliances with full charges of 50 or more pounds argues for lowering the leak rates. The evidence discussed later demonstrates that the leak rates of 35 percent for IPR and commercial refrigeration and 15 percent for comfort cooling are considerably above the “lowest achievable level of emissions” envisioned in CAA section 608(a)(3)(A).
While section 608(a)(3) does not require EPA to perform a cost-benefit analysis to determine what leak rate(s) would constitute the “lowest achievable level of emissions,” in general, EPA has balanced the benefits from reducing emissions of refrigerants with the costs of these requirements. EPA has determined that the costs are reasonable given the significant benefits that accrue (both private in the form of cost savings and public in the form of improved health and environmental protection from reduced GHG and ODS emissions). Specifically, EPA reviewed data from the lowest-emitting equipment to gauge technological feasibility and then reviewed other datasets, such as CARB data and consent decree requirements, to determine a reasonable set of requirements. EPA then assessed the costs and benefits associated with extending the existing requirements to appliances using substitute refrigerants. EPA also assessed the tighter requirements applicable to appliances containing ODS or non-exempt substitute refrigerants such as lower leak rates, the requirement to repair leaks once the applicable leak rate is exceeded, the requirement to conduct verification tests on all types of appliances, and periodic leak inspections for appliances that had exceeded the leak rates.
Based on the comments received, EPA considered ways to reduce the cost of these requirements, as compared to the proposal. These changes are discussed in full later in this section and include: Limiting periodic leak inspections to appliances that have exceeded the applicable leak rate, rather than requiring all appliances to be inspected; finalizing a leak rate for IPR of 30 percent rather than 20 percent; allowing greater flexibility for owners and operators to determine which leaks to repair rather than requiring the repair of all leaks; and modifying the proposed chronic leaker provision so that it results in reporting to EPA rather than automatic retirement of the appliance.
This rule also provides flexibility that will reduce the cost of complying with the existing regulations. For comfort cooling and commercial refrigeration appliances, EPA is allowing an extension to the 30-day repair requirement if the arrival of a part is delayed, recognizing that the short additional time needed for delivery of a part can result in a nearer-term and less costly emission reduction than a retrofit. EPA is also allowing an extension to implement a retrofit or retirement for any appliance that transitions to a non-exempt substitute refrigerant.
The prior regulations at § 82.156(i) focused on actions an appliance owner or operator must take after discovering an appliance has a leak. EPA proposed to require annual or quarterly leak inspections as a proactive maintenance practice depending on the type and size of the appliance. More specifically, EPA proposed to require that owners or operators of commercial refrigeration appliances or IPR normally containing 500 or more pounds of refrigerant conduct quarterly leak inspections of the appliance, including the appliance's refrigerant circuit. Inspections would be annual for commercial refrigeration appliances and IPR containing 50 pounds or more but less than 500 pounds of refrigerant, as well as comfort cooling appliances and other appliances normally containing 50 or more pounds of refrigerant.
The purpose of the proposed leak inspection requirement was to determine the location of refrigerant leaks. This proposal was designed with Next Generation Compliance objectives in mind (see Section II.D.3). The Agency anticipated that many appliance owners and operators would take action earlier if leaks were identified because it is in their financial interest to do so and would reduce emissions and refrigerant costs. Repairing leaks earlier could also prevent that appliance from being pulled into the proposed regulatory requirements at § 82.157 for exceeding the applicable leak rate. EPA also proposed to allow owners or operators to forgo periodic leak inspections if they installed and operated an automatic leak detection system that continuously monitors the appliance for leaks.
Other commenters expressed qualified support for annual leak inspections, especially if it is phased in, starting with larger systems or if a company can provide evidence that they have not added refrigerant to a system in over a year. Another commenter stated that leak inspections should only be annual, unless the equipment exceeds the applicable leak rate for that system. That commenter believes that the inspections should return to being an annual requirement after the leak rate has been reduced below the threshold for two years. One commenter stated that the greatest value of a leak inspection is on a system with a known leak.
Based on these comments relating to the expense and value of conducting leak inspections on all appliances, EPA is finalizing the leak inspection requirement only for appliances that have been found to be above the applicable leak rate. EPA proposed to only require that the leaks identified from a leak inspection be repaired when the applicable leak rate is exceeded. EPA's proposal observed that the costs of repairing all leaks when the leak rate is below the applicable leak rate may be higher than the benefits, especially when the leak is a series of small pinhole leaks and the leak rate is very low, as may often be the case. As stated in the proposed rule, when the applicable leak rate is exceeded, the benefits of repairing those leaks are significant—both for the environment and for the owner/operator (in decreased refrigerant replacement costs)—and do result in significant savings, which supports repair of leaks. EPA appreciates the concern raised by commenters who question the value of conducting leak inspections on appliances that are known to not be leaking, or leaking at a low rate that would not trigger a requirement for repair under the regulations. Periodic leak inspections are a best practice within the industry to reduce emissions of refrigerants and the Agency continues to recommend periodic leak inspections for all appliances as even well-maintained appliances might leak.
EPA is finalizing a requirement at § 82.157(d)(1) to conduct a leak inspection after discovering the leak rate had exceeded the applicable leak rate. Thereafter, EPA is requiring episodic leak inspections based on the full charge size and type of appliance on the same schedule as in the proposed § 82.157(b)(1)-(3), but in this final rule EPA added a provision clarifying that this requirement ends if the appliance remains below the applicable leak rate for a specific time. More specifically, following a leak rate exceedance, EPA is requiring quarterly leak inspections for IPR and commercial refrigeration appliances containing 500 or more pounds of refrigerant until there are four quarters in a row where the appliance has not exceeded the applicable leak rate. For IPR and commercial refrigeration appliances containing between 50 and 500 pounds of refrigerant, and for all comfort cooling appliances or other remaining appliances normally containing 50 or more pounds of refrigerant, EPA is requiring annual leak inspections following a leak rate exceedance until the owner or operator can demonstrate that the appliance has not exceeded the applicable leak rate for one year. More frequent monitoring is important for larger commercial refrigeration appliances and IPR because those systems tend to have more leaks than comfort cooling appliances and because the amount of refrigerant that would be lost in a leak is generally greater for those systems.
In our view, and based on our review of comments, limiting inspections to those appliances that are known to have leaked and triggered the repair requirements appropriately tailors the leak inspection requirement to those systems that are most likely to leak and provides important information about whether the leak repairs have held over the longer term. EPA is not finalizing the proposed revision allowing for annual leak inspections when refrigerant has not been added to the appliance for more than a year as EPA is not finalizing the periodic leak inspection requirement for systems that are below the applicable leak threshold. As discussed later, EPA is finalizing the proposed revision allowing the use of automatic leak detection systems in lieu of quarterly or annual leak inspections.
EPA proposed to establish a process that would allow less frequent leak inspections for federally owned appliances that are located in remote locations or are otherwise difficult to access for routine maintenance. One commenter disagreed with the proposal to allow a reduced inspection schedule for federally owned appliances. Other commenters requested that EPA provide a similar exemption to privately owned appliances.
Because EPA is not finalizing periodic leak inspections for appliances below the applicable leak threshold, EPA is also not finalizing the reduced leak inspection schedule for federally owned appliances. EPA is requiring that federally owned equipment that has leaked in excess of the applicable leak rate be subject to the same periodic leak inspection schedule as privately owned equipment. The concerns about burden raised by federal agencies during the development of the proposal are addressed by removing the proposed requirement that leak inspections be conducted on all appliances. The number of appliances leaking above the final leak thresholds is less than 20 percent of the total number of installed appliances with charges of 50 pounds or greater.
EPA proposed that periodic leak inspections would not need to be performed by certified technicians and took comment on that idea. Two commenters agreed that leak inspections should not be required to be conducted by certified technicians. Reasons stated for not requiring the inspection to be done by a certified technician are that they are more expensive than in-house personnel, they may be less familiar with the appliance, and that the person doing the inspection will not necessarily be performing activities that can only be performed by a certified technician such as adding or removing refrigerant or making any repairs to the appliance. Another commenter believes that leak inspections should be performed by someone trained to fix leaks, and thus that the persons performing leak inspections must be a certified technician.
In this final rule, EPA is requiring that the required leak inspections be performed by certified technicians. EPA is making this change from the proposal for several reasons. First, required leak inspections are now limited to appliances that are known to have been leaking. It is now very likely that a technician will have to add refrigerant or make additional repairs after the leak inspection. This is certainly the case for the inspection triggered by discovering that the leak rate exceeds the threshold. Second, because EPA is no longer requiring the repair of all identified leaks, the person inspecting the system must also be qualified to determine which leaks must be repaired to bring the leak rate below the applicable level. Third, while certified technicians may be more expensive to hire, the overall burden of the leak inspection requirement is less since many fewer appliances must be inspected than originally proposed. Under the proposal, all appliances of a certain size would require leak inspections, which EPA estimated to be approximately 1.5 million. Under the finalized provisions, that number drops to approximately 282,000 appliances. EPA has considered the comments about the cost of performing a leak inspection and has updated the technical support document accordingly. Finally, EPA is not specifying a single method but rather allowing the person conducting the inspection to determine the method(s) that are appropriate for that appliance. This technical judgment requires someone trained in the methods of leak detection, which is more likely to be the case for a certified technician.
Many commenters requested clarification on what portions of an appliance are subject to a leak inspection. The proposed regulatory text was silent on this issue but the notice of proposed rulemaking discussed inspecting visible components and the proposed definition of leak inspection included an examination of “all visible components of an appliance.” The proposal did not define “visible” or address the treatment of components that are only visible if intermediary steps are taken (
Another commenter requested specific exceptions for components that are difficult to monitor, insulated, unsafe to monitor, or otherwise not accessible. Consistent with other leak detection and repair programs for New Source Performance Standards, Subparts VV and VVa, which relates to equipment leaks of VOC in synthetic organic chemicals manufacturing, the commenter suggests that the following sources be exempt from inspection: (1) Components that require monitoring personnel to be elevated more than 2 meters above a support surface; (2) components that are insulated; (3) components that are determined to be un-safe to monitor as determined by site personnel; (4) components that are under “ice” that forms on the outside of equipment. A couple of commenters also expressed concern about requiring leak inspections on equipment that cannot be accessed due to radiological concerns.
EPA appreciates the difficulties associated with inspecting the entirety of an appliance, which these comments illustrate. EPA proposed a definition of leak inspection that includes “all visible components.” EPA is modifying that proposed definition to remove the reference to “all visible components.” Also, in light of the points raised in the comments, EPA is clarifying in the final rule that a leak inspection must be conducted on all visible and accessible components of an appliance, with some exceptions. EPA did not propose any exceptions but did state in the notice of proposed rulemaking that the inspection should occur on all visible and accessible components of an appliance. The exceptions finalized in this rulemaking clarify what is not considered visible or accessible: 1) Where components are insulated, under ice that has formed on the outside of equipment, underground, behind walls, or are otherwise inaccessible; (2) where personnel must be elevated more than 2 meters above a support surface; or (3) where components are unsafe to inspect, as determined by site personnel. This clarification takes into consideration risks to the person conducting the inspection. The Agency does not expect that an appliance be shut down in order to fulfill the obligation of inspecting all visible components.
A few commenters encouraged EPA to require automatic leak detection equipment on appliances with more than 2,000 pounds of refrigerant to harmonize EPA's requirements with California's. EPA responds that while this rule does not impose requirements that are inconsistent with CARB's program, EPA has not included all of CARB's requirements in this rule. EPA is requiring that automatic leak detection systems meet the same level of detection (10 parts per million of vapor) and notification thresholds (100 parts per million of vapor, a loss of 50 pounds of refrigerant, or a loss of 10 percent of the full charge) as CARB requires. EPA knows that such equipment is already available on the market and capable of meeting those standards, which allows companies wishing to install automatic leak detection equipment to do so sooner than if EPA established different standards in this rule. It also means that installed equipment that meets California's requirements will meet EPA's requirements. EPA disagrees, as discussed later, with the comment suggesting it require the use of automatic leak detection equipment.
Some commenters were opposed to requiring automatic leak detection. One such commenter stated that it does not work well outdoors and that it may be hazardous to enclose a system to facilitate leak detection. It can also be expensive and EPA did not estimate the costs of requiring it. One nuclear power producer commented that any modifications to nuclear generating stations must undergo extensive engineering and risk review processes. This argues against requiring the installation of monitoring equipment. Another commenter stated that it has not been able to identify any reliable information confirming that such automatic leak detection devices are available, cost-effective, and capable of satisfying EPA's requirements.
EPA responds that the Agency is not requiring the use of automatic leak detection equipment in this final rule. Rather, this is an option that an owner or operator can choose to pursue in lieu of conducting periodic leak inspections. EPA agrees that automatic leak detection equipment may not be appropriate for all systems, and the Agency is not suggesting that components be enclosed in order to allow for automatic leak detection equipment where it would be hazardous to do so. The decision to install such equipment is up to the owner/operator. With regard to availability, EPA responds that California's existing requirements for use of such systems have been in place since 2011 and include the same standards as those EPA is finalizing in this rule, so equipment meeting these requirements is already available and in use. EPA encourages anyone interested in using automatic leak detection to consult entities in California regarding the availability and performance of such equipment. Another commenter notes that electronic leak detection equipment is currently installed in thousands of supermarkets, further supporting the idea that such equipment is available and in use.
Many commenters supported automatic leak detection equipment in lieu of periodic leak inspections but were concerned that the systems they currently have installed do not meet the requirements of the proposed rule because the entire refrigeration system is not within the building envelope. EPA proposed that automatic leak detection equipment systems that directly detect the presence of a refrigerant in air could only be used where the entire appliance or the compressor, evaporator, condenser, or other component with a high potential to leak is located inside an enclosed building or structure. Multiple commenters requested that EPA still allow the option of using automatic leak detection for those components that are not outdoors. The outside components would then be the only portion of the system that would be subject to periodic inspections. EPA agrees that automatic leak detection equipment should be allowed for enclosed components even if only portions of an appliance are enclosed and the proposed rule was intended to cover that situation. EPA has revised the final rule to more clearly allow for this and to clarify that in such situations, the automatic leak detection equipment would only be used to monitor components located in an enclosed building or structure but the other components would continue to be subject to any applicable leak inspection requirements.
One commenter encouraged EPA to require that the leak detection system be certified. There are third party systems on the market that claim to check charges, but the commenter believes some may be inaccurate. The commenter recommends referencing ASHRAE 207P, which will allow for verification of the charge checking systems. EPA responds that the referenced ASHRAE standard is still under development and we are unaware of any certification programs that exist or that are planned to reference that standard once finalized. Requiring certifications for leak detection systems is therefore not appropriate at this time. EPA is finalizing the proposal to require that the owner or operator calibrate the automatic leak detection system annually and keep records documenting the calibration.
The leak rate is the rate at which an appliance is losing refrigerant, measured between refrigerant charges. If the leak rate for an appliance is above a specified threshold, the regulatory revisions finalized in this rule require certain actions, such as leak repair, from the owner/operator.
EPA is lowering the leak rates for IPR, commercial refrigeration, and comfort cooling and other appliances containing ODS refrigerants and is establishing those same leak rates for appliances using non-exempt substitute refrigerants. EPA is lowering the leak rates to 30 percent (from 35 percent) for IPR, 20 percent (from 35 percent) for commercial refrigeration appliances and 10 percent (from 15 percent) for comfort cooling and all other appliances with a full charge of 50 pounds or more of ODS or non-exempt substitute refrigerant. For the reasons discussed below, EPA is finalizing a higher leak rate for IPR than proposed while finalizing the same rates as proposed for commercial refrigeration and comfort cooling. In making this decision, EPA has assessed the compliance costs, cost savings, and environmental benefits and has found that the aggregated costs are reasonable, and that lowering leak rates will result in fewer emissions of both ODS and non-exempt substitute refrigerants.
EPA reviewed data submitted under California's RMP, the South Coast Air Quality Management District (SCAQMD), GreenChill partners, consent decrees for both commercial refrigeration and IPR for companies found to be in violation of subpart F regulations, EPA's Vintaging Model, conversations with potentially affected stakeholders, and comments on this and past proposed rules. See the technical support document
California's RMP requires that owners or operators of any appliance with more than 50 pounds of ODS or HFC refrigerant repair leaks, conduct leak inspections or install automatic leak detection equipment, and report their
California's South Coast Air Quality Management District is an air pollution control agency that services the areas of Orange County and the urban portions of Los Angeles, Riverside, and San Bernardino counties, which contained approximately half of the population of California at that time. SCAQMD had issued Rule 1415 to reduce emissions of ozone-depleting refrigerants from stationary refrigeration and air-conditioning systems. The rule required any person within SCAQMD's jurisdiction who owns or operates a refrigeration system to minimize refrigerant leakage. A refrigeration system is defined for the purposes of that rule as “any non-vehicular equipment used for cooling or freezing, which holds more than 50 pounds of any combination of class I and/or class II refrigerant, including, but not limited to, refrigerators, freezers, or air-conditioning equipment or systems.”
Under Rule 1415, SCAQMD collected the following information every two years from owners or operators of such refrigeration systems: Number of refrigeration systems in operation; type of refrigerant in each refrigeration system; amount of refrigerant in each refrigeration system; date of the last annual audit or maintenance performed for each refrigeration system; and the amount of additional refrigerant charged every year. For the purposes of Rule 1415, additional refrigerant charge is defined as the quantity of refrigerant charged to a refrigeration system in order to bring the system to a full capacity charge and replace refrigerant that has leaked. This reporting requirement has now been replaced by the statewide RMP reporting.
EPA analyzed the SCAQMD data on ODS-containing appliances for the proposed 2010 Leak Repair Rule. The analysis prepared for that rule can also be found in the docket for today's rulemaking. The dataset contains information on over 4,750 appliances from 2004 and 2005 with ODS refrigerant charges greater than 50 pounds. The data included refrigeration and air-conditioning appliances that meet EPA's definitions of IPR (
In the proposed rule, EPA discussed reducing the leak rate for IPR and commercial refrigeration from 35 percent to 20 percent. EPA specifically sought comments on whether a 20 percent leak rate was appropriate, or whether a leak rate higher than 35 percent or as low as 10 or 15 percent would be appropriate. After considering the comments received and upon further analysis of the CARB data, EPA is finalizing a leak rate of 30 percent.
Some commenters supported the lower leak rates noting that real-world experience shows that the lower leak thresholds are technically and practically achievable. Some industry members encouraged EPA to explore the feasibility of further lowering rates for IPR in the future, consistent with improved and available industry best practices. Other commenters stated that data from GreenChill and consent decrees are not representative of IPR facilities. One commenter also stated that CARB data do not support that a 20 percent threshold is achievable because one third of the reporting facilities are not achieving such performance. As a result, the commenter stated that EPA has not shown that lowering the leak rate for IPR from 35 to 20 percent is necessary nor economically or practically feasible.
Some commenters suggested EPA distinguish between old and new equipment. One commenter noted that existing IPR equipment can meet the 35 percent leak rate but not all could achieve the 20 percent leak rate. Thus, the proposed leak rate would strand significant investment in custom-designed refrigeration process equipment. Another commenter stated that older IPR facilities were designed when refrigerant tightness was not a critical design element. Facilities have been upgraded and maintained to achieve 35 percent leak rates but further upgrades and repairs to bring them to a lower rate would be costly if not impossible. The commenter also stated that it would not be cost effective since many are near the end of their useful lives. A few commenters suggested that EPA follow the 1998 proposal and allow for the 35 percent rate if the appliance meets all of the following criteria: (1) The refrigeration system is custom-built; (2) the refrigeration system has an open-drive compressor; (3) the refrigeration system was built in 1992 or before; and (4) the system is direct-expansion (contains a single, primary refrigerant loop). Another commenter recommended keeping the leak rate at 35 percent for systems using substitute refrigerants, stating that companies that retrofitted from ODS to HFC refrigerants should be recognized for that prior environmental advancement.
In response to the comment that some of the data are not representative of IPR facilities, EPA responds that the Technical Support Document for the proposal did distinguish between IPR and commercial refrigeration. EPA did not use GreenChill's commercial refrigeration data or consent decrees for commercial refrigeration as a basis for the proposal on IPR. In the final Technical Support Document, as well as the discussion that immediately follows, EPA has further separated out the analysis for IPR.
After considering these comments and further reviewing the CARB data, EPA is finalizing a leak rate of 30 percent for IPR, rather than 20 percent as proposed. The potential benefits of lowering the leak rate to 20 percent are small in relation to the potential costs incurred by those small number of facilities that could be affected.
EPA's model, informed by the 2013 CARB data, indicates that 92 percent of IPR appliances have leak rates below 30 percent. Almost 10 percent of ODS-containing appliances would trigger the leak repair requirements if the leak rate were lowered from 35 to 20 percent, as proposed. However, if the leak rate is lowered from 35 to 30 percent only 0.6 percent more ODS-containing IPR appliances would trigger the leak repair requirements.
Viewed another way, using the California data as a proxy for the entire United States' IPR systems, the proposed 20 percent leak rate could affect up to 9 percent of all IPR appliances (though only a small subset of IPR systems above 20 percent using ODS refrigerant would be newly affected because they were already subject to the 35 percent leak rate). Appliances that leaked more than 20 percent are responsible for 86 percent of emissions in the CARB data. Changing the leak rate threshold to 30 percent, as EPA is finalizing in this rule, would affect 7 percent of all IPR appliances and an even smaller subset of ODS-containing equipment (only 0.6 percent). In the CARB records, appliances leaking more than 30 percent are responsible for 75 percent of emissions.
EPA's review of the 2004 and 2005 data submitted to the SCAQMD from 349 IPR facilities also indicate that 81 percent of ODS-containing IPR appliances had leak rates below 30 percent. Slightly less than 5 percent of ODS-containing appliances would trigger the leak repair requirements if the leak rate was lowered from 35 to 20 percent, as proposed. In this final rule, only 1.5 percent of ODS-containing appliances would trigger the leak repair requirements if the leak rate was lowered from 35 to 30 percent. However, by extending the leak repair requirements to IPR appliances containing non-exempt substitute refrigerants, a 30 percent leak rate would also trigger all IPR facilities using non-exempt substitute refrigerants above that threshold, not just the incremental difference of facilities operating between 30 and 35 percent.
EPA calculates leak inspection and repair costs of a 20 percent leak rate for IPR to be $7.0 million, with annual emissions reductions equal to 0.63 MMTCO
EPA recognizes that some IPR transitioned to HFCs from ODS refrigerants. This may have been an environmental decision for some, but other commenters stated that this was done to avoid being covered by the subpart F regulations. For whatever reasons, these facilities transitioned to a substitute refrigerant and therefore were no longer required to maintain a leak rate below 35 percent. EPA's analysis described above indicate that that a majority of the new IPR equipment affected by the rule will be those using substitute refrigerants. At a 30 percent leak rate, EPA estimates that there will be 492 newly affected systems containing ODS refrigerant but 5,938 systems containing HFC refrigerants.
While the number of affected IPR facilities may be small (EPA estimates there are 1.5 million appliances with a charge size of at least 50 pounds of an ODS or non-exempt substitute refrigerant), the challenges faced by IPR facilities to upgrade or improve their system are more substantial that those faced by other appliance types. In general, leak rates are highest for IPR systems for a number of factors. First, such appliances are generally custom-built and assembled at the site where they are used rather than in a factory where standard manufacturing practices can be put in place to reduce leaks. Appliances used in IPR are custom-designed for a wide spectrum of processes and facilities, including applications such as flash freezers aboard commercial fishing vessels to cooling processes used in the manufacture of pharmaceuticals. This results in the sector having an extraordinarily broad range of equipment configurations and designs. Custom designed equipment may also present more challenges to original equipment manufacturers who wish to systematically implement leak reduction technologies. Second, these appliances generally use a long, single refrigerant loop for cooling that is not enclosed within a piece of equipment. This tends to raise average leak rates, particularly when the refrigerant loop flows through inaccessible spaces, such as underneath floors, or when used in challenging climates and operating conditions. Third, these appliances are often integrated into production plants or other applications and typically operate continuously. This need for continuous operation can make repairing certain leaks more difficult and costly, possibly requiring manufacturing processes to be shut down and long lead times. Multiple commenters agreed with and provided comments supporting EPA's assessment that IPR facilities can be leakier and more challenging to repair than commercial refrigeration and comfort cooling appliances.
In response to comments requesting different leak rates for old and new appliances, EPA is not distinguishing between old and new appliances in the regulations for the following reasons. First, CARB data indicate that older IPR equipment is not necessarily leakier than newer IPR equipment. While newer systems can generally be designed with leak tightness in mind, EPA has also found that the quality of the construction and the operation and maintenance of the appliance plays a larger role in whether the appliance leaks than the age of the equipment
For clarity and to facilitate compliance, and consistent with the proposal, EPA is not finalizing a distinction between old and new IPR appliances in the leak thresholds finalized in this rulemaking. In response to the commenters encouraging EPA to explore the feasibility of further lowering IPR rates in the future, EPA will take this under advisement for future analyses and such a future analysis may include the age of the facility and refrigeration technology used. Further gradation of the IPR category is not necessary at this time.
EPA proposed to lower the leak rate for commercial refrigeration appliances from 35 percent to 20 percent. Based on the data analysis discussed in this
First, EPA reviewed data from GreenChill, an EPA partnership with food retailers to reduce refrigerant emissions and decrease their impact on the ozone layer and climate change. Established in 2007, this partnership has 27 member companies comprising almost 30 percent of all supermarkets in the United States. GreenChill works to help food retailers voluntarily (1) transition to environmentally friendlier refrigerants; (2) lower refrigerant charge sizes; (3) eliminate leaks; and (4) adopt green refrigeration technologies and best environmental practices. One of the GreenChill partnership's programs that helps food retailers reduce their refrigerant emissions is the Food Retailer Corporate Emissions Reduction Program. Under this program, partners report their corporate-wide average leak rate for all refrigerants. A corporate-wide average leak rate is the sum of all refrigerant additions in a given time period for all of the commercial refrigeration appliances owned by a corporate entity, divided by the full charge for all of the commercial refrigeration appliances owned by that same corporate entity during that time period.
Between 2007 and 2014, the corporate-wide average leak rate for all reporting GreenChill partners remained within a relatively narrow range of between 12.6 percent and 13.8 percent. Remarkably, when new partners joined, the reported corporate-wide average leak rate across all partners remained level. Several supermarket chains in the GreenChill program, including some having hundreds of stores, have consistently reported a corporate-wide leak rate below 10 percent. These data support the conclusion that leak rates in commercial refrigeration appliances can be considerably lower than 35 percent and that a 20 percent leak rate is reasonable.
Some commenters found GreenChill data unpersuasive because they are self-reported and unverified and because they represent the average performance of multiple appliances rather than the performance of individual systems. Another commenter stated that GreenChill data are not representative of the supermarket industry as a whole and do not consider the capabilities of independent operators or small businesses.
EPA disagrees with the comments regarding the use of GreenChill data. It is appropriate to use the GreenChill data to inform EPA's consideration of achievable leak rates for commercial refrigeration. The average performance of multiple appliances is relevant to understanding how well individual appliances, on average, perform. This dataset represents almost a third of the supermarket industry, including a few smaller independent operators, over multiple years and locations across the United States. Even if the data were biased towards larger chains and organizations that have proactively sought to reduce their emissions below the prior regulatory rate of 35 percent, these data give an indication of what is achievable when companies seek to reduce leak rates. Further, these data demonstrate that leak rates well below 20 percent are not just achievable but may be consistently maintained. A leak rate is not inherent to a particular piece of equipment but rather includes factors such as how that appliance is operated and maintained.
One commenter representing the supermarket industry supported lowering the leak rate threshold but stated that 20 percent may be burdensome for small businesses and independent retailers. Other commenters in the supermarket industry supported the proposed 20 percent leak rate and one stated that they currently meet that rate for both ODS and HFC equipment. CARB submitted comments suggesting that EPA lower the leak rate to 10 percent for commercial refrigeration, or totally eliminate the threshold. Based on their 2014 RMP data, lowering the threshold to 10 percent would raise the number of affected systems in California from 5,500 to 6,342 (out of more than approximately 20,000 systems) while reducing greenhouse gas emissions by 0.11 MMTCO
EPA responds that the average leak rate across all GreenChill commercial refrigeration appliances does not rise appreciably when new companies joined the partnership, which indicates that companies operating outside of the GreenChill partnership are operating with leak rates well below 35 percent.
Based on data in the record, EPA does not agree that a 10 percent leak rate would be appropriate for commercial refrigeration. GreenChill partners have lower leak rates than the industry average, yet the average rate among all commercial refrigeration appliances in GreenChill is around 13 percent. There are only nine supermarkets that have achieved the Platinum level certification. EPA therefore does not believe that 10 percent is currently regularly achievable industry-wide. EPA also appreciates the concept raised by the commenter that establishing lower leak rates for future appliances could be a way to encourage innovation. EPA did request comment on whether there are other regulatory incentives that could provide a basis to go with a leak rate lower than 20 percent and establishing a target rate to achieve in the future is an intriguing concept. EPA will take this comment under advisement. However, in today's final rule EPA is basing the revised leak rates on what appliances are currently able to regularly achieve.
The data submitted to the SCAQMD from 1,722 commercial refrigeration appliances indicate that 77 percent of ODS-containing comfort cooling appliances had leak rates below 20 percent. Only 8 percent of ODS-containing appliances would trigger the leak repair requirements if the leak rate was lowered from 35 to 20 percent. In 2010, when EPA analyzed the data, EPA found that the SCAQMD leak repair data for commercial refrigeration appliances was consistent with EPA's analysis of the commercial refrigeration sector.
EPA has also reviewed how companies agreed to manage refrigerants through recent consent decrees with the Agency. In consent decrees with Safeway and Costco, the two companies agreed to bring their corporate-wide leak rates from about 25 percent to 18 and 19 percent, respectively. In a recent consent decree with Trader Joe's, the company agreed to achieve and maintain an annual corporate-wide average leak rate of 12.1 percent through 2019. One commenter was unpersuaded by the use of consent decrees because they are aspirational and do not reflect actual operation. EPA agrees that the corporate-wide leak rates to be obtained under these consent decrees are not data
EPA proposed to lower the leak rate for comfort cooling appliances and all other refrigeration appliances normally containing 50 pounds or more of refrigerant that do not fit into the commercial refrigeration or IPR categories from 15 percent to 10 percent. Based on the data analysis discussed in this section and comments, EPA is finalizing that rate as proposed.
Some commenters recommended keeping the leak rate at 15 percent because some older systems may not be able to achieve a lower leak rate. These commenters stated that large chillers from the 1990s have a leak rate of 8 to 10 percent due to the seal lubrication design and that as chillers age, the leak rate increases. They asserted EPA should therefore consider the equipment's date of manufacture, the compressor configuration, and whether the equipment is custom built. Another commenter recommended a 5 percent leak rate for comfort cooling and cited multiple data sources. This commenter pointed to sources of data showing a 0.5 percent leak rate for HCFC-123 chillers, as well as a 2009 CARB analysis showing a leak rate of 1 percent and the 2005 IPCC/TEAP Special Report which shows average annual leak rates for best practice in large commercial air-conditioning to be 0.5 percent. Another commenter indicated support for the 10 percent leak rate and noted that the threshold could be lowered further without creating undue burden, but did not provide any technical data concerning average leak rates.
EPA responds that the Agency does consider factors such as the date of manufacture and the compressor configuration for establishing a leak rate applicable to all comfort cooling appliances. Since as far back as 1998, EPA found that comfort cooling appliances leaked less than five percent per year, with many new comfort cooling appliances leaking around two or even one percent per year. The highest leak rates reported from new equipment back in 1998 was high pressure chillers with open-drive compressors with leak rates ranging from four to seven percent. (63 FR 32066). This assessment continues to be valid based on industry feedback on EPA's Vintaging Model. On the other side of the spectrum, the ultralow leak rates (
A few commenters stated that EPA lacks definitive data on typical and economically achievable leak rates for comfort cooling appliances. These commenters asserted that the CARB and GreenChill data presented in the proposed rule are primarily related to commercial refrigeration and IPR, and that SCAQMD's data is not nationally representative because those appliances have been subject to leak regulations since 1991.
EPA responds that the Agency has analyzed average leak rates specifically of comfort cooling appliances as reported to SCAQMD and CARB, and as estimated in the Vintaging Model. As reflected in this analysis, these three sources indicate that most comfort cooling appliances can regularly achieve an annual leak rate of 10 percent. This memo also cites other industry estimates of leak rates in comfort cooling appliances. The majority of these estimates range between 2 and 5 percent with three of the fourteen estimates estimating leak rates above 10 percent.
The data submitted to the SCAQMD from 2,700 comfort cooling appliances indicate that 87 percent of ODS-containing comfort cooling appliances had leak rates below 10 percent. Only 1.5 percent of ODS-containing appliances would trigger the leak repair requirements if the leak rate was lowered from 15 to 10 percent.
EPA agrees that appliances in California or in the SCAQMD may have lower leak rates than appliances nationally, given the refrigerant management regulations that have existed in the state for many years. EPA therefore compared California data with the national assumptions in the Vintaging Model and found that the two correlate closely. The Vintaging Model is updated frequently with data supplied by refrigerant industry stakeholders. Therefore, any difference is not likely to be significant. This comparison is found in the final technical support document in the docket.
Commenters also stated that previous actions are leading the recovery of the ozone layer. These commenters stated that reducing the leak rate as proposed will not contribute to the recovery of the ozone layer and thus EPA cannot justify the burden on owners and operators of such equipment. EPA anticipates that this action will contribute to the recovery of the ozone layer and has calculated a reduction in ODP-weighted emissions of 114 ODP tons. However, section 608 does not require EPA to quantify the impact of this action on the ozone layer. To the contrary, section 608(a) directs EPA to establish regulations that reduce the use and emissions of ODS to the lowest achievable level, without requiring separate evaluation of how each such reduction would affect the recovery of the stratospheric ozone layer. Individual actions such as reducing emissions from comfort cooling appliances fit into the broader approach to ozone layer protection reflected in Title VI of the Clean Air Act. As such, any action that reduces the use and emissions of ODS can help the recovery of the ozone layer.
EPA also received two comments regarding what is included under the term
At this time, EPA is not finalizing a definition of “other appliance.” The owners or operators of some of the appliances included in a definition may currently treat such appliances as IPR or commercial refrigeration. While not all “other appliances” fall under IPR, for those that do, moving them into an “other appliances” category would reduce their leak rate from 35 to 10 percent without prior notice. More
The first step in reducing refrigerant leaks is knowing whether the appliance is leaking refrigerant and, if so, to what extent. The prior regulations at § 82.156(i) did not explicitly require technicians or owners and operators to calculate the leak rate each time refrigerant is added to an appliance. Recognizing that knowing the leak rate is necessary for compliance with the leak repair provisions of subpart F, EPA's
To reinforce this practice, EPA is clarifying in the revisions to the regulatory text finalized in this rule that owners or operators of appliances with 50 or more pounds of refrigerant must calculate the leak rate every time refrigerant is added to those appliances. EPA is also clarifying that the leak rate would not need to be calculated when refrigerant is added immediately following a retrofit or the installation of a new appliance or for a seasonal variance.
Two commenters suggested that the leak rate calculation should not be required on non-leaking appliances where all identified leaks are repaired within 30 days of discovery. While EPA commends appliance owners and operators who regularly repair all identified leaks within 30 days, calculating the leak rate each time refrigerant is added is still necessary. Comments indicate that in some instances, appliance owners and operators are unable to find significant leaks that may be driving the high leak rate. Given this feedback, EPA concludes that calculating the leak rate is needed to alert the appliance owner or operator to the fact that, in the case of a continually high leak rate, the typical repair and inspection attempts are not sufficiently addressing the problem with the appliance. Moreover, because the revisions to the leak repair rules as finalized in this action require owners or operators to repair leaks to lower the leak rate below the applicable threshold, calculating the leak rate on an ongoing basis provides important information to help evaluate whether this requirement has been satisfied. Not calculating the leak rate each time refrigerant is added could also lead to confusion for technicians that service more than one customer if each has different equipment subject to different regulatory compliance requirements.
EPA is also clarifying in this final rule how to handle seasonal variances. In regions of the country that experience large temperature swings during the year, refrigerant in some appliances can migrate from the condenser to the receiver. This migration results in a need to add refrigerant to an appliance to “flood the condenser” in the season of lower temperature ambient conditions (fall or winter). In this case, the added refrigerant would have to be removed when the weather returns to design ambient conditions to prevent high head pressures. This technique is often referred to as a winter-summer charge procedure or a seasonal adjustment. Seasonal adjustments are not necessary for appliances with properly sized system receivers because they can hold the appliances' full charge, including the additional charge needed to flood the condenser.
Under this final rule, owners or operators can exclude from the leak rate calculation the amount added that is less than or equal to the amount removed during the prior season. In a properly charged, non-leaking system, adding refrigerant during months with lower ambient conditions (fall or winter) would require an equivalent amount of refrigerant to be removed in the months with higher ambient conditions (spring or summer). If more refrigerant is added in the fall/winter than was removed in the prior spring/summer, the difference between the two would be considered a leak and not a seasonal variance. Without requiring that the amount added be equal to or less than the amount removed to qualify for the exemption, there is no way to distinguish legitimate seasonal variances from refrigerant leaks. For example, an appliance owner removes 150 pounds of refrigerant during the spring. Later that year, he adds 180 pounds to that same system to address a seasonal variance. The owner would be able to consider 150 of the 180 pounds as a seasonal variance and the remaining 30 pounds as a leak.
EPA expects only one removal and one addition of refrigerant to account for seasonal variance. If the amount added is equal to or less than the amount removed in the previous season, but an additional amount is added in close proximity (typically within a few days to a few weeks) to the addition being counted as a seasonal variance, and the two additions together are less than or equal to the amount removed in the previous season, the second addition would be considered part of the same refrigerant addition unless the owner or operator could document a leak.
As discussed previously in this notice, EPA is defining a seasonal variance as the removal of refrigerant from an appliance due to a change in ambient conditions caused by a change in season, followed by the subsequent addition of an amount that is less than or equal to the amount of refrigerant removed in the prior change in season, where both the removal and addition of refrigerant occurs within one consecutive 12-month period.
EPA is finalizing in the revised regulations at § 82.157(b) that the leak rate does not need to be calculated when adding refrigerant that qualifies as a seasonal variance. Both the addition and prior removal of refrigerant due to seasonal variances must be documented. Such additions and removals would already be accounted for in service records provided by the technician to the owner/operator. The recordkeeping requirements for this flexibility in calculating the leak rate are located in § 82.157(l)(2), and those for maintaining records associated with the seasonal variance if it is excluded from the leak rate calculation are at § 82.157(l)(10).
Commenters were generally supportive of this new flexibility, but had some concerns, many of which are discussed in the definitions section of this notice. Several commenters requested clarification on whether the owner or operator would be responsible for this requirement. Owners or operators must keep records of refrigerant added and removed from an appliance. If they wish to claim a seasonal variance, they must note in their records the amount of refrigerant that was removed at the end of the last season for a seasonal variance. This is likely to be one of the only reasons to remove refrigerant without immediately adding additional refrigerant or without
The prior regulations at § 82.156(i) generally require owners or operators to repair leaks within 30 days of the leak rate being exceeded (
Many commenters requested that EPA differentiate between major fixable leaks and minor unfixable leaks. They stated that it is impossible to repair “all leaks” as many systems have minuscule leaks that are not fixable. A couple of commenters suggested that EPA not require the repair of leaks that meet the ASHRAE 147 standard, which are those that are less than 0.1oz/year/joint. Another commenter recommends a threshold of 10,000 ppm if using leak detection equipment, or detection visible to the naked eye if using qualitative tests like a soap bubble test. Other commenters supported EPA's proposed exception that allows a technician to use best professional judgment to decide that a leak is not caused by a faulty component or connection and that the leak would not be reduced from repair or adjustment.
Some commenters were concerned about the diminishing returns of repairing all identified leaks. In some cases, small leaks may actually require extensive repair activities and even component replacement. Repairing all identified leaks will extend repair times, which for IPR systems may increase the costs of the repair or, in the case of nuclear generating facilities, increase the risk of conducting those repairs. For those reasons, these commenters said owners and operators should be provided flexibility to select which leaks to repair or make a good-faith effort to repair leaks.
In this final rule, after consideration of the comments, EPA is not finalizing the proposed change to require repair of all identified leaks. In the proposal, EPA acknowledged that a small amount of refrigerant can migrate from an appliance even if the refrigerant circuit is unbroken, and requested comment on whether there should be a limited exception from the requirement. Instead, the regulations finalized today contain the same requirement as in the original rule by requiring that leaks be repaired such that the leak rate will be below the applicable leak rate. Accordingly, EPA is not at this time setting a final standard for what is, or is not, an actionable leak beyond the applicable leak rate. In not finalizing this proposed change, EPA considers that an owner or operator may have good reason to choose not to repair a small leak. EPA also considers the original intent of the leak repair provisions, as explained in the 1993 Rule. At that time the Agency considered requiring the repair of all leaks “which has the benefit of simplicity and clarity” but explained that without “any type of lower bound, however, this standard could result in huge amounts of money being spent to repair even pinhole leaks in equipment that may soon be obsolete . . . The intent of the leak repair requirement in this rule is to assure that substantial leaks are repaired.” (58 FR 28680). Not finalizing this proposed requirement reduces the number of leaks that are to be repaired and accordingly will reduce the burden of the final rule compared with the proposed rule for two reasons. First, the repair effort itself may take less time. Second, fewer verification tests on the repairs, and recordkeeping associated with such tests, will be needed.
The final regulations include other provisions to help ensure that leaks are repaired consistent with the Rule's provisions, and to address compliance and enforceability of the leak repair provisions. For example, the final regulations provide for initial and follow-up verification tests, as discussed below. They also specify that the leak rate must be confirmed upon the next refrigerant addition. EPA recognizes that this will result in some uncertainty because the owner or operator will not know whether the repair is successful until the leak rate is measured at a future date. There are two instances in which EPA will consider a repair to be successful beyond calculating the leak rate upon the next refrigerant addition. The first instance is if a subsequent leak inspection does not find any leaks at all.
If upon the next refrigerant addition the appliance is still exceeding the threshold leak rate, EPA's presumption is that the repair failed. The burden is on the owner or operator of the appliance to show that leaks were repaired to bring the leak rate below the applicable threshold and that those repairs held.
One commenter stated that the greatest value of a leak inspection is on a system with a known leak. A comprehensive leak inspection on an appliance that has exceeded the applicable leak rate will ensure that the technician does not stop an inspection when the first leak is found. Another commenter encouraged EPA to be specific that the leak inspection be conducted on the whole system not just where the original leak was found. Another commenter stated that if a particular circuit in a rack house is found to be leaking and is subsequently repaired and passes the verification test, it would be nonsensical to require the inspection of other circuits on that particular appliance.
EPA agrees with these three commenters. The leak inspection must encompass all visible and accessible components of an appliance, with certain exceptions specified in the revised rule. The leak inspection is not complete simply because a single suspected leak is identified. Only through an inspection of the whole of the appliance can an owner or operator know that the repairs that are to be made will be sufficient to bring the appliance below the applicable leak rate. However, a leak inspection need
The prior regulations at § 82.156(i)(3) required verification tests for repairs to IPR and federally owned commercial and comfort cooling appliances containing an ODS refrigerant. Verification tests are performed on appliances, or portions thereof, shortly after they are repaired to confirm that leaks have been fixed. Without verification tests, it may take additional time for the owner and operator to realize that a repair has been unsuccessful and during that time refrigerant could continue to leak from the appliance. EPA is extending this requirement to all required repairs because ensuring that the repairs are done correctly the first time is vital to reducing refrigerant emissions, regardless of whether the appliance is used for IPR, commercial refrigeration, comfort cooling, or is in the category of “other appliances.”
EPA is finalizing the requirement at § 82.157(e) that owners or operators of all types of appliances that are subject to the leak repair requirements (including those using an ODS or non-exempt substitute refrigerant) perform both an initial and follow-up verification of repairs every time the applicable leak rate is exceeded (unless a retrofit or retirement plan is being developed). Most commenters on this issue supported the requirement for a follow-up verification test. Commenters agreed that the combination of an initial and a follow-up verification test provides effective confirmation of successful repair. One commenter stated that requiring the verification of all repairs would be excessively burdensome. The commenter discusses this burden in the context of the proposal to repair “all identified leaks.” The commenter continues that if amendments to the rule for inspections and repairs are adopted in any form, EPA should adopt verification provisions that are limited to significant leaks or adopt an 80/20 rule to assure that the majority of leak repairs are verified by a certified technician or qualified plant personnel.
EPA disagrees with the comment about limiting verification provisions to significant leaks or adopting an 80/20 rule. Because EPA is not requiring the repair of all identified leaks in the final rule, the number of verification tests should be reduced. However, as explained above, it is important that all repairs be verified both for purposes of compliance and enforceability and for purposes of avoiding emissions from leaking appliances. Since owners or operators have flexibility to determine which leaks to repair as long as they can meet the obligation to bring the leak rate below the applicable threshold, they may generally consider what are significant leaks in their repair effort. The verification tests would only apply to the leaks that were repaired.
One commenter stated that a follow-up verification test is unnecessary if there are periodic leak inspections and thus they should be eliminated. EPA disagrees with this comment because a follow-up verification test and a leak inspection serve two separate purposes. The verification test is conducted shortly after the repairs to confirm the success of those repairs. The leak inspections are to identify over the next year or longer whether new leaks have developed or whether minor leaks have become more significant and to determine the location of such leaks.
EPA requested comments on whether to require a minimum time between initial and follow up verification tests, such as one to three hours, to allow an appliance to return to normal operating characteristics and conditions. Many commenters recommended that EPA not establish a minimum time. Commenters suggested that the follow-up verification test be allowed as soon as the appliance returns to normal operating characteristics and conditions. Requiring a waiting period would increase costs by requiring an additional service call. Furthermore, high pressure systems will reveal whether a leak was properly repaired almost immediately.
EPA has considered the burden of conducting verification tests on all appliances. The Agency understands that most technicians pressure check appliances immediately following repairs. Such pressure checks would satisfy the initial verification requirements. EPA is concerned that follow-up verifications may not be a part of normal operating procedures for all repairs. This final rule would allow both initial and follow-up verification tests to be conducted during the same service appointment. Accordingly, EPA does not expect the requirement for verification tests to result in a longer servicing event and thus we do not expect this requirement to result in incremental labor costs. However, the final rule provides, and EPA reiterates, that the technician must wait until the appliance returns to normal operating characteristics and conditions, which includes operating temperatures, pressures, fluid flows, speeds, and other characteristics, including full charge of the appliance, that would be expected for a given process load and ambient condition during normal operation.
Some commenters requested that EPA add a reporting requirement for technicians to provide owners or operators with the results of the verification tests. These commenters expressed that it is difficult to get all of the documentation that they are required to maintain from the technicians who generate those records. EPA agrees with the need to harmonize the recordkeeping provisions between technicians and owners and operators and understands that in order for owners and operators to maintain the required records of the verification tests, they would need to obtain relevant information from the person conducting those tests. For these reasons, EPA is adding a requirement for technicians to provide documentation at the conclusion of each service visit to § 82.157(l)(5).
Two commenters suggested that EPA provide an exception for situations where a follow-up verification test is impossible, for example, when it would be unsafe to be present when the system is at normal operating characteristics and conditions. One of the commenters recommended that EPA allow a standing deep vacuum test in lieu of a follow-up verification test. EPA responds that the Agency attempted to address similar concerns from commenters in 1995. Examples included leaks inside a heat exchanger, compressor internals, locations that must be insulated prior to start-up, and locations in close proximity to dangerous hot equipment or moving parts where access is not possible after reassembly (See 60 FR 40429). At that time, the Agency amended the regulation at § 82.156(i)(3) to state that “[i]n all cases, the follow-up verification test shall be conducted at normal operating characteristics and conditions, unless sound professional judgment indicates that tests performed at normal operating characteristics and conditions will produce less reliable results, in which case the follow-up verification test shall be conducted at or near the normal operating pressure where practicable, and at or near the normal operating temperature where practicable.” EPA had proposed to remove that provision to make the regulation clearer and less ambiguous.
EPA is also finalizing the proposed change to clarify that owners or operators may conduct as many repair attempts as needed within the initial 30 days (or longer if an extension is available) to repair the appliance. Consequently, the Agency is explicitly allowing unlimited verification tests within the required repair window. Commenters were supportive of this clarification.
The prior regulations contained extensions to the repair or retrofit/retirement deadlines under four conditions:
• The appliance was mothballed (available for all appliances) (§ 82.156(i)(10));
• The appliance was located in an area subject to radiological contamination or where shutting down the appliance would directly lead to radiological contamination (available for federally owned appliances) (§ 82.156(i)(1)(ii) and (i)(5)(ii));
• Applicable federal, state, or local regulations made a repair within 30 or 120 days impossible (available for IPR) (§ 82.156(i)(2)(i)); or
• Parts were unavailable (available for IPR) (§ 82.156(i)(2)(i)).
While not an extension, IPR facilities were also allowed an initial repair period of 120 days rather than 30 days if an industrial process shutdown is required to complete the repair. In addition, an exemption to the repair requirement was allowed for all types of appliances if a dated retrofit or retirement plan is developed within 30 days and is then implemented within one year of the date developed.
EPA proposed to provide these extensions to all appliance categories, not just IPR and federally owned equipment. EPA is finalizing these proposed extensions, with some changes from the proposal. Based on comments received, EPA is finalizing a modified version for the extension for when necessary parts are unavailable. More specifically, EPA is clarifying that the extension is allowed when components that must be replaced as part of the repair are not available within the initial 30 day (or 120 day) repair time frame. Also based on comments, EPA is modifying the proposed changes to allow these extensions upon notification to EPA, unless EPA notifies the source otherwise, rather than requiring owners or operators to request an extension and wait for EPA approval. Taken together, these changes significantly reduce the burden of the leak repair regulations on owners of comfort cooling and commercial refrigeration appliances and to a lesser extent IPR.
Based on comments received, EPA is modifying the extension for when necessary parts are unavailable. Many commenters supported EPA's proposal to allow additional time to acquire and install a replacement for a leaking component. While EPA views installing a component as a type of repair, the comments indicate that some owners or operators consider the replacement of a component as different than the repair of an appliance. Replacing a component is more costly, requires more time to order, and requires more system downtime to install. Owners or operators may attempt to repair a leak but upon a failed follow-up verification test may ultimately decide that the whole component where the leak is located needs to be replaced. By the time a decision is made to replace the whole component, there is little time remaining within the initial 30 day repair window to procure and install that component.
Based on these comments, EPA is modifying the extension for when necessary parts are unavailable by clarifying that the extension is allowed when components that must be replaced as part of the required repair are not available within the initial 30 day time frame (or 120 days if an industrial process shutdown is required). This extension encourages the proper repair of an appliance, which in EPA's view, includes the replacement of major components if necessary, rather than simply patching those components, an approach which may not be successful in the longer term. Furthermore, some owners or operators would prefer to replace a faulty component before they are required to retrofit or retire an entire appliance and believe this could, in many instances, be an equally effective means to address needed repairs. This extension should also reduce the potentially large burden upon owners or operators of requiring a large-scale retrofit or retirement when replacing the leaking component might satisfactorily repair the appliance.
The extensions for repair in the prior regulations are open-ended. While those regulations provided only the additional time needed to receive delivery of the necessary parts, it did not set an outer limit for delivery nor did it clearly provide time to install the components once they are received. EPA is finalizing its proposal to set a limit on the extension for the installation of a necessary component. The owner or operator must complete the repair within 30 days after receiving delivery of the component and the total extension may not exceed 180 days (or 270 days if an IPR shutdown is required).
To qualify for any of the extensions in this section, owners or operators must perform all repairs that can be completed within the initial 30 or 120 day period. Initial verification tests must be performed on all completed repairs. A final verification test may not be appropriate for the completed repairs depending on the nature of the remaining repairs and state of the appliance. The owner or operator must also document all such repair efforts and the reason for the inability to make the repair. This would include a written statement from the appliance or component manufacturer or distributor stating the unavailability of the necessary component and the expected delivery date.
Some commenters stated that any changes to nuclear generating stations must undergo extensive engineering and risk review processes, which recommends against the requirement to retrofit if they cannot repair the system. The commenter noted that extended downtime of safety systems in such facilities will increase risk to workers and may conflict with federal regulations. EPA responds that the Agency is providing extensions for any appliance type subject to radiological contamination. Previously, this extension was available only for federally owned appliances. EPA is also not changing the open-ended nature of the extensions due to radiological contamination or compliance with applicable federal, state, or local regulations. Together, this should allow repairs in accordance with the commenter's schedule.
In some instances, encouraging repair may be a preferable environmental outcome to requiring the retrofit or retirement of a leaking system. Appliances that are to be retired are not required to be repaired. Thus, an appliance may continue to leak for up to a year (in addition to extension opportunities). Under this final rule, leaks must be repaired to bring the leak rate below the applicable threshold within 30 days and any component replacement must occur within 6 months. The extension could accelerate the time by which the appliance will stop releasing refrigerants by making leak repair seem more attractive or
Based on the comments received, EPA is allowing these extensions to be automatic, so long as EPA is notified. Previously, owners or operators would have to request these extensions from EPA and wait for them to be approved. One commenter requested that EPA automatically grant the extension where there are limiting federal, state, or local laws so long as the owner or operator maintains the proper documentation that demonstrates they satisfy the condition. Another commenter requested that EPA harmonize the timing of the request with the 30 day time frame to repair. Previously, a request had to be made within 30 days of exceeding the leak rate but EPA had an additional 30 days to approve or deny the request. There was no clear tolling of the 30 day repair clock which meant a system could be denied an extension after the repair deadline expired. EPA is resolving these conflicting schedules by considering repair requests approved unless EPA notifies the owner or operator that it is not approved.
Owners or operators must provide the same information to EPA as was contained in a request for an extension under the prior regulations. The request must include: Identification and address of the facility; the name of the owner or operator of the appliance; the leak rate; the method used to determine the leak rate and full charge; the date a leak rate above the applicable leak rate was discovered; the location of leak(s) to the extent determined to date; any repair work performed thus far, including the date that work was completed; the reasons why more than 30 days are needed to complete the repair; and an estimate of when the work will be completed.
If an extension to the earlier submitted completion date is necessary, the owner or operator must still submit a request to EPA with a new estimated date of completion and documentation of the reason for that change. The request must be within 30 days of identifying that further time is needed. The owner or operator must keep a dated copy of this submission and proof that it was submitted.
The previous regulations at § 82.156(i)(6) required an owner or operator of an appliance that exceeds the applicable leak rate to develop a retrofit or retirement plan generally within 30 days if they were unable to repair the leak or simply choose not to repair the leak and instead retire the appliance. EPA proposed four revisions to the retrofit/retirement provision. First, EPA proposed to remove the requirement to retrofit or retire an appliance after a failed follow-up verification test. Second, EPA proposed to remove the requirement to use a substitute with a lower or equivalent ODP. Third, EPA proposed to establish explicit elements of a retrofit/retirement plan. Fourth, EPA proposed to require that all identified leaks be repaired as part of implementing any retrofit plan. EPA is finalizing these four proposals, with some modifications based on comments.
Both prior to initiating this rulemaking and through comments received on the proposed rule, appliance owners/operators have expressed their concern to EPA that the requirement to retrofit or retire an entire appliance because it has failed a verification test is not always practical or necessary. In their view, a failed verification test should indicate to a technician that further repair work needs to be performed to properly fix the leak, not a regulatory requirement to begin retrofitting or retiring the appliance. As EPA discusses in the section on follow-up verification tests, in the revisions finalized in this rule EPA is allowing as many repairs and follow-up verification tests as are necessary to fix the appliance within the required time frame. Accordingly, consistent with these comments, the revised regulations no longer require an owner or operator to retrofit or retire an entire appliance simply because it has failed a verification test.
EPA proposed that failing to comply with “paragraphs (e) and (f) of this section,” which included the proposed requirement to repair all identified leaks and verify all repairs, would trigger a requirement to develop a retrofit or retirement plan within 30 days, rather than a failed verification test. As discussed above, EPA is not finalizing the proposal to repair all identified leaks; therefore, EPA is modifying the trigger to develop a retrofit or retirement plan accordingly. In this final rule, a plan must be developed within 30 days of discovering that an appliance continues to leak above the applicable leak rate after having conducted the necessary repairs and verification tests. This provision as finalized is also narrower and clearer than a “failure to comply with paragraphs (e) and (f) of this section,” which EPA proposed, because the proposed language could have been interpreted to also include failure to maintain records rather than failure to repair the appliance. EPA has added a provision to clarify that owners or operators are still required to develop a retrofit or retirement plan even if they do not affirmatively choose to retrofit, retire, or repair their leaking appliance.
EPA proposed to remove this requirement and allow for retrofits or retired/replaced appliances to use any refrigerant (other than the one currently used in that appliance in the case of retrofits), so long as it is acceptable for use under SNAP. This proposed revision would not relax the prior requirements with respect to HCFCs since the regulations implementing sections 605 and 606 of the CAA already prohibit the use of virgin HCFCs in appliance manufacture (as of January 1, 2010, for HCFC-142b and HCFC-22; and as of January 1, 2020, for other HCFCs) and thus installation and retrofit of such appliances would not occur. As explained in the proposal, requiring the use of a refrigerant with a lower or equivalent ODP could be problematic if the requirement were read strictly because some non-exempt substitutes like HFOs that are not classified as an ODS have a negligible, but non-zero, ODP. For example,
Some commenters suggested that EPA should require a retrofit to an acceptable substitute under SNAP, with one commenter suggesting that it be a lower GWP alternative than the refrigerant currently being used. Another commenter suggested that if the SNAP-approved refrigerant with the lowest available GWP is being used, EPA should allow for documented repairs and quarterly leak inspection in place of forced system retirement.
Other commenters questioned the value of retrofitting a system that already uses substitute refrigerants and suggest that retrofit plans should not be required for non-ODS equipment. One commenter viewed the existing rules as providing an opt-out incentive to owners that voluntarily retrofit to a non-ODS. The commenter requested that EPA retain this feature so that owners that switch from a high-GWP refrigerant to a low-GWP refrigerant similarly benefit. Similarly, a commenter questioned how retrofitting helps the owner/operator if the rules for HFCs are the same as for ODS.
EPA responds that the Agency is finalizing provisions that encourage the repair of leaking systems instead of requiring the retrofitting or retirement of those systems. Most significantly, EPA is finalizing the proposal to allow all comfort cooling, commercial refrigeration, and IPR appliances the opportunity to extend the deadline to repair leaking appliances beyond 30 days (or 120 days if an industrial process shutdown is required). It is not the Agency's intention to use the retrofit or retirement requirements in the subpart F regulations to dictate specific refrigerant choices. The revisions to these regulations are intended to provide as much flexibility to the owner or operator to decide what is appropriate for their system.
• Identification and location of the appliance;
• Type (
• Type (
• Itemized procedure for converting the appliance to the new refrigerant, including changes required for compatibility (for example, procedure for flushing old refrigerant and lubricant; and changes in lubricants, filters, gaskets, o-rings, and valves), if retrofitted;
• Plan for the disposition of recovered refrigerant;
• Plan for the disposition of the appliance, if retired; and
• Schedule for completion within one year of the appliance retrofit or retirement.
Some commenters stated that this is excessively detailed and includes information that is unlikely to be known immediately upon deciding to retrofit or retire an appliance. One commenter noted that it will take time to perform the necessary engineering evaluations and investigate the costs and timing associated with the available options. The commenter provided revised regulatory text to remove reference to the type of refrigerant and full charge for the retrofitted system, the procedure for converting the appliance to a new refrigerant, and the schedule for conducting the retrofit or retirement.
EPA responds that the shortest time frame in which a retrofit or retirement plan would have to be developed is when, upon discovering a leak, the owner or operator immediately chooses to retrofit or retire the appliance upon discovering that leak. In that circumstance the plan would be developed within 30 days. In all other circumstances, the owner will have 30 days from when repair attempts have failed, including repairs attempted under various extensions, to develop the plan.
While some information may not be available in that time frame, the owner or operator can develop an initial plan within 30 days and then modify it as additional information is determined. For example, owners or operators may not know within the allotted time frame what the itemized procedure will be until they finalize plans for the retrofit or retirement. The plan could indicate what steps must be taken in order to have enough information to make the necessary determinations. The information required in the plan is not excessively detailed because the owner or operator will need to know this information in order to properly dispose of the old appliance and install the replacement.
One commenter also stated that the plan does not need to be kept onsite with the appliance, so long as it can be made available to EPA and that it is also unnecessary for a plan to be signed because staff, including the person who initially signed the plan, could change. The commenter believes it is sufficient for EPA to be told who is responsible for the plan when it is provided to the Agency. EPA responds that it is appropriate for the plan to be accessible at the site of the appliance. The previous rules required that the original plan or a legible copy be kept at the site of the appliance. This could imply maintaining a printed version of the plan with the appliance. EPA is finalizing the proposal to allow for the plan to be “accessible” at the site of the appliance, which includes an option to have the plan be “accessible” in electronic format. This provides sufficient flexibility for the plan's storage while still allowing for the plan to be quickly available upon request. It is also important that the plan be signed so that the authorized representative has taken responsibility for the plan and so that EPA can identify who that person is and the date the plan was created.
Under the prior regulations at § 82.156(i)(6), an owner or operator generally was required to complete the retrofit or retirement of a leaking appliance containing an ODS within one year of creating a retrofit or retirement plan. Extensions were available in the following circumstances:
• If delays were caused by requirements of other applicable federal, state, or local laws or regulations (available for IPR);
• If a suitable replacement refrigerant with a lower ODP was unavailable (available for IPR);
• If the supplier of the appliance or a critical component quoted a delivery time of more than 30 weeks from when the order was placed (available for IPR);
• If complications presented by the appropriations and/or procurement process resulted in a delivery time of more than 30 weeks (available for federally owned appliances); or
• If the appliance was located in an area subject to radiological contamination and creating a safe working environment will require more than 30 weeks (available for federally owned appliances).
EPA proposed at § 82.157(i) four substantive revisions to these extensions. First, as with all other leak repair provisions, EPA proposed to apply these extensions to appliances containing non-exempt substitute refrigerants. EPA is finalizing this revision, as proposed.
Second, EPA proposed to remove the extension for when a suitable replacement refrigerant with a lower ODP is not available. EPA established this extension when certain applications using CFCs did not have a suitable HCFC substitute. Today, there are many more substitutes for ODS refrigerants. In fact, few appliances can be newly installed or retrofitted with virgin ODS because of the HCFC use restrictions implementing section 605 of the CAA. As discussed previously in this notice, EPA is removing the requirement that a retrofit use a refrigerant with a similar or lower ODP. Therefore, the rationale for this extension no longer exists and EPA is removing it as proposed. EPA is accordingly also removing the term
Third, EPA proposed a new extension at § 82.157(i)(1) if the appliance is to be retrofitted to or replaced with a refrigerant that is exempt from the venting prohibition as listed in § 82.154(a). In that situation, EPA proposed to allow an extension up to 18 months. Whereas the prior extensions were only available to IPR and federally owned appliances, EPA proposed to make this extension available to comfort cooling and commercial refrigeration appliances as well.
Some commenters were supportive of this proposal as a way to encourage transition to zero-ODP and low-GWP refrigerants. Other commenters were opposed to the proposal because it encourages the use of refrigerants that are more toxic, hazardous, or flammable than HFCs.
EPA responds that the first comment is correct that the refrigerants that are exempt from the venting prohibition, such as carbon dioxide (R-744), and the hydrocarbon refrigerants ethane (R-170), propane (R-290), isobutane (R-600a), and R-441A in certain uses, have an ODP of zero and low GWPs ranging from one to eight. EPA further notes that subject to 40 CFR subpart G, many of the refrigerants exempt from the venting prohibition are not acceptable when retrofitting certain types of equipment; hence, in most cases these exempt refrigerants would be used in new equipment replacing the leaking system. One reason to provide more time for retrofitting or replacements for exempt substitutes is to allow time to purchase and install new equipment. With respect to the points made by the second comment, the refrigerant must be approved under SNAP for the end-use in order to be used. A company choosing to move to one of these alternatives would reasonably be expected to consider safety characteristics of the refrigerant. Moreover, for refrigerants that are exempt from the venting prohibition, the Agency has already determined that the release of these substances do not pose a threat to the environment as part of the decision to exempt them from the venting prohibition. Accordingly, EPA is finalizing this extension as proposed.
Fourth, the prior regulations at § 82.156(i)(3)(v) relieved owners and operators of IPR appliances of the requirement to retrofit or retire their appliances if they established that the appliance's leak rate is below the applicable rate within 180 days of an initial failed follow-up verification test and they notified EPA within 30 days of that determination. EPA proposed to remove this provision because it was infrequently used and because other extensions, in particular the extension to receive a replacement component, should provide sufficient flexibility for IPR and other appliances.
Multiple commenters recommended that EPA retain this exemption because there may be situations where the root cause of a leak is not identified until after a retrofit/retirement plan is developed. The commenters stated that an appliance need not be retrofitted or retired if it can be demonstrated that it is repaired.
Based on these comments, EPA is not finalizing its proposal to remove that provision. Just because it is not frequently used does not mean that it may not be used in the future, especially since EPA is expanding the universe of appliances subject to the retrofit/retirement plan requirements to include those that use non-exempt substitute refrigerants. EPA agrees that an appliance need not be retrofitted or retired if it can be demonstrated that the repairs bring the leak rate of the appliance below the threshold leak rates. In the instance of a retrofit, because EPA is requiring that all identified leaks be repaired, it is possible that the appliance could be repaired to such an extent as to not need to complete the retrofit.
EPA is concerned, however, about whether this provision could provide a mechanism to delay repairs. To discourage this, EPA is requiring that all identified leaks be repaired consistent with the retrofit requirements, rather than merely fixing leaks sufficient to bring the appliance below the applicable leak rate, which is what EPA is finalizing for repairs required under § 82.157(d). EPA is also revising the reporting elements that were found in the prior regulations related to this provision. Rather than allowing the owner or operator to merely provide notice to EPA, the Agency is requiring that the owner or operator request that EPA relieve them of the obligation to retrofit or retire the appliance. Like other requests in the leak repair provisions, the request will be considered approved unless EPA notifies the owners or operators otherwise within 60 days of receipt. The request must also provide other information about the equipment and the repair, such as an explanation of why the repair was not conducted within the time frames required under § 82.157(d) and (f). This approach provides flexibility for owners and operators while avoiding it becoming simply an extension of the duty to repair because of the increased level of repair and the information requirements associated with its use. EPA anticipates this will be most useful in situations where the root cause of the leak is not identified until after a retrofit/retirement plan is developed.
Finally, EPA proposed to revise the extension for IPR to implement a retrofit plan where a supplier of the appliance or a critical component has quoted a delivery time of more than 30 weeks from when the order is placed. EPA proposed to modify this to mirror the extension allowed for the repair of an appliance in this situation, such that the appliance or appliance components would have to be installed on the retrofitted appliance within 120 days after receiving delivery of the necessary parts. Previously, this extension allowed
EPA proposed to add a total leak limit to the repair requirement to address chronically leaking systems. Under that proposal, an appliance containing 50 or more pounds of refrigerant may not leak more than 75 percent of its full charge in two consecutive twelve-month periods and remain in use. If an appliance exceeded the two year leak limit, the owner or operator would be out of compliance until the appliance was retired or mothballed and later retired.
For the proposed rule, EPA reviewed data reported to CARB to determine whether such a total leak limit would be necessary and, if so, what the limit should be. In 2013, approximately 8 percent of reporting appliances had leaked more than 75 percent of their full charge over the calendar year and were responsible for 38 percent of total reported emissions. Due to the high chronic leaks of such appliances, the environmental benefit of establishing a cumulative leak limit could be large. Nonetheless, the number of appliances affected by this proposed limit should be low.
Environmental NGOs and state pollution control agencies were supportive of the proposed two year leak limit, with one NGO suggesting a leak limit of 55 percent instead of 75 percent. A chemical manufacturer was also supportive if the proposal allowed an exemption for unavoidable catastrophic leaks. Many other commenters expressed strong opposition to the proposed two year leak limit, describing it as redundant, unnecessary, or punitive. Commenters state that there are many reasons why an appliance may leak in excess of 75 percent for two consecutive years even though the appliance is in good condition. For example, commenters expressed that it is possible for two large volume leaks to occur from unrelated components. Multiple commenters stated that owners should not have to mothball an appliance where the cause of the leak can be remedied by the replacement of a component. Commenters that operate supermarkets were especially concerned about the requirement to retire the appliance given that EPA's definition of appliance includes all of the display cases and coolers attached to the refrigerant circuit. This requirement would result in the scrapping and replacement of perfectly good components. Another commenter for similar reasons suggested that IPR be exempt from the retirement responsibility due to their unique nature, although the commenter believed comfort cooling and commercial refrigeration could remain subject to the 2 year leak limit. If EPA chose to finalize this leak limit, many commenters requested an off-ramp provision from the automatic retirement for catastrophic leaks resulting from accidents, vandalism, acts of nature, non-mechanical failures, or on a case-by-case decision upon notifying EPA.
In response to the significant concerns raised by commenters, EPA is not finalizing this proposed two year leak limit. EPA is aware of the many situations in which a system can leak large quantities of refrigerant in consecutive years. For instance, it is possible, though rare, for two catastrophic leaks to occur on the system through no fault of the operator. Although EPA requested comments on a possible exemption for catastrophic leaks, it is clear from the comments that there is a wide range of opinions about what a catastrophic leak is, and what can cause such a leak. Because EPA is not finalizing this provision, it is not defining the term
EPA also assumed that, absent catastrophic leaks, it was unlikely for a system to be in compliance with other parts of subpart F while still leaking at this rate. EPA generally anticipates that a leaking appliance will be repaired within 30 days to six months. However, the leak repair regulations contemplate situations in which an owner or operator is unable to repair or subsequently retrofit a system in a timely fashion (
While EPA wishes to reduce chronically leaking systems, EPA believes other practices required under this final rule will help address chronic leakers. For example, strengthening the leak repair regulations by lowering the rate at which the initial repairs must be performed, requiring leak inspections prior to those repairs, verification tests of those repairs, and subsequent leak inspections after the repair, will reduce the number of chronically leaking systems.
Data received from CARB and other sources indicate that there are systems that may not be adhering to the leak repair requirements of subpart F. Some commenters, even those opposed to the specific proposal offered by EPA, agree that the worst chronic leaking systems may warrant special consideration. However, they found the proposed provision both overly broad and overly harsh in its outcome. Some commenters proposed alternate methods of addressing chronically leaking systems. One commenter stated that a requirement to properly document causes for large leaks and to establish corrective actions would likely be more effective at reducing large leaks than simply imposing a two year leak limit that would result in a unit being retired. CARB recommended that if both (a) the annualized leak rate exceeds 100 percent more than 4 times in the previous 365 days and (b) more than 120 percent of the total charge has been added in the previous 365 days, the system or faulty component should be retired. EPA considered CARB's approach and finds it attractive for a couple of reasons. This alternative has the benefit of considering the number of refrigerant additions in addition to the total amount of refrigerant released, thereby removing appliances affected by catastrophic leaks. It also would take effect after one year, which will cut in half the time in which refrigerant is being released into the environment. However, this approach would still require the automatic retirement of these systems, which some commenters found to be too strict a penalty.
The chronically leaking appliance provision, as proposed, would apply to appliances containing 50 pounds or more of refrigerant that leak more than 75 percent of the full charge in each of two consecutive twelve-month periods. Based on the comments, EPA is revising the chronically leaking appliance provision. EPA is requiring that owners or operators of appliances that leak 125 percent of their full charge in a calendar year submit a report to EPA detailing their repair efforts. The reports must be submitted no later than March 1 of the year following the 125 percent or greater leak. Through that report, the owner or operator must demonstrate that they are
By raising the threshold, EPA intends to avoid capturing appliances affected by unavoidable losses of full charge. Systems would have to lose their full charge and then a significant quantity more. Using CARB data and scaling up to the whole U.S., EPA estimates that 1,425 appliances (or 0.1 percent of all appliances with 50 or more pounds of refrigerant) would be affected at 125 percent of full charge.
Like CARB's approach, this would apply after one year rather than waiting for a second year of high leaks. As such, it will catch chronic leakers sooner than the provision EPA proposed. Several commenters contended the opportunity for a case-by-case determination is necessary to account for the variety of situations that might trigger the chronically leaking appliance provisions. They contended that without the opportunity for a case-by-case determination, the provision will force the retirement of working equipment. EPA's revised approach is similar to what many commenters suggested in that it allows for a case-by-case discussion after notifying EPA. Adding this reporting requirement also furthers EPA's goal of revising these regulations to improve enforcement and compliance of the regulations in subpart F. This will incentivize many owners and operators to improve their systems to ensure that they do not trigger this reporting requirement.
Comments were mixed as to whether the chronically leaking appliance provisions should be calculated based on calendar year, 12-month consecutive periods, or whether regulated entities should be given the discretion to choose one or the other. These concerns are partially moot, given that EPA has changed this requirement to allow for reporting to EPA in lieu of a retrofit or retirement. EPA is finalizing provisions stating that the 125 percent is based on calendar year so that entities do not need to calculate refrigerant additions on a rolling basis.
The prior regulations contained recordkeeping and reporting provisions for all of subpart F at § 82.166. As proposed, EPA is finalizing a recordkeeping paragraph at § 82.157(l) and a reporting paragraph at § 82.157(m) within the leak repair section to make these requirements easier to locate.
The prior regulations also required that certain records be kept in hard copy at the site of the appliance. Under the revisions finalized in this rule, EPA is explicitly allowing, though not requiring, electronic records in this final rule. EPA recognizes that many companies employ electronic databases to store and track records. An electronic recordkeeping system has advantages to paper records, and EPA encourages owners and operators of appliances to use one of these systems to track refrigerant additions and other required records. Electronic systems allow for more comprehensive refrigerant management and can help identify leaky appliances earlier. These records must still be accessible onsite if an EPA inspector visits a facility, but that access can occur through downloading or printing the records from an online system.
Some commenters stated that the recordkeeping for the newly proposed requirements will be a significant burden. One commenter stated that the recordkeeping from all of the leak inspections would be a large burden and urged EPA to minimize that burden in the final rule. Another stated that requiring detailed information on the location of all repaired leaks with the type of verification test would be a substantial burden and would require enhanced service records tailored to individual equipment. The commenter suggested EPA require instead only the date and results of initial and follow-up verification tests.
EPA responds that the Agency recognizes the concerns about the extent of the proposed recordkeeping burden. EPA is finalizing the recordkeeping requirements as proposed but is modifying the final rule to reduce the number of such records. First, EPA is only requiring leak inspections on systems that have exceeded the applicable leak rate, rather than on all appliances. EPA estimates that the universe of affected appliances will decrease by 81 percent relative to the proposal (from 1.5 million to 282,000 appliances). Though there are fewer leak inspections, EPA estimates a higher total burden because the Agency has increased the estimates for the costs of each inspection based on public comments. Second, EPA is only requiring repairs sufficient to bring the leak rate below the threshold leak rate, rather than requiring the repair of all identified leaks (unless the owner or operator chooses to calculate their leak rate using the Rolling Average method). There should be fewer verification tests and thus less to record.
EPA is finalizing the leak inspection records as proposed. Specifically, owners or operators must keep records of leak inspections that include the date of inspection, the method(s) used to conduct the leak inspection, a list of the location of each leak that was identified, and a certification that all visible and accessible parts of the appliance were inspected. The specificity of the leak inspection documentation is appropriate because this information will help demonstrate that the repair has brought the appliance's leak rate below the threshold leak rate. This information would allow the owner or operator to demonstrate, if needed, that a further exceedance of the leak rate threshold after repairing leaks is due to a new leak rather than a leak that was previously identified but not repaired.
EPA is also finalizing the verification test records as proposed. Specifically, owners or operators must maintain records that include the location of the appliance, the date of the verification tests, the location of all repaired leaks that were tested, the type of verification test used, and the results of those tests. It is important to document that each specific repair was verified so as to determine whether a repair was successful and whether the leak has been addressed. EPA is not requiring such specificity as a schematic of that individual appliance showing the locations of all repairs and verification tests. However, information should allow a technician to generally know which components of the appliance were repaired.
In this final rule, EPA is establishing the recordkeeping requirements described generally in this section for owners and operators of appliances normally containing 50 or more pounds of class I, class II, or non-exempt substitute refrigerant. All records required in § 82.157(l) must be maintained for at least three years.
• Maintain records documenting the full charge of appliances;
• Maintain records, such as invoices or other documentation showing when refrigerant is added or removed from an appliance, when a leak inspection is performed, when a verification test is conducted, and when service or maintenance is performed;
• If using an automatic leak detection system, maintain documentation that the system is installed and audited or calibrated annually and records of when the monitoring system identifies a leak and the location of the leak;
• Maintain retrofit and/or retirement plans;
• Maintain retrofit and/or extension requests submitted to EPA;
• If a system is mothballed to suspend a deadline, maintain records documenting when the system was mothballed and when it was brought back on-line (
• Maintain records of purged and destroyed refrigerant if excluding such refrigerant from the leak rate;
• Maintain records to demonstrate a seasonal variance; and
• Maintain copies of any reports submitted to EPA under § 82.157(m).
Multiple commenters noted that owners or operators must expend a tremendous amount of effort to obtain good records from outside service providers. Often facility owners are provided incorrect or incomplete paperwork or are unable to obtain paperwork at all. The commenters were generally supportive of EPA's proposal that would make it a requirement for technicians to provide the necessary information to the owner or operator of the appliance. However, one commenter stated that the record for the proposed rule does not justify the extent of records that technicians must provide to owners/operators and suggested that EPA maintain only the current recordkeeping requirements for technicians.
Multiple commenters requested that EPA remove the proposed requirement that technicians provide the owner or operator with the full charge of the appliance or the leak rate calculations because technicians often do not have sufficient information, such as the date of last service, to make those calculations. Other commenters requested that the Agency require the technician provide the owner or operator with information about the initial and follow-up leak repair verification tests that matches what EPA proposed to require the owner or operator to maintain.
After considering the comments, EPA is finalizing its proposal to align the records that the technician must provide to the owner or operator with the records that the owner or operator are required to maintain, with a few exceptions described below. In response to the comment that EPA maintain only the current recordkeeping requirements for technicians, the service technician is generally in the better position to generate those records as they are performing the service activities and usually are the expert that the appliance owner or operator is relying on to make informed decisions about their appliances. Finalizing these requirements for technicians should help ensure that the appropriate records are created so that they can be maintained.
Specifically, EPA is requiring that whenever an appliance with 50 or more pounds of refrigerant is maintained, serviced, repaired, or disposed of, the technician must provide the owner or operator with an invoice or other documentation that indicates (1) the identity and location of the appliance; (2) the date and type of maintenance, service, repair, or disposal performed, including the location of repairs and the results of any verification tests or leak inspections (if applicable); (3) the name and contact information of the person performing the maintenance, service, repair, or disposal; and (4) the amount and type of refrigerant added to and/or removed from the appliance (if applicable).
Based on the comments, EPA is not finalizing a requirement that the technician calculate the leak rate or provide the owner or operator with a record indicating the full charge of the appliance. The rules as finalized require the technician to provide information that they are best positioned to gather and that is relevant to calculating the leak rate and full charge, but the owner or operator is well positioned to determine those numbers because they should have the historical information that informs that calculation. Accordingly, it is not necessary for the technician to calculate the leak rate and EPA has modified the requirement at § 82.157(b) to explicitly state that it is the owner or operator's responsibility to calculate the leak rate. Because the owner and operator is also required to calculate the full charge it is no longer a relevant record for the technician to provide.
The final rule also explicitly requires that persons conducting the initial or follow-up leak repair verification test must, upon conclusion of that service, provide the documentation needed to meet the owner or operator's recordkeeping requirements. This furthers the goal of aligning the technician and owner or operator's recordkeeping requirements.
The existing regulations require that owners or operators report to EPA in certain circumstances. EPA is not making changes to those reporting requirements in this final rule:
• If the owner or operator is requesting an extension to the 30-day (or 120-day) requirement to complete repairs pursuant to § 82.157(f);
• If the owner or operator is requesting an extension to complete a retrofit or retirement of an appliance pursuant to § 82.157(i); or
• If the owner or operator is excluding purged refrigerants that are destroyed from annual leak rate calculations pursuant to § 82.157(k).
EPA is also finalizing two reporting requirements that were not contained in the proposed rule. First, EPA is requiring at § 82.157(j) that owners or operators submit a report if their appliance leaks 125 percent or more of the full charge in a calendar year and thereby triggers the chronically leaking appliances provision. EPA is adding this report to provide added flexibility, so that appliances that have leaked 125 percent of their full charge or greater do not necessarily need to be retired or retrofitted provided there is an explanation for the leak. This report must explain the reason for the leak rate of 125 percent or greater and could potentially include, among other things, the documentation prepared to extend the repair requirement or a description of catastrophic events. As discussed earlier in this notice, this reporting requirement is based on comments received to remove the two-year leak
Second, this final rule contains a provision allowing owners or operators who are retrofitting or retiring an appliance to request that EPA relieve them of that obligation if they can establish within 180 days of the plan's date that the appliance no longer exceeds the applicable leak rate. This provision is contained in the prior regulations. EPA had proposed to remove it, but based on comments requesting that it be left in place, EPA is not finalizing the proposal to remove it. EPA is requiring information be included in the report that is similar to the previously existing requirement except EPA is additionally requiring a description of why the repair was not conducted within the time frames required under paragraphs (d) and (f) of this section. In addition, it must include a signed statement that all identified leaks will be repaired and an estimate of when those repairs will be completed (not to exceed one year from date of the plan). These additional elements are necessary to ensure that this provision is not used as a way to circumvent the required time frames for repair.
EPA is not finalizing the proposed requirement for the report that would have accompanied an extension request from federal agencies to conduct less frequent leak inspections in the proposed rule. EPA is not finalizing this proposed extension and thus the reporting element is no longer necessary.
EPA is also finalizing the requirement that all reports be submitted to EPA via email at
Two commenters requested that the Agency require that owners and operators keep a record of the amount of refrigerant leaked annually to the atmosphere by refrigerant type and that this information be reported to EPA. Additionally, the commenters requested that EPA make the data related to the emissions of refrigerants publicly available. In accordance with the transparency element of the Next Generation Compliance initiative, the general public could then point out violations and owners and operators would have an incentive to correct excessively leaking appliances.
EPA responds that in general, EPA is not requiring that owners or operators calculate the sum total of refrigerant leaked annually or submit those data to EPA. The volume of reporting would be substantial and for a majority of appliances would be of limited value to EPA or the general public. However, owners or operators of equipment that leaks 125 percent of the total charge in a calendar year will have to calculate their total refrigerant additions to determine whether they have met that threshold. EPA finds that there is merit for those chronically leaking systems to perform this calculation and report to EPA because that will encourage those owners or operators to take steps to ensure they do not meet or exceed that threshold.
Under the prior regulations, all refrigerant recovery and/or recycling equipment manufactured or imported on or after November 15, 1993, and used during the maintenance, service, repair, or disposal of appliances containing an ODS refrigerant must be certified by an approved equipment testing organization to ensure that it meets certain performance standards. These standards may vary for certain equipment intended for use with the disposal of small appliances. These performance standards were contained in tables 2 and 3 of § 82.158, as well as appendices B1, B2, and C of subpart F. EPA based these standards in large part on ARI (now AHRI) Standard 740-1993 and ARI Standard 740-1995. Recovery and/or recycling equipment intended for use during the maintenance, service, repair, or disposal of MVAC and MVAC-like appliances must meet the standards in subpart B. The regulations pertaining to MVACs refer to subpart B and state that such recovery and/or recycling equipment must meet the standards of § 82.36(a).
In the revisions finalized in this rule, EPA is requiring that all recovery and/or recycling equipment manufactured or imported for use during the maintenance, service, repair, or disposal of appliances (except small appliances, MVACs, and MVAC-like appliances) that contain non-exempt substitute refrigerants be certified by an approved equipment testing organization as being capable of meeting certain performance standards. EPA is requiring that after January 1, 2017, all newly manufactured or imported recovery and/or recycling equipment used during the disposal of all appliances, including MVACs and MVAC-like appliances, also be certified. One commenter agreed that recovery and/or recycling equipment for use with non-exempt substitute refrigerants should be certified. This comment supports EPA's approach.
EPA proposed that all existing recovery and/or recycling equipment that met certification requirements for ODS prior to this rulemaking would be considered as certified for non-exempt substitute refrigerants. EPA is further clarifying that if a person who recovers refrigerant has recovery equipment that was certified as meeting the requirements for an ODS refrigerant, it can be used to recover other non-flammable refrigerants in that pressure category. For example, recovery equipment manufactured in 2015 that was certified to recover HCFC-22 can be used to recover other non-ODS refrigerants like R-407A, R-407C, or R-410A. However, proper care should be taken to prevent refrigerant mixing if using the same recovery device with multiple refrigerants.
One commenter noted that additional equipment testing would be required if the equipment manufacturers want older equipment to handle newer non-exempt substitute refrigerants. EPA responds that all equipment manufactured or imported on or after January 1, 2017, must be tested under the new standards. This is true of older equipment designs previously certified for ODS which have not been tested for substitute refrigerants. However, any equipment manufactured or imported prior to the effective date is grandfathered and does not have to be recertified. Technicians can continue to use previously certified recovery equipment that they already own. As has been the case when EPA has previously changed equipment standards, EPA does not require technicians to recertify or replace their existing equipment.
EPA is adding appendices B3 and B4, based on the AHRI Standard 740-2016,
Certifying refrigerant recovery and/or recycling equipment for use with non-exempt substitutes serves multiple purposes. First, certification provides reliable information on the ability of equipment to minimize emissions of these substitute refrigerants, by measuring and/or establishing standards for recovery efficiency (vacuum level) and maximum emissions from air purging, oil draining, equipment clearing, and hose permeation. The fact that the equipment minimizes emissions is part of our consideration of whether emissions associated with using recovery equipment are considered
Finally, certification embraces Next Generation Compliance principles. Users of certified equipment, when following the manufacturer's instructions, will be in compliance with the regulatory standards for the evacuation of refrigerant.
EPA is using AHRI Standard 740-2016 as the basis for the recycling and/or recovery equipment requirements in appendix B3. This standard does not address the safety of recovering flammable refrigerants. EPA is therefore creating appendix B4, which requires the recovery/recycling performance of appendix B3 and the safety performance of Underwriters Laboratories (UL) Standard 1963-2011, Supplement SB—
Two testing organizations supported using UL 1963 to address flammable refrigerants. One commenter preferred that EPA reference UL 1963 directly within appendix B4 rather than establishing separate requirements in appendix B4 that are based on that standard. Separate requirements published outside of that standard would make it more difficult to apply the standard. EPA responds that appendix B4 refers to UL 1963, Supplement SB, and does not reproduce the standard in the appendix due to copyright concerns.
Another commenter strongly recommended that a label be required on all products certified to handle flammable refrigerants. EPA responds that UL 1963, Supplement SB has requirements for markings that must be placed on recovery and/or recycling equipment certified to handle flammable refrigerants. Because EPA is incorporating those standards in appendix B4 by reference, EPA is requiring those markings.
As proposed, EPA is removing the requirement under § 82.162 that anyone who maintains, services, repairs, or disposes of appliances containing an ODS submit a signed statement to the appropriate EPA Regional office stating that they own recovery and/or recycling equipment and are complying with the applicable requirements of subpart F. EPA received one comment in support of taking this action.
EPA created this provision in 1993 when the Agency first required that recovery and/or recycling equipment be certified and that technicians use certified equipment. At the time, the use and availability of recovery and/or recycling equipment was not as commonplace as it is today. Equipment certification by owners demonstrated to EPA that equipment was available for use by certified technicians. In particular, EPA was interested in the capabilities of grandfathered, or pre-1993, equipment. Since certified recovery and/or recycling equipment is now commonly available, EPA no longer needs the information contained in the certification statement such as the number of service trucks and personally identifiable information of equipment owners.
EPA is reorganizing § 82.158 by appliance type. EPA is also combining tables 2 and 3, which contain the levels of evacuation that must be achieved by recovery and/or recycling equipment, to remove inconsistencies in terminology and formatting.
EPA also revised how the requirements for recovery equipment used on small appliances are written. In general, the requirement is that the equipment is capable of recovering 90 percent of the refrigerant in the test stand when the compressor of the test stand is operational and 80 percent of the refrigerant when the compressor of the test stand is not operational. In addition, there are secondary considerations that could allow for the certification of recovery equipment based on when that equipment was manufactured or imported.
EPA relies on independent third party organizations approved by the EPA Administrator to certify that refrigerant recovery and/or recycling equipment meets the standards in subpart F. Any equipment testing organization may apply for approval so long as they can verify that they have the expertise and technical capability to verify the performance of the recovery and/or recycling equipment, have no conflict of interest (
Any new certifying organization must have expertise to certify equipment that is used to recover or recycle refrigerants that are subject to this subpart. This means that they must be able to evaluate and certify HFCs and other non-exempt substitute refrigerants, including flammable refrigerants. Because the same expertise is needed to test equipment used for ODS and substitute refrigerants, equipment certifying organizations that have already been approved by EPA may continue to certify equipment designed for substitute refrigerants without needing to re-apply. In comments on the proposed rule, two certifying organizations agreed that currently approved organizations should not have to reapply to certify equipment used to recycle and/or recover substitute refrigerants and that the same expertise is needed to test equipment used for ODS and substitutes.
EPA is removing the requirement that organizations provide a list of all certified equipment to EPA within 30 days of the organization's approval by EPA and annually at the end of each calendar year thereafter. Instead, EPA is requiring that the certified equipment testing organizations publish online a list of equipment that meets EPA requirements. This list must include the manufacturer and the name and/or serial number of a newly certified model line, which is the information that the certifying organizations had to provide to EPA. This list must be updated no less than once per year, but an organization can choose to update the list more frequently. Online lists must contain certified equipment until three years after that equipment is no longer offered for sale. Making the information available online will be no more burdensome for the testing organization than submitting the list to EPA. Online publication is also a better method of communicating these findings to the public and the service/repair industry than sending the information to EPA. Two certifying organizations commented that they support these revisions because they already make the information publicly available through their Web sites.
EPA is also adding to the regulatory text the timing for records retention that had previously only been found in guidance documents. The regulation now specifies that all records must be maintained for three years after the equipment is no longer offered for sale. EPA is adopting a similar timeframe for the online lists of certified equipment.
EPA also encourages the use of electronic reporting and has established the email address
The prior regulations at § 82.161 required the certification of all individuals who maintain, service, or repair air-conditioning and refrigeration equipment containing an ODS, other than MVACs which are addressed in a separate subpart of the regulations. This group includes installers, contractor employees, in-house service personnel, and anyone else who performs installation, service, maintenance, or repair that might reasonably have the opportunity to release ODS refrigerants to the environment. In addition, individuals disposing of air-conditioning and refrigeration equipment other than small appliances, MVACs, and MVAC-like appliances must be certified. Individuals disposing of small appliances, MVACs, and MVAC-like appliances do not need to be certified.
Under those rules, technicians become certified by passing a test containing questions drawn from a bank developed by EPA with input from industry educational organizations with a certification program approved by EPA. The test includes questions on the role of CFCs and HCFCs in stratospheric ozone depletion, the requirements of the subpart F, and proper techniques for recycling and conserving refrigerant. EPA makes the question bank available to certifying organizations that demonstrate that they can properly generate, track, administer, and grade tests; issue certificates; and keep records.
In this final rule, EPA is finalizing its proposal to extend the certification requirements to technicians who work with non-exempt substitute refrigerants.
Persons who are not certified technicians are more likely to intentionally or inadvertently release refrigerant in the course of servicing, maintaining, repairing, or disposing of refrigeration and air conditioning equipment. One commenter stated that they believe most of the intentional venting of refrigerant is done by individuals who are not certified technicians. Another commenter noted that they have observed a lack of competence within the equipment servicing sectors leading in many instances to the improper handling of refrigerants or servicing of mechanical equipment.
EPA responds that these comments support the importance of extending the technician certification requirement, as well as other provisions of the refrigerant management rules, to non-exempt substitute refrigerants. Certified technicians are more likely to understand how and why to recover and recycle refrigerants and to have the proper equipment to do so. Technician certification helps ensure that technicians know refrigerant recovery requirements and techniques. The prior regulations did not specifically prohibit an uncertified individual from opening an air conditioner that contains a substitute refrigerant in order to add a substitute refrigerant or replace components. Similarly, the regulations did not specifically prohibit an uncertified individual from opening an air conditioner that contains an ODS refrigerant to add ODS refrigerant (assuming a certified technician purchased the ODS refrigerant). While the venting prohibition generally applies to these actions, without training or certification the individual performing such servicing activities may not even be aware of the prohibition against knowingly venting or otherwise releasing refrigerant.
Tips reported to the Agency indicate that servicing by uncertified individuals occurs. One commenter asserted that a substantial number of technicians, possibly up to 25 percent, are operating without certification. EPA responds that this information, if true, would further support the extension of the technician certification requirement to non-exempt substitute refrigerants. Requiring that anyone opening an appliance (except those containing only exempt substitute refrigerants) be a certified technician will reduce emissions caused by uninformed service personnel and will facilitate enforcement of the venting prohibition, especially when coupled with the recordkeeping requirement for appliances containing more than five and less than 50 pounds of refrigerant.
Many companies require certification of their technicians regardless of the type of refrigerant being used. The principles of proper handling, recovery, and disposal of non-exempt substitute refrigerants are similar if not identical to those for ODS refrigerants, except that additional safeguards are advisable for flammable refrigerants. The fact that some individuals may be working on non-ODS appliances without certification and without following safe handling practices places them at a disadvantage with respect to
Many commenters supported extending the technician certification requirement for the handling of substitute refrigerants. While some commenters stated that EPA does not have authority to extend section 608 regulations to substitutes, those commenters did not raise the specific issue of technician certification. EPA addresses those general comments about its authority for this action in Section III of this notice. Two commenters recommended extending the technician certification requirement to flammable refrigerants. Three commenters urged EPA to extend the technician certification requirement for the handling of all refrigerants, even if they are exempt from the venting prohibition. These commenters stated that treating all refrigerants equally will provide consistency and clarity in the industry. Other commenters stated that many of the exempt refrigerants have special considerations such as flammability or toxicity that require care during handling and servicing. As noted previously, some commenters stated that the sales restriction should be extended to hydrocarbons. These commenters noted that the flammability of these refrigerants poses far greater risks than that of R-22 when handling it and servicing equipment. One commenter recommended that if the sales restriction was extended to flammable refrigerants then it should be extended to all exempt refrigerants.
As stated in the proposed rule, EPA is not extending the technician certification requirement (and thus the sales restriction) to individuals maintaining, servicing, repairing, or disposing of appliances containing substitute refrigerants that are exempt from the venting prohibition. EPA has exempted substitutes, at least in the specified end-uses, from the venting prohibition because the Agency has determined for purposes of section 608(c) that they do not pose a threat to the environment when released. For water or nitrogen, technician certification would provide no environmental benefit nor would it increase technician safety. For ammonia or chlorine, other regulations address the risks related to those specific compounds (for example, OSHA regulations that address risk to technician safety). The types of refrigeration equipment that use these exempt substitute refrigerants are also significantly different from an engineering standpoint from the equipment that uses ODS or HFC refrigerants. Therefore, there is little potential for ODS and these exempt substitute refrigerants to be mixed and intentionally released to the environment.
Hydrocarbon refrigerants may be different than the other substitute refrigerants. EPA notes that all end-uses for hydrocarbons currently authorized under SNAP are also exempted under the venting prohibition. The Agency did not propose and is not establishing a technician certification requirement or sales restriction for those exempt substitute refrigerants. The Agency may consider in future whether there are any regulatory or other measures that would be appropriate to address the handling of exempt flammable refrigerants.
As a result of today's action, flammable substitutes that have not been exempted from the venting prohibition in a particular end-use are subject to the requirements of subpart F, including the sales restriction and the technician certification requirements. Unlike the other exempt substitutes, hydrocarbons are being sold to service existing ODS and HFC equipment for which this refrigerant is not listed as acceptable under SNAP. Specifically, R-22a, which is propane, in some cases mixed with isobutane and an odorant, has been marketed as a “drop-in” (or more appropriately termed a “retrofit”) replacement for existing equipment designed for use with HCFCs and/or HFCs. Often these are MVACs or residential split systems.
R-22a has not been submitted to SNAP for review for these uses, and EPA has not listed propane as acceptable for these end-uses under the SNAP program. Accordingly, EPA considers its introduction into interstate commerce for this use a violation of the SNAP regulations. In addition, EPA has not exempted R-22a or propane used as a retrofit in existing HCFC-22 appliances from the venting prohibition. As a result, R-22a and propane are subject to the requirements of subpart F in such non-exempt end-uses, including the sales restriction and the technician certification requirements.
The Agency has learned through its recent enforcement actions against Enviro-Safe and Northcutt, two distributors of R-22a, and through other investigations that R-22a is being sold to both consumers and technicians. Often the buyers are not aware there is a difference between R-22 and R-22a, or even that R-22a is flammable. As a result, appliances have exploded and technicians have been injured. Technicians need to be aware of the safety concerns of using such refrigerant for themselves or subsequent technicians who service ODS or HFC equipment that inappropriately contains hydrocarbons. Consumers must also not have easy access to this refrigerant for their own safety. Applying the sales restriction to unapproved uses of hydrocarbon refrigerants and educating technicians through the certification program will reduce safety risks and prevent the mixing (and subsequent venting) of ODS and HFC refrigerants with these unapproved alternatives.
One commenter, while supportive of extending the technician certification requirements to those working with non-exempt substitute refrigerants, disagreed with the premise that failing to require certification will result in the release and mixture of ODS and non-ODS refrigerants.
EPA responds that information about the illegal use of R-22a as a replacement for R-22 indicates to EPA that people are purchasing their own refrigerant and mixing it with HCFCs. The consequences of inappropriately mixing refrigerants include significant losses in performance and energy efficiency, damage to equipment, the lost value of the mixed refrigerant (which is at best difficult, and often impossible, to separate into the component refrigerants), and costs for destroying mixed refrigerants. Refrigerant mixture also leads both directly and indirectly to refrigerant release. Mixture leads directly to release because mixtures of certain refrigerants, such as R-22 and R-134a, have higher pressures than either component alone. Thus, pressure-sensitive components such as air purge devices on recycling machines and relief devices on appliances may be activated by these mixtures, venting the refrigerant to the atmosphere. Purge devices in particular are often set to open when the pressure of the recovery cylinder's contents rises more than 5-10 psi above the expected saturation pressure for the refrigerant; this margin is exceeded by R-22/R-134a mixtures containing more than ten percent of the contaminating refrigerant.
Refrigerant mixture also reduces recycling and leads indirectly to release. First, mixed refrigerants lose their value for reclamation because it is difficult to separate the component refrigerants. Typically, reclaimers will pay refrigerant distributors for recovered refrigerant. Reclaimers may actually charge money to accept highly mixed refrigerant or not take it at all. Mixed refrigerants cost money to reclaim or destroy and this cost could provide a financial incentive for illegal venting. Second, the direct releases and equipment breakdowns caused by contamination lead to increased equipment servicing, which itself leads to unavoidable releases of refrigerant. Thus, failure to require certification for people working with substitute refrigerants would increase the probability of both substitute and ozone-depleting refrigerants being emitted to the atmosphere.
As noted previously in this notice, certified technicians are more likely to understand how and why to recover and recycle refrigerants and to have the proper equipment to do so. The skills and knowledge that certified technicians have reduces the likelihood that they would mix or release ODS and non-ODS refrigerants. For these reasons, EPA is requiring technician certification for persons working with non-exempt substitutes.
EPA is currently updating the technician certification test bank through a process separate from this rulemaking. While this is not a regulatory change—the Agency can update the test bank when appropriate without promulgating a new regulation—it aligns with EPA's efforts to extend the refrigerant management regulations to substitute refrigerants. Currently, the questions focus on CFCs and HCFCs, even though CFCs have been phased out for nearly twenty years and the predominant HCFC, HCFC-22, will be phased out by 2020.
As part of the public participation process for this rule, stakeholders provided input regarding updating the test bank questions. Many commenters supported updating the test bank, especially given the new refrigerants and technologies that have become available since the test was initially developed. Commenters provided suggestions for numerous topics that should be covered by the exam. These include placing greater focus on the venting prohibition, recovery best practices, safe handling of flammable refrigerants, use of new refrigerants, financial benefits of refrigerant recycling, and the costs of non-compliance related to equipment efficiency, equipment life, and environmental harm. One commenter observed that the core, Type II, and Type III tests should now include questions on verification testing since this will be a new requirement of technicians servicing comfort cooling and commercial refrigeration appliances under the leak repair provisions.
EPA responds that all of these suggested topics fit into the testing topics listed in appendix D. EPA intends to consider these potential topics when updating the test bank questions. EPA has begun reviewing the test bank and consulting with certification and training organizations to identify questions that should be updated, replaced, or removed. EPA also intends to incorporate new and revised elements of the National Recycling and Emission Reduction Program that are being finalized in this action in the updated test bank. As such, the test bank will not be completed until after publication of the final rule. Testing organizations have requested time to update their training and testing materials before the new questions go into effect. EPA anticipates the new questions will be added to all exams by mid- to late 2017.
The regulations at § 82.161 require that organizations operating technician certification programs apply to EPA to have their programs approved. The application process ensures that technician certification programs meet minimum standards for generating, tracking, and grading tests, as well as keeping records. Approved technician certification programs must keep records of the names of technicians they have certified and the unique numbers assigned to each technician certified through their programs. These records allow both the Agency and the certification program to verify certification claims and to monitor the certification process. Approved technician certification programs also must submit reports to EPA every six months containing information on the number of students certified and the pass/fail rate. Such reports allow the Agency to monitor program compliance.
As discussed previously, EPA is requiring in this final rule that technicians who work with non-exempt substitute refrigerants be certified. By extension, EPA is also requiring that technician certification programs offer tests to certify those technicians. This should not require significant changes to current practices other than using the updated test bank once available and the revisions discussed in this section. EPA is not requiring that current certification programs recertify based on any of the revisions in this final rule. EPA did not receive comment specifically on these proposed revisions.
In regulatory revisions finalized in this rule, EPA is requiring that certifying organizations publish online lists of the technicians certified by that organization. However, EPA is not establishing a single “database” nor requiring certified organizations to create their own databases as was contemplated in the proposed rule. The primary intent of these published lists is to assist technicians who have lost their certification cards and reduce the burden currently facing the Agency and technician certification programs in assisting technicians who have lost their certification cards as described in the proposed rule. These goals can be accomplished for all future technicians through the publication of limited information online. Technicians should be able to find out who certified them through a simple web search.
In the proposed rule, EPA described this as a database and discussed one of its possible uses as a tool refrigerant wholesalers could use to verify their customer is a certified technician. Many commenters supported the creation of a single technician database maintained by EPA. A few of those commenters encouraged EPA to include all certified technicians, not just newly certified technicians, because an incomplete list would have only marginal value for anyone referencing the list prior to selling refrigerant. Some refrigerant distributors wanted assurance that their refrigerant sales would not be adversely affected or that they would not be held responsible for errors or omissions in the technician database. One commenter who employs in-house technicians stated that their technicians would prefer not to be included in such a database. The commenter requested that there not be a database, or if there is one that technicians should have to affirmatively opt in, rather than being given the option of opting out.
EPA responds that the Agency did consider the possibility of a database that could be used to enforce the sales restriction. EPA agrees that in order to be used for regulatory purposes the
As this requirement is primarily for the benefit of the technician, EPA is requiring technician certification programs to notify individuals taking the certification exam that information will be posted online and allow them to opt out. Allowing the opt out is sufficient for those technicians who do not want to be listed; requiring an opt in to be listed, on the other hand, would reduce the utility of the lists. EPA is also exempting federal government-run programs from this requirement as proposed. The public release of government and military personnel names linking them to their federal employment could present significant privacy and security concerns.
EPA did not receive comment on the proposed information that would need to be published. EPA is therefore finalizing as proposed the following information requirements: The first name, middle initial, and last name of the certified technician, the technician's city of residence when taking the test, the type(s) of certification received, and the date each certification was received. EPA is not requiring any specific format for providing this information. EPA is aware that some certifying organizations already provide this information online to their technicians and the Agency does not intend to require that they change how they offer the information so long as the required data elements are included. Rather than continuous updating, as would have been required of a database, EPA is requiring that the lists be updated annually, although individual organizations may choose to update their lists more frequently.
In this rulemaking, EPA is finalizing its proposal to remove provisions related to voluntary certification programs at § 82.161(g). This program was created to allow technicians who were trained prior to the establishment of approved technician certification programs to be recognized as certified technicians. This program expired in 1994 and is no longer necessary. EPA did not receive any comments on this proposal.
As proposed, EPA is finalizing revisions to the requirements for the required text that is printed on certification cards. Some organizations told EPA prior to publication of the proposed rule that the language used on the certification card implies that a technician as defined in subpart F may be trained in other aspects of equipment installation. The primary purpose of the 608 certification card is for a technician to prove to a vendor that they understand the environmental impacts of mishandling refrigerants and are legally permitted to perform the necessary maintenance, servicing, repair, or disposal work under CAA section 608. While this certification qualifies an individual to maintain, service, repair, or dispose of appliances containing certain refrigerants for purposes of CAA section 608, the 608 exam is less focused on the operational and engineering aspects of refrigeration and air-conditioning equipment. Accordingly, the 608 certification is not intended to serve as a general license for individuals who work on such equipment.
To more accurately reflect the knowledge needed to obtain the certification, EPA is updating the card to read: “[Name of person] has successfully passed a [Type I, Type II, Type III, and/or Universal, as appropriate] exam on how to responsibly handle refrigerants as required by EPA's National Recycling and Emission Reduction Program.”
EPA stated in the 1993 Rule establishing the technician certification requirements that standardized language will decrease administrative costs and aid in enforcement. In addition, it was intended to ease burden on refrigerant wholesalers who must inspect the cards to verify the certification of technicians. Those principles also apply to this rulemaking, and updating the information required on the certification card should improve clarity and should not result in any new administrative costs. EPA notes that the Agency is not requiring that currently certified technicians obtain new cards with the updated language. The new language applies only to cards issued to newly certified technicians. In the event where a technician is requesting a replacement for a lost card, EPA encourages that the certifying organization use the updated language whenever feasible.
In this rulemaking, EPA is also finalizing minor edits to appendix D “Standards for Becoming a Certifying Program for Technicians.” EPA did not receive any comments on this element of the proposal and is finalizing the revisions as proposed. More specifically, EPA is updating the description of test content to include the environmental impact of not just ODS but also substitute refrigerants. EPA is removing paragraphs (i) through (k) on approval process, grandfathering, and sample application as they are outdated, redundant, or self-explanatory. EPA is removing the reference that EPA will periodically publish information on the fees charged by the programs as the Agency no longer collects this information. To protect the private information of technicians and minimize the potential for fraud, EPA is removing social security numbers as an acceptable form of identification for Type I technicians using the mail-in format and stating that social security numbers cannot be used in the unique certification number assigned to newly certified technicians. EPA also is requiring that certifying organizations provide a hand-out or electronic communication to technicians after they have taken the certification test explaining who provided the training, who to contact with questions regarding the certification process, and when they should expect to receive their score, and if they passed, their certification cards.
The regulations at § 82.164 required that anyone reclaiming used ODS refrigerant for sale to a new owner, except for people properly certified under subpart F prior to May 11, 2004, is required to reprocess refrigerant to standards laid out in appendix A (based on ARI Standard 700-1995,
In this final rule, EPA is extending the reclamation standards for refrigerants in appendix A to additional non-ozone depleting substitute refrigerants. Most of the refrigerants in appendix A were
The standard in the previously existing rules was adopted in 1995. It is appropriate to update this standard to ensure that refrigerants developed in the last twenty years are reclaimed properly. While industry has established standards for these new refrigerants, EPA's regulations have not kept pace. Therefore, reclaimers have not had a legal obligation to achieve such standards. Instilling confidence in the market that reclaimed refrigerant is as good as virgin refrigerant is crucial to its widespread use. Ensuring a healthy market for reclaimed refrigerant is also crucial to support the value of used refrigerant and provide incentives through market forces to recover used gas from appliances during their maintenance, servicing, repair, or disposal.
Many refrigerant reclaimers and distributors commented that the current 0.5 percent unsaturates limit is appropriate. One commenter specifies that the reclamation industry as a whole has delivered more than 200 million pounds of reclaimed refrigerant at that unsaturates level without any known issues. Another commenter expressed concern that lowering the unsaturates limit will make successful reclamation impossible. Other commenters encouraged EPA to incorporate the AHRI Standard 700-2015,
EPA responds that it is not incorporating either the AHRI Standard 700-2015,
This final rule will extend the prior reporting requirements that are applicable to ODS to HFCs and other non-exempt substitutes. Reclaimers must report annually the aggregate quantity of material sent to them for reclamation (the combined mass of refrigerant and contaminants) by refrigerant type, the mass of each refrigerant reclaimed by type, and the mass of waste products. EPA has been publishing the aggregate total of each ODS refrigerant reclaimed each year on its Web site. After these revised reporting requirements take effect, EPA will begin collecting and making available reclamation data for non-exempt substitute refrigerants as well as ODS, which should provide EPA and the general public a greater understanding of the extent of HFC recovery and reclamation. One commenter encouraged EPA to publish data on the amount of refrigerant being sent to a reclaimer in addition to the amount reclaimed. The commenter does not believe that aggregated data is CBI and believes that sharing the data publicly will provide further justification for the actions taken in this rule. EPA responds that the Agency has aggregated and released the reported quantity of refrigerant received for reclamation, as well as the aggregate quantity of refrigerant reclaimed since 2010. This includes an aggregate of all of the different types of refrigerant reported to EPA as received and/or reclaimed. Because reporting on substitutes was previously not a requirement, the data on HFCs are incomplete and based only on reports from companies that chose to provide such data.
Under the prior regulations at § 82.164(b), reclaimers must certify that the refrigerant reclaimed meets the specifications in AHRI Standard 700-1995 using the analytical methodology prescribed in appendix A. In addition to updating the standard to AHRI Standard 700-2016, EPA is finalizing revisions to the regulations to clarify that the analysis must be conducted on each batch of refrigerant being reclaimed and that reclaimers must maintain records of each analysis. Requiring reclaimers to maintain records helps to ensure that refrigerant is being reclaimed to the appropriate specifications. The standard practice for reclaimers currently is to analyze by batch, and to generate records when doing so, so these revisions update the regulations to reflect current practices and do not add additional burden. EPA is also requiring that all recordkeeping and reporting requirements for reclaimers be maintained and reported by refrigerant type (
EPA is also clarifying what aggregate information must be reported annually to the Agency, and removing a redundant recordkeeping provision related to that report. Currently, reclaimers provide data on ODS reclamation to EPA in multiple formats. EPA intends to develop an electronic form to standardize the reporting across all reclaimers. This should reduce burden on the Agency and on reclaimers as EPA must currently engage in a back and forth process to ensure that all required data have been reported properly. This will also allow the Agency to publish reclamation data in a more timely manner.
Previously reclaimers were required to certify that the refrigerant reclaimed meets the specifications in AHRI Standard 700-1995 using the analytical methodology prescribed in appendix A. EPA proposed to specify that reclaimers must, “[v]erify that each batch of refrigerant reclaimed meets these specifications using the analytical
One commenter suggested that a testing ID or batch number be placed on each cylinder packaged from the bulk cylinder to allow for traceability back to the analysis. EPA recognizes that some companies may want to do this for their own internal quality control. However, EPA is not presently convinced of the environmental benefit of making this change at this time.
Multiple reclaimers requested that the reclaimed refrigerant be independently analyzed by an accredited laboratory. They stated that independently verifying that reclaimed refrigerant meets the required specifications reaffirms the appropriate industry standard already being followed by most reclaimers. One commenter found that it would not be necessary to require independent analysis since all reputable reclaimers already do this. EPA responds that it did not propose to require independent third-party testing of reclaimed refrigerant and does not presently have sufficient information to finalize such a requirement. Before requiring third-party testing, EPA would want to better understand the frequency with which such testing is done, the costs involved, whether such testing would improve the quality of the reclaimed refrigerant on the market, and which and how many companies conduct such testing. Therefore, at this time EPA is not requiring independent third-party testing. However, as discussed previously in this notice, ensuring the quality of reclaimed refrigerant is very important to its use and to further the goals of the section 608 program and EPA may consider establishing such requirements in a future rulemaking.
EPA requested comment on possible future proposed revisions to the reclamation requirements including establishing more stringent certification requirements for reclaimers; establishing a third-party certification or audit program for reclaimers; and requiring labeling of reclaimed refrigerant. Many reclaimers and other commenters provided input on these questions. Because EPA was merely seeking comment for potential future actions and did not propose any specific action for this rulemaking, EPA is not responding to those comments at this time and is not taking final action with respect to any of those comments. EPA will consider the information received for a potential future rulemaking.
EPA received comments related to hazardous waste in the context of the safe disposal requirements, recovery equipment, and reclamation. Multiple commenters requested that EPA create new Resource Conservation and Recovery Act (RCRA) exclusions from the definition of hazardous waste for all recovered refrigerants, perhaps with the exception of ammonia. The commenters stated that classifying used refrigerant as a hazardous waste would prevent technicians from recovering and transporting used refrigerant and prevent reclaimers from accepting, processing, or reclaiming such refrigerant. As a result, commenters foresee less recovery and increased emissions because handling compounds classified as hazardous waste would be cost prohibitive. The commenters point to the exclusion EPA created for used CFCs at 40 CFR 261.4(b)(12) as a model.
EPA responds that to be a hazardous waste, a compound must either be specifically listed as a hazardous waste per 40 CFR 261 Subpart D or exhibit one of the following characteristics: Ignitability, reactivity, toxicity, or corrosivity per 40 CFR 261 Subpart C. In 1990, EPA revised the toxicity characteristic and as a result, became aware that certain CFCs may exhibit the toxicity characteristic. On February 13, 1991, the Agency issued an exclusion from the RCRA hazardous waste regulations for CFCs used as refrigerants, provided the refrigerant is reclaimed for further use. Most non-exempt substitute refrigerants are not listed nor do they exhibit any characteristics of a hazardous waste and therefore, are not considered hazardous wastes when they are recovered and reclaimed. However, some refrigerants are flammable (
EPA is also finalizing revisions in this rule that consolidate provisions related to refrigerant reclaimers into a single section at § 82.164. This rule also clarifies what is required of the reclaimer. The prior regulations required a reclaimer to certify that he or she will meet a certain set of standards and engage in certain behaviors. The revised regulations require first, that a reclaimer meet those standards and behaviors and second, that they certify to having done so. EPA is making this revision to improve the clarity and enforceability of these provisions. EPA did not receive any comments on this proposal.
The prior regulations included all recordkeeping and reporting provisions in one section of subpart F (§ 82.166). While having all the provisions in one place can be useful, they are separated from the required practices specific to that regulated entity. This can create difficulty for the regulated community in finding what records they must keep and what reports they must make to remain in compliance with the section 608 requirements. To improve the readability of the recordkeeping and reporting provisions, EPA is moving the requirements that were in § 82.166 to the relevant section describing the required practices. The recordkeeping and reporting provisions that remain in § 82.166 relate to the leak repair provisions in § 82.156(i) that are effective until January 1, 2019.
EPA summarizes some of the key amended recordkeeping and reporting provisions for this rulemaking below and intends to prepare a guidance document for this rule that includes all of the recordkeeping and reporting requirements. Additional discussion of these provisions may be found in the section of this notice discussing the corresponding required practice. This summary is not exhaustive, so to determine all of recordkeeping requirements that apply to a particular requirement, you must consult the appropriate text in the revised regulations.
A summary of some key, revised recordkeeping requirements for subpart F is included here. Unless otherwise noted, all records must be maintained for at least three years.
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Reporting and notification are important components of the National Recycling and Emission Reduction Program and allow EPA to track compliance with the requirements. A summary of some key requirements is included here, and additional discussion may be found in other sections of this notice. Please consult the appropriate regulatory provision for a complete list of reporting and notification requirements. All of these reporting requirements are new for equipment containing non-exempt substitutes. Unless the information is claimed as confidential business information or as otherwise noted, all notifications must be submitted electronically to
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EPA proposed that the final rule become effective on January 1, 2017, with later compliance dates for specific provisions that stakeholders may need additional time to implement. The “effective date” is the date that the regulatory text in the Code of Federal Regulations at 40 CFR part 82, subpart F will change. Unless otherwise specified, it is also the date by which the regulated community must comply with the revised regulation. Additional “compliance dates” are the dates by which the regulated community must comply with specific provisions of the revised regulation.
One commenter stated that January 1, 2017, is too aggressive a compliance date, given the length of time needed to issue the final rule and the rule's size and complexity. EPA responds that while the Agency is finalizing an effective date of January 1, 2017, as proposed, it is also establishing later compliance dates for some new provisions as well as for the application of some existing provisions to non-exempt substitutes. Where a later compliance date applies, the revised regulations explicitly specify that later compliance date.
The existing provisions related to ODS that were not substantively modified by the rule continue to apply with respect to ODS. For minor changes to existing ODS provisions, the compliance date is the same as the effective date of the rule. Provisions in this final rule for which there is no delayed compliance date with respect to ODS include the sales restriction, technician certification requirements, safe disposal requirements, evacuation requirements, restriction on the sale of used refrigerant, requirement that appliances include a process stub or servicing aperture, and the recordkeeping associated with those provisions. While in most instances this
This rule establishes a compliance date of January 1, 2018, for many provisions that are newly applicable to substitute refrigerants. These include the sales restriction, technician certification requirements, safe disposal requirements, evacuation requirements, and the recordkeeping associated with those provisions. The new requirement that small cans of substitute MVAC refrigerant be equipped with self-sealing valves will also apply as of January 1, 2018. In addition, this rule establishes a compliance date of January 1, 2018, for the new recordkeeping requirement associated with the disposal of appliances containing more than five and less than 50 pounds of either ODS or non-exempt substitute refrigerant.
Lastly, this rule establishes a compliance date of January 1, 2019, for the revised leak repair provisions, regardless of whether the appliance contains an ODS or a non-exempt substitute refrigerant.
The following sections discuss EPA's rationale for these staggered compliance dates.
EPA proposed January 1, 2017, as the compliance date for the sales restriction of all refrigerant (non-exempt substitutes or ODS). EPA also proposed to require that small cans of MVAC refrigerant be manufactured with self-sealing valves by one year from the publication of the final rule and that the sale of small cans without self-sealing valves cease by two years from publication of the final rule.
EPA is finalizing a compliance date of January 1, 2018, for the sales restriction as applied to non-exempt substitute refrigerants. Changes related to the sales restriction, as applied to ODS, apply January 1, 2017, as proposed. EPA is also finalizing a compliance date of January 1, 2018, to equip small cans with a self-sealing valve. EPA is not finalizing a sell-through requirement in this rule.
EPA is delaying the compliance date for the sales restriction so that it matches the compliance dates for other aspects of the rule related to sales of non-exempt substitute refrigerants. Specifically, EPA proposed one year from the date of publication of the final rule as the date by which technicians working with appliances containing non-exempt substitutes must be certified and the date by which small cans of MVAC refrigerant must be equipped with a self-sealing valve. As discussed below, EPA is finalizing January 1, 2018, as the compliance date for both of those provisions. To minimize potential conflicts by having different compliance dates, EPA is extending the compliance date for the sales restriction of substitute refrigerants to January 1, 2018.
With regards to small cans of MVAC refrigerant, manufacturers, distributors and retailers of automotive refrigerant supported the proposed “manufacture-by” date of one year from publication of the final rule, but commented that they oppose a sell-through date for small cans that do not have self-sealing valves. They commented that such a requirement would be inefficient, burdensome, costly, and environmentally problematic. It would require all retailers to know of the requirement and establish processes for returning unsold cans back to the manufacturer for destruction. More likely, the cans may be improperly disposed of, which would negate the environmental benefit of the new provisions. One commenter stated that a “manufacture-by” date would shift EPA's burden in ensuring compliance from a few manufacturers to thousands of retailers. Furthermore, commenters cited EPA's July 2015 SNAP rule (80 FR 42901; July 20, 2015) which listed HFC-134a as unacceptable for use as an aerosol as of a “manufacture-by” date, rather than a “sell-by” date. CARB commented on EPA's proposal for a two-year sell-through period that a one-year sell-through period has been found to be acceptable in their experience.
EPA responds that to allow all entities in the distribution chain time to plan for and communicate changes to the sales restriction on non-exempt substitute refrigerants, as well as the requirement for self-sealing valves on small cans, EPA is finalizing a sales restriction date and “manufacture-by” or “import-by” date of January 1, 2018. This will provides slightly more time than one year from publication of the final rule, which EPA proposed for the self-sealing valve requirement. Generally speaking, EPA has attempted to simplify the compliance dates so they do not fall in the middle of a month or during the middle of the cooling season.
In response to the comments received on EPA's proposal to allow small cans manufactured and placed into initial inventory or imported before that date to be sold for one additional year, EPA is not finalizing the sell-through requirement and is finalizing only a date by which small cans must be manufactured or imported with a self-sealing valve. EPA agrees that this is the least-burdensome option and that it avoids the potential for any unintended consequences of a “sell-by” date.
EPA proposed that the extension of the requirements for the recovery of non-exempt substitute refrigerant prior to disposal/recycling of small appliances, MVACs, and MVAC-like appliances take effect one year from publication of the final rule. EPA proposed that changes related to ODS equipment be effective January 1, 2017.
One commenter supported the proposed one-year extension to the compliance date for substitute refrigerants. EPA is finalizing a compliance date of January 1, 2018, for the extension to non-exempt substitute refrigerants. This will provide sufficient time for final disposers such as scrap recyclers to learn about the extension to non-exempt substitutes and make any adjustments needed to start maintaining records associated with disposal of appliances containing non-exempt substitutes. Using January 1, 2018, rather than one year from publication will also make communicating the compliance date for the rule easier.
Because EPA is not making substantive changes to the existing requirements for appliances containing ODS, EPA does not expect that final disposers will need extra time to adjust to the updates in this rule for those appliances. Accordingly, EPA is finalizing a compliance date for ODS appliances of January 1, 2017.
EPA proposed that the extension of the requirements related to the evacuation of non-exempt substitute refrigerants before the maintenance, servicing, repair, or disposal of appliances apply one year from publication of the final rule. EPA proposed that changes related to ODS equipment apply January 1, 2017.
Two commenters supported the proposed one year extension to the compliance date for non-exempt substitutes. Another commenter requested two years on the ground that
EPA is finalizing a compliance date of January 1, 2018, for the extension of the requirements to appliances containing non-exempt refrigerants. This will provide affected entities time to learn about the extension and make any adjustments needed to apply the required practices to the evacuation of appliances containing non-exempt substitutes. Because EPA is not making substantive changes to the existing requirements for appliances containing ODS, EPA does not expect that affected entities will need extra time to adjust to the updates in this rule for those appliances. Accordingly, EPA is finalizing a compliance date for ODS appliances of January 1, 2017.
EPA is establishing a delayed compliance date of January 1, 2018, for the new requirement to keep records upon disposal of appliances containing either a class I, class II, or non-exempt substitute refrigerant. This is slightly more than one year from publication of the final rule, which was what EPA proposed. The delayed compliance date will allow affected entities to establish a recordkeeping program to track the amount of refrigerant recovered from appliances that are disposed of in the field. EPA expects that the same amount of time will be needed for ODS and non-ODS appliances because this is a new requirement, not an update to an existing requirement.
This rule makes significant revisions to the leak repair provisions, including lowering the leak rates, requiring leak repair verification tests on new types of equipment, and modifying the recordkeeping and reporting requirements. In addition, owners and operators of appliances using non-exempt substitute refrigerants that were previously not covered by any subpart F required practices will have to familiarize themselves with the requirements. EPA is therefore establishing a later compliance date for the appliance maintenance and leak repair requirements than for most other provisions.
EPA proposed a compliance date 18 months from publication of the final rule. One commenter suggested that EPA shorten the compliance date to 12 months and two commenters agreed that it should be at minimum 18 months. Five commenters recommended more than 18 months, with the longest extensions ranging from 24 to 36 months after the publication of the final rule. These commenters stated that later dates would decrease the costs of compliance and give companies adequate time to train employees and update current systems to meet the requirements of the rule. Extending the compliance dates would also allow more time for owners or operators to bring equipment up to the new standards, and avoid having to potentially conduct numerous repairs or replacements at once. Commenters who supported a 36-month extension noted constraints with the federal budget cycle and acquisition requirements or referred to Maximum Achievable Control Technology rules that typically provide three years to comply.
Because the leak repair provisions already provide the opportunity for extensions for delays caused by the federal agency appropriations and/or procurement process, EPA disagrees with federal agencies requesting a 36 month extension to the compliance date. EPA agrees with commenters that additional time may be needed to understand the regulations and to make repairs on systems that have not previously been subject to the subpart F required practices. Therefore, EPA is establishing a compliance date of January 1, 2019. This date is two years from the effective date, and more than 24 months from publication of the final rule. This is sufficient time for owners and operators of appliances with 50 or more pounds of refrigerant to learn about the updated requirements; update systems, standard operating procedures, and training materials to best administer the requirements; and fix leakier systems.
Until January 1, 2019, the leak repair provisions at § 82.156(i) and the associated recordkeeping requirements at § 82.166 continue to apply as specified to appliances containing ODS refrigerant. Those leak repair provisions use terminology contained in the definitions as they existed prior to this rulemaking. EPA has added those unmodified definitions to § 82.156(j) for the purposes of implementing § 82.156(i) until the new provisions take effect January 1, 2019.
EPA proposed that the standards for recovery and recycling equipment apply to the manufacture and import of equipment for non-exempt substitutes as of January 1, 2017. One commenter requested additional time on the ground that recovery and recycling equipment may need to be modified to meet the requirements of the final rule. EPA responds that the Agency is not requiring that existing recovery and/or recycling equipment be modified or replaced with new equipment certified for use with non-exempt substitute refrigerants. Rather, EPA is requiring only that
EPA proposed that technicians be certified to handle non-exempt substitute refrigerants by one year from publication of the final rule. EPA proposed that changes related to ODS apply January 1, 2017.
One commenter supported the one year extension to the compliance date for non-exempt substitute refrigerants. Another commenter requested two years so as to allow time for certifying organizations to write and review the certification test questions as well as train, or re-train, technicians on that new material.
EPA is establishing a compliance date of January 1, 2018, for technicians to be certified to handle non-exempt substitute refrigerants. This is slightly more than the proposal of one year from publication of the final rule. This will provide time for EPA to update the test bank with questions related to non-exempt substitute refrigerants and for certifying organizations to update their testing materials to use the new questions. EPA does not anticipate that a two year extension would be necessary because HVACR contractors are generally working on both ODS refrigerants and non-exempt substitute refrigerants, and there is not likely to be a rush of contractors needing to be certified.
EPA is also finalizing the compliance dates for the publication of lists of certified technicians as proposed. As such, any technician certified on or after January 1, 2017, must be included in a publicly accessible list of certified technicians or provided the ability to opt out. Technician certification programs must make these lists available starting January 1, 2018.
EPA requested input on other aspects of the National Recycling and Emission Reduction Program that might be addressed in a future rulemaking. Specifically EPA requested feedback on (1) establishing a voluntary program for
For the reasons explained in Section III of this preamble, EPA considered economic factors in the development of this rule. EPA considered the costs of different actions that would achieve the goals of this rule to individual entities and the United States economy as a whole. While selecting regulatory actions that would achieve the goals of this rule, EPA elected to consider the costs of different actions to individual entities and the United States economy as a whole. Many commenters claimed that the benefits of the proposed regulatory provisions do not justify the costs, while four comments supported the cost effectiveness of the proposed rule. EPA has taken these comments into consideration and is finalizing several provisions that will be less burdensome than proposed. This section provides a brief overview of how the Agency calculated costs and then discusses major revisions to the final rule that affect EPA's economic analysis. A full description of the cost analyses is included in the technical support document
To estimate the incremental costs of the regulatory revisions, the Agency developed a set of model entities with a distribution of different model facilities, each of which could contain a set of model appliances. This set of model entities was used to represent the potentially affected entities in a variety of economic sectors in the United States, and they were developed based on EPA's Vintaging Model and cross-checked with the 2013 dataset of repair records developed under California's RMP. Each model entity reflects information about the typical number of facilities in a given sector and size category and the number of pieces of equipment in each equipment category that are likely to be owned and/or operated by each facility. By combining the model entities with economic data on potentially affected industries from the United States Census, EPA obtained a model for the potentially affected population. By applying the costs of leak inspections, repairs, recordkeeping and reporting, self-sealing cans for MVAC servicing, and other regulatory revisions to this population, EPA estimated the costs to individual entities and the total cost to the economy.
Some regulatory revisions in this action, such as providing extensions to owners or operators of comfort cooling and commercial refrigeration before having to replace leaking appliances reduce the cost of compliance to owners of ODS-containing equipment. These reductions were included in the incremental cost of the action.
As detailed more fully in the technical support document, the rulemaking includes new compliance costs of approximately $75.5 million split into approximately $32.5 million for owners and operators of equipment containing ODS and $43 million in non-ODS systems. Offsetting the new compliance costs are reductions in cost due to the removal of some regulatory requirements and increasing flexibility for repairs. These offsetting costs total $51 million, all related to equipment containing ODS. Taken together (the new compliance costs less the offsetting costs), EPA estimates that the net total cost to comply with the requirements of this final rule is $24.5 million per year (Table 3 shows these net costs at both the rule component level and for the total rule).
Some regulatory revisions, by reducing the amount of refrigerant lost to leaks, also result in savings for equipment owners or operators of the cost of purchasing replacement refrigerant. EPA estimates that affected entities would avoid spending over $44 million in refrigerant purchases alone due to the regulatory revisions. The compliance costs and refrigerant savings combined are estimated to be savings of $19.6 million per year. Furthermore, costs could additionally be lower because appliances running with the correct amount of refrigerant are generally more energy efficient to operate and last longer.
Several commenters questioned the validity of EPA's cost estimates and some provided examples of costs from their own business/organizations. One commenter said that, given the amount of paperwork and added compliance requirements in the proposed rule, the cost estimates are implausibly low and call into question the fundamental integrity of the Agency's economic analysis. Another said that they would estimate the cost to implement the new requirements to be well in excess of $100 million just to repair and potentially replace IPR systems, noting that the replacement of a single complex IPR system can be as high as $10 million.
EPA responds that the aggregate costs and savings for the economy as a whole would not be expected to be distributed evenly across affected entities. For example, owners of ODS-containing equipment with low leak rates might only incur costs for recordkeeping. On the other hand, owners of HFC-containing equipment with high leak rates might incur costs of repairing leaks, though they would also realize savings due to reduced refrigerant purchases. Owners of ODS-containing comfort cooling or commercial refrigeration appliance with high leak rates may also incur costs of repairing leaks but also substantial cost savings by not having to retrofit or retire the appliance if unable to repair within 30 days, given the extensions provided in the final rule.
Several commenters claimed that requiring all systems to have annual or quarterly leak inspections would impose significant costs on owners of all systems including those systems that do not leak or leak very little. One commenter, using their estimate for the cost of each leak inspection of a particular facility's appliances, when taken quarterly across some 5,200 retail stores and supporting business units, stated that the impact on their company would exceed $10 million. Another commenter called quarterly leak inspections redundant if it is already required that leaks be fixed in a timely manner. Two commenters supported leak inspections and trade group supported periodic leak inspections as a proactive means to detect leaks, reduce refrigerant emissions, and maintain energy efficiency of equipment.
The Agency responds that a proactive plan of maintenance leads to reduced emissions of refrigerant and is part of the best practices for operation of these systems. Discussions with members of industry and reports from the GreenChill program support the effectiveness of a program of regular inspections to lower average leak rates. However, to allow for flexibility in how system owners and operators implement their refrigeration management programs, especially for the least leaky equipment, EPA is not finalizing a requirement that all systems undergo periodic leak inspections. Only systems that show a history of excessive emissions by exceeding the leak rate threshold will require periodic inspections, and then only for a limited time if the leak rate of the system is addressed effectively. This will reduce the burden on owners of systems that are not responsible for emissions, while focusing attention on systems that require it. EPA estimates that this will affect 282,000 appliances, compared to approximately 1.5 million under the proposed rule.
EPA's analysis of the costs of leak inspection used the median hourly rate for heating, air-conditioning, and refrigeration mechanics and installers provided by the Bureau of Labor Statistics, along with an additional 110% for overhead. EPA assumed that leak inspections could be carried out quickly because the proposal allowed employees and not certified technicians to conduct the inspections. However, as discussed previously, a number of stakeholders claimed that inspections by employees not specialized in refrigeration would be far less effective and pointed out that the standard practice for many entities is to hire technicians for inspections. EPA is requiring in this final rule that leak inspections be conducted by certified technicians. EPA's final analysis continues to use the average rate provided by the Bureau of Labor Statistics but has increased the number of hours for each inspection.
Several commenters said that the costs of completely replacing a system if it leaked more than 75 percent of its full charge in two consecutive years were very high, and that these costs would not necessarily fall on those whose poor maintenance practices allowed for excessive emissions. They also commented that the provision was inefficient because all of the system components would need to be replaced, even those that were known not to be leaking, imposing additional costs with no additional benefit.
In response to the potential significant costs that commenters said the proposed “chronic leaker” provision would incur, EPA is finalizing a modification of this provision that would instead require reporting to EPA rather than retirement
Two commenters said that requiring all leaks be fixed after a system exceeds the threshold leak rate would lead to high costs with diminishing returns as smaller and smaller leaks were repaired.
EPA maintains that once a system has been evacuated for repair it is a best practice to repair any significant leaks. Doing so makes financial sense because allowing leaks to continue leads to the purchase of more refrigerant, reduced energy efficiency, possible increased service costs if the system must be shut down and repaired again, and increased risk of loss of cooling. However, EPA agrees that some leaks may allow very small amounts of refrigerant to escape and that some leaks are difficult to access or repair. Therefore, taking into account the comments, EPA is not finalizing the requirement that all identified leaks be repaired.
Two commenters claimed that lowering the maximum leak rate for IPR systems to 20 percent would lead to significant economic burden for some businesses, and one of whom said that EPA has not provided adequate benefits to justify this requirement.
EPA has estimated that lowering the maximum rate at which systems may be allowed to leak perpetually without being repaired protects the environment by reducing emissions of pollutants. EPA recognizes that maintenance of IPR systems presents particular challenges. These systems are often very large and complex, making finding leaks more difficult. They can also be extremely costly to shut down to allow for repairs. Therefore, in consideration of comments and other feedback from stakeholders, the Agency is finalizing a leak rate of 30 percent for IPR systems. While this will reduce benefits, we hope to strike a balance between the costs and benefits of this provision that will allow greater flexibility in the management of these systems. Under the proposed leak rate of 20 percent, the EPA estimates benefits of 0.63 MMTCO
One commenter stated that there is substantial uncertainty in the transition pathway away from HFCs due to EPA's SNAP rule that changed the listing status for certain substitute refrigerants (80 FR 42870) (“SNAP Program Status Change Rule”). The commenter encouraged EPA to consider a wider range of possible baseline futures when calculating the 2020 and 2025 benefits of the rule.
EPA responds that the Agency has considered that many end users will change the ODS substitutes being used because of the SNAP rule and EPA considered such change when estimating the benefits of this final action. EPA assumed transitions away from substitutes that are no longer acceptable in some end-uses, most notably in commercial refrigeration based on the most likely scenario detailed in
Under the Small Business Regulatory Enforcement Fairness Act (SBREFA), federal agencies must consider the effects regulations may have on small entities. If a rule may have a significant economic impact on a substantial number of small entities (SISNOSE), the Agency would be required to take certain steps to ensure that the interests of small entities were represented in the rulemaking process. To determine if this was necessary, EPA used the model entity analysis to ascertain the likelihood that the revisions would have a SISNOSE. EPA estimates that approximately 740 of the approximately 854,580 affected small businesses could incur costs in excess of 1 percent of annual sales and that fewer than 80 small businesses could incur costs in excess of 3 percent of annual sales. These levels are below the thresholds used in other Title VI rulemakings under which it can be presumed that an action will have no SISNOSE. Nevertheless, EPA consulted numerous stakeholders, including small businesses, in the development of this rule.
The full description of the cost analyses, including sensitivity analyses of key assumptions and alternate options, is included in the technical support document
This action is a significant regulatory action that was submitted to OMB for review. This action was deemed to raise novel legal or policy issues. Any changes made in response to OMB recommendations have been documented in the docket. EPA prepared an economic analysis of the potential costs and benefits associated with this action. This analysis is summarized in Section VI of the notice and is available in the docket.
The information collection activities in this rule have been submitted for approval to the Office of Management and Budget (OMB) under the PRA. The Information Collection Request (ICR) document that EPA prepared has been assigned EPA ICR number 1626.15. You can find a copy of the ICR in the docket for this rule, and it is briefly summarized here. The information collection requirements are not enforceable until OMB approves them.
All recordkeeping and reporting requirements under this program are specifically described in Section IV.L of this notice. In order to facilitate compliance with and enforce the refrigerant management requirements of section 608 of the CAA, EPA requires reporting and recordkeeping by technicians, technician certification programs, refrigerant recovery/recycling equipment testing organizations, refrigerant wholesalers and purchasers, refrigerant reclaimers, refrigeration and air-conditioning equipment owners, and other establishments that perform
Much of this burden is already covered by the existing requirements in 40 CFR part 82, subpart F, and the existing ICR, which was last approved by OMB in December 2014. The OMB control number for this information collection is 2060-0256.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9. When OMB approves this ICR, the Agency will announce that approval in the
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. The small entities subject to the requirements of this action are businesses and small governmental jurisdictions that own or service comfort cooling, commercial refrigeration, or IPR equipment. EPA estimates that approximately 740 of the approximately 854,580 affected small businesses could incur costs in excess of 1 percent of annual sales and that fewer than 80 small businesses could incur costs in excess of 3 percent of annual sales. These levels are below the thresholds under which it can be presumed that an action will have no SISNOSE, as used in other Title VI rulemakings. Details of this analysis are presented in the
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This rule supplements the statutory self-effectuating prohibition against venting refrigerants by ensuring that certain service practices are conducted that reduce the emissions of ozone-depleting refrigerants and their substitutes. For example, this rule strengthens the leak repair requirements, establishes recordkeeping requirements for the disposal of appliances containing more than five and less than 50 pounds of refrigerant, and modifies the technician certification program.
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 rule does not significantly or uniquely affect the communities of Indian tribal governments. This rule supplements the statutory self-effectuating prohibition against venting refrigerants by ensuring that certain service practices are conducted that reduce the emissions of ozone-depleting refrigerants and their substitutes. For example, this rule strengthens the leak repair requirements, establishes recordkeeping requirements for the disposal of appliances containing more than five and less than 50 pounds of refrigerant, and modifies the technician certification program. Thus, Executive Order 13175 does not apply to this action.
This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is not economically significant as defined in Executive Order 12866. Nonetheless, the environmental health or safety risk addressed by this action may have a disproportionate effect on children. Depletion of stratospheric ozone results in greater transmission of the sun's ultraviolet (UV) radiation to the earth's surface. The following studies describe the effects of excessive exposure to UV radiation on children: (1) Westerdahl J, Olsson H, Ingvar C. “At what age do sunburn episodes play a crucial role for the development of malignant melanoma,” Eur J Cancer 1994: 30A: 1647-54; (2) Elwood JM Japson J. “Melanoma and sun exposure: an overview of published studies,” Int J Cancer 1997; 73:198-203; (3) Armstrong BK, “Melanoma: childhood or lifelong sun exposure,” In: Grobb JJ, Stern RS Mackie RM, Weinstock WA, eds. “Epidemiology, causes and prevention of skin diseases,” 1st ed. London, England: Blackwell Science, 1997: 63-6; (4) Whiteman D., Green A. “Melanoma and Sunburn,” Cancer Causes Control, 1994: 5:564-72; (5) Heenan, PJ. “Does intermittent sun exposure cause basal cell carcinoma? A case control study in Western Australia,” Int J Cancer 1995; 60: 489-94; (6) Gallagher, RP, Hill, GB, Bajdik, CD, et al. “Sunlight exposure, pigmentary factors, and risk of nonmelanocytic skin cancer I, Basal cell carcinoma,” Arch Dermatol 1995; 131: 157-63; (7) Armstrong, DK. “How sun exposure causes skin cancer: an epidemiological perspective,” Prevention of Skin Cancer. 2004. 89-116.
This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution or use of energy.
This action involves technical standards. In some instances, EPA is deciding to use a modified version of an industry standard for purposes of this rule; in others, EPA is deciding to use an industry standard by reference exactly as written.
EPA is incorporating by reference UL 1963, Supplement SB,
EPA is incorporating by reference standards referenced in AHRI Standard 700-2016. Specifically, these standards are:
EPA is incorporating by reference standards referenced in AHRI Standard 740-2016.
Specifically, these standards are:
EPA is not incorporating by reference California Air Resources Board,
At this time EPA is not finalizing an incorporation by reference for the ASHRAE terminology found at
EPA believes this action will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it affects the level of environmental protection equally for all affected populations. This rule amends the leak repair requirements for appliances using ozone-depleting substances, thereby protecting human health and the environment from increased amounts of UV radiation and increased incidence of skin cancer. The effects of exposure to UV radiation and the estimated reduction in emissions of ozone-depleting substances from this rule is contained in Section II.D.1 of this notice.
This action is subject to the CRA, and 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).
Environmental protection, Air pollution control, Chemicals, Incorporation by reference, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, the Environmental Protection Agency amends 40 CFR part 82 as follows:
42 U.S.C. 7414, 7601, 7671-7671q.
(a) The purpose of this subpart is to reduce emissions of class I and class II refrigerants and their non-exempt substitutes to the lowest achievable level by maximizing the recapture and recycling of such refrigerants during the maintenance, service, repair, and disposal of appliances and restricting the sale of refrigerants consisting in whole or in part of a class I or class II ozone-depleting substance or their non-exempt substitutes in accordance with Title VI of the Clean Air Act.
(b) This subpart applies to any person maintaining, servicing, or repairing appliances containing class I, class II or non-exempt substitute refrigerants. This subpart also applies to persons disposing of such appliances (including small appliances and motor vehicle air conditioners), refrigerant reclaimers, technician certifying programs, appliance owners and operators, manufacturers of appliances, manufacturers of recovery and/or recycling equipment, approved recovery and/or recycling equipment testing organizations, and persons buying, selling, or offering to sell class I, class II, or non-exempt substitute refrigerants.
The revisions and additions to read as follows:
As used in this subpart, the term:
(1) The discharge, deposit, dumping or placing of any discarded appliance into or on any land or water;
(2) The disassembly of any appliance for discharge, deposit, dumping or placing of its discarded component parts into or on any land or water;
(3) The vandalism of any appliance such that the refrigerant is released into the environment or would be released into the environment if it had not been recovered prior to the destructive activity;
(4) The disassembly of any appliance for reuse of its component parts; or
(5) The recycling of any appliance for scrap.
(1) Use of the equipment manufacturer's determination of the full charge;
(2) Use of appropriate calculations based on component sizes, density of refrigerant, volume of piping, and other relevant considerations;
(3) Use of actual measurements of the amount of refrigerant added to or evacuated from the appliance, including for seasonal variances; and/or
(4) Use of an established range based on the best available data regarding the normal operating characteristics and conditions for the appliance, where the midpoint of the range will serve as the full charge.
(1) Annualizing Method. (i) Step 1. Take the number of pounds of refrigerant added to the appliance to return it to a full charge, whether in one addition or if multiple additions related to same leak, and divide it by the number of pounds of refrigerant the appliance normally contains at full charge;
(ii) Step 2. Take the shorter of the number of days that have passed since the last day refrigerant was added or 365 days and divide that number by 365 days;
(iii) Step 3. Take the number calculated in Step 1 and divide it by the number calculated in Step 2; and
(iv) Step 4. Multiply the number calculated in Step 3 by 100 to calculate a percentage. This method is summarized in the following formula:
(2) Rolling Average Method. (i) Step 1. Take the sum of the pounds of refrigerant added to the appliance over the previous 365-day period (or over the period that has passed since the last successful follow-up verification test
(ii) Step 2. Divide the result of Step 1 by the pounds of refrigerant the appliance normally contains at full charge; and
(iii) Step 3. Multiply the result of Step 2 by 100 to obtain a percentage. This method is summarized in the following formula:
(a)
(i) Carbon dioxide in any application;
(ii) Nitrogen in any application;
(iii) Water in any application;
(iv) Ammonia in commercial or industrial process refrigeration or in absorption units;
(v) Chlorine in industrial process refrigeration (processing of chlorine and chlorine compounds);
(vi) Hydrocarbons in industrial process refrigeration (processing of hydrocarbons);
(vii) Ethane (R-170) in very low temperature refrigeration equipment and equipment for non-mechanical heat transfer;
(viii) Propane (R-290) in retail food refrigerators and freezers (stand-alone units only); household refrigerators, freezers, and combination refrigerators and freezers; self-contained room air conditioners for residential and light commercial air-conditioning; heat pumps; and vending machines;
(ix) Isobutane (R-600a) in retail food refrigerators and freezers (stand-alone units only); household refrigerators, freezers, and combination refrigerators and freezers; and vending machines;
(x) R-441A in retail food refrigerators and freezers (stand-alone units only); household refrigerators, freezers, and combination refrigerators and freezers; self-contained room air conditioners for residential and light commercial air-conditioning; heat pumps; and vending machines.
(2)
(i) The applicable practices in § 82.155, § 82.156, and § 82.157 are observed, recovery and/or recycling machines that meet the requirements in § 82.158 are used whenever refrigerant is removed from an appliance, the technician certification provisions in § 82.161 are observed, and the reclamation requirements in § 82.164 are observed; or
(ii) The requirements in subpart B of this part are observed.
(3) The knowing release of a class I or class II refrigerant or a non-exempt substitute refrigerant after its recovery from an appliance is a violation of the venting prohibition.
(b) No person may maintain, service, repair, or dispose of an appliance containing a class I or class II refrigerant or a non-exempt substitute refrigerant without:
(1) Observing the applicable practices in § 82.155, § 82.156, and § 82.157; and
(2) Using recovery and/or recycling equipment that is certified for that type of refrigerant and appliance under § 82.158.
(c)
(i) The buyer has been certified as a Type I, Type II, Type III, or Universal technician under § 82.161;
(ii) The buyer employs at least one technician who is certified as a Type I, Type II, Type III, or Universal technician under § 82.161 and provides proof of such to the seller;
(iii) The buyer has been certified in accordance with 40 CFR part 82, subpart B and the refrigerant is acceptable for use in MVACs under 40 CFR part 82, subpart G;
(iv) The buyer employs at least one person who is certified under 40 CFR part 82, subpart B, and provides proof of such to the seller and the refrigerant is acceptable for use in MVACs under 40 CFR part 82, subpart G. Nothing in this provision relieves persons of the requirements of § 82.34(b) or § 82.42(b);
(v) The refrigerant is sold only for eventual resale to persons certified under § 82.161 or 40 CFR part 82, subpart B or to appliance manufacturers (
(vi) The refrigerant is sold to an appliance manufacturer;
(vii) The refrigerant is contained in an appliance with a fully assembled refrigerant circuit or an appliance component;
(viii) The refrigerant is charged into an appliance by a certified technician or an apprentice during maintenance, service, or repair of the appliance; or
(ix) The non-exempt substitute refrigerant is intended for use in an MVAC and is sold in a container designed to hold two pounds or less of refrigerant, has a unique fitting, and has a self-sealing valve.
(2)
(i) Each container holding two pounds or less of non-exempt substitute refrigerant for use in an MVAC must be equipped with a single self-sealing valve that automatically closes and seals when not dispensing refrigerant.
(ii) The leakage rate from each container must not exceed 3.00 grams per year when the self-sealing valve is closed. This leakage rate applies to new, full containers as well as containers that may be partially full.
(iii) The leakage rate must be determined using the standards described in appendix E (incorporated by reference, see § 82.168).
(iv) All testing to demonstrate compliance with this paragraph must be conducted by an independent test laboratory in the United States. For purposes of this requirement, an independent test laboratory is one that is not owned, operated, or affiliated with the applicant certifying equipment and/or products.
(3)
(ii) Electronic or paper copies of all records described in appendix E must be maintained by manufacturers of containers holding two pounds or less of non-exempt substitute refrigerant for use in an MVAC to verify self-sealing valves meet the requirements specified in paragraph (c)(2) of this section. All records must be kept for three years after each purchase.
(d)
(1) Has been reclaimed by a person who has been certified as a reclaimer under § 82.164;
(2) was used only in an MVAC or MVAC-like appliance and is to be used only in an MVAC or MVAC-like appliance and recycled in accordance with 40 CFR part 82, subpart B;
(3) is contained in an appliance that is sold or offered for sale together with a fully assembled refrigerant circuit;
(4) is being transferred between or among a parent company and one or more of its subsidiaries, or between or among subsidiaries having the same parent company; or
(5) is being transferred between or among a Federal agency or department and a facility or facilities owned by the same Federal agency or department.
(e)
(2) No person may sell or distribute, or offer for sale or distribution, any small appliance (except appliances containing only refrigerants that have been exempted under paragraph (a)(1) of this section) unless it is equipped with a process stub to facilitate the removal of refrigerant at servicing and disposal.
(f)
(g) Rules stayed for consideration. Notwithstanding any other provisions of this subpart, the effectiveness of 40 CFR 82.154(c), only as it applies to refrigerant contained in appliances without fully assembled refrigerant circuits, is stayed from April 27, 1995, until EPA takes final action on its reconsideration of these provisions. EPA will publish any such final action in the
Until January 1, 2018, this section applies only to disposal of appliances containing class I and class II refrigerants. Starting on January 1, 2018, this section applies to disposal of appliances containing any class I or class II refrigerant or any non-exempt substitute refrigerant.
(a) Persons recovering refrigerant from a small appliance, MVAC, or MVAC-like appliance for purposes of disposal of these appliances must evacuate refrigerant to the levels in § 82.156(b) through (d) using recovery equipment that meets the standards in § 82.158(e) through (g), or 40 CFR part 82 subpart B, as applicable.
(b) The final processor—
(1) Recover any remaining refrigerant from the appliance in accordance with paragraph (a) of this section; or
(2) Verify using a signed statement or a contract that all refrigerant that had not leaked previously has been recovered from the appliance or shipment of appliances in accordance with paragraph (a) of this section. If using a signed statement, it must include the name and address of the person who recovered the refrigerant and the date the refrigerant was recovered. If using a signed contract between the supplier and the final processor, it must either state that the supplier will recover any remaining refrigerant from the appliance or shipment of appliances in accordance with paragraph (a) of this section prior to delivery or verify that the refrigerant had been properly recovered prior to receipt by the supplier.
(i) It is a violation of this subpart to accept a signed statement or contract if the person receiving the statement or contract knew or had reason to know that the signed statement or contract is false.
(ii) The final processor must notify suppliers of appliances that refrigerant must be properly recovered in accordance with paragraph (a) of this section before delivery of the items to the facility. The form of this notification may be signs, letters to suppliers, or other equivalent means.
(iii) If all the refrigerant has leaked out of the appliance, the final processor must obtain a signed statement that all the refrigerant in the appliance had leaked out prior to delivery to the final processor and recovery is not possible. “Leaked out” in this context means those situations in which the refrigerant has escaped because of system failures, accidents, or other unavoidable occurrences not caused by a person's
(c)
The revisions and additions to read as follows:
Until January 1, 2018, this section applies only to evacuation of refrigerant from appliances containing class I or class II refrigerants. Starting on January 1, 2018, this section applies to evacuation of refrigerant from appliances containing any class I or class II refrigerant or any non-exempt substitute refrigerant, excluding paragraph (i) of this section which applies only to appliances containing class I or class II refrigerants until January 1, 2019. Starting January 1, 2019, the provisions in § 82.157 apply in lieu of paragraph (i) of this section.
(a)
(1) If evacuation of the appliance to the atmosphere is not to be performed after completion of the maintenance, service, or repair, and if the maintenance, service, or repair is not major as defined at § 82.152, the appliance must:
(i) Be evacuated to a pressure no higher than 0 psig before it is opened if it is a medium-, high- or very high-pressure appliance;
(ii) Be pressurized to a pressure no higher than 0 psig before it is opened if it is a low-pressure appliance. Persons must cover openings when isolation is not possible. Persons pressurizing low-pressure appliances that use refrigerants with boiling points at or below 85 degrees Fahrenheit at 29.9 inches of mercury (standard atmospheric pressure), must not use methods such as nitrogen that require subsequent purging. Persons pressurizing low-pressure appliances that use refrigerants with boiling points above 85 degrees Fahrenheit at 29.9 inches of mercury, must use heat to raise the internal pressure of the appliance as much as possible, but may use nitrogen to raise the internal pressure of the appliance from the level attainable through use of heat to atmospheric pressure; or
(iii) For the purposes of oil changes, be evacuated or pressurized to a pressure no higher than 5 psig, before it is opened; or drain the oil into a system receiver to be evacuated or pressurized to a pressure no higher than 5 psig.
(2) If leaks in the appliance make evacuation to the levels in Table 1 unattainable or would substantially contaminate the refrigerant being recovered, persons opening or disposing of the appliance must:
(i) Isolate leaking from non-leaking components wherever possible;
(ii) Evacuate non-leaking components to be opened or disposed of to the levels specified in Table 1; and
(iii) Evacuate leaking components to be opened or disposed of to the lowest level that can be attained without substantially contaminating the refrigerant. This level may not exceed 0 psig.
(3)
(i) The company name, location of the appliance, date of recovery, and type of refrigerant recovered for each appliance;
(ii) The total quantity of refrigerant, by type, recovered from all disposed appliances in each calendar month; and
(iii) The quantity of refrigerant, by type, transferred for reclamation and/or destruction, the person to whom it was transferred, and the date of transfer.
(b)
(1) When using recovery equipment manufactured before November 15, 1993, recover 80 percent of the refrigerant in the small appliance; or
(2) When using recovery equipment manufactured on or after November 15, 1993, recover 90 percent of the refrigerant in the appliance when the compressor in the appliance is functioning, or 80 percent of the refrigerant in the appliance when the compressor in the appliance is not functioning; or
(3) Evacuate the appliance to four inches of mercury vacuum.
(c)
(d)
(e) System-dependent equipment may not be used with appliances with a full charge of more than 15 pounds of refrigerant, unless the system-dependent equipment is permanently attached to the appliance as a pump-out unit.
(f) Persons who maintain, service, repair, or dispose of only appliances that they own and that contain pump-out units are exempt from the requirement to use certified, self-contained recovery and/or recycling equipment.
(g) All recovery and/or recycling equipment must be used in accordance with the manufacturer's directions unless such directions conflict with the requirements of this subpart.
(h) Refrigerant may be returned to the appliance from which it is recovered or to another appliance owned by the same person without being recycled or reclaimed, unless the appliance is an MVAC or MVAC-like appliance.
(i) The provisions in this paragraph (i) apply to owners and operators of appliances containing 50 or more pounds of class I and class II refrigerants only until January 1, 2019. The definitions in paragraph (j) of this section apply for purposes of this paragraph (i) in lieu of the definitions in § 82.152.
(j)
(i) Use the equipment manufacturer's determination of the correct full charge for the equipment;
(ii) Determine the full charge by making appropriate calculations based on component sizes, density of refrigerant, volume of piping, and other relevant considerations;
(iii) Use actual measurements of the amount of refrigerant added or evacuated from the appliance; and/or
(iv) Use an established range based on the best available data regarding the normal operating characteristics and conditions for the appliance, where the midpoint of the range will serve as the full charge, and where records are maintained in accordance with § 82.166(q).
(i) Method 1. (A) Step 1. Take the number of pounds of refrigerant added to the appliance to return it to a full charge and divide it by the number of pounds of refrigerant the appliance normally contains at full charge;
(B) Step 2. Take the shorter of the number of days that have passed since the last day refrigerant was added or 365 days and divide that number by 365 days;
(C) Step 3. Take the number calculated in Step 1. and divide it by the number calculated in Step 2.; and
(D) Step 4. Multiply the number calculated in Step 3. by 100 to calculate a percentage. This method is summarized in the following formula:
(ii) Method 2. (A) Step 1. Take the sum of the quantity of refrigerant added to the appliance over the previous 365-day period (or over the period that has passed since leaks in the appliance were last repaired, if that period is less than one year),
(B) Step 2. Divide the result of Step 1. by the quantity (
(C) Step 3. Multiply the result of Step 2. by 100 to obtain a percentage. This method is summarized in the following formula:
(a)
(b)
(c)
(2) Leak Rates:
(i) 20 percent leak rate for commercial refrigeration equipment;
(ii) 30 percent leak rate for industrial process refrigeration equipment; and
(iii) 10 percent leak rate for comfort cooling appliances or other appliances with a full charge of 50 or more pounds of refrigerant not covered by (c)(2)(i) or (ii) of this section.
(d)
(1) A certified technician must conduct a leak inspection, as described in paragraph (g) of this section, to identify the location of leaks.
(2) Leaks must be repaired such that the leak rate is brought below the applicable leak rate. This must be confirmed by the leak rate calculation performed upon the next refrigerant addition. The leaks will be presumed to be repaired if there is no further refrigerant addition for 12 months after the repair or if the leak inspections required under paragraph (g) do not find any leaks in the appliance. Repair of leaks must be documented by both an initial and a follow-up verification test or tests.
(3) The time frames in paragraphs (d) through(f) of this section are temporarily suspended when an appliance is mothballed. The time will resume on the day additional refrigerant is added to the appliance (or component of an appliance if the leaking component was isolated).
(e)
(1)
(i) For repairs that can be completed without the need to open or evacuate the appliance, the test must be performed after the conclusion of the repair work and before any additional refrigerant is added to the appliance.
(ii) For repairs that require the evacuation of the appliance or portion of the appliance, the test must be performed before adding any refrigerant to the appliance.
(iii) If the initial verification test indicates that the repairs have not been successful, the owner or operator may conduct as many additional repairs and initial verification tests as needed within the applicable time period.
(2)
(i) A follow-up verification test must demonstrate that leaks where a repair attempt was made are repaired. If the follow-up verification test indicates that the repairs have not been successful, the owner or operator may conduct as many additional repairs and verification tests as needed to bring the appliance below the leak rate within the applicable time period and to verify the repairs.
(f)
(1) One or more of the following conditions must apply:
(i) The appliance is located in an area subject to radiological contamination or shutting down the appliance will directly lead to radiological contamination. Additional time is permitted to the extent needed to conduct and finish repairs in a safe working environment.
(ii) Requirements of other applicable Federal, state, or local regulations make a repair within 30 days (or 120 days if an industrial process shutdown is required) impossible. Additional time is permitted to the extent needed to comply with the pertinent regulations.
(iii) Components that must be replaced as part of the repair are not available within 30 days (or 120 days if an industrial process shutdown is required). Additional time is permitted up to 30 days after receiving delivery of the necessary components, not to exceed 180 days (or 270 days if an industrial process shutdown is required) from the date the appliance exceeded the applicable leak rate.
(2) Repairs to leaks that the technician has identified as significantly contributing to the exceedance of the leak rate and that do not require additional time must be completed and verified within the initial 30 day repair period (or 120 day repair period if an industrial process shutdown is required);
(3) The owner or operator must document all repair efforts and the reason for the inability to make the repair within the initial 30 day repair period (or 120 day repair period if an industrial process shutdown is required); and
(4) The owner or operator must request an extension from EPA at the address specified in paragraph (m) of this section within 30 days (or 120 days if an industrial process shutdown is required) of the appliance exceeding the applicable leak rate in paragraph (c) of this section. Extension requests must include: Identification and address of the facility; the name of the owner or operator of the appliance; the leak rate; the method used to determine the leak rate and full charge; the date the appliance exceeded the applicable leak rate; the location of leak(s) to the extent determined to date; any repair work that has been performed thus far, including the date that work was completed; the reasons why more than 30 days (or 120 days if an industrial process shutdown is required) are needed to complete the repair; and an estimate of when the work will be completed. If the estimated completion date is to be extended, a new estimated date of completion and documentation of the reason for that change must be submitted to EPA within 30 days of identifying that the completion date must be extended. The owner or operator must keep a dated copy of this submission.
(g)
(i) For commercial refrigeration and industrial process refrigeration appliances with a full charge of 500 or more pounds, leak inspections must be conducted once every three months until the owner or operator can demonstrate through the leak rate calculations required under paragraph (b) of this section that the appliance has not leaked in excess of the applicable leak rate for four quarters in a row.
(ii) For commercial refrigeration and industrial process refrigeration appliances with a full charge of 50 or more pounds but less than 500 pounds, leak inspections must be conducted once per calendar year until the owner or operator can demonstrate through the leak rate calculations required under paragraph (b) of this section that the appliance has not leaked in excess of the applicable leak rate for one year.
(iii) For comfort cooling appliances and other appliances not covered by paragraphs (g)(1)(i) and (ii) of this section, leak inspections must be conducted once per calendar year until the owner or operator can demonstrate through the leak rate calculations required under paragraph (b) of this section that the appliance has not leaked in excess of the applicable leak rate for one year.
(2) Leak inspections must be conducted by a certified technician using method(s) determined by the technician to be appropriate for that appliance.
(3) All visible and accessible components of an appliance must be inspected, with the following exceptions:
(i) Where components are insulated, under ice that forms on the outside of equipment, underground, behind walls, or are otherwise inaccessible;
(ii) Where personnel must be elevated more than two meters above a support surface; or
(iii) Where components are unsafe to inspect, as determined by site personnel.
(4) Quarterly or annual leak inspections are not required on appliances, or portions of appliances, continuously monitored by an automatic leak detection system that is audited or calibrated annually. An automatic leak detection system may directly detect refrigerant in air, monitor its surrounding in a manner other than detecting refrigerant concentrations in air, or monitor conditions of the appliance.
(i) For systems that directly detect the presence of a refrigerant in air, the system must:
(A) Only be used to monitor components located inside an enclosed building or structure;
(B) Have sensors or intakes placed so that they will continuously monitor the refrigerant concentrations in air in proximity to the compressor, evaporator, condenser, and other areas with a high potential for a refrigerant leak;
(C) Accurately detect a concentration level of 10 parts per million of vapor of the specific refrigerant or refrigerants used in the refrigeration appliance(s); and
(D) Alert the owner or operator when a refrigerant concentration of 100 parts per million of vapor of the specific refrigerant or refrigerants used in the refrigeration appliance(s) is reached.
(ii) For a system that monitors its surrounding in a manner other than detecting refrigerant concentrations in air or monitor conditions of the appliance, the system must automatically alert the owner or operator when measurements indicate a loss of 50 pounds of refrigerant or 10 percent of the full charge, whichever is less.
(iii) When automatic leak detection equipment is only being used to monitor portions of an appliance, the remainder of the appliance continues to be subject to any applicable leak inspection requirements.
(h)
(i) an appliance leaking above the applicable leak rate in paragraph (c) of this section if the owner or operator intends to retrofit or retire rather than repair the leak;
(ii) an appliance leaking above the applicable leak rate in paragraph (c) of this section if the owner or operator fails to take any action to identify or repair the leak; or
(iii) an appliance continues to leak above the applicable leak rate after having conducted the required repairs and verification tests under paragraphs (d) and (e) of this section.
(2) A retrofit or retirement plan must, at a minimum, contain the following information:
(i) Identification and location of the appliance;
(ii) Type and full charge of the refrigerant used in the appliance;
(iii) Type and full charge of the refrigerant to which the appliance will be converted, if retrofitted;
(iv) Itemized procedure for converting the appliance to a different refrigerant, including changes required for compatibility with the new substitute, if retrofitted;
(v) Plan for the disposition of recovered refrigerant;
(vi) Plan for the disposition of the appliance, if retired; and
(vii) A schedule, not to exceed one-year, for completion of the appliance retrofit or retirement.
(3) The retrofit or retirement plan must be signed by an authorized company official, dated, accessible at the site of the appliance in paper copy or electronic format, and available for EPA inspection upon request.
(4) All identified leaks must be repaired as part of any retrofit under such a plan.
(5)(i) Unless granted additional time, all work performed in accordance with the plan must be finished within one year of the plan's date (not to exceed 13 months from when the plan was required in paragraph (h)(1) of this section).
(ii) The owner or operator may request that EPA relieve it of the obligation to retrofit or retire an appliance if the owner or operator can establish within 180 days of the plan's date that the appliance no longer exceeds the applicable leak rate and if the owner or operator agrees in writing to repair all identified leaks within one year of the plan's date consistent with paragraph (h)(4) and (h)(5)(i) of this section. The owner or operator must submit to EPA the retrofit or retirement plan as well as the following information: The date that the requirement to develop a retrofit or retirement plan was triggered; the leak rate; the method used to determine the leak rate and full charge; the location of the leak(s) identified in the leak inspection; a description of repair work that has been completed; a description of repair work that has not been completed; a description of why the repair was not conducted within the time frames required under paragraphs (d) and (f) of this section; and a statement signed by an authorized official that all identified leaks will be repaired and an estimate of when those repairs will be completed (not to exceed one year from date of the plan). The request will be considered approved unless EPA notifies the owners or operators within 60 days of receipt of the request that it is not approved.
(i)
(1)
(2)
(i) Requirements of other applicable Federal, state, or local regulations make a retrofit or retirement within one year impossible. Additional time is permitted to the extent needed to comply with the pertinent regulations;
(ii) The new or the retrofitted equipment is custom-built as defined in this subpart and the supplier of the appliance or one of its components has quoted a delivery time of more than 30 weeks from when the order is placed. The appliance or appliance components must be installed within 120 days after receiving delivery of the necessary parts; or
(iii) After receiving an extension under paragraph (i)(2)(ii) of this section, owners or operators may request additional time if necessary to finish the retrofit or retirement of equipment. The request must be submitted to EPA before the end of the ninth month of the initial extension and must include the same information submitted for that extension, with any necessary revisions. A dated copy of the request must be available on-site in either electronic or paper copy. The request will be considered approved unless EPA notifies the owners or operators within 60 days of receipt of the request that it is not approved.
(3)
(i) A delivery time of more than 30 weeks from the beginning of the official procurement process is quoted due to complications presented by the Federal agency appropriations and/or procurement process;
(ii) The appliance is located in an area subject to radiological contamination and creating a safe working environment will require more than 30 weeks; or
(iii) After receiving a one-year extension under paragraphs (i)(3)(i) or (ii) of this section, additional time may be requested if necessary to finish the retrofit or retirement of equipment. The request must be submitted to EPA before the end of the ninth month of the one-year extension and must include the same information submitted for that one-year extension, with any necessary revisions. A dated copy of the request must be available on-site in either electronic or paper copy. The request will be considered approved unless EPA notifies the owners or operators within 60 days of receipt of the request that it is not approved.
(j)
(k)
(l)
(1) Owners or operators must determine the full charge of all appliances with 50 or more pounds of refrigerant and maintain the following information for each appliance until three years after the appliance is retired:
(i) The identification of the owner or operator of the appliance;
(ii) The address where the appliance is located;
(iii) The full charge of the appliance and the method for how the full charge was determined;
(iv) If using method 4 (using an established range) for determining full charge, records must include the range for the full charge of the appliance, its midpoint, and how the range was determined;
(v) Any revisions of the full charge, how they were determined, and the dates such revisions occurred.
(2) Owners or operators must maintain a record including the following information for each time an appliance with a full charge of 50 or more pounds is maintained, serviced, repaired, or disposed of, when applicable. If the maintenance, service, repair, or disposal is done by someone other than the owner or operator, that person must provide a record containing the following information, with the exception of (l)(2)(vii) and (viii) of this section, to the owner or operator:
(i) The identity and location of the appliance;
(ii) The date of the maintenance, service, repair, or disposal performed;
(iii) The part(s) of the appliance being maintained, serviced, repaired, or disposed;
(iv) The type of maintenance, service, repair, or disposal performed for each part;
(v) The name of the person performing the maintenance, service, repair, or disposal;
(vi) The amount and type of refrigerant added to, or in the case of disposal removed from, the appliance;
(vii) The full charge of the appliance; and
(viii) The leak rate and the method used to determine the leak rate (not applicable when disposing of the appliance, following a retrofit, installing a new appliance, or if the refrigerant addition qualifies as a seasonal variance).
(3) Owners or operators must keep records of leak inspections that include
(4) If using an automatic leak detection system, the owner or operator must maintain records regarding the installation and the annual audit and calibration of the system, a record of each date the monitoring system identified a leak, and the location of the leak.
(5) Owners or operators must maintain records of the dates and results of all initial and follow-up verification tests. Records must include the location of the appliance, the date(s) of the verification tests, the location(s) of all repaired leaks that were tested, the type(s) of verification test(s) used, and the results of those tests. Technicians conducting initial or follow-up verification tests must, upon conclusion of that service, provide the owner or operator of the appliance with documentation that meets these requirements.
(6) Owners or operators must maintain retrofit or retirement plans developed in accordance with paragraph (h) of this section.
(7) Owners or operators must maintain retrofit and/or extension requests submitted to EPA in accordance with paragraph (i) of this section.
(8) Owners or operators that suspend the deadlines in this section by mothballing an appliance must keep records documenting when the appliance was mothballed and when additional refrigerant was added to the appliance (or isolated component).
(9) Owners or operators who exclude purged refrigerants that are destroyed from annual leak rate calculations must maintain records to support the amount of refrigerant claimed as sent for destruction. Records must be based on a monitoring strategy that provides reliable data to demonstrate that the amount of refrigerant claimed to have been destroyed is not greater than the amount of refrigerant actually purged and destroyed and that the 98 percent or greater destruction efficiency is met. Records must include flow rate, quantity or concentration of the refrigerant in the vent stream, and periods of purge flow. Records must include:
(i) The identification of the facility and a contact person, including the address and telephone number;
(ii) A description of the appliance, focusing on aspects relevant to the purging of refrigerant and subsequent destruction;
(iii) A description of the methods used to determine the quantity of refrigerant sent for destruction and type of records that are being kept by the owners or operators where the appliance is located;
(iv) The frequency of monitoring and data-recording; and
(v) A description of the control device, and its destruction efficiency.
(10) Owners or operators that exclude additions of refrigerant due to seasonal variance from their leak rate calculation must maintain records stating that they are using the seasonal variance flexibility and documenting the amount added and removed under § 82.157(l)(2).
(11) Owners or operators that submit reports to EPA in accordance with paragraph (m) of this section must maintain copies of the submitted reports and any responses from EPA.
(m)
(1) Owners or operators must notify EPA at this address in accordance with paragraph (f) of this section when seeking an extension of time to complete repairs.
(2) Owners or operators must notify EPA at this address in accordance with paragraph (h)(5)(ii) of this section when seeking relief from the obligation to retrofit or retire an appliance.
(3) Owners or operators must notify EPA at this address in accordance with paragraph (i) of this section when seeking an extension of time to complete the retrofit or retirement of an appliance.
(4) Owners or operators must notify EPA at this address in accordance with paragraph (j) of this section for any appliance that leaks 125 percent or more of the full charge in a calendar year.
(5) When excluding purged refrigerants that are destroyed from annual leak rate calculations, owners or operators must notify EPA at this address within 60 days after the first time the exclusion is used by the facility where the appliance is located. The report must include the information included in paragraph (l)(9) of this section.
Starting January 1, 2017, this section applies to recovery and/or recycling equipment for use during the maintenance, service, repair, or disposal of appliances containing any class I or class II refrigerant or any non-exempt substitute refrigerant.
(a) No person may manufacture or import recovery and/or recycling equipment for use during the maintenance, service, repair, or disposal of appliances unless the equipment is certified in accordance with this section.
(b) No person may alter the design of certified refrigerant recovery and/or recycling equipment in a way that would affect the equipment's ability to meet the certification standards in this section without resubmitting the altered design for certification testing. Until it is tested and shown to meet the certification standards in this section, equipment so altered will be considered uncertified.
(c) Recovery and/or recycling equipment manufactured or imported before November 15, 1993, intended for use during the maintenance, service, repair, or disposal of appliances (except small appliances, MVACs, and MVAC-like appliances) will be considered certified if it is capable of achieving the level of evacuation specified in Table 2 of this section when tested using a properly calibrated pressure gauge.
(d) Manufacturers and importers of recovery and/or recycling equipment must have such equipment certified by an approved equipment testing organization as follows:
(1) Recovery and/or recycling equipment manufactured or imported on or after November 15, 1993, and before September 22, 2003, intended for use during the maintenance, service, repair, or disposal of appliances (except small appliances, MVACs, and MVAC-like appliances) must be certified by an approved equipment testing organization as being capable of achieving the level of evacuation specified in Table 2 of this section under the conditions of appendix B1 of this subpart (based upon the ARI Standard 740-1993,
(2) Recovery and/or recycling equipment manufactured or imported on or after September 22, 2003, and
(3) Recovery and/or recycling equipment manufactured or imported on or after January 1, 2017, intended for use during the maintenance, service, repair, or disposal of appliances (except small appliances, MVACs, and MVAC-like appliances) must be certified by an approved equipment testing organization as being capable of achieving the level of evacuation specified in Table 2 of this section under the conditions of appendix B3 (for non-flammable refrigerants) based upon AHRI Standard 740-2016 or appendix B4 (for flammable refrigerants) of this subpart.
(4) Recovery and/or recycling equipment whose recovery efficiency cannot be tested according to the procedures in appendix B1, B2, B3, or B4 of this subpart as applicable may be certified if an approved third-party testing organization adopts and performs a test that demonstrates, to the satisfaction of the Administrator, that the recovery efficiency of that equipment is equal to or better than that of equipment that:
(i) Is intended for use with the same type of appliance; and
(ii) Achieves the level of evacuation in Table 2. The manufacturer's instructions must specify how to achieve the required recovery efficiency, and the equipment must be tested when used according to these instructions.
(5) The equipment must meet the minimum requirements for certification under appendix B1, B2, B3, or B4 of this subpart as applicable.
(6) If the equipment is equipped with a noncondensables purge device, the equipment must not release more than 3 percent of the quantity of refrigerant being recycled through noncondensables purging under the conditions of appendix B1, B2, B3, or B4 of this subpart as applicable.
(7) The equipment must be equipped with low-loss fittings on all hoses.
(8) The equipment must have its liquid recovery rate and its vapor recovery rate measured under the conditions of appendix B1, B2, B3, or B4 as applicable, unless the equipment has no inherent liquid or vapor recovery rate.
(e)
(1) Equipment manufactured or imported before November 15, 1993, will be considered certified if it is capable of either recovering 80 percent of the refrigerant in the system, whether or not the compressor of the test stand is operational, or achieving a four-inch vacuum when tested using a properly calibrated pressure gauge.
(2) Equipment manufactured or imported on or after November 15, 1993, may also be certified if it is capable of achieving a four-inch vacuum under the conditions of appendix B1 of this subpart, based upon ARI Standard 740-1993.
(3) Equipment manufactured or imported on or after September 22, 2003, and before January 1, 2017, may also be certified if it is capable of achieving a four-inch vacuum under the conditions of appendix B2 of this subpart, based upon ARI Standard 740-1995.
(4) Equipment manufactured or imported on or after January 1, 2017, may also be certified if it is capable of achieving a four-inch vacuum under the conditions of appendix B3 of this subpart (for non-flammable refrigerants), based upon AHRI Standard 740-2016 or appendix B4 of this subpart (for flammable refrigerants), based upon both AHRI Standard 740-2016 and UL 1963, Supplement SB,
(5) Equipment used to evacuate any class I or class II refrigerant or any non-exempt substitute refrigerant from small
(f)
(2) Equipment manufactured or imported before November 15, 1993, intended for use during the maintenance, service, or repair of MVAC-like appliances must be capable of reducing the system pressure to 102 mm of mercury vacuum under the conditions of appendix A of subpart B of this part.
(g)
(h)
(2) The label must also show the date of manufacture and the serial number (if applicable) of the equipment. The label must be affixed in a readily visible or accessible location, be made of a material expected to last the lifetime of the equipment, present required information in a way that it is likely to remain legible for the lifetime of the equipment, and be affixed in such a way that it cannot be removed from the equipment without damage to the label.
(i)
(1) Retests of certified recovery and/or recycling equipment in accordance with paragraphs (d) and (e) of this section; or
(2) Inspections of recovery and/or recycling equipment at manufacturing facilities to ensure that each equipment model line that has been certified under this section continues to meet the certification criteria.
(j)
(k) Equipment that is advertised or marketed as “recycling equipment” must be capable of recycling the standard contaminated refrigerant sample of appendix B2, B3, or B4 of this subpart (as applicable) to the levels in the following table when tested under the conditions of appendix B2, B3 or B4 of this subpart:
(a) Any equipment testing organization may apply for approval by the Administrator to certify equipment under the standards in § 82.158 and appendices B2, B3, B4, or C of this subpart. Applications must be sent to
(b) Applications for approval must include:
(1) A list of equipment present at the organization that will be used for equipment testing.
(2) Verification of the organization's expertise in equipment testing and the technical experience of the organization's personnel.
(3) Verification of the organization's knowledge of the standards and recordkeeping and reporting requirements of this subpart.
(4) A description of the organization's program for verifying the performance of certified recovery and/or recycling equipment manufactured over the long term, specifying whether retests of equipment or inspections of equipment at manufacturing facilities will be used.
(5) Verification that the organization has no conflict of interest and receives no direct or indirect financial benefit from the outcome of certification testing.
(6) Agreement to allow the Administrator access to records and personnel to verify the information contained in the application.
(c) Organizations may not certify equipment before receiving approval from EPA. If approval is denied under this section, the Administrator must give written notice to the organization setting forth the basis for the determination.
(d) If an approved testing organization conducts certification tests in a way not consistent with the representations made in its application or with the provisions of this subpart, the Administrator may revoke approval in accordance with § 82.169. In such cases, the Administrator must give notice to the organization setting forth the basis for the determination.
(e)
(2) Approved equipment testing organizations must notify EPA at
(3) All records must be maintained for three years after the equipment is no longer offered for sale. Online lists must contain certified equipment until three years after that equipment is no longer offered for sale.
Until January 1, 2018, this section applies only to technicians and organizations certifying technicians that maintain, service, or repair appliances containing class I or class II refrigerants. Starting on January 1, 2018, this section applies to technicians and organizations certifying technicians that maintain, service, or repair appliances containing any class I or class II refrigerant or any non-exempt substitute refrigerant.
(a)
(i) Persons who maintain, service, or repair small appliances must be certified as Type I technicians.
(ii) Persons who maintain, service, repair, or dispose of medium-, high-, or very high-pressure appliances (except small appliances, MVACs, and MVAC-like appliances) must be certified as Type II technicians.
(iii) Persons who maintain, service, repair, or dispose of low-pressure appliances must be certified as Type III technicians.
(iv) Persons who maintain, service, repair, or dispose of all appliances described in paragraph (a)(1)(i) through (iii) of this section must be certified as Universal technicians.
(v) Technicians who maintain, service, or repair MVAC-like appliances must either be certified as Type II technicians or be certified in accordance with 40 CFR part 82, subpart B.
(vi) Persons who maintain, service, or repair MVAC appliances for consideration must be certified in accordance with 40 CFR part 82, subpart B.
(vii) Persons who dispose of small appliances, MVACs, and MVAC-like appliances are not required to be certified.
(2) Apprentices are exempt from the requirement in paragraph (a)(1) of this section provided the apprentice is closely and continually supervised by a certified technician while performing any maintenance, service, repair, or disposal that could reasonably be expected to release refrigerant from an appliance into the environment, except those substitute refrigerants exempted under paragraph (a)(1) of this section. The supervising certified technician and the apprentice have the responsibility to ensure that the apprentice complies with this subpart.
(3) The Administrator may require technicians to demonstrate at their place of business their ability to perform proper procedures for recovering and/or recycling refrigerant, except those substitute refrigerants exempted under paragraph (a)(1) of this section. Failure to demonstrate or failure to properly use the equipment may result in revocation or suspension of the certificate. Failure to abide by any of the provisions of this subpart may also result in revocation or suspension of the certificate. If a technician's certificate is revoked, the technician would need to recertify before maintaining, servicing, repairing, or disposing of any appliances.
(4) (i) Technicians certified under this section must keep a copy of their certificate at their place of business.
(ii) Technicians must maintain a copy of their certificate until three years after no longer operating as a technician.
(5)
(b)
(2)
(3)
(4)
(5) Programs certifying technicians must maintain records in accordance with section (g) of appendix D of this subpart.
(6) Starting January 1, 2018, programs certifying technicians, excluding Federally-run programs, must publish online a list of all technicians they have certified on or after January 1, 2017. Certifying organizations must update these lists at least annually.
(i) The list must include the first name, middle initial, and last name of the certified technician, the technician's city of residence when taking the test, the type(s) of certification received, and the date each certification was received.
(ii) Programs certifying technicians must provide notice to technicians that such information will be published online in compliance with any other Federal, state or local regulations, and allow technicians to opt out of being included in such lists.
(7) If an approved program violates any of the above requirements, the Administrator may revoke approval in accordance with § 82.169. In such cases, the Administrator must give notice to the organization setting forth the basis for the determination.
(c)
(a) All persons reclaiming used class I or II refrigerant or non-exempt substitute refrigerant for sale to a new owner must meet the following requirements:
(1) Reclaim such refrigerant to all the specifications in appendix A of this subpart (based on AHRI Standard 700-2016,
(2) Verify that each batch of such refrigerant reclaimed meets these specifications using the analytical methodology prescribed in appendix A of this subpart, which includes the primary methodologies included in appendix A of AHRI Standard 700-2016;
(3) Release no more than 1.5 percent of the refrigerant during the reclamation process;
(4) Dispose of wastes from the reclamation process in accordance with all applicable laws and regulations; and
(5) Maintain records and submit reports in accordance with paragraph (d) of this section.
(b) The owner or a responsible officer reclaiming used refrigerant for sale to a new owner, except for persons who properly certified under this section before May 11, 2004, must certify to the Administrator at the address in § 82.160(a) that they will meet the requirements in paragraph (a) of this section. The certification must include the name and address of the reclaimer and a list of equipment used to reclaim the refrigerant to the required standard, and to analyze the refrigerant to ensure it meets these specifications.
(c) Certificates are not transferable. In the event of a change in ownership of an entity which reclaims refrigerant, the new owner of the entity must certify with the Administrator within 30 days of the change that they will meet the reclaimer certification requirements. In the event of a change in business management, location, or contact information, the owner of the entity must notify EPA within 30 days of the change at the address in § 82.160(a).
(d)
(2) Reclaimers must maintain records of the names and addresses of persons sending them material for reclamation and the quantity of the material (the combined mass of refrigerant and contaminants) by refrigerant type sent to them for reclamation. Such records must be maintained on a transactional basis for three years.
(3) Reclaimers must report to the Administrator annually by February 1 of the next calendar year the total annual quantity of material (the combined mass of refrigerant and contaminants) by refrigerant type sent to them for reclamation, the total annual mass of each refrigerant reclaimed, and the total annual mass of waste products.
(e) Failure to abide by any of the provisions of this subpart may result in revocation or suspension of the certification of the reclaimer in accordance with § 82.169. In such cases, the Administrator must give notice to the organization setting forth the basis for the determination.
Revisions and addition to read as follows:
This section contains leak repair reporting and recordkeeping requirements that apply to owners and operators of appliances containing 50 or more pounds of class I or class II refrigerants until January 1, 2019. Starting January 1, 2019, the recordkeeping and reporting requirements in the leak repair provisions in § 82.157(l) and (m) apply to owners and operators of appliances containing 50 or more pounds of class I or class II refrigerants or non-exempt substitutes.
(a)-(i) [Reserved]
(l) [Reserved]
(m) All records required to be maintained pursuant to this section must be kept for a minimum of three years unless otherwise indicated.
(q) Owners or operators choosing to determine the full charge as defined in § 82.156(j) of an affected appliance by using an established range or using that methodology in combination with other methods for determining the full charge as defined in § 82.156(j) must maintain the following information:
(a) Certain material is incorporated by reference into this subpart part with the approval of the Director of the Federal Register under 5 U.S.C. 552(a) and 1 CFR part 51. You can obtain the material from the sources listed below. You may inspect a copy of the approved material at U.S. EPA's Air and Radiation Docket; EPA West Building, Room 3334, 1301 Constitution Ave. NW., Washington, DC, or 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
(b) Air-Conditioning, Heating, and Refrigeration Institute (AHRI), 2111 Wilson Boulevard, Suite 500, Arlington, VA 22201,
(1) AHRI Standard 110-2016,
(2) 2008 Appendix C to AHRI Standard 700-2014,
(3) 2008 Appendix D to AHRI Standard 700-2014,
(c) American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc., (ASHRAE), 1791 Tullie Circle NE., Atlanta, GA 30329, U.S.A.
(1) ANSI/ASHRAE Standard 63.2-1996 (RA 2010),
(d) ASTM International, 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959,
(1) ASTM D1296-01 (Reapproved 2012),
(2) [Reserved]
(e) Gas Processors Association, 6526 East 60th Street, Tulsa, Oklahoma 74145.
(1) GPA Standard STD-2177-13,
(2) [Reserved]
(f) General Services Administration, 301 7th St. SW., Washington, DC 20410.
(1) BB-F-1421B, Federal Specification for “Fluorocarbon Refrigerants,” dated March 5, 1982, IBR approved for Appendix A to subpart F.
(2) [Reserved]
(g) International Electrotechnical Commission (IEC), 3, rue de Varembé, P.O. Box 131. CH-1211 Geneva 20—Switzerland, 41 22 919 02 11,
(1) IEC 60038,
(2) [Reserved]
(h) Underwriters Laboratories (UL), 333 Pfingsten Road, Northbrook, IL 60062, 847-272-8800,
(1) UL 1963,
(2) [Reserved]
This appendix is based on the Air-Conditioning, Heating, and Refrigeration Institute Standard 700-2016,
1.1
1.1.1
1.1.2
2.1
2.1.1 Single-Component Fluorocarbon Refrigerants: R-11, R-12, R-13, R-22, R-23, R-32, R-113, R-114, R-115, R-116, R-123, R-124, R-125, R-134a, R-141b, R-142b, R-143a, R-152a, R-218, R-227ea, R-236fa, R-245fa, R-1233zd(E), R-1234yf, R-1234ze(E);
2.1.2 Single Component Hydrocarbon Refrigerants: R-50, R-170, R-E170, R-290, R-600, R-600a, R-601, R-601a, R-610, R-1150, R-1270;
2.1.3 Carbon Dioxide Refrigerant: R-744;
2.1.4 Zeotropic Blend Refrigerants: R-401A, R-401B, R-402A, R-402B, R-403A, R-403B, R-404A, R-405A, R-406A, R-407A, R-407B, R-407C, R-407D, R-407E, R-407F, R-408A, R-409A, R-409B, R-410A, R-410B, R-411A, R-411B, R-412A, R-413A, R-414A, R-414B, R-415A, R-415B, R-416A, R-417A, R-417B, R-417C, R-418A, R-419A, R-419B, R-420A, R-421A, R-421B, R-422A, R-422B, R-422C, R-422D, R-422E, R-423A, R-424A, R-425A, R-426A, R-427A, R-428A, R-429A, R-430A, R-431A, R-434A, R-435A, R-437A, R-438A, R-439A, R-440A, R-442A, R-444A, R-444B, R-445A, R-446A, R-447A, R-448A, R-449A, R-450A;
2.1.5 Zeotropic Hydrocarbon Blend Refrigerants: R-432A, R-433A, R-433B, R-433C, R-436A, R-436B, R-441A, R-443A; and
2.1.6 Azeotropic Blend Refrigerants: R-500, R-502, R-503, R-507A, R-508A, R-508B, R-509A, R-510A, R-511A, and R-512A.
3.1
3.2
3.2.1
3.2.2
4.1
4.1.1 Isomer content (see Table 1A)
4.1.2 Air and other non-condensables (see Tables 1A, 2A, 3)
4.1.3 Water (see Tables 1A, 2A, 3)
4.1.4 All other volatile impurities (see Tables 1A, 2A, 3)
4.1.5 High boiling residue (see Tables 1A, 2A, 3)
4.1.6 Halogenated unsaturated volatile impurities (see Table 1A)
4.1.7 Particulates/solids (see Tables 1A, 2A, 3)
4.1.8 Acidity (see Tables 1A, 2A, 3)
4.1.9 Chloride (see Tables 1A, 2A, 3)
4.2 Hydrocarbon Characterization. Characterization of hydrocarbon refrigerants (Tables 1B and 2B) and contaminants are listed in the following general classifications:
4.2.1 Nominal composition
4.2.2 Other allowable impurities
4.2.3 Air and other non-condensables
4.2.4 Sulfur odor
4.2.5 High boiling residue
4.2.6 Particulates/solids
4.2.7 Acidity
4.2.8 Water
4.2.9 All other volatile impurities
4.2.10 Total C3, C4, and C5 polyolefins
4.3
4.3.1 Purity
4.3.2 Air and other non-condensables
4.3.3 Water
4.3.4 High boiling residue
4.3.5 Particulates/solids
5.1
5.2
5.2.1
5.2.2
5.2.3
5.2.3.1
5.2.3.2
5.2.4
5.2.4.1
5.2.4.2
5.2.4.3
5.3
5.3.2
5.3.3
5.4
5.4.1
5.4.2
5.5
5.5.1
5.5.2
5.6
5.6.1
5.5.2
5.7
5.7.1
5.7.2
5.8
5.8.1
5.8.2
5.9
5.9.1
5.9.2
5.10
5.10.1
The test method shall be gas chromatography with a thermal conductivity detector as described in
5.10.2
5.11
5.11.1
5.11.2
5.12
5.12.1
5.12.2
5.13
5.13.1
5.13.2
6.1
Listed here are all standards, handbooks, and other publications essential to the formation and implementation of the standard. All references in this appendix are considered as part of this standard.
Listed here are standards, handbooks, and other publications which may provide useful information and background but are not considered essential.
This appendix is based on the Air-Conditioning, Heating, and Refrigeration Institute Standard 740-2016,
1.1 The purpose of this standard is to establish methods of testing for rating and evaluating the performance of refrigerant recovery, and/or recycling equipment and general equipment requirements (herein referred to as “equipment”) for contaminant or purity levels, capacity, speed and purge loss to minimize emission into the atmosphere of designated refrigerants.
2.1 This standard applies to equipment for recovering and/or recycling single refrigerants, azeotropes, zeotropic blends, and their normal contaminants from refrigerant systems. This standard defines the test apparatus, test gas mixtures, sampling procedures and analytical techniques that will be used to determine the performance of refrigerant recovery and/or recycling equipment (hereinafter, “equipment”). Appendix B4 of this subpart establishes standards for recovery/recycling equipment used with flammable refrigerants.
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.8.1
3.8.2
3.9
3.10
3.11
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
5.1
5.2
6.1
6.2
6.2.1
6.2.2
6.2.3
6.2.4
6.2.5
6.2.6
6.3
6.3.1 For equipment utilizing nominal
6.3.2 For equipment utilizing
6.4
6.4.1
7.1
7.1.1
7.1.2
7.1.3
7.1.4
7.2
7.3
7.3.1
7.4
7.4.1
7.4.1.1
7.4.1.2
7.4.1.3
7.4.1.4
7.4.2
7.4.2.1
7.4.3
7.4.4
7.4.4.1
7.4.4.2
7.5
7.5.1
7.5.1.1
7.5.2
7.5.2.1
7.5.3
7.5.3.1
7.5.3.2
7.6
8.1
8.2
8.2.1
8.2.2
8.2.3
8.2.4
8.2.5
8.2.6
9.1
9.1.1
9.2
9.3
9.3.1 For equipment using multi-pass recycling or a separate sequence, the recycle rate shall be determined by dividing the net weight, W, of the refrigerant to be recycled by the actual time T required to recycle. Any set-up or operator interruptions shall not be included in the time T.
9.3.2 If no separate recycling sequence is used, the recycle rate shall be the higher of the vapor refrigerant recovery rate or the liquid refrigerant recovery rate. The recycle rate shall match a process which leads to contaminant levels in Section 9.9. Specifically, a recovery rate determined from bypassing a contaminant removal device cannot be used as a recycle rate when the contaminant levels in Section 9.9 are determined by passing the refrigerant through the contaminant removal device.
9.4
9.5
9.5.1
For units which either recycle or publish (list) non-condensable removal, non-condensable gases are purged, operating the recycle device per the manufacturer's instructions through an evaporator pressure regulator (EPR) valve into a liquid nitrogen-chilled cylinder. This combination will simulate the atmosphere while allowing the capture of purge gases. The cylinder is weighed before and after the purge procedure.
9.5.2
9.5.3
9.6
9.7
9.8
9.9
9.10
10.1
11.1
Recommended nameplate voltages for 60 Hertz systems shall include one or more of the equipment nameplate voltages shown in Table 1 of AHRI 110-2016 (incorporated by reference, see § 82.168). Recommended nameplate voltages for 50 Hertz systems shall include one or more of the utilization voltages shown in Table 1 of IEC 60038 (English version) (incorporated by reference, see § 82.168).
11.2
Listed here are all standards, handbooks, and other publications essential to the formation and implementation of the standard. All references in this appendix are considered as part of this standard.
13.1
13.1.1 The particulate material (pm) will be a blend of 50 percent coarse air cleaner dust as received, and 50 percent retained on a 200-mesh screen. The coarse air cleaner dust is available from: AC Spark Plug Division; General Motors Corporation; Flint, Michigan.
13.1.2
13.1.3
This appendix is based on the Air-Conditioning, Heating, and Refrigeration Institute Standard 740-2016,
1.1 The purpose of this standard is to establish methods of testing for rating and evaluating the performance and safety of refrigerant recovery and/or recycling equipment and general equipment requirements (herein referred to as “equipment”) for contaminant or purity levels, capacity, speed and purge loss to minimize emission into the atmosphere of designated refrigerants, as well as safety for use with flammable refrigerants.
2.1 This standard applies to equipment for recovering and/or recycling flammable single refrigerants, azeotropes, zeotropic blends, and their normal contaminants from refrigerant systems. This standard defines the test apparatus, test gas mixtures, sampling procedures, analytical techniques, and equipment construction that will be used to determine the performance and safety of refrigerant recovery and/or recycling equipment (hereinafter, “equipment”).
3.1 All terms in this appendix will follow the definitions in § 82.152 and Appendix B3 to Subpart F of Part 82 unless otherwise defined in this appendix.
3.2 All definitions used in UL 1963, including the definitions in Supplement SB, as applicable, are incorporated by reference, see § 82.168.
4.1
4.2
Technicians must pass a closed-book, proctored test, administered in a secure environment, by an EPA-approved certifying program to be certified as a Type II or Type III technician.
Technicians must pass a closed-book, proctored test (or series of tests), administered in a secure environment, by an
Each certifying program must assemble tests by choosing a prescribed subset from the EPA test bank. EPA will have a test bank with more questions than are needed for an individual test, which will enable the certifying program to generate multiple tests in order to discourage cheating. Each test must include 25 questions drawn from Group 1 and 25 questions drawn from each relevant technical Group. Tests for Universal technicians will include 100 questions (25 from Group 1 and 25 from each relevant technical Group). Universal tests may be taken all at once, or by combining passing scores on separate Type I, Type II, and Type III tests. Questions should be divided in order to sufficiently cover each topic within the Group.
Certifying programs must provide a paper hand-out or electronic form of communication to technicians after they have completed their certification test that contains the following information:
Each certifying program must show a method of randomly choosing which questions will be on the tests. Multiple versions of the test must be used during each testing event. Test answer sheets must include the name and address of the applicant, the name and address of the certifying program, and the date and location at which the test was administered.
Training material accompanying mail-in Type I tests must not include sample test questions mimicking the language of the certification test. All mail-in material will be subject to review by EPA.
Certifying programs may charge individuals reasonable fees for the administration of the tests. EPA will publish a list of all approved certifying programs.
The certification test for Type I (if taken as part of a Universal certification), Type II, Type III, and Universal technicians is a closed-book exam. The proctors must ensure that the applicants for certification do not use any notes or training materials during testing. Desks or work space must be placed in a way that discourages cheating. The space and physical facilities are to be conducive to continuous surveillance by the proctors and monitors during testing.
The proctor may not receive any benefit from the outcome of the testing other than a fee for proctoring. Proctors cannot know in advance which questions are on the tests they are proctoring.
Proctors are required to verify the identity of individuals taking the test by examining photo identification. Acceptable forms of identification include but are not limited to drivers' licenses, government identification cards, passports, and military identification.
Certifying programs for Type I technicians using the mail-in format, must take sufficient measures at the test site to ensure that tests are completed honestly by each technician. Each test for Type I certification must provide a means of verifying the identification of the individual taking the test. Acceptable forms of identification include but are not limited to drivers' licenses and passports.
After the completion of a test, proctors must collect all test forms, answer sheets, scratch paper and notes. These items are to be placed in a sealed envelope.
Group I will ask questions in the following areas:
Group II will ask questions covering sector-specific (
The passing score for the closed-book Type I, Type II, Type III and Universal certification test is 70 percent. The passing score for Type I certification tests using the mail-in format is 84 percent.
Each wallet-sized identification card must include, at a minimum, the name of the certifying program including the date the certifying program received EPA approval, the name of the person certified, the type of certification, a unique number for the certified person that does not include a technician's social security number, and the following text:
[name of person] has successfully passed a [Type I, Type II, Type III and/or Universal—as appropriate] exam on how to responsibly handle refrigerants as required by EPA's National Recycling and Emissions Reduction Program.
EPA must receive an activity report from all approved certifying programs by every January 30 and July 30, which covers the previous six months of certifications. The first report must be submitted following the first full six-month period for which the program has been approved by EPA. This report includes the pass/fail rate. If the certifying program believes a test bank question needs to be modified, information about that question should also be included.
Approved certifying programs will receive a letter of approval from EPA. Each testing center must display a copy of that letter at their place of business.
Approved technician certification programs that voluntarily plan to stop providing the certification test must forward all records required by this appendix and § 82.161 to another program currently approved by EPA in accordance with this appendix and with § 82.161. Approved technician certification programs that receive records of certified technicians from a program that no longer offers the certification test, and the program that is voluntarily withdrawing from being a technician certification program must inform EPA at the address listed in § 82.160 within 30 days of receiving or transferring these records. The notification must include the name and address of the program to which the records have been transferred. If another currently approved program willing to accept the records cannot be located, these records must be submitted to EPA at the address listed at § 82.160.
Technician certification programs that have had their certification revoked in accordance with § 82.169 must forward all records required by this appendix and § 82.161 to EPA at the address listed in § 82.160. Failure to do so is a violation of 40 CFR part 82, subpart F.
If the certifying programs offer training or provide review materials to the applicants, these endeavors are to be considered completely separate from the administration of the certification test.
This appendix is based on the California Air Resources Board (CARB) standard
This test procedure is used by manufacturers of containers holding two pounds or less of refrigerant for use in a motor vehicle air conditioner (MVAC) to determine the leakage rate of small containers of automotive refrigerant that are subject to the requirements of 40 CFR part 82, subpart F. Specifically, this test procedure will specify the equipment, procedures, and calculations to determine if a container holding two pounds or less of refrigerant for use in an MVAC complies with the leakage rate specified in § 82.154(c)(2)(ii). All terms in this appendix will follow the definitions in § 82.152 unless otherwise defined in this appendix.
All containers holding two pounds or less of refrigerant for use in an MVAC must comply with other applicable codes and regulations such as local, state, or Federal safety codes and regulations.
This test procedure involves the use of materials under pressure and operations and should only be used by or under the supervision of those familiar and experienced in the use of such materials and operations. Appropriate safety precautions should be observed at all times while performing this test procedure.
This procedure is used to determine the leakage rate of containers holding two pounds or less of refrigerant for use in an MVAC (small cans). Testing will involve subjecting both full and partially empty cans in both upright and inverted positions at two temperatures: 73 °F and 130 °F.
Thirty small cans are tested under each condition for a total of 240 small cans tested. Small cans are brought to temperature stability, weighed, then stored for 30 days under specified conditions of temperature, orientation, and state of fill, then re-weighed. Leakage rate (grams/year) is estimated by (weight loss in grams) x 365/(days duration). The leakage rate is then compared to a standard of 3.00 grams/year to determine if a given small can complies with the leakage rate specified in § 82.154(c)(2)(ii).
3.1 Contaminants on the operator's hands can affect the weight of the small can and the ability of the small can to absorb moisture. To avoid contamination of the small can, the balance operator should wear gloves while handling the small cans.
3.2 Weight determinations can be interfered with by moisture condensing on the small can and by thermal currents generated by temperature differences between the small can and the room temperature. The small cans cool during discharge and could cause condensation. For these reasons, small cans must be equilibrated to balance room temperature for at least four hours before weighing.
3.3 Variations in the temperature, pressure, and humidity of the ambient air will cause variations in the buoyancy of the small can. These variations should typically be less than 25 mg for a small can. If the small can is not leaking at all, then the uncorrected weight changes will be within the range of 0 ± 25 mg, which is about ten percent of the 247 mg loss expected after thirty days for a can leaking at 3 g/yr. In that case buoyancy corrections can be omitted. If the absolute value of the uncorrected weight change exceeds 25 mg, then all calculations must be made using weights corrected for buoyancy based on the temperature, pressure, and humidity of the weighing room.
3.4 Some electronic balances are sensitive to the effects of small static charges. The small can should be placed directly on the balance pan, ensuring metal to metal contact. If the balance pan is not grounded, the small can and balance pan should be statically discharged before weighing.
The mass of a full small can could range from roughly 50 g to 1000 g depending on the container capacity. A top loading balance, capable of a maximum weight measurement of not less than 1,000 g and having a minimum readability of 0.001 g, reproducibility and linearity of ± 0.002 g, must be used to perform mass measurements.
5.1 A top loading balance that meets the requirements of Section 4 above.
5.2 A NIST traceable working standard mass for balance calibration. A NIST traceable working standard mass for a balance linearity check. A reference mass to serve as a “blank” small can.
5.3 An enclosure capable of controlling the internal air temperature from 73 °F ± 5 °F, and an enclosure capable of controlling the internal air temperature to 130 °F ± 5 °F.
5.4 A temperature instrument capable of measuring the internal temperature of the temperature conditioning enclosures and the balance room with a sensitivity of ± 2 °F.
5.5 A barometric pressure instrument capable of measuring atmospheric pressure at the location of the balance to within ± 0.02 inches of mercury.
5.6 A relative humidity measuring instrument capable of measuring the relative humidity (RH) at the location of the balance with a sensitivity of ± 2 percent RH.
5.7 A hose with appropriate fitting for dispensing refrigerant from the small can to a recovery machine.
5.8 A refrigerant recovery machine to collect the discharged refrigerant from small cans being tested.
6.1 Calibrations are applied to the balance and to the support equipment such as temperature, humidity, and pressure monitoring equipment. Procedures for calibration are not spelled out here. General calibration principals for the support equipment and the balance are described in Section 11, Quality Assurance/Quality Control. Detailed calibration procedures for measurements made using the balance are contained in Attachment A: “Balance Protocol for Gravimetric Determination of Sample Weights using a Precision Balance.”
7.1 Receive a batch of 240 small cans of one design to be tested. These may include several SKUs from different manufacturers if the container and valve combination are the same.
7.2 Clean small cans with Alkanox solution or equivalent and dry with a lint free towel.
7.3 Confirm that the sample ID sticker on the small can matches the sample ID on the chain of custody forms.
7.4 Select a reference mass similar to the weight of a full small can. If multiple sets of similar sized small cans are being tested, only one reference mass is needed; it can be used with all sets. Store the reference mass in the balance area.
7.5 Evacuate the contents of one half of the small cans (120 cans) into the refrigerant recovery machine using normal DIY dispensing procedures until each small can is approximately half full.
7.6 Select a reference mass similar to the weight of the half-full small can. If multiple sets of similar size small cans are being tested, only one reference mass is needed; it can be used with all sets. Store the reference mass in the balance area.
Weighing cans on the balance is done in accordance with Attachment A to this appendix. Attachment A describes how to conduct weight determinations including appropriate calibration and QC data. This section, “Small Can Weighing,” describes the overall process, not the details of how to use the balance.
8.1 Put on gloves. Check the small cans for contamination.
8.2 Place the 240 small cans into a location where they can equilibrate to balance room temperature. Record the small can test IDs and the equilibration start time
8.3 Let cans equilibrate for at least four hours.
8.4 Weigh the set of 240 small cans and the reference weights using Attachment A and log the results to the Balance Weighing Log Form available on EPA's Web site.
8.5 Transfer data from the Balance Weighing Log Form to the Small Can Test Data Form in sets of 30, one set for each of the eight conditions to be tested.
8.6 Place each set of 30 small cans into the appropriate orientation and temperature for soaking:
8.7 Soak the small cans for 30 days undisturbed.
8.8 Place the 240 small cans into a location where they can equilibrate to balance room temperature.
8.9 Let the small cans equilibrate for at least four hours.
8.10 Weigh the set of 240 small cans, the reference weights, and any additional sets of small cans using Attachment A.
8.11 Transfer data from the Balance Weighing Log Form to the corresponding Small Can Test Data Forms.
The calculations in this section are described in terms of “weight.” Mass is a property of the small can, whereas weight is a force due to the effects of buoyancy and gravity. Procedures for correcting the effect of buoyancy are given in Attachment B of this appendix. Ignoring buoyancy,
The emission rate in grams/day for each small can is calculated by subtracting the final weight from the initial weight and then dividing the weight difference by the time difference measured in days to the nearest hour (nearest 1/24 of a day). The emission rate in g/day is multiplied by 365 to determine emission rate in grams/yr. If the annual emission rate for any small can exceeds the entire small can contents, then the annual emission rate for that small can is adjusted to equal the entire small can contents/year (
Loss rate for each small can
Calculate the average loss rate for the 240 small cans as follows:
During small can weighing, record the small can weights and date/times on the Balance Weighing Log Form. After each weighing session, transfer the measured weights and date/times from the Balance Weighing Log Form to the Small Can Test Data Form.
At the end of the test, complete the calculations described in Section 9, Calculations, and record the results on the Small Can Test Data Form.
11.1 All temperature, pressure, and humidity instruments should be calibrated annually against NIST traceable laboratory standards. The main purpose of the NIST traceable calibration is to establish the absolute accuracy of the device. The instruments should also be checked periodically such as weekly, monthly, or quarterly against intermediate standards or against independent instruments. For example, a thermocouple can be checked weekly against a wall thermometer. A barometer or pressure gauge can be checked weekly by adjusting to sea level and comparing with local airport data. The main purpose of the frequent checks is to verify that the device has not failed in some way. This is especially important for electronic devices such as a digital thermometer, but even a liquid filled thermometer can develop a problem such as a bubble.
11.2 The balance should be serviced and calibrated annually by an independent balance service company or agency using NIST traceable reference masses. Servicing verifies accuracy and linearity, and the maintenance performed helps ensure that a malfunction does not develop.
11.3 The balance must also be calibrated and its linearity checked with working standards before and after each weighing session, or before and after each group of 24 small cans if more than 24 small cans are weighed in a session. Procedures for calibrating and using the balance, as well as recording balance data, are described in the accompanying balance weighing protocol. These procedures include zero checks, calibration checks, and reference mass checks. Procedures for calculating quality control data from those checks are described in Attachment A.
11.4 The small cans are cleaned then handled using gloves to prevent contamination. All equilibration and soaking must be done in a dust free area.
12.1
This Protocol summarizes a set of procedures and tolerances for weighing objects in the range of 0 to 1,000 g with a resolution of 0.001 g. This protocol only addresses balance operations, it does not address project requirements for equilibration, sample hold time limits, sample collection etc.
12.2
The balance is zeroed and calibrated using procedures defined herein. Object weight determinations are conducted along with control object weight determinations, zero checks, calibration checks, sensitivity checks, and replicate weightings in a defined sequence designed to control and quantitatively characterize precision and accuracy.
12.3
N/A.
12.4
Object weights can be affected by temperature and relative humidity of their environment, air currents, static electricity, gain and loss of water vapor, gain or loss of and loss of volatile compounds directly from the sample or from contaminants such as finger prints, marker ink, and adhesive tape.
Contamination, transfer of material to or from the samples, is controlled by conducting operations inside a clean area dedicated to the purpose and having a filtered laminar air flow where possible; by wearing gloves while handling all samples and related balance equipment; by using forceps to handle small objects, and by keeping the balance and all related equipment inside the clean area.
Air currents are controlled by conducting weighing operations inside a closed chamber or glove box and by allowing the substrates to reach temperature and relative humidity equilibrium. The chamber is maintained at 40 percent relative humidity and 25 °C by a continuous humidity and temperature control system. The temperature and RH
Static electric charges on the walls of the balance and the weighed objects, including samples, controls, and calibration weights, can significantly affect balance readings. Static is avoided by the operator ground himself and test objects as described in the balance manual.
12.5
N/A
12.6
• Filtered, temperature and humidity controlled weighing chamber.
• Precision Balance
• Plastic forceps
• Nylon fabric gloves.
• Working calibration weights: ANSI Class 2, 1000g and 500 g
• Working sensitivity weight: 50 mg
• Reference objects: references are one or more objects that are typical of the objects to be weighed during a project, but that are stored permanently inside the balance glove box. Reference objects are labeled Test1, Test2, Test3, etc.
12.7
N/A
12.8
N/A. See relevant project requirements and SOPs.
12.9
Data quality is controlled by specifying frequencies and tolerances for Zero, Calibration, Linearity, and Sensitivity checks. If checks do not meet tolerance criteria, then samples must be re-weighed. In addition, the procedures specify frequencies for Control Object Checks.
Data quality is quantitatively characterized using Zero Check, Calibration Check, and Control Check data. These data are summarized monthly in statistics and QC charts.
12.10
The absolute accuracy of the balance is established by calibration against an ANSI Class 2, stainless steel working weight: 1000.000 g ± 0.0025 g. Linearity is established checking the midpoint against an ANSI Class 2 stainless steel working weight: 500.000 ± 0.0012 g. Sensitivity is established using and ANSI Class 2 stainless steel or aluminum working weight: 50 mg. Precision is checked by periodically checking zero, calibration, and reference object weights.
12.11
12.11.1
Weighing a series of substrates consists of performing the following procedures in sequence, while observing the procedures for handling and the procedures for reading the balance:
This sequence is interrupted and samples are reweighed if QC check tolerances are not met. Each of these procedures along with procedures for handling and reading the balance are described below. The QC tolerances referred to in these procedures are listed in Table 1.
12.11.2
1. Never touch samples, weights, balance pans, etc. with bare hands. Wear powder free gloves to handle the weights, controls, and samples.
12.11.3
1. Close the door. Wait for the balance stabilization light to come on, and note the reading.
2. Watch the balance reading for 30 sec (use a clock). If the reading has not changed by more than 0.001 g from the reading noted in step 1, then record the reading observed at the end of the 30 sec period.
3. If the reading has drifted more than 0.001 g note the new balance reading and go to step 2.
4. If the balance reading is flickering back and forth between two consecutive values choose the value that is displayed more often than the other.
5. If the balance reading is flickering equally back and forth between two consecutive values choose the higher value.
12.11.4
12.11.5
12.11.6
12.11.7
1. This protocol does not include reweigh samples to obtain replicates. The projects for which this protocol is intended already include procedures multiple weightings of each sample.
12.12
For Zero Checks, let Z equal the recorded Zero Check value. For control checks let T1, T2, etc. equal the recorded value for control object Test 1, Test 2, etc. For Calibration Checks, let C1000 equal C1000 reading minus 1000, M = C500—500, S = .C.050—C500—.050. For Replicate Checks, let D equal the loss that occurred between the first and second measurements. In summary:
Tabulate the mean and standard deviation for each of the following: Z, C, M, G. T1, T2, T3. Depending on the number of operators using the balance and the number of protocols in use, analyze the data by subcategories to determine the effects of balance operator and protocol. Each of these standard deviations, S
For Z, C, M, and G, check the mean value for statistical difference from 0. If the means are statistically different than zero, troubleshooting to eliminate bias may be called for. For Z, C, M, G, T1, T2, T3, check that the standard deviations are all comparable. If there are systematic differences, then troubleshooting to eliminate the problem may be called for.
Note that the precision of a weight gain, involves two weight determinations, and therefore is larger than S by a factor of sqrt(2). On the other hand replicate weighings improves the precision of the determinations by a factor of sqrt(N). If N = 2,
To estimate the overall uncertainty in a weight determination, a conservative estimate might be to combine the imprecision contributed by the zero with the imprecision contributed by the calibration.
The uncertainty in a weight gain from N replicates is then given by:
But due to the balance adjustment and reweigh tolerances, we expect S
12.13
The data necessary to characterize the accuracy and precision of this method are still being collected. The method is used primarily to weigh objects before and after a period of soaking to determine weight loss by subtraction. Given the reweigh tolerances, we expect that the precision of weight gain determinations will be on the order of 0.006 g at the 1-sigma level. Bias in the weight gain determination, due to inaccuracy of the calibration weight and to fixed non-linearity of the balance response is on the order 0.005 percent of the gain.
12.14
When discharging half the can contents during can preparation, do not vent the contents of the small can to the atmosphere. Use an automotive recovery machine to transfer small can contest to a recovery cylinder.
12.15
Dispose of the contents of the recycle cylinder through a service that consolidates waste for shipment to EPA certified facilities for reclaiming or destruction.
13.1
Variations in gravity are important only when weighing objects under different gravitational fields,
Based on the discussion above, no corrections for gravity are necessary when determining weight changes in small cans.
13.2
Within a weighing session, the difference in density between the sample object and the calibration weight will cause the sample object weight value to differ from its mass value due to buoyancy. For a 1-liter object in air at 20 °C and at 1 atm, the buoyant force is about 1.2 g. The volume of a 1 kg object with a density of 8 g/cm
Based on the discussion above, buoyancy corrections must be made.
Variables measured or calculated:
U.S. Citizenship and Immigration Services, DHS.
Final rule.
The Department of Homeland Security (DHS) is amending its regulations related to certain employment-based immigrant and nonimmigrant visa programs. Specifically, the final rule provides various benefits to participants in those programs, including the following: improved processes and increased certainty for U.S. employers seeking to sponsor and retain immigrant and nonimmigrant workers; greater stability and job flexibility for those workers; and increased transparency and consistency in the application of DHS policy related to affected classifications. Many of these changes are primarily aimed at improving the ability of U.S. employers to hire and retain high-skilled workers who are beneficiaries of approved employment-based immigrant visa petitions and are waiting to become lawful permanent residents, while increasing the ability of those workers to seek promotions, accept lateral positions with current employers, change employers, or pursue other employment options.
This final rule is effective January 17, 2017.
Comments and related materials received from the public, as well as background documents mentioned in this preamble as being available in the docket, are part of docket USCIS-2015-0008. For access to the online docket, go to
Kathleen Angustia or Nikki Lomax-Larson, Adjudications Officers (Policy), Office of Policy and Strategy, U.S. Citizenship and Immigration Services, Department of Homeland Security, 20 Massachusetts Avenue NW., Washington, DC 20529. The contact telephone number is (202) 272-8377.
DHS is amending its regulations related to certain employment-based immigrant and nonimmigrant visa programs. The final rule is intended to benefit U.S. employers and foreign workers participating in these programs by streamlining the processes for employer sponsorship of nonimmigrant workers for lawful permanent resident (LPR) status, increasing job portability and otherwise providing stability and flexibility for such workers, and providing additional transparency and consistency in the application of DHS policies and practices related to these programs. These changes are primarily intended to better enable U.S. employers to employ and retain high-skilled workers who are beneficiaries of employment-based immigrant visa (Form I-140) petitions, while increasing the ability of these workers to further their careers by accepting promotions, changing positions with current employers, changing employers, and pursuing other employment opportunities.
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First, the final rule largely conforms DHS regulations to longstanding DHS policies and practices established in response to certain sections of the American Competitiveness and Workforce Improvement Act of 1998 (ACWIA), Public Law 105-277, div. C, tit. IV, 112 Stat. 2681, and the American Competitiveness in the Twenty-first Century Act of 2000 (AC21), Public Law 106-313, 114 Stat. 1251, as amended by the 21st Century Department of Justice Appropriations Authorization Act, Public Law 107-273, 116 Stat. 1758
Specifically, the final rule clarifies and improves policies and practices related to:
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Second, this rule builds on the provisions listed above by making changes consistent with the goals of AC21 and ACWIA to further provide stability and flexibility in certain immigrant and nonimmigrant visa categories. The amended provisions improve the ability of certain foreign workers, particularly those who are successfully sponsored for LPR status by their employers, to accept new employment opportunities, pursue normal career progression, better establish their lives in the United States, and contribute more fully to the U.S. economy. These changes also provide certainty for the regulated community and improve consistency across DHS adjudications, thereby enhancing DHS's ability to fulfill its responsibilities related to U.S. employers and certain foreign workers. Specifically, the final rule provides the following:
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As noted above, these changes codify and improve USCIS policies concerning various employment-based immigrant and nonimmigrant visa classifications, including by making it easier to hire and retain nonimmigrant workers who have approved Form I-140 petitions and giving such workers additional career options as they wait for immigrant visas to become available. These improvements are increasingly important considering the lengthy waits and consistently growing demand for immigrant visas.
Finally, to provide additional stability and certainty to U.S. employers and individuals eligible for employment authorization in the United States, this final rule changes several DHS regulations governing the processing of applications for employment authorization. First, to minimize the risk of any gaps in employment authorization, this final rule automatically extends the validity of Employment Authorization Documents (EADs or Forms I-766) in certain circumstances based on the timely filing of EAD renewal applications. Specifically, the rule automatically extends the employment authorization and validity of existing EADs issued to certain employment-eligible individuals for up to 180 days from the date of expiration, as long as: (1) A renewal application is filed based on the same employment authorization category as the previously issued EAD (or the renewal application is for an individual approved for Temporary Protected Status (TPS) whose EAD was issued under 8 CFR 274a.12(c)(19)); (2) the renewal application is timely filed prior to the expiration of the EAD (or, in accordance with an applicable
Following careful consideration of public comments received, DHS has made several modifications to the regulatory text proposed in the Notice of Proposed Rulemaking (NPRM) published in the
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First, DHS is revising proposed 8 CFR 204.5(p)(1)(i), which discusses the eligibility of principal beneficiaries of immigrant visa petitions to obtain EADs
Second, DHS also is making several revisions to proposed 8 CFR 204.5(p)(3), which addresses certain eligibility requirements for principal beneficiaries and family members seeking to renew EADs issued in compelling circumstances. DHS clarifies in final § 204.5(p)(3) that applicants seeking to extend such employment authorization must file a renewal Form I-765 before the expiration of their current employment authorization. DHS also streamlines and clarifies the regulatory text covering the two instances in which applicants may be eligible to apply for renewal. DHS clarifies that under final § 204.5(p)(3)(i)(A), applicants may apply for renewal if the principal beneficiary continues to demonstrate compelling circumstances and an immigrant visa is not authorized for issuance to the principal beneficiary based on his or her priority date. DHS also clarifies that under final § 204.5(p)(3)(i)(B), a principal beneficiary may apply for renewal if his or her priority date is one year or less either before or after the relevant date in the Department of State Visa Bulletin. In determining whether the difference between the principal beneficiary's priority date and the date upon which immigrant visas are authorized for issuance is one year or less, DHS will use the applicable Final Action Date in the Visa Bulletin that was in effect on the date the application for employment authorization is filed.
Third, DHS is removing a ground of ineligibility that was proposed in § 204.5(p)(5), as it was duplicative of requirements for renewal under § 204.5(p)(3)(i)(B), which authorizes eligibility for renewals when the difference between the principal beneficiary's priority date and the date upon which immigrant visas are authorized for issuance to the principal beneficiary is 1 year or less according to the Visa Bulletin in effect on the date the application for employment authorization is filed.
Fourth, DHS is revising proposed § 204.5(p)(3)(ii) to clarify that family members may submit applications to renew employment authorization concurrently with renewal applications filed by the principal beneficiaries, or while such applications are pending, but family renewal applications cannot be approved unless the principal beneficiaries' applications are granted under paragraph (p)(3)(i) and remain valid.
Finally, DHS is making several technical revisions for readability and clarity.
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Moreover, in § 214.1(l)(2), DHS is adding the O-1 classification to the list of visa classifications for which USCIS will not consider an individual to have failed to maintain nonimmigrant status for a period of up to 60 days or until the end of the authorized validity period, whichever is shorter, solely because of the cessation of the employment on which the visa classification was based. In addition, DHS is clarifying that the 60-day grace period must be used in a single period of consecutive days during the relevant authorized validity period. DHS also is changing the phrase “for a one-time period during any authorized validity period,” to read “once during each authorized validity period” to clarify that the 60-day grace period may be provided to an individual only once per authorized validity period. However, an individual may be provided other such grace periods if he or she receives a new authorized validity period in one of the eligible nonimmigrant classifications. In addition, DHS is making other technical revisions to proposed § 214.1(l)(1), (2) and (3).
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Second, DHS is expanding the language in § 214.2(h)(4)(v)(C)(
Third, in § 214.2(h)(4)(v)(C)(
In addition, DHS is making technical edits by replacing the use of the word “or” with “and” in the first clause of 8 CFR 214.2(h)(4)(v)(C)(
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At § 214.2(h)(8)(ii)(F)(
In addition, DHS is defining the phrase “governmental research organization” in § 214.2(h)(19)(iii)(C) to include state and local government research entities, and not just federal government research entities, whose primary mission is the performance or promotion of basic research and/or applied research. This definition is adopted for cap exemption purposes at 8 CFR 214.2(h)(8)(ii)(F)(
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First, in § 245.25(a), DHS is replacing a general reference in the NPRM to a “USCIS designated form” with a specific reference to “Form I-485 Supplement J” as the form DHS intends to be used for an individual to demonstrate continuing eligibility for adjustment of status based on an existing or new job offer under INA 204(j).
Second, DHS also is clarifying that the Supplement J may be accompanied by “material and credible documentary evidence, in accordance with form instructions.” This revision expands the types of evidence that can be submitted in support of Supplement J beyond “material and credible information provided by another Federal agency, such as information from the Standard Occupational Classification (SOC) system,” as had been proposed. As a result, DHS is deleting the evidentiary list included in proposed § 245.25(b).
Third, DHS is revising proposed § 245.25(a)(2)(ii) to reaffirm that a qualifying Form I-140 petition must be approved before DHS examines a portability request under INA 204(j). Moreover, DHS is adding § 245.25(a)(2)(ii)(B) to confirm that, unless approval of the petition would be inconsistent with a statutory requirement, a pending qualifying Form I-140 petition may be approved if (1) the petitioner established the ability to pay at the time of filing the petition and (2) all other eligibility criteria are met at the time of filing and until the beneficiary's application for adjustment of status has been pending for 180 days.
Finally, DHS is reorganizing and renumbering § 245.25(a), and making other technical and conforming edits.
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In addition to the above changes that were made in response to public comment, DHS is making several technical changes to the regulatory text in this final rule so that DHS regulations better reflect current ACWIA fee amounts and filing procedures:
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The authority of the Secretary of Homeland Security (Secretary) for these regulatory amendments is found in various sections of the Immigration and Nationality Act (INA), 8 U.S.C. 1101
• Section 205 of the INA, 8 U.S.C. 1155, which grants the Secretary broad discretion in determining whether and how to revoke the approval of any Form I-140 petition approved under section 204 of the INA, 8 U.S.C. 1154;
• Section 214 of the INA, 8 U.S.C. 1184, including section 214(a)(1), 8 U.S.C. 1184(a)(1), which authorizes the Secretary to prescribe by regulation the terms and conditions of the admission of nonimmigrants;
• Section 274A(h)(3)(B) of the INA, 8 U.S.C. 1324a(h)(3)(B), which recognizes the Secretary's authority to extend employment authorization to noncitizens in the United States;
• Section 413(a) of ACWIA, which amended section 212(n)(2)(C) of the INA, 8 U.S.C. 1182(n)(2)(C), to authorize the Secretary to provide certain whistleblower protections to H-1B nonimmigrant workers;
• Section 414 of ACWIA, which added section 214(c)(9) of the INA, 8 U.S.C. 1184(c)(9), to authorize the Secretary to impose a fee on certain H-1B petitioners to fund the training and education of U.S. workers;
• Section 103 of AC21, which amended section 214(g) of the INA, 8 U.S.C. 1184(g), to provide: (1) An exemption from the H-1B numerical cap for certain H-1B nonimmigrant workers employed at institutions of higher education, nonprofit entities related to or affiliated with such institutions, and nonprofit research organizations or governmental research organizations; (2) that an H-1B nonimmigrant who ceases to be employed by a cap-exempt employer, and who was not previously counted against the cap, will be subject to the H-1B numerical limitations; and (3) that a worker who has been counted against
• Section 104(c) of AC21, which authorizes the extension of authorized H-1B admission beyond the general 6-year maximum for H-1B nonimmigrant workers who have approved EB-1, EB-2, or EB-3 Form I-140 petitions but are subject to backlogs due to application of certain per-country limitations on immigrant visas;
• Section 105 of AC21, which added what is now section 214(n) of the INA, 8 U.S.C. 1184(n),
• Sections 106(a) and (b) of AC21, which, as amended, authorize the extension of authorized H-1B admission beyond the general 6-year maximum for H-1B nonimmigrant workers who have been sponsored for permanent residence by their employers and who are subject to certain lengthy adjudication or processing delays;
• Section 106(c) of AC21, which added section 204(j) of the INA to authorize certain beneficiaries of approved EB-1, EB-2, and EB-3 Form I-140 petitions who have filed applications for adjustment of status to change jobs or employers without invalidating their approved petitions; and
• Section 101(b)(1)(F) of the HSA, 6 U.S.C. 111(b)(1)(F), which establishes as a primary mission of DHS the duty to “ensure that the overall economic security of the United States is not diminished by efforts, activities, and programs aimed at securing the homeland.”
Taken together, the amendments in this final rule are intended to reduce unnecessary disruption to businesses and workers caused by immigrant visa backlogs, as described in Section III.C of this preamble. The benefits from these amendments add value to the U.S. economy by retaining high-skilled workers who make important contributions to the U.S. economy, including technological advances and research and development endeavors, which are highly correlated with overall economic growth and job creation.
DHS has analyzed potential costs of these regulations and has determined that the changes have direct impacts to individual beneficiaries of employment-based nonimmigrant and immigrant visa petitions in the form of filing costs, consular processing costs, and potential for longer processing times for EAD applications during filing surges, among other costs. Because some of these petitions are filed by sponsoring employers, this rule also has indirect effects on employers in the form of employee replacement costs.
The amendments clarify and amend policies and practices in various employment-based immigrant and nonimmigrant visa programs, with the primary aim of providing additional stability and flexibility to foreign workers and U.S. employers participating in those programs. In part, the final rule clarifies and improves upon longstanding policies adopted in response to the enactment of ACWIA and AC21 to ensure greater consistency across DHS adjudications and provide greater certainty to regulated employers and workers. These changes provide various benefits to U.S. employers and certain foreign workers, including the enhanced ability of such workers to accept promotions or change positions with their employers, as well as change employers or pursue other employment opportunities. These changes also benefit the regulated community by providing instructive rules governing: (1) Extensions of stay for certain H-1B nonimmigrant workers facing long delays in the immigrant visa process; (2) the ability of workers who have been sponsored by their employers for LPR status to change jobs or employers 180 days after they file applications for adjustment of status; (3) the circumstances under which H-1B nonimmigrant workers may begin employment with a new employer; (4) the method for counting time in status as an H-1B nonimmigrant worker toward maximum periods of stay; (5) the entities that are properly considered related to or affiliated with institutions of higher education for purposes of the H-1B program; and (6) the circumstances under which H-1B nonimmigrant workers can claim whistleblower protections. The increased clarity provided by these rules enhances the ability of certain high-skilled workers to take advantage of the job portability and related provisions in AC21 and ACWIA.
The final rule also amends the current regulatory scheme governing certain immigrant and nonimmigrant visa programs to further enhance job portability for certain workers and improve the ability of U.S. businesses to retain highly valued individuals. These benefits are achieved by: (1) Revising the provisions affecting the continued validity of approved Form I-140 petitions, and retention of priority dates of those petitions, for purposes of processing immigrant visas or applications for adjustment of status; (2) establishing a means for certain nonimmigrant workers with approved Form I-140 petitions to directly request separate employment authorization for a limited time when facing compelling circumstances; (3) providing grace periods to certain nonimmigrants to enhance their ability to seek an authorized change of employment; and (4) identifying exceptions to licensing requirements applicable to certain H-1B nonimmigrant workers.
The final rule also amends current regulations governing the processing of applications for employment authorization to provide additional stability to certain employment-authorized individuals in the United States while addressing fraud, national security, and operational concerns. To prevent gaps in employment for such individuals and their employers, the final rule provides for the automatic extension of EADs (and, where necessary, employment authorization) upon the timely filing of a renewal application. To protect against fraud and other abuses, the final rule also eliminates current regulatory provisions that require adjudication of applications for employment authorization in 90 days and that authorize interim EADs when that timeframe is not met.
DHS has prepared a full costs and benefits analysis of the final rule, which can be found in the docket for this
ACWIA was enacted on October 21, 1998. Among other things, ACWIA was intended to address shortages of workers in the U.S. high-technology sector. To increase the number of such workers in the United States, section 411 of ACWIA increased the annual numerical cap on H-1B visas from 65,000 to 115,000 in each of fiscal years (FY) 1999 and 2000, and to 107,500 in FY 2001.
ACWIA also included several measures intended to improve protections for U.S. and H-1B nonimmigrant workers. Section 413 of the ACWIA provided enhanced penalties for employer violations of Labor Condition Application (LCA) obligations as well as willful misrepresentations by employers in LCAs.
Section 414 of ACWIA imposed a temporary fee on certain H-1B employers to fund, among other things, job training of U.S. workers and scholarships in the science, technology, engineering, and mathematics (STEM) fields.
AC21 was enacted on October 17, 2000. It made numerous changes to the INA designed to improve the U.S. economy in the short and long term. First, AC21 sought to improve economic growth and job creation by immediately increasing U.S. access to high-skilled workers.
AC21 contained several provisions designed to improve access to employment-based immigrant visas for certain workers. Section 104 of AC21, for example, sought to ameliorate the impact of the “per-country limitations,” which generally limit the number of immigrant visas that may be issued to the nationals of any one country to no more than 7 percent of the total number of immigrant visas.
Section 104(c) of AC21 was designed to further ameliorate the impact of the per-country limitations on H-1B nonimmigrant workers who are the beneficiaries of approved EB-1, EB-2, or EB-3 Form I-140 petitions. Specifically, section 104(c) of AC21 authorized the extension of H-1B status beyond the statutory 6-year maximum for such individuals if immigrant visas are not immediately available to them because the relevant preference category is already over-subscribed for that foreign national's country of birth.
AC21 also sought to more generally ameliorate the impact of the lack of employment-based immigrant visas on the high-skilled beneficiaries of approved Form I-140 petitions. Sections 106(a) and (b) of AC21, as amended by section 11030A of the 21st Century Department of Justice Appropriations Authorization Act, Public Law 107-273 (2002), authorized the extension of H-1B status beyond the statutory 6-year maximum for H-1B nonimmigrant workers who are being sponsored for LPR status by U.S. employers and are subject to lengthy adjudication or processing delays. Specifically, these provisions exempted H-1B nonimmigrant workers from the 6-year limitation on H-1B status contained in INA 214(g)(4), if 365 days or more have elapsed since the filing of a labor certification application (if such certification is required under INA 212(a)(5), 8 U.S.C. 1182(a)(5)), or a Form I-140 petition under INA 203(b), 8 U.S.C. 1153(b). These provisions were intended to allow such high-skilled individuals to remain in the United States as H-1B nonimmigrant workers, rather than being forced to leave the country and disrupt their employers due to a long-pending labor certification application or Form I-140 petition.
Finally, to provide stability and flexibility to beneficiaries of approved Form I-140 petitions subject to immigrant visa backlogs and processing delays, AC21 also provided certain workers the improved ability to change jobs or employers without losing their positions in the immigrant visa queue. Specifically, section 106(c) of AC21 provides that certain Form I-140 petitions filed under the EB-1, EB-2, and EB-3 preference categories will remain valid with respect to a new qualifying job offer if the beneficiary changes jobs or employers, provided an application for adjustment of status has been filed and such application has been pending for 180 days or more.
As noted above, one of the principal purposes for the enactment of AC21 was to improve the country's access to high-skilled workers. AC21 therefore contains several additional provisions intended to expand and strengthen the H-1B program.
Section 103 of AC21 amended the INA to create an exemption from the H-1B numerical cap for those H-1B nonimmigrant workers who are employed or offered employment at an institution of higher education, a nonprofit entity related or affiliated to such an institution, or a nonprofit research organization or governmental research organization.
For purposes of this H-1B numerical cap exemption, the term “institution of higher education” is given the same meaning as that set forth in section 101(a) of the Higher Education Act of 1965, Public Law 89-329, 79 Stat. 1224 (1965), as amended (codified at 20 U.S.C. 1001(a) (“Higher Education Act”)).
(1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, or persons who meet the requirements of [20 U.S.C. 1091(d)];
(2) is legally authorized within such state to provide a program of education beyond secondary education;
(3) provides an educational program for which the institution awards a bachelor's degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree, or awards a degree that is acceptable for admission to a graduate or professional degree program, subject to review and approval by the Secretary [of Education];
(4) is a public or other nonprofit institution; and
(5) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted preaccreditation status by such an agency or association that has been recognized by the Secretary [of Education] for the granting of preaccreditation status, and the Secretary [of Education] has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.
Section 103 of AC21 also amended the INA to ensure that H-1B nonimmigrant workers can change jobs or employers without again being counted against the H-1B cap. Specifically, section 103 provides that an individual who has been counted against the H-1B numerical cap within the 6 years prior to petition approval shall not be counted against the cap unless that individual would be eligible for a new 6-year period of authorized H-1B admission.
Section 103 of AC21 also amended the INA to address cases in which an H-1B nonimmigrant worker seeks to change employment from a cap-exempt entity to a “cap-subject” entity. Section 103 provides that once employment ceases with respect to a cap-exempt entity, the H-1B nonimmigrant worker will be subject to the cap if not previously counted and no other exemptions from the cap apply.
Section 105 of AC21 further improved the H-1B program by increasing job portability for H-1B nonimmigrant workers. Specifically, section 105 allows an H-1B nonimmigrant worker to begin concurrent or new H-1B employment upon the filing of a timely, nonfrivolous H-1B petition.
The Secretary of Homeland Security has broad authority to extend employment authorization to noncitizens in the United States.
Individuals in the second class, described at 8 CFR 274a.12(b), are employment authorized incident to their nonimmigrant status, but each individual's employment authorization is valid only with a specific employer. Individuals in this second group do not file separate requests for evidence of employment authorization and are not generally issued EADs. These individuals instead obtain a Form I-94 indicating their nonimmigrant status and attendant employment authorization.
Individuals in the third class, described at 8 CFR 274a.12(c), are required to apply for employment authorization and may begin working only if USCIS approves their application. This employment authorization is subject to the restrictions described in the regulations for the specific employment eligibility category. Generally, the approval of an EAD application by an individual described in 8 CFR 274a.12(c) is within the discretion of USCIS. There is no right to appeal the denial of an EAD application.
Individuals requesting an EAD must file Form I-765 with USCIS in accordance with the form instructions.
The final rule addresses in part some of the challenges that flow from the statutory limits on immigrant visas, consistent with existing DHS authorities. The number of employment-based immigrant visas statutorily allocated per year has remained unchanged since the passage of the Immigration Act of 1990. In the intervening 25 years, the country's economy has expanded dramatically. The size of the U.S. economy, as measured by U.S. gross domestic product (GDP), increased by about 83 percent since 1990, rising from $8.955 trillion in 1990 to $16.397 trillion in 2015.
AC21 was enacted as a response to the long and growing delays for many beneficiaries of Form I-140 petitions, to ameliorate the detrimental impact of such delays on the U.S. economy, U.S. businesses, and affected workers themselves. Those delays, however, have grown substantially longer than those that existed at the time AC21 was passed. Although DHS has worked diligently to improve processing times during the intervening period, visa backlogs due to statutory numerical limits for many individuals seeking EB-2 and EB-3 classification have grown significantly for certain individuals.
Many individuals subject to the immigrant visa backlogs confront the choice between remaining employed in a specific job under the same terms and conditions originally offered to them, or abandoning the pursuit of an immigrant visa altogether if they do not have another Form I-140 petition filed on their behalf. When such a worker changes employers or jobs—including a change to an identical job with a different employer or to a new but related job for the same employer—the worker is typically subject to uncertainty as to whether USCIS will approve his or her application for LPR status based on the change. Moreover, these individuals must consider whether such changes would involve expensive additional immigration processes, greatly discouraging them. Indeed, under current regulations, some changes in employment could result in the loss of nonimmigrant status, loss of the ability to change to another nonimmigrant status, loss of an approved immigrant visa, loss of the ability to obtain an immigrant visa or adjust to LPR status, or the need for the affected worker and his or her family to immediately depart the United States. As a result, these employees often suffer through many years of effective career stagnation, as they are largely dependent on current employers for immigration status and are substantially restricted in their ability to change employers or even accept promotions from, or make lateral movements within, their current employers.
Simply put, many workers in the immigrant visa process are not free to consider all available employment and career development opportunities. This effectively prevents U.S. employers from treating them like the high-potential individuals the employer hired them to be, thus restricting productivity and the promise they offer to our nation's economy. The lack of predictability and flexibility for such workers may also prevent them from otherwise investing in and contributing to the local, regional, and national economy or fully integrating into American society.
During the 60-day public comment period, DHS received 27,979 comments offering a wide variety of opinions and recommendations on the NPRM and related forms. A range of entities and individuals submitted comments, including nonimmigrants seeking to become LPRs, U.S. workers, schools and universities, employers, labor organizations, professional organizations, advocacy groups, law firms and attorneys, and nonprofit organizations.
Many commenters expressed support for the rulemaking, in whole or in part. Supporters of the proposed rule agreed that it would help the United States attract and retain high-skilled foreign workers and would provide some relief to nonimmigrants and their families during their transition to LPR status. In particular, these commenters approved of the proposals to retain priority dates for the beneficiaries of immigrant visa petitions; provide grace periods of up to 60 days for certain high-skilled nonimmigrant workers to enhance job portability; extend grace periods of up to 10 days for certain high-skilled nonimmigrant workers so that they may more easily change or extend their nonimmigrant status; and codify guidance on counting previously exempt workers under nonimmigrant visa caps, as well as policies determining admission periods for such workers. Some commenters who generally supported the proposals also suggested changes to certain provisions.
Other commenters opposed the proposed rule for different reasons. Some commenters who opposed the proposed rule questioned DHS's legal authority to promulgate some of the regulatory changes contained therein. A substantial number of other commenters, however, objected to the proposed rule because they believed many proposed changes should and could be more expansive. Such commenters, for example, believed that the rule should have substantially broadened the criteria for obtaining independent employment authorization for beneficiaries of immigrant visa petitions, rather than limiting such a benefit to cases involving compelling circumstances. Many commenters who opposed the rule were intending immigrants who described their personal experiences to illustrate how they would have been helped by the additional changes they requested. Some commenters argued that the proposed rule did nothing more than codify existing policies and that DHS could have gone further under existing statutory authorities.
A number of other comments were opposed to the proposed rule based on generalized concerns about its impact on the U.S. economy. Some commenters were concerned that this rule may facilitate the displacement of American workers in certain sectors of the U.S. economy, such as in the information technology sector. Other commenters were concerned that the rule could facilitate the displacement of U.S. workers and a decrease in wages for U.S. citizen workers. One commenter opposing the proposed rule advocated for developing U.S. citizens' employment skills to enable them to have more employment opportunities.
Others submitted comments related to the potential for fraud or to perceived irregularities in the rulemaking process. Commenters, for example, expressed concern that this rule could increase the potential for fraud and abuse, particularly by employers seeking to take advantage of the immigration system. Commenters also expressed concern that the substance of the rulemaking was unduly affected by a former lobbyist. Other commenters were concerned that provisions in the proposed rule would provide greater financial benefits to immigration attorneys and to USCIS than to the foreign workers who are the subject of the rule.
Finally, DHS received a number of comments that were beyond the scope of this rulemaking. For example, several commenters asked DHS to include provisions creating new immigration benefits for inventors, researchers, and founders of start-up enterprises, a proposal that was not raised in the NPRM and some of which is the subject of a different rulemaking.
DHS has reviewed all of the public comments received in response to the proposed rule and thanks the public for its extensive input during this process. In the discussion below, DHS summarizes and responds to all relevant comments that were timely submitted on the NPRM, which are grouped by subject area.
As discussed at length in section II.B. above, the authority of the Secretary for these regulatory amendments is found in various sections of the INA, ACWIA, AC21, and the HSA. General authority for issuing the final rule is found in section 103(a) of the INA, 8 U.S.C. 1103(a), which authorizes the Secretary to administer and enforce the immigration and nationality laws, as well as section 102 of the HSA, 6 U.S.C. 112, which vests all of the functions of DHS in the Secretary and authorizes the Secretary to issue regulations. Other sections of the INA, together with ACWIA and AC21, provide specific statutory authority for multiple provisions of the final rule as detailed in section III.A of this preamble. DHS notes that, to the extent some of the commenters' requests for changes require action from Congress or other Departments, the Department lacks the authority to adopt these changes. DHS believes that this final rule improves upon existing policies and provides additional flexibilities consistent with DHS's existing authority to administer the U.S. immigration system under the relevant statutes passed by Congress.
This rulemaking reflects the lawful exercise of statutory authority delegated by Congress. In the preamble to this final rule, DHS has identified the statutory authorities for all of the
Finally, with regard to the concerns about this rule increasing the number of H-1B visas that are exempt from the annual limit, DHS notes that, for the most part, this regulation codifies longstanding policy and practice implementing the relevant provisions of AC21. This rule generally codifies already existing policy interpretations identifying which employers are cap-exempt under the H-1B program and DHS also includes revised definitions of “related or affiliated nonprofit entity” and “governmental research organizations” to clarify certain terms and to avoid confusion.
Additionally, DHS is not providing compelling circumstances employment authorization to an unlimited number of foreign workers and their dependents while they wait for immigrant visas to become available. Rather, DHS is allowing certain high-skilled nonimmigrant workers and their dependents, who are all on the path to LPR status, to apply for independent and temporary employment authorization if they meet certain criteria, including demonstrating that the workers need such employment authorization due to compelling circumstances. While some of the dependents of these individuals may not have been part of the workforce at the time they receive such employment authorization, they would eventually become part of the workforce even without this separate employment authorization as they are already on the path to permanent residence.
DHS's core responsibilities include enhancing homeland security and preventing terrorism, enforcing and administering the immigration laws, and ensuring the integrity of the immigration system.
Additionally, as provided under section 214(c)(12) of the INA, 8 U.S.C. 1184(c)(12), a Fraud Prevention and Detection Fee must be paid by an employer petitioning for a beneficiary's initial grant of H-1B or L nonimmigrant classification, as well as for a beneficiary who is changing employers within these classifications. The INA requires fees deposited into the Fraud Prevention and Detection Account to be divided into thirds, and allocated to DHS, DOL, and DOS.
Additionally, FDNS currently combats fraud and abuse across all benefit types—including the EB-1, EB-2, EB-3, H-1B, and L-1 programs—by developing and maintaining efficient and effective anti-fraud and screening programs, leading information sharing and collaboration activities, and supporting the law enforcement and intelligence communities. As mentioned above, FDNS's primary mission is to determine whether individuals or organizations requesting immigration benefits pose a threat to national security, public safety, or the integrity of the nation's immigration system. USCIS verifies information and combats immigration fraud using various tools, including the Administrative Site Visit and Verification Program (ASVVP), under which FDNS conducts compliance review site visits for petitions in the H-1B, L-1, and religious worker programs. USCIS also conducts checks of various USCIS and other databases, including the FDNS-DS and the Validation Instrument for Business Enterprises (VIBE). USCIS has formed a partnership with ICE, under which FDNS pursues administrative inquiries into most application and petition fraud and ICE conducts criminal investigations into major fraud conspiracies. Individuals with information regarding fraud and abuse in the immigration benefits system are encouraged to contact FDNS at
DHS believes that existing rules and measures collectively provide adequate tools to detect and combat fraud and abuse, and that this rulemaking does not require new or additional protections. Accordingly, DHS has not made any changes in response to these comments.
The final rule clarifies when priority dates are established for employment-based immigrants and expands the ability of beneficiaries of approved Form I-140 petitions in the EB-1, EB-2, and EB-3 categories to retain their priority dates for use with subsequently filed Form I-140 petitions. First, the final rule fills a hole in current regulations. Existing regulations establish that the priority date of an employment-based immigrant visa petition accompanied by a labor certification is established when the labor certification is accepted for processing by DOL. Those regulations, however, do not indicate when the priority date is established for an employment-based petition that is
Second, the final rule disallows retention of the priority date of an approved Form I-140 petition if the approval of the petition is revoked because of fraud, willful misrepresentation of a material fact, the invalidation or revocation of a labor certification, or material error.
In addition, the final rule clarifies that an approved Form I-140 petition that is subject to withdrawal or business termination cannot on its own serve as a bona fide employment offer related to the petition.
DHS believes these regulatory changes are critical to fully implementing the job portability provisions of AC21. Therefore, the final rule retains these proposals with minor modifications to reflect public comment summarized below.
This change expands the ability of beneficiaries to retain the priority dates of approved Form I-140 petitions, including but not limited to when a petition's approval is revoked based solely on withdrawal of the petition. This provision improves the ability of certain workers to accept promotions, change employers, or pursue other employment opportunities without fear of losing their place in line for certain employment-based immigrant visas.
DHS notes, however, that commenters may have confused provisions that govern the retention of
To further provide clarity in this area, DHS removed the phrase “provided that the revocation of a petition's approval under this clause will not, by itself, impact a beneficiary's ability to retain his or her priority date under 8 CFR 204.5(e)” from proposed 8 CFR 205.1(a)(3)(iii)(C) and (D). DHS intended this phrase to simply restate that under § 204.5(e), a priority date may be retained, despite withdrawal or business termination that occurs less than 180 days after the petition's approval. DHS is removing the phrase from the proposed text because it could be construed as creating an unintended exception to the priority date retention provision.
DHS declines to adopt commenters' proposal that a Form I-140 petition remains approved if the withdrawal or business termination occurs at any time before the Form I-140 has been approved for at least 180 days. DHS believes that the 180-day threshold is consistent with and furthers the goals of job portability under INA 204(j). Additionally, DHS believes the 180-day threshold protects against fraud and misuse while providing important stability and flexibility to workers who have been sponsored for permanent residence. In addition to the period that it typically takes for a petitioning employer to obtain a labor certification from DOL and approval of a Form I-140 petition from DHS, the 180-day requirement provides additional assurance that the petition was bona fide when filed. The final rule, therefore, maintains Form I-140 petition approval despite petitioner withdrawal or business termination when such petitions have been approved for 180 days or more, or its associated adjustment of status application has been pending for 180 days or more.
This provision was intended to build upon existing DHS policies that have governed the validity of Form I-140 petitions in the event of withdrawal or business termination before and after beneficiaries are eligible to change jobs or employers under INA 204(j). DHS did not intend that its regulatory proposal would modify the existing timeframe before an individual would become eligible to port under INA 204(j); rather, this provision was intended to protect those individuals who are not yet eligible for INA 204(j) portability from the automatic revocation of the approval of a Form I-140 petition that had been approved for 180 days or more. Consistent with the intent of AC21 and DHS policy, DHS is revising the regulatory language at 8 CFR 205.1(a)(3)(iii)(C) and (D) to make clear that an approved Form I-140 petition involving withdrawal or business termination occurring 180 days or more after
With respect to obtaining lawful permanent residence under the EB-2 and EB-3 classifications, the INA requires that the worker be the beneficiary of a valid Form I-140 petition, which generally must be supported by a valid labor certification at the time of adjustment of status.
INA section 212(a)(5)(A) and (D) generally prohibits any foreign worker seeking to perform skilled or unskilled labor from being admitted to the United States under the EB-2 and EB-3 immigrant visa classifications unless the Secretary of Labor has determined and certified that there are not sufficient workers who are able, willing, qualified, and available to perform that work at the location the foreign worker will perform the work and that the employment of that foreign worker will not adversely affect the wages and working conditions of similarly situated U.S. workers. Under current DOL regulations, a permanent labor certification remains valid only for the particular job opportunity, for the individual named on the labor certification, and for the area of intended employment stated on the application for permanent labor certification.
While DHS cannot expand portability beyond the INA 204(j) context, the final rule does provide some additional flexibility and stability for individuals who may not be eligible for INA 204(j) portability, by allowing beneficiaries of approved Form I-140 petitions to retain their priority dates in certain situations and allowing certain Form I-140 petitions to remain valid, including for purposes of section 204(j) portability, notwithstanding withdrawal of the petition or termination of the petitioner's business, as described above.
The final rule at 8 CFR 245.25 codifies DHS policy and practice requiring that a foreign worker seeking to adjust his or her status to that of an LPR must have a valid offer of employment at the time the Form I-485 application is filed and adjudicated. DHS at final 8 CFR 245.25(a)(2) codifies the existing policy and practice to determine eligibility to adjust status based on a request to port under section 204(j) of the INA. In the final rule at 8 CFR 245.25(a)(2)(ii)(A) and (B), DHS reaffirms that a qualifying immigrant visa petition has to be approved before DHS examines a portability request under INA 204(j) and determines an individual's eligibility or continued eligibility to adjust status based on the underlying visa petition. DHS also codifies current practice regarding the adjudication of portability requests when the Form I-140 petition is still pending at the time the application for adjustment of status has been pending for 180 days or more in final 8 CFR 245.25(a)(2)(ii)(B).
Based on its program experience in adjudicating adjustment of status applications, USCIS determined that certain threshold evidence regarding the job offer is required in all cases to successfully determine eligibility for adjustment of status based on an employment-based immigrant visa petition and facilitate the administrative processing of INA 204(j) porting requests. USCIS has consequently developed a new form—Supplement J to Form I-485, Confirmation of Bona Fide Job Offer or Request for Job Portability Under INA Section 204(j) (“Supplement J”)—to standardize the collection of such information. The offer of employment may either be the original job offer or, pursuant to INA 204(j), a new offer of employment, including qualifying self-employment, that is in the same or similar occupational
The use of Supplement J will ensure uniformity in the collection of information and submission of initial evidence. Supplement J will be used to assist USCIS, as appropriate, in confirming that the job offer described in a Form I-140 petition is still available at the time an individual files an application for adjustment of status, or a qualifying job offer otherwise continues to be available to the individual before final processing of his or her application for adjustment of status. Supplement J also will be used by applicants for adjustment of status to request job portability, and by USCIS to determine, among other things, whether a new offer of employment is in the same or a similar occupational classification as the job offer listed in the Form I-140 petition.
Supplement J collects necessary information about the job offer and includes attestations from the foreign national and employer regarding essential elements of the portability request. In a number of ways, Supplement J will improve the processing of porting requests submitted under INA 204(j). As further described in the responses to comments below, DHS is making a revision to the Supplement J instructions to clarify that individuals applying for adjustment of status on the basis of a national interest waiver (NIW), as well as aliens of extraordinary ability, are not required to use Supplement J. Currently, USCIS is not adding an extra fee for submission of this new supplement, but may consider implementing a fee in the future.
In response to this comment, DHS amended proposed 8 CFR 245.25(a)(2) to reflect DHS's current policy and longstanding practice related to such pending Form I-140 petitions.
First, in accordance with existing practice, USCIS will only adjudicate a qualifying Form I-140 petition in accordance with the standards described in final 8 CFR 245.25(a)(2)(ii) when USCIS has been notified that the beneficiary intends to port to a new job pursuant to INA 204(j). As indicated in the precedent decision,
The burden is on the applicant to demonstrate eligibility or otherwise maintain eligibility for adjustment of status to lawful permanent residence.
Second, in determining whether a Form I-140 petitioner meets the “ability to pay” requirements under 8 CFR 204.5(g)(2) for a pending petition that a beneficiary seeks to rely upon for 204(j) portability, DHS reviews the facts in existence at the time of filing.
Third, DHS is clarifying for INA 204(j) portability purposes that a qualifying Form I-140 petition will be approved if eligibility requirements (separate and apart from the ability to pay requirement) have been met at the time of filing and until the foreign national's application for adjustment of status has been pending for 180 days.
Section 8 CFR 245.25(a)(2), as amended in this final rule, is consistent with AC21, existing regulations, USCIS policies implementing AC21, and current practice. Specifically, DHS reads 8 CFR 245.25(a)(2), as amended in this final rule, in harmony with 8 CFR 103.2(b)(1), which requires an applicant or petitioner to “establish that he or she is eligible for the requested benefit at the time of filing the benefit request and must continue to be eligible through adjudication.” In cases involving a request for INA 204(j) portability that is filed before USCIS adjudicates the Form I-140 petition, DHS will assess a petitioner's ability to pay as of the date the Form I-140 petition was filed and all other issues as of the date on which the application for adjustment of status was pending 180 days, regardless of the date on which the petition is actually adjudicated. DHS believes this policy meaningfully implements congressional intent in enacting INA 204(j) to allow workers who cannot immediately adjust status based on backlogs to move to new employment while their applications for adjustment of status remain pending.
Accordingly, for petitioners to satisfy the ability to pay requirement in this limited context, eligibility will be deemed established through adjudication for purposes of 8 CFR 103.2(b)(1) if the ability to pay existed at the time the priority date is established through time of the petition's filing.
DHS believes that this specific adjudicatory practice is consistent with the requirements in 8 CFR 103.2(b)(1),
Finally, DHS maintains through this final rule its existing policy and practice to deny a pending Form I-140 petition at any time, and even after the associated application for adjustment of status has been pending for 180 days or more, if the approval of such petition is inconsistent with a statutory requirement in the INA or other law.
DHS recognizes that variations in job duties are natural and may occur because they involve employers in different economic sectors. This does not necessarily preclude two positions from being in similar occupational classifications for purposes of 204(j) portability. SOC codes provide a measure of objectivity in such assessments and thus can help address uncertainty in the portability determination process.
DHS recognizes that individuals earn opportunities for career advancement as they gain experience over time. Cases involving career progression must be considered under the totality of the circumstances to determine whether the applicant has established by a preponderance of the evidence that the relevant positions are in similar occupational classifications for INA 204(j) portability purposes. For further guidance on the DHS analysis of cases involving career progression, commenters are encouraged to read the March 16, 2016, USCIS policy memorandum, “Determining Whether a New Job is in `the Same or a Similar Occupational Classification' for Purposes of Section 204(j) Job Portability.”
Given the large overall number and variety of benefit requests and applications that USCIS adjudicates each year, DHS can more efficiently intake and process INA 204(j) portability requests on Supplement J than those submitted through letter correspondence. Among other things, Supplement J provides a consistent format and uniform content, which allows DHS to more easily find and capture necessary information as well as match the form with the corresponding Form I-485 application. Because there is no standardized form currently associated with porting requests, DHS contract and records staff cannot efficiently enter data associated with those requests. With the Supplement J, standardized data can more readily be entered and tracked in agency electronic systems. This, in turn, will greatly enhance USCIS's ability to monitor the status of portability requests, track file movement, and otherwise improve accountability and transparency regarding USCIS's processing of portability requests.
DHS does not agree with several commenters' statements that the Supplement J requirement will increase uncertainty with respect to job portability requests. Rather, DHS believes that Supplement J will reduce past uncertainties by facilitating (1) the tracking of portability requests through the adjudication process, (2) the provision of timely acknowledgements and notices, and (3) the ability of individuals to know if their new job is in a same or a similar occupational classification before the Form I-485 application is adjudicated.
Additionally, an individual who seeks to port in the future may affirmatively file Supplement J to seek a determination as to whether a new job offer is in the same or a similar occupational classification. A DHS decision will inform the individual whether the new job offer can support the pending Form I-485 application and continued eligibility to obtain lawful permanent residence without the need for a new employer to file a new Form I-140 petition. This process will provide transparency into USCIS's “same or similar” determinations, providing individuals with increased certainty and better allowing them to make informed career decisions, such as whether to change jobs prior to final adjudication of the pending Form I-485 application.
While an applicant may be required to submit Supplement J when requesting job portability, or in response to an RFE or NOID, DHS does not believe that this new requirement will create significant new burdens or legal risks for employers and employees. As discussed in more detail in the Regulatory Impact Analysis (RIA), the submission of Supplement J will not impose significant additional burdens of time on employers, because employers are already required in such cases to submit job offer or employment confirmation letters supporting INA 204(j) portability. For this same reason, DHS believes the Supplement J requirement will also not impose significant new legal costs, including by increasing the likelihood that individuals or employers will need to consult with lawyers.
While DHS presents a sensitivity analysis for the potential annual costs of Supplement J in the RIA as ranging from $126,598 to $4,636,448, DHS believes that the submission of Supplement J does not impose significant additional burdens on USCIS or employers because applicants are already required to submit letters from employers when requesting INA 204(j) portability. DHS does not have information on how long it currently takes to complete employment confirmation or job offer letters, so DHS cannot conduct side-by-side comparisons. However, anecdotal input suggests that, notwithstanding concern to the contrary, the Supplement J requirement in fact is roughly equivalent to the letter-writing process, as employment confirmation and job offer letters currently provide information similar to that requested in Supplement J.
Additionally, USCIS recognizes in the RIA that the simplified and standardized process provided by the Supplement J requirement may facilitate the ability of employees to change employers. This process, along with the potential for an increased awareness of INA 204(j) portability as a result of this regulation, could potentially increase the number of Supplement J forms submitted. While beneficial to applicants, such an increase has the potential to result in higher turnover for some employers, along with additional costs that may be incurred due to employee replacement. However, DHS does not currently have data on the percentage of employees who port to other employers vis-à-vis those who port to other positions with their same employers. In the RIA, DHS qualitatively discusses the potential costs to employers resulting from employee turnover.
DHS reiterates that the Supplement J requirement will streamline adjudication by providing clear instructions on the types of information
Applicants requesting portability under INA 204(j) must provide evidence that the employer is a viable employer extending a bona fide offer of full-time employment to the applicant, and that the employer will employ the applicant in the job proffered upon the applicant's grant of lawful permanent resident status. The current practice is to have applicants submit this evidence in the form of job offer letters from employers. These letters must contain the employer's signature, as well as a certification that everything in the letter is true and correct. Supplement J does not depart from this past practice in any meaningful way. Because Supplement J requests the same information as is currently provided in letters that are currently provided by employers, and that contain the employer's signature, DHS does not see how the Supplement J requirement increases the ability to take advantage of, or otherwise assert control over, employees.
DHS agrees with commenters, however, that Supplement J will not alleviate current employment-based immigrant visa wait times. Many Form I-485 applications may remain pending for lengthy periods of time due to the retrogression of visa numbers for particular employment-based immigrant visa preference categories, which may lead to visas becoming unavailable after Form I-485 applications are filed. Congress established the numerical limitations on employment-based immigrant visa numbers. The Department of State allocates employment-based immigrant visas based on the applicant's preference category, priority date, and country of chargeability. Supplement J does not affect the statutory availability of employment-based immigrant visas or the allocation of such numbers by DOS. USCIS cannot approve an individual's application for adjustment of status until a visa has again become available to that individual.
Supplement J improves administration of the portability provisions that Congress created so that individuals experiencing lengthy delays in the adjudication of their Form I-485 applications can change jobs while retaining their eligibility to adjust status on the basis of an approved Form I-140 petition. Supplement J will result in the more efficient adjudication of Form I-485 applications once visas become available, which DHS believes will encourage, not deter employers from hiring workers eligible to port under section 204(j).
The final rule provides a stopgap measure, in the form of temporary employment authorization, to certain nonimmigrants who are the beneficiaries of approved employment-based immigrant visa petitions, are caught in the continually expanding backlogs for immigrant visas, and face compelling circumstances. This stopgap measure is intended to address certain particularly difficult situations, including those that previously may have forced individuals on the path to lawful permanent residence to abruptly stop working and leave the United States. When sponsored workers and their employers are in particularly difficult situations due to employment-based immigrant visa backlogs, the compelling circumstances employment authorization provision may provide a measure of relief, where currently there is none.
Specifically, the final rule provides that, to obtain a temporary grant of compelling circumstances employment authorization, an individual must (1) be in the United States in E-3, H-1B, H-1B1, O-1, or L-1 nonimmigrant status, including in any applicable grace period, on the date the application for employment authorization is filed; (2) be the principal beneficiary of an approved Form I-140 petition; (3) establish that an immigrant visa is not authorized for issuance based on his or her priority date, preference category, and country of chargeability according to the Final Action Date in effect on the date the application is filed; and (4) demonstrate compelling circumstances that justify the exercise of USCIS discretion to issue an independent grant of employment authorization.
DHS is finalizing the compelling circumstances employment authorization provision with several changes to the proposed regulatory text to clarify the eligibility requirements for initial and renewal applications filed by principals and dependents. An individual requesting an EAD must file an application on Form I-765 with USCIS in accordance with the form instructions. Under final 8 CFR 204.5(p)(3), some individuals may be eligible for a renewal of their compelling circumstances EAD on either or both bases of eligibility, depending on their circumstances. DHS also recognizes that an applicant may seek to renew his or her compelling circumstances EAD on a different basis than that on the initial application. In the responses to comments below, DHS further explains the provisions in the final rule, including the manner in which DHS determined the specific population of beneficiaries who would be eligible for this type of employment authorization and its rationale for providing employment authorization only to those individuals who are facing compelling circumstances.
A common concern expressed by commenters opposing the compelling circumstances requirement was that the number of individuals who would be eligible for such EADs would be too narrow. Some commenters suggested that it would be better to never finalize the rule if the compelling circumstance provision were to remain intact. Certain commenters opposed DHS's introduction of a compelling circumstances requirement because no other employment authorization category is conditioned upon a showing of compelling circumstances. One commenter, for example, reasoned that the “compelling circumstances” requirement should be eliminated because applicants for adjustment of status, who similarly are on the path to lawful permanent residence, need not demonstrate compelling circumstances to obtain an EAD. Other commenters noted that recipients of deferred action under the Deferred Action for Childhood Arrivals (DACA) policy are not required to establish compelling circumstances to qualify for employment authorization and stated that it is only fair that nonimmigrants with approved Form I-140 petitions who are contributing to society by working and paying taxes be treated equivalently. Some commenters concluded that the Department is “targeting” certain foreign workers by imposing the compelling circumstances condition.
DHS believes the expansions suggested by commenters have the potential to create uncertainty among employers and foreign nationals with consequences for predictability and reliability in the employment-based immigration system. Among other things, the suggestions could lead to unlimited numbers of beneficiaries of approved immigrant visa petitions choosing to fall out of nonimmigrant status, as described in greater detail below. The resulting unpredictability in the employment-based immigrant visa process must be carefully weighed in light of the Secretary's directive to “provide stability” to these beneficiaries, while modernizing and improving the high-skilled visa system.
The White House Fact Sheet on Immigration Accountability Executive Action referenced by the commenters concerning portability of high-skilled workers and their spouses is addressed in several elements of this rulemaking, including through the new H-1B portability provisions, the section 204(j) portability provisions, and provisions revising the circumstances under which Form I-140 petitions are automatically revoked. To the degree these comments specifically relate to provisions authorizing employment of H-4 nonimmigrant spouses of H-1B nonimmigrant workers who have been sponsored for permanent resident status, that provision was subject to separate notice-and-comment rulemaking and is now codified at 8 CFR 214.2(h)(9)(iv).
Finally, commenters did not suggest how the compelling circumstances EAD would facilitate the ability of employers to exploit their employees. DHS disagrees that the availability of such EADs, which are available to high-skilled nonimmigrant workers on a voluntary basis, would result in
In the NPRM, DHS provided four examples of situations that, depending on the totality of the circumstances, may be considered compelling and justify the need for employment authorization: (1) Serious illness or disability faced by the nonimmigrant worker or his or her dependent; (2) employer retaliation against the nonimmigrant worker; (3) other substantial harm to the applicant; and (4) significant disruption to the employer. These situations are meant to be illustrative, as compelling circumstances will be decided on a case-by-case basis and may involve facts that vary from those provided above. For that reason, DHS invited the public to suggest other types of compelling circumstances that may warrant a discretionary grant of separate employment authorization. DHS also requested comments on the manner in which applicants should be expected to document such compelling circumstances. In response, DHS received numerous comments providing examples and suggestions, which are discussed below.
Another commenter requested that DHS expand on the phrase “other substantial harm to the applicant,” believing that this provision may be the most common basis for demonstrating compelling circumstances. Another commenter suggested that DHS broaden the circumstances in which employer retaliation would be considered to be compelling, so as to benefit employees involved in labor disputes. The commenter noted that, as discussed in the preamble of the NPRM, the category titled “Employer Retaliation” would require an employee to document that an employer had taken retaliatory action before the employee could become eligible to apply for employment authorization based on compelling circumstances. To alleviate undue risk, the commenter recommended revising the category so that it would cover individuals involved in labor disputes. The commenter believed this change would reduce the harm that retaliation can cause to employees and prevent the chilling effect such retaliation can have on the exercise of labor rights.
A commenter also requested that, as related to DHS's proposal to consider significant disruption to employers, compelling circumstances apply when an employer attests that departure of the employee will: (1) Delay a project; (2) require the company to expend time or resources to train another employee to fill the role; (3) result in additional costs to recruit and hire a new employee; or (4) harm the company's professional reputation in the marketplace.
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Although approaching or reaching the statutory temporal limit on an individual's nonimmigrant status will not, standing alone, amount to compelling circumstances, this could be a factor considered by DHS in weighing the totality of the circumstances on a case-by-case basis. Likewise, job loss alone will not be considered substantial harm to the applicant, unless an individual can show additional circumstances that compound the hardship associated with job loss.
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○ An L-1B nonimmigrant worker sponsored for permanent residence by an employer that subsequently undergoes corporate restructuring (
○ An H-1B nonimmigrant worker who provides critical work on biomedical research for a non-profit entity, affiliated with an institution of higher education, that subsequently reorganizes and becomes a for-profit entity, causing the worker to no longer be exempt from the H-1B cap. In cases where the worker may be unable to obtain employment authorization based on his or her H-1B status, and the employer is unable to file a new H-1B petition based on numerical limitations or to obtain another work-authorized nonimmigrant status, the employment authorization available under 8 CFR 204.5(p) could provide a temporary bridge for continued employment of the worker as his or her departure would create substantial disruption to the employer's biomedical research.
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DHS acknowledges that many beneficiaries eagerly await the opportunity to become lawful permanent residents. The Department works closely with DOS to improve the immigrant visa processing system, but notes that it is inevitable that beneficiaries may experience long waits and that processing times will vary. As indicated in the NPRM, DHS does not believe that a long wait for an immigrant visa constitutes a compelling circumstance on its own. Many workers who face a lengthy wait for an immigrant visa, including those who have reached their statutory maximum time period in nonimmigrant status, often face difficult choices. DHS does not consider that these common consequences, on their own, would amount to compelling circumstances. Nor does DHS believe that many of the other scenarios suggested by commenters involve compelling circumstances on their own. Home ownership, notable academic qualifications, or dissatisfaction with a position or salary, standing alone, do not rise to the level of a compelling circumstance. However, any one of these situations could rise to the level of compelling circumstances in combination with other circumstances.
Likewise, unemployment, in and of itself, will generally not be considered a compelling circumstance. However, unemployment could rise to the level of a compelling circumstance if, for example, the applicant demonstrates that the unemployment was a result of serious illness, employer retaliation, or would result in substantial harm or significant employer disruption, as described above and in the NPRM.
DHS closely considered comments advocating for protection of derivatives. DHS has determined it is appropriate to extend the benefits provided by the compelling circumstances provision to spouses and children of principal beneficiaries whose employment authorization has not been terminated or revoked.
DHS also specifically considered comments expressing concern for children who may “age out” or have recently “aged out” of immigration benefit eligibility. DHS notes that, by statute, once a person turns 21, he or she is no longer a “child” for purposes of the INA, subject to certain statutory exceptions by which individuals who surpass that age are or may be considered to remain a “child” by operation of law.
While circumstances relating to a business start-up could be relevant to a presentation of compelling circumstances, an interest in entrepreneurship standing alone cannot support an employment authorization request based on a compelling circumstance. With regard to Form I-140 petitions approved in the EB-2 category based on a national interest waiver, in this final rule DHS is confirming that beneficiaries of approved Form I-140 petitions under the EB-2 category, which include national interest waiver beneficiaries and physicians working in medically underserved areas, are eligible to apply for employment authorization based on compelling circumstances, as long as they meet all other applicable requirements.
In the NPRM, DHS proposed to limit the discretionary grant of employment authorization based on compelling circumstances only to certain workers who are in the United States in E-3, H-1B, H-1B1, O-1, or L-1 nonimmigrant status and who are the beneficiaries of approved employment-based immigrant
DHS declines the commenter's request to include EB-4 beneficiaries as eligible to apply for employment authorization based on compelling circumstances because Congress, with very limited exception,
With respect to the timing of the renewal application, DHS has reviewed the renewal provision as proposed and agrees with commenters that the proposed regulatory text was ambiguous regarding the timing of renewal applications. Therefore, DHS clarifies in the final rule at § 204.5(p)(3) that applications for renewal of employment authorization based on compelling circumstances must be filed by the applicant prior to the expiration of his or her current employment authorization. Requiring renewal applications to be properly filed prior to the expiration of the current employment authorization is consistent with DHS's goal of promoting ongoing employment and also encourages such applicants to avoid accruing unlawful presence, which could affect their eligibility to obtain LPR status. Like other Form I-765 applicants, individuals applying for employment authorization based on compelling circumstances, at either the initial or renewal stage, must be in the United States when applying for the benefit.
At the same time, DHS also wants to ensure that foreign workers whose priority dates have already been reached take appropriate measures to apply for permanent residence, as the compelling circumstances EAD is not a substitute for lawful permanent residence. DHS, therefore, believes it is reasonable to condition compelling circumstances EADs to the unavailability of immigrant visas, thereby ensuring that foreign workers avail themselves of the opportunity to apply for and obtain lawful permanent residence when able to do so.
As noted by commenters, the proposed ineligibility ground based on a priority date being current for more than one year was superfluous with respect to initial applicants (who were required to show that a visa was not immediately available), as their eligibility would have already ended at the time their immigrant visa was authorized for issuance. The proposed ineligibility ground was also superfluous with respect to the second renewal criterion (
In response to public comment, DHS is simplifying the renewal criteria for compelling circumstances EADs. As modified, the final rule makes clear that a principal beneficiary seeking to renew an EAD based on compelling circumstances remains eligible if his or her priority date is not authorized for immigrant visa issuance with respect to his or her preference category and country of chargeability based on the Final Action Date in the Visa Bulletin in effect on the date the renewal application is filed. This modification tracks the eligibility criteria for the initial application for the EAD, and therefore should be readily understood by all parties, making it easier for both the public and USCIS to determine whether someone is eligible for renewal under that basis. DHS retains the second renewal criterion where a principal beneficiary will be eligible to renew the EAD if his or her priority date is one year or less (either before or after) of the Final Action Date in the Visa Bulletin in effect on the date the renewal application is filed. For purposes of greater clarity, in this final rule DHS has included an illustrative example in the regulatory text applicable to renewal applications by principal beneficiaries based on the Visa Bulletin in effect on the date the renewal application is filed. In addition to these changes, DHS made additional edits in this provision to clarify the Visa Bulletin in effect on the date the application for employment authorization is filed establishes the Final Action date for purposes of a renewal application.
Together, the renewal criteria operate to preclude eligibility to individuals for whom a visa has been authorized for issuance for over one year. Therefore, DHS removed the separate ineligibility criteria from § 204.5(p)(5) as unnecessary. DHS believes that these changes should eliminate the confusion or inconsistency in the regulatory provisions.
DHS disagrees with the suggestion that no additional restrictions tied to authorization for immigrant visa issuance should apply to renewal eligibility. DHS intends this provision to provide short-term relief to certain high-skilled workers who are well on their way to LPR status to help them when they are facing compelling circumstances while they wait for their immigrant visas to become available. Consistent with that intent, applicants seeking to benefit from employment authorization based on compelling circumstances must also continue to pursue lawful permanent residence. Therefore, DHS believes it appropriate to deny a renewal application, even when compelling circumstances continue to be shown, in cases where the applicant should already have had ample time to obtain an immigrant visa and become a lawful permanent resident. Thus, renewal will not be granted under any circumstances if the applicant's priority date is more than one year earlier than the applicable Final Action date on the Visa Bulletin in effect at the time of filing the renewal application. In cases in which the Visa Bulletin at the time of a renewal application is filed indicates that the beneficiary's priority date is not authorized for immigrant visa issuance, applicants can seek renewal of their employment authorization based on a showing of new or continuing compelling circumstances.
In addition, DHS believes that important additional flexibility for principal beneficiaries of Form I-140 petitions results from retaining the second ground for renewal, which allows applicants to renew employment authorization without a showing of compelling circumstances if the applicant's priority date is close to becoming or recently became eligible for immigrant visa issuance (
Because there was confusion reflected in many comments with regard to eligibility to make a renewal request and the relevance of the Visa Bulletin, DHS has revised the regulatory text to foster a better understanding and simplify the use and implementation of the compelling circumstances EAD renewal process by both applicants and USCIS adjudicators. DHS has edited the text at 8 CFR 204.5(p)(3)(i)(A) to mirror the requirements for initial eligibility, as well as to eliminate a separate ineligibility ground (
First, § 204.5(p)(3)(i)(A) allows the principal beneficiary to apply for renewal of employment authorization if
Consequently, under this final rule, a principal beneficiary who continues to experience compelling circumstances, and whose immigrant visa is not authorized for issuance, may be able to renew the compelling circumstances EAD if DHS determines that the issuance of employment authorization is justified.
Second, final 8 CFR 204.5(p)(3)(i)(B) allows the principal beneficiary to apply for a renewal of his or her employment authorization without having to show compelling circumstances if, based on his or her priority date, he or she is near the date that an immigrant visa could be issued under the applicable preference category and country of chargeability. Specifically, the difference between the principal beneficiary's priority date and the Final Action Date must be 1 year or less according to the Visa Bulletin in effect on the date the renewal application is filed. This 1-year limitation extends both before and after the specified Final Action Date, thereby allowing beneficiaries whose priority dates are 1 year or less before the relative current priority date, as well as those beneficiaries whose priority dates are 1 year or less after the relative current priority date, to request renewal of their EADs. Allowing for renewals of employment authorization without a demonstration of continuing compelling circumstances provides a bridge for those individuals who may be issued an immigrant visa in the near future. As enumerated in the proposed rule at 8 CFR 204.5(p)(5), this renewal ground incorporates an important DHS policy goal of encouraging individuals to become lawful permanent residents by limiting eligibility for a compelling circumstances EAD to only those whose priority dates have been current for one year or less according to the Visa Bulletin in effect on the date the renewal is filed. DHS believes this provides a reasonable window during which an individual may either apply for adjustment of status, and thereby be issued employment authorization pursuant to that filing, or complete the immigrant visa process abroad. Additionally, DHS has revised this provision to clarify which Visa Bulletin governs for purposes of calculating the difference between the beneficiary's priority date and the Final Action Date.
To avoid further confusion, DHS provides the following examples to facilitate a better understanding of the eligibility requirement for renewal with respect to the Visa Bulletin, and DHS has incorporated one of these examples in the regulatory text:
• The first example involves a Visa Bulletin Final Action cut-off date of November 1, 2000 for the beneficiary's preference category and country of chargeability. If the beneficiary is basing the renewal application on compelling circumstances, his or her priority date must be on or after November 1, 2000 to apply for a renewal under § 204.5(p)(3)(i)(A), as immigrant visas will not be authorized for issuance to beneficiaries with priority dates on or after November 1, 2000.
• The second example again involves a Visa Bulletin Final Action cut-off date of November 1, 2000, but the beneficiary is seeking a renewal under 8 CFR 204.5(p)(3)(i)(B), which provides that “[t]he difference between the principal beneficiary's priority date and the date upon which visas are authorized for issuance for the principal beneficiary's preference category and country of chargeability is 1 year or less according to the current Visa Bulletin on the date the application for employment authorization is filed.” Because this 1-year window extends both ways—before and after the specified Final Action Date—the beneficiary's priority date can be as early as October 31, 1999 or as late as October 31, 2001. Beneficiaries qualifying for renewal under this alternative need not show compelling circumstances to meet the eligibility criteria.
Finally, to implement this provision, DHS is revising Form I-765 and accompanying form instructions with this final rule and will conduct public outreach and publish guidance explaining the filing requirements and eligibility criteria for this new employment authorization category. Information about renewing applications for employment authorization granted pursuant to compelling circumstances will be included.
Importantly, as already noted, individuals who are seeking lawful permanent residence based on classification as an employment-based immigrant are generally barred by statute from applying to adjust their status in the United States if they are not in lawful nonimmigrant status.
As such, granting advance parole to individuals who receive compelling circumstances EADs would not, as a rule, make them eligible for employment-based adjustment of status or otherwise enhance stability or certainty in the efforts of these individuals to become lawful permanent residents. DHS thus will not automatically grant advance parole in conjunction with all compelling circumstances EADs. However, to better assist individuals with compelling circumstances EADs who need to travel, DHS will consider granting advance parole, as appropriate for urgent humanitarian reasons or significant public benefit, to such individuals on a case-by-case basis.
Many commenters stated that granting employment authorization to DACA recipients, while declining to do so for nonimmigrants, provides a significant advantage to undocumented individuals and encourages unauthorized immigration. Other commenters stated that it is unfair to provide employment authorization to undocumented individuals through DACA and not to nonimmigrants abiding by complex U.S. immigration laws and currently suffering from a lack of job mobility while awaiting available immigrant visas. These commenters highlighted the benefits of independent employment authorization, including freedom from what they perceive as restrictive and immobile H-1B employment, increased opportunity for upward mobility with their current employer, and greater mobility within the U.S. job market in general. One commenter stated that denying independent employment authorization for nonimmigrants with approved Form I-140 petitions creates the equivalent to modern day slavery for nonimmigrant employees, while DACA recipients are allowed to work for whatever employer they choose. A number of commenters stated that their dependent children, who came to the United States legally, should be granted the same benefits as DACA recipients. Several commenters expressed the opinion that being in the United States in a legal status is more difficult than being in the United States under a grant of DACA.
DHS disagrees with commenters who contend that the limitations placed on the compelling circumstances EAD give DACA recipients an advantage over nonimmigrant workers. DACA recipients are individuals who are removable from the United States but whose removal is deferred. They do not have a lawful immigration status either before or after receiving DACA and instead are simply provided with relief from removal for periods of two years at a time, if they remain eligible. DACA is a discretionary policy related to enforcement and removal and is not comparable to individuals with nonimmigrant status. DHS considers DACA requests pursuant to an exercise of discretion on a case-by-case basis. Nonimmigrant workers are in a more advantageous position than DACA recipients with respect to the immigration laws by virtue of being in the United States in a lawful immigration status. Among other things, presence in nonimmigrant status is not a basis for removability, family members of nonimmigrants are typically able to obtain benefits through the nonimmigrant, and nonimmigrants are better situated with respect to eligibility to pursue lawful permanent residence and, thereafter, U.S. citizenship.
Under the final rule, DHS may provide grace periods of up to 10 days before the petition validity period (or other authorized validity period) begins, and of up to 10 days after the validity period ends to individuals in certain employment-authorized nonimmigrant visa classifications that previously have not been afforded these periods, namely the E-1, E-2, E-3, L-1 and TN classifications.
In response to public comment, DHS is striking a phrase from the proposed regulation that was unnecessarily limiting and not fully consistent with how existing 10-day grace periods may be used by H, O and P nonimmigrants. Specifically, DHS is deleting from proposed 8 CFR 214.1(l)(1) the phrase that could have been read to limit use of a 10-day grace period only “to prepare for departure from the United States or to seek an extension or change of status based on a subsequent offer of employment.” As noted, this deletion will further the purpose of the NPRM proposal to extend to the E-1, E-2, E-
Under the final rule, DHS may also authorize a grace period of up to 60 days in the E-1, E-2, E-3, H-1B, H-1B1, L-1, and TN classifications during the period of petition validity (or other authorized validity period).
This 60-day grace period further supports AC21's goals of providing improved certainty and stability to nonimmigrants who need to change jobs or employers. The 60-day grace period would provide needed flexibility to qualifying nonimmigrants who face termination of employment prior to the end of their petition validity periods. The grace period, for example, allows such nonimmigrants to remain in the United States without violating their status and potentially obtain new job offers from employers that seek to file new nonimmigrant petitions, and requests for an extension of stay, on their behalf. In such cases, even though prior employment may have terminated several weeks prior to the filing of the new petition, DHS may consider such an individual to have not violated his or her nonimmigrant status and allow that individual to extend his or her stay with a new petitioner, if otherwise eligible. If the new petition is granted, the individual may be eligible for an additional grace period of up to 60 days in connection with the new authorized validity period.
Finally, the final rule at 8 CFR 214.1(l)(3) makes clear that the nonimmigrant worker, during either a 10-day or 60-day grace period, may apply for and, if otherwise eligible, be granted an extension of stay or change of status. The beneficiary may also commence employment under H-1B portability per § 214.2(h)(2)(i)(H), discussed in some detail below, if otherwise eligible. To further effectuate the intended purpose of these provisions, DHS is also making clarifying edits to the regulatory text at § 214.1(l)(2), and (l)(3).
Additionally, in response to public comment, DHS is removing from the 10-day grace period provision in 8 CFR 214.1(l)(1) the clause that reads, “to prepare for departure from the United States or to seek an extension or change of status based on a subsequent offer of employment.” DHS is removing this clause to avoid an unintended limitation on the use of such grace periods and to maintain consistency with grace periods already enjoyed by H, O and P nonimmigrants. While DHS maintains that the 10-day grace period commencing when the relevant validity period expires is typically used by individuals to prepare for departure from the United States or to extend or change status, DHS determined upon further examination that the clause is unnecessarily limiting and does not fully comport with how the existing 10-day grace period may be used by H, O and P nonimmigrants. Such grace periods are also used for other permissible non-employment activities such as changing one's status to that of a dependent of a nonimmigrant spouse or vacationing prior to departure. DHS clarifies that, under this final rule, nonimmigrants in E-1, E-2, E-3, L-1, or TN status may engage in the same types of activities during the 10-day grace period that H, O, and P nonimmigrants currently engage in under the existing 10-day grace period.
Many commenters stated that the term “one-time” in the proposed regulatory text was unclear, and they did not understand whether the rule allowed for one grace period per lifetime, per employer, per petition validity period, or per total period of stay in any given status. Some commenters proposed alternative approaches to measuring the one-time 60-day grace period, including allowing the 60-day grace period to be divisible so that the unused portion of a 60-day grace period could be used toward a subsequent cessation of employment within the same period of valid nonimmigrant status, or carried forward into a new validity period and aggregated with a subsequent 60-day grace period.
The final rule at 8 CFR 214.2(h)(2)(i)(H) codifies longstanding DHS policies implementing H-1B job portability under INA 214(n). This section of the final rule enhances the ability of H-1B nonimmigrant workers to change jobs or employers by authorizing them to accept new or concurrent employment upon the filing of a nonfrivolous H-1B petition (“H-1B portability petition”).
The final rule allows H-1B employers to file successive H-1B portability petitions (often referred to as “bridge petitions”) on behalf of H-1B nonimmigrant workers. An H-1B nonimmigrant worker who has changed employment based on an H-1B portability petition filed on his or her behalf may again change employment based on the filing of a new H-1B portability petition, even if the former H-1B portability petition remains pending. Eligibility for employment pursuant to a second or subsequent H-1B portability petition, however, would effectively depend on (1) whether any prior H-1B portability petitions have been approved or remain pending, and (2) whether the individual's Form I-94, issued upon admission or extended pursuant to an approved H-1B petition, has expired. If the request for an extension of stay was denied in a preceding H-1B portability petition and the individual's Form I-94 authorizing admission in or extension of H-1B status has expired, a request for an extension of stay in any successive H-1B portability petition(s) must also be denied.
Additionally, DHS does not agree that these clarifications would impose new restrictions on employers. As noted above, USCIS has long interpreted INA 214(n) as requiring an individual to maintain lawful H-1B status, or be in an authorized period of stay based on a timely filed extension of H-1B status, in order to “port” to a new employer. As this is longstanding policy and practice, DHS disagrees that the codification of such provision would present a new deterrent to employers recruiting certain H-1B nonimmigrants, such as physicians.
Thus, an eligible nonimmigrant may be granted employment authorization until the adjudication of the H-1B petition if he or she chooses to engage in concurrent or new employment (including new employment with the same employer) or may be granted employment authorization for a period not to exceed 240 days if he or she chooses to continue the current employment with the same employer. For these reasons, DHS disagrees with the commenter's assessment that this provision renders 8 CFR 274a.12(b)(20) moot.
Generally, if an individual's original H-1B petition has expired prior to the time that the beneficiary seeks admission to the United States, or if such petition is otherwise no longer valid, the beneficiary must present evidence that USCIS has approved a new H-1B petition to be admitted to the United States. If the original H-1B petition has not yet expired, however, the beneficiary of an H-1B portability petition who travels abroad may be admissible if, in addition to presenting
DHS notes that an H-1B beneficiary who has a valid and unexpired Form I-94 remains in a period of authorized stay. As long as the petitioner can demonstrate that the beneficiary remained in valid H-1B nonimmigrant status when a successive portability petition was filed, the timely filed petition and associated extension of stay request should not be denied simply because of a denial or withdrawal of the preceding portability petition. DHS does not consider an H-1B portability petition that is filed before the validity period expires to constitute a “bridge petition”; rather, a bridge petition is one filed after expiration of the Form I-94, but during the time in which the individual was in a period of authorized stay based on a preceding timely filed extension petition.
DHS believes that this rule achieves the ameliorative purpose of section 214(n) to enhance the job flexibility of H-1B nonimmigrant workers and minimize the potential exploitation of such workers by employers. DHS thus adopts the proposed provision without change.
The final rule amends existing DHS regulations to incorporate the Department's current policy
First, in this final rule, DHS is making clarifications to the proposal in the NPRM covering unlicensed beneficiaries who will work, under the supervision of licensed senior or supervisory personnel, in an occupation that typically requires licensure.
Second, DHS is expanding the bases under which an individual may be granted H-1B nonimmigrant status despite the individual's inability to obtain a required license in the United States. The proposed rule expressly allowed for a temporary exception to the licensure requirement for individuals who were substantively qualified for licensure but who could not obtain such licensure due only to the need to have a Social Security number or employment authorization. In response to public comment, DHS is clarifying that a temporary exception to the licensure requirement may also be available in cases in which the inability to obtain the license is due to a “similar technical requirement.” Final 8 CFR 214.2(h)(4)(v)(C)(
Petitions for such unlicensed H-1B beneficiaries may be approved for up to 1 year.
In addition, DHS agrees with commenters and recognizes that there may be other analogous technical requirements not specifically identified in the proposed rule that similarly prevent a beneficiary from obtaining a license. DHS is therefore providing additional flexibility in the final rule by allowing beneficiaries to demonstrate that a “similar technical requirement” bars the issuance of a license to an individual who is not yet in H-1B status. In such situations, the petitioner must still demonstrate that the beneficiary is otherwise qualified to receive the state or local license, meaning that all educational, training, experience, and other substantive requirements have been met. The petitioner must also still demonstrate that the beneficiary has applied for such license in accordance with state or local rules and procedures, unless such rules and procedures prohibit the beneficiary from applying for the license without first meeting the technical requirement.
Additionally, commenters were concerned that the proposed rule gave USCIS too much authority to “second-guess” established practices followed by state licensing authorities. One commenter was of the view that if the relevant state licensing authority deems the proposed supervision to be adequate, USCIS should not evaluate the level at which duties are performed or the degree of supervision received. Another commenter stated that refining the regulatory text would help to avoid denials of H-1B petitions filed for unlicensed workers whose supervision is deemed adequate by the state but determined to be inadequate by USCIS.
DHS also declines to implement the commenter's proposal to approve petitions for beneficiaries lacking necessary licensure for the period requested on the petition and then issue an RFE to request proof of licensure 1 year after approval. Such a proposal would be operationally and administratively burdensome, both because it would require USCIS to track petitions and because it would require USCIS to incur the costs of re-determining eligibility without collecting an appropriate fee. The proposal could add also uncertainty for petitioners and H-1B nonimmigrant workers while their petitions are under re-review. For these reasons, DHS retains in the final rule the current 1-year limitation on the duration of approval of H-1B petitions filed on behalf of unlicensed workers under 8 CFR 214.2(h)(4)(v)(C)(
DHS also declines to adopt the commenter's request to provide an exception to the 1-year limit for a foreign beneficiary who submits a health care worker certificate with the H-1B petition. State laws govern licensure requirements for individuals to fully practice their profession, and DHS regulations accordingly require the petitioner to submit a copy of the beneficiary's license to establish that the beneficiary is fully qualified to practice in his or her specialty occupation.
In this final rule, DHS codifies its longstanding policy interpretations identifying which employers are exempt
In the final rule, DHS is improving upon and codifying current policy interpreting the statutory cap and fee exemptions for a nonprofit entity that is related to or affiliated with an institution of higher education.
In the final rule, DHS is replacing the phrase “primary purpose” with “fundamental activity” to avoid potential confusion. This change makes it clearer that nonprofit entities may qualify for the cap and fee exemptions even if they are engaged in more than one fundamental activity, any one of which may directly contribute to the research or education mission of a qualifying college or university. Further, the term “related or affiliated nonprofit entity” is defined consistently for both cap-exemption and ACWIA fee-exemption purposes. This change results in a standard that better reflects current operational realities for institutions of higher education and how they interact with, and sometimes rely on, nonprofit entities.
Second, the final rule revises the definition of “governmental research organization,” in response to public comment, so that the phrase includes state and local government research entities in addition to federal government research entities.
Third, the final rule codifies other existing policies and practices in this area. Specifically, the final rule codifies: (1) The requirements for exempting H-1B nonimmigrant workers from the cap in cases in which they are not directly employed by a cap-exempt employer (final 8 CFR 214.2(h)(8)(ii)(F)(
While some commenters suggested deleting the requirement altogether, such that any entity could qualify merely by entering into any kind of affiliation agreement with a qualifying institution of higher education, DHS believes that Congress did not intend such a broad exemption from the cap and fee provisions. With respect to institutions of higher education, Congress intended to exempt those foreign national workers who would directly contribute to the research or education missions of those institutions; there is no evidence that Congress intended to allow exemptions based on agreements unrelated to those missions.
In addition, these commenters offered suggested edits to the regulatory text to ensure that a nonprofit entity that submits a formal written affiliation agreement is also not required to affirmatively prove that the entity is not owned or controlled by the institution of higher education. These commenters requested that proposed 8 CFR 214.2(h)(8)(ii)(F)(
Based on the comments received, DHS is removing the phrase “absent a demonstration of shared ownership or control” from 8 CFR 214.2(h)(8)(F)(
DHS is not adopting the commenters' recommendation to allow for deference to another agency's determination that a nonprofit entity is related to or affiliated with an institution of higher education. Such determinations, including those made by state or local agencies, could be based on a different substantive standard than the INA requires and could result in inconsistent treatment of similar relationships and affiliations. Therefore, in the final rule, DHS adopts a standard that it will apply consistently across all H-1B petitions claiming cap and fee exemptions.
In evaluating the commenter's analysis supporting its request that the phrase “governmental research
DHS believes that these intervening statutory changes support the commenter's requested change. In addition, the commenter's requested change would ensure that the DHS and DOL interpretations remain consistent in this context and reflect a recognition that the federal government does not have a monopoly on consequential government-led research and development efforts.
In the scenario contemplated by the commenter, the basis for the H-1B nonimmigrant worker's employment with an employer that normally would be cap-subject is an exemption from the otherwise controlling H-1B numerical limits based on concurrent employment at a cap-exempt institution, entity or organization as described in section 214(g)(5)(A) and (B) of the INA, 8 U.S.C. 1184(g)(5)(A) and (B). If the concurrent cap-exempt employment ceases before the end of the petition validity period of the cap-subject employment, and the H-1B nonimmigrant worker is not otherwise exempt from the numerical limitations, USCIS may revoke the approval of the cap-subject concurrent employment petition. Because the concurrent employment at a cap-subject employer is considered cap-exempt solely because the H-1B nonimmigrant worker's concurrent cap-exempt employment is continuing, DHS believes it is reasonable to limit the cap-subject concurrent employment approval period to the approved concurrent cap-exempt employment. Although concurrent employers may be on different hiring cycles, this does not change the fact that the concurrent cap-subject employment is contingent upon the continuation of the cap-exempt employment. As such, DHS is not adopting the commenter's suggestion to allow for approval validity periods of cap-subject concurrent employment to exceed the validity period of the concurrent cap-exempt employment.
In this final rule, DHS is consolidating and codifying longstanding DHS policy implementing sections of AC21 related to the method for calculating time counted toward the maximum period of H-1B admission, as well as determining exemptions from such limits. Specifically, the final rule addresses: (1) When an H-1B nonimmigrant worker can recapture time spent physically outside of the United States (
In response to public comment, DHS is also providing several clarifications in the final rule. First, DHS has amended the regulatory text at 8 CFR 214.2(h)(13)(iii)(C) to more clearly provide that remaining H-1B time may be recaptured at any time before the foreign worker uses the full period of H-1B admission described in section 214(g)(4) of the INA. Second, DHS has made several edits to simplify and streamline the regulatory text at 8 CFR 214.2(h)(13)(iii)(D), which describes eligibility for the “lengthy adjudication delay” exemption afforded by section 106(a) and (b) of AC21 to the general 6-year maximum period of H-1B admission. In particular, the final rule
Finally, DHS is making a correction to 8 CFR 214.2(h)(13)(iii)(E), which was intended to codify existing policy regarding eligibility for H-1B status beyond the general 6-year maximum, pursuant to section 104(c) of AC21, for certain individuals who are beneficiaries of Form I-140 petitions but are affected by the per-country limitations.
The relevant USCIS policy memoranda,
Further, DHS agrees with the commenter that, in certain circumstances, foreign workers need not be in H-1B status to be eligible for the lengthy adjudication delay exemptions under section 106(a) and (b) of AC21, as long as they “previously held” H-1B status. This provision, as proposed and finalized in this rule, allows foreign workers to obtain additional periods of H-1B status through petitions to change status or through admission after H-1B visa issuance at a U.S. consulate.
DHS believes that, overall, the 1-year filing requirement is consistent with congressional intent and provides a reasonable amount of time for an individual to take the necessary steps toward obtaining lawful permanent residence, despite visa number retrogression and progression. In addition, DHS believes that tying the extension to immigrant visa availability will encourage individuals to pursue lawful permanent residence without interfering with the ability of petitioners to file H-1B portability petitions on behalf of foreign workers.
The final rule also retains current policy that alleviates concerns raised by commenters about the 1-year filing requirement. Specifically, the rule resets the 1-year clock following any period in which an application for adjustment of status or immigrant visa could not be filed due to the unavailability of an immigrant visa. It also authorizes USCIS to excuse the failure to timely file such an application, as a matter of discretion, if an individual establishes that the failure to apply was due to circumstances beyond his or her control. The final rule further clarifies that for purposes of determining when an individual becomes ineligible for the lengthy adjudication delay exemption, DHS will look to see if he or she failed to apply for adjustment of status or an immigrant visa within 1 year of the date an immigrant visa is authorized for issuance based on the applicable Final Action Date in the Visa Bulletin.
DHS recognizes that individuals admitted in J-1 status who are subject to a 2-year foreign residence requirement may experience uncertainty when seeking post-sixth year H-1B extensions under section 106(a) of AC21, but the Department believes that this uncertainty is balanced by including the discretion to excuse late filings due to circumstances beyond the individual's control.
Although the heading for section 104(c) refers to a “one-time protection,” the statutory text makes clear that the exemption remains available until the beneficiary has an EB-1, EB-2, or EB-3 immigrant visa immediately available to him or her.
Some commenters asked DHS only to revise the provision concerning extensions under section 104(c), such that a spouse who is in H-1B nonimmigrant status could benefit from his or her spouse's certified labor certification or approved Form I-140 petition as the basis for an H-1B extension under section 104(c). One commenter stated that section 106(a) of AC21 may be used as a basis to allow an H-1B nonimmigrant worker to seek a 1-year extension of H-1B status beyond 6 years when his or her spouse, who is also an H-1B nonimmigrant worker, is the beneficiary of an appropriately filed permanent labor certification application.
Similarly, section 106(a) clearly states that the exemption is available for any H-1B beneficiary on whose behalf an immigrant petition or labor certification has been filed. As amended, that section states in pertinent part: “The limitation contained in section 214(g)(4) of the Immigration and Nationality Act (8 U.S.C. 1184(g)(4)) with respect to the duration of authorized stay shall not apply to any nonimmigrant alien previously issued a visa or otherwise provided nonimmigrant status under section 101(a)(15)(H)(i)(b) of such Act (8 U.S.C. 1101(a)(15)(H)(i)(b)), if 365 days or more have elapsed since the filing of any of the following: (1) Any application for labor certification under section 212(a)(5)(A) of such Act (8 U.S.C. 1182(a)(5)(A)), in a case in which certification is required or used by the alien to obtain status under section 203(b) of such Act (8 U.S.C. 1153(b)). (2) A petition described in section 204(b) of such Act (8 U.S.C. 1154(b)) to accord the alien a status under section 203(b) of such Act.”
As with section 104(c), DHS also interprets the reference to “section 203(b)” in section 106(a) to apply to principal beneficiaries of Form I-140 petitions, but not derivative beneficiaries who are separately addressed in section 203(d) of the INA, which provides that family members may be accorded the same immigrant visa preference allocation as the principal beneficiary.
DHS notes, however, that derivative beneficiaries may be eligible for an independent grant of work authorization in accordance with 8 CFR 214.2(h)(9)(iv) and 274a.12(c)(26). Those regulations extend eligibility for employment authorization to certain H-4 dependent spouses of H-1B nonimmigrant workers who are seeking LPR status, including H-1B nonimmigrant workers who are the principal beneficiaries of an approved Form I-140 petition or who have had their H-1B status extended under section 106(a) and (b) of AC21. Accordingly, DHS is not revising its longstanding policy to address the commenters' suggestion.
In this final rule, DHS enhances worker protection by providing whistleblower protections in cases of retaliation by the worker's employer. The final rule provides that a qualifying employer seeking an extension of stay
DHS did not receive public comments regarding the proposed changes to the DHS regulations concerning individuals applying for adjustment of status under the Haitian Refugee Immigrant Fairness Act of 1998 (HRIFA), Public Law 105-277, div. A, title IX, sections 901-904, 112 Stat. 2681-538-542 (codified as amended at 8 U.S.C. 1255 note (2006)). Therefore, DHS is retaining these changes as proposed. Under the final rule, DHS will be required to issue an EAD, rather than an interim EAD, within the timeframes currently provided in 8 CFR 245.15(n)(2). Additionally, HRIFA-based applicants for adjustment of status are eligible for the automatic 180-day extension of expiring EADs, provided they file a timely request for renewal.
In this final rule, DHS is adopting with minimal changes the NPRM's proposed regulatory text to update 8 CFR 274a.13 governing the processing of Applications for Employment Authorization (Forms I-765) and is also changing its policy concerning how early USCIS will accept renewal applications in the same employment
DHS listed 15 employment categories in the Supplementary Information to the NPRM that meet the regulatory criteria.
Current DHS policy allows EAD renewal applications submitted under certain categories to be filed up to 120 days before the applicant's current EAD expires. In response to the comments received requesting additional time for advance filing, DHS will adopt a filing policy that will generally permit the filing of an EAD renewal application up to 180 days before the current EAD expires, except when impracticable. This filing policy will be posted on the USCIS Web site and will take into consideration any other regulatory provisions that might require a longer or shorter filing window depending on the specific renewal EAD employment category.
The measures DHS is taking in this final rule will provide additional stability and certainty to employment-authorized individuals and their U.S. employers, while reducing opportunities for fraud and better accommodating increased security measures, including technological advances that utilize centralized production of tamper-resistant documents.
Eliminating the 90-day EAD processing timeframe will also support USCIS's existing practice regarding concurrent filing of EAD applications based on underlying immigration benefits. For example, although victims of domestic violence can receive their initial EADs only after USCIS adjudicates the underlying victim-based benefit request, USCIS allows the concurrent filing of the Form I-765 with the underlying victim-based benefit request so that such victims receive EADs expeditiously following a grant of the benefit request.
Another commenter suggested that DHS keep the 90-day adjudication requirement in the regulations but add limited exceptions. According to the commenter, these exceptions could address situations involving security concerns, situations in which underlying benefit applications or petitions are still being adjudicated, and situations involving operational emergencies that prevent DHS from making timely adjudications.
DHS also declines to adopt the suggestion by commenters to retain the 90-day adjudication timeframe in the regulations and modify it to provide for exceptions, such as in cases involving security concerns. Applying different processing standards to certain applicants adds complexity to the overall management of the agency's workloads, and to the customer service inquiry process.
The additional relief from processing delays that DHS is providing in this final rule is the new provision that automatically extends the validity of EADs and, if needed, employment authorization for up to 180 days for certain applicants who timely file renewal EAD applications under the same eligibility category. The automatic
Regarding the example raised by the commenter, the Form I-539 instructions do not address issues of employment authorization. Rather, the Form I-539 instructions outline who is eligible to apply for an extension of stay or change of nonimmigrant status. However, the current version of the Form I-765 instructions clearly state that some H-4 nonimmigrant spouses of H-1B nonimmigrant workers are eligible for employment authorization and may also be able to concurrently file their Form I-765 with Form I-539. DHS also currently permits such H-4 nonimmigrant spouses seeking an extension of stay to file Form I-539 concurrently with a Petition for a Nonimmigrant Worker (Form I-129) seeking an extension of stay on behalf of the H-1B nonimmigrant worker. This provides several efficiencies, as continued H-4 status of the dependent spouse is based on the adjudication of the H-1B nonimmigrant worker's Form I-129 petition and both forms may be processed at the same USCIS location. By posting concurrent filing instructions in form instructions or on the USCIS
With respect to the Form I-765, DHS will post on the USCIS Web site a list of the categories of applicants who may file their Forms I-765 concurrently with their underlying eligibility requests. By posting this type of comprehensive information on the USCIS Web site, applicants will have up-to-date information on filing procedures.
To avoid potential gaps in employment authorization resulting from unexpected delays in processing, DHS is providing workable solutions in this final rule. As mentioned earlier in this Supplementary Information, USCIS is changing its recommended filing timelines and will accept renewal EAD applications filed as far in advance as 180 days from the expiration date of the current EAD. The extent of the advance filing window will depend on operational considerations. Affected stakeholders can, and are strongly encouraged to, reduce any potential gaps in employment authorization or employment authorization documentation by filing Forms I-765 well enough in advance of the expiration dates on their current EADs.
Further, DHS is providing automatic 180-day extensions of some EADs to renewal applicants within certain employment eligibility categories upon the timely filing of applications to renew their EADs.
In response to concerns regarding accrual of unlawful presence, DHS believes that removal of the 90-day adjudication timeline from the regulations generally has no effect on the application of DHS's longstanding unlawful presence guidance. A foreign national will not accrue unlawful presence in the United States if he or she is deemed to be in an authorized period of stay. Neither the mere pendency of a Form I-765 application nor the receipt of an EAD generally determines whether an individual is in an authorized period of stay for purposes of accrual of unlawful presence. DHS has described circumstances deemed to be “authorized periods of stay” in policy guidance.
With respect to the comments regarding freedom to travel outside the United States, DHS is not prohibiting applicants with pending Forms I-765 from traveling. However, DHS's longstanding policy is that if an applicant travels outside of the United States without a valid visa or other travel document while he or she has a pending change of status application, DHS considers the applicant to have abandoned that application.
Finally, with respect to commenters' concerns that this rule will cause employers to refrain from hiring foreign workers or may lay off foreign workers to avoid potential fines imposed by ICE, DHS believes that the steps it has taken to minimize the possibility of gaps in employment authorization will satisfactorily allay these concerns. Employers that refuse to hire workers with 180-day extensions, or that terminate such workers, may be in violation of the INA's anti-discrimination provision at section 274B, 8 U.S.C. 1324b, which prohibits, inter alia, discrimination based on a worker's citizenship status, immigration status, or national origin, including discriminatory documentary practices with respect to the employment eligibility verification (Form I-9 and E-Verify) process. Employers that violate the anti-discrimination provision may be subject to civil penalties, and victims of such discrimination may be entitled to back pay awards and reinstatement. For more information, visit
DHS recognizes the possibility of gaps in employment authorization for renewal applicants who are not included on the list of employment categories eligible for automatic renewal of their EADs because they require adjudication of an underlying benefit request. Such individuals are encouraged to contact the National Customer Service Center (NCSC) if their application is pending for 75 days or more to request priority processing of their application. In order to further ensure against gaps in employment authorization for renewal applicants, DHS also is modifying its 120-day advance filing policy and will accept Forms I-765 that are filed up to 180 days in advance of the EAD expiration date, except where impracticable. With this modification, DHS expects that the risk of gaps in employment authorization and the possibility of worker layoffs will be minimal.
Regarding the commenter's suggestion to provide for a 240-day (rather than a 180-day) automatic extension, DHS determined that 180 days would be more appropriate. The 180-day period should provide USCIS sufficient time to adjudicate Form I-765 applications, particularly when individuals file well ahead of the expiration of their EADs, as explained further below. In fact, existing regulations already contain a provision granting an automatic 180-day extension of EADs in certain instances, and that time frame has proven workable.
Moreover, DHS believes that providing an automatic 240-day extension is unwarranted given that the typical Form I-765 processing time is 90 days,
Moreover, the resources necessary to process interim EADs are similar to the resources necessary to issue EADs of full duration. Regardless of whether the EAD is for a full duration or for an interim period, the EAD must contain all of the same security and anti-counterfeiting features. Maintaining this duplicative processing would significantly hamper USCIS's ability to maintain reasonable processing times.
DHS notes that if a renewal applicant with a combination EAD/advance parole card has an urgent need to travel outside the United States while the employment authorization renewal application is pending, the applicant may request expedited adjudication of the concurrently filed advance parole request under USCIS's longstanding expedite criteria. If USCIS expedites the adjudication of the advance parole request and grants advance parole, the applicant will receive a separate advance parole authorization on Form I-512 (Authorization for Parole of an Alien into the United States) and a separate EAD following adjudication of the renewal EAD application. If the applicant does not receive an expedited approval of the advance parole request, then the applicant may receive a combination card following adjudication of both the EAD renewal application and parole request.
In the case of an H-4 nonimmigrant spouse filing for an extension of stay and renewal of employment authorization, DHS cannot be reasonably assured that the spouse will continue to be eligible for employment authorization until a full adjudication of the Form I-765 is conducted. Under DHS regulations, an H-4 nonimmigrant spouse is eligible for employment authorization if either the H-1B nonimmigrant worker has an approved Form I-140 petition or the spouse's current H-4 admission or extension of stay was approved pursuant to the H-1B nonimmigrant worker's admission or extension of stay based on sections 106(a) and (b) of AC21.
Allowing eligible H-4 nonimmigrant spouses to file Form I-765 concurrently with their Form I-539 extension applications (and, if needed, also with the Form I-129 filed on behalf of the H-1B principal) enables the receipt of employment authorization soon after the underlying immigration benefit requests are adjudicated, thereby significantly reducing the overall adjudication timeline for these H-4 nonimmigrant spouses. To further ensure against gaps in employment authorization for H-4 nonimmigrant spouses and others, except when impracticable, DHS will be permitting EAD renewal applicants to file Forms I-765 up to 180 days prior to the expiration of their current EADs.
The NPRM did not include a proposal regarding additional security checks for F-1 nonimmigrant students. Therefore, such changes would be outside the scope of this rulemaking. However, DHS notes that foreign nationals who apply for F-1 nonimmigrant visas undergo security checks before visa issuance. Additionally, USCIS conducts security checks on all F-1 nonimmigrant students on OPT before rendering a final decision on their Forms I-765. DHS may consider requiring additional security checks for F-1 nonimmigrant students in future rulemakings.
In addition, DHS disagrees with the commenter's assertion that the J-2 nonimmigrant category comports with the conditions stated in the NPRM and adopted in this final rule for automatic EAD extensions. DHS is limiting automatic extensions to those renewal applicants who, among other criteria, either continue to be employment authorized incident to status beyond the expiration of their EADs or are applying for renewal under a category that does not first require the adjudication of an underlying benefit request. J-2 nonimmigrants do not fit within the regulatory criteria because they must first receive approvals of their underlying requests for extension of J-2 nonimmigrant stay before they are eligible for employment authorization. The same is true with respect to the suggestion to expand the automatic extension provision to L-2, F-1 OPT, and H-4 nonimmigrants. Renewal of employment authorization for such nonimmigrants is dependent on the prior adjudication of underlying benefit requests. DHS cannot be reasonably assured these classes of individuals will remain eligible for employment authorization until full adjudication of the Form I-765 application is complete. L-2 nonimmigrants, for example, include both spouses and dependent children of L-1 nonimmigrants. However, only L-2 nonimmigrant spouses are eligible for employment authorization. USCIS must adjudicate the Form I-765 application to determine the applicant's valid L-2 nonimmigrant status, the L-1 principal's current nonimmigrant status, and evidence of the marital relationship. For F-1 OPT nonimmigrants, USCIS must determine whether the F-1 nonimmigrant student has obtained a Form I-20 A-B/I-20ID, Certificate of Eligibility of Nonimmigrant F-1 Student Status, endorsed by his or her Designated School Official within the past 30 days. If the applicant is an F-1 nonimmigrant student seeking STEM OPT, USCIS must examine the student's degree and determine whether the student's employer is an E-Verify employer, among other requirements. If the applicant is an F-1 nonimmigrant student seeking off-campus employment under the sponsorship of a qualifying
DHS declines to place stickers on EADs at biometrics appointments for several reasons. Most EAD renewal applicants are not requested to appear for biometrics appointments. In addition, DHS has determined that considering the wide variety of affected categories and the number of potential extensions involved, providing extension stickers poses security concerns and is not economical or operationally feasible.
The main security and fraud risks underpinning DHS's decision to remove the 90-day EAD adjudication timeline and interim EAD requirements flow from granting interim EADs to individuals before DHS is sufficiently assured of their eligibility and before background and security checks have been completed. DHS believes that any reduction in the level of eligibility and security vetting before issuing evidence of employment authorization, whether on an interim basis or otherwise, would both be contrary to its core mission and undermine the security, quality, and integrity of the documents issued.
In addition, the 90-day timeline and interim EAD requirements would hamper DHS's ability to implement effective security improvements in cases in which those improvements could extend adjudications in certain cases beyond 90 days. Given the inherent fraud and national security concerns that flow from granting immigration benefits (including EADs) to individuals prior to determining eligibility, DHS believes that the 90-day timeframe and interim EAD provisions at current 8 CFR 274a.13(d) do not provide sufficient flexibility for DHS to enforce and administer the immigration laws while enhancing homeland security.
Moreover, retaining the interim EAD provision would continue to fundamentally undermine overall
DHS rejects commenters' suggestions to designate alternate interim documents that do not evidence employment authorization or contain sufficient security features, such as the Form I-797C receipt notice, in lieu of EADs. For decades, Congress, legacy INS, and DHS have been concerned about the prevalence of fraudulent documents that could be presented to employers to obtain unauthorized employment in the United States. To address these concerns, Congress passed the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), Pub. L. 104-208, which strengthened the requirements for secure documentation used in the employment eligibility verification process.
The instances in which DHS issues temporary documentation concern lawful permanent residents and, therefore, are distinguishable.
While DHS strongly believes that it is necessary to eliminate the 90-day adjudication timeline and the requirement to issue interim EADs, the Department understands the need for temporary employment authorization in cases involving application processing delays. For this reason, this rule authorizes automatic extensions of employment authorization, but only for defined classes of individuals. First, DHS is limiting the automatic extension of EADs (and employment authorization, if applicable) to certain renewal applicants, rather than initial filers. As previously mentioned, this limitation meets DHS's policy to issue EADs to only those individuals who have been determined eligible. Second, to further protect the integrity of the immigration process, DHS is requiring that renewal applications be based on the same employment authorization category as that indicated on the expiring EAD, with the narrow exception of TPS beneficiaries, as described earlier.
Employers are required to verify the identity and employment authorization of all individuals they hire for employment on Form I-9. For those individuals whose employment authorization or EADs expire, employers must reverify employment authorization at the time of expiration. DHS is finalizing the changes related to the Form I-9 verification process as proposed, with the exception of minor, technical revisions, in order to conform to the new automatic employment authorization provision established by this rule.
DHS is taking additional steps to minimize potential confusion among employers. DHS will engage in public outreach in connection with this rule. USCIS will update the Form I-797C receipt notices to include information about automatic extensions of employment authorization based on renewal applications and to direct applicants to the USCIS Web site for more information about qualifying employment categories. USCIS will also update the I-9 Central Web page on its Web site to provide guidance to employers regarding automatically extended EADs and proper completion of Form I-9. DHS intends to include this information in a future revision to the M-274 Handbook for Employers. Because DHS did not propose changes to the Form I-9 instructions to add information regarding automatic extensions of EADs in the proposed rule, DHS is unable to add this information to the form instructions in the final rule. DHS may consider such an addition in a future revision of the Form I-9 instructions under the PRA process.
DHS received a number of comments related to matters falling outside the topics discussed above. These comments are addressed below.
In addition, this rule enhances worker whistleblower protection by conforming regulations governing the H-1B program to certain policies and practices developed to implement the ACWIA amendments to the INA.
Section 212(n)(2)(C) of the INA also requires DHS to establish a process under which an H-1B nonimmigrant worker who files a complaint with DOL regarding such illegal retaliation, and is otherwise eligible to remain and work in the United States, “may be allowed to seek other appropriate employment in the United States for a period not to exceed the maximum period of stay authorized for such nonimmigrant classification.”
Through this final rule, DHS also provides flexibility to certain nonimmigrants with approved Form I-140 petitions who face compelling circumstances that warrant an independent grant of employment authorization.
DHS agrees that those who qualify for NIWs could help contribute to research and medical advances, the U.S. economy, wages and working conditions of U.S. workers, and educational and training programs. Individuals who qualify for the NIW are already able to take advantage of a faster path to an immigrant visa because they are exempt from the labor certification process administered by DOL and may directly petition DHS for an immigrant visa.
Many commenters agreed that increased stability while waiting to adjust status would encourage these high-skilled workers to more fully contribute to the economy by making increased investments. Some high-skilled workers expressed interest in making purchases or investments—such as buying houses or cars, traveling abroad, or making retirement contributions—but refrained from doing so due to their inability to predict their
DHS also received other general comments concerning the economy in which the commenters recommended that DHS allow market supply-and-demand forces to dictate the responses to business needs for foreign workers. Other commenters asserted that only 1 to 2 percent of high-skilled foreign workers would benefit from the changes outlined in this rule.
Finally, commenters also expressed concern over the negative effects that both legal and illegal immigration have on wages, the economy, schools, the deficit, and the environment, among other things.
While DHS appreciates commenters questioning the overall reach of this rule and the assertion that only limited numbers of high-skilled foreign workers will be impacted by these provisions, DHS has made an effort to provide additional flexibilities to as many high-skilled foreign workers as possible while still adhering to its statutory limitations. DHS estimates the maximum number of foreign workers that will be impacted by this rule based on the best available information.
The aim of the INA 204(j) portability provisions is to standardize the existing porting process with additional clarifications; these provisions thus do not change the population of individuals who are eligible to port under section 204(j) of the INA. The regulatory provision authorizing employment authorization in compelling circumstances is intended to offer a stopgap measure for those nonimmigrants who have been sponsored for lawful permanent residence and need additional flexibility due to particularly difficult circumstances. DHS intentionally limited the availability of such employment authorization in part because individuals who avail themselves of this benefit will, in many cases, lose their nonimmigrant status and thus be required to apply for an immigrant visa abroad via consular processing rather than through adjustment of status in the United States.
DHS appreciates the comments on the negative impacts of legal immigration including the impacts on wages, jobs, the labor force, employer costs, and the estimates derived by the agency. DHS responds to these comments more thoroughly in other sections of Part Q of this rule.
While DHS appreciates the commenters' concerns about the negative impacts of unauthorized immigration, this rule does not address the immigration of individuals who are admitted without inspection or parole, or those who stay beyond their authorized period of admission.
With respect to comments noting a negative impact of immigration on schools and the deficit, comments lacked specific information expanding on these statements and explaining how this rule would impact schools or the deficit. Without additional information, DHS cannot determine the impact this rule would have on schools or the deficit. The impact of this rule on environmental issues is discussed more fully in Review under the National Environmental Policy Act (NEPA), Section Q, subpart 6.
Other commenters expressed concern that large numbers of recent U.S. college graduates are having difficulty securing jobs. These commenters expressed their view that this rule will allow foreign workers to saturate the open job market, thereby increasing competition for jobs at all skill levels and denying them to recent U.S. graduates seeking work. Commenters noted their concern that many recent U.S. graduates carry large student loan debt and need jobs to begin paying off their loans shortly after graduation.
While many commenters expressed concern that the rule will adversely affect the availability of jobs for U.S. workers, other commenters stated that the rule will have a favorable effect. For example, some commenters asserted that immigration has a positive impact on job creation and that increasing the number of foreign workers increases employment opportunities for other workers in the labor market. Another commenter claimed that there is little evidence that immigrants diminish the employment opportunities of U.S. workers and thus they are unlikely to have an effect on the American labor force and labor market.
From a labor market perspective, it is important to note that the number of jobs in the United States is not fixed or static. Basic principles of labor market economics recognize that individuals not only fill jobs, but also stimulate the economy and create demand for jobs through increased consumption of goods and services.
DHS also appreciates commenters' concerns that DHS should not increase the number of foreign workers through this rule, especially in STEM fields. While DHS does not specifically identify foreign workers in STEM fields as the main beneficiaries of this rule, the main beneficiaries of this rule may nevertheless be high-skilled workers who happen to be in STEM fields. Further, it is not the goal of this rule to increase the numbers of workers in STEM fields, rather it is to provide various flexibilities to high-skilled foreign workers in certain employment-based immigrant and nonimmigrant visa programs who are already working in
Moreover, DHS appreciates the comments received citing studies suggesting that the United States does not have a STEM worker shortage. DHS notes that the intention of this rule is not to increase the number of STEM workers in the United States or to eliminate a possible STEM worker shortage. While, as just noted, there is a possibility that this rule could impact the number of STEM foreign workers, DHS does not know how many STEM foreign workers would be impacted. Further, DHS explained in a recent rulemaking that there is no straightforward answer as whether the United States has a surplus or shortage of STEM workers.
DHS reviewed the cited BLS data showing that foreign-born workers are gaining jobs at a much higher rate than native-born workers in support of their argument that immigration to the United States needs to be reduced. DHS notes that the BLS employment data cited show the monthly change in employment levels of the entire U.S. population, separated into groups of native-born and foreign-born workers for comparison.
In addition, DHS appreciates the comments it received that large numbers of recent college graduates are having difficulty securing jobs and that foreign workers will saturate the job market, thereby increasing competition for jobs and denying them to recent U.S. graduates seeking work. As this rule is primarily focused on retaining and providing flexibilities to high-skilled foreign workers who are already in the United States, DHS disagrees with these commenters. Most of the high-skilled foreign workers targeted in this rule would not be competing for similar jobs or levels of jobs as recent college graduates. However, DHS has considered the impact on the labor market, as discussed in the RIA and in other sections of this final rule. As previously discussed though, the rule simply accelerates the timeframe by which spouses and dependents are able to enter the U.S. labor market. Importantly, the rule does not require eligible spouses and dependents to submit an application for employment authorization, nor does the granting of employment authorization guarantee that spouses and dependents will obtain employment.
DHS appreciates the commenter's suggestion that the rule should prohibit certain petitioners from being allowed to submit H-1B or L-1 petitions based on how many of their employees are already foreign workers; however, DHS notes such action is beyond the scope of this regulation. While DHS does not prevent petitioners from filing based on current numbers of foreign workers, certain petitioning employers are required by law to pay additional fees when filing H or L nonimmigrant petitions, depending on the size of the employer and number of foreign workers it employs in those statuses.
Other commenters stated that the rule will have a favorable effect on U.S. workers. For example, one commenter stated that job flexibility for foreign workers will improve competition in the job market and allow foreign workers to better compete with American workers, thereby improving wages for all workers. Moreover, according to the commenter, allowing foreign workers to change jobs, as outlined in the rule, would allow such workers to progress in their careers without restrictions and would make the labor market fairer for all American citizens.
Moreover, DHS appreciates the commenter's concern that the lack of job portability diminishes economic growth by restricting upward and lateral job mobility of foreign workers, which in turn prevents jobs from opening up that may be filled by U.S. workers. The focus of this rule is to streamline and standardize the porting process and make it easier for eligible individuals to port and advance upwards in their careers. DHS believes that standardizing job portability will thus benefit high-skilled workers in immigrant and nonimmigrant visa classifications.
Other commenters stated that the rule will have a favorable effect on the wages of high-skilled U.S. and foreign workers. Many commenters noted that high-skilled foreign workers raise the wages of U.S. workers. For example, some commenters cited recently published research showing that higher numbers of H-1B nonimmigrant workers in STEM fields appear to positively affect the wages of U.S. high-skilled workers.
DHS takes seriously commenters that stated that some companies underpay U.S. workers by implicitly threatening to replace them with lower-paid foreign workers on H-1B and L-1 visas. DHS continues to work with DOL to protect U.S. workers. To protect the wages and working conditions of U.S. workers, the INA requires employers that file a request with DHS for an H-1B nonimmigrant worker to first file an LCA with DOL, attesting to pay the required wage; to provide working conditions that will not adversely affect the working conditions of U.S. workers similarly employed; that there is no strike, lockout, or work stoppage in the course of a labor dispute in the occupational classification at the place of employment at the time of filing; and to notify its U.S. workers that it intends to hire the nonimmigrant worker.
With regard to commenters' concerns that the rule would deter employers from either retaining existing foreign workers or hiring new foreign workers by making regulatory compliance a more difficult process, DHS notes that, for the most part, it is codifying longstanding policy and practice implementing relevant provisions of AC21. Many of these changes are primarily aimed at improving the ability of U.S. employers to hire and retain high-skilled workers who are beneficiaries of approved employment-based immigrant visa petitions and are waiting to become lawful permanent residents, while increasing the ability of those workers to seek promotions, accept lateral positions with current employers, change employers, or pursue other employment options. DHS's intention is not to add to regulatory compliance, but rather to simplify and ease regulatory compliance.
In the RIA for this final rule, DHS has updated the estimated maximum number of individuals that may be eligible to apply for the compelling circumstances employment authorization. DHS estimates for the final rule that a maximum total of 361,766 individuals may be eligible to apply for employment authorization based on compelling circumstances in the first year of implementation of this rule and a maximum annual estimate of 64,561 individuals in the second and subsequent years.
The commenter also was of the view that the unfunded mandates associated with the published NPRM significantly change how the statutory caps on immigrant and H-1B nonimmigrant visas operate for all other H-1B employers as well. The commenter asserted that the NPRM states there is a very significant impact on the entire range of STEM- and IT-related economic sectors, which rely on increases in productivity and innovation driven by immigration of H-1B workers who adjust status while employed in the United States. The commenter stated that the proposed regulations are not the result of voluntary action by taxpayer funded state and local government agencies. Additionally, the commenter cited the book
While these provisions do not directly impose any additional Federal mandates on state, local, and tribal governments, in the aggregate, or by the private sector, there may be some petitioning employers that could potentially experience some employee turnover costs should the worker beneficiaries of those petitions choose to port to another employer or obtain independent employment authorization based on compelling circumstances. DHS recognizes that these provisions could place additional burdens on the state and private sector in these circumstances. However, DHS reiterates that these are not required immigration benefits. State and private sector employers make the cost-benefit decisions of whether to expend finances to petition for foreign workers.
DHS agrees with the commenter that codifying the AC21 and ACWIA policies and practices would affect and change the numbers of individuals subject to the H-1B cap exemption and ACWIA fees. DHS provides this assessment of the ACWIA fees in the RIA of this final rule (as well as the RIA published in the NPRM). As stated in the RIA, DHS reported a total of 8,589 H-1B exemptions due to an employer being a nonprofit entity related to or affiliated with an institution of higher education.
DHS does not state in the NPRM that there will be a significant impact on any specific sectors of the economy that may be reliant on H-1B workers, nor does it identify STEM- or IT-related workers as the main beneficiaries of the provisions in the final rule. As previously mentioned, DHS does not have enough data to substantiate the commenter's conclusion from Malkin and Miano's book on STEM worker shortages. Please see section Q(3)(i) for further discussion about the rule's intended beneficiaries and the effect on foreign workers in STEM fields. DHS reiterates that the goals of this rule include enhancing U.S. employers' ability to retain and attract high-skilled and certain other workers to the United States and increasing flexibility in pursuing normal career progression for those workers pursuing LPR status in certain employment-based immigrant visa categories who are waiting for immigrant visas to become available.
For an action to be categorically excluded, MD 023-01 Rev. 01 requires the action to satisfy each of the following three conditions: (1) The entire action clearly fits within one or more of the Categorical Exclusions; (2) the action is not a piece of a larger action; and (3) no extraordinary circumstances exist that create the potential for a significant environmental effect. MD 023-01 Rev. 01 section V.B(1)-(3).
DHS has determined that this rule does not individually or cumulatively have a significant effect on the human environment because it fits within the Categorical Exclusion found in MD 023-01 Rev. 01, Appendix A, Table 1, number A3(d): “Promulgation of rules . . . that interpret or amend an existing regulation without changing its environmental effect.” Rather, this rule affects current participants in immigration programs by codifying existing policies and procedures and making amendments to DHS regulations designed to improve its immigration programs.
Finally, this rule is not part of a larger action and presents no extraordinary circumstances creating the potential for significant environmental effects because it does not introduce new populations that may have an impact on the environment. Therefore, this rule is categorically excluded from further NEPA review.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available alternatives, and if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action” that is economically significant, under section 3(f)(1) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget.
DHS is amending its regulations relating to certain employment-based immigrant and nonimmigrant visa programs. The amendments interpret existing law and change regulations in order to provide various benefits to participants in those programs, including: Improved processes for U.S. employers seeking to sponsor and retain immigrant and nonimmigrant workers, greater stability and job flexibility for such workers, and increased transparency and consistency in the application of DHS policy related to affected classifications. Many of these changes are primarily aimed at improving the ability of U.S. employers to retain high-skilled workers who are beneficiaries of approved employment-based immigrant visa petitions and are waiting to become LPRs, while increasing the ability of those workers to seek promotions, accept lateral positions with current employers, change employers, or pursue other employment options.
First, DHS amends its regulations consistent with certain worker portability and other provisions in AC21 and ACWIA. These amendments clarify and improve longstanding DHS policies and practices, previously articulated in DHS memoranda and precedent decisions. These amendments also implement sections of AC21 and ACWIA relating to certain foreign workers who have been sponsored for LPR status by their employers. In so doing, the rule provides a primary repository of governing rules for the regulated community and enhances consistency among DHS adjudicators. In addition, the rule clarifies several interpretive questions raised by AC21 and ACWIA.
Second, and consistent with existing DHS authorities and the goals of AC21 and ACWIA, DHS is amending its regulations governing certain employment-based immigrant and nonimmigrant visa programs to provide additional stability and flexibility to employers and workers in those programs. The final rule, among other things: Improves portability for certain beneficiaries of approved employment-based immigrant visa petitions by limiting the grounds for automatic revocation of petition approval; enhances job portability for such beneficiaries by improving their ability to retain their priority dates for use with subsequently approved employment-based immigrant visa petitions; establishes or extends grace periods for certain high-skilled nonimmigrant workers so that they may more easily maintain their nonimmigrant status when changing employment opportunities or preparing for departure; and provides additional stability and flexibility to certain high-skilled workers by allowing those who are working in the United States in certain nonimmigrant statuses, are the beneficiaries of approved employment-based immigrant visa petitions, are subject to immigrant visa backlogs, and demonstrate compelling circumstances to apply for employment authorization for a limited period. These and other changes provide much needed flexibility to the beneficiaries of employment-based immigrant visa petitions, as well as the U.S. employers who employ and sponsor them for permanent residence. In addition, these changes provide greater stability and predictability for U.S. employers and avoid potential disruptions to their operations in the United States.
Finally, consistent with providing additional certainty and stability to certain employment-authorized individuals and their U.S. employers, DHS is also changing its regulations governing the processing of applications for employment authorization to minimize the risk of any gaps in such authorization. These changes provide for the automatic extension of the validity of certain Employment Authorization Documents (EADs or Form I-766) for an interim period upon the timely filing of an application to renew such documents. At the same time, in light of national security and fraud concerns, DHS is removing regulations that provide a 90-day processing timeline for EAD applications and that require the issuance of interim EADs if processing extends beyond the 90-day mark.
Table 1, below, provides a more detailed summary of the provisions and their impacts.
As required by OMB Circular A-4, Table 2 presents the prepared accounting statement showing the expenditures associated with this regulation.
DHS has prepared a full analysis according to Executive Orders 12866 and 13563. This analysis can be found by searching for RIN 1615-AC05 on
The Regulatory Flexibility Act of 1980 (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, 5 U.S.C. 601-612 requires Federal agencies to consider the potential impact of regulations on small entities during the development of their rules. The term “small entities” comprises small businesses, not-for-profit organizations that are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. An “individual” is not defined by the RFA as a small entity, and costs to an individual from a rule are not considered for RFA purposes. In addition, the courts have held that the RFA requires an agency to perform a regulatory flexibility analysis of small entity impacts only when a rule directly regulates small entities.
The changes made by DHS have direct effects on individual beneficiaries of employment-based nonimmigrant and immigrant visa petitions. As individual beneficiaries of employment-based immigrant visa petitions are not defined as small entities, costs to these individuals are not considered as RFA costs. However, because the petitions are filed by sponsoring employers, this rule has
Small entities that can incur additional indirect costs by this rule are those that file and pay fees for certain immigration benefit petitions, including Form I-140 petitions. DHS conducted a statistically valid sample analysis of these petition types to determine the number of small entities indirectly impacted by this rule. While DHS acknowledges that the changes engendered by this rule directly affect individuals who are beneficiaries of employment-based immigrant visa petitions, which are not small entities as defined by the RFA, DHS believes that the actions taken by such individuals as a result of this rule will have immediate indirect effects on U.S. employers. Employers will be indirectly affected by employee turnover-related costs as beneficiaries of employment-based immigrant visa petitions take advantage of this rule. Therefore, DHS is choosing to discuss these indirect effects in this final regulatory flexibility analysis.
The purpose of this action, in part, is to amend regulations affecting certain employment-based immigrant and nonimmigrant classifications in order to conform them to provisions of AC21 and ACWIA. The rule also seeks to provide greater job flexibility, mobility and stability to beneficiaries of employment-based nonimmigrant and immigrant visa petitions, especially when faced with long waits for immigrant visas. In many instances, the need for these individuals' employment has been demonstrated through the labor certification process. In most cases, before an employment-based immigrant visa petition can be approved, DOL has certified that there are no U.S. workers who are ready, willing and available to fill those positions in the area of intended employment. By increasing flexibility and mobility, the worker is more likely to remain in the United States and help fill the demonstrated need for his or her services.
DHS published the NPRM along with the Initial Regulatory Flexibility Analysis (IRFA) on December 31, 2015 (80 FR 81899) with the comment period ending February 29, 2016. During the 60-day comment period, DHS received 27,979 comments from interested individuals and organizations. DHS received numerous comments that referred to aspects of the economic analysis presented with the NPRM. The comments, however, did not result in revisions to the economic analysis in the final rule that are relevant to the analysis of effects on small businesses, small organizations, and small governmental jurisdictions presented in this FRFA. DHS received few comments that referred specifically to the IRFA. DHS addresses these comments below.
Commenters only indirectly mentioned the IRFA by mentioning the impact of the form, Supplement J, on potential employers who may be small start-ups or small businesses. Commenters suggested that many of these small start-ups hire high-skilled foreign workers to stay competitive in high-technology industries in order to compete globally, and they believed that such hiring increased job opportunities for native-born U.S. citizens as well. Commenters expressed concern that Supplement J is an unnecessary burden, especially for small business owners and startups, and commented that it will not help to increase job portability.
DHS appreciates these viewpoints and carefully considered the impact of Supplement J throughout this rulemaking, especially to small entities. DHS reaffirms its belief expressed in the RIA for the NPRM and again in the RIA for the final rule that Supplement J will clarify the process to port to another job and increase flexibility to high-skilled workers so they can advance in their careers and progress in their occupations. As explained in the PRA, completing the Supplement J requires approximately 60 minutes. In the Initial Regulatory Flexibility Analysis, DHS examined the indirect impact of this rule on small entities as this rule does not directly impose costs on small entities. DHS recognizes that this rule imposes indirect costs on small entities because these provisions would affect beneficiaries of employment-based immigrant visa petitions. If those beneficiaries take certain actions in line with the rule that provide greater flexibility and job mobility, then there would be an immediate indirect impact on the current sponsoring U.S. employers. DHS reaffirms that the addition of Supplement J may negatively impact employers in the form of employee turnover costs and some additional burden.
No comments were filed by the Chief Counsel for Advocacy of the Small Business Administration.
DHS conducted a statistically valid sample analysis of employment-based immigrant visa petitions to determine the maximum potential number of small entities indirectly affected by this rule when a high-skilled worker who has an approved employment-based immigrant visa petition, and an application for adjustment of status that has been pending for 180 days or more, ports to another employer. DHS utilized a subscription-based online database of U.S. entities, Hoovers Online, as well as three other open-access, free databases of public and private entities—Manta, Cortera, and Guidestar—to determine the North American Industry Classification System (NAICS) code, revenue, and employee count for each entity.
Using a 12-month period, from September 2014 to August 2015, of data on actual filings of employment-based immigrant visa petitions, DHS collected internal data for each filing organization. Each entity may make multiple filings. For instance, there were 101,245 employment-based immigrant visa petitions filed, but only 23,284 unique entities that filed petitions. DHS devised a methodology to conduct the small entity analysis based on a representative, random sample of the potentially impacted population. To achieve a 95 percent confidence level and a 5 percent confidence interval on a population of 23,284 entities, DHS used the standard statistical formula to determine that a minimum sample size of 378 entities was necessary. DHS created a sample size greater than the 378 minimum necessary in order to increase the likelihood that our matches would meet or exceed the minimum required sample. Of the 514 entities sampled, 393 instances resulted in entities defined as small. Of the 393 small entities, 290 entities were classified as small by revenue or number of employees. The remaining 103 entities were classified as small because information was not found (either no petitioner name was found or no information was found in the databases). Table 3 shows the summary statistics and results of the small entity analysis of Form I-140 petitions.
The amendments in this rule do not place direct requirements on small entities that petition for workers. However, if the principal beneficiaries of employment-based immigrant visa petitions take advantage of certain flexibility provisions herein (including porting to new sponsoring employers or pursuing employment authorization in cases involving compelling circumstances), there could be increased turnover costs (employee replacement costs) for U.S. entities sponsoring the employment of those beneficiaries, including costs of petitioning for new employees. While DHS has estimated 28,309 individuals who are eligible to port to new employment under section 204(j) of the INA, the Department was unable to predict how many will actually do so. As mentioned earlier in the Executive Orders 12866 and 13563 analysis, a range of opportunity costs of time to petitioners that prepare Supplement J ($43.93 for a human resources specialist, $93.69 for an in-house lawyer, or $160.43 for an outsourced lawyer) are anticipated depending on the total numbers of individuals who port. However, DHS is currently unable to determine the numbers of small entities who take on immigrant sponsorship of high-skilled workers waiting to adjust status based on petitions filed by original sponsoring employers. The estimates presented also do not represent employee turnover costs to original sponsoring employers, but only represent paperwork costs. Similarly, DHS is unable to predict the volume of principal beneficiaries of employment-based immigrant visa petitions who will pursue the option for employment authorization based on compelling circumstances.
The amendments relating to the H-1B numerical cap exemptions may impact some small entities by allowing them to qualify for exemptions of the ACWIA fee when petitioning for H-1B nonimmigrant workers. As DHS cannot predict the numbers of entities these amendments will affect at this time, the exact effect on small entities is not clear, though some positive effect should be anticipated.
This rule does not impose direct costs on small entities. Therefore, DHS has not proposed any measures to minimize direct effects on small entities. The final rule may indirectly affect small entities because the provisions would affect beneficiaries of employment-based immigrant visa petitions. If those beneficiaries take actions in line with certain proposals that provide greater flexibility and job mobility, then there is an immediate indirect impact—an externality—to the current sponsoring U.S. employers. DHS considered whether to exclude from the flexibility and job mobility provisions those beneficiaries who were sponsored by U.S. employers that were considered small. However, because DHS limited the eligibility for employment authorization to beneficiaries who are able to demonstrate compelling circumstances, and restricted the 204(j) portability provisions to those seeking employment within the same or a similar occupational classification, DHS did not believe it was necessary to pursue this alternative proposal. There are no other alternatives that DHS considered that would further limit or shield small entities from the potential of negative externalities and that would still accomplish the goals of this regulation. To reiterate, the goals of this regulation include providing increased flexibility and normal job progression for beneficiaries of approved employment-based immigrant visa petitions. To incorporate alternatives that would limit such mobility for beneficiaries that are employed or sponsored by small entities would be counterproductive to the goals of this rule.
The Unfunded Mandate Reform Act of 1995 (UMRA) is intended, among other things, to curb the practice of imposing unfunded Federal mandates on state, local, and tribal governments. Title II of UMRA requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in a $100 million or more expenditure (adjusted annually for inflation) in any one year by state, local, and tribal governments, in the aggregate, or by the private sector. The value equivalent of $100 million in 1995 adjusted for inflation to 2014 levels by the Consumer Price Index for All Urban Consumers is $155 million. This rule exceeds the $100 million expenditure threshold in the first year of implementation (adjusted for inflation) and therefore DHS is providing this UMRA analysis.
The authority of the Secretary of Homeland Security (Secretary) for these regulatory amendments is found in various sections of the INA, 8 U.S.C. 1101
The two major provisions of this rule for economic analysis purposes provide job flexibility through INA 204(j) portability and job flexibility through employment authorization to a limited number of employment-authorized nonimmigrants in compelling circumstances. These provisions do not directly impose any additional Federal mandates on state, local, and tribal governments, in the aggregate, or by the private sector. However, employers who petition on behalf of applicants could potentially experience some employee turnover costs should these applicants choose to obtain the compelling circumstances EAD or choose to port to another employer. DHS recognizes that these provisions could place additional burdens on the state and private sector in these circumstances. DHS specifically considered the situation where a public institution of higher education filed a petition on behalf of a high skilled worker and that high skilled worker utilized porting under section 204(j) of the INA to move to another employer. The flexibilities provided as a result of this rule would place additional costs and burdens on the states in this scenario and other similar scenarios. However, DHS reiterates that these are not required immigration benefits. State and private sector employers make the cost-benefit decisions of whether to expend finances to petition for foreign workers. DHS presents the impacts of these provisions more fully in the RIA found with this final rule on
DHS does not believe that this rule will have any impact on health or safety. The impact of this rule on environmental issues is discussed more fully in Review under the National Environmental Policy Act (NEPA), Section Q, subpart 6 of this final rule.
DHS has provided compliance costs of the main provisions that may indirectly trigger Federal mandates in the full RIA discussion of each provision published with this final rule as well as in the FRFA. DHS reiterates that state and private sector employers make the cost-benefit decisions of whether to expend finances to petition for foreign workers and that these provisions are not mandatory requirements.
DHS has provided discussions of the effect of this rule on the economy in Section Q of this final rule.
DHS has not consulted with elected representatives of the affected State, local, and tribal governments as the Federal mandates imposed by this rule are voluntary and DHS cannot predict which States or private sector entities will apply for these benefits in the future.
This final rule is a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996. This rule will result in an annual effect on the economy of more than $100 million in the first year only. For each subsequent year, the annual effect on the economy will remain under $100 million. As small businesses may be impacted under this regulation, DHS has prepared a Final Regulatory Flexibility analysis. The RFA analysis can be found with the analysis prepared under Executive Orders 12866 and 13563 on
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. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.
This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.
Under the Paperwork Reduction Act (PRA) of 1995, Public Law 104-13, Departments are required to submit to the Office of Management and Budget (OMB), for review and approval, any reporting requirements inherent in a rule. This final rule makes revisions to the following information collections:
1. The Application for Employment Authorization, Form I-765; and FormI-765 Work Sheet, Form I-765WS, OMB Control Number 1615-0040. Specifically, USCIS revises this collection by revising the instructions to Form I-765 to include information for the newly amended group of applicants (beneficiaries of approved Form I-140 petitions who are in the United States in E-3, H-1B, H-1B1, O-1, or L-1 nonimmigrant status, who do not have immigrant visas immediately available to them, and who demonstrate compelling circumstances justifying a grant of employment authorization) eligible to apply for employment authorization under final 8 CFR 274a.12(c)(35). Their dependent spouses and children who are present in the United States in nonimmigrant status are also eligible to obtain employment authorization under 8 CFR 274a.12(c)(36), provided that the principal foreign national has been granted employment authorization. USCIS is also amending Form I-765 to include Yes/No questions requiring these applicants to disclose certain criminal convictions. USCIS estimates an upper-bound average of 213,164 respondents will request employment authorization as a result of the changes in this rule in the first 2 years. This average estimate is derived from a maximum estimate of 361,766 new
2. USCIS is revising the form and its instructions and the estimate of total burden hours has increased due to the addition of this new population of Form I-765 filers, and the increase of burden hours associated with the collection of biometrics from these applicants.
3. The Immigrant Petition for Alien Worker, Form I-140; OMB Control Number 1615-0015. Specifically, USCIS is revising this information collection to remove ambiguity regarding whether information about the principal beneficiary's dependent family members should be entered on the Form I-140 petition, by revising the word “requests” to “requires” for clarification in the form instructions. USCIS is also revising the instructions to remove the terms “in duplicate” in the second paragraph under the labor certification section of the instructions because USCIS no longer requires uncertified Employment and Training Administration (ETA) Forms 9089 to be submitted in duplicate. There is no change in the data being captured on the information collection instrument, but there is a change to the estimated annual burden hours as a result of USCIS's revised estimate of the number of respondents for this collection of information.
4. The Petition for a Nonimmigrant Worker, Form I-129, OMB Control Number 1615-0009. USCIS is making revisions to Form I-129, specifically the H-1B Data Collection and Filing Fee Exemption Supplement and the accompanying instructions, to correspond with revisions to the regulatory definition of “related or affiliated nonprofit entities” for the purposes of determining whether the petitioner is exempt from: (1) Payment of the $750/$1,500 fee associated with the American Competitiveness and Workforce Improvement Act (ACWIA) and (2) the statutory numerical limitation on H-1B visas (also known as the H-1B cap). USCIS cannot predict the number of new respondents that would file petitions for foreign workers as a result of the changes in this rule.
5. The Application to Register Permanent Residence or Adjust Status, Form I-485, including new Supplement J, “Confirmation of Bona Fide Job Offer or Request for Job Portability under INA Section 204(J),” OMB Control Number 1615-0023. Specifically, USCIS is creating a new Supplement J to FormI-485 to allow the applicant for adjustment of status requesting portability under section 204(j) of the INA, and the U.S. employer offering the applicant a new permanent job offer, to provide formal attestations regarding important aspects of the job offer. Providing such attestations is an essential step to establish eligibility for adjustment of status in any employment-based immigrant visa classification requiring a job offer, regardless of whether the applicant is making a portability request under section 204(j) or is seeking to adjust status based upon the same job that was offered in the underlying immigrant visa petition. Through this new supplement, USCIS will collect required information from U.S. employers offering a new permanent job offer to a specific worker under section 204(j). Moreover, Supplement J will also be used by applicants who are not porting pursuant to section 204(j) to confirm that the original job offer described in the Form I-140 petition is still bona fide and available to the applicant at the time the applicant files the Form I-485 application. Supplement J replaces the current Form I-485 initial evidence requirement that an applicant must submit a letter on the letterhead of the petitioning U.S. employer that confirms that the job offer on which the Form I-140 petition is based is still available to the applicant.
This supplement also serves as an important anti-fraud measure, and it allows USCIS to validate employers extending new permanent job offers to individuals under section 204(j). USCIS estimates that approximately 28,309 new respondents will file Supplement J as a result of the changes made by the rule.
Additionally, USCIS is revising the instructions to Form I-485 to reflect the implementation of Supplement J. The Form I-485 instructions are also being revised to clarify that eligible applicants need to file Supplement J to request job portability under section 204(j). There is no change to the estimated annual burden hours as a result of this revision as a result of the changes in this rule.
• Application for Employment Authorization Document;
• Form I-765 Work Sheet;
• Immigrant Petition for Alien Worker;
• Petition for Nonimmigrant Worker;
• Application to Register Permanent Residence or Adjust Status.
(3) Agency form number, if any, and the applicable component of the DHS sponsoring the collection: Forms I-765/I-765WS, I-140, I-129 and I-485; USCIS.
(4) Affected public who will be asked or required to respond, as well as a brief abstract:
(5) An estimate of the total annual number of respondents and the amount of time estimated for an average respondent to respond:
• Form I-765/I-765WS:
○ 2,136,583 responses related to Form I-765 at 3.42 hours per response;
○ 250,000 responses related to Form I-765WS at .50 hours per response;
○ 405,067 responses related to Biometrics services at 1.17 hours; and
○ 2,136,583 responses related to Passport-Style Photographs at .50 hours per response.
• Form I-140:
○ 213,164 respondents at 1.08 hours per response.
• Form I-129:
○ Form I-129—333,891 respondents at 2.34 hours;
○ E-1/E-2 Classification to Form I-129—4,760 respondents at .67 hours;
○ Trade Agreement Supplement to Form I-129—3,057 respondents at .67 hours;
○ H Classification Supplement to Form I-129—255,872 respondents at 2 hours;
○ H-1B and H-1B1 Data Collection and Filing Fee Exemption Supplement—243,965 respondents at 1 hour;
○ L Classification Supplement to Form I-129—37,831 respondents at 1.34 hours;
○ and P Classifications Supplement to Form I-129—22,710 respondents at 1 hour;
○ Q-1 Classification Supplement to Form I-129—155 respondents at .34 hours; and
○ R-1 Classification Supplement to Form I-129—6,635 respondents at 2.34 hours.
• Form I-485:
○ 697,811 respondents at 6.25 hours per response;
○ 697,811 respondents related to Biometrics services at 1.17 hours.
(6) An estimate of the total annual public burden (in hours) associated with these collections:
•
•
•
•
(7) An estimate of the annual public burden (monetized) associated with these collections:
•
•
•
•
DHS has considered the public comments received in response to the NPRM, published in the
Administrative practice and procedure, Adoption and foster care, Immigration, Reporting and recordkeeping requirements.
Administrative practice and procedure, Immigration.
Administrative practice and procedure, Aliens, Cultural exchange programs, Employment, Foreign officials, Health professions, Reporting and recordkeeping requirements, Students.
Aliens, Immigration, Reporting and recordkeeping requirements.
Administrative practice and procedure, Aliens, Employment, Penalties, Reporting and recordkeeping requirements.
Accordingly, DHS amends chapter I of title 8 of the Code of Federal Regulations as follows:
8 U.S.C. 1101, 1103, 1151, 1153, 1154, 1182, 1184, 1186a, 1255, 1324a, 1641; 8 CFR part 2.
The revisions and addition read as follows:
(d)
(e)
(2) The priority date of a petition may not be retained under paragraph (e)(1) of this section if at any time USCIS revokes the approval of the petition because of:
(i) Fraud, or a willful misrepresentation of a material fact;
(ii) Revocation by the Department of Labor of the approved permanent labor certification that accompanied the petition;
(iii) Invalidation by USCIS or the Department of State of the permanent labor certification that accompanied the petition; or
(iv) A determination by USCIS that petition approval was based on a material error.
(3) A denied petition will not establish a priority date.
(4) A priority date is not transferable to another alien.
(5) A petition filed under section 204(a)(1)(F) of the Act for an alien shall remain valid with respect to a new employment offer as determined by USCIS under section 204(j) of the Act and 8 CFR 245.25. An alien will continue to be afforded the priority date of such petition, if the requirements of paragraph (e) of this section are met.
(n) * * *
(3)
(p)
(i) In the case of an initial request for employment authorization, the individual is in E-3, H-1B, H-1B1, O-1, or L-1 nonimmigrant status, including the periods authorized by § 214.1(l)(l) and (2), as well as any other periods of admission authorized by this chapter before a validity period begins or after the expiration of a validity period, on the date the application for employment authorization (Form I-765) is filed;
(ii) An immigrant visa is not authorized for issuance to the principal beneficiary based on his or her priority date on the date the application for employment authorization is filed; and
(iii) USCIS determines, as a matter of discretion, that the principal beneficiary demonstrates compelling circumstances that justify the issuance of employment authorization.
(2)
(3)
(i) He or she is the principal beneficiary of an approved immigrant petition for classification under section 203(b)(1), 203(b)(2) or 203(b)(3) of the Act and either:
(A) An immigrant visa is not authorized for issuance to the principal beneficiary based on his or her priority date on the date the application for employment authorization, (Form I-765) is filed; and USCIS determines, as a matter of discretion that the principal beneficiary demonstrates compelling circumstances that justify the issuance of employment authorization; or
(B) The difference between the principal beneficiary's priority date and the date upon which immigrant visas are authorized for issuance for the principal beneficiary's preference category and country of chargeability is 1 year or less according to the Department of State Visa Bulletin in effect on the date the application for employment authorization (Form I-765), is filed. For example, if the Department of State Visa Bulletin in effect on the date the renewal application is filed indicates immigrant visas are authorized for issuance for the applicable preference category and country of chargeability to individuals with priority dates earlier than November 1, 2000, USCIS may grant a renewal to a principal beneficiary whose priority date is on or between October 31, 1999 and October 31, 2001; or
(ii) He or she is a family member, as described under paragraph (p)(2) of this section, of a principal beneficiary granted a renewal of employment authorization under paragraph (p)(3)(i) that remains valid, except that the family member need not be maintaining nonimmigrant status at the time the principal beneficiary applies for renewal of employment authorization under paragraph (p) of this section. A family member may file an application to renew employment authorization concurrently with an application to renew employment authorization filed by the principal beneficiary or while such application by the principal beneficiary is pending, but the family member's renewal application cannot be approved unless the principal beneficiary's application is granted. The validity period of a renewal of employment authorization granted to family members may not extend beyond the validity period of the renewal of employment authorization granted to the principal beneficiary.
(4)
(5)
8 U.S.C. 1101, 1103, 1151, 1153, 1154, 1155, 1182, 1324a, and 1186a.
(a) * * *
(3) * * *
(iii) * * *
(C) In employment-based preference cases, upon written notice of withdrawal filed by the petitioner to any officer of USCIS who is authorized to grant or deny petitions, where the withdrawal is filed less than 180 days after approval of the employment-based preference petition, unless an associated adjustment of status application has been pending for 180 days or more. A petition that is withdrawn 180 days or more after its approval, or 180 days or more after the associated adjustment of status application has been filed, remains approved unless its approval is revoked on other grounds. If an employment-based petition on behalf of an alien is withdrawn, the job offer of the petitioning employer is rescinded and the alien must obtain a new employment-based preference petition in order to seek adjustment of status or issuance of an immigrant visa as an employment-based immigrant, unless eligible for adjustment of status under section 204(j) of the Act and in accordance with 8 CFR 245.25.
(D) Upon termination of the petitioning employer's business less than 180 days after petition approval under section 203(b)(1)(B), 203(b)(1)(C), 203(b)(2), or 203(b)(3) of the Act, unless an associated adjustment of status application has been pending for 180 days or more. If a petitioning employer's business terminates 180 days or more after petition approval, or 180 days or more after an associated adjustment of status application has been filed, the petition remains approved unless its approval is revoked on other grounds. If a petitioning employer's business terminates the job offer of the petitioning employer is rescinded and the beneficiary must obtain a new employment-based preference petition on his or her behalf in order to seek adjustment of status or issuance of an immigrant visa as an employment-based immigrant, unless eligible for adjustment of status under section 204(j) of the Act and in accordance with 8 CFR 245.25.
8 U.S.C. 1101, 1102, 1103, 1182, 1184, 1186a, 1187, 1221, 1281, 1282, 1301-1305 and 1372; sec. 643, Pub. L. 104-208, 110 Stat. 3009-708; Pub. L. 105-277, 112 Stat. 2681-641; Pub. L. 106-313, 114 Stat. 1251-1255; Pub. L. 106-386, 114 Stat. 1477-1480; section 141 of the Compacts of Free Association with the Federated States of Micronesia and the Republic of the Marshall Islands, and with the Government of Palau, 48 U.S.C. 1901 note, and 1931 note, respectively; 48 U.S.C. 1806; 8 CFR part 2.
(l)
(2) An alien admitted or otherwise provided status in E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1 or TN classification and his or her dependents shall not be considered to have failed to maintain nonimmigrant status solely on the basis of a cessation of the employment on which the alien's classification was based, for up to 60 consecutive days or until the end of the authorized validity period, whichever is shorter, once during each authorized validity period. DHS may eliminate or shorten this 60-day period as a matter of discretion. Unless otherwise authorized under 8 CFR 274a.12, the alien may not work during such a period.
(3) An alien in any authorized period described in paragraph (l) of this section may apply for and be granted an extension of stay under paragraph (c)(4) of this section or change of status under 8 CFR 248.1, if otherwise eligible.
The revisions and additions read as follows:
(h) * * *
(2) * * *
(i) * * *
(H)
(
(
(
(
(
(
(
(
(4) * * *
(v) * * *
(C)
(
(
(
(
(8) * * *
(ii) * * *
(F)
(
(
(
(
(
(
(
(
(
(
(
(
(13) * * *
(i) * * *
(A) Except as set forth in 8 CFR 214.1(l) with respect to H-1B beneficiaries and their dependents and paragraph (h)(5)(viii)(B) of this section with respect to H-2A beneficiaries, a beneficiary shall be admitted to the United States for the validity period of the petition, plus a period of up to 10 days before the validity period begins and 10 days after the validity period ends. The beneficiary may not work except during the validity period of the petition.
(iii) * * *
(C)
(
(
(D)
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(E)
(
(
(
(
(
(
(
(
(19) * * *
(i) A United States employer (other than an exempt employer defined in paragraph (h)(19)(iii) of this section, or an employer filing a petition described in paragraph (h)(19)(v) of this section) who files a Petition for Nonimmigrant Worker (Form I-129) must include the additional American Competitiveness and Workforce Improvement Act (ACWIA) fee referenced in § 103.7(b)(1) of this chapter, if the petition is filed for any of the following purposes:
(ii) A petitioner must submit with the petition the ACWIA fee, and any other applicable fees, in accordance with § 103.7 of this chapter, and form instructions. Payment of all applicable fees must be made at the same time, but the petitioner may submit separate checks. USCIS will accept payment of the ACWIA fee only from the United States employer or its representative of record, as defined in 8 CFR 103.2(a) and 8 CFR part 292.
(iii) * * *
(B)
(
(
(
(
(C) * * * A governmental research organization is a federal, state, or local entity whose primary mission is the performance or promotion of basic research and/or applied research. * * *
(D) A primary or secondary education institution; or
(E) A nonprofit entity which engages in an established curriculum-related clinical training of students registered at an institution of higher education.
(v)
(A) The petition is an amended H-1B petition that does not contain any requests for an extension of stay;
(B) The petition is an H-1B petition filed for the sole purpose of correcting a Service error; or
(C) The petition is the second or subsequent request for an extension of stay filed by the employer regardless of when the first extension of stay was filed or whether the ACWIA fee was paid on the initial petition or the first extension of stay.
(vi)
(B) Exempt filing situations. Any non-exempt employer who claims that the ACWIA fee does not apply with respect to a particular filing for one of the reasons described in paragraph (h)(19)(v) of this section must indicate why the ACWIA fee is not required.
(20)
8 U.S.C. 1101, 1103, 1182, 1255; Pub. L. 105-100, section 202, 111 Stat. 2160, 2193; Pub. L. 105-277, section 902, 112 Stat. 2681; Pub. L. 110-229, tit. VII, 122 Stat. 754; 8 CFR part 2.
(n) * * *
(2)
(a)
(1) The employment offer by the petitioning employer is continuing; or
(2) Under section 204(j) of the Act, the applicant has a new offer of employment from the petitioning employer or a different U.S. employer, or a new offer based on self-employment, in the same or a similar occupational classification as the employment offered under the qualifying petition, provided that:
(i) The alien's application to adjust status based on a qualifying petition has been pending for 180 days or more; and
(ii) The qualifying immigrant visa petition:
(A) Has already been approved; or
(B) Is pending when the beneficiary notifies USCIS of a new job offer 180 days or more after the date the alien's adjustment of status application was filed, and the petition is subsequently approved:
(
(
(iii) The approval of the qualifying petition has not been revoked.
(3) In all cases, the applicant and his or her intended employer must demonstrate the intention for the applicant to be employed under the continuing or new employment offer (including self-employment) described in paragraphs (a)(1) and (2) of this section, as applicable, within a reasonable period upon the applicant's grant of lawful permanent resident status.
(b)
8 U.S.C. 1101, 1103, 1324a; 48 U.S.C. 1806; 8 CFR part 2.
(b) * * *
(1) * * *
(vii) If an individual's employment authorization expires, the employer, recruiter or referrer for a fee must reverify on the Form I-9 to reflect that the individual is still authorized to work in the United States; otherwise, the individual may no longer be employed, recruited, or referred. Reverification on the Form I-9 must occur not later than the date work authorization expires. If an Employment Authorization Document (Form I-766) as described in § 274a.13(d) was presented for completion of the Form I-9 in combination with a Notice of Action (Form I-797C), stating that the original Employment Authorization Document has been automatically extended for up to 180 days, reverification applies upon the expiration of the automatically extended validity period under § 274a.13(d) and not upon the expiration date indicated on the face of the individual's Employment Authorization Document. In order to reverify on the Form I-9, the employee or referred individual must present a document that either shows continuing employment eligibility or is a new grant of work authorization. The employer or the recruiter or referrer for a fee must review this document, and if it appears to be genuine and relate to the individual, reverify by noting the document's identification number and expiration date, if any, on the Form I-9 and signing the attestation by a handwritten signature or electronic signature in accordance with paragraph (i) of this section.
The additions read as follows:
(b) * * *
(9) * * * In the case of a nonimmigrant with H-1B status, employment authorization will automatically continue upon the filing of a qualifying petition under 8 CFR 214.2(h)(2)(i)(H) until such petition is adjudicated, in accordance with section 214(n) of the Act and 8 CFR 214.2(h)(2)(i)(H);
(c) * * *
(35) An alien who is the principal beneficiary of a valid immigrant petition under section 203(b)(1), 203(b)(2) or 203(b)(3) of the Act described as eligible for employment authorization in 8 CFR 204.5(p).
(36) A spouse or child of a principal beneficiary of a valid immigrant petition under section 203(b)(1), 203(b)(2) or 203(b)(3) of the Act described as eligible for employment authorization in 8 CFR 204.5(p).
The revisions read as follows:
(a)
(d)
(i) Properly filed as provided by form instructions before the expiration date shown on the face of the Employment Authorization Document, or during the filing period described in the applicable
(ii) Based on the same employment authorization category as shown on the face of the expiring Employment Authorization Document or is for an individual approved for Temporary Protected Status whose EAD was issued pursuant to 8 CFR 274a.12(c)(19); and
(iii) Based on a class of aliens whose eligibility to apply for employment authorization continues notwithstanding expiration of the Employment Authorization Document and is based on an employment authorization category that does not require adjudication of an underlying application or petition before adjudication of the renewal application, including aliens described in 8 CFR 274a.12(a)(12) granted Temporary Protected Status and pending applicants for Temporary Protected Status who are issued an EAD under 8 CFR 274a.12(c)(19), as may be announced on the USCIS Web site.
(2)
(3)
(4)
Occupational Safety and Health Administration (OSHA), Labor.
Final rule.
OSHA is revising and updating its general industry standards on walking-working surfaces to prevent and reduce workplace slips, trips, and falls, as well as other injuries and fatalities associated with walking-working surface hazards. The final rule includes revised and new provisions addressing, for example, fixed ladders; rope descent systems; fall protection systems and criteria, including personal fall protection systems; and training on fall hazards and fall protection systems. In addition, the final rule adds requirements on the design, performance, and use of personal fall protection systems.
The final rule increases consistency between the general industry and construction standards, which will make compliance easier for employers who conduct operations in both industry sectors. Similarly, the final rule updates requirements to reflect advances in technology and to make them consistent with more recent OSHA standards and national consensus standards. OSHA has also reorganized the requirements and incorporated plain language in order to make the final rule easier to understand and follow. The final rule also uses performance-based language whenever possible to give employers greater compliance flexibility.
In accordance with 28 U.S.C. 2112(a)(2), OSHA designates Ms. Ann Rosenthal, Associate Solicitor of Labor for Occupational Safety and Health, Office of the Solicitor, U.S. Department of Labor, Room S-4004, 200 Constitution Avenue NW., Washington, DC 20210, to receive petitions for review of the final rule.
The following table of contents identifies the major sections of the preamble to the final rule:
This
• 1990 proposed rule on Walking and Working Surfaces (29 CFR 1910, subpart D)—Docket No. OSHA-S041-2006-0666 (formerly Docket No. S-041);
• 1990 proposed rule on Personal Protective Equipment—Fall Protection—Docket No. OSHA-S057-2006-0680 (formerly Docket No. S-057);
• 2003 reopening of the rulemaking record—Docket No. OSHA-S029-2006-0662 (formerly Docket No. S-029);
• 1994 final rule on Fall Protection in the Construction Industry—Docket No. OSHA-S206-2006-0699 (formerly Docket No. S-206);
• 1983 and 1985 proposed rules on Powered Platforms for Building Maintenance—Docket Nos. OSHA-S700-2006-0722 and OSHA-S700A-2006-0723 (formerly Dockets Nos. S-700 and S-700A, respectively); and
• 2014 final rule on Electric Power Generation, Transmission, and Distribution; Electrical Protective Equipment—Docket No. OSHA-S215-2006-0063 (Formerly Docket No. S-215).
All of these dockets are available for viewing at
Workers in many diverse general industry workplaces are exposed to walking-working surface hazards that can result in slips, trips, falls and other injuries or fatalities. According to the Bureau of Labor Statistics (BLS) data, slips, trips, and falls are a leading cause of workplace fatalities and injuries in general industry, which indicates that workers regularly encounter these hazards (see Section II below).
The final rule covers all general industry walking-working surfaces, including but not limited to, floors, ladders, stairways, runways, dockboards, roofs, scaffolds, and elevated work surfaces and walkways. To protect workers from hazards associated with those surfaces, particularly hazards related to falls from elevations, the final rule updates and revises the general industry Walking-Working Surfaces standards (29 CFR part 1910, subpart D). The final rule includes revised and new provisions that address, for example, fixed ladders; rope descent systems; fall protection systems and criteria, including personal fall protection systems; and training on fall hazards and fall protection systems. In addition, the final rule adds new requirements on the design, performance, and use of personal fall protection systems to the general industry Personal Protective Equipment (PPE) standards (29 CFR part 1910, subpart I). These and other measures the final rule incorporates reflect advances in technology and industry best practices that have been developed since OSHA adopted subpart D in 1971.
The final rule also gives employers greater flexibility to prevent and eliminate walking-working surface hazards. For example, the final rule, like the construction Fall Protection Standards (29 CFR part 1926, subpart M), gives employers flexibility to protect workers from falling to a lower level by using personal fall protection systems, including personal fall arrest, travel restraint, and work positioning systems; instead of requiring the use of guardrail systems, which the existing rule mandates. In addition, consistent with section 6(b)(5) of the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 651, 655(b)(5)) the final rule uses performance-based language in place of specification language, where possible, to increase compliance flexibility for employers. OSHA believes the flexibility the final rule provides will allow employers to select and provide the controls they determine will be most effective in the particular workplace operation or situation to protect their workers and prevent injuries and fatalities from occurring.
The final rule also increases harmonization between OSHA standards, which many stakeholders requested. Of particular importance, OSHA increased consistency between the final rule and OSHA's construction Scaffolds, Fall Protection, and Stairway and Ladder standards (29 CFR part 1926, subparts L, M, and X), which makes compliance easier for employers who conduct operations in both industry sectors. The revisions in and additions to the final rule will allow employers to use the same fall protection systems and equipment and follow the same practices when they perform either general industry or construction activities.
The final rule also increases consistency by incorporating provisions from other standards OSHA adopted more recently, including Powered Platforms for Building Maintenance (29 CFR 1910.66) and Scaffolds, Ladders and Other Working Surfaces in Shipyard Employment (29 CFR part 1915, subpart E).
OSHA also drew many provisions in the final rule from national consensus standards, including ANSI/ASSE A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Roof Openings; Stairs and Guardrail Systems; ANSI/ASSE Z359.1-2007, Safety Requirements for Personal Fall Arrest Systems, Subsystems and Components; and ANSI/IWCA I-14.1-2001, Window Cleaning Safety Standard. Many stakeholders recommended that OSHA incorporate the requirements in those standards into the final rule. OSHA agrees with stakeholders that national consensus standards represent industry best practices and reflect advancements in technology, methods, and practices developed in the years since the Agency adopted the existing rule.
OSHA also has made the final rule easier to understand and follow by reorganizing and consolidating provisions, using plain language, and adding informational tables, illustrations, and appendices. For example, the final rule adds two non-mandatory appendices to final § 1910.140 that address planning for, selecting, using, and inspecting personal fall protection systems (appendix C) and test methods and procedures for personal fall arrest work positioning systems (appendix D).
OSHA's efforts to revise and update the existing walking-working surfaces standards have been ongoing since 1973. Over that time, OSHA has gathered and analyzed a large body of data and information on walking-working surface hazards and methods to prevent and eliminate them. After careful examination and analysis of the rulemaking record as a whole, OSHA has determined that the requirements in this final rule will significantly reduce
OSHA believes that many employers already are in compliance with many provisions in the final rule; therefore, they should not have significant problems implementing it. OSHA also has included measures to make implementation of the final rule easier for employers. The final rule provides extended compliance dates for implementing some requirements and applies other requirements only prospectively. For example, the final rule gives employers as much as 20 years to equip fixed ladders with personal fall arrest or ladder safety systems. Moreover, since the final rule incorporates requirements from national consensus standards, most equipment manufacturers already provide equipment and systems that meet the requirements of the final rule.
The OSH Act requires OSHA to make certain findings with respect to standards. One of these findings, specified by Section 3(8) of the OSH Act, requires an OSHA standard to address a significant risk and to reduce this risk significantly. (See
The Regulatory Flexibility Act (5 U.S.C. 601, as amended) requires that OSHA determine whether a standard will have a significant economic impact on a substantial number of small firms. As discussed in Section V, the Assistant Secretary examined the small firms affected by this final rule and certifies that these provisions will not have a significant impact on a substantial number of small firms.
From 1976 through the 1980s, OSHA gathered a large body of scientific and technical research and information, including:
• Recommendations for fall prevention, ladders, scaffolds, slip resistance, and handrails from the University of Michigan;
• Studies on guardrails, slip resistance, scaffolds, and fall prevention from the National Bureau of Standards (now the National Institute of Standards and Technology);
• Analysis of various walking-working surfaces by Texas Tech University;
• Accident, injury, and fatality data from the Bureau of Labor Statistics (BLS); and
• National consensus standards from the American National Standards Institute (ANSI), American Society of Testing and Materials (ASTM), and the American Society of Mechanical Engineers (ASME).
OSHA received comments and held an informal public hearing on the two proposals (55 FR 29224), but did not finalize either.
Several stakeholders requested an informal public hearing on the proposed rule (Exs. 172; 178; 180; 201; 256). OSHA granted the requests for a public hearing (75 FR 69369 (11/10/2010)), and convened the hearing on January 18, 2011, in Washington, DC (Ex. 329). Administrative Law Judge John M. Vittone presided over the four-day hearing during which 39 stakeholders presented testimony (Ex. 329). At the close of the hearing on January 21, 2011, Judge Vittone ordered that the hearing record remain open for an additional 45 days, until March 7, 2011, for the submission of new factual information and data relevant to the hearing (Exs. 327; 330; 328). He also ordered that the record remain open until April 6, 2011, for the submission of final written comments, arguments, summations, and briefs (Exs. 327; 331-370). On June 13, 2011, Judge Vittone issued an order closing the hearing record and certifying it to the Assistant Secretary of Labor for Occupational Safety and Health (Ex. 373).
To promulgate a standard that regulates exposure to workplace hazards, OSHA must demonstrate that exposure to those hazards poses a “significant risk” of death or serious physical harm to workers, and that the standard will substantially reduce that risk. The Agency's burden to establish significant risk derives from the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 651
Section 3(8) of the OSH Act requires that workplace safety and health standards be “reasonably necessary or appropriate to provide safe or healthful employment and places of employment” (29 U.S.C. 652(8)). A standard is reasonably necessary and appropriate within the meaning of section 3(8) if it materially reduces a significant risk of harm to workers. The Supreme Court, in the “Benzene” decision, stated that section 3(8) “implies that, before promulgating any standard, the Secretary must make a finding that the workplaces in question are not safe” (
“[S]afe” is not the equivalent of “risk-free.” . . . [A] workplace can hardly be considered “unsafe” unless it threatens the workers with a significant risk of harm.
Therefore, before [the Secretary] can promulgate
Relying on the U.S. Census' Statistics of U.S. Businesses for 2007, OSHA estimates that 6.9 million general industry establishments employing 112.3 million employees will be affected by the final standard. For the industries affected by the final standard, OSHA examined fatalities and lost-workday injuries for falls to a lower level.
In the proposed rule, the Agency preliminarily concluded that falls constitute a significant risk and that the proposed standards would substantially reduce the risk of falls to employees (75 FR 28861, 28865-28866 (5/24/2010)). The analysis of U.S. Bureau of Labor Statistics (BLS) data from 1992 to 2004 identified an annual average of 300 fatal falls, 213 (71 percent) of which resulted from falls to a lower level and an annual average of 299,404 non-fatal falls resulting in lost-workday injuries,
Based on the analysis presented in this section, which OSHA updated with more recent data, and in the Final Economic and Final Regulatory Flexibility Screening Analysis (FEA) (Section V), OSHA determines that workplace exposure to hazards associated with walking-working surfaces, particularly the hazards of falling to a lower level, poses a significant risk of serious physical harm or death to workers in general industry. BLS data from 2006-2012 show that an average of 261 fatal falls to a lower level occurred annually in general industry. In addition, BLS data for 2006-2012 indicate that an average of 48,379 lost-workday (LWD) injuries from falls to a lower level occurred annually in general industry.
OSHA also concludes, based on this section and the FEA, that the “practices, means, methods, operations, or processes” the final rule requires will substantially reduce that risk. Specifically, the Agency estimates that full compliance with the final rule will prevent 29 fatalities from falls to a lower level and 5,842 lost-workday injuries from falls to a lower level annually in general industry.
Every year many workers in general industry experience slips, trips, falls and other injuries associated with walking-working surface hazards. These walking-working surface hazards result in worker fatalities and serious injuries, including lost-workday injuries. Slips, trips, and falls, including falls on the same level, can result in injuries such as fractures, contusions, lacerations, and sprains, and may even be fatal. Falls to lower levels can increase the severity of injuries as well as the likelihood of death. Falls on the same level can also result in strains and sprains when employees try to “catch” themselves to prevent falling.
There are many walking-working surface hazards that can cause slips, trips, and falls. These hazards include damaged or worn components on personal fall protection systems and rope descent systems; portable ladders used for purposes for which they were not designed; fixed ladders that are not equipped with fall protection; damaged stair treads; snow, ice, water, or grease on walking-working surfaces such as floors; and dockboards that are not properly secured or anchored.
Identifying walking-working surface hazards and deciding how best to protect employees is the first step in reducing or eliminating the hazards. To that end, the final rule requires that employers regularly inspect walking-working surfaces. It also requires that employers assess walking-working surfaces to determine if hazards are present, or likely to be, that necessitate the use of personal fall protection systems (§§ 1910.132(d); 1910.28(b)(1)(v)). In addition, employers must train employees on fall hazards and equipment plus the proper use of personal fall protection systems (§§ 1910.30, 1910.132(f)). After employers have assessed the workplace and identified fall hazards, final § 1910.28 requires employers to provide fall protection to protect their employees from falls. Final §§ 1910.29 and 1910.140 specify the criteria fall protection systems must meet, such as strength and performance requirements. Section A of the FEA provides detailed information on the incidents the final rule will prevent.
OSHA examined fall fatalities for 2006 to 2012 in industries covered by the final standard using data from the BLS Census of Fatal Occupational Injuries (CFOI). Table II-1, summarizing the data in Table V-6 of the FEA, shows the total number of fatal falls to a lower level from 2006 to 2012.
As described in Table V-6 of the FEA, over the seven-year period, the Professional, Scientific, and Technical Services industry and the Administrative and Support Services industry (NAICS codes 541 and 561, respectively) accounted for 27 percent of the fatal falls, while the Manufacturing (NAICS 31-33) and Transportation (NAICS 48) sectors accounted for 9.6 and 7.1 percent of the fatal falls, respectively. Among all three-digit NAICS codes affected by the standard, BLS reported the highest number of fatal falls in NAICS code 561,
Table V-7 of the FEA also includes data on fatal falls. That table displays the number of fatal falls by type of fall and industry sector for 2006-2010. These data indicate that during this period, there were, on average, 255 fatal falls to a lower level in general industry establishments when fatal falls are summed across all affected two-digit NAICS industries. While the annual number of fatal falls decreased and then rose since 2006, the average annual number of fatal falls to a lower level from 2006-2010 (255 fatal falls to a lower level) and 2011-2012 (274 fatal falls to a lower level)
In addition to being a major source of lost-workday injuries, falls to a lower level were also some of the most severe. Falls to a lower level had the second highest median days away from work, a key measure of the severity of an injury or illness, every year from 2006-2012, except 2010 (where it was the third highest). BLS data also demonstrate that the majority of lost-workday falls to a lower level that occurred in private industry occurred in general industry. More specifically, for 2006-2012, approximately three-quarters of the lost-workday falls to a lower level in private industry occurred in general industry.
Table V-8 of the FEA shows the average number of lost-workday injuries due to falls in general industry, by type of fall, for 2006-2012. Based on these data, OSHA estimates that, on average, approximately 48,379 serious (lost-workday) injuries per year resulted from falls to a lower level and would be directly affected by the final standard.
Table II-2, based on BLS's
Based on the number of fatalities and lost-workday injuries reported by BLS for falls to a lower level, and evidence that non-fatal injuries are among the most severe work-related injuries, OSHA finds that workers exposed to fall hazards are at a significant risk of death or serious injury.
Several stakeholders agreed that fall hazards present a significant risk of injury and death (Exs. 63; 121; 158; 189; 363; OSHA-S029-2006-0662-0177; OSHA-S029-2006-0662-0350). For example, Bill Kojola of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) asserted:
Fall hazards remain one of the most serious problems faced by millions of workers. We are convinced that the proposed changes, when implemented as a result of promulgating a final rule, will prevent fatalities and reduce injuries from fall hazards (Ex. 363).
Similarly, in his written comments, Robert Miller of Ameren Corporation stated that the proposed rule is a positive approach towards eliminating at-risk conditions and events (Ex. 189).
Charles Lankford, of Rios and Lankford Consulting International, challenged OSHA's preliminary finding that falls present a significant risk and that revising the general industry fall protection standards is necessary to address the problem. Mr. Lankford used NIOSH and BLS data to argue, respectively, that the final rule is not necessary because the rate of fall fatalities decreased from 1980-1994 and “held steady” from 1992 to 1997 (Ex. 368). OSHA is not persuaded by Mr. Lankford's argument because, as discussed above, current BLS data from 2006-2012 show that an average of 261 fatal falls to a lower level occurred annually and these falls continue to be a leading cause of fatal occupational injuries in general industry. OSHA believes this shows that a significant risk of death from falls to a lower level still exists in general industry workplaces. With regard to Mr. Lankford's claim that fall fatalities held “steady” from 1992-1997, according to the BLS data, the number of fatal falls increased each year during that period (with the exception of 1995), and reached a 6-year high in 1997.
In addition, Mr. Lankford argued that:
[H]istorical incident rates for non-fatal falls also do not display an increasing fall problem. The all-industries non-fatal fall incidence rate has declined every year since 2003 (the oldest year in the BLS Table I consulted), so the decline in rates is not attributable to the current recession. If we exclude 2008 and 2009 data, manufacturing did not show a change. Yet 2006 and 2007 showed lower injury incidence rates than 2003 and 2004 (Ex. 368).
Mr. Lankford also suggested that fatal falls are a greater problem in the “goods producing sector” than the “service sector.” However, this assertion is not supported by the BLS data. As described in Table V-6 of the FEA, from 2006-2012, among all three-digit NAICS codes affected by the standard, BLS reported the highest number of fatal falls in a “service sector” (NAICS code 561, Administrative and Support Services). Further, over the seven-year period, the Professional, Scientific, and Technical Services industry and the Administrative, and Support Services industry (NAICS codes 541 and 561, respectively) accounted for 28 percent of the fatal falls.
Based on the evidence and analysis, OSHA disagrees with Mr. Lankford's comment. As mentioned above, after examining recent BLS data (2006-2012), OSHA finds that the available evidence points to a significant risk. OSHA believes that the risk of injury, combined with the risk of fatalities constitutes a significant safety threat that needs to be addressed by rulemaking—specifically a revision to subparts D and I. OSHA believes that the revisions to subparts D and I are reasonable and necessary to protect affected employees from those risks. Based on the BLS data, the Agency estimates that full compliance with the revised walking-working surfaces standards will prevent 28 fatalities and 4,056 lost-workday injuries due to falls to a lower level annually. OSHA finds that these benefits constitute a substantial reduction of significant risk of harm from these falls.
Several commenters urged OSHA to expand its analysis to include fatalities and injuries resulting from falls on the same level (Exs. 77; 329 (1/20/2011 pp. 42, 60-61); 329 (1/21/2011, pp. 200-203); 330). However, the Agency finds that, with regard to its significant risk analysis, the data for falls to a lower level constitute the vast majority of the risk that the standard addresses,
However, as discussed in the FEA, the final rule has relatively few new provisions addressing falls on the same level, such as slips and trips from floor obstructions or wet or slippery working surfaces. The requirements expected to yield the largest benefits from preventing falls on the same level are found in final § 1910.22 General requirements. These final provisions will result in safety benefits to workers by controlling worker exposure to fall hazards on walking-working surfaces, especially on outdoor surfaces. Tables V-11 and V-13 of the FEA show that OSHA estimates only 1 percent of fatal falls on the same level and 1 percent of lost-workday falls on the same level will be prevented by these provisions.
Since falls to a lower level constitute the vast majority of the risk the final rule addresses, OSHA's significant risk analysis includes only falls to a lower level. Because of this, OSHA notes the final risk analysis may understate the risk of falls in general industry, since falls on the same level account for 68 percent of falls resulting in a lost-workday injury.
The U.S. Chamber of Commerce questioned whether OSHA's estimate of the benefits of the proposed standard justified the efforts undertaken to issue the standard:
We note with some surprise that OSHA's analysis suggests this new regulation will have a relatively minor impact on the total number of fatalities attributed to falls from height. OSHA claims that for the years 1992-2007 there were an average of 300 fatal falls per year from height. OSHA calculates that this standard will result in 20 fewer fatal falls per year. We do not mean to diminish the significance of saving 20 lives, but OSHA seems to be projecting less impact than a standard of this scope would suggest. Indeed, OSHA even admits in the preamble that:
First, far from creating confusion, this rulemaking assures that OSHA rules will be in much closer accord with existing consensus standards and practices and that OSHA's general industry fall protection requirements will be better aligned with its construction fall protection standard. There are many situations in which improved enforcement of existing rules would be highly cost beneficial but is not possible. On the other hand, OSHA can enforce new provisions to this rule at minimal marginal costs per inspection since the bulk of the costs of an inspection involves the time to reach the site, walk through the site looking for violations of all OSHA rules, and conduct the necessary closing and enforcement conferences.
The purpose of the OSH Act is to “assure so far as possible every working man and woman in the nation safe and healthful working conditions and to preserve our human resources” (29 U.S.C. 651(b)). To achieve this goal, Congress authorized the Secretary of Labor to issue and to enforce occupational safety and health standards (see 29 U.S.C. 655(a) (authorizing summary adoption of existing consensus and Federal standards within two years of the OSH Act's effective date); 655(b) (authorizing promulgation of standards pursuant to notice and comment); and 654(a)(2) (requiring employers to comply with OSHA standards)).
A safety or health standard is a standard “which requires conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment or places of employment” (29 U.S.C. 652(8)).
A standard is reasonably necessary or appropriate within the meaning of section 3(8) of the OSH Act if it materially reduces a significant risk to workers; is economically feasible; is technologically feasible; is cost effective; is consistent with prior Agency action or is a justified departure; adequately responds to any contrary evidence and argument in the rulemaking record; and effectuates the Act's purposes at least as well as any national consensus standard it supersedes (see 29 U.S.C. 652; 58 FR 16612, 16616 (3/30/1993)).
A standard is technologically feasible if the protective measures it requires already exist, can be brought into existence with available technology, or can be created with technology that can reasonably be expected to be developed (
A standard is economically feasible if industry can absorb or pass on the cost of compliance without threatening its long-term profitability or competitive structure (
Section 6(b)(7) of the OSH Act authorizes OSHA to include among a standard's requirements labeling, monitoring, medical testing, and other information-gathering and transmittal provisions (29 U.S.C. 655(b)(7)).
All safety standards must be highly protective (see 58 FR at 16614-16615;
The final rule revises and updates the requirements in the general industry Walking-Working Surfaces standards (29 CFR part 1910, subpart D), including requirements for ladders, stairs, dockboards, and fall and falling object protection; and it adds new requirements on the design, performance, and use of personal fall protection systems (29 CFR part 1910, subpart I). The final rule also makes conforming changes to other standards in part 1910 that reference requirements in subparts D and I.
This part of the preamble discusses the individual requirements in the specific sections of final subpart D; explains the need for and purposes of the requirements; and identifies the data, evidence, and reasons supporting them. This preamble section also discusses issues raised in the proposed rule and by stakeholders, significant comments and testimony submitted to the rulemaking record, and substantive changes from the proposed rule.
In accordance with section 6(b)(8) of the OSH Act, OSHA drew many of the revisions, new provisions, and technological advancements in the proposed and final rules from various national consensus standards. In the discussion of the specific sections of final subpart D, OSHA identifies the national consensus standards that section references. In the summary and explanation of the proposed rule, OSHA's references to national consensus standards are to the editions that were current at that time. In the time since OSHA published the proposed rule, many of the referenced consensus standards have been revised and updated. In the final preamble, OSHA references the most recent editions of those national consensus standards, where appropriate, after examining and verifying that they are as protective as earlier editions.
OSHA has taken a number of steps in the final rule, like the proposal, to provide greater compliance flexibility for employers and make the final rule easier to understand and follow, which stakeholders supported (
Finally, clarifying provisions and terms, using plain language, and consolidating and reorganizing the requirements also make the final rule easier to understand, thereby, enhancing
Final § 1910.21 establishes the scope of and defines the terms used in 29 CFR part 1910, subpart D—Walking-Working Surfaces.
Final paragraph (a), like the proposed rule, specifies that the subpart applies to all general industry workplaces. It covers all walking-working surfaces unless specifically excluded by an individual section of this subpart. The final rule consolidates the scope requirements for subpart D into one provision and specifies that the final rule applies to all walking-working surfaces in general industry workplaces. The final rule defines “walking-working surfaces” as any surface on or through which an employee walks, works, or gains access to a work area or workplace location (§ 1910.21(b)). Walking-working surfaces include, but are not limited to, floors, ladders, stairways, steps, roofs, ramps, runways, aisles, scaffolds, dockboards, and step bolts. Walking-working surfaces include horizontal, vertical, and inclined or angled surfaces.
Final paragraph (a) also specifies that subpart D does not apply to general industry walking-working surfaces, including operations and activities occurring on those surfaces, that an individual section or provision specifically excludes. Final subpart D addresses each of these specific exclusions in the relevant individual section or provision. OSHA notes that each exclusion only applies to the specific section or provision in which it appears and not to any other final subpart D section or provision. Existing subpart D does not have a single scope provision that applies to the entire subpart. Rather, it includes separate scope requirements in various sections in the subpart (
OSHA believes the consolidated scope provision in final paragraph (a) is clearer and easier to understand than the existing rule. Final paragraph (a) allows employers to determine more easily whether the final rule applies to their particular operations and activities. In addition, the final rule is consistent with OSHA's interpretation and enforcement of subpart D since the Agency adopted the walking-working surfaces standards in 1971. It also is consistent with other OSHA standards, including Agency construction standards (
A number of stakeholders commented on the proposed scope provision (
Verallia commented that the proposed scope, combined with the proposed definition of “walking-working surfaces” (§ 1910.21(b)), “greatly expands the obligation of employers” and makes some requirements, such as regular inspections, “unduly burdensome” (Ex. 171). Verallia recommended that OSHA limit the scope of the final rule by revising the walking-working surfaces definition (see discussion of the definition of walking-working surfaces in final § 1910.21(b)). OSHA disagrees with Verallia's contention. The existing rule covers all of the examples of walking-working surfaces listed in the proposed definition of walking-working surfaces (proposed § 1910.21(b)).
Several stakeholders urged that OSHA exclude inspection, investigation, and assessment operations performed before the start of work and after work is completed (
Exception: The provisions of this subpart do not apply when employees are making an inspection, investigation, or assessment of workplace conditions prior to the actual start of construction work or after all construction work has been completed.
Such language would have the effect of excluding these operations from the entirety of subpart D, which OSHA opposes. Although OSHA excludes these operations from the fall protection requirements in final § 1910.28 (see discussion in final § 1910.28(a)(2)), employers performing them must comply with the other requirements in this subpart. For example, those employers must ensure that ladders and stairways their workers use to get to the workplace location are safe; that is, are in compliance with the requirements in final § 1910.23 and final § 1910.25, respectively. Employers also must ensure that the workers performing those operations can safely perform those operations by ensuring they receive the training that final § 1910.30 requires.
Some stakeholders recommended that OSHA exclude public safety employees from the final rule (Exs. 167; 337; 368). The Public Risk Management Association (PRIMA) offered three reasons for excluding public safety employees from the final rule. First, they said employers do not control the walking-working surfaces where employees perform public safety and emergency response operations (Ex. 167). Second, they said it is “unreasonable” to require public safety employees (
OSHA does not believe excluding public safety employees from the entire final rule is appropriate or necessary. Many general industry employers that the final rule covers perform operations on walking-working surfaces that they do not own, thus, in this respect, public safety employers and operations are not unique. Regardless of whether general industry employers own the walking-working surfaces where their workers walk and work, they still must ensure the surfaces are safe for them to use. For example, general industry employers, including public safety employers, must ensure that the walking-working surfaces are able to support their employees as well as the equipment they use. If walking-working surfaces cannot support the maximum intended load, employees and, in the case of public safety employers, the people they are trying to assist or rescue, may be injured or killed.
OSHA does not believe stakeholders provided convincing evidence showing this and other requirements (
Although neither the proposed rule nor OSHA standards define “agricultural operations,” the Agency has said they generally include “any activities involved in the growing and harvesting of crops, plants, vines, fruit trees, nut trees, ornamental plants, egg production, the raising of livestock (including poultry and fish) and livestock products” (
OSHA's Appropriations Act uses the term “farming operations,” which is similarly defined as “any operation involved in the growing or harvesting of crops, the raising of livestock or poultry, or related activities conducted by a farmer on sites such as farms, ranches, orchards, dairy farms or similar farming operations” (CPL 02-00-51; 42 FR 5356 (1/28/1977); Memorandum for Regional
The Occupational Safety and Health Review Commission (OSHRC) has ruled that activities integrally related to these core agricultural operations also are agricultural operations (
Under the
In addition, activities performed on a farm that “are not related to farming operations and are not necessary to gain economic value from products produced on the farm” are general industry activities (Memorandum for Regional Administrators (July 29, 2014) (these activities on a small farm “are not exempt from OSHA enforcement” under the appropriations rider)). To illustrate, the memorandum specifies the following activities performed on a farm are general industry activities (“food manufacturing operations”) not farming operations exempt under the appropriations rider:
• Grain handling operation that stores and sells grain grown on other farms;
• Food processing facility that makes cider from apples grown on the farm or processes large carrots into “baby carrots;” and
• Grain milling facility and use of milled flour to make baked goods.
As mentioned, a number of stakeholders urged that OSHA include agricultural operations in the final rule for several reasons (Exs. 201; 323; 325; 340; 370). First, the stakeholders said fall hazards are present throughout agricultural operations. For instance, Farmworker Justice stated:
Fall hazards exist in all types of farm operations in both crop and animal production, including work in vegetable fields, packing sheds, fruit orchards, tree nurseries, greenhouses, mushroom houses, dairies, poultry farms, cattle feedlots, and other livestock operations (Ex. 325).
They also said that workers are exposed to fall hazards while working on various types of walking-working surfaces, including ladders, farm machinery, and elevated farm structures (Ex. 325).
Second, stakeholders said fall hazards are a leading cause of worker fatalities and injuries in agricultural operations. Farmworker Justice said the annual number of fatal falls in agricultural operations accounted for almost 10 percent of all annual occupational fatal falls (Ex. 370). They said a NIOSH analysis of 2005 Bureau of Labor Statistics (BLS) data indicated that fall-related farmworker deaths occurred at a rate of 1.4 per 100,000, “a rate exceeded in only two other industries: Construction . . . and mining” (Ex. 325, referring to 2005 Census of Fatal Occupational Injury data). According to Farmworkers Justice, BLS data from 2004-2009 indicated that 157 agricultural workers died due to falls, which they said was an average of over 28 fall deaths per year (Exs. 329 (1/18/2011, pp. 228); 370). California Rural Legal Assistance Foundation (CRLAF) said BLS fatality data from 1992-1997 indicated 166 agricultural workers died as a result of falls from elevations (Ex. 201).
Farmworker Justice and CRLAF also submitted evidence on the prevalence of fall injuries in agricultural operations. CRLAF said an analysis of 1991 Florida worker compensation records in agricultural operations revealed that falls accounted for nearly 25 percent of all serious, disabling work injuries (Ex. 201). Farmworker Justice reported:
BLS data indicates that workers in both crop and animal production had among the highest rates of non-fatal fall-related injuries requiring days away from work of all U.S. workers in 2009 (Ex. 370).
Farmworker Justice stated that fall injuries were particularly frequent among workers harvesting tree fruit and nut crops:
According to 2009 BLS fall injury data . . . orchard workers suffered ladder-related fall injuries at the rate of 33.6 per 10,000 workers, which would be among the top 20 industry fall rates examined by OSHA (Ex. 370;
CRLAF reported similar data showing “nearly one-third (31%) of the 13,068 Workers' Compensation Claims in Washington State orchards between 1996 and 2001 involving compensation for lost work time were for ladder related injuries.”
Third, stakeholders said the fall protection standards that California, Oregon, and Washington have adopted to protect agricultural workers show that it is feasible to apply the final rule to agriculture operations (Exs. 325; 329 (1/18/2011, pgs. 207-210); 340; 370). Farmworker Justice said that government officials, agricultural orchard employers, and agricultural safety training experts in these states indicated that compliance with those standards have “significantly reduced injuries among agricultural workers” (Ex. 370). It also reported that a Washington study of fall injuries among orchard workers over a five-year period (1996-2001) following implementation of the state's fall protection standard found “statistically significant annual reductions in injuries” (Ex. 370, discussing Hofmann J, Snyder K, Keifer M. “A descriptive study of workers claims in Washington State orchards,” 56 Occupational Medicine 251-257 (2006)).
OSHA agrees with the stakeholders that walking-working surface hazards, particularly fall hazards, exist in agricultural operations. That said, OSHA has not included agricultural operation in the final rule. The Agency has not gathered and analyzed the type of information on agricultural operations necessary to support a rule. OSHA has not gathered and analyzed information on the number of agricultural workers and establishments the final rule would affect. In addition, OSHA has not determined what percentage of agricultural
OSHA has not gathered and analyzed data and information on the jobs in agricultural operations where walking-working surface hazards are present and worker injuries and fatalities are occurring; the current employer practices to address these hazards; and the availability and cost of controls, such as fall protection systems, to protect workers from those hazards. In addition, OSHA has not conducted the economic and regulatory flexibility analyses necessary to make a feasibility determination. And, because the proposal clearly did not extend to agricultural operations, the public has not had a chance to comment on those issues. These and other steps are necessary before OSHA can issue a final rule that applies to agricultural operations. As such, the final rule applies to general industry and not agricultural operations. However, if an operation performed on a farm is not an “agricultural operation” or integrally related to an agricultural operation, such as a food manufacturing or other post-harvesting operations, then the final general industry rule applies.
Many stakeholders support adding specific fall protection requirements for rolling stock and motor vehicles to the final rule (
Stakeholders who support adding specific fall protection requirements said workers are exposed to fall hazards working on rolling stock and motor vehicles; falls from rolling stock and motor vehicles have resulted in death and serious injury; and feasible, effective fall protection systems exist and are in use to protect employees working on rolling stock and motor vehicles. These stakeholders include safety professional organizations (
Stakeholders who oppose adding specific requirements said requiring fall protection for rolling stock and motor vehicles is not necessary, creates a greater hazard, and is infeasible. Some said OSHA did not have authority to regulate rolling stock and motor vehicles, and, in any event, should leave such regulation to the Federal Railroad Administration (FRA) and Federal Motor Carrier Safety Administration (FMCSA), respectively. Some stakeholders urged OSHA that the final rule limit fall protection requirements to vehicles located inside or contiguous to a building or structure. These stakeholders include employers, small businesses, and industry associations (Exs. 182; 220; OSHA-S029-2006-0662-0226; OSHA-S029-2006-0662-0229; OSHA-S029-2006-0662-0231; OSHA-S029-2006-0662-0237; OSHA-S029-2006-0662-0252; OSHA-S029-2006-0662-0306; OSHA-S029-2006-0662-0340).
Other stakeholders, however, including some who oppose requiring fall protection, said a significant number/percentage of employees must climb on or access the tops of rolling stock and motor vehicles to perform a wide range of tasks, including loading/unloading, tarping, maintenance and repair, inspections, sampling, snow and ice removal, and other tasks (
Second, a number of stakeholders stated that fall protection is not necessary on rolling stock and motor vehicles because worker exposure to fall hazards is limited. Several stakeholders said exposure is “infrequent,” “brief and sporadic” (Exs. 124; 181; 183; 187;
Third, some stakeholders assert fall protection is not necessary on rolling stock and motor vehicles because the heights employees climb do not pose fall hazards. For instance, ATA said the height of most commercial vehicle trailers is no more than 49 to 50 inches (
Fourth, a number of stakeholders said fall protection is not necessary because no or few injuries from falls off rolling stock and motor vehicles have occurred in their establishments or industry (Exs. 63; 121; 148; 162; 181; 237; OSHA-S029-2006-0662-0219; OSHA-S029-2006-0662-0237; OSHA-S029-2006-0662-0252; OSHA-S029-2006-0662-0320). Douglas Greenhaus, with ATD/NADA, said:
I've spent over twenty-five years working with truck dealerships on matters involving employee health and safety. In that time, I have only rarely heard of injuries arising from falls from commercial trucks, tractors, or trailers (Ex. 181.
The Cargo Tank Risk Management Committee (CTRMC) stated:
While falls from the top of tank trailers can result in serious injury, the actual frequency of such injuries is very rare. A typical large cargo tank motor vehicle fleet makes over 300 delivers per day and has averaged less than 2 falls from its tank trailers per year (Ex. 63).
Stakeholders pointed out that industry surveys also show falls from rolling stock and motor vehicles were low. McNeilus Trucking reported that a 2002 Illinois Ready Mix Concrete Association survey found only two falls from ready-mix concrete trucks occurred in over 66 million climbs (Ex. OSHA-S029-2006-0662-0219). According to an International Liquid Terminals Association's (ILTA) 2010 annual survey, six of the 221 (2.7%) injuries were falls from rolling stock and motor vehicles, which “represent a very small proportion of the total number of recordable incidents” (Ex. 335). A NGFA survey of 901 facilities showed that during a two-year period (2007-09), during which the facilities handled 1.5 million railcars and 1.4 million motor vehicles, no fatalities and only 12 injuries occurred (Ex. 148).
By contrast, a number of stakeholders said falls from rolling stock and motor vehicles are a serious problem that have resulted in worker deaths and serious injuries (
Stakeholders reported a similar experience in the truck transportation industry. For example, Rick Hunter, of the Alabama Trucking Association Workers Compensation Fund, said:
Each year drivers and shop [technicians] are injured from falls from tankers and flatbed trailers. I know of 4 deaths from this type fall in Alabama” (Ex. 257).
Cameron Baker, with Standfast USA, testified that one truck company with more than 900 drivers, reported an average of 31 falls per year during a nine-year period (1998-2006) (Exs. 329 (1/20/2011, pgs. 151-52); 355-11). He estimated that the total cost to the company for those fall injures was $3.33 million (Ex. 355-11). Standfast also submitted information indicating that rolling stock and motor vehicle fall injuries are increasing (Ex. 355-11).
Fifth and finally, a number of stakeholders said employers already are using effective measures to protect workers on rolling stock and motor vehicles and requiring additional measures in the final rule will not increase worker safety (
• Conventional fall protection system such as cable line and retractable lifeline systems; work platforms with railings/guardrails; walkways with railings; and portable access systems with railings or safety cages; ladders with railings (Exs. 63; 124; 148; 158; 162; 169; 181; 335);
• Anti-slip surfaces on motor vehicle walkways (Ex. 158);
• Initial, periodic, and remedial training, which is the only measure some stakeholders use (
• Work practices such as site-specific loading/unloading protocols and safe climbing techniques (
• Administrative controls, including “blue-flagging” rail cars on isolated tracks to prevent moving while employees are on them, prohibiting workers from being on moving rolling stock, and keeping employees off railcars in unsafe weather conditions (
However, as mentioned, other stakeholders believe requiring fall protection on rolling stock and motor vehicles is necessary because many employers have not implemented readily available controls even though their workers are exposed to fall hazards on rolling stock and motor vehicles and fall injuries and fatalities are occurring in the railroad and truck transportation industries (
Stakeholders said that requiring personal fall protection systems on rolling stock and motor vehicles could create a greater risk by causing “entanglement with moving parts” (Ex. 124) and creating trip hazards (Exs. 181; OSHA-S029-2006-0662-0244). They also said requiring workers “to continually tie and untie from a variety of anchorage points when the employee accesses and moves around” rolling stock or motor vehicles also could create a greater hazard (Ex. 121; OSHA-S029-2006-0662-0244). Keller and Heckman explained:
[T]he worker would first have to climb or otherwise travel to the anchorage location to attach and then detach from the anchorage, which might very well pose a greater hazard than simply working carefully without fall protection (Ex. OSHA-S029-2006-0662-0244).
Also, these stakeholders did not show that there are no alternative fall protection measures or systems available to protect workers. In fact, these and other stakeholders identified various types of fall protection systems that they and other employers are using successfully to protect employees working on rolling stock and motor vehicles (
Dealerships often use railing-equipped metal stairs with lockable casters or other ladder systems to reach the sides and tops of trucks, tractors, or trailers, thereby reducing the need to climb on the vehicles themselves. When and where used, mobile work platforms and scaffolds have adjustable `maximum' heights and are equipped with side rails and toe boards to prevent falling or tripping from the top section. . . . Paint booths often have mobile or stationary stair platforms equipped with railings and safety chains (Ex. 181).
Stakeholders asserted various reasons why they believe it is not technologically feasible to require fall protection on rolling stock and motor vehicles that are not located in or contiguous to a building or other structure. First, several stakeholders contend that guardrail systems, safety net systems, and personal fall protection system are not feasible in those locations (
Standfast USA said safety net systems are difficult to deploy and guardrail systems either obstruct loading racks or cannot be raised when the racks are present (Ex. 329 (1/20/2011, pgs. 156-58)).
Regarding personal fall protection systems, stakeholders stated there is no place to install anchorage points when rolling stock and motor vehicles are not located in or contiguous to a building or structure (
However, other stakeholders submitted evidence showing that controls are available and in use on rolling stock and motor vehicles regardless of location (
Second, several stakeholders stated that retrofitting rolling stock and motor vehicles with fall protection is not feasible (Exs. 63; 158; 190; 192; 329 (1/20/2011, pgs. 112-13); 335; OSHA-S029-2006-0662-0219). McNeilus Trucking, for instance, said retrofitting could affect the structural integrity or performance of rolling stock and motor vehicles (Ex. OSHA-S029-2006-0662-0219.
It's not easy to take these piping manifolds and just simply overlay a superstructure in many cases. . . . [W]hen we're looking at older installations that might require retrofitting where . . . retrofit really does require complete bulldoze and start over” (Ex. 329 (1/20/2011, pgs. 112-13).
Other stakeholders, including industry associations, commented that rolling stock and motor vehicles have been retrofitted with fall protection systems (
Third, some stakeholders asserted fall protection on rolling stock and motor vehicles is not feasible because of circumstances beyond their control (Exs. 148; 181; 326). These stakeholders said, for example, they cannot install fall protection systems because they do not own the motor vehicles (
Bulk feed transportation equipment must meet maximum height constraints in order to comply with Department of Transportation regulations. The maximum allowable height of trucks and trailers is 13′6″. Since the top of our equipment is approximately 13′ high, the industry is limited in positioning additional structures above this height (Ex. 158).
Other evidence in the record, however, indicates that there are many portable and stand-alone fall protection systems available and in use today in both the rail and truck transportation industries, including overhead cable line systems, moveable stairs with railings, mobile access platforms with railings and/or safety cages and overhead tarping systems (
Fall protection system manufacturers indicated that, based on their experience, “it is feasible and practical to provide workers with active or passive means of fall protection [for working on rolling stock and motor vehicles] in nearly every work situation” (Ex. 329 (1/18/2011, pgs. 82-83);
Employers and industry associations submitted information about effective fall protection controls that have been implemented (
As mentioned, AFIA said member companies have installed several types of fall protection systems (
[T]he additional couple of minutes to don a full body harness and attach it to a retractable lanyard are insignificant compared to a lost-time accident (Ex. 158).
OSHA believes the evidence employers and industry associations submitted shows it is technologically feasible in many cases for employers to provide fall protection for rolling stock and motor vehicles regardless of their location.
Regarding rolling stock, FRA said the Federal Railroad Safety Act (FRSA) grants them broad authority to regulate
In the preamble to the proposed rule, OSHA acknowledged that FRA has authority to regulate “railroad operations” (75 FR 28867). At the same time, OSHA noted that the FRA Policy Statement also recognizes that OSHA has authority for certain “occupational safety and health” issues in the railroad industry:
FRA recognizes that OSHA currently is not precluded from exercising jurisdiction with respect to conditions not rooted in railroad operations nor so closely related to railroad operations as to require regulation by FRA in the interest of controlling predominant operational hazards (43 FR 10587).
The American Railroad Association (ARA) said OSHA should allow the FRA to exercise authority over rolling stock for two reasons. First, they said rolling stock presents “special concerns, such as clearance issues in rail tunnels and the unique configuration of rolling stock.” Second, they said FRA, not OSHA, has “expertise to determine when regulations [on rolling stock] are necessary and the content of those regulations” (Ex. OSHA-S029-2006-0662-0202). OSHA believes it also has the expertise to address fall hazards on rolling stock. That said, “[i]n the past, FRA and OSHA have closely coordinated their mutual efforts to improve workplace safety in the rail industry” and OSHA “is committed to continuing working cooperatively” with FRA to maintain and further develop its expertise in rail industry safety (Ex. OSHA-S029-2006-0662-0232).
With regard to commercial motor vehicles, stakeholders asserted that, under Section 4(b)(1), the Motor Carrier Safety Act (MCSA) preempts OSHA from regulating commercial motor vehicles (Exs. 124; 187; 326). The MCSA defines “commercial motor vehicle” as a self-propelled or towed vehicle used on the highways in interstate commerce to transport passengers or property, if the vehicle:
• Has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater;
• Is designed or used to transport more than 8 passengers (including the driver) for compensation;
• Is designed or used to transport more than 15 passengers, including the driver, and is not used to transport passengers for compensation; or
• Is used in transporting material found by the Secretary of Transportation to be hazardous under section 5103 of this title and transported in a quantity requiring placarding under regulations prescribed by the Secretary under section 5103 (49 U.S.C. 31132).
However, as interpreted by the courts and the Occupational Safety and Health Review Commission, section 4(b)(1) does not create an industry-wide exemption. Rather, it preempts OSHA regulation of a particular workplace hazard addressed by the regulation of another agency. Thus, an OSHA standard is preempted by the MCSA only to the extent that the FMCSA has adopted a regulation for commercial motor vehicles addressing the hazard. For example, FMCSA addresses fall hazards for certain commercial motor vehicles in 49 CFR part 399. Since the Agency did not propose any specific fall protection requirements for rolling stock or motor vehicles, OSHA has not included any in this final rule. However, it will continue to consider the comments it has received, and in the future the Agency may determine whether it is appropriate to pursue any action on this issue.
Participants noted that two employees could be working side by side on similar tasks, but one could be covered by the general industry standard and the other by the construction standard. Representatives expressing these concerns included residential construction and remodeling, painting, heating and air conditioning, chimney sweeping, and others (Ex. 124).
In 1994, OSHA clarified the definitions of maintenance v. construction activities:
OSHA's regulations define construction work as “construction, alteration, and/or repair, including painting and decorating.” They further provide that OSHA's construction industry standards apply “to every employment and place of employment of every employee engaged in construction work.” . . . In order for work to be construction work, the employer need not itself be a construction company. . . . Further, construction work is not limited to new construction. It includes the repair of existing facilities. The replacement of structures and their components is also considered construction. . . .
There is no specified definition for “maintenance,” nor is there a clear distinction between terms such as “maintenance,” “repair,” or “refurbishment.” “Maintenance activities” can be defined by OSHA as making or keeping a structure, fixture or foundation (substrates) in proper condition in a routine, scheduled, or anticipated fashion. This definition implies “keeping equipment working in its existing state,
In subsequent letters of interpretation, OSHA identified factors the Agency considers in determining whether the activity is maintenance or construction and applied them to specific examples (Letter to Randall Tindell (2/1/1999);
• Nature of the work. Equipment reinstalled or replaced with identical equipment is generally maintenance.
• Whether the work is scheduled. Activity that is an anticipated, routine, and periodic event to keep equipment from degrading and maintain it in its existing state is suggestive of maintenance. As long as the activity continues to be a scheduled activity, the passage of time between the activity, even 10 to 20 years, normally does not alter the characterization of the activity as maintenance;
• The scale and complexity of the activity; which also takes into consideration the amount of time and material required to complete it. Although a project may not necessarily be large in terms of scale, a complex activity in terms of steps involved and tools and equipment needed to complete is likely to be construction; and
• The physical size of the object being worked on. Physical size can be a factor if, because of its size, the process of removal and replacement involves significantly altering the structure or equipment that the object is in. Significant alterations of the structure or equipment will likely be construction.
OSHA believes these factors and examples outlined in the letters of interpretation provide useful guidance to help employers determine whether a particular activity is maintenance or construction. If there is an instance where an employer may not be able to easily classify an activity as maintenance or construction, when measured against the above factors, following the more protective standard will ensure compliance.
In any event, since one of the primary goals of this rulemaking is to harmonize the general industry and construction walking-working surface standards, OSHA believes the distinction between maintenance and construction is of much less significance. As discussed in the introduction to the Summary and Explanation (Section IV), in updating and revising the walking-working surface standards in subpart D and adding new personal fall protection requirements to subpart I, OSHA made requirements consistent with construction standards, where possible. For example, in final §§ 1910.28 and 1910.140, OSHA adopts the flexible approach to providing fall protection systems that the construction standard codified in 1994. Thus, whether performing general industry or construction operations, employers may provide personal fall protection systems to protect their workers. OSHA notes that in the discussion of provisions in subparts D and I the Agency identifies the corresponding construction standards the final rule incorporates. As a result, OSHA believes that in most cases employers will be able to use the same controls, particularly fall protection systems, and follow the same work practices regardless of whether they are performing general industry or construction activities.
Final paragraph (b) defines terms that are applicable to all sections of final subpart D. For the most part, OSHA drew the final definitions from the existing rule (existing § 1910.21(a) through (g)), other OSHA standards (
• American National Standard Institute (ANSI) A14.1-2007, American National Standard for Safety Requirements for Portable Wood Ladders (ANSI A14.1-2007) (Ex. 376);
• American National Standard Institute (ANSI) A14.2-2007, American National Standard for Safety Requirements for Portable Metal Ladders (ANSI A14.2-2007) (Ex. 377);
• American National Standard Institute (ANSI) A14.3-2008, American National Standard for Ladders—Fixed—Safety Requirements (ANSI A14.3-2008) (Ex. 378);
• American National Standard Institute (ANSI) A14.5-2007, American National Standard for Safety Requirements for Portable Reinforced Plastic Ladders (ANSI A14.5-2007) (Ex. 391);
• American National Standard Institute (ANSI) A14.7-2011, Safety Requirements for Mobile Ladder Stands and Mobile Ladder Stand Platforms (ANSI A14.7-2011) (Ex. 379);
• American National Standard Institute/American Society of Safety Engineers (ANSI/ASSE) A10.18-2012, Safety Requirements for Temporary Roof and Floor Holes, Wall Openings, Stairways, and Other Unprotected Edges in Construction and Demolition Operations (ANSI/ASSE A10.18-2012) (Ex. 388);
• American National Standard Institute/American Society of Safety Engineers (ANSI/ASSE) A10.32-2012, Fall Protection Systems—American National Standard for Construction and Demolition Operations (Ex. 390);
• American National Standard Institute/American Society of Safety Engineers (ANSI/ASSE) A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Roof Openings; Stairs and Guardrail Systems (ANSI/ASSE A1264.1-2007) (Ex. 13);
• American National Standard Institute/American Society of Safety Engineers (ANSI/ASSE) Z359.0-2012, Definitions and Nomenclature Used for Fall Protection and Fall Arrest (ANSI/ASSE Z359.0-2012) (Ex. 389);
• American National Standard Institute/International Window Cleaning Association (ANSI/IWCA) I-14.1-2001, Window Cleaning Safety (ANSI/IWCA I-14.1-2001) (Ex. 14);
• American National Standard Institute (ANSI) MH30.2-2005, Portable Dock Leveling Devices: Safety, Performance and Testing (ANSI MH30.2-2005) (Ex. 20);
• National Fire Protection Association (NFPA) 101-2012, Life Safety Code (NFPA 101-2012) (Ex. 385); and
• International Code Council (ICC) International Building Code-2012 (IBC-2012) (Ex. 386).
Final paragraph (b) differs from the existing and proposed rules in several respects. First, the final rule eliminates a number of terms the regulatory text no longer uses. The final rule does not retain the proposed definitions for the following terms because OSHA did not use these terms in final subpart D: “qualified climber,” “safety factor,” and “single-point adjustable suspension scaffold.”
Second, in addition to the definitions in the proposed rule, final paragraph (b) adds a number of new definitions, including “anchorage,” “dangerous equipment,” “low-slope roof,” “personal fall arrest system,” “personal fall protection system,” “positioning system (work-positioning system),” “stairway (stairs),” “travel restraint system,” and “warning line.” Most of the definitions are commonly used terms that pertain to new control methods that the final rule allows employers to use to protect workers from falling. For example, several definitions relate to personal fall protection systems, which the final rule allows employers to use instead of guardrails, cages, and wells specified by the existing rule.
Third, final paragraph (b) revises existing definitions to make them consistent with OSHA's construction
Fourth, final paragraph (b), like the proposed rule, reorganizes the terms and definitions and clarifies that they are applicable to every section of subpart D. By contrast, the existing rule in § 1910.21 lists the terms and definitions for each section of subpart D separately. Consequently, because the existing rule uses some terms in more than one section of subpart D, it defines those terms multiple times. Final paragraph (b) eliminates this unnecessary repetition, thereby making the final rule easier to understand.
Fifth, and finally, in revising final paragraph (b), OSHA used plain and performance-based language. The Agency believes these types of revisions make the terms and definitions easy for employers and workers to understand, and clarifies several issues raised by stakeholders (discussed below).
The following paragraphs discuss the terms and definitions included in final paragraph (b).
The existing rule did not specifically address or define alternating tread-type stairs. The definition in the final rule is consistent with ANSI/ASSE A1264.1-2007. OSHA received no comments on the proposed definition and adopts it as discussed.
OSHA drew the term and definition for “anchorage” from the § 1910.140, Personal fall protection systems. The definition is consistent with the construction fall protection (§ 1926.500(b)), the general industry powered platforms (§§ 1910.66, appendix C, Section I(b)), and the shipyard-employment fall protection standards (§ 1915.151(b)). It also is consistent with the “anchorage” definition in ANSI/ASSE A10.32-2012 (Section 2.4) and ANSI/ASSE Z359.0-2012 (Section 2.5). See § 1910.140 for additional information and discussion of stakeholder comments on the definition of “anchorage.”
OSHA notes that once the employer assigns an authorized employee to perform certain work tasks or to be in a certain location, the worker may continue to perform those tasks or be in such work locations without further approval. OSHA did not receive any comments on the proposed definition and adopts it as discussed.
This definition is essentially the same as the definition for “cage” found in existing § 1910.21(e)(11); it also is consistent with ANSI A14.3-2008, American National Standard for Ladders—Fixed—Safety Requirements. OSHA did not receive any comments on the proposed definition and adopts it with only minor revisions for clarity.
The final definition is consistent with ANSI A14.1-2007, ANSI A14.2-2007, and ANSI A14.5-2007. OSHA did not receive any comments on the proposed definition and adopts it with only minor revisions for clarity.
This new definition was added in response to a recommendation from Northrop Grumman Shipbuilding that OSHA define “dangerous equipment” in the final rule (Ex. 180). OSHA drew the new definition from the construction fall protection standard (§ 1926.500(b)).
The final rule allows employers to use designated areas for work on low-slope roofs (final § 1910.28(b)(13)). The concept of a designated area in the final rule is similar to controlled access zones and warning line systems in OSHA's construction fall protection standards (§§ 1926.500(b) and 1916.502(g) and (h)), which also do not require the use of conventional fall protection in specified situations.
The final definition differs from the proposal in that the proposed definition included the term “temporary” work, while the final does not. OSHA continues to believe that employers need to limit use of designated areas to short and brief tasks, such as equipment repair or annual maintenance, that
The final rule uses the term “transport vehicle” in place of the proposed term “carrier.” OSHA believes “transport vehicle” is clear and familiar to employers as it is a commonly used term for a cargo-carrying vehicle. The Agency drew the term from ANSI MH30.2-2005.
The final rule adds examples of devices that OSHA includes within the definition of dockboards, including bridge plates, dock plates, and dock levelers. The Agency believes that providing these examples will help employers and workers better understand whether devices manufactured under other names are “dockboards.” OSHA notes that the list of dockboard examples is not exhaustive. That is, any device that employers use to span a gap or compensate for the difference in levels between a loading platform and transport vehicle is a dockboard for the purposes of final subpart D.
OSHA did not receive any comments on the proposed definition and adopts the definition with the changes discussed above.
OSHA proposed revising the definition of “equivalent” in existing § 1910.23(g)(6) to incorporate language from the construction standards for fall protection, stairways, and ladders standards (§§ 1926.450(b); 1926.500(b); and 1926.1050(b)). These standards specify that the employer has the burden to demonstrate that the alternate designs, materials, methods, or items will provide an equal or greater degree of safety for workers than the designs, materials, methods, or items the final rule specifies or requires. OSHA did not receive any comments on the proposed definition and finalizes the term so it is consistent with OSHA construction standards.
The final definition generally is consistent with ANSI A14.1-2007, ANSI A14.2-2007, and ANSI A14.5-2007. OSHA did not receive any comments on the proposed definition and adopts it as proposed.
For the purpose of this definition, load refusal includes permanent deformation of a component part, which is consistent with ANSI/ASSE A1264.1-2007 (Section 2.3). For example, elongation of a connector that causes the connector to lose its strength is the type of permanent deformation OSHA intends the final definition to cover. Similarly, damage to a guardrail system that weakens the bolts or other fasteners so the system cannot support a worker's weight is the type of permanent deformation the final definition intends to covers.
OSHA did not receive any comments on the proposed term and definition and adopts the definition with minor editorial changes for clarity.
In response to the proposal, OSHA received one comment from Mr. David Hoberg of DBM Corporations, recommending that OSHA add a specific height to the definition of fall hazard (Ex. 206). He said that a specific height is needed for enforcement purposes. OSHA disagrees. The risk of a fall or other harm exists at any height, including on the same level. That said, OSHA has established specific heights that trigger fall protection requirements in final § 1910.28. The final definition is adopted as proposed.
The final definition differs from the existing and proposed rules by clarifying what OSHA does not consider to be fixed ladders. Accordingly, the final definition specifies that fixed ladders do not include ship stairs (ship ladders), step bolts, and manhole steps. Although these devices share some of
While fixed ladders include ladders attached to equipment, OSHA notes ladders that are designed into or are an integral part of machines or equipment are excluded from coverage by final § 1910.23(a)(2).
The final definition, as revised, is consistent with OSHA's stairways and ladders standard for construction (§ 1926.1050(b)) and ANSI A14.3-2008 (Section 3). OSHA received no comments on the proposed definition and finalizes it with the revisions discussed.
Second, the final definition deletes language in existing § 1910.21(e)(14) and the proposed rule specifying that employers use only grab bars placed adjacent to a ladder or used as an extension of a ladder. The final definition revises this language to ensure that employers use only grab bars installed above the height of the ladder, not adjacent to it. When grab bars are also in a vertical orientation relative to a ladder, they are not an extension of the ladder; therefore, the final definition removed the language from the proposal referring to grab bars as an extension of a ladder.
The proposed and final definition simplify the existing definitions in § 1910.21(a)(6) and (g)(7) by consolidating the terms “guardrail” and “standard railing” into the single term “guardrail system.” The existing definitions are similar to, and included within, the final definition. As a result, there is no need to include both terms and definitions in the final rule since the single term “guardrail system” adequately covers both terms.
The final rule clarifies the proposed definition by specifying that guardrails are barriers that employers may erect on a side, edge, or other area of a walking-working surface (
OSHA did not receive any comments on the proposed definition and, therefore, adopts it as explained.
The proposed and final definition simplify and consolidate into one term the three definitions for “handrail” in the existing rule in §§ 1910.21(a)(3), (b)(1), and (g)(8). Specifically, the final definition deletes existing specifications for the materials (
The final definition consolidates and simplifies the existing rule in two respects. First, the final rule designates a “hole” as a gap or open space in “horizontal walking-working surfaces,” (
Designating the term “hole” to refer to gaps in horizontal or similar walking-working surfaces allows OSHA to simplify and consolidate the existing definitions for “floor hole” and “floor opening” into a single term: “hole.” The existing rule in § 1910.21(a)(1) defines a “floor hole” as a gap that is more than one inch but less than 12 inches at its least dimension, while existing § 1910.21(a)(2) defines a “floor opening” as a gap that is 12 inches or more at its least dimension. Combining the two terms also makes the final definition consistent with the definition in the construction fall protection standard in § 1926.500(b). The final rule, like the proposal, also expands the term “hole” to cover gaps in roofs and similar horizontal walking-working surfaces, as well as floors.
Second, consistent with the Plain Writing Act of 2010, the final definition substitutes “open space” for “void” to make the term easier to understand.
OSHA received one comment on the proposed rule. Mark Damon, of Damon, Inc., questioned the need for a definition of hole in a fall protection standard, asserting that workers could not fall through a two-inch or larger gap (Ex. 251). OSHA disagrees with Mr. Damon's assertion. Although a worker cannot fall through a narrow (2-inch) hole in a walking-working surface, such holes can cause workers to trip and fall on the same level or to a lower level. Such falls can result in worker injury or death. As such, OSHA is retaining the definition with the changes discussed above.
Although manhole steps have individual rungs, they involve unique conditions, and OSHA addresses these conditions in a separate section of final subpart D (§ 1910.24). Therefore, the final definition excludes manhole steps from the individual-rung ladder definition to prevent any confusion and emphasize that final § 1910.24, not final § 1910.23 applies to manhole steps.
The proposed rule also included ladders consisting of rungs individually attached to a piece of equipment. Because final rule § 1910.23(a)(2) excludes ladders designed into or integral to a piece of equipment, there was no need to include such ladders within the definition of individual rung ladders.
OSHA did not receive any comments on the proposed definition and adopts it with the revisions discussed above.
OSHA received one comment on the proposed “ladder” definition. Steve Smith, of Verallia, recommended that OSHA clarify the term because he said that the phrase “a device with steps” is ambiguous and could include stairs as well as a ladder (Ex. 171). OSHA does not agree that stakeholders might mistakenly think the term “ladder” includes stairs. The proposed and final definitions of “ladder” are essentially the same as the one that all of the ANSI A14 ladder standards use: “Ladder. A device incorporating or employing steps, rungs, or cleats on which a person may step to ascend or descend” (see,
The existing rule in § 1910.21(e)(13) uses a similar term, “ladder safety device,” which also excludes ladder cages and wells. OSHA's construction ladder standard in § 1926.1053 uses the same term, but does not include a definition of the term. The final definition is consistent with the ANSI fixed-ladder standard (ANSI A14.3-2008; Section 3).
OSHA received one comment on the definition of ladder safety system. Darryl Hill, of the American Society of Safety Engineers (ASSE), urged OSHA to prohibit the use of body belts in ladder safety systems as the Agency did with personal fall arrest systems:
ASSE opposes the use of body belts. There are good “safety reasons” . . . for supporting OSHA's decision in 1998 to ban the use of body belts as part of a personal fall arrest system. OSHA needs to take this opportunity to ban their use entirely for the same reasons it banned them in 1998. A full body harness distributes arresting forces over larger areas of the workers body and provides better suspension support, as research has repeatedly confirmed (Ex. 127).
OSHA agrees with ASSE that full-body harnesses provide better suspension support precisely because they distribute arresting/impact forces over a larger area of a worker's body than body belts. To that end, the final rule in § 1910.140(d)(3) retains OSHA's 1998 prohibition on the use of body belts as part of a personal fall arrest system. OSHA believes this requirement in final § 1910.140 addresses ASSE's concern and the Agency encourages employers to provide, and require that their workers use body harnesses when using any type of personal fall protection equipment.
OSHA added this term to final paragraph (b) because the final rule includes a new provision on controlling fall hazards on low-slope roofs (final § 1910.28(b)(13)), which is consistent with the construction fall protection standard in § 1926.501(b)(10). OSHA is aware that low-slope roofs also are referred to as “flat roofs.” However, even a so-called “flat roof” has some slope to allow for drainage. As such, OSHA believes that the term “low-slope roof” more accurately represents these roofing configurations.
OSHA did not receive any comments on the proposed definition and adopts it with minor editorial changes.
OSHA clarified the final definition in several ways. First, the proposed rule indicated that “maximum intended load” was also known as “designed working load.” OSHA is aware that “designed working load” is an outdated term; thus, the final definition deletes it. Second, the final definition adds language clarifying that the maximum intended load includes the combined total weight of the load, as well as the force of the load.
Third, the final definition adds “vehicles” to the list of potential components of a total load. Vehicles are found on many types of walking-working surfaces, and determinations of the maximum intended load must include the weight of vehicles, and the load being carried by the vehicles, applied to the walking-working surface.
Fourth, the final definition adds language clarifying that employers are responsible for determining the maximum load in terms of all equipment, vehicles, materials, workers, and other items they reasonably anticipate applying to a walking-working surface. Requiring that an employer know the maximum weight and force a walking-working surface can support and the total weight and force of the loads they reasonably anticipate applying to that surface is essential in safeguarding workers from harm,
Fifth and finally, the final definition adds the language “at any time” to make the definition consistent with other OSHA standards (
OSHA did not receive any comments on the proposed definition and adopts it with the revisions discussed above.
In the proposal, OSHA asked for comment on whether it is necessary to define a common term like “mobile,” but the Agency did not receive any comments. Therefore, OSHA adopts the proposed definition with one editorial clarification (replacing “and/or” with “or”).
The final definition clarifies the proposed rule and OSHA's existing definition for ladder stand in several ways. First, the final definition adds language clarifying that mobile ladder stands usually consist of wheels or casters on a rigid base, in addition to steps. This addition clearly distinguishes ladder stands from other types of ladders. Second, the final rule simplifies and clarifies the definition by using the term “steps” in place of “treads in the form of steps,” which is in the existing and proposed definitions. The term “step,” which final paragraph (b) also defines, is clear and well understood, and does not require further elaboration.
Third, the final definition deletes the proposed term “flat” used to describe ladder stand steps because it is not necessary. Final § 1910.23 establishes requirements for ladder stand steps (final §§ 1910.23(b)(1) and (b)(4)). OSHA did not receive any comments on the proposed definition and adopts it with the clarifications discussed above.
The final definition is consistent with ANSI A14.7-2011, although the ANSI standard, like the proposed rule, includes the definition of mobile ladder stand. OSHA did not receive any comments on the proposed definition and finalizes the definition with minor clarifications.
OSHA clarified the proposed definition slightly by adding terminology to the final definition that it used in the final definition of “riser.” This terminology specifies that, in addition to not having upright (vertical) members, stairways with open risers do not have inclined members. This revision makes the final definition consistent with ANSI/ASSE A1264.1-2007 (Section 2.11).
OSHA did not receive any comments on the proposed definition and adopts it with the clarifications discussed above.
As discussed in the definition of “hole,” the final rule simplifies and consolidates four terms in the existing rule that distinguish between openings and holes in walking-working surfaces. As mentioned, the term “opening” in the final rule refers to gaps or open spaces in areas that are generally vertical, such as walls and partitions. The final definition consolidates into one term the definitions of “wall hole” and “wall opening” in existing § 1910.21(a)(10) and (a)(11). This consolidation makes the final definition of “opening” consistent with the construction fall protection standard
Consistent with the Plain Writing Act of 2010, the final definition substitutes “open space” for “void” to make the term easier to understand.
OSHA did not receive any comments on the proposed definition and adopts the term as discussed above.
The final definition is consistent with OSHA's construction standards for scaffolds and fall protection in §§ 1926.450(b) and 1926.500(b), respectively, and ANSI/ASSE Z359.0-2012 (Section 2.98). See the preamble to final § 1910.140 for further discussion and comments on personal fall arrest systems.
Personal fall protection systems have the following components in common: An anchorage, body support (
A definition for personal fall protection systems was provided in the proposed rule, in proposed § 1910.140 (75 FR 29147). Because the term is used in final subpart D, and OSHA believes the term is integral to understanding the final rule, the Agency decided to include the same definition in subpart D. The requirements for, and comments on, personal fall protection systems are in final § 1910.140, Personal fall protection systems.
OSHA did not receive any comments on the proposed definition and adopts it as proposed with a minor editorial revision.
The final rule clarifies the definition by deleting the language “rear braces” from the proposed definition to eliminate any confusion about what constitutes a portable ladder for the purposes of the final rule. Rear braces are a structural component of self-supporting portable ladders; however, as mentioned above, the final definition of portable ladder is not limited to those types of ladders.
OSHA notes that portable ladders include, but are not limited to, self-supporting, non-self-supporting, articulated, sectional, extension, special purpose, and orchard ladders. OSHA believes that the term portable ladders should be widely understood by employers.
OSHA received one comment on the proposed definition. Virginia Ruiz, representing California Rural Legal Assistance Foundation and Farmworker Justice, urged OSHA to cover agriculture operations in the final rule (Ex. 201). In her comment, Ms. Ruiz pointed out that proposed revisions to the California general industry portable-ladder standards (Title 8 CCR, Sections 3276, 3277, 3278, 3287, and 3413) cover special-purpose orchard and fruitpickers' ladders (Ex. 201). For further discussion on the inclusion of agriculture operations in subpart D, see the discussion above in final paragraph (a), Scope.
The definition is the same as the definition in § 1910.140(b). The newly revised electric power generation, transmission, and distribution standard in § 1910.269, and the construction standard for fall protection in § 1926.500(b), also contain similar terms and definitions. The final definition also is consistent with ANSI/ASSE Z359.0-2012 (Section 2.120).
Although the proposed rule for subpart D used the term work-positioning system, the proposal did not define it. The Agency believes it is important to define positioning systems in final subpart D to ensure that employers and workers understand the meaning of this term as used in this subpart, most importantly that such systems do not arrest falls from elevated walking-working surfaces.
The final definition, however, differs from the definition of “qualified person” in the general industry powered platforms standard (§ 1910.66, Appendix C, Section I(b)) and ANSI/ASSE Z359.0-2012. The § 1910.66 definition, for instance, requires that qualified persons have a degree or professional certificate, not only professional standing, plus extensive knowledge, training, and experience. OSHA explained in the proposed rule that to require qualified persons to meet the definition in the powered platforms standard would mean that the qualified person “would most likely need to be an engineer” (75 FR 28905).
Two stakeholders recommended that the Agency adopt the definition in
After investing 40 years in industrial fall protection it is important to feed back my experiences from hundreds of site visits and contacts over that time. I am strongly recommending that the word “or” be replaced with “and”. Both are critically important and the anchorage must be documented with at least a sketch or engineering drawing which presently it rarely is except for 1910.66 App. C. In America, anchorages are mostly guesswork and this does not do justice to “the personal fall arrest system” term that OSHA is seeking to establish unless the engineering background is added. Furthermore the design of anchorages can easily be incorporated into architects and engineers drawings but is presently not because there is no requirement for an engineer. This simple change may result in saving over one half the lives lost from falls in the USA in my opinion (Ex. 155).
Mr. Hoberg, of DBM, Inc., said that defining qualified “has been a struggle for decades” and that the § 1910.66 definition “is a good one”:
Two things have become commonly accepted—a competent person is one who has enough experience and knowledge to know when to call a qualified person. A qualified person is one who knows the technical and working practice aspects of the problem.
The problem we have had was how to limit the `I know, therefore I am a qualified person' (Ex. 206).
The final rule does not adopt the definition of “qualified person” in § 1910.66 appendix C. The definition of “qualified” in the final rule has been in use for years in the referenced construction standards. OSHA believes the definition is clear and employers understand it. In addition, OSHA believes that employers understand and can distinguish between qualified and competent persons.
With regard to the certification of anchorages, OSHA believes that the anchorage requirements in final §§ 1910.27 and 1910.140, combined with the final definition of “qualified” person, are adequate to ensure worker safety. OSHA notes that building owners are free to have their building anchorages certified by professional engineers. Therefore, OSHA finalizes the definition of “qualified” as proposed.
The proposed rule, similar to the 1990 proposal, defines ramp as an inclined surface between different elevations that is used for the passage of employees, vehicles, or both. The final rule revises the proposed definition for two reasons. First, the proposed definition only refers to the passage of employees and vehicles, but not other things that may be moved across ramps, such as materials, supplies, and equipment. The final definition does not limit the use of ramps as passageways. Second, the final rule simplifies the proposed definition to make it consistent with the definition in ANSI/ASSE A1264.1-2007 (Section 2.16).
OSHA did not receive any comments on the proposed definition and adopts it as discussed above.
The final rule differs from the proposed definition in that the final definition clarifies that risers may also be inclined (nearly vertical), as well as vertical, members of a stair, and connect treads to the next higher tread, platform or landing. The height of a riser is measured as the vertical distance from the tread (horizontal surface) of one step to the top of the leading edge of the tread above it (see Figure D-8.). OSHA did not receive any comments on the proposed definition and adopts it with the clarification discussed above.
OSHA revised the final definition in several ways. First, the ANSI/ASSE Z359.0-2012 (Sections 2.13 and 2.100) defines both “automatic descent control device” and “manual descent control device.” However, neither definition encompasses the entire system. The Agency's final definition, like ANSI/IWCA I-14.1-2001, covers the entire system, not just the descent control device. In light of the ANSI/ASSE Z359.0-2012 definitions, OSHA believes that stating, as in the proposal, that another name for an RDS is “controlled descent device” may be confusing. Therefore, OSHA removed that statement in the final definition. To further clarify the final definition and distinguish it from the terms in ANSI/ASSE Z359.0-2012, OSHA added language identifying components of a typical RDS.
Second, OSHA added language to the final rule specifically excluding industrial rope-access systems from the final definition of “rope descent system.” OSHA received several comments recommending that the term “rope descent system” include industrial rope access systems, either as part of rope descent systems or as a new section (
In light of the comments, not only does the final definition clarify that rope descent systems do not include industrial rope access systems, but also final § 1910.27, Scaffolds and rope descent systems, explains that the final rule does not cover industrial rope access systems. OSHA agrees, as SPRAT pointed out, that while industrial rope access systems may use equipment similar to rope descent systems (
Third, OSHA received several comments that opposed OSHA's characterization of a rope descent system in the proposal as a “variation of the single-point adjustable suspension scaffold” (Exs. 62; 168; 205). For example, Brian Gartner, of Weatherguard Service, Inc., said, “A rope descent system is not a variation of the single point adjustable scaffold. The scaffold has the capability of being raised as well as being lowered, rope descent systems only travel downward, and a scaffold has an area, a platform, to store tools and supplies, stand, etc.” (Ex. 168). OSHA agrees with the commenters and deleted that comparison from the final definition.
The final definition consolidates and simplifies the existing definitions into one term that identifies their common characteristics and purpose (see existing § 1910.21(e)(8), (9), and (10)). The final definition also incorporates plain language (“climb up and down”) to explain that workers use rungs, steps, or cleats to ascend or descend ladders.
OSHA received one comment on the proposed definition. Nigel Ellis said OSHA should retain the separate definitions in the existing rule “to explain a rung is designed for holding and stepping but that a step cannot be held since it is only for the feet (shoes)” (Ex. 155). OSHA does not agree that including such language is necessary.
First, the final definition is consistent with ANSI portable ladder standards (ANSI A14.1-2007, ANSI A14.2-2007, and ANSI A14.5-2007). Rungs, steps, and cleats are all horizontal surfaces for climbing ladders, even if their specifications vary. (Rungs are circular or oval, cleats are rectangular, and steps are flat). Instead of focusing on the differences in the specification, the final rule and the ANSI standards identify, and focus on, the primary purpose of rungs, steps, and cleats; to provide a place to step to climb up and down the ladder.
Second, OSHA believes it is not accurate to say that “a step cannot be held” (Ex. 155). Although side rails provide handholds for climbing ladders, especially those with steps, neither the final rule nor the ANSI standards prohibit workers for holding onto steps, either while climbing or standing on a ladder. As such, OSHA believes the language Mr. Ellis suggests may cause confusion; therefore, OSHA is not adopting it.
OSHA added three clarifications to the final “runway” definition. First, the final definition substitutes “walking-working surface” for “passageway.” This change makes the definition consistent with the definitions of other terms in final subpart D. Second, the final definition also more clearly indicates that employees use runways to perform work as well as to gain access to other areas in the workplace. Third, the final rule simplifies the definition by substituting plain language (
OSHA did not receive any comments on the proposed definition and adopts it with the clarifications discussed above.
The final rule consolidates into a single term the two definitions in the existing rule in § 1910.21(f)(27) and (g)(15). The final definition also adds two clarifications to the proposed definition. First, it adds “equipment” to the list of items a scaffold must be capable of supporting. Second, it also clarifies that the final definition of scaffold, including suspension scaffolds, does not include rope descent systems. As discussed above, a number of commenters opposed characterizing rope descent systems as a type of single-point adjustable scaffold (Ex. 62; 168; 205). One commenter, David Hoberg, with DBM Consultants, said rope descent systems differ in many ways from scaffolds. For instance, he said the stabilization required for rope descent systems over a height of 130 feet differs from the stabilization required for scaffolds (Ex. 206). Consequently, OSHA added to the definition of scaffold that the term does not apply to rope descent systems.
Ship stairs are not standard stairs within the meaning of this section. Generally, ship stairs are a type of stairway found in buildings and structures that have limited space, and are used for accessing special use areas, such as but not limited to, attics, roofs, mechanical equipment spaces, etc.
OSHA notes that ship stair is a term of art and use of the term in this subpart is not intended to infer applicability to the shipyard employment, marine terminal, or longshoring industries.
OSHA did not receive any comments on this definition and adopts it with minor editorial revisions for clarity.
OSHA did not receive any comments on the proposed definition and finalizes with the clarifications discussed above.
Additionally, in the final rule, OSHA replaced the proposed term “steps” with “treads.” As noted above in the definition for rungs, steps or cleats, in the final rule, OSHA clarifies that steps are a component of ladders whereas treads are components of stairs.
Spiral stairs are not standard stairs within the meaning of this section, and the final rule limits their use in general industry workplaces (see final § 1910.25(b)(8)). Employers generally use spiral stairs generally in workplaces that have limited space.
OSHA did not receive any comments on the proposed definition and adopts it as discussed above.
The final definition eliminates “vertical” from the term barriers in order to make the definition consistent with final § 1910.29(f). That provision does not require barriers to be vertical; for example, barriers may be horizontal rails.
OSHA did not receive any comments on the proposed definitions and adopts it with the revision discussed.
The existing rule defines stairways as a series of steps leading from one level or floor to another, or leading to platforms, pits, boiler rooms, crossovers, or around machinery tanks and other equipment that are used more or less continuously or routinely by employees, or only occasionally by specific individuals. A series of steps and landings having three or more risers constitutes stairs or stairway (existing § 1910.21(b)(8)). OSHA did not propose a definition of stairway; however, the Agency decided to retain and revise the existing definition.
The final definition revises the existing definition in several ways. First, the final rule simplifies the definition considerably. OSHA believes the term “stairway” (“stairs”) is commonly understood and does not require a long explanation. Therefore, OSHA limits the final definition to identifying the specific aspects of the stairways the final rule covers.
Second, the final rule removes language in the existing definition that limits stairways to stairs that have “three or more risers” (existing § 1910.28(b)(8)). The proposed rule did not retain the existing definition of stairway, which limited covered stairs to those that have three or more risers. Including a definition in the final rule clarifies the Agency's intent to cover stairways that have fewer risers.
OSHA adopted the existing definition from national consensus standards in effect in 1971 and those standards have been revised and updated. In particular, the current versions of ANSI/ASSE A1264.1-2007 (Section E6.1) and IBC-2012 (Section 202) specify that a stair has one or more risers. The revision makes the final rule consist with those national consensus standards, which OSHA believes that most employers already follow.
Finally, OSHA adds language to the final definition explaining that stairways include standard, spiral, alternating tread-type, and ship stairs (ship ladders). The existing rule did not include that language.
OSHA did not receive any comments about a definition for “stairway (stairs)” and adopts the definition as discussed.
Existing OSHA standards do not define “standard stairs.” The ANSI/ASSE A1264.1-2007 (Section 6) standard uses the terms “fixed stairs” and “conventional stair designs,” but does not define either term.
Although ship stairs, spiral stairs, and alternating tread-type stairs are fixed or permanently installed stairs, the final definition specifies that they are not considered standard stairs under this subpart.
OSHA did not receive any comments on the proposed definition and finalizes it as discussed above.
OSHA did not receive any comments on the proposed definition and adopts it as discussed.
OSHA did not receive any comments on the proposed definition and adopts it with the clarification discussed above.
OSHA did not receive any comments on the proposed definition and finalizes it with the revisions discussed above.
The final definition clarifies the existing rule in § 1910.21(e)(15) and the proposed rule by stating that, at the top of a through ladder, a worker steps off the ladder onto a “walking-working surface,” which may be a landing or another type of surface (
OSHA did not receive any comments on the proposed definition and adopts it with the clarification discussed above.
According to the International Safety Equipment Association (ISEA), manufacturers provide a number of choices for tieback applications, such as tieback lines or lanyards, and tieback anchors (Ex. 185). ISEA said manufacturers design tieback lanyards for wrapping around a suitable anchor structure (
ANSI/IWCA I-14.1-2001 (Sections 5.7.17, 17.4, and 17.6) notes that the exclusive use of tieback anchors is with tieback lines, not lifelines. The final rule requires that tieback lines and lifelines have separate anchors.
Existing OSHA standards do not define “tieback.” OSHA drew the definition from ANSI A10.8-2011, American National Standard for Construction and Demolition Operations—Safety Requirements for Scaffolding. OSHA believes that adding a definition for “tieback” clarifies the use of the term elsewhere in this subpart. Mr. Hoberg, of DBM Consultants, stated clarification is necessary because various parts of the country use the term differently, and that “each area swears adamantly that theirs is the right one and keeps trying to change the other” (Ex. 206).
The definition is finalized with the clarifying revisions noted above.
The final rule consolidates into one term the three definitions in the existing rule in § 1910.21(a)(9), (f)(31), and (g)(16), all of which are consistent with the final definition. The final rule clarifies that toeboards prevent tools, as well as materials and other equipment, from falling on workers who may be below the elevated walking-working surface.
Finally, and most importantly, OSHA clarifies expressly that toeboards serve two purposes: Preventing materials, tools, and equipment from falling on and injuring workers on a lower level; and protecting workers from falling off elevated walking-working surfaces. The final definition is consistent with OSHA's construction standard for fall protection in § 1926.500(b) and ANSI/ASSE A10.18-2012 (Section 2.18).
OSHA did not receive any comments on the proposed definition and adopts it with the clarifications discussed above.
OSHA drew the definition from final § 1910.140(b). The definition also is consistent with the definition in ANSI/ASSE Z359.0-2012 (Section 2.204), and the definition of the term “restraint (tether) system” in ANSI/ASSE A10.32-2012 (Sections 2.53).
OSHA did not receive any comments on the proposed definition in § 1910.140 and, therefore, adopts a definition as described above for final subpart D. For further discussion about the definition of “travel restraint system,” see the preamble discussion for final § 1910.140.
The final definition revises the existing and proposed rules by using “stairways or stair” in place of “step.” This revision clarifies that treads describe horizontal members of stairways. In the existing and proposed rules, treads and steps refer to horizontal members of both ladders and stairways, which OSHA believes may cause confusion. By limiting the term “tread” to stairways or stairs, and the term “step” to ladders, the final rule should resolve any potential confusion.
Treads are measured by their width (side to side) and depth (front to back). OSHA notes that tread depth is measured horizontally between the vertical planes of the foremost projection of adjacent treads, and at a right angle to the tread's leading edge. This method of measurement is consistent with the NFPA 101-2012 (Section 7.2.2.3.5) and the IBC-2012 (Section 1009.7.2).
The final definition is consistent with ANSI/ASSE A1264.1-2007.1 (Section 2.26). OSHA did not receive any comments on the proposed definition and adopts it as discussed.
The final rule revises the proposed definition in two respects. First, it states that a walking-working surface is unprotected if it does not have a stair rail system, in addition to not having a wall or guardrail system as specified in the proposed definition, to protect workers from falling.
Second, OSHA deleted the height-specification language in the proposed rule. This language is not necessary because final § 1910.29, Fall protection systems and falling object protection—criteria and practices, already addresses these height requirements.
OSHA did not receive any comments on the proposed definition and finalizes it with the revisions discussed above.
The final rule makes two revisions to the proposed walking-working surface definition. First, the final definition adds “work area” as a location to which a worker may gain access. This revision means that walking-working surfaces include those areas where employees perform their job duties, as well as other locations in the workplace, such as hallways and supply and change rooms. OSHA notes that, for some work and occupations, including equipment service and repair, delivery of materials and supplies, and landscaping, the “work area” may be at various locations. OSHA believes that adding “work area” to the final definition makes it clear what the term covers. The revision also makes the final definition consistent with ANSI/ASSE A1264.1-2007 (Section 2.28).
Second, also consistent with ANSI/ASSE A1264.1-2007, the final rule deletes the list of examples of walking-working surfaces from the proposal. Accordingly, the regulated community is to broadly construe the final definition of “walking-working surface” to cover any surface on or through which employees walk, work, or gain access to a work area or workplace location. Since the final definition does not exclude any walking-working surface, OSHA does not believe that identifying a partial list of surfaces the final rule covers is helpful, necessary, or definitive.
OSHA received several comments addressing the scope of the definition of “walking-working surface,” which it discusses above in the preamble to § 1910.21(a), Scope.
Workers may enter the demarcated area only if the employer provides them with the required fall hazard training (see final § 1910.30) and assigns them to work in the demarcated area. In large part, OSHA drew the definition in the final rule from the definition of “warning line system” in the construction standard for fall protection (see § 1926.500(b)).
Although the proposed rule used the term “warning line,” the proposal did not define it. The final rule corrects this oversight. The Agency believes it is important to define the term so that employers and workers understand the new fall prevention method, and so employers may comply with the new warning line requirements.
OSHA did not receive any comments and adopts the definition as discussed above.
The final rule deletes proposed language stating that “proper clearances for a well provide the person climbing the ladder the same protection as a cage” to prevent employers and workers from mistakenly believing that wells and cages provide fall protection. Information in the record indicates that wells and cages do not protect workers from falling (see,
OSHA did not receive any comments on the proposed definition and adopts the term with the revision discussed above.
The word Cover is not presently defined as to adequacy and walkability in the May 2010 standard proposal. A cover may be a plywood board or perhaps OSB or temporarily and more dangerously a section of drywall to keep out dust and weakens when wet. The new to America Platform Nets should be accommodated for maintenance work to allow walkable fabric covers to be used for walking across holes and open spaces.
The term cover should be defined on a structural level applicable to any unit skylight, including plastic, light transmitting pane and smoke vent and where it is either a board, fabric, fall protection net, walkable net, skylight with structural members impervious to the effects of UV sunlight, screen, grill and should be tested for impacts with humans (Ex. 155).
OSHA believes employers understand the meaning of cover; therefore, it is not necessary to add a definition to the final rule.
Second, Mercer ORC requested that OSHA define the term “chain gate” and identify how it differs from the term “swinging gate” (Ex. 254). The reference to chain gate in proposed § 1910.29(b)(10) was a typographical error that inadvertently omitted the comma between chain and gate. Given that, there is no need to add a definition for either chain gate or swinging gate.
Final § 1910.22 revises and updates the existing requirements that apply to surfaces in general industry. These provisions address:
• Surface conditions and housekeeping (paragraph (a));
• Application of loads on walking-working surfaces (paragraph (b));
• Access to and egress from walking-working surfaces (paragraph (c)); and
• Inspection, maintenance, and repair of walking-working surfaces (paragraph (d)).
In general, the final rule revises the existing requirements in several ways. First, final § 1910.22, as well as all other sections of final subpart D, uses the term “walking-working surface.” Final § 1910.21(b) defines walking-working surface as any horizontal or vertical surface on or through which an employee walks, works, or gains access to a workplace location. Walking-working surfaces include, but are not limited to, floors, stairways, roofs, ladders, runways, walkways, dockboards, aisles, and step bolts.
In final § 1910.22, as in other sections of final subpart D, OSHA revised the existing language so it is performance-based and easier to understand, consistent with the OSH Act (29 U.S.C. 655(b)(5)), and the Plain Language Act of 2010 (Pub. L. 111-274;
OSHA also moved or deleted provisions in existing § 1910.22 that address specific issues or hazards rather than general conditions. For example, OSHA moved the existing guardrail and covers requirements (existing § 1910.22(c)) to final §§ 1910.28 (Duty to have fall protection), and 1910.29 (Fall protection systems criteria and practices). OSHA believes that the existing provision, which addresses two specific types of fall protection measures, is more appropriately grouped with the other fall protection measures. In addition, OSHA deleted the requirements on mechanical-handling equipment in existing paragraph (b) because § 1910.176(a) addresses that issue.
Final paragraph (a), like the existing and proposed rules, contains general requirements on housekeeping and walking-working surface conditions. Pursuant to section 6(a) of the OSH Act (29 U.S.C. 655(a)), OSHA adopted most of the requirements in existing paragraph (a) from the ANSI standard in effect in the early 1970s (ANSI Z4.1-1968, Requirement for Sanitation in Places of Employment (Z4.1-1968)). Although ANSI updated the Z4.1 standard several times since 1968 (see ANSI Z4.1-1986 (R2005) (Z4.1-R2005)), OSHA did not update the requirements until this rulemaking.
Final paragraph (a)(1), consistent with the existing and proposed rules, requires that employers ensure surfaces are kept in a clean, orderly, and sanitary condition in “[a]ll places of employment, passageways, storerooms, service rooms, and walking-working surfaces.” Final paragraph (a)(1) also is consistent with Z4.1-R2005 (Section 3.1.1). OSHA adds the term “walking-working surfaces” to the provision to eliminate any confusion about the surfaces the final rule is intended to cover.
In the preamble to the proposed rule, OSHA explained its longstanding position that § 1910.22(a), especially § 1910.22(a)(1), covers hazards other than slips, trips, and falls, and includes fire and explosion resulting from combustible dust accumulations (see 75 FR 28874). Prior court decisions uphold OSHA's interpretation, saying “the housekeeping [§ 1910.22(a)] standard is not limited to tripping and falling hazards, but may be applied to significant accumulation of combustible dust” (
As these cases show, § 1910.22(a)(1) serves as an important enforcement tool for preventing hazardous combustible dust accumulations on walking-working surfaces. Moreover, in essentially every document addressing combustible dust that OSHA released since
In the proposed rule, OSHA requested comment on whether the Agency should include a specific reference to combustible dust or other types of dust or materials in final § 1910.22(a) to clarify explicitly that the provision does, and will continue to, cover combustible dust hazards. OSHA received many comments. Two commenters, United Food and Commercial Workers (UFCW) (Ex. 159) and the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) (Exs. 172; 329 (1/20/2011, p. 219); 363) supported including a specific reference in both final § 1910.22(a)(1) and (a)(2). Bill Kojola of the AFL-CIO said: “While agency interpretations to include combustible dust have proven useful to address this hazard, we believe an explicit referencing of combustible dust within each of these paragraphs is necessary to * * * let employers know with explicit certainty that combustible dust is covered by these provisions” (Ex. 172). UFCW, which said it represents food plants, including sugar, corn, flour-milling, and cocoa plants, explained: “The food dusts in these plants can be combustible. Housekeeping—keeping combustible dust from accumulating on floors and other surfaces and keeping surfaces as free from dust as possible—is a critical aspect to mitigating and preventing combustible dust explosions” (Ex. 159).
However, most commenters, for various reasons, opposed including a specific reference to combustible dust in final § 1910.22(a) (Exs. 73; 96; 124; 148; 158; 166; 173; 186; 189; 190; 202; 207; 254). First, many commenters seemed to think that existing § 1910.22(a)(1) does not cover combustible dust, and that OSHA is aiming to add it to the final rule as part of this rulemaking (Exs. 73; 96; 124; 148; 158; 166; 202). For example, several commenters said that § 1910.22(a) and this rulemaking focus, and should focus, on preventing slips, trips, and falls, which is not the primary hazard of combustible dust (Exs. 73; 96; 124; 158; 166; 190; 207; 254). The United States Beet Sugar Association (USBSA) and National Grain and Feed Association (NGFA), citing a 1978 OSHA Memorandum, also argued that OSHA is uncertain whether § 1910.22(a) applies to combustible dust because the Agency instructed its compliance officers to cite § 1910.22(a)(1) and
These commenters are mistaken. As described in detail above, OSHA has for more than 30 years interpreted § 1910.22(a)(1) as applying to combustible dust hazards, and the courts have upheld this interpretation. In the 2009 “Status Report on Combustible Dust National Emphasis Program,” OSHA noted that housekeeping violations (§ 1910.22(a)(1)) accounted for 20 percent of the violations involving combustible dust, second only to hazard communication violations. In the Advance Notice of Proposed Rulemaking on combustible dust, OSHA also stated that existing § 1910.22(a) covers “accumulation of dust, including dust that may be combustible” (74 FR 54334, 54335 (October 21, 2009)). Therefore, regardless of whether OSHA includes a specific reference to combustible dust in final § 1910.22(a)(1), OSHA's enforcement policy remains the same.
With regard to USBSA's and NGFA's “uncertainty” argument, the 1978 memorandum they cite has not been OSHA's policy since 1981, when the courts and the Review Commission upheld OSHA's interpretation that § 1910.22(a)(1) covers combustible dust.
Second, a number of commenters cited OSHA's ongoing combustible dust rulemaking as a reason why the Agency should not reference combustible dust in final § 1910.22(a)(1) (Exs. 73; 96; 124; 158; 189; 190; 202; 207; 254). The National Federation of Independent Business (NFIB) said that including a reference to combustible dust in final § 1910.22(a) would “create confusion for small businesses when the combustible dust rule is finalized” (Ex. 173). The Small Business Administration Office of Advocacy (SBA Advocacy) said that § 1910.22(a) is so vague that “it would undo any specificity in any forthcoming combustible dust standard” (Ex. 124). USBSA agreed, stating that including a reference to combustible dust in § 1910.22(a)(1) “would significantly undermine the usefulness of a combustible dust rule” and “would swallow up and nullify whatever specificity is provided by a comprehensive combustible dust standard” (Ex. 166).
The National Cotton Ginners' Association (NCGA), the Texas Cotton Ginners Association (TCGA), and American Feed Industry Association (AFIA) said including combustible dust in § 1910.22(a)(1) would be “redundant and possibly conflicting” when OSHA “re-regulate[s] these same dusts in the future under the combustible dust rule” (Exs. 73; 96; 158).
OSHA believes these arguments are premature since OSHA's Spring 2016 Unified Agenda of Regulatory and Deregulatory Actions (Reg Agenda) states that combustible dust is in the Prerule Stage.
Third, on a related issue, some commenters contend that OSHA must regulate combustible dust in a separate rulemaking. The United States Chamber of Commerce (USCC) said a separate rulemaking is necessary because combustible dust is a complex, multi-variable hazard that is “not amenable to a simple characterization” and does not have a consensus definition: “Merely telling employers that the walking/working surfaces are not to have a level of dust that would be combustible gives them no guidance, serves no workplace safety purpose, and will only lead to OSHA having another source for citations” (Ex. 202).
USBSA said a separate standard was necessary because § 1910.22(a)(1) and (2) do not address issues such as “[h]ow much [combustible dust] is too much?”; “[w]hat must an employer do at what dust level?”; and “[s]hould all combustible dusts be treated the same?” (Ex. 166).
NFIB also said a separate rulemaking on combustible dust is necessary because OSHA “does not understand the implications of [final § 1910.22(a)(1)] on small businesses” (Ex. 173). NFIB said that OSHA incorrectly certified in the proposed rule that the rulemaking would not have a significant economic impact on small businesses, thereby avoiding the requirement to convene a Small Business Advisory Review (SBAR) panel. As a result, NFIB said OSHA underestimated the proposed compliance costs, and that regulating combustible dust in a separate rulemaking would allow OSHA to hear from a SBAR panel and “fully grasp the burden” that a combustible dust rule will impose on small business (Ex. 173).
OSHA disagrees with the commenters. As noted above, for more than 30 years, OSHA has used § 1910.22(a)(1) as an effective enforcement tool in general industry establishments of all sizes to address fire and explosion hazards related to combustible dust accumulations. This earlier discussion also mentioned that the 2009 Status Report on the Combustible Dust NEP determined that 20 percent of all combustible dust-related violations pertained to housekeeping (§ 1910.22(a)(1)). This history indicates that combustible dust is not too complex to enforce under existing rules.
With regard to NFIB's contention that the proposed rule underestimated compliance costs, OSHA points out that § 1910.22(a)(1) already covers combustible dust. Accordingly, in the proposed economic analysis, OSHA did not have to include any costs for the combustible dust requirement or any other existing applicable requirement.
Fourth, some commenters said including a reference to combustible dust in final § 1910.22(a)(1) is invalid because the national consensus standard (ANSI Z4.1-1968) from which OSHA adopted § 1910.22(a)(1), pursuant to section 6(a) of the OSH Act, applied only to “sanitation” and sanitary conditions (
OSHA does not agree with USBSA's arguments. Under section 6(a), OSHA “is not bound to adopt all provisions of national consensus standards,” and that not adopting the scope and purpose provisions “[does] not constitute impermissible modification” of the requirements of a national consensus
Accepting USBSA's position that § 1910.22(a)(1) only addresses sanitation hazards would mean that OSHA could not use § 1910.22(a)(1) to cite slip, trip, and fall hazards because they are not sanitation hazards. USBSA does not mention that incongruous outcome in its comments, but instead selectively addresses a specific hazard it does not want OSHA to cite under the final rule.
However, previous decisions by the Review Commission and courts of appeal broadly construe § 1910.22(a)(1) (
In
We reject Pratt & Whitney's contention that the scope of [§ 1910.22(a)(1)] is limited to disease prevention and does not encompass tripping hazards. The standard's requirement that places of employment be kept `in a sanitary condition' is in addition to the requirement that workplaces be `clean and orderly', thus demonstrating that the standard is directed not merely to sanitation but to all hazards arising from poor housekeeping, including tripping hazards.
OSHA notes that, contrary to Mr. Carroll's declaration, ANSI Z4.1-1968, on its face, covers hazards other than sanitation hazards. The standard contains several provisions that do not relate to sanitation, including lighting; keeping workplaces in an orderly condition; and maintaining workplaces free from protruding nails, holes, and loose boards.
Fifth, NGFA (Ex. 148) and AFIA (Ex. 158) recommended that OSHA not include a reference to combustible dust in § 1910.22(a)(1) because it would subject their industry to “duplicative and unnecessary requirements” that OSHA's Grain Handling Facilities standard (§ 1910.272) already addresses and, therefore, would cause confusion. They said § 1910.272, along with section 5(a)(1) (29 U.S.C. 654(a)(1)), is working effectively in controlling grain dust hazards, which obviates the need for additional regulation.
AFIA pointed out that the number of fatalities from explosions involving combustible dust declined dramatically in the industry since 1980 (Ex. 158). AFIA maintains that a number of factors contributed to reducing the frequency and severity of these occurrences, including widespread voluntary efforts by industry and trade organizations to increase awareness, research into and implementation of new engineering controls, employee training, and automation that reduces workforce exposure to explosion hazards from combustible dust. Although the Grain Handling Facilities standard issued by OSHA in 1987 (§ 1910.272) may account for some of the reduction in explosions, notably grain-mediated combustible-dust explosions, it was not in effect in the early 1980s, the initial explosion reduction timeframe AFIA cites. Only the court and the Review Commission decisions affirming OSHA's interpretation that § 1910.22(a)(1) applies to combustible dust hazards were in effect in 1981 and 1982. Given that, OSHA believes that it is reasonable to infer that § 1910.22(a)(1) contributed to reducing the number of explosions and fires involving combustible dust during the early 1980s. For all these reasons, OSHA continues to apply § 1910.22(a)(1) to grain-handling facilities.
Finally, USBSA explained that referencing combustible dust in § 1910.22(a)(1) could conflict with §§ 1910.307 (Electrical-Hazardous (classified) locations) and 1910.178 (Powered industrial trucks), stating:
[A]pplying those provisions with a reference to combustible dust would undermine what little specificity already exists in the current standards addressing combustible dust. For example, applying them would significantly undermine the existing distinctions between unclassified, Class II, Division 1, and Class II, Division 2, areas in 29 C.F.R. 1910.307 and 1910.178, which specify where and under what circumstances approved electrical equipment and forklift trucks are required in dusty conditions. There is no point in specifying what electrical equipment and forklift trucks are required under dusty conditions if those conditions are illegal in the first place under § 1910.22(a) (Ex. 166).
In response, OSHA reiterates that § 1910.22(a)(1) already applies to combustible dust. Existing § 1910.22(a) generally addresses combustible dust hazards on walking-working surfaces, while §§ 1910.307 and 1910.178 address more specific combustible dust hazards related to electric equipment and powered industrial trucks, respectively, and OSHA finds no indication that they conflict with each other. Moreover, the Agency has not experienced any conflicts enforcing those requirements.
Final paragraph (a)(2), like the existing and proposed rules, requires that employers ensure the floor of each workroom is maintained in a clean and, to the extent feasible, in a dry condition. The final rule is similar to OSHA's housekeeping requirements in its Shipyard Employment standards (§ 1915.81(c)(3)) and Z4.1-R2005 (section 3.1.2). OSHA believes it is important for employers to maintain walking-working surfaces in a clean and dry condition to protect workers from possible injury from slips, trips, and falls and other hazards.
Final paragraph (a)(2) also requires that employers take additional action if they cannot keep workroom floors in a dry condition. OSHA notes this provision only requires employers to take additional actions when they are using “wet processes.” When wet processes are used, the final rule requires that drainage is maintained and, to the extent feasible, dry standing places are provided, such as false floors, platforms, and mats. Final paragraph (a)(2) provides examples of measures employers can use to provide workers with dry standing places, such as false floors, platforms, and mats, but gives employers flexibility to select other measures that are effective in providing dry standing places. OSHA believes this provision is necessary to protect workers from slips, trips, falls, and other hazards on wet surfaces.
The American Meat Institute (AMI) commented on the proposed rule:
In the meat industry, as in several others, there is simply no possible way to maintain floors in a “dry condition” in areas such as slaughter departments, vat/bin washing rooms, during sanitation operations, etc. And, providing false floors, mats, platforms, etc., though done where possible, is not practical in all areas. Stated simply, there are many cases where floors in operating areas will be “wet” throughout the working shift. However, it should be recognized that “wet” is a relative term; there is significant difference between standing water of some depth as opposed to simply damp surfaces (Ex. 110).
AMI recommended that the final rule make a distinction between wet floors where there is standing water and floors that are “continuously damp” because of periodic cleaning or rinsing, stating:
In the proposed rule, OSHA requested comment on whether final paragraph (a)(2) should include a provision, similar to that in Shipyard Employment (29 CFR 1915.81(c)(3)), requiring that, in wet processes, employers provide appropriate waterproof footwear, such as overboots, when it is not practicable to maintain drainage and dry standing areas (75 FR 28874). OSHA received three comments in response to this request, all of which opposed adding that provision to the final rule. Edison Electric Institute (EEI) (Ex. 207) and the American Wind Energy Association (AWEA) (Ex. 178) both said that employers should determine whether a hazard exists that necessitates use of personal protective equipment (PPE) and select the best method to prevent slips, trips, and falls on wet surfaces. UFCW raised concerns that allowing the use of PPE would cause employers to use PPE instead of following the hierarchy of controls:
By specifically offering the employer the option of providing PPE, OSHA will have the unintended effect of negating the original requirement to eliminate the hazard or control it through engineering controls. We have seen a similar unfortunate dynamic in the implementation and enforcement of 1910.95(b)(1) which supposedly allows the use of PPE
OSHA finds the commenters' arguments convincing and, therefore, did not add the language in § 1915.81(c)(3) to the final rule. In particular, OSHA agrees with the concerns UFCW raised about the hierarchy of controls, and reaffirms that employers must provide dry standing places, and maintain drainage using engineering controls, to the extent such controls are feasible.
Final paragraph (a)(3), which OSHA revised significantly from the proposed rule, requires employers to ensure walking-working surfaces are maintained free of hazards such as loose boards, corrosion, leaks, spills, snow, ice, and sharp or protruding objects.
In general, OSHA revised the language in final paragraph (a)(3) to more clearly and specifically reflect the type and nature of the hazards the Agency intended to address in this provision. The revisions serve two purposes. First, the revisions clarify that a major focus of final subpart D is to protect workers from walking-working surface hazards that could cause or exacerbate the severity of a slip, trip, or fall. For example, if employers do not maintain walking-working surfaces free of leaks, spills, and ice workers could slip and fall and be seriously injured. Similarly, if unused tools (
Second, it emphasizes OSHA's longstanding position, supported by the court decisions noted previously, that the scope of § 1910.22, and paragraph (a)(3) specifically, also covers walking-working surface hazards other than slips, trips, and falls. For example, a nail protruding from a wall may not cause a slip, trip, or fall, but could cause a serious laceration or puncture wound if a worker walks into or bumps into it. Similarly, if employers do not ensure the immediate removal of caustic chemicals or substances spilled onto a walking-working surface, workers may be at risk of adverse effects, such as chemical burns, if they accidentally touch the substance.
The existing rule, which OSHA adopted from the Z4.1-1968 standard, requires that employers, to facilitate cleaning, keep every floor, working place, and passageway free from “protruding nails, splinters, holes, or loose boards.” In the proposed rule, OSHA decided to revise existing paragraph (a)(3) to emphasize that the examples of the hazards listed can result in more than slips, trips, and falls, and are present in more than cleaning operations. Therefore, OSHA replaced the existing examples of specific hazards with performance-based language, stating, “Employers must ensure that all surfaces are designed, constructed, and maintained free of recognized hazards that can result in injury or death to employees,” and deleted the existing “[t]o facilitate cleaning” language.
Many commenters opposed proposed paragraph (a)(3). Most argued that the performance-based language “free of recognized hazards” was vague, overly broad, and appeared to duplicate the General Duty Clause of the OSH Act (Exs. 124; 150; 165; 173; 190; 196; 236). For example, the Sheet Metal and Air Conditioning Contractors National Association (SMACNA) said: “[P]roposed section 1910.22(a)(3) . . . appears to be a `General Duty Clause' specific to this standard . . . and does not offer any logical means of compliance. . . . [T]he proposed requirement is open-ended and provides very little guidance to address any particular hazard” (Ex. 165). The Mechanical Contractors Association of America (MCAA) expressed similar concerns about the language and how OSHA would enforce it:
[T]he general duty clause-like language proposed . . . as 29 CFR 1910.22(a)(3) would allow compliance officers to issue general duty clause-like citations without having to meet the extensive and elaborate criteria established by the agency for issuing general duty clause citations. MCAA believes that this language would cause confusion, dissention and controversy without enhancing worker protection (Ex. 236).
NFIB raised three concerns about proposed paragraph (a)(3). First, NFIB pointed out that the proposed rule does not define “recognized hazards,” saying “[t]he term may have a different meaning to a small business owner than it does to an OSHA inspector” (Ex. 173).
This standard, as written, is so broad that it could be inferred by an inspector or judge that if any injury occurs—for any reason—the employer can be cited for failure to comply. The presumption is that a small business owner should foresee all possibilities of injuries, even in the most remote of circumstances (Ex. 173).
According to SBA Office of Advocacy, small businesses attending their forum on the proposed rule expressed concerns that OSHA would use the proposed rule to impose a “ `de facto' Safety and Health Program (S&HP) or Injury and Illness Prevention Program (I2P2) requirement on employers” (Ex. 124). Therefore, SBA Office of Advocacy and Associated Builders and Contractors (ABC), who raised similar concerns, recommended that OSHA clarify the regulatory language, as well as the purpose of the requirement in the final rule (Exs. 124; 196).
The commenters raise valid concerns. The purpose of the proposed requirement was not to codify the General Duty Clause as a standard or reduce OSHA's burdens in proving a General Duty Clause violation. Rather, as explained above, the purpose was to use performance-based language to point out that failure to adequately clean and maintain walking-working surfaces: (1) Can make slips, trips, and falls more severe, and (2) can result in adverse effects other than slips, trips, and falls (
Mr. Lankford recommended removing the design and construction requirements in proposed paragraph (a)(3) because they would impose “significant responsibility on employers” in the many instances when “[t]here is no connection between the designer/builder and the current employer” (Ex. 368). In the hearing, Mr. Lankford said OSHA should allow employers to comply with the requirement by confirming that the walking-working surfaces “were built according to the standard or local building code” (Ex. 329 (1/20/2011, p. 297)). OSHA agrees, and removed the design and construction requirements in final paragraph (a)(3).
On a separate issue, Ellis Fall Safety Solutions suggested that OSHA add a requirement to § 1910.22(a) that walking-working surfaces be “walkable from a body space point of view,” meaning an employee in the 95th height percentile should be able to walk upright without encountering head or other obstructions (Ex. 155). OSHA believes the performance-based requirements in final paragraph (a)(3) takes this issue into account in an effective way. Paragraph (a)(3) requires that employers maintain walking-working surfaces free of protruding objects that could harm workers, regardless whether the worker is tall or large.
Michael Bell of Joneric Products, a footwear manufacturer, objected to the scope of OSHA's benefits policy:
This Proposed Rule virtually ignores fatalities and injuries that occur not from heights. There are some easy solutions to remedy these fatalities and injuries.
1. Recognize that workers whose primary job is to wash, wax or maintain floors are at high risk of slips and falls. There are companies that manufacture specialized footwear for these activities.
2. Recognize that many workers primarily work outdoors. Most of them must work on Public Property. Even though OSHA has no authority to tell a private citizen how to maintain their properties at least admit that many injuries do occur outdoors and they are reportable to OSHA.
3. Recognize that inclement weather is the cause of a good many of these injuries.
4. Know that this is serious enough that many companies are proactive in attempting to reduce these weather related injuries. But, they do not make up for the companies that ignore the situation because there is [sic] no OSHA regulations.
5. Companies have a wide range of products to choose from many manufacturers (Ex. 77).
OSHA agrees with Mr. Bell's statement and notes that the provisions in § 1910.22(a)(1)-(3) address slips and falls to the same level. In particular, OSHA notes that these final provisions will require employers to control worker exposure to fall hazards on outdoor surfaces.
Final paragraph (b) requires that employers ensure each walking-working surface can support the “maximum intended load” for that surface. The final rule, like the proposal defines maximum intended load as the total weight of all employees, equipment, machines, vehicles, tools, materials, and loads that employers reasonably anticipate they may be apply to that walking-working surface. The existing rule includes a similar provision requiring that employers not place on a floor or roof any load weighing more than the building official has approved for the surface (existing § 1910.22(d)(2)). The construction fall protection standard also requires that employers “determine if walking/working surfaces on which its employees are to work have the strength and integrity to support employees safely” and only allow employees to work on surfaces that meet the requirement (29 CFR 1926.501(a)(2)).
Final paragraph (b), like the proposal, specifies that it covers all walking-working surfaces; that is, “any horizontal or vertical surface on or through which an employee walks, works, or gains access to a workplace location” (see final § 1910.21(b)). Accordingly, employers must ensure that all walking-working surfaces, which include, but are not limited to, floors, roofs, stairs, ladders, and ramps; can support the maximum intended load. The existing rule specifies it applies to “any floor or roof” of a building or other structure (existing § 1910.22(d)(2)). Final paragraph (b) also replaces the specification requirements in existing § 1910.22(d)(1) with performance-based language. The existing rule specifies that the loads the building official approves for a specific walking-working surface “shall be marked on plates of approved design . . . and securely affixed . . . in a conspicuous place in the space to which they relate.”
In the proposed rule, OSHA said the existing specification requirement was not necessary for two reasons: (1) Load-limit information is available in building plans, and (2) engineers take maximum loads into consideration when they design industrial surfaces. OSHA proposed to replace the existing rule with provisions requiring that employers ensure that walking-working surfaces are “[d]esigned, constructed, and maintained to support their maximum intended load” (proposed paragraph (b)(1)), and “[n]ot loaded beyond their maximum intended load” (proposed paragraph (b)(2)).
OSHA received three comments on the proposal. The first commenter, AFSCME, recommended requiring that employers ensure all walking and working surfaces have the “structural integrity” to support the workers, their tools and equipment. OSHA believes that requiring employers to ensure each surface is capable of supporting the maximum intended load, as defined in final § 1910.22(b), achieves the result AFSCME advocates. The definition of “maximum intended load” in final § 1910.21(b) includes the total weight of all employees, equipment, machines, vehicles, tools, materials, and loads that the employer reasonably anticipates may be applied to the walking-working surface.
The second commenter, Charles Lankford, objected to the proposed requirement that employers ensure walking-working surfaces are “designed and constructed” to support their maximum intended load (proposed paragraph (b)(1)):
[E]mployers will be unable in most cases to ensure positively that existing or newly purchased walking and working surfaces were “designed and constructed” (perhaps decades earlier) to comply with this standard.
Employers will for practical purposes be limited to relying on third party certification, testing, listing, and/or labeling of platforms and surfaces such as scaffold planks, floors of crane cabs, runways, etc. However, OSHA did not state in the proposed rule that reliance on third party certifications would be a method of compliance or could be a valid defense from citations (Ex. 368;
OSHA disagrees with Mr. Lankford's contention. The existing rule makes it easy for employers to know for certain whether a walking-working surface on an existing building or structure can support the maximum intended loads employers anticipate placing on that surface. The existing rule requires that load limits for buildings and structures used for mercantile, business, industrial, or storage purposes: (1) Be approved by the building official; and (2) be posted in the area of the walking-working surface (existing § 1910.22(d)(1)). The existing rule also prohibits employers from putting any load on a walking-working surface that exceeds the weight the building official has approved. Under the final rule, employers can readily obtain information about walking-working surfaces in those buildings and structures from the plates required to be posted in accordance with the existing rule. For new buildings and structures, employers can obtain information on load limits from building plans, local codes, and third party certification or conduct their own evaluation.
Mr. Lankford is correct that the proposed rule, as well as the final rule, does not state specifically how employers must obtain information about load limits for a walking-working surface. However, OSHA believes there are many ways employers can obtain such information. Mr. Lankford provided examples of several methods employers may use, including obtaining load limits from the plates posted in the area; relying on third party certification; and testing or evaluating walking-working surfaces. Instead of codifying the methods Mr. Lankford mentioned, OSHA has used performance-based language in the final rule to give employers greater flexibility in selecting the method they want to use to identify whether the walking-working surface can support the maximum intended load employers will place on it.
Finally, the National Chimney Sweep Guild (NCSG) contended the requirement that employers ensure each walking-working surface can support the maximum intended load they will apply to it is not feasible and, as proposed, go beyond what is reasonably necessary or appropriate (Exs. 150; 240; 365; 329 (1/18/2011, p. 254-348)). First, NCSG said that chimney sweeps are not able to determine the “maximum intended load”
The sweep would have no practical means of determining the maximum intended load for a roof, and no way of determining whether the roof was designed, constructed, and maintained to support the unknown maximum intended load. Only when a job would require a significant load on a roof or under other highly unusual circumstances would a sweep attempt to access the attic below a roof to check the structural integrity of the roof. We doubt most trades would be able to determine whether a roof could safely support its maximum intended load (as established by the builder and/or local code) (Ex. 150).
The final rule, like the construction fall protection standard, requires that employers are responsible for taking the steps necessary to ensure that each walking-working surface employee's access has the strength and structural integrity to safely support the maximum intended load employers will place on the surface. NCSG agreed that assessing hazards and inspecting roof surfaces is necessary before workers step on roofs to perform chimney sweep work:
We recognize that the employer of a sweep must implement reasonable measures designed to determine whether a roof or other walking-working surface can be safely utilized by the employee to perform the pre-assigned task and any additional tasks that may be identified after the sweep arrives at the site (Ex. 150).
Where workers perform single-person jobs, which NCSG said are the majority of jobs their members perform, employers are responsible for ensuring that workers know how to assess and determine whether the walking-working surface they will access will support the loads reasonably anticipated to be placed on it. For example, employers must ensure that their employees (
Once we actually get to the job, we are making a hazard assessment . . . of . . . electrical lines, the slope of the roof, the condition of the roof, is there adequate places for our ladders, can we safely access the roof with ladders, is the roof wet, ice covered, snow covered, and ultimately we use all of that information to formulate a go or no go roof decision, whether [we] are actually going to access the roof (Ex. 329 (1/18/2011, p. 276-303)).
In addition, NCSG said member employers also periodically go to jobs sites to discuss and observe workers performing tasks, further indicating that assessments and determinations of the strength and structural of roofs are being done (Ex. 150).
Finally, not only did NCSG say it is not feasible for its members to comply with final paragraph (b), they also said:
We doubt most trades would be able to determine whether a roof could safely support its maximum intended load (as established by the builder and/or local code) (Ex. 150).
Since 1994, the current construction fall protection standard has required employers performing construction activities to “determine if the walking-working surfaces on which its employees are to work have the strength and structural integrity to support employees safely” (§ 1926.501(a)(2)). According to NCSG, 20 percent of the work chimney sweep companies perform are significant and major installations and repairs and covered by the construction fall protection standard (Ex. 150). These operations involve a substantial quantity of equipment, tools and materials being used and placed on the roof. OSHA has not received any reports that chimney sweep companies have experienced difficulty assessing whether the roof has the “strength and structural integrity” to support workers and the equipment, materials, and tools they are using to make those installations and repairs. Because the final rule is consistent with the construction standard, OSHA believes NCSG members will not have difficulty visually assessing whether the roof can support chimney cleaning, inspections, and minor repair work, which do not require the quantities of equipment, tools, and materials of substantial and major installations/repair jobs. For these reasons, OSHA does not find NCSG's infeasibility contention to be convincing.
Second, NCSG expressed concern that the final rule will require member companies to hire “a structural engineer or someone with significant advanced training” to make a “technical determination” that the walking-working surface has the necessary structural integrity, and that it would be infeasible for small companies to have a structural engineer or similar expert person on staff to assess the walking-working surfaces at each worksite (Ex. 150).
The final rule, like the construction fall protection standard, does not require that employers hire engineers or other experts to make a technical determination about whether a walking-working surface has the strength and structural integrity to support the maximum intended load employers reasonably anticipate placing on that surface. OSHA agrees with NCSG that employers may comply with final paragraph (b) by making “a visual examination of the condition of the roof and the rest of the structure” (Ex. 150). As OSHA discussed in the preamble to the proposed rule, if conditions warrant or if employers cannot confirm from the visual examination that the walking-working surface can support the load they will place on it, OSHA believes employers need to conduct a more involved or detailed inspection to ensure the surface is safe for employees (75 FR 28888). OSHA does not believe NCSG members will have difficulty complying with this requirement. NCSG said member companies already conduct visual examinations and hazard assessments to determine whether roofs can support the total load their workers will place on them (Ex. 150). Moreover, NCSG said employers periodically come to job sites to observe how workers are performing tasks, which presumably include observing tasks such as hazard assessments and visual examinations of roofs.
Final paragraph (c), like the proposal, requires that employers provide, and ensure that each worker uses, a safe means of access and egress to and from walking-working surfaces. For purposes of the final rule, the term “safe” means that no condition (for example, an obstruction, lock, damage) could prevent or endanger a worker trying to access or egress a walking-working surface. Thus, employers must ensure that means of access and egress remain clear and in good repair so workers can safely move about walking-working surfaces.
Final paragraph (c), like the proposal, replaces the specifications in the existing rule (§ 1910.22(b)) with performance-based language. The existing rule requires that aisles and passageways be kept in good repair, with no obstructions across or in aisles that could create a hazard. Where mechanical handling equipment is used, the existing rule requires that sufficient safe clearances be allowed for aisles, at loading docks, through doorways, and wherever turns or passage must be made. The revision ensures that final paragraph (c) applies to all walking-working surfaces the final rule covers, which means that employers must provide safe access to and egress from “any horizontal or vertical surface on or through which an employee walks, works, or gains access to a workplace location” (final § 1910.21(b)). Examples of walking-working surfaces that require safe access and egress include floors, stairways, ladders, roofs, ramps, and aisles. The final rule, by using the term “walking-working surface,” requires that employers ensure means of access and egress are safe regardless of whether the walking-working surfaces are on the same or different levels. The final rule also applies to both temporary and permanent walking-working surfaces.
OSHA notes that the final rule does not retain the specification language in existing § 1910.22(b)(2) that requires appropriate marking of “permanent aisles and passageways.” The performance-based language in final paragraph (c) requires that an employer provide and ensure workers use a safe means of access and egress to and from walking-working surfaces. One way employers can meet the performance language is by appropriately marking passageways and permanent aisles as a means of identifying safe access and egress.
OSHA did not receive any comments on proposed paragraph (c) and finalizes the proposed provision, as discussed, with minor editorial changes for clarity.
Final paragraph (d), like the proposed rule, specifies general inspection, maintenance, and repair requirements for walking-working surfaces. Final paragraph (d)(1) requires that employers inspect and maintain walking-working surfaces in a safe condition. OSHA believes that inspecting walking-working surfaces is necessary to ensure they are maintained in a safe condition. To ensure they are in a safe condition, the final rule specifies that employers must inspect walking-working surfaces both (1) regularly and (2) as necessary.
The term “regular inspection” means that the employer has some type of schedule, formal or informal, for inspecting walking-working surfaces that is adequate enough to identify hazards and address them in a timely manner. The final rule uses a performance-based approach instead of mandating a specific frequency for regular inspections. OSHA believes that employers need to consider variables unique to each workplace that may affect the appropriate frequency for workplace inspections. Therefore, OSHA believes that employers are in the best position to evaluate those variables and determine what inspection frequency is adequate to identify and address hazards associated with walking-working surfaces. Once employers make that determination, the final rule requires that they conduct inspections of walking-working surface according to that frequency.
Adding a general requirement in the final rule for regular inspections of walking-working surfaces makes the rule consistent with OSHA's construction standards. Section 1926.20(b)(2) requires employers to have a program that “provides for frequent and regular inspections of job sites, materials, and equipment.”
In addition to regular inspections, final paragraph (d)(1) also requires
The proposed rule specified that employers conduct “periodic” inspections, in addition to regular inspections. The purpose of the proposed requirement to conduct periodic inspections was to address specific workplace events, conditions, or situations that trigger slip, trip, or fall hazards not addressed by regular inspections, which are conducted at fixed times. However, OSHA believes that the language “as necessary” more accurately describes the purpose of the proposed requirement. Moreover, OSHA believes that the revised language clarifies when employers need to check walking-working surfaces and, thus, will enable employers to use their resources efficiently. Therefore, OSHA specified in final paragraph (d)(1) that employers must conduct inspections as necessary, in addition to regular inspections. Accordingly, employers must check the workplace when events, conditions, or situations arise that could put workers at risk of harm due to slips, trips, or falls, regardless of whether the workplace is due for a regular inspection. Thus, the final rule, as revised, fulfills the interpretation given to paragraph (d) in the proposal, that the employer “ensure that inspections are conducted frequently enough so that hazards are corrected in a timely manner” (75 FR 28862, 28875).
AFSCME recommended that § 1910.22 also require that employers perform a hazard assessment (Ex. 226). OSHA believes that requiring employers to inspect walking-working surfaces regularly and as necessary enables employers to determine the hazards that are present in those areas; therefore, additional language is not necessary.
NCSG objected to paragraph (d)(1)'s requirement that walking-working surfaces be maintained in a “safe” condition as again incorporating the General Duty Clause (Ex. 150). That is not OSHA's intent, and the Agency incorporates its response to the that objection, discussed in final paragraph (a)(3), here. The same hazards are addressed by final paragraphs (a)(3) and (d)(1); (a)(3) requires that the surface be maintained free of those hazards, while (d)(1) requires inspection for and correction of those hazards when found.
Final paragraph (d)(2) requires that employers correct or repair hazardous conditions on walking-working surfaces before allowing workers to use those surfaces again. The final rule also requires that if employers cannot fix the hazard immediately, they must guard the hazard to prevent workers from using the walking-working surface until they correct or repair it. Taking immediate corrective action or guarding the hazard is important for the safety of workers; delaying either action can put workers at risk of injury or death. OSHA notes that corrective action may include removal of the hazard.
When employers cannot fix the hazard immediately and need to guard the hazard area, the final rule gives employers flexibility in selecting the type of guarding to use (
NCSG contended that proposed paragraph (d)(2) is a redundant provision, since proposed paragraph (a)(3) would already contain language requiring that walking-working surfaces be free of hazards (Ex. 150).
OSHA disagrees. First, as discussed, OSHA revised final paragraph (a)(3) so it more clearly identifies examples of walking-working surface hazards that could cause slips, trips, and falls. For example, if employers do not maintain walking-working surfaces free of leaks and spills, workers could slip and fall and be seriously injured. Corrosion can weaken walking-working surfaces and render them unable to support loads placed on them. In addition, examples of walking-working surface hazards incorporated in final paragraph (a)(3), stress that final § 1910.22, like the existing rule, covers more than slip, trip, or fall hazards.
Second, OSHA does not believe final paragraphs (a)(3) and (d)(2) are redundant because they serve different purposes and objectives. The purpose of final paragraph (a)(3) is to ensure employers have procedures or programs in place to maintain walking-working surfaces so workers are not exposed to hazards that may cause injuries such as slips, trips, and falls. OSHA believes that if employers establish good housekeeping and maintenance procedures and programs they can prevent worker exposure to such hazards. However, even when employers establish rigorous housekeeping and maintenance programs, hazardous conditions may still arise. When they occur, final paragraph (d)(2) specifies what employers must do to correct or repair those hazards before they allow workers to use the surface.
Final paragraph (d)(3) requires that when any correction or repair involves the structural integrity of the walking-working surface, a qualified person must perform or supervise that correction or repair. For purposes of the final rule, OSHA defines a qualified person as “a person who, by possession of a recognized degree, certificate, or professional standing, or who by extensive knowledge, training, and experience has successfully demonstrated the ability to solve or resolve problems relating to the subject matter, the work, or the project” (see § 1910.21(b)). The definition in the final rule is the same as other OSHA standards (
Structural integrity generally addresses a structure's uncompromised ability to safely resist the loads placed on it. Deficiencies in the structural integrity of a walking-working surface can be extremely hazardous. OSHA believes corrections and repairs involving the structural integrity of a walking-working surface require the skill of a qualified person to ensure that affected surfaces are safe during and after repair or correction.
OSHA received three comments that raised concerns about the requirement in proposed paragraph (d)(3). Steven Smith of Verallia stated:
The duty to inspect, to guard, or take out of use certain areas, and to require `qualified persons' be present for all repairs is duplicative of other OSHA requirements and adds additional layers of procedure and cost to employers that are unduly burdensome and unnecessary (Ex. 171).
Oft times repairs to facility equipment is performed by contractors and their employees or supervisors would be considered qualified. As [paragraph (d)(3)] reads, this may be interpreted to mean that the employer is responsible to staff qualified employees for all structural repairs to walking and working surfaces. Clarity of expectations needs to be taken into consideration in the final version (Ex. 189).
I believe it is excessive to ask of someone assigned to sand or scrape excessive rust off the metal treads of stairways and then paint them, to possess a degree or demonstrated `extensive knowledge training, and experience' . . . . The more appropriate option here would be to require a qualified person for those applications where he/she is specifically required, and allow for a `competent' person to apply his/her competency for the broad scope of tasks which he/she is well-suited to perform (Ex. 368).
OSHA believes the commenters have misinterpreted proposed paragraph (d)(3) as requiring qualified persons to conduct all correction and repair tasks. To the contrary, final paragraph (d)(3) is narrowly drawn. The final rule only requires that a qualified person perform or supervise the correction or repair of a walking-working surface if the correction or repair affects the structural integrity of the walking-working surface. If the correction or repair task does not rise to that level, the final rule does not require the employer to have a qualified person perform or supervise the task. Thus, using Mr. Lankford's example, final paragraph (d)(3) does not require employers to have a qualified person, as defined in this rule, perform or supervise sanding or scraping rust off of stairway treads. However, for example, a qualified person may have to perform or supervise welding a broken rung on a metal ladder.
To ensure that employers clearly understand the limited scope of final paragraph (d)(3), OSHA revised and reorganized the provision. For example, OSHA revised the language in the final rule to clarify that it only applies to repairs and corrections that affect the structural integrity of a walking-working surface, and not to the general maintenance of walking-working surfaces.
Mr. Smith generally commented that the requirements in proposed paragraph (d) were subjective and vague; however, he did not provide any explanation or examples to substantiate these comments (Ex. 171). OSHA disagrees with these comments. Pursuant to the OSH Act (29 U.S.C. 655(b)(5)), OSHA used performance-oriented language in paragraph (d) to provide employers with greater flexibility in complying with the requirements. As discussed above, OSHA also revised the language in paragraph (d) to provide greater clarity. In addition, this preamble explains in detail what employers must do to comply with the inspection, maintenance, and repair requirements in final paragraph (d).
Final § 1910.23 revises and consolidates into one section the existing ladder requirements in §§ 1910.25 (Portable wooden ladders), 1910.26 (Portable metal ladders), 1910.27 (Fixed ladders), and 1910.29 (Mobile ladder stands and scaffolds (tower)). The final rule retains many of the existing requirements because OSHA believes they continue to provide an appropriate level of worker safety.
The final rule also updates and revises the existing OSHA general industry ladder rules to increase safety, clarity, consistency, and flexibility. To illustrate, the final rule revises the existing ladder requirements to make them consistent with OSHA's construction ladder standard (29 CFR 1926.1053). This action will make compliance easier for employers engaged in both general industry and construction operations.
Similarly, the final rule updates existing ladder requirements to make them consistent with current national consensus standards addressing ladders, including:
• American National Standards Institute (ANSI) A14.1-2007, American National Standard for Ladders—Wooden—Safety Requirements (A14.1-2007) (Ex. 376);
• ANSI A14.2-2007, American National Standard for Ladders—Portable Metal—Safety Requirements (A14.2-2007) (Ex. 377);
• ANSI A14.3-2008, American National Standard for Ladders—Fixed—Safety Requirements (A14.3-2008) (Ex. 378);
• ANSI A14.5-2007, American National Standard for Ladders—Portable Reinforced Plastic—Safety Requirements (A14.5-2007) (Ex. 391); and
• ANSI A14.7-2011, American National Standard for Mobile Ladder Stands and Mobile Ladder Stand Platforms (A14.7-2011) (Ex. 379).
Throughout the summary and explanation of final § 1910.23, OSHA identifies which provisions are consistent with these national consensus standards. OSHA believes this is important because national consensus standards represent accepted industry practices, and thus are technologically and economically feasible. Moreover, since most of those national consensus standards have been in place for years, OSHA believes that virtually all ladders this section covers that are manufactured today meet the requirements in those standards. As such, employers should not have problems complying with the requirements in the final rule that OSHA drew from those standards.
OSHA notes that final § 1910.23 incorporates a number of revisions to make the final rule easier for employers and workers to understand and follow. First, as mentioned, OSHA has consolidated all of the general industry ladder provisions into this section. Second, within this section, OSHA has consolidated into a single paragraph the general requirements that are common to, and apply to, all types of ladders. These revisions eliminate unnecessary repetition, and make the section easier to follow. The organization of the consolidated final ladder requirements is:
• Paragraph (a) Application—This paragraph specifies the types of ladders the final rule covers or exempts;
• Paragraph (b) General requirements for all ladders—This paragraph specifies the requirements that are common to, and apply to, all types of ladders the final rule covers;
• Paragraph (c) Portable ladders—This paragraph specifies the requirements that apply to portable ladders, including wood, metal, and fiberglass or composite material portable ladders;
• Paragraph (d) Fixed ladders—This paragraph covers the provisions that apply to fixed ladders, including individual-rung ladders; and
• Paragraph (e) Mobile ladder stands and mobile ladder stand platforms—This paragraph updates existing OSHA requirements for mobile ladder stands, and adds requirements for mobile ladder stand platforms.
Third, in the final rule OSHA revises existing provisions to make them performance-based, whenever appropriate. Performance-based language gives employers maximum flexibility to comply with the requirements in the final rule by using the measures that best fit the individual workplace.
Finally, when possible, OSHA drafted final § 1910.23 in plain language, which also makes the final rule easier to understand than the existing rules. For example, the final rule uses the term “access” instead of “access and egress,” which OSHA used in the existing and proposed rules. OSHA believes this revision makes the final rule easier to understand than the existing and proposed rules. Moreover, using “access” alone eliminates potential confusion since the term “egress” is often linked, and used interchangeably with, the term “means of egress,” or “exit routes,” which 29 CFR part 1910, subpart E (Exit Routes and Emergency Planning), addresses. The purpose of
OSHA believes the need for the vast majority of the provisions in final § 1910.23 is well settled. Pursuant to section 6(a) of the OSH Act (29 U.S.C. 655(a)), OSHA adopted most of them in 1971 from existing national consensus standards. Furthermore, all of the ANSI ladder standards, with the exception of A14.7-2011, Mobile Ladder Stands, derive from the original A14, American National Standard Safety Code for Construction, Care, and Use of Ladders, which ANSI first adopted in 1923. ANSI also revised and updated those standards regularly since then to incorporate generally accepted industry best practices.
With the revision of OSHA's ladder requirements for general industry, OSHA also revised the ladder requirements in other general industry standards. For example, OSHA replaced the ladder requirements in 29 CFR 1910.268 (Telecommunications) with the requirement that ladders used in telecommunications meet the requirements in 29 CFR part 1910, subpart D, including § 1910.23.
Final paragraph (a), similar to the proposal, requires that employers ensure that each ladder used in general industry, except those ladders the final rule specifically excepts, meets the requirements in final § 1910.23. Final paragraph (a) consolidates and replaces the application requirements in each of the existing OSHA ladder rules with a uniform application provision applicable to all ladders; § 1910.21(b) defines “ladder” as “a device with rungs, steps, or cleats used to gain access to a different elevation.”
Final paragraph (a) includes two exceptions. First, final paragraph (a)(1) specifies that § 1910.23 excepts ladders used in emergency operations such as firefighting, rescue, and tactical law enforcement operations or training for these operations. The proposed rule limited the exception to firefighting and rescue operations, but the final rule expanded that exception to cover all emergency operations and training, including tactical law enforcement operations. OSHA believes this exception is appropriate because of the exigent conditions under which emergency responders perform those operations and training.
OSHA based the expansion of the exception for all emergency operations in part on comments from David Parker, manager of the risk-management section for the Pima County (Tucson, AZ) Sheriff's Office and Public Risk Management Association (PRIMA) board member, which represents 1,500 public-sector members, including the following comment:
[The impact of the proposed rulemaking on public entities] is particularly important in view of the fact that some of the requirements within the proposed [rule] may well be reasonable, necessary, cost effective and [technologically] feasible in common industrial environments. But they can create significant challenges and greater hazard when extended to certain public entity activities such as police tactical operations and training (Ex. 329, 01/20/2011, p. 7).
Mr. Parker also said that applying the ladder requirements to emergency operations, specifically law enforcement tactical situations, and their training exercises, was impractical because those operations require ladders designed for fast placement and access.
Second, final paragraph (a)(2), like the proposed rule, exempts ladders that are designed into or are an integral part of machines or equipment. OSHA notes this exemption applies to vehicles that the Department of Transportation (DOT) regulates (
Final paragraph (a)(2) is consistent with OSHA's ladder requirements for marine terminals (29 CFR 1917.118(a)(1)), which excepts ladders that are an integral part of transportation-carrier equipment (
The exceptions in final paragraph (a) differ from the exceptions in the existing OSHA ladder rules (
Existing § 1910.29(a) specifies that it does not cover “aerial ladders;” however, the existing rule does not define this term. Section 1910.67 (Vehicle-mounted elevating and rotating work platforms) defines “aerial ladder” as a “device consisting of a single- or multiple-section extension ladder” mounted on a vehicle (§ 1910.67(a)(2)). Although the final rule does not specifically except aerial ladders, OSHA believes that aerial ladders come within the exception for ladders designed into, or that are an integral part of, a machine or equipment, which includes vehicles.
OSHA did not receive any comments on paragraph (a) of the proposed rule and, therefore, adopted it as revised.
Final paragraph (b), like the proposed rule, establishes general requirements that apply to all ladders this section covers, including wood, metal, and fiberglass or composite ladders, portable and fixed ladders, stepladders and stepstools, mobile ladder stands and mobile ladder stand platforms, and other ladders such as job-made ones. The final rule draws most of the provisions in this paragraph from the existing OSHA ladder standards for general industry and construction with the goal of making these standards consistent. OSHA also draws a number of provisions from the national consensus standards listed above.
Final paragraph (b)(1), like the proposed rule, requires that employers ensure ladder rungs, steps, and cleats are parallel, level, and uniformly spaced when the ladder is in position for use. The final provision is consistent with OSHA's other ladder requirements in general industry, marine terminals, longshoring, and construction (see §§ 1910.25(c)(2)(i)(B), 1910.27(b)(1)(ii), 1910.268(h)(2) and (6), 1917.118(d)(2)(i), 1917.119(b)(2), 1918.24(f)(2), 1926.1053(a)(2)). Final paragraph (b)(1) also is consistent with the ANSI ladder standards (A14.1-2007, Sections 6.2.1.2, 6.3.1.2, 6.4, and 6.5.4; A14.2-2007, Section 5.3; A14.3-2008, Sections 5.1.1,
Final paragraph (b)(1) adds the word “cleats,” which is common terminology for a type of ladder cross-piece. OSHA added the term, which is interchangeable with “rungs” and “steps,” to make final paragraph (b)(1) consistent with other Agency ladder standards and national consensus standards. OSHA did not receive any comments on the proposed provision.
Final paragraphs (b)(2) and (3) establish requirements for spacing between rungs, steps, and cleats on different types of ladders. With the exception of ladders in elevator shafts, the final rule requires that employers measure spacing between the centerlines (midpoint) of the rungs, steps, or cleats. Measuring the spacing at the centerline of the rung, step, or cleat ensures that measurements are done consistently throughout the length of the ladder and variations between different steps are minimal.
Like the proposed rule, final paragraph (b)(2) requires that, except for ladders in elevator shafts and telecommunication towers, employers ensure ladder rungs, steps, and cleats are spaced not less than 10 inches and not more than 14 inches apart. OSHA drew the proposed and final requirement from its construction ladder standard (§ 1926.1053(a)(3)(i)), which OSHA updated in 1990 (55 FR 47660 (11/14/1990)). Final paragraph (b)(2) is consistent with OSHA standards that have flexible vertical-spacing requirements. For example, OSHA's Telecommunications standard at 29 CFR 1910.268 specifies that vertical spacing on fixed ladders on communication towers not exceed 18 inches (§ 1910.268(h)(2)), and vertical spacing of rungs on climbing devices be not less than 12 inches and not more than 16 inches apart (§ 1910.268(h)(6)). In addition, three maritime standards specify that rungs be spaced between 9 to 16.5 inches apart (§§ 1917.118(d)(2)(1); 1917.119(b)(2); 1918.24(f)(2)).
Final paragraph (b)(2) provides greater flexibility than ANSI's ladder standards, most of which require that vertical spacing be 12 inches (A14.1-2007, Sections 6.2.1.2 and 6.3.1.2; A14.2-2007, Section 5.3; and A14.3-2008, Section 5.1.1), but the A14.7-2011 standard incorporates flexible vertical spacing on mobile ladder stands by specifying that vertical spacing not exceed 10 inches (Section 4.3.3).
Although OSHA believes that both the final rule and existing OSHA and national consensus ladder standards provide adequate protection, the Agency also believes it is important that the final rule be consistent with the construction ladder requirements (§ 1926.1053). OSHA recognizes that some employers and workers perform both general industry and construction work. Increasing consistency between OSHA's general industry and construction standards will assist those employers and workers in complying with the OSHA requirements, and also will minimize the potential for confusion. In addition, providing greater flexibility will give employers more options to tailor ladders to specific work operations. There were no comments on the proposed provision.
The final rule, like the proposal, adds two exceptions to paragraph (b)(2). Final paragraph (b)(2)(i) specifies that employers must ensure rungs and steps on ladders in elevator shafts are spaced not less than 6 inches and not more than 16.5 inches apart, as measured along the ladder side rails.
Final paragraph (b)(2)(ii) specifies that employers ensure that vertical spacing on fixed ladder rungs and steps on telecommunication towers not exceed 18 inches, which is consistent with the existing requirement in OSHA's Telecommunications standard in § 1910.268(h)(2). Final paragraph (b)(2)(ii) also adds the phrase “measured between the centerlines of the rungs or steps.” This addition clarifies the provision, and makes it consistent with final paragraphs (b)(2) and (3), which also requires vertical spacing to be measured between rung or step centerlines. OSHA did not receive any comments on the proposed exceptions.
Final paragraph (b)(3), like the proposed rule, addresses vertical spacing for stepstool steps. The final rule requires that employers ensure stepstool steps are spaced not less than 8 inches, and not more than 12 inches, apart, as measured between centerlines of the steps. The final paragraph (b)(3) deleted the terms “rungs” and “cleats” from the proposal because stepstools do not have them.
OSHA proposed requirements for stepstools in recognition that employers use stepstools routinely in general industry. However, stepstools differ from stepladders and other portable ladders, and OSHA does not believe that some of the requirements applicable to stepladders are appropriate for stepstools. The final rule defines a stepstool as a self-supporting, portable ladder with flat steps and side rails that is designed so an employee can climb on all of the steps and the top cap. A stepstool is limited to those ladders that are not height adjustable, do not have a pail shelf, and do not exceed 32 inches (81 cm) in overall height to the top cap, except that side rails may continue above the top cap (§ 1910.21(b)).
Stepladders and other portable ladders, by contrast, do not have height limits, and the final rule requires that employers ensure workers do not stand on the top step or cap of those ladders.
OSHA drew final paragraph (b)(3) from its construction ladder standards (§ 1926.1053(a)(3)(ii)), and the final rule is consistent with the ANSI ladder standards that address stepstools (A14.1-2007, Section 6.5.4; and A14.2-2007, Section 6.6.4). These standards also address stepstools differently from step ladders and other portable ladders.
OSHA believes that employers should not have any difficulty complying with final paragraph (b)(3). The A14.1-2007 and A14.2-2007 standards have been available for years, so OSHA believes that almost all stepstools currently in use already meet the requirements in the final rule. OSHA did not receive any comments on proposed paragraph (b)(3).
Final paragraph (b)(4) consolidates OSHA's existing requirements on the minimum clear width for rungs, steps, and cleats on portable and fixed ladders (§§ 1910.25, 1910.26, 1910.27). The final rule requires employers to ensure that ladder rungs, steps, and cleats on portable and fixed ladders have a minimum “clear width” of 11.5 inches and 16 inches, respectively. “Clear width” is the space between ladder side rails, but does not include the width of the side rail. OSHA also incorporates as paragraph (b)(4) the proposed note informing employers that the clear width measurement on fixed ladders is done before installation of any ladder safety system.
Generally, the final rule is consistent with OSHA's existing ladder standards, notably OSHA's standards for portable wood ladders, fixed ladders, mobile ladder stands and platforms, and construction ladders (existing §§ 1910.25(c)(2)(i)(
The final rule also is consistent with the ANSI ladder standards (A14.1-2007, Sections 6.2.1.3, 6.3.2.4, 6.3.3.8, 6.3.4.3, 6.3.5.4, and 6.4.1.3; A14.2-2007, Sections 6.1.3, 6.2.1, and 6.2.2; and A14.3-2008, Section 5.1.2). Although the minimum clear widths in the ANSI standards differ depending on the type of portable or fixed ladder used, virtually all of these standards require the minimum clear width specified by the final rule.
Final paragraph (b)(4) contains four exceptions to the minimum clear-width requirement. First, final paragraph (b)(4)(i), like the proposal, includes an exception for ladders with narrow rungs that are not designed to be stepped on, such as those located on the tapered end of orchard ladders and similar ladders. This exception recognizes that manufacturers did not design the narrow rungs at the tapered end of the ladder to be foot holds, but rather designed them to allow the worker to establish the best work position. For example, tapered ladders allow workers to safely position the ladder for activities such as pruning tree branches. Since workers will not use the narrow rungs on the tapered end of orchard and other similar ladders for stepping, OSHA believes that it is not necessary to apply the clear width requirements in the final rule to the narrow rungs on these ladders. However, OSHA stresses that the exception only applies to the narrow rungs on the tapered end; the remainder of the ladder rungs where workers may step must meet the requirements in the final rule. Moreover, employers are responsible for ensuring that workers do not step on the narrow rungs.
Second, final paragraph (b)(4)(ii) retains the proposed rule's exception for portable manhole entry ladders supported by manhole openings. The final rule only requires that the rungs and steps of those ladders have a minimum clear width of 9 inches. Southern New England Telephone Co. said the revision was necessary because the ladder supported at the manhole opening reduces clearance for workers climbing through the manhole opening (Ex. OSHA-S041-2006-0666-0785). The commenter also said that using a narrower ladder provides more space for workers to negotiate the manhole opening, which makes it less likely that space restrictions could cause the worker to fall.
Third, final paragraph (b)(4)(iii), like the proposal, incorporates the exception in OSHA's Telecommunications rule (§ 1910.268(h)(5)) for rolling ladders used in telecommunications centers. That standard only requires that rungs and steps on rolling ladders used in telecommunication centers have a minimum clear width of 8 inches. OSHA notes that the final rule deletes the existing requirements in § 1910.268(h), and specifies that ladders used in telecommunications must meet the requirements in revised subpart D.
Final paragraph (b)(4)(iv) is a new requirement that addresses the minimum clear width for stepstools, which OSHA defines as a type of portable ladder (§ 1910.21(b)). The final rule specifies that stepstools must have a minimum clear width of at least 10.5 inches instead of the 11.5-inch minimum clear width that the final rule requires for other portable ladders. Although OSHA did not receive any comments on this issue, in accordance with section 6(b)(8) of the OSH Act (29 U.S.C. 655(b)(8)), the Agency added this provision to make the rule consistent with ANSI/ALI national consensus standards for wood and metal portable ladders (A14.1-2007 and A14.2-2007).
As mentioned above, final paragraph (b)(4) incorporates into this provision the language from a note in the proposal specifying the minimum clear width on fixed ladders is to be measured before installing ladder safety systems. OSHA included the information to help employers understand how OSHA measures clear width on fixed ladders for compliance purposes and has determined that the information may better serve employers in the actual provision, instead of in a note. OSHA did not receive any comments on the proposed provision.
Final paragraph (b)(5), like the proposal, adds a new requirement that employers ensure wooden ladders are not coated with any material that may obscure structural defects. Such defects, if hidden by coating or paint, could injure or kill workers if the defected ladder they step on breaks or collapses. OSHA drew the final rule from its construction ladder standard, which prohibits coating wood ladders with any “opaque covering” (§ 1926.1053(a)(12)), but adds language identifying the hazard that the provision will prevent (
Final paragraph (b)(5) does not carry forward the language in the construction and ANSI ladder standards that allows identification or warning labels to be placed on one face of the side rails. OSHA does not believe the language is necessary for two reasons. First, for purposes of final paragraph (b)(5), OSHA does not consider manufacturer-applied warning and information labels to be “coatings,” therefore, final paragraph (b)(5) does not prohibit placing labels on one side of side rails. Second, OSHA believes that the requirements in final paragraph (b)(9) to inspect ladders before initial use each workshift to identify defects, and the requirement in final paragraph (b)(10) to remove defective ladders from service, will ensure that employers do not use ladders with structural defects, even structural defects covered up by labels placed on the face of side rails. OSHA did not receive any comments on the proposed provision.
Final paragraph (b)(6) requires that employers ensure metal ladders are made with corrosion-resistant material or are protected against corrosion. For example, metal ladders coated or treated with material that resists corrosion will meet this requirement. Alternatively, employers may use metal ladders made with material that is inherently corrosion-resistant, such as aluminum. OSHA believes this provision is necessary to protect workers because rusty metal ladders can become weak or fragile, and can break when a worker steps on them. To illustrate, untreated metal ladders exposed to certain acids may experience chemical corrosion that could reduce the strength of the metal.
Final paragraph (b)(6) carries forward the language in OSHA's existing portable metal ladders standard (§ 1910.26(a)(1)), and is consistent with a similar provision in the existing fixed ladder standard (§ 1910.27(b)(7)(i)). The final rule also retains the language in the existing rule that employers do not have to protect metal ladders that are inherently corrosion resistant. In the proposed rule, OSHA preliminarily determined that this language was not necessary because ladders “protected against corrosion” included ladders made of inherently corrosion-resistant material. However, upon further analysis, OSHA believes that retaining the existing language (§ 1910.26(a)(i)) makes the final rule clearer and better reflects the purpose of this provision.
Final paragraph (b)(7), like the proposed rule, specifies that employers must ensure ladder surfaces are free of puncture and laceration hazards. Workers can suffer cuts and puncture wounds if a ladder has sharp edges or projections, splinters, or burrs. The final rule consolidates and simplifies OSHA's existing ladder requirements addressing puncture and laceration hazards (see §§ 1910.25(b)(1)(i) and (c)(2)(i)(f); 1910.26(a)(1) and (a)(3)(viii); and 1910.27(b)(1)(iv) and (b)(2)). Although final § 1910.22(a)(3) contains a similar general requirement, OSHA believes it is important to include language in final paragraph (b)(7) to emphasize the need to keep ladders free of such hazards to prevent injuries and falls. For example, a worker's instantaneous reaction to getting cut on a sharp projection could be to release his or her grip on the ladder, which could cause the worker to fall. OSHA did not receive any comments on the proposed provision.
Final paragraph (b)(8), like the proposed rule, requires that employers ensure ladders are used only for the purposes for which they were designed. OSHA believes, as the ANSI standards states, that “[p]roper use of [ladders] will contribute significantly to safety” (A14.1-2007, Section 8.1.5; A14.2-2007, Section 8.1.5; and A14.3-2008, Section 9.1.2). Improper use of a ladder can cause workers to fall.
Final paragraph (b)(8) revises the existing general industry ladder rules. Using performance-based language, final paragraph (b)(8) consolidates the existing general industry requirements on permitted and prohibited uses of ladders (§§ 1910.25(d)(2) and 1910.26(c)(3)(vii)). Those standards specify a number of uses that are clearly unsafe and, thus, prohibited, such as using ladders for scaffold planks, platforms, gangways, material hoists, braces, or gin poles. However, the existing rules do not, and could not, provide an exhaustive list of all unsafe uses. For example, the existing rules do not specifically prohibit self-supporting portable metal ladders to be used as a scaffold plank support system, yet such practices are clearly dangerous and an improper use of ladders. Therefore, final paragraph (b)(8) revises the existing rules to specify how employers must use ladders, instead of specifying a longer, but still incomplete, list of prohibitions. OSHA's approach to final paragraph (b)(8) is consistent with A14.3-2008, which states, “The guidelines discussed in this section do not constitute every proper or improper procedure for the maintenance and use of ladders (Section 9.1.1.).” Accordingly, the prohibited uses listed in the existing rules continue to be improper procedures for the use of ladders, which this final rule continues to prohibit.
Final paragraph (b)(8) is virtually identical to OSHA's construction ladder standard (§ 1926.1053(b)(4)), and is consistent with the ANSI ladder standards (A14.1-2007, Section 8.3; A14.2-2007, Section 8.3; and A14.3-2008, Section 9.1.2). Final paragraph (b)(8) does not carry forward the language in existing § 1910.26(c)(3)(vii), which prohibits employers from using ladders for certain purposes “unless specifically recommended for use by the manufacturer.” OSHA believes that requiring employers to use ladders “only for the purposes for which they were
Final paragraph (b)(9) requires that employers ensure ladders are inspected before initial use in each work shift, as well as more frequently as necessary. The purpose of this inspection is to identify visible defects that could affect the safe use and condition of the ladder and remove unsafe and damaged ladders from service before a worker is hurt. Employers may accomplish the visual inspection as part of the worker's regular procedures at the start of the work shift. The final rule differs in two respects from the existing and proposed standards. First, the final rule states more explicitly than the existing and proposed rules when the inspection of each ladder must be done: before using the ladder for the first time in a work shift. Two of OSHA's existing general industry rules require that employers inspect ladders “frequently” and “regularly” (§§ 1910.25(d)(1)(x) and 1910.27(f)). OSHA's construction ladder standard requires employers to inspect ladders “on a periodic basis” (§ 1926.1053(b)(15)).
In the proposed rule, OSHA sought to clarify the frequency of ladder inspections. OSHA drew on the language in its longshoring ladder standard (§ 1918.24(i)(2)) and A14.1-2007 and A14.2-2007. OSHA's longshoring standard requires that employers inspect ladders “before each day's use” (§ 1918.24(i)(2)), and the ANSI standards require that employers inspect ladders periodically, “preferably before each use” (A14.1-2007, Section 8.4.1.; and A14.2-2007, Section 8.4.1). Based on those standards, OSHA proposed that employers inspect ladders “before use.” OSHA intended the proposed language to mean that employers must ensure ladders are inspected before workers use them for the first time during a work shift. OSHA believes the language in final paragraph (b)(9) more clearly and directly states the Agency's intention.
Second, final paragraph (b)(9) adds language specifying that, in addition to inspecting ladders before they are used for the first time during the work shift, employers also must inspect ladders “as necessary” to identify defects or damage that may occur during a work shift after the initial check. OSHA believes that situations may arise or occur during a work shift that necessitate employers conducting additional inspections of ladders to ensure that they continue to remain safe for workers to use. For example, if a ladder tips over, falls off a structure (
Final paragraph (b)(9) provides employers with flexibility to tailor ladder inspections to the situations requiring them. For example, inspections conducted at the start of the work shift may include checking the ladder to ensure the footing is firm and stable, engaging spreader or locking devices to see if they work, and identifying whether there are missing or damaged components. If a ladder tips over, the employer may focus the inspection on identifying whether footing problems may have caused the
• Side rails for dents or bends;
• Rungs for excessive dents;
• All rung-to-side-rail connections;
• Hardware connections; and
• Rivets for shear (existing § 1910.26(c)(2)(vi)(a)).
OSHA believes this list of inspection procedures may be both over-inclusive and under-inclusive. For example, the existing rule does not specify that the inspection cover the ladder footing. OSHA believes that using performance-based language will allow employers to determine the scope of the inspection that may be necessary.
Finally, OSHA notes that the revisions simplifying final paragraphs (b)(8) and (9) are consistent with the goals of the Plain Language Act of 2010. OSHA did not receive any comments on these proposed provisions.
Final paragraph (b)(10), which is almost identical to the proposed rule, requires that employers immediately tag ladders with structural or other defects “Dangerous: Do Not Use” or similar language that is in accordance with § 1910.145. In addition, final paragraph (b)(10) requires that employers remove defective ladders from service until the employer repairs them in accordance with § 1910.22(d) or replaces them. Final § 1910.22(d)(2) contains a general requirement that employers correct, repair, or guard against “hazardous conditions on walking-working surface surfaces,” including ladders. However, OSHA believes it is important to also include a specific requirement in this section because falling from a defective ladder could seriously injure or kill workers. Final paragraph (b)(10) clearly instructs employers of the minimum procedures (
Final paragraph (b)(10) is a performance-based consolidation of the existing general industry, maritime, and construction requirements (§§ 1910.25(d)(1)(iii), (d)(1)(x), and (d)(2)(viii); 1910.26(c)(2)(vii); 1915.72(a)(1); 1917.119(e)(1); 1918.24(i)(1); and 1926.1053(b)(16)). Some of these standards are similar to the final rule, while other standards specify particular ladder defects that necessitate removing the ladder from service. For example, the construction ladder standard requires removal of ladders that have defects such as broken or missing rungs, cleats, or steps; broken rails; or corroded ladder components (§ 1926.1053(b)(16)), and the existing general industry portable wood ladders standard requires employers to replace frayed rope (§ 1910.25(d)(i)(iii)). The final rule simplifies the existing requirements by specifying that employers remove ladders that have “structural or other defects.” OSHA believes this approach will make the final rule easier to understand. As noted above, the defects listed in the existing rules in §§ 1910.25(d)(2)(viii) and 1910.26(c)(2)(vii)) continue to warrant removal of the ladder from service.
Final paragraph (b)(10) retains the key signal warning word “Dangerous” in existing § 1910.25(d)(1)(x). OSHA proposed to remove the word from the regulatory text and include it in guidance material. After further analysis, OSHA believes that retaining the signal word is necessary to get workers' attention to provide them with basic information that a hazard exists and they must not use the ladder. OSHA did not receive any comments on proposed paragraph (b)(10).
Final paragraphs (b)(11), (12), and (13), like the proposed rule, are companion provisions that establish safe work practices for climbing ladders. The final paragraphs are almost identical to OSHA's construction ladder standard (
Final paragraph (b)(11), like the existing (§ 1910.26(c)(3)(v)) and proposed rules, requires that employers ensure workers face the ladder when climbing up and down it. The final rule also is almost identical to OSHA's construction ladder standard (§ 1926.1053(b)(20)) and the ANSI ladder standards (A14.1-2007, Section 8.3.7; A14.2-2007, Section 8.3.7; and A14.3-2008, Section 9.2.1). Facing the ladder while climbing ensures that workers are able to maintain a firm grip on the ladder and also identify possible defects before climbing any higher. Accordingly, workers are to face the steps, not away from them, when climbing up and down mobile units.
To make final paragraph (b)(11) easier to understand, OSHA replaced the existing and proposed language “ascending or descending” with plain language: Climbing up and down. This revision is consistent with general comments recommending that OSHA make the final rule easier to read and understand (Exs. 53; 175). OSHA did not receive any comments on the proposed provision.
Final paragraph (b)(12), like the proposed rule, adds a new provision requiring that employers ensure workers use “at least one hand to grasp the ladder at all times when climbing up and down it.”
The final rule requires that employees “grasp” the ladder with at least one hand when climbing, which is equivalent to the requirement in A14.1-2007 and A14.2-2007 to “maintain a firm hold on the ladder” (A14.1-2007, Section 8.3.7.; A14.2-2007, Section 8.3.7). At the hearing, Ellis explained the importance of maintaining a firm grasp on the ladder at all times, “[F]alls happen very suddenly and unless you have your hand on something or your foot on something that's horizontal and flat or round * * * you're going to be surprised. And once you get to a few inches away the speed of the fall is such you can't reach—you can't grab, that's why you can't stop a fall” (Ex. 329 (1/21/2011), p.277). Many stakeholders said employers already train workers to use three-point contact when climbing ladders (
NCSG contended that an employer can comply with this requirement if its employees slide one hand along the rail of the ladder while climbing so that the other hand is free to carry an object (Ex. 150). It claimed that merely maintaining “contact” between the hand and the ladder at all times was sufficient (see Ex. 329 (1/18/2011), p. 289). OSHA does not agree that this technique is grasping the ladder within the meaning of paragraph (b)(12). It is important that a climber have a firm hold on the ladder
OSHA notes that the requirement that a worker maintain a firm grasp of the ladder with at least one hand at all times while climbing does not prohibit workers from carrying certain objects while they climb. However, any object a worker does carry must be of a size and shape that still allows the worker to firmly grasp the ladder with that hand while climbing.
OSHA received one comment on proposed paragraph (b)(12). Ellis Fall Safety Solutions (Ex. 344) recommended OSHA require that workers hold onto horizontal rungs and not side rails or ladder extensions. Ellis submitted a study showing that climbers cannot hold onto side rails or ladder extensions effectively if they begin to fall off the ladder. OSHA agrees with Ellis that grasping the ladder on horizontal rungs is preferable and encourages employers to follow this practice. However, OSHA also recognizes there may be times when it is necessary for employees to hold the side rails. OSHA is not aware of any reports that holding the side rails of ladders creates a problem when workers maintain three points of contact while climbing. In addition, OSHA notes that neither the construction ladder standard (§ 1926.1053(b)(21)) nor the ANSI/ALI consensus standards (A14.1-2007 and A14.2-2007) prohibit workers from holding onto ladder side rails while climbing.
Final paragraph (b)(13), like the proposed and construction ladder rules (§ 1926.1053(b)(22)), requires that employers ensure workers climbing ladders do not carry any objects or loads that could cause them to lose their balance and fall. As OSHA stated in the preamble to the construction ladder standard, the purpose of this provision is to emphasize the importance of proper and careful use of ladders when workers need to carry items to and from work spaces:
It is OSHA's belief that the employee's focus and attention while climbing up and/or down a ladder should be on making a safe ascent or descent and not on transporting items up and down the ladder (55 FR 47682).
As explained above, neither the final rule nor the construction ladder standard prohibit workers from carrying an object while climbing a ladder. The final rule allows workers to carry an object, provided they:
• Face the ladder while climbing (final paragraph (b)(11));
• Grasp the ladder with at least one hand at all times when climbing up and down the ladder, which will ensure workers maintain at least three points of contact (final paragraph (b)(12)); and
• Do not carry an object(s) that could cause them to lose their balance and fall (final paragraph (b)(13)).
Similarly, in the preamble to the construction ladder standard, OSHA said:
Although OSHA believes that small items such as hammers, pliers, measuring tapes, nails, paint brushes, and similar items should be carried in pouches, holsters, or belt loops, the language in the final rule would not preclude an employee from carrying such items while climbing a ladder so long as the items don't impede the employee's ability to maintain full control while climbing or descending the ladder (55 FR 47682).
Under both the final and construction rules, employers are responsible for ensuring that workers are able to maintain full control and balance while they are climbing. Employers also must ensure that carrying an object does not impede workers' control and balance, such as struggling to maintain their control or balance on the ladder. To that end, employers need to evaluate whether the weight and size of tools and other items workers use for jobs are such that workers can maintain their balance and grasp on the ladder while carrying the item in that hand or whether workers need to use other methods to get the items to the roof safely, such as using backpacks, making multiple climbs, or lifting items attached to ropes. NCSG said their members conduct evaluations (
Employers also need to ensure workers know what items they can and cannot carry while climbing ladders. NCSG agreed, saying they train workers so they “understand what items they are permitted to carry and how they should be carried so that they maintain a stable position while ascending and descending the ladder(s)” (Ex. 150). For example, OSHA does not believe workers can maintain the required balance and control if they must carry a heavy or bulky object in one hand while climbing.
NCSG raised several objections to proposed paragraphs (b)(12) and (13). NCSG said the requirements “would make it technically and economically infeasible for [chimney] sweeps to perform their work” because it would be impossible for workers to get items up to the roof if they cannot carry them in one hand and slide their other hand up the ladder rail while climbing (Ex. 150). OSHA does not believe the record supports NCSG's infeasibility contentions.
First, as stated above, final paragraphs (b)(12) and (13) do not prohibit workers from carrying an item when they climb a ladder. Workers can carry an object while climbing a ladder, provided they also can grasp the ladder with that hand during the climb. Some of the objects NCSG said their members carry are small enough that it would be possible for workers to hold them and grasp the ladder with the same hand.
Second, even if a worker cannot carry a particular object and still maintain a firm grasp on the ladder with that hand, there are a variety of other methods they can use to transport the object(s) to the roof and still allow the worker to firmly grasp the ladder with their hands. According to NCSG, member companies already use them. For example, NCSG said workers get tools and equipment, such as flashlights, mirrors, screwdrivers, wrenches, cameras, tape measures, and cleaning rods and brushes, up to the roof using backpacks, tool belts, and quivers (Ex. 150). For one story homes, NCSG said workers lean roof hook ladders against the eaves and pull the ladder up once they have climbed up on the roof (Ex. 329 (1/18/2011), p. 342).
If the job is a major repair (
OSHA believes that chimney sweep companies also can use handlines and ropes to pull heavy or bulky items up on the roof. OSHA believes this method will work particularly well for getting chimney caps and roof hook ladders to the roof, both of which NCSG said do not fit into backpacks. Pulling up materials to the roof is a common practice in the construction industry. In the preamble to the construction ladder standard, OSHA said workers take “large or heavy” items to the roof by
NCSG claimed that using handlines to lift items to roofs would be “economically infeasible” because it could not be done without the assistance of a second person, which they claim would increase job costs by about 30 percent. OSHA finds this claim unsupported by the record. NCSG did not explain or provide evidence about why a second worker would be necessary in such instances. In addition, NCSG did not provide any support for its claim that costs would increase by 30 percent.
Finally, NCSG contended that complying with final paragraphs (b)(12) and (13) would create a greater hazard for workers than allowing them to carrying objects up ladders with one hand while sliding the other hand up the ladder rails (Ex. 150). In particular, they said that attaching work tools and other items to a rope and lifting them to the roof would create a greater fall hazard because workers must be “right at the roof's edge to keep the item in view and lift it onto the roof” (Ex. 150). To establish that an OSHA standard creates a greater hazard an employer must prove, among other things, that the hazards of complying with the standard are greater than those of not complying, and alternative means of employee protection are not available (
NCSG has not provided any evidence to establish that complying with final paragraphs (b)(12) and (13) or using other methods to get objects up to the roof is more dangerous than allowing employees to carry objects, regardless of their weight and size, in one hand while sliding the other hand up ladder rails while they climb the ladders. In fact, an NCSG witness testified that the greatest fall hazard is the “ladder-to-roof transition” (Ex. 329 (1/18/2011), p. 333). The transition is made even more hazardous if workers are carrying heavy or bulky objects in one hand and trying to get onto the roof by sliding the other hand along the ladder rail.
NCSG also maintained that pulling items up to the roof with handlines would require workers to be at the roof's edge, where they will be at risk of falling. NCSG did not provide any evidence to support that claim. OSHA notes that the final rule requires workers to use fall protection while working at the edge of a roof.
Finally, although NCSG said they were “not aware of any feasible alternatives to carrying items in one hand and sliding the other hand up the ladder rail, NCSG identified several alternatives that they currently are using. NCSG said workers put tools and other items in backpacks, tool belts, and quivers so they can climb ladders with both hands free, instead of carrying the objects in their hands (Ex. 150). With the exception of roof hook ladders and chimney caps, NCSG said they are able to get all items up to the roof in backpacks, tool belts, and quivers. OSHA also believes that handlines and ropes are feasible to safely lift chimney caps and roof hook ladders.
Final paragraph (c), like the proposed rule, sets forth requirements for portable ladders. The requirements in final paragraph (c) are in addition to the requirements in final paragraph (b) that apply to all ladders this section covers. The final rule defines “portable ladder” as a ladder that can be readily moved or carried, and usually consists of side rails joined at intervals by steps, rungs, or cleats (§ 1910.21(b)).
To further OSHA's goal of making the final rule clearer and easier to read, final paragraph (c) replaces existing detailed design and construction specifications with more flexible performance-based language. By doing so, OSHA was able to make other revisions that will increase employers' and workers' understanding of the final rule. First, using performance-based language allowed OSHA to combine the existing requirements for portable wood (existing § 1910.25) and portable metal ladders (existing § 1910.26), thereby eliminating unnecessary repetition. Second, it allowed OSHA to remove the exceptions in existing § 1910.25(a) for “special” types of ladders, including orchard ladders, stock room step ladders, and library ladders. Final paragraph (c) covers all of those ladders to the extent that employers use them in general industry operations. Finally, it also allows OSHA to remove the separate requirements for certain types of portable ladders such as painter's stepladders, mason's ladders, and trolley and side-rolling ladders.
Final paragraph (c)(1), like the existing and proposed rules, requires that employers minimize slipping hazards on portable metal ladders. Accordingly, the final rule specifies that employers must ensure rungs and steps of portable metal ladders are corrugated, knurled, dimpled, coated with skid-resistant material, or otherwise treated to minimize the possibility of slipping. Final paragraph (c)(1) is the same as OSHA's construction ladder standard (§ 1926.1053(a)(6)(ii)), and is consistent with A14.2-2007 (Section 5.5). Ellis (Ex. 155) supported skid-resistance on ladder steps. There were no opposing comments on the provision.
Final paragraph (c)(2), like the proposal, retains existing requirements (§§ 1910.25(c)(2)(i)(
The OSHA construction ladder standard also requires that stepladders have spreaders or locking devices (§ 1926.1053(a)(8)). In addition, the A14.1-2007 and A14.2-2007 standards require spreaders or locking devices for stepladders, and A14.2-2007 requires that combination ladders and trestle ladders also have those devices (A14.1-2007, Section 6.2.1.6; and A14.2-2007, Sections 6.1.9, 6.5.8, 6.6.8). The proposed rule would have required that stepladders be “designed” with spreaders or locking devices; the final rule clarifies that the stepladder must be “equipped” with those devices when used by an employee.
Final paragraph (c)(2) does not retain language in the existing rules requiring that employers remove or cover sharp points or edges on spreaders (§§ 1910.25(c)(2)(i)(
Final paragraph (c)(3) requires that employers not load portable ladders beyond their maximum intended load. A note to final paragraph (c)(3) reminds employers that maximum intended load includes the weight and force of workers and the tools, equipment, and materials workers are carrying, which is consistent with the definition of “maximum intended load” in final § 1910.21(b).
The final rule differs from both the existing and proposed rules. The existing rule requires that portable ladders be capable of withstanding a 200-pound load. In the proposed rule, OSHA required that employers ensure that the weight on portable ladders not exceed the weight “for which they were designed and tested, or beyond the manufacturer's rated capacity.”
After further analysis, OSHA removed the proposed language from final paragraph (c)(3) for the following reasons. First, OSHA believes that requiring employers to ensure each ladder supports its maximum intended load is comprehensive, and the additional language in the proposed rule is not necessary. OSHA believes that the language in the “maximum intended load” definition (
Second, removing the additional language in the proposal makes final paragraph (c)(3) consistent with final § 1910.22(b), and easier to understand. Third, OSHA believes that including the proposed language “manufacturer's rated capacity” in the final rule may cause confusion about whether the provision applies to both job-made ladders and manufactured ones. The language in the final standard clearly reads that the requirement applies to all types of portable ladders.
OSHA notes that, unlike the performance-based language in final paragraph (c)(3), the construction ladder standard requires that portable ladders meet specific load requirements (§ 1926.1053(a)(1)). As discussed above, one of the goals of this rulemaking is to make the final rule consistent with the construction standard. Accordingly, OSHA will consider employers who ensure their portable ladders meet the load requirements in § 1926.1053(a)(1) as being in compliance with final paragraph (c)(3). OSHA did not receive any comments on the proposed provision and finalizes the provision as discussed.
Final paragraph (c)(4), like the proposed rule, requires that employers ensure portable ladders are used only on stable and level surfaces unless they are secured or stabilized to prevent accidental displacement. When the footing of ladders is not stable or level and the ladder is not secure, the ladder can slip out of place or tip over because of workplace activities, traffic, and weather conditions (
The final rule consolidates and revises the existing portable ladder rules, which requires placing portable ladders so they have “secure footing” (§§ 1910.25(d)(2)(iii) and 1910.26(c)(3)(iii)). The final rule further clarifies that employers can ensure secure footing for portable ladders either by (1) placing them on a stable and level surface, or (2) securing or stabilizing them.
Depending on the type of ladder and the conditions of use, securing or stabilizing portable ladders may be as simple as using swivel or rubber ladder feet, or may involve more complex procedures such as using ladder levelers to equalize side rail support. The A14.1-2007 and A14.2-2007 standards provide useful guidance about methods employers can use to secure portable ladders, including foot ladder boards and similar devices.
Final paragraph (c)(4) does not carry forward language in existing § 1910.25(d)(2)(iii) requiring that the top rest for portable ladders be reasonably rigid and have ample strength to support the supplied load. OSHA believes final paragraph (c)(10) adequately addresses the hazard, so the language in the existing rule is no longer needed. The final rule requires placing the bottom and top of ladder side rails on a stable and level surface, or securing and stabilizing the ladder. Unless the employer addresses the stability of both ends of the ladder, the ladder is not safe for workers to use.
Final paragraph (c)(4) is almost identical to OSHA's construction ladder standard (§ 1926.1053(b)(6)), and is consistent with OSHA's maritime ladder standards (§§ 1915.72(a)(3); 1917.119(f)(8); and 1918.24(j)(1) and (2)). The final rule also is consistent the A14 portable ladder standards (A14.1-2007, Section 8.3.4; and A14.2-2007, Section 8.3.4). OSHA did not receive any comments on the proposed provision.
Final paragraph (c)(5), like the existing and proposed rules, requires that employers ensure workers do not use portable single-rail ladders. OSHA's construction ladder standard (§ 1926.1053(b)(19)), which also prohibits using single-rail ladders, defines them as “a portable ladder with rungs, cleats, or steps mounted on a single rail instead of the normal two rails used on most other ladders” (§ 1926.1050(b)). In the preamble to the final construction ladder rule, OSHA said, “Single-rail ladders are inherently difficult to use because of their instability” (55 FR 47681). OSHA believes that use of single-rail ladders in general industry also poses the same hazards. OSHA notes the prohibition in the existing rule has been in place since OSHA adopted it in 1971 from national consensus standards available at the time.
Although the A14.1-2007 standard does not contain the prohibition on single-rail ladders that was in A14.1-1968, OSHA believes it is clear that A14.1-2007 and A14.2-2007 do not cover or endorse their use. The definition of portable ladder in both of these standards indicates that they consist of “side rails, joined at intervals by rungs, steps, cleats or rear braces” (A14.1-2007, Section 4; and A14.2-2007, Section 4). OSHA notes that A14.1-2007 and A14.2-2007 do not address single-rail ladders, which indicates that their use is not generally accepted industry practice.
Mr. Robert Miller, a senior safety supervisor with Ameren, opposed the prohibition on single-rail ladders, arguing:
I don't feel it is necessary to eliminate what for an employer may be the safest most feasible method of accessing another level of the work area if that employer can show by training, performance and history that the single rail ladder poses no greater hazard than another method (Ex. 189).
Mr. Miller recommended that OSHA allow employers to demonstrate by training, performance, and history that the single-rail ladder poses no greater hazard than any other method (Ex. 189). However, Mr. Miller did not provide a single example of when using a single-rail ladder would be as safe, or safer, than using portable ladders with two side rails. Accordingly, Mr. Miller did not convince OSHA to remove from the final standard the prohibition on using single-rail ladders.
OSHA notes that, in an enforcement action, employers may raise the affirmative defense of greater hazard. Employers raising this defense have the
Final paragraph (c)(6), like the proposal, adds a new requirement that employers ensure a ladder is not moved, shifted, or extended while a worker is on it. Moving, shifting, or extending an occupied ladder is dangerous to workers, whether it is the worker on the ladder who moves (“hops”) it or a worker on the ground who moves the ladder while a worker is on the ladder. Moving, shifting, or extending an occupied ladder could cause the worker to fall off the ladder or cause the ladder to tip over. According to the A14.1-2007 standard, a leading factor contributing to falls from portable ladders is movement of the ladder (A14.1-2007, Section 8.1.5).
OSHA drew this provision from the construction ladder standard (§ 1926.1053(b)(11)). The A14.1-2007 and A14.2-2007 standards also prohibit “relocating” a ladder while a worker is on it (A14.1-2007, Section 8.3.15; and A14.2-2007, Section 8.3.15). OSHA did not receive any comments on the proposed provision.
Final paragraph (c)(7), consistent with the proposed rule, requires that employers ensure ladders placed in locations where other activities or traffic can displace them (
• Secured to prevent accidental displacement (final paragraph (c)(7)(i)); or
• Guarded by a temporary barricade, such as a row of traffic cones or caution tape, to keep activities or traffic away from the ladder (final paragraph (c)(7)(ii)).
Final paragraph (c)(7) is consistent with the existing rule, which requires that employers must not place ladders in front of doors unless the door is blocked, locked, or guarded (§ 1910.25(d)(2)(iv)). OSHA believes the final rule retains the flexibility of the existing rule and identifies additional measures employers can use to prevent activities and traffic from striking ladders that are near passageways, doorways, or driveways, which may cause workers located on the ladders in those areas to fall. For example, to prevent injury to workers while they work on ladders by a doorway, employers can “secure” the area by simply locking the door so no one can open it and strike the ladder, or “guard” the door using a temporary barricade of traffic cones or caution tape. If the doorway is a required exit route (see 29 CFR part 1910, subpart E) that cannot be locked or blocked, the final rule allows employers the flexibility to “guard” the doorway by posting a monitor to control passage through the door.
Final paragraph (c)(7) is almost identical to OSHA's construction ladder standard (§ 1926.1053(b)(8)). It also is consistent with A14.1-2007 (Section 8.3.12) and A14.2-2007 (Section 8.3.12).
Final paragraph (c)(8) requires that employers ensure that employees do not use the cap, if equipped, and the top step of a stepladder as steps. The purpose of final paragraph (c)(8) is to clarify that the existing and proposed rules, which state that employers must not use the “top of a stepladder,” includes both the top step of the stepladder and top cap of the stepladder. Using either surface as a step may decrease the ladder's stability and cause it to fall over, injuring the worker.
Final paragraph (c)(8) is almost identical to OSHA's construction ladder standard (§ 1926.1053(b)(13)), and is consistent with both A14.1-2007 (Section 8.3.2(1)) and A14.2-2007 (Section 8.3.2(1)). OSHA did not receive any comments on the proposed provision.
Final paragraph (c)(9) requires that employers ensure portable ladders used on slippery surfaces are secured and stabilized. For the purposes of this paragraph, slippery surfaces include, but are not limited to, environmental (
The final rule gives employers flexibility in selecting measures to secure or stabilize ladders that they use. Consistent with OSHA's construction ladder standard (§ 1926.1053(b)(7)), in appropriate situations employers may use ladders equipped with slip-resistant feet to secure and stabilize them on slippery surfaces. However, employers may not be able to rely on the use of ladders with slip-resistant feet in all cases where surfaces are slippery. In some conditions it may be necessary for employers to take additional or other measures, such as lashing, to secure and stabilize portable ladders. For example, the construction ladder standard specifies that slip-resistant feet shall not be used as a substitute for holding a ladder that is used upon slippery surfaces including, but not limited to, flat metal or concrete surfaces that are constructed so they cannot be prevented from becoming slippery (§ 1926.1053(b)(7)).
OSHA notes the final rule covers all portable ladders while the proposed rule only would have applied the requirement to portable ladders that are not self-supporting. OSHA revised the final rule for two reasons. First, although under final paragraph (c)(4) OSHA considers slippery surfaces to be unstable for all types of portable ladders, the Agency is expressly applying final paragraph (c)(9) to all portable ladders to make sure the hazard is clearly addressed. For example, self-supporting ladders that are not equipped with slip-resistant feet can move or slide in slippery conditions, which can cause the worker to fall off the ladder. The revision ensures that the final rule protects workers from this hazard.
Second, the revision of final paragraph (c)(9) makes the provision consistent with the construction ladder standard, which applies to all ladders (§ 1926.1053(b)(7)). Applying final paragraph (c)(9) to all portable ladders also makes the final rule consistent with A14.1-2007 (Section 8.3.4) and A14.2-2007 (Section 8.3.4), which address all wood and metal portable ladders, as well as Section 6(b)(8) of the OSH Act (29 U.S.C. 655(b)(8)). Section 6(b)(8) specifies that whenever an OSHA standard differs substantially from an existing national consensus standard, the Agency must explain why the adopted rule better effectuates the purposes of the OSH Act. OSHA believes the revised provision will protect all workers using any type of portable ladder, and therefore best effectuates the OSH Act. OSHA did not receive any comments on the proposed provision.
Final paragraph (c)(10), like both the existing and proposed rules, requires that employers ensure that employees place the top of non-self-supporting ladders so that both side rails are supported, unless the ladders are equipped with single support attachments. Final paragraph (c)(10) revises the existing rule (§ 1910.26(c)(3)(iv)) by adding the term “non-self-supporting” to clarify that it is non-self-supporting ladders that need to be supported before workers attempt to use them. Self-supporting ladders must not be used as non-self-supporting
Final paragraph (c)(11), like the existing and proposed rules, requires that employers ensure portable ladders used to gain access to an upper landing surface have side rails that extend at least 3 feet above the upper landing surface. OSHA believes that retaining the existing requirement is important because transitioning from ladders to upper landing surfaces is hazardous to workers. Requiring the ladder side rails to extend 3 feet above the upper landing surface ensures that workers have adequate support and hand holds so they can access the upper landing surface safely. OSHA's construction ladder standard (§ 1926.1053(b)(1)), A14.1-2007 (Section 8.3.10), and A14.2-2007 (Section 8.3.10) also require that portable ladders extend 3 feet above the upper landing surface.
OSHA received one comment on the proposal. Ellis Fall Safety Solutions (Ex. 329 (1/21/2011, p. 260)) said OSHA should recognize attaching extensions onto the end of side rails as an acceptable means to comply with the 3-foot extension requirement. In the proposal, OSHA noted that employers may use after-market ladder extensions to increase the length of a ladder to meet proposed paragraph (c)(11), provided:
• The after-market rail extensions “are securely attached (that is, secured to the extent necessary to stabilize the extension and not expose the employee to a falling hazard from the extension's displacement)”; and
• The ladder to which the after-market rail extensions is attached is “specifically designed for the application” in accordance with proposed paragraph (c)(14).
OSHA said that side-rail extensions that meet these requirements “would be considered part of the ladder itself” (75 FR 28877). In 2005, OSHA permitted use of after-market rail extensions under the construction ladder standard if the ladders meet the requirements above (see letter to Mr. Bruce Clark, president of American Innovations Corporation, December 22, 2005).
Final paragraph (c)(12), like proposed paragraph (c)(13), requires that employers not use ladders and ladder sections tied or fastened together to provide added length unless the ladder design specifically permits such use. The purpose of the final paragraph is to prevent the use of unsafe rigging methods and to use ladders only as they were intended. Ladders gerry-rigged to provide longer lengths are not likely to be as strong and stable as ladders designed to reach such heights.
Limiting fastening together ladders and ladder sections to those “specifically designed for such use” means that the designer developed both the ladders and any mechanism used to connect them specifically to achieve greater length. The final rule revises existing § 1910.26(c)(3)(v), which specifies that the manufacturer must equip the ladders and ladder sections with necessary hardware fittings, if the manufacturer endorses allowing such ladder extensions, to ensure that the requirement covers both manufactured and job-made ladders and ladder sections. Therefore, under the final rule the ladder designer, regardless of whether employed by the employer, a manufacturer, or other company, must develop the ladder or ladder section specifically for the purpose of fastening them together to extend the length of the ladder or the employer must not fasten the ladder or ladder sections together. Final paragraph (c)(12) is consistent with existing § 1910.25(d)(2)(ix), A14.1-2007 (Section 8.3.11), and A14.2-2007 (Section 8.3.11).
Final paragraph (c)(13) retains the language in existing § 1910.25(d)(2)(v), which prohibits placing ladders on boxes, barrels, or other unstable bases to obtain additional height. The proposed rule (proposed paragraph (c)(14)) prohibited employers from increasing the reach of ladders and ladder sections by any means not permitted specifically by the design of the ladders. After further analysis, OSHA believes the language in the existing rule is clearer and easier to understand than the proposed language. The language also is the same as A14.1-2007 (Section 8.3.4) and A14.2-2007 (Section 8.3.4).
For the purposes of final paragraph (c)(13), unstable bases include surfaces such as vehicles, truck flatbeds, scaffolds, and stairs. OSHA received one comment on the proposed provision. Southern Company (Ex. 192) asked whether paragraph (c)(13) prohibited the use of ladder-leveling devices that extend the reach of the ladder. Final paragraph (c)(12) addresses fastening together ladders and ladders sections. However, OSHA does not consider ladder-leveling devices to be ladders or ladder sections. Rather they are devices attached to ladder side rails and allow for independent adjustment of the rails to ensure the ladder is level. Like the A14 standards, OSHA considers ladder-leveling devices to be “ladder accessories . . . that may be installed on or used in conjunction with ladders” (A14.1-2007, Section 1.1; and A14.2-2007, Section 1.1). Although ladder-leveling devices may be temporary or permanent attachments to the ladder, OSHA does not consider ladder-leveling devices to be “part of the ladder itself” (75 FR 28877). Therefore, final paragraph (c)(13) does not apply to ladder-leveling devices, even if they increase the length of the ladder.
That said, other provisions in §§ 1910.22 and 1910.23 (
Final paragraph (d) establishes requirements that apply to fixed ladders, in addition to the requirements in final paragraph (b). The final rule defines “fixed ladder” as a ladder, with side rails or individual rungs, that is permanently attached to a structure, building or equipment (§ 1910.21(b)). Fixed ladders do not include ship stairs, stepbolts, or manhole steps.
Final paragraph (d)(1), like the proposed rule, establishes a
The performance-based language in final (d)(1) replaces the detailed specification requirements in the existing rules (§ 1910.27(a)(1)(i) through (iv) and (a)(2)). OSHA requested comment on whether the Agency should retain the specification requirements in existing § 1910.27(a)(1), but did not receive any comments.
OSHA did not adopt proposed paragraph (d)(2) as a companion to proposed paragraph (d)(1). Proposed paragraph (d)(2) required that employers ensure fixed ladders installed on or after 150 days after issuing the final rule meet specific design, construction, and maintenance requirements, including supporting two 250-pound live loads. The existing rule requires that fixed ladders support a single concentrated 200-pound load (§ 1910.27(a)(1)). After additional analysis, OSHA decided to adopt proposed paragraph (d)(1), and not retain existing § 1910.27(a) or adopt proposed paragraph (d)(2). First, OSHA believes the maximum load requirement in final paragraph (d)(1) is as safe as, or more protective than, the existing and proposed rules. Final paragraph (d)(1) requires that employers ensure that a fixed ladder meets the maximum load that the designer specifically established for that particular fixed ladder. OSHA believes that following the load requirement established for a particular ladder is at least as safe as a general specification (200 or 250 pounds) applied to all fixed ladders.
Second, OSHA believes the performance-based approach in final paragraph (d)(1) is easier to understand and follow than the minimum weight specifications in the existing and proposed rules. In addition, the final rule gives employers greater flexibility in selecting and using fixed ladders. OSHA notes that Ameren (Ex. 189), among other commenters, supported the use of performance-based language for this and other provisions in the final rule.
Third and finally, not adopting the proposed rule, which had an effective date 150 days after publication of the final rule, addresses commenters' concerns that that OSHA failed to give adequate lead-in time to come into compliance with the new requirement (Exs. 189; 192).
Final paragraph (d)(2), like proposed paragraph (d)(3), requires that employers ensure the minimum perpendicular distance from the ladder to the nearest permanent object in back of the ladder is 7 inches. The final rule requires that this distance be measured from the centerline of the fixed ladder steps and rungs or grab bars, or both, to the object in back of the ladder (
Final paragraph (d)(2), like the proposal, revises the existing rule (§ 1910.27(c)(4) and (5)) in several ways. First, the final rule replaces the existing 4-inch minimum perpendicular distance for grab bars with a 7-inch minimum clearance. To ensure worker safety while they climb fixed ladders and transition to upper landing surfaces, OSHA believes that the minimum perpendicular distance for grab bars needs to be the same as the minimum perpendicular distance specified for ladder rungs and steps.
Second, final paragraph (d)(2) eliminates an exception from the 7-inch clearance requirement for “unavoidable obstructions” (§ 1910.27). OSHA stated in the preamble to the final construction ladder standard that “the minimum clearance requirement is necessary, regardless of any obstructions, so that employees can get safe footholds on ladders” (55 FR 47675).
Third, final paragraph (d)(2) adds a new exception that reduces the minimum perpendicular clearance in elevator pits to 4.5 inches. OSHA drew this exception from the construction ladder standard (§ 1926.1053(a)(13)). The exception is consistent with the ANSI/ASME A17.1-2010, Safety Code for Elevators and Escalators (Section 2.2.4.2.4) (Ex. 380). Generally, space in elevator pits is restricted, and it may not be possible to have a 7-inch clearance. In the preamble to the construction ladder standard, OSHA said the exception for elevator pit ladders was appropriate because elevator shafts generally are secure from unauthorized access (55 FR 47675). As such, only workers who have the required equipment and fall protection training would be accessing the elevator pit (55 FR 47675). Under the final rule, employers must train each worker in the proper use of equipment, including fixed ladders, before permitting any worker to use the equipment (§ 1910.30(b)(1)).
One of OSHA's goals in revising the existing rule (§ 1910.27(c)(4)) was to make the final rule consistent with OSHA's construction ladder standard, and final paragraph (d)(2) is almost the same as that rule (§ 1926.1053(a)(13)). The construction standard also contains language specifically indicating that the required 7-inch clearance also applies to obstructions. In addition, the final rule is consistent with the 7-inch minimum perpendicular distance in existing § 1910.27(c)(4) and A14.3-2008 (Section 5.4.2.1).
OSHA received one comment from Southern Company (Ex. 192). They asked to grandfather in the existing requirement because they have many fixed ladders and “[r]edesigning or moving any of these ladders to avoid these obstructions could be expensive or in some cases infeasible.” OSHA does not believe that grandfathering is necessary. The Agency believes the vast majority of fixed ladders currently in use comply with the final requirement because the final rule reflects requirements in place under ANSI A14.3 since 1974. In addition, OSHA's construction standard has required the same clearance since the Agency adopted it in 1994.
Final paragraphs (d)(3) through (8) establish requirements for ladder extension areas to ensure that workers are able to transition safely from the fixed ladder to the landing surface. In particular, several of the provisions apply to through and side-step ladders. The A14.3-2008 standard defines through ladders as rail ladders that require a worker getting off to step through the ladder to reach the landing (A14.3-2008, Section 3). That standard also defines side-step ladders as rail ladders that require workers getting off at the top to step sideways from the ladder to reach the landing (A14.3-2008, Section 3).
Final paragraph (d)(3), like the existing (§ 1910.27(c)(5)) and proposed rules, requires that employers ensure grab bars on the climbing side do not protrude beyond the rungs of the ladder they serve. The final rule defines grab bars as individual vertical or horizontal handholds that provide access above the ladder height (§ 1910.21(b)). Grab bars that protrude beyond the rungs of the ladder can be hazardous because they make it more difficult to climb and transition to landing surfaces. To illustrate, having the grab bars protrude further than the ladder would put the worker at an angle greater than 90 degrees and make climbing and holding
Final paragraph (d)(4), like the proposed rule, establishes requirements for through and side-step ladders, including those ladders used on buildings with parapets. The final rule requires that employers ensure the side rails of through or side-step ladders extend 42 inches above the top of the access level or platform served by the ladder.
Final paragraph (d)(4) also adds language specifying what constitutes the “access level” for through and side-step ladders on buildings that have parapets. When a parapet has an opening that permits passage through it (
Final paragraph (d)(5), like the existing (§ 1910.27(d)(3)) and proposed rules, specifies that employers ensure that there are no steps or rungs on the portion of the through ladder extending above the access level. It is obvious that this requirement is necessary to allow workers to pass the ladder and step onto the upper landing surface. The final rule is the same as OSHA's construction ladder standard (§ 1926.1053(a)(25)) and A14.3-2008 (Section 5.3.2.2).
In addition, final paragraph (d)(5), like the proposed rule, also requires flared extensions of the side rails above the access level to provide clearance of not less than 24 inches and not more than 30 inches. The final rule increases the existing clearance width (from 18 to 24 inches) between the side rails. OSHA believes the additional clearance will help to ensure that workers equipped with personal fall protection systems, tools, and other items have adequate space to negotiate the pass-through area and reach the upper landing safely. The increased clearance width makes the final rule consistent with OSHA's construction standard (§ 1926.1053(a)(25)) and A14.3-2008 (Section 5.3.2.2).
Final paragraph (d)(5) adds a new clearance width requirement for through ladders equipped with ladder safety systems. In those cases, the final rule requires that employers ensure the clearance between side rails of the extensions does not exceed 36 inches. The new provision makes the final rule consistent with OSHA's construction ladder standard (§ 1926.1053(a)(25)). OSHA did not receive any comments on the proposed provision.
Final paragraph (d)(6), like the proposed rule, adopts a performance-based revision of the existing rule for side-step ladders (§ 1910.27(d)(3)). Accordingly, the final rule requires that employers ensure the side rails, rungs, and steps of side-step ladders be continuous in the extension. The existing rule, by contrast, specifies that the landings of side-step or off-set fixed ladder sections have side rails and rungs that extend to the next regular rung above or beyond the 42-inch minimum extension. OSHA believes the performance-based revision makes the final rule easier to understand and follow. The final rule is consistent with OSHA's construction standard (§ 1926.1053(a)(24)) and A14.3-2008 (Section 5.3.2.3).
Final paragraphs (d)(7) and (8) specify criteria for grab bars. Final paragraph (d)(7), like the proposed rule, requires that employers ensure grab bars extend 42 inches above the access level or landing platforms of the ladder, which is the same height required for side rails in the extension area of through and side-step ladders (see final paragraph (d)(4)). Final paragraph (d)(7) revises and clarifies the existing rule (§ 1910.27(d)(4)), which states that grab bars “be spaced by a continuation of the rung spacing when they are located in the horizontal position,” and have the same spacing as ladder side rails when located in the vertical position. The final rule identifies, more clearly and exactly, the required location (
OSHA drew the language in final paragraph (d)(7), in part, from its construction ladder standard (§ 1926.1053(a)(27)) and A14.3-2008 (Sections 5.3.3.1 and 5.3.3.2). The final rule expands application to grab bars on all fixed ladders; OSHA's construction ladder standard and A14.3-2008 only apply to individual-rung ladders. Also, the final rule does not include the exception in OSHA's construction standard and A14.3-2008 for manhole steps, covers, and hatches because manhole steps are not considered ladders in this rule and are covered in a separate section (final § 1910.24). OSHA did not receive any comments on the proposed provision.
Final paragraph (d)(8), like the existing (§ 1910.27(d)(4)) and proposed rules, requires that employers ensure the minimum size (
OSHA received one comment about grab bars. Nigel Ellis, Ellis Safety Solutions, LLC (Ex. 155), recommended that the final rule require horizontal grab bars, especially if the length of vertical grab bar exceeds 6 inches. He pointed to a study (Young et al., “Hand-hold Coupling: Effect of Handle Shape, Orientation, and Friction on Breakaway Strength,” 51 Human Factors 705, October 2009) showing that breakaway strength (
OSHA agrees that horizontal bars provide the possibility of stronger grips than vertical ones in the event of a fall from a ladder when a ladder safety system or a personal fall protection system is not taken into account. However, horizontal grab bars do not provide the level of protection from falls that ladder safety systems and personal fall protection systems provide. Given that ladder safety systems and personal fall protection systems will increasingly protect workers who climb ladders from falling, OSHA does not believe is it necessary at this point to require installation of horizontal grab bars when any vertical grab bar exceeds 6 inches.
Final paragraph (d)(9), like the proposed rule, establishes two requirements for ladders that terminate at hatch covers. First, the final rule requires that employers ensure that the hatch cover opens with sufficient clearance to provide easy access to or from the ladder (see final paragraph (d)(9)(i)). Second, the final rule requires
Final paragraph (d)(9), like the proposal, revises the existing rule in two ways. First, the final rule increases to 70 degrees the angle to which counterbalanced hatch covers must open. The existing rule only requires that hatch covers open a minimum of 60 degrees, but also specifies that the minimum distance from the centerline of the top rung be at least 24 inches for ladders with “offset wells,” and at least 30 inches for “straight wells.” OSHA believes that increasing the opening to 70 degrees will ensure that the space between the top rung and hatch provides adequate clearance regardless of what type of fixed ladder is used.
Second, the final rule replaces the specification requirement in the existing rule with performance-based language. The performance-based language ensures that the final rule provides a level of worker safety that is as great as or greater than the existing rule, but gives employers the flexibility to determine how counterbalanced hatch covers will open to 70 degrees. The performance-based language also makes final paragraph (d)(9) clearer and easier to follow than the existing rule. The final rule is consistent with A14.3-2008 (Section 5.3.4.2). OSHA notes that A14.3-2008 also includes language similar to the specification language in the existing rule, but the language is only advisory. OSHA did not receive any comments on the proposed provision.
Final paragraph (d)(10), like the existing (§ 1910.27(b)(1)(v)) and proposed rules, requires that employers ensure that the construction of individual-rung ladders will prevent the worker's feet from sliding off the ends of the rungs (Figure D-4 in regulatory text illustrates). OSHA believes this requirement is essential because individual-rung ladders do not have side rails to block the worker's feet from sliding off the rung. Final paragraph (d)(10) is the same as OSHA's construction industry standard (§ 1926.1053(a)(5)). OSHA did not receive any comments on the proposed provision.
Final paragraph (d)(11), like the proposed rule, requires that employers ensure workers do not use fixed ladders that have a pitch greater than 90 degrees from the horizontal. A ladder that exceeds a pitch of 90 degrees makes the ladder dangerous to climb because pitch greater than 90 degrees would require climbers to exert considerable extra force to maintain their grip on the ladder against the gravitational force. The final rule revised the specification approach in the existing requirements (§ 1910.27(e)(1) through (4)), and replaces it with performance-based language. OSHA believes much of the language in the existing rule continues to provide useful information best included in compliance-assistance documents. OSHA did not receive any comments on the proposed paragraph.
Final paragraph (d)(12), like the proposed rule, addresses step-across distances for through and side-step ladders. Specifically, final paragraph (d)(12)(i) requires that employers ensure the step-across distance for through ladders is not less than 7 inches, and not more than 12 inches, to the nearest edge of the structure, building, or equipment accessed from the ladders, measured from the centerline of the ladder. Final paragraph (d)(12)(ii) requires that employers ensure the step-across for side-step ladders is at least 15 inches, but not more than 20 inches, measured from the centerline of the ladder to the nearest point of access on the platform edge.
The final rule, like the proposal, revises the existing rule in § 1910.27(c)(6) in several ways. First, the final rule establishes specific step-across distances for each through and side-step ladder (§ 1910.27(c)(6)). The existing rule establishes a single step-across distance applicable to all fixed ladders. Compared to the existing rule, OSHA believes the final rule more appropriately tailors the step-across distances to the type of ladder used, which improves worker safety.
Second, final paragraph (d)(12) revises the existing step-across distance (
Third, the final rule does not retain the companion provision in the existing rule (§ 1910.27(d)(1)) that requires employers to provide a landing platform if the step-across distance is greater than 12 inches. OSHA believes that the final rule already addresses this issue; therefore, it is not necessary to retain the requirement.
Final paragraph (d)(12) requires that employers measure step-across distance from the centerline of the ladder to the “nearest edge of the structure, building, or equipment.” Thus, in the final rule, the nearest edge of a structure may be a landing platform. Final paragraph (d)(12) is consistent with OSHA's construction ladder standard (§ 1926.1053(a)(16)) and A14.3-2008 (Section 5.4.2.2). OSHA did not receive any comments on the proposed provision.
Final paragraph (d)(13) addresses fixed ladders that do not have cages or wells. Final paragraph (d)(13)(i), like the existing (§ 1910.27(c)(2)) and proposed rules, requires that employers ensure ladders without cages or wells have a clear width of at least 15 inches on each side of the ladder centerline to the nearest object. Having at least a 15-inch minimum clearance on the ladder is necessary to provide adequate clearance to climb the ladder and prevent damage to the ladder. Figure D-2 illustrates this requirement, which is consistent with OSHA's construction ladder standard (§ 1926.1053(a)(17)) and A14.3-2008 (Section 5.4.3.1).
Final paragraph (d)(13)(ii), like the proposed rule, requires that employers ensure there is a minimum perpendicular distance of 30 inches from the centerline of the steps or rungs to the nearest object on the climbing side of the ladder. The final rule, like the proposal, revises the existing requirement in § 1910.27(c)(1) in three ways. First, the final rule replaces the existing requirement that the pitch of the ladder be the basis of the minimum perpendicular distance (
Second, the final rule provides an exception to the minimum perpendicular clearance requirement “[w]hen unavoidable obstructions are encountered.” The final rule allows a reduction of the minimum clearance to 24 inches in those cases, provided that
Third, final paragraph (d)(13) recasts the existing rule so it is more performance-based. OSHA believes this change makes the final rule easier to understand and follow than the existing rule.
OSHA received one comment on the proposed provision. Ameren Corporation stated:
As long as the fixed ladders in any facility comply with the current “inches clearance per pitch” requirements, they should be grandfathered in due to the potential financial impact and minimum difference in clearance as well as any history of no apparent difficulties with head clearance by way of reviewing incident reporting trends (Ex. 189).
OSHA does not agree with Ameren that the revisions to the minimum perpendicular clearance on the climbing side of fixed ladders will have any significant financial impact on employers who are in compliance with the existing rule. As mentioned earlier, almost all fixed ladders have a 90-degree pitch, which means that they must already meet the 30-inch clearance requirement of the existing rule. Therefore, the vast majority of employers would not have to replace their ladders since they are in compliance with the existing provision.
Final paragraph (d) includes an informational note stating that §§ 1910.28 and 1910.29 establish, respectively, the duty to provide fall protection for workers using fixed ladders and the mandatory criteria for that fall protection.
Final paragraph (e) establishes requirements that apply to mobile ladder stands and mobile ladder stand platforms (mobile ladder stands and platforms). These requirements apply to mobile ladder stands and platforms in addition to the requirements specified by paragraph (b) of this section that cover all ladders.
Final paragraph (e) is a performance-based revision of the design and use requirements in the existing rule (§ 1910.29(a) and (f)), and consistent with the design requirements in the ANSI standard (A14.7-2011). Therefore, consistent with the requirement in the OSH Act that OSHA express standards “in terms of objective criteria and of the performance desired,” final paragraph (e) does not incorporate the testing requirements in either the existing OSHA rule or ANSI standard (
For purposes of the final rule, final § 1910.21(b) defines a “mobile ladder stand”
• Is mobile;
• Has a fixed height;
• Is self-supporting; and
• Is designed for use by one worker at a time.
This paragraph of the final rule also specifies that mobile ladder stands generally consist of:
• Wheels or casters on a rigid base;
• Steps (treads); and
• A top step.
Mobile ladder stands also may have handrails. This definition is consistent with both the existing OSHA rule and ANSI standard (§ 1910.21(g); A14.7-2011, Section 3). Although the final rule does not identify what constitutes a “top step,” the ANSI standard defines the term “top step” as “[t]he uppermost flat surface of a ladder stand upon which a person may stand and that has a front to back dimension of not less than 9.5 inches or more than 32 inches and does not exceed 6.7 square feet in area” (A14.7-2011, Section 3).
A “mobile ladder stand platform,” as defined in the final rule (§ 1910.21(b)), is a mobile ladder stand with treads leading to one or more platforms. Unlike the definition of mobile ladder stands, some mobile ladder stand platforms may be designed for use by more than one worker at a time.
Although the existing OSHA ladder rules for general industry do not define or specifically address mobile ladder stand platforms, the final definition is consistent with the ANSI standard (A14.7-2011, Section 3). The ANSI standard also defines a “platform” as “[a]n elevated surface for standing or working that is more than 6.7 square feet in area, or more than 32 inches in depth and may be occupied by more than one person” (A14.7-2011, Section 3).
While the existing OSHA rule does not specifically address mobile ladder stand platforms, many of the provisions in the existing rule provide effective worker protection regardless of whether employees are working on mobile ladder stands or mobile ladder stand platforms. Thus, when appropriate, in the final rule OSHA applied provisions in the existing rules to mobile ladder stand platforms as well as mobile ladder stands.
One commenter raised general concerns about the design requirements for mobile ladder stands and platforms:
Nearly all requirements are design and construction requirements over which an employer would have minimal or no control.
Again, an employer would be relying primarily on third party certification without any assurance that such reliance would be recognized as a legitimate defense against OSHA citations (Ex. 368).
The commenter is correct that most of the general provisions in proposed and final paragraph (e)(1) are equipment-design requirements. This also applies to the existing OSHA rules, which have been in place since 1973. Many other OSHA standards also require that employers provide equipment designed, constructed, and maintained so it is safe for their workers to use. In the years since OSHA adopted the existing rules, no employers have raised concerns about being able to comply with the design requirements. OSHA also believes that today, more than 40 years after it adopted the existing rules, virtually all mobile ladder stands and platforms manufactured meet the design requirements of the existing rules, as well as the ANSI standard.
OSHA, however, does not agree that employers have minimal or no control over whether mobile ladder stands and platforms meet the design requirements in the final rule. Employers are free to design and construct their own equipment to the design requirements in OSHA standards, and some employers do. For example, employers may build their own mobile ladder stands and platforms if they need the units for special purposes, or if the ladders must fit into unusual locations.
Employers also have control over the equipment they purchase. They can evaluate, investigate, and even test potential equipment to ensure that it meets OSHA requirements. They also can select equipment that a recognized third party (
Final paragraph (e)(1) establishes general design and use requirements that apply to both mobile ladder stands and mobile ladder stand platforms. OSHA drew these general requirements from two sources: (1) The existing rule (§ 1910.29); and (2) A14.7-2011.
Final paragraph (e)(1)(i), like the existing (§ 1910.29(a)(3)(ii)) and proposed rules, requires that employers ensure that the minimum width of steps on mobile ladder stands and platforms is 16 inches. This minimum-width requirement applies regardless of the
OSHA believes that employers should not have any problem complying with final paragraph (e)(1)(i). The existing OSHA and ANSI standards have been in place for many years and OSHA believes the width of steps on virtually all mobile ladder stands and platforms meet the ANSI requirements, and, therefore, are in compliance with the final rule. OSHA did not receive any comments on the proposal, and adopts the provision as discussed.
Final paragraph (e)(1)(ii), like the existing (§ 1910.29(a)(3)(iv)) and proposed rules, requires that employers ensure that steps and platforms of mobile ladder stands and platforms be slip resistant. The final rule includes language, drawn from A14.7-2011, that gives employers greater flexibility in complying with the slip-resistance requirement. Final paragraph (e)(1)(ii) provides that employers may meet the slip-resistance requirement by providing mobile ladder stands and platforms where the slip-resistant surfaces either are (1) an integral part of the design and construction of the mobile ladder stand and platform, or (2) provided by a secondary process or operation. For the purposes of this final rule, secondary processes include things such as dimpling, knurling, shotblasting, coating, spraying the walking-working surfaces, or adding durable slip-resistant tape to steps and platforms.
In addition to providing more flexibility than the existing OSHA requirements for meeting the slip-resistance requirement, OSHA believes the final paragraph will help to ensure a level of protection that is equivalent to or greater than the existing requirements. First, it allows employers to select the types of slip resistance that will provide the most effective protection for workers in the particular workplace conditions in which employers use the unit. For example, in outdoor, icy conditions, grated steps and platforms may provide better slip resistance than steps and platforms with a sprayed-on finish.
Second, the new language also indicates that employers have both an initial and continuing obligation to ensure that steps and platforms on mobile ladder stands and platforms remain slip resistant (
Final paragraphs (e)(1)(iii) and (iv) establish strength and stability requirements for mobile ladder stands and platforms to ensure units are safe for workers to use. Final paragraph (e)(1)(iii), which is almost identical to proposed paragraph (e)(1)(vi), requires that employers ensure mobile ladder stands and platforms are capable of supporting at least four times their maximum intended load. The existing OSHA rule and ANSI standard also require that mobile ladder stands be capable of supporting at least four times the “design working load” or “rated load,” respectively (§ 1910.29(a)(2)(ii)(
Final paragraph (e)(1)(iv), which also is almost identical to proposed paragraph (e)(1)(iii), requires that employers ensure wheels and casters of mobile ladder stands and platforms under load are capable of supporting: (1) their proportional share of four times the maximum intended load, plus (2) their proportional share of the unit's weight. OSHA believes this requirement is necessary to ensure that mobile ladder stands and platforms are safe for workers to use. Unless the wheels and casters can support both the proportional weight of the mobile ladder stand or platform and the weight of the maximum intended load placed on that unit, failure of the wheel(s) or caster(s) may occur. If that happens, the stand or platform could become unstable and the worker could fall off the unit and be injured or killed.
Final paragraph (e)(1)(iv) provides greater protection than the existing OSHA rule in § 1910.29(a)(4). The existing rule does not require that wheels or casters be capable of supporting the weight of the mobile ladder stand or mobile ladder stand platform, as well as the weight of the load (
In final paragraphs (e)(1)(iii) and (iv), OSHA replaced the term “design working load” in the existing OSHA rule with “maximum intended load” (
Finally, consistent with OSHA's goal to make the final rule performance based, final paragraphs (e)(1)(iii) and (iv) do not incorporate the testing requirements in either the existing OSHA rule (§ 1910.29(f)(5)) or A14.7-2011 (Section 5). OSHA did not receive any comments on either of the proposed requirements, and adopts final paragraphs (e)(1)(iii) and (iv) as discussed above.
Final paragraph (e)(1)(v) establishes general requirements for handrails on mobile ladder stand and platform steps (except for handrails on top steps when paragraph (e)(2)(ii) applies). Final paragraph (e)(1)(v) requires that employers ensure mobile ladder stands and platforms have handrails when the height of the top step or platform is 4 feet or higher above lower levels. Where handrails are required, employers must ensure that the handrails have a vertical height of at least 29.5 inches but not more than 37 inches, as measured from the front edge of the step, unless specified elsewhere in the section.
The purpose of the final paragraph (e)(1)(v) is to protect workers from falling when they are climbing or standing on mobile ladder stands and platforms. OSHA believes handrails are necessary to assist workers as they are
The existing OSHA rule requires that mobile ladder stand steps have handrails (a minimum of 29 inches high, measured vertically from the center of the step) if the height of the top step was more than 5 feet or 5 steps (§ 1910.29(f)(4)). However, the existing rule does not specify the maximum height allowed for the handrails. In addition, the existing rule does not contain a specific provision covering handrails on mobile ladder stand platforms. The proposed rule, on the other hand, included specific and separate handrails provisions for mobile ladder stands and mobile ladder stand platforms (proposed paragraphs (e)(2)(ii) and (e)(3)(ii)). In the final rule, OSHA consolidated those proposed provisions into the general requirement in paragraph (e)(1)(v) to reduce repetition and simplify the final rule.
The final rule provides greater protection than the existing OSHA rule. The final rule requires that mobile ladder stands and platforms have handrails where the top step height is at least 4 feet compared to more than 5 feet or 5 steps in the existing rule. OSHA notes that the ANSI standard (A14.7-2011, Sections 4.3.5 and 4.4.5) also requires that handrails provide the same level of protection as the final rule.
Final paragraph (e)(1)(v), like the proposal (a note to proposed paragraphs (e)(2)(ii) and (e)(3)(ii)), also allows alternatives to the handrails requirement for “special-use applications.” In such situations, the final rule permits employers to use removable gates or non-rigid members (such as chains) instead of handrails on the top step of mobile ladder stands and platforms. The alternative means of compliance allows employers to remove the gates or chains when a work task involves special-use application; however, employers must replace the gates or chains (
Final paragraph (e)(1)(vi), like the existing OSHA and proposed rules (§ 1910.29(a)(3)(i) and (f)(2); proposed paragraph (e)(1)(v)), requires that employers ensure the maximum work-surface height of mobile ladder stands and platforms does not exceed four times the shortest dimension of the base, without additional support. OSHA believes this requirement is necessary to prevent units from tipping over and injuring workers. Also consistent with the existing and proposed rules, the final rule specifies that when mobile ladder stands and platforms need to reach greater heights, the employer must provide additional support such as outriggers, counterweights, or comparable means to stabilize the base and prevent the unit from overturning. The ANSI standard includes the same requirement (A14.7-2011, Section 5.2).
Final paragraph (e)(1)(vi) differs from the existing OSHA rule in one respect: it does not incorporate the testing requirement in existing § 1910.29(f)(2) for calculating the maximum base length, opting instead to adopt a performance-based requirement. Similarly, it does not incorporate the A14.7-2011 testing provisions. OSHA did not receive any comments on the proposal, and adopts it with minor editorial clarifications.
Final paragraph (e)(1)(vii), like proposed paragraph (e)(1)(iv), requires that employers ensure wheels and casters on mobile ladder stands and platforms are equipped with a system that will impede horizontal movement when a worker is on the unit. OSHA drew the final requirement from the ANSI standard (A14.7-2011, Sections 4.3.8 and 4.4.9); the existing OSHA rule does not contain a similar provision. OSHA believes the requirement in final paragraph (e)(1)(vii) is necessary to prevent accidental or inadvertent movement of a mobile ladder stand or platform. If the stand or platform suddenly moves, it may cause the worker to fall off the unit. Sudden movement also can cause materials, equipment, and tools to fall off a mobile ladder stand or platform and hit employees working in the immediate area. The phrase “rigid and swivel” has been removed from the proposed language because it is unnecessary. In addition, OSHA added the phrase “when an employee is on a stand or platform” to the proposed text to clarify that it is acceptable that mobile ladder stands move at other times. OSHA did not receive any comments on the proposed rule, and adopts it as discussed.
Final paragraph (e)(1)(viii), like proposed paragraph (e)(1)(vii), requires that employers ensure mobile ladder stands and platforms do not move while workers are on them. The final rule will prevent workers from falling from mobile ladder stands and platforms. Working on a unit, particularly on the top step or platform, raises the unit's center of gravity, causing the unit to become less stable. If somebody moves the unit, intentionally or not, a worker on the unit could lose his or her balance and experience a serious fall. The same consequences could occur if a worker rides on a mobile ladder stand or platform when somebody moves the unit to a new location in the workplace.
OSHA also drew this requirement from A14.7-2011 (Section 6.4) because the existing rule does not contain a similar requirement. OSHA did not receive any comments on the proposed rule, and adopted it as proposed with minor editorial changes for clarity.
Final paragraph (e)(2) establishes design requirements for mobile ladder stands that apply to mobile ladder stands in addition to the general mobile ladder stand and platform requirements in final paragraph (e)(1). As with the general requirements in final paragraph (e)(1), OSHA carried forward most of the provisions in final paragraph (e)(2) from its existing rule (§ 1910.29) or from A14.7-2011.
Final paragraph (e)(2)(i), like proposed paragraph (e)(2)(i), establishes requirements for mobile ladder stand steps. The employer must ensure that these steps:
• Are uniformly spaced and arranged;
• Have a maximum rise of 10 inches; and
• Have a minimum depth of 7 inches.
The final rule also requires that the employer ensure the slope (angle) of the
The requirements in final paragraph (e)(2)(i) are consistent with the general requirements for ladders in final paragraph (b) of this section. Final paragraph (b) also requires that ladder steps be “parallel, level, and uniformly spaced” (final paragraph (b)(1)) and have steps spaced “not less than 10 inches and not more than 14 inches apart” (final paragraph (b)(2))(see discussion of final paragraph (b) above).
Final paragraph (e)(2)(i) differs from the existing OSHA rule (§ 1910.29(f)(3)) in two respects. The final rule does not carry forward the existing requirements to have (1) a 9-inch minimum rise for mobile ladder stand steps, and (2) a minimum 55-degree slope for step stringers. OSHA believes final paragraph (e)(2)(i) simplifies the rule and provides greater compliance flexibility. Since the final rule is virtually identical to the ANSI standard (A14.7-2011, Section 4.3.3), OSHA also believes the revisions to the final rule do not compromise worker protection. OSHA did not receive any comments on the proposed rule, and adopted it with minor editorial revisions.
Final paragraph (e)(2)(ii), like proposed paragraph (e)(2)(iii) and the ANSI standard (A14.7-2011, Section 4.3.6), establishes requirements for mobile ladder stands with a top step height more than 10 feet above lower levels. Final paragraph (e)(2)(ii) requires that employers ensure these mobile ladder stands have handrails on three sides of the top step. The employer must ensure that the handrail has a vertical height of at least 36 inches. Also, top steps with a length (depth) of at least 20 inches, front to back, must have midrails and toeboards.
The requirements in final paragraph (e)(2)(ii) provide additional protection from falls and falling objects that are particularly important when employees work on taller mobile ladder stands. To protect workers from falls, final paragraph (e)(2)(ii) ensures that workers have a handhold to grab onto while they are climbing or located on the top step. In addition, final paragraph (e)(2)(ii) requires top steps that are at least 20 inches in depth to be provided with a midrail and toeboard. This protects adjacent workers from falling objects when the top step becomes large enough for the possibility of materials, tools, equipment, or other objects to be placed on the top step. OSHA drew the requirements in final paragraph (e)(2)(ii) from the ANSI standard (A14.7-2011, Section 4.3.6). The existing OSHA rule (§ 1910.29(f)(4)) does not include any of these protections.
Although final paragraph (e)(2)(ii) is similar to proposed paragraph (e)(2)(iii), it also differs in some respects. OSHA reorganized the final paragraph so it is a plain-language provision. OSHA believes that the reorganized provision in the final rule is easier for employers to understand than the proposed provision.
Also, final paragraph (e)(2)(ii) contains two clarifications of the proposed provision. First, final (e)(2)(ii) clarifies the handrail, midrail, and toeboard requirements, stating that employers must provide these protective structures on three sides of the top step. Although OSHA believes that most employers understand that locating handrails, midrails, and toeboards on three sides is necessary to provide adequate protection to their workers, the final rule expressly clarifies this requirement.
Second, a note to final paragraph (e)(2)(ii), like final paragraph (e)(1)(v), incorporates an alternative method from the handrail and midrail requirement for special-use applications. (See the explanation of the exception for special-use applications in paragraph (e)(i)(v) above.) OSHA did not receive any comments on the proposed provision, and adopts it as revised.
Final paragraph (e)(2)(iii), like proposed paragraph (e)(2)(iv), requires that employers ensure the standing areas of mobile ladder stands are within the base frame. OSHA believes this requirement is necessary to ensure the stability of mobile ladder stands. Keeping the center of gravity within the base frame increases the stability of the mobile ladder stand. This requirement reduces the potential for the mobile ladder stand to tip when a worker is using it.
OSHA drew final paragraph (e)(2)(iii) from the ANSI standard (A14.7-2011, Section 4.3.9) since the existing OSHA rule does not include this requirement. Consistent with the goal of making the final rule more performance based, OSHA did not adopt the stability-testing requirements in the ANSI rule (A14.7-2011, Section 5). OSHA did not receive any comments on the proposed provision, and adopts it as proposed.
Employers must comply with the design requirements for mobile ladder stand platforms specified by final paragraph (e)(3), as well as the general requirements for mobile ladder stands and platforms in final paragraph (e)(1). OSHA drew most of these requirements from A14.7-2011. In addition, OSHA expanded the existing requirements on mobile ladder stands in § 1910.29 that apply to mobile ladder stand platforms.
Final paragraph (e)(3)(i), like the proposed paragraph and final paragraph (e)(2)(i), requires that employers ensure the steps of mobile ladder stand platforms:
• Are uniformly spaced and arranged;
• Have a maximum rise of 10 inches; and
• Have a minimum depth of 7 inches.
Final paragraph (e)(3)(i) differs from final paragraph (e)(2)(i) in one respect. It includes an exception when the employer demonstrates that the final requirement is not feasible. In that circumstance, the employer may use mobile ladder stand platforms that have steeper slopes or vertical rung ladders, provided the employer stabilizes the alternative unit to prevent it from overturning. The final rule includes this exception because OSHA recognizes that there may be situations or locations where, for example, the slope of the step stringer on a mobile ladder stand platform may need to be greater than the 60-degree limit. To illustrate, there may be a workplace space where the employer needs to use a mobile ladder stand platform, but the unit does not fit. In that situation, OSHA believes it would be appropriate to use an alternative unit with a steeper stringer slope or a vertical rung ladder that takes up less space.
The ANSI standard also includes a similar exception for mobile ladder stand platforms (A14.7-2011, Section 4.4.3). The exception in the ANSI standard specifically permits employers to use alternative mobile ladder stand platforms that have steps with a slope of 60 to 70 degrees. OSHA notes that some alternative units consist of retractable ship's stairs which, consistent with final § 1910.25(e)(1), have a slope of 60 to 70 degrees. When employers demonstrate the final rule is not feasible, OSHA notes that employers will be in compliance with final paragraph (e)(3)(i) if they use mobile ladder stand platforms with a slope of up to 70 degrees, the limit permitted by A14.7-2011, Section 4.4.3. The exception also requires that employers properly stabilize the alternative unit to reduce the risk of workers falling off the steeper steps. OSHA did not receive any comments on the proposed provision, and adopts it as discussed above.
Final paragraphs (e)(3)(ii) and (iii) establish requirements addressing the
Although the existing OSHA rule contains a requirement for handrails on mobile ladder stands (§ 1910.29(f)(4)), it only requires that the vertical of height of the handrails be at least 29 inches, which is not as protective as the ANSI standard. Therefore, OSHA adopted final paragraph (e)(3)(ii) from the ANSI standard (A14.7-2011, Section 4.4.4).
Final paragraph (e)(3)(ii) differs from the proposed rule in that OSHA removed the proposed requirement that mobile ladder stand platforms have handrails on the steps if the top step height is 4 feet to 10 feet. The final rule consolidated that requirement in final paragraph (e)(1)(v), which preserves the step-handrail requirement for both mobile ladder stands and platforms. (See discussion of handrails in the summary of final paragraph (e)(1)(v) above.) OSHA did not receive any comments on the proposed requirement, and adopts it as revised.
Final paragraph (e)(3)(iii), like the proposal (proposed paragraph (e)(3)(iii)), establishes requirements for mobile ladder stand platforms that are more than 10 feet above a lower level. For these units, the final rule requires that employers must ensure that the exposed sides and ends of the platforms have both guardrails and toeboards. OSHA notes that all fall protection and falling object protection requirements must meet the systems criteria in final § 1910.29.
OSHA believes it is essential that guardrails on platforms that are more than 10 feet in height comply with the criteria in final § 1910.29(b) to ensure that employers adequately protect workers from falling off the platforms. OSHA also believes that toeboards must meet the criteria in final § 1910.29(k)(1) to ensure workers on the ground are not hit by falling objects. The toeboards must, consistent with the requirements of § 1910.29:
• Have a vertical height of at least 3.5 inches;
• Not have more than a 0.25-inch clearance above the platform surface;
• Be solid or have openings that do not exceed 1-inch at the greatest dimension; and
• Be capable of withstanding a force of at least 50 pounds applied at any downward or outward direction at any point along the toeboard (see final § 1910.29(k)(1)(ii)).
Lastly, like final paragraphs (e)(1)(v) and (e)(2)(ii), final paragraph (e)(3)(iv) includes language, proposed as a note to this provision, that permits the use of removable gates or non-rigid members instead of handrails and guardrails in special-use applications (see further discussion of special-use applications in final paragraph (e)(1)(v) above). OSHA did not receive any comments on the proposed provisions, and adopts them as revised.
Final § 1910.24, like the proposed rule, establishes new design, strength, and use requirements for step bolts and manhole steps. The final rule defines a step bolt as “a bolt or rung attached at intervals along a structural member used for foot placement and as a handhold when climbing or standing” (§ 1910.21(b)). Step bolts, often are used on metal poles or towers, and include pole-steps, commonly used on wooden poles such as utility poles.
The final rule, like the proposed rule, defines manhole steps as “steps individually attached to, or set into, the wall of a manhole structure” (§ 1910.21(b)). Manhole steps are cast, mortared, or attached by mechanical means into the walls of the base, riser, and conical top sections of a manhole.
Telecommunications, gas, and electric utility industries are the industries that most often use step bolts and manhole steps. Manufacturing establishments also use them instead of conventional ladders and stairs, especially in locations where it is infeasible to use ladders and stairs.
OSHA drew the step bolt and manhole step requirements in the final rule from the following six sources:
• The step bolt, pole step, and manhole ladder requirements in OSHA's Telecommunications standard (29 CFR 1910.268);
• The step bolt and manhole step provisions in OSHA's 1990 proposed Walking and Working Surfaces and Personal Protective Equipment (Fall Protection Systems) standard (55 FR 13360), which drew its requirements from proposed Electric Power Generation, Transmission, and Distribution standard (29 CFR 1910.269) (54 FR 4974 (1/31/1989));
• American National Standards Institute/Telecommunications Industry Association (ANSI/TIA) 222-G-1996, Structural Standard for Antenna Supporting Structures and Antennas (ANSI/TIA 222-G-1996) (Ex. 33);
• American National Standards Institute/Telecommunications Industry Association (ANSI/TIA) 222-G-2005, Structural Standard for Antenna Supporting Structures and Antennas (ANSI/TIA 222-G-2005) (Ex. 27);
• American Society for Testing and Materials (ASTM) C 478-13, Standard Specification for Precast Reinforced Concrete Manhole Sections (ASTM C 478-13) (Ex. 381); and
• American Society for Testing and Materials (ASTM) A 394-08, Standard Specification for Steel Transmission Tower Bolts, Zinc-Coated and Bare (ASTM A 394-08).
Consistent with section 6(b)(5) of the OSH Act (29 U.S.C. 655(b)(5)), the final rule is performance based to the extent possible. For example, final paragraph (a)(2) of this section requires that the employer ensure that step bolts are designed, constructed, and maintained to prevent the worker's foot from slipping off the ends, instead of mandating specific requirements on the size and shape that the step bolt heads must meet.
OSHA notes that two of the step bolt provisions (final paragraphs (a)(1) and (7)), and all but two of the manhole step requirements (final paragraph (b)(2)), apply only to those steps installed after the effective date of the final rule. OSHA recognizes that many step bolts and manhole steps already in workplaces currently comply with the requirements in final § 1910.24. This high rate of compliance, OSHA believes, is the result of the Agency issuing its Telecommunications standard in 1975 (40 FR 13341 (3/26/1975)), and because the national consensus standards addressing step bolts and manhole steps have been in place for a number of years. That said, OSHA believes the most efficient and least disruptive way
For example, if an inspection of an electric utility tower finds a corroded step bolt that cannot support the required load (final paragraphs (a)(6) and (7)), the final rule requires that the employer replace it with one made of corrosion-resistant materials or with corrosion-resistant coatings (final paragraph (a)(1)). However, if the inspection shows existing step bolts still have useful life,
Paragraph (a) of the final rule, like the proposal, establishes requirements addressing the design, dimensions, strength, and installation of step bolts. OSHA received a comment recommending that the final rule prohibit the use of step bolts unless it requires that employers provide fall protection, such as ladder safety systems, when workers use step bolts (Ex. 155). Dr. J. Nigel Ellis, of Ellis Fall Safety Solutions, referenced a 1990 Duke Power study he said demonstrated step bolts had a high breaking frequency, and therefore, that fall protection was necessary for workers using step bolts. Dr. Ellis also said fall protection needed to be continuous, and not require the worker to manipulate or handle objects when climbing.
OSHA addressed in final § 1910.28 Dr. Ellis' concerns about protecting workers using step bolts that break unexpectedly. That section requires that employers provide fall protection for workers on any walking-working surface with an unprotected side or edge that is four feet or more above a lower level (§ 1910.28(b)). The final rule is more protective than ANSI/TIA 222-G-2005, which requires that antenna-supporting structures designed for climbing to heights greater than 10 feet must have at least one climbing facility (
Final paragraph (a)(1), 1ike the proposed rule, requires that employers ensure step bolts installed in an environment where corrosion may occur are constructed of, or coated with, material that protects against corrosion. The final rule is consistent with 1990 proposed § 1910.24(b)(6) (55 FR 13399). The ANSI/TIA 222-G-2005 standard requires that structural steel members and components must have zinc coating (Section 5.6.1). Although the national consensus standard specifies that hot-dip galvanizing is the preferred method, employers may use other equivalent methods (Section 5.6.1).
Corrosive environments can cause damage to unprotected metals. For example, corrosion can lead to deterioration and weakening that may cause step bolts to break or fail to support the total required load. OSHA believes that corrosion-resistant materials and coatings will protect step bolts and ensure they are capable of supporting at least four times the maximum intended load.
Final paragraph (a)(1), like the proposed rule, applies the requirement prospectively to step bolts installed on or after the effective date of the final rule. As noted above, OSHA believes this is the most efficient way to implement this provision while, at the same time, ensuring worker protection. Mr. Robert Miller, of Ameren Corporation, supported OSHA's decision to make the paragraph (a)(1) prospective (Ex. 189). Accordingly, OSHA is adopting paragraph (a)(1) as discussed.
Final paragraph (a)(2), similar to the proposed rule, requires that employers ensure step bolts are designed, constructed, and maintained to prevent the worker's foot from slipping off the end of it. If a worker's foot slips off the end of the step bolt, the worker could fall or sustain an injury from slipping. Designing the head of the step bolt to prevent the worker's foot from slipping off will provide the requisite protection. Final paragraph (a)(2) also is consistent with the ANSI/TIA 222-G-2005 standard (Section 12.5(f)), as well as 1990 proposed § 1910.24(b)(5).
The proposed rule specified that step bolts be “designed to prevent slipping or sliding off the end of the bolt,” but the proposal also required step bolts to be “designed, constructed, and maintained” free of recognized hazards (proposed § 1910.22(a)(3)). Only properly designed, constructed, and maintained step bolts will be effective in preventing the worker's foot from slipping off the end, therefore the Agency added “constructed and maintained” to final paragraph (a)(2) to emphasize that step bolts must meet these requirements as well. OSHA did not receive any comments on the proposed provision and has adopted paragraph (a)(2) with the revisions discussed.
Final paragraph (a)(3), like the proposed rule, requires that employers ensure step bolts are uniformly spaced at a vertical distance of not less than 12 inches and not more than 18 inches apart, measured center to center. The final paragraph also notes that the spacing from the entry and exit surface to the first step bolt may differ from the spacing between other step bolts. This requirement means that the maximum uniform spacing between alternating step bolts is 18 inches, resulting in a maximum spacing between step bolts on the same side of 36 inches. OSHA believes that uniform spacing helps to ensure safe climbing when using step bolts. (Figure D-6 illustrates the vertical spacing requirements in the final rule.)
The final rule generally is consistent with the proposed rule and the existing Telecommunications standard (§ 1910.268(h)(2)), which limit the maximum vertical spacing between step bolts (alternating) to 18 inches. OSHA adopted the Telecommunications standard in 1975 based on recommendations of a voluntary committee of representatives from telephone companies and communication unions (40 FR 13341 (3/26/1975)). The 1990 proposal specified that the spacing between step bolts be between 6 and 18 inches (§ 1910.24(b)(1)). The ANSI/TIA 222-G-2005 standard requires that the spacing between step bolts be between 10 to 16 inches, with a tolerance of ± 1 inch (Section 12.5).
In the proposed rule, OSHA requested, but did not receive, comments on whether the Agency should adopt the proposed requirement or the spacing that the ANSI/TIA 222-G-2005 standard specifies. OSHA believes that adopting the maximum 18-inch uniform vertical spacing requirement in final paragraph (a)(3) is appropriate for two reasons. First, as mentioned earlier, the step bolt requirement in the Telecommunications standard has been in place for more than 35 years. During that period, the telecommunications industry constructed many towers that have step bolts spaced no more than 18 inches apart. OSHA has no data showing that the maximum 18-inch vertical step bolt spacing requirement in the Telecommunications standard poses any safety problems or resulted in any injury in that industry. Moreover, OSHA believes that most of the telecommunications industry already is in compliance with § 1910.268, and that final paragraph (a)(3) would not impose a financial burden on employers.
Second, if the ±1-inch tolerance allowed in the ANSI/TIA 222-G-2005 standard is taken into account, there is, at most, only a 1-inch difference in the maximum vertical spacing in final paragraph (a)(3) and the ANSI/TIA 222-G-2005 standard. OSHA does not consider this difference to be significant in this provision. Therefore, OSHA is adopting in the final provision, the step bolt spacing requirement (between 12 and 18 inches) that is consistent with OSHA's Telecommunications standard.
Final paragraph (a)(3), like the proposed rule, allows the spacing of step bolts at the entry and exit surface to the first step bolt to differ from the uniform spacing between the other step bolts. For example, the first step bolt on a monopole may be 10 feet above the ground. Having a higher first step bolt on a structure is not unusual; in many cases, this configuration limits unauthorized access to the structure's hazardous heights, communication devices, or electrical wiring.
OSHA's Telecommunications standard also allows the spacing of the initial step bolt to differ from the other steps, “except where working, standing, or access steps are required” (existing § 1910.268(h)(2)). The 1990 proposal did not specifically address spacing of the initial step bolt. Section 12.5(a) of ANSI/TIA 222-G-2005 requires that “spacing shall remain uniform over a continuous length of climb,” but does not address entry and exit spacing. OSHA believes that allowing a variation in spacing from the entry surface to the first step bolt or from the last step bolt to the exit surface will make it easier and safer for workers to establish their foothold. Once again, since the Telecommunication standard allows the spacing on the first and exit step bolt to differ and OSHA is not aware of any injuries or problems occurring as a result, the Agency is adopting paragraph (a)(3) as proposed, with minor editorial revisions.
Final paragraph (a)(4), like the proposed rule, requires that employers ensure step bolts have a minimum clear width of 4.5 inches. The final rule is the same as OSHA's Telecommunications standard (§ 1910.268(h)(2)); 1990 proposed § 1910.24(b)(2); and the ANSI/TIA 222-G (2005) standard (Section 12.5(f)).
OSHA believes it is necessary that workers have an adequate space on which to step and secure their foothold while climbing or they could slip and fall. OSHA believes the telecommunications industry supports the 4.5-inch minimum clear-step width in the Telecommunications and ANSI/TIA 222-G-2005 standards. In addition, since both standards have been in place for many years, OSHA believes the industry already is in compliance with the minimum clear width requirement.
Mr. Larry Halprin, of Keller and Heckman, said that OSHA should only apply the vertical spacing distance (final paragraph (a)(3)) and minimum clear width (final paragraph (a)(4)) requirements prospectively (Ex. OSHA-S029-2006-0662-0381). He stated that, in the OSHA notice reopening the rulemaking docket on subpart D, the Agency said that the 1990 proposal specified prospective application of the revised provisions, and “would allow workplaces and equipment meeting existing subpart D requirements to be `grandfathered in'” (68 FR 23529 (5/2/2003)). However, neither the 2010 nor the 1990 proposed rules stated that OSHA would apply the vertical spacing or minimum clear width requirements prospectively. In addition, as mentioned, the Telecommunications and ANSI/TIA 222-G-2005 standards, which have been in place more than 35 years, include both requirements. Moreover, OSHA received no comments from affected industries indicating that they could not meet the existing vertical spacing and minimum clear width requirements. Therefore, OSHA believes that most employers already are in compliance with final paragraphs (a)(3) and (4). Accordingly, OSHA does not believe it is necessary to limit the vertical spacing and minimum clear width requirements to prospective application and adopts the provisions as proposed, with minor editorial revisions.
Final paragraph (a)(5), like the 2010 and 1990 proposed rules, requires that employers ensure the minimum perpendicular distance between the centerline of each step bolt to the nearest permanent object in back of the step bolt is at least 7 inches. When employers can demonstrate that they cannot avoid an obstruction, the final rule permits them to reduce the minimum perpendicular clearance space to 4.5 inches.
The required 7-inch minimum perpendicular clearance space in final paragraph (a)(5) is consistent with the minimum perpendicular clearance for fixed ladders in final § 1910.23(d)(2), the construction ladders standard (§ 1926.1053(a)(13)), and ANSI/TIA 222-G-2005 standard (Section 12.5). However, final paragraph (a)(5), like the 2010 and 1990 proposals, provides more flexibility than those standards. When the employer demonstrates that an obstruction is not avoidable, final paragraph (a)(5) allows employers to reduce the minimum perpendicular clearance to 4.5 inches for any step bolt.
OSHA believes that a 7-inch minimum perpendicular clearance for step bolts, like fixed ladders, is necessary to ensure workers are able to maintain a secure foothold and negotiate the step bolts while they are climbing or working. Because the final rule gives employers the flexibility to reduce the minimum perpendicular clearance space for any step bolt if an obstruction cannot be avoided, the Agency believes that employers need to be able to demonstrate that they made a case-by-case evaluation and determination that the obstruction was not avoidable in the specific instance. For example, where an employer uses step bolts in an industrial setting because it is not feasible to use fixed ladders or stairs (
Final paragraphs (a)(6) and (7) address strength requirements for existing step bolts and for step bolts installed on or after the effective date of the final rule. The final rule establishes different strength requirements for existing and new step bolts to reduce the need for
Final paragraph (a)(6), like the proposed rule, requires that employers ensure each step bolt installed before the effective date of the final rule is capable of supporting the maximum intended load. The final rule defines maximum intended load as “the total load (weight and force) of all workers, equipment, vehicles, tools, materials, and loads the employer reasonably anticipates to be applied to a walking-working surface at any one time” (§ 1910.21(b)).
The final provision is based on the Telecommunications standard requirement that employers shall ensure that no employee nor any material or equipment may be supported or permitted to be supported on any portion of a ladder unless it is first determined, by inspections and checks conducted by a competent person that such ladder is adequately strong, and in good condition (§ 1910.268(h)(1)), and is consistent with 1990 proposed § 1910.24(c)(2). The ANSI/TIA 222-G-2005 standard establishes strength specifications:
A load factor, α
The minimum nominal load on individual rungs or steps shall be equal to a normal concentrated load of 250 lbs [1.1 kN] applied at the worst-case location and direction.
The minimum nominal load on ladders shall be 500 lbs [2.2 kN] vertical and 100 lbs [445 N] horizontal applied simultaneously, concentrated at the worst-case location between consecutive attachment points to the structure (Section 12.4).
The general requirements in the final rule specify that employers ensure all walking-working surfaces are capable of supporting the total weight and force employers reasonably anticipate placing on that surface (§ 1910.22(b)). Final paragraph (a)(6) reinforces that this requirement applies as well to existing step bolts. OSHA believes step bolts that cannot support their maximum intended load are not safe to use, regardless of when the employer installed them.
The ANSI/TIA 222-G standard has been in place since 2005, and OSHA believes most step bolts manufactured today meet the requirements of that standard. In addition, OSHA's experience is step bolt manufacturers generally specify maximum loads that step bolts can withstand without failure. As such, OSHA believes that most existing step bolts are in compliance with final paragraph (a)(6) and § 1910.22(b). That said, employers must continue to inspect step bolts to ensure that the loads placed on the step bolts covered by this provision do not exceed the maximum intended loads and manufacturer specifications. This is because failure or deflection of step bolts can occur during use, particularly since the weight on step bolts is not static and varies as a worker climbs. OSHA did not receive any comments on proposed paragraph (a)(6), and is adopting it as discussed.
Final paragraph (a)(7), like the proposed rule, requires that employers ensure each step bolt installed on or after the effective date of the final rule is capable of supporting at least four times its maximum intended load. As discussed in the proposed rule, OSHA believes that requiring step bolts be capable of supporting four times the maximum intended load is necessary to provide a safety factor that is adequate to ensure that step bolts do not fail during use. The required safety factor (
Final paragraph (a)(7) is consistent with 1990 proposed § 1910.24(c)(1), which specified that “[e]ach step bolt shall be capable of withstanding, without failure, at least four times the intended load calculated to be applied to the [step] bolt.” In addition, as mentioned above, the Telecommunications standard requires any portion of a ladder to be “adequately strong,” while the ANSI/TIA 222-G-2005 standard establishes specification requirements.
The ASTM A 394-08 standard establishes specification for step bolts with nominal thread diameters of
Final paragraph (a)(7), unlike the ANSI/TIA and ASTM standards, is a performance-based requirement. OSHA believes that giving employers flexibility in determining the maximum load they anticipate applying to any step bolt will ensure that the maximum intended load accurately reflects the particular work and workplace conditions present. By contrast, OSHA believes that the ANSI/TIA 222-G-2005 test procedures are for manufacturers, not employers, because manufacturers are in the best position to test whether step bolts meet the strength requirements. Employers are free to use the specifications and test procedures in the ANSI/TIA national consensus standard to determine whether their step bolts meet the maximum intended load requirements in final paragraph (a)(7).
OSHA received two comments on the proposed requirement. As discussed in final paragraph (a)(1), Mr. Miller, of Ameren, supported the Agency's decision to apply the new strength requirement in final paragraph (a)(7) prospectively (Ex. 189). In the second comment, Mr. Richard Willis, of Southern Company, questioned how employers would calculate the performance-based maximum intended load for step bolts in final paragraph (a)(7) (Ex. 192). He recommended:
We suggest that the methodology of National Electric Safety Code (NESC) 2007 Rule 261N be adopted. We also feel that OSHA needs to state a failure criteria for 1910.24(a)(7). . . .
Instead of using the four times the maximum intended load, OSHA should consider using the criteria of the NESC or IEEE 1307 (Ex. 192).
OSHA recognizes the methodologies in the national consensus standards that Mr. Willis recommended are methodologies employers can use to determine and ensure that step bolts are capable of supporting four times the maximum intended load. Employers are free to use the NESC and IEEE 1307 standards, which OSHA referenced in the proposed rule (75 FR 28901) in determining whether their step bolts are capable of supporting four times the total load they reasonably anticipate placing on the step bolt. In a 2003 letter of interpretation, OSHA wrote, “We believe in most situations an employer's compliance with IEEE 1307-1996 will usually prevent or eliminate serious hazards” (OSHA letter to Mr. Brian Lacoursiere, May 5, 2003).
Under the performance based final rule, employers may use other methods to ensure step bolts comply with the strength requirement in final paragraph (a)(7). For example, employers may select step bolts that manufacturers test according to the strength requirements specified by the ANSI/TIA 222-G
Mr. Willis also said that OSHA should state the failure criteria for final paragraph (a)(7) as: “If the intent is a 15 degree deflection as referenced by the NESC and in 1910.24(a)(9), then this should be stated” (Ex. 192). OSHA does not believe it is necessary to put additional language in final paragraph (a)(7) specifying a “failure criteria” for step bolt strength. First, the Agency believes that final paragraph (a)(9) makes clear that step bolts bent more than 15 degrees do not meet the requirement in paragraph (a)(7). Final paragraph (a)(9) states that employers must remove and replace those step bolts. Second, the language Mr. Willis recommended is not performance based as it does not include other failure criteria manufacturers and employers may use. Therefore, OSHA finalizes the provision as discussed.
Final paragraph (a)(8) requires that employers ensure step bolts are inspected at the start of each work shift and maintained in accordance with § 1910.22. By including the reference to § 1910.22, OSHA is emphasizing that step bolts, like all walking-working surfaces, must meet the general requirements in the final rule.
OSHA believes a visual inspection often can reveal structural and other problems with step bolts that may make them unsafe for workers to use. Employers must correct, repair, or replace step bolts with structural problems (
As with the inspection requirements in final § 1910.22, the inspection of step bolts most often will consist of a short, visual observation of the condition of the step bolts. Final paragraph (a)(7) permits workers to perform this visual inspection as they begin to climb the structure, so long as the workers inspect the step bolts before stepping on, or grasping them, and know not to proceed if the step bolts do not pass the visual inspection. Where a worker or supervisor identifies a problem during a visual inspection, a more thorough examination may be necessary. The employer must repair, correct, or replace the damaged or hazardous step bolt before allowing workers to continue climbing the structure.
OSHA notes the proposed rule, like 1990 proposed § 1910.24(c)(4), specified that employers inspect step bolts visually “before each use.” The phrase “before each use” means before the worker climbs the step bolts for the first time at the start of the work shift. It does not mean that employers must, throughout a work shift, have workers inspect the step bolts each time they climb them. OSHA understands that workers may climb step bolts multiple times during a work shift, and believes that inspecting step bolts at the initial climb is sufficient. OSHA did not receive any comments on the inspection requirement and adopts the requirement as discussed.
Final paragraph (a)(9), like the proposed rule, requires that employers ensure any step bolt that is bent more than 15 degrees from the perpendicular, in any direction, is removed and replaced with a bolt that meets the requirements of the section, before a worker uses it. OSHA believes this provision is necessary because step bolts bent to such a degree are not safe for workers to use. Regardless of the direction of the bend, it could cause the worker to slip or fall off the step bolt. If the bend in a step bolt is more than 15 degrees below horizontal, a worker's feet may slip or slide off the end of the step bolt. If the bend in a step bolt extends upwards more than 15 degrees, it is likely to reduce the minimum clear step width (4.5 inches) necessary to ensure the worker has a secure and safe foothold (final paragraph (a)(4)).
The final rule also requires that employers ensure that step bolts used for replacement meet the all of the requirements of final paragraph (a). This requirement will ensure that replacement step bolts provide workers with the maximum level of protection afforded by paragraph (a).
OSHA drew final paragraph (a)(9) from 1990 proposed § 1910.24(c)(5). OSHA did not receive any comments on paragraph (a)(9), and adopts it as discussed.
Final paragraph (b) addresses the design, capacity, and use of manhole steps. There are no requirements specifically addressing manhole steps in existing subpart D, although OSHA's Telecommunications standard establishes requirements to protect workers who use metal ladders in manholes (§ 1910.268(h)(8)). OSHA drew most of the manhole step requirements from the 1990 proposed Walking and Working Surfaces and Personal Protective Equipment (Fall Protection Systems) standard (55 FR 13360), which drew its requirements from a 1989 proposed rule on Electric Power Generation, Transmission, and Distribution. OSHA did not believe that it was necessary to include the manhole step requirements in the Electric Power Generation, Transmission, and Distribution final rule because the 1990 proposed rule to revise subpart D included provisions on manhole steps.
Final paragraph (b)(1), like the proposed rule, requires that employers ensure manhole steps are capable of supporting their maximum intended load, as defined in § 1910.21(b). As mentioned in the discussion of final paragraph (a)(6), final § 1910.22(b) requires that employers ensure all walking-working surfaces are able to support the maximum intended load that employers reasonably anticipate placing on them. Final paragraph (b)(1) emphasizes that the maximum intended load requirement in the final rule applies to existing manhole steps, regardless of when the employer installed them. Manhole steps that cannot support the maximum intended load without failure are not safe to use.
OSHA based the provision on 1990 proposed § 1910.24(c)(2), which also specified that existing manhole steps be capable of supporting their maximum intended load. The ASTM C 478 standard requires vertical and horizontal load testing of manhole steps in accordance with ASTM Test Methods C 497 (Section 16.6.1.3) (Ex. 382).
Final paragraph (b)(1), like final paragraph (a)(6) of this section and final § 1910.22(b), is performance based. However, employers are free to use the test procedures in ASTM C 478 and C 497 in determining whether their manhole steps can support the maximum intended load the employer anticipates placing on them. OSHA did not receive any comments on this provision, and adopted it as proposed wit minor editorial revisions.
Final paragraph (b)(2), like the proposal, establishes requirements for manhole steps installed on or after the effective date of the final rule. OSHA based most of these requirements on 1990 proposed § 1910.24, and ASTM C 478-13, with many of the manhole step requirements in 1990 proposed § 1910.24 applying only prospectively (
Final paragraph (b)(2)(i), like the proposed rule, requires that employers ensure manhole steps have a corrugated, knurled, dimpled, or other surface that minimizes the possibility of a worker slipping. The final rule is consistent with the requirements for metal manhole ladders in OSHA's Telecommunications standard (§ 1910.268(h)(8)(v)). The 1990 proposed rule (proposed § 1910.24(b)(7)) specified the same requirement as final paragraph (b)(2)(i) for manhole steps.
OSHA believes this final rule is necessary to reduce workers' risk of slipping and falling. Underground manholes often have moisture and other slippery substances (
Final paragraph (b)(2)(ii), like the proposal and final paragraph (a)(1) of this section for step bolts, requires that employers ensure manhole steps are constructed of, or coated with, material that protects against corrosion if the manhole steps are in an environment where corrosion may occur. The final rule is consistent with the Telecommunications standard (§ 1910.268(h)(8) introductory text and (h)(8)(vi)) and 1990 proposed § 1910.24(b)(6)). The Telecommunications standard also requires that employers, when selecting metal ladders, ensure that the ladder hardware must be constructed of a material that is protected against corrosion and that the metals used shall be selected as to avoid excessive galvanic action (§ 1910.268(h)(8)(vi)). The ASTM C 478 standard, however, addresses corrosion hazards using a different approach. The national consensus standard does not require that manhole steps consist of corrosion-resistant materials or have corrosion-resistant coatings. Instead, it requires that ferrous metal steps not painted or treated to resist corrosion must have a minimum cross-sectional dimension of one inch. OSHA believes that requiring all manhole steps to consist of corrosion-resistant material or have corrosion-resistant coatings is more protective, and better effectuates the purposes of the OSH Act, than ASTM C 478. OSHA's final rule protects manhole steps from becoming corroded, while the ASTM C 478 standard requires that employers make ferrous metal steps with large cross-sectional dimensions so they will hold up against corrosion longer.
Furthermore, as discussed in final paragraph (a)(1) of this section for step bolts, OSHA believes that corrosive environments can weaken and cause damage to unprotected metals, including manhole steps. Corrosion resistance will help to prevent deterioration that can lead to failure of manhole steps. OSHA did not receive any comments on the provision and adopts it as proposed with minor editorial clarifications.
Final paragraph (b)(2)(iii), like the proposed rule, requires that employers ensure manhole steps have a minimum clear step width of 10 inches. The final rule is consistent with the ASTM C 478 standard (Section 16.5.2), as well as 1990 proposed § 1910.24(b)(2). The ASTM C 478 standard has been in place for many years, so OSHA believes that most manhole steps have a step width of at least 10 inches. OSHA did not receive any comments on paragraph (b)(2)(iii) and adopts it as proposed.
Final paragraph (b)(2)(iv), like the proposal, requires that employers ensure manhole steps are uniformly spaced at a vertical distance of not more than 16 inches apart, measured center to center between steps. As mentioned above, OSHA believes that uniform spacing helps to make climbing safe. The ASTM C 478 standard specifies a maximum vertical spacing of 16 inches. The 1990 proposed provision (proposed § 1910.24(b)(1) specifies a uniform spacing of not less than six inches nor more than 18 inches apart.
Final paragraph (b)(2)(iv), like final paragraph (a)(3) of this section for step bolts, also allows spacing from the entry and exit surface to the first manhole step to be different from the spacing between the other steps. Additionally, OSHA added a standard method for measuring the distance—from center to center between steps. This measurement method and the allowance for different spacing of the first manhole step are common practices, and will provide the consistency needed to help protect workers, who will be entering, exiting, and working in different manholes. OSHA did not receive any comments on this provision and adopts it as discussed.
Final paragraph (b)(2)(v), like the proposed rule, requires that employers ensure manhole steps have a minimum perpendicular distance of at least 4.5 inches measured between the centerline of the manhole step and the nearest permanent object in back of it. The minimum clear-distance requirement is consistent with 1990 proposed § 1910.24(b)(3) and ASTM C 478, indicating that 4.5 inches is the common, accepted clearance for manhole steps. This requirement will provide adequate foot and hand holds, which are necessary for workers to safely climb manhole steps. OSHA did not receive any comments on this provision and adopts it as proposed.
Final paragraph (b)(2)(vi), like the proposal and final paragraph (a)(2) of this section for step bolts, requires that employers ensure that manhole steps are designed, constructed, and maintained to prevent the worker's foot from slipping or sliding off the end of the manhole step, which can result in a fall or slip. The final rule is the same as 1990 proposed § 1910.24(b)(5).
The proposed rule specified that manhole steps be designed to prevent workers' feet from slipping off the end of the step. For the same reasons discussed above in final paragraph (a)(2) for step bolts, OSHA added “constructed and maintained” to the final rule. OSHA did not receive any comments on this provision and adopted it as revised.
Final paragraph (b)(3), like the proposed rule and final paragraph (a)(8) of this section for step bolts, requires that employers ensure manhole steps are inspected at the start of the work shift, and maintained in accordance with § 1910.22. 1990 proposed § 1910.24(c)(4) specified that manhole steps be maintained in a safe condition and visually inspected prior to each use. OSHA's reasons for requiring manhole step inspections at the start of each work shift are the same reasons as those discussed above in final paragraph (a)(8) and, therefore, are not repeated here.
The proposed rule specified that manhole steps be visually inspected before each use. Mr. Miller, of Ameren, objected to the proposed language, saying: “Manhole steps are inspected when entered. There should be no need for additional inspection which would only increase the time and have little to no impact on safety. This seems only to be a paperwork requirement and would
OSHA is unclear what Mr. Miller means by “additional inspection,” specifically whether he is referring to the “before each use” language in the proposed rule or the requirement that employers also maintain manhole steps in accordance with final § 1910.22, which requires inspection of walking-working surfaces regularly and as necessary. The “before each use” language means that employers must ensure inspection of manhole steps before the first use in a work shift, and not every time a worker climbs on manhole steps. OSHA recognizes that workers may climb manhole steps multiple times during a work shift, and believes that inspecting the manhole steps when workers first use them during a work shift is sufficient. The final rule clarifies this point.
If Mr. Miller is referring to the inspections of walking-working surfaces employers must conduct in accordance with § 1910.22(d)(1), OSHA disagrees with Mr. Miller that such inspections are simply a paperwork burden that have no impact on safety. Conducting regular inspections ensures that hazards are identified and corrected in a timely manner, thereby preventing worker injury or death. Regular inspections also are important if workers do not use manhole steps daily or frequently. Inspections provide the assurances that walking-working surfaces such as manhole steps will be in a safe and useable condition when workers use them.
By contrast, the American Federation of State, County and Municipal Employees (AFSCME) recommended that OSHA strengthen the visual inspection requirement for existing manhole steps: “Our members report that many of these steps degrade due to exposure to the elements and are difficult to inspect visually. Often manholes are not entered regularly. We suggest the Agency require inventory of manholes that use permanent step ladders and that they be inspected annually” (Ex. 226). OSHA believes that the level of inspection the final rule requires provides far more protection than AFSCME recommends for existing manhole steps. Final paragraph (b)(3) requires that employers ensure each manhole step is inspected at the start of each work shift, which could amount to multiple inspections each workday, depending on the number of work shifts in a workday. OSHA believes that requiring inspection before initially using manhole steps in a work shift is more protective than using manhole steps that were last inspected almost a year ago.
Final paragraph (b)(3) also requires that employers maintain manhole steps in accordance with final § 1910.22. That section requires employers to inspect walking-working surfaces regularly and as necessary, and to maintain them in safe condition. “Regular inspection” means that the employer has some type of schedule, formal or informal, for inspecting walking-working surfaces that is adequate to identify hazards and address them in a timely manner. For purposes of the final rule, “as necessary” means that employers must conduct inspections when particular workplace conditions, circumstances, or events occur that warrant an additional check of walking-working surfaces to ensure that they are safe for workers to use. For example, an additional inspection may be necessary to ensure that a significant leak or spill does not create a slip, trip, or fall hazard on a walking-working surface.
OSHA believes this combination of inspection requirements will ensure that employers identify and correct hazardous conditions, such as degradation due to corrosion, on a timely basis, even if workers do not use manhole steps regularly. In addition, the requirement that manhole steps must be capable of supporting the maximum intended load (§ 1910.22(b)) will supplement visual inspections to ensure that manhole steps are safe to use.
Section 1910.25 of the final rule establishes requirements for the design and installation of stairways. OSHA carried forward the majority of these requirements from the existing rule (§ 1910.24, Fixed industrial stairs), and also drew a number of provisions from the following national consensus standards:
• American Society of Safety Engineers/American National Standard Institute (ASSE/ANSI) A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Roof Openings; Stairs and Guardrail Systems (A1264.1-2007) (Ex. 13);
• National Fire Protection Association (NFPA) 101-2012, Life Safety Code (NFPA 101-2012) (Ex. 385); and
• International Code Council (ICC) International Building Code-2012 (IBC-2012) (Ex. 386).
Final § 1910.25 is titled “Stairways,” which replaces the “Fixed Industrial Stairs” title in the existing rule (see discussion of “fixed industrial stairs” below). The final rule (§ 1910.21(b)) defines a stairway as “risers and treads that connect one level with another, and includes any landings and platforms in between those levels.” Final § 1910.25, like the proposed rule, covers all stairways, including standard, ship, spiral, and alternating-tread type stairs, used in general industry (§ 1910.25(a)). OSHA organized final § 1910.25 by the types of stairways that the final rule covers, and revised the format to add a separate paragraph identifying the scope and application of the section, as follows:
• Paragraph (a), Application, which specifies the stairs the final rule covers and excepts;
• Paragraph (b), now titled General Requirements, which establishes the requirements that apply to
• Paragraph (c), Standard Stairs; and
• Paragraphs (d) through (f), which specify requirements when employers use spiral stairs, ship stairs, and alternating tread-type stairs.
Final § 1910.25, like the proposal, replaces the term “fixed industrial stair” in the existing rule with the plain-language term “stairways.” In addition, in final § 1910.25, OSHA uses the term, “standard stairs,” that § 1910.21(b) defines as “a fixed or permanently installed stairway.” In the proposed rule, the Agency explained that “fixed industrial stairs” was the term in use when OSHA adopted the existing rule in 1971 from ANSI A64.1-1968 (now A1264.1-2007). The Agency said “standard stairs” was easier to understand and consistent with revised and updated national consensus standards (A1264.1-2007, NFPA 101-2006) and industry codes (IBC-2003) (75 FR 28881-82). Those standards and codes used “standard stairs,” “stairways,” and “fixed stairs” interchangeably, and none used or defined “fixed industrial stairs.”
OSHA requested comment about replacing the term “fixed industrial stairs,” particularly whether it would cause confusion or leave a gap in coverage. OSHA only received one comment from the National Fire Protection Association (NFPA), which supported the proposed change (Ex. 97). NPFA said standard stairs was consistent with NFPA 101-2009 (Sections 3.1 and 7.2.2.2.1). OSHA believes it is important to update terminology so standards are easy to understand and reflect current industry practice.
As mentioned, OSHA changed the title of final paragraph (a) to “Application.” OSHA believes that “Application” better describes the content of paragraph (a), which identifies what stairways the final rule covers and excludes. Final paragraph (a) is broad and comprehensive. The scope of the existing rule, § 1910.24(a), which covers “interior and exteriors stairs around machinery, tanks, and other equipment, and stairs leading to or from floors, platforms, or pits,” also is comprehensive. However, OSHA believes the language in the final rule more clearly and fully explains the Agency's objective, and ensures that the final rule does not inadvertently exclude any type of stairway used in general industry.
Final paragraph (a) also lists certain stairways that § 1910.25 does not cover, specifically:
• Stairs serving floating roof tanks;
• Stairs on scaffolds;
• Stairs designed into machines or equipment; and
• Stairs on self-propelled motorized equipment (
The exemption for stairs designed into machines or equipment and stairs on self-propelled motorized equipment is consistent with the scope of A1264.1-2007 and other national consensus standards, none of which address those stairs either. In the proposed rule, the Agency explained that it did not have sufficient information about such stairs, and there were no national consensus standards or industry codes to turn to for guidance or best industry practices. Although OSHA requested comment and information, only the Society of Professional Rope Access Technicians (SPRAT) responded:
It is the recommendation of this commenter that any stairs not covered by recognized industry standards, and about which the Agency does not have sufficient information or evidence to regulate, simply be acknowledged as a potentially hazardous situation with provision for protection against falls required (Ex. 205).
Although final § 1910.25 does not apply to stairs designed into machines or equipment or stairs on self-propelled motorized equipment, OSHA notes that the OSH Act's requirement that employers provide their workers with a place of employment that is free from recognized hazards that are causing, or are likely to cause, death or serious physical harm continues to apply (see 29 U.S.C. 654(a)(1)).
Final paragraph (a) eliminates the following existing exceptions:
OSHA also did not include the existing exemption for stairs used for fire exit purposes in either the proposed or final rules for two reasons. First, OSHA recognizes that employers could use virtually all stairways for fire and emergency exits, which makes a special provision for fire-exit stairs unnecessary. Second, when workers use stairways to exit an area in the event of a fire, it is important that the stairways meet the safety requirements in § 1910.25 so workers are able to safely escape. The Agency notes that its Means of Egress standards (29 CFR part 1910, subpart E) supplement walking-working surfaces requirements, including those in § 1910.25, for those portions of exit routes, including stairways, that are “generally separated from other areas to provide a protected way of travel to the exit discharge” (29 CFR 1910.43(c)).
Paragraph (b) of the final rule sets forth general requirements for all stairways covered by this section, while other provisions of § 1910.25 specify
Final paragraph (b)(1), like proposed paragraph (a)(2), requires that employers ensure handrails, stair rail systems, and guardrail systems are provided in accordance with final § 1910.28. This provision is intended to protect workers from falling off stairways. The final rule revises the proposal in two ways. First, OSHA added “guardrail systems” to final paragraph (b)(1). There are places on stairways, such as a platform between two flights of stairs, where guardrails, not stair rail systems are used. This was OSHA's intent in the proposed rule and is clarified for the final rule. There is no additional burden imposed on employers because they already must provide protection on unprotected sides and edges 4 feet or more above a lower level in accordance with final § 1910.28. Section 1910.29 of the final rule details the criteria these guardrail systems must meet.
Second, the Agency did not include the note from proposed paragraph (a)(2) in final paragraph (b)(1). The note was moved to § 1910.29(f)(1)(iii) in the final rule. The proposed note specified that the top rail of a stair rail system may also serve as a handrail when installed in accordance with § 1910.29(f). The Agency determined that the note primarily addresses criteria for stair rail systems and is more appropriately placed with the criteria requirements in § 1910.29. OSHA did not receive any comments on the proposed provision and adopted the provision with the clarifications discussed above.
Final paragraph (b)(2), like proposed paragraph (a)(3), requires employers to ensure that the vertical clearance above any stair tread to any overhead obstruction is at least 6 feet, 8 inches, as measured from the leading edge of the tread. Like the proposal, spiral stairs must meet the vertical clearance requirement specified by final paragraph (d)(3), which is 6 feet, 6 inches.
The required vertical clearance in the final rule is lower than the 7-foot minimum clearance in the existing requirement (§ 1910.24(i)). However, the 6-foot, 8-inch clearance is consistent with A1264.1-2007 (Section 6.12) and NFPA 101-2012. OSHA notes that Section 6(b)(8) of the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 655(b)(8)) requires OSHA to promulgate rules that are consistent with existing national consensus standards or explain why differences better effectuate the purpose of the OSH Act. The Agency believes that the requirements in A1264.1-2007 and NFPA 101-2012 provide adequate protection and reflect accepted industry practice. OSHA also points out that stairways built in compliance with the existing clearance requirements already meet the final rule. OSHA did not receive any comments on the proposed provision.
Final paragraphs (b)(3) through (5) establish requirements for riser heights, tread depths, and stairway landing platform dimensions. The final paragraphs, which are consistent with existing subpart D, are the minimum criteria necessary to ensure worker safety when using stairs. The final provisions also contain minor non-substantive changes to increase clarity.
Final paragraph (b)(3), like proposed paragraph (a)(4), incorporates the requirement in existing § 1910.24(f) that employers ensure that stairs have uniform riser heights and tread depths between landings. OSHA believes that retaining this requirement is necessary because, in the Agency's experience, even small variations in riser height can cause trips.
OSHA, however, is not carrying forward other language in existing § 1910.24(f). For example, the existing rule requires that employers ensure stair treads and nosings are slip-resistant. OSHA does not believe this provision is necessary because final § 1910.22 already addresses this hazard. To illustrate, § 1910.22(a)(3) requires employers to maintain walking-working surfaces free of hazards such as spills, and § 1910.22(d)(1) requires employers to maintain walking-working surfaces in a safe condition. Therefore, OSHA is not repeating this requirement in final § 1910.25.
Similarly, OSHA believes it is not necessary to include in final § 1910.25(b)(3) the existing language allowing employers to use “welded bar grating treads without nosings.” The final rule is performance-based so employers are free to use stairways constructed of any type of material that will meet the requirements of the final rule.
OSHA received comments on the proposed provision. In particular, NFPA argued that the uniform tread and riser dimensions in final paragraph (b)(3) are not achievable because the provision does not include construction tolerances. NFPA stated, “It is not technically possible to build stairs with consistent riser height and consistent tread depth as construction tolerances creep into the process” (Ex. 97). To address this issue, NFPA recommended that OSHA incorporate the tolerances allowed in NFPA 101-2009, which permits an allowance of no more than
OSHA believes that minor variations in tread depth and riser height, such as those allowed in NFPA 101-2012 and A1264.1-2007, are acceptable. OSHA understands that minor variations in tread depth and riser height due to construction tolerances are likely to occur when building stairs and these minor variations are acceptable under the final rule.
Final paragraph (b)(4), like proposed paragraph (a)(5) and existing § 1910.24(g), requires that employers ensure the size of stairway landings and platforms is not less than the stair width and not less than 30 inches in depth, as measured in the direction of travel. The final rule is consistent with A1264.1-2007 (Section 6.10). OSHA did not receive any comments on the proposed provision adopts the proposed language with only minor clarifications.
Final (b)(5), like proposed paragraph (a)(6), requires that, when a door or a gate opens directly onto a stairway, employers must provide a platform and ensure the swing of the door or gate does not reduce the effective usable depth of the platform to less than:
• 20 inches for platforms installed before the effective date of the final rule; and
• 22 inches for platforms installed on or after the effective date of the final rule.
The final and proposed rules revise the language of the existing rule (§ 1910.23(a)(10)), which requires employers to ensure that doors or gates do not reduce the effective usable depth to less than 20 inches, by increasing the effective usable platform depth by 2 inches for newly installed platforms. The final rule grandfathers in the 20-inch platform depth requirement for existing stairways. Increasing the platform depth requirement to a minimum 22 inches is consistent with
The final and proposed rules use the term “effective usable depth.” The term means the portion of the platform that is beyond the swing of the door or gate where a worker can stand when opening the door or gate. As Figure D-7 in the regulatory text illustrates, the effective useable depth is that portion of the platform that extends beyond the swing radius of the door or gate when it is open fully to the leading edge of the stair. OSHA believes this term expressly clarifies that the minimum platform depth must consider the portion of the platform used to accommodate the swing of the door or gate.
The Agency requested comment on the proposed provision and the amount of unobstructed space necessary for landing platforms when doors or gates open directly onto them. Ameren Corporation commented:
The necessary landing outside the swing radius of any door is directly dependent upon the direction of the door's swing in relation to the direction of travel. If the door opens in the direction of travel, much less clearance is needed for the employee. Since no objective evidence is available for one distance for all paths of travel, the clearance of door swing should remain as is and allow the employer to determine whether or not two more inches of clearance is necessary for the safety of their personnel (Ex. 189).
OSHA believes that adopting the 22-inch effective useable platform depth for newly installed stair platforms is appropriate. As mentioned earlier, OSHA drew the requirement from the A1264.1-2007 standard. The standard reflects the considered views of employers, employees, safety professionals, and others. The 22-inch requirement also was in the 1995 and 2002 editions of the A1264.1 standard. With the requirement in A1264.1-2007 being in effect since 1995, OSHA believes it clearly represents accepted industry practice. OSHA notes the 22-inch effective-depth requirement applies to platforms installed on or after the effective date of the final rule, which is January 17, 2017. OSHA believes that the phase-in time the final rule allows is more than adequate for employers who install platforms, gates, and doors on stairways.
Ameren Corporation also raised an issue about the compliance deadline for paragraph (b)(5):
Lead time for material orders are often quite longer than three months[,] often up to years to order material for large capital projects. Small projects with possibly only a small amount of material being required shouldn't have much of an issue of complying depending on the manufacturer capabilities and their imposed deadlines. Stipulations of “ordered” material should be imposed in regard to the date of the final rule because the time between ordering and placing into service is often greater than 90 days (Ex. 189).
The 22-inch platform depth requirement in the final rule is prospective: it only applies to stairways, platforms, doors, and gates installed on or after the effective date of the final rule, which is January 17, 2017. This provision gives employers a 60-day lead time after publication of the final rule to come into compliance with the requirement when they install new stairway platforms. OSHA does not believe that it is necessary to extend the compliance deadline any further, even though the Agency proposed 150 days. The Agency believes a 60-day compliance lead time is more than adequate given that the 22-inch requirement in the A1264.1 standard has been in place for more than 18 years. During this 18-year period, OSHA believes the vast majority of employers, as well as manufacturers, construction companies, and building owners, came into compliance with the 22-inch requirement. Therefore, OSHA requires employers to comply with the 22-inch effective useable platform depth requirement by the standard's effective date.
Final paragraph (b)(6), like proposed paragraph (a)(7), requires that employers ensure stairs can support at least five times the normal anticipated live load, and never less than a concentrated load of 1,000 pounds, applied at any point on the stairway. This requirement is consistent with A1264.1-2007 and earlier versions, which have been in place for many years. OSHA believes that most existing stairs have been installed in accordance with the ANSI requirements, and, therefore, already are in compliance.
OSHA requires employers to apply this safe-load requirement to spiral stairs, ship stairs, and alternating tread-type stairs, as well as standard stairs. OSHA believes the safe-load requirement is necessary to protect workers from stair collapse due to overloading, regardless of the type of stairs they are using. OSHA notes that final paragraph (b)(6), like the ANSI standard, applies to all stairs that § 1910.25 covers.
For the purposes of final paragraph (b)(6), a “normal anticipated live load” means a dynamic load (
Final paragraph (b)(6) includes revisions that OSHA believes will provide an equal or greater level of protection to workers than the existing and proposed rules. For example, final paragraph (b)(6) requires that employers ensure stairways “can support” the required load, while the existing (at § 1910.24(c)) and proposed rules specify that stairways must “be designed and constructed” to support the required load. The revision ensures that, in addition to the design and construction of the stairways, the employer has an ongoing duty to maintain the stairways to ensure they can continue to support the load applied to them without collapse.
The final rule also revises the default strength language to require that stairways be capable of supporting a concentrated load of not less than 1,000 pounds “applied at any point.” The existing rule requires that stairways be capable of carrying not less than a “moving” concentrated load of 1,000 pounds. OSHA believes the final provision provides equal or greater level of safety by making the final rule applicable to any single point on the stairs, particularly the point that experiences maximum stress. These revisions are consistent with A1264.1-2007. OSHA did not receive any comments on the proposed provision and adopts paragraph (b)(6) with the changes discussed.
Final paragraphs (b)(7) through (9) specify when and where employers must provide standard stairs, and under what conditions employers may use spiral, ship, or alternating tread-type stairs. In final paragraphs (b)(7) and (8), OSHA simplified and reorganized the existing rule (§ 1910.24(b)) to make the requirements clearer and easier to understand than the existing and proposed rules.
Final paragraph (b)(7), like proposed paragraph (a)(8) and existing § 1910.24(b), requires employers to provide standard stairs to allow workers to travel from one walking-working surface to another. The existing and final rules both recognize that standard
For purposes of the final rule, OSHA describes “regular and routine travel” in much the same way as the existing rule in § 1910.24(b). The term includes, but is not limited to, access to different levels of the workplace daily or during each shift so workers can conduct regular work operations, as well as operations “for such purposes as gauging, inspection, regular maintenance, etc.” (existing § 1910.24(b)). “Regular and routine” also includes access necessary to perform routine activities or tasks performed on a scheduled or periodic, albeit not daily, basis, particularly if the tasks may expose employees to acids, caustics, gases, or other harmful substances, or require workers to manually carry heavy or bulky materials, tools, or equipment (existing § 1910.24(b)).
Final paragraph (b)(7) retains the existing provision allowing the use of winding stairways on tanks and similar round structures when the diameter of the tank or structure is at least 5 feet. OSHA notes that winding stairs on such tanks and structures still must meet the other general requirements for stairways specified in the final rule. This provision does not preclude the use of fixed ladders to access elevated tanks, towers, and similar structures, or to access overhead traveling cranes, etc., when the use of such ladders is standard or common industry practice. OSHA received no comments on the proposed requirement and adopted the provision with only minor editorial change.
Final paragraph (b)(8) allows employers to use spiral stairs, ship stairs, and alternating tread-type stairs (collectively referred to as “non-standard stairs”), but only when employers can demonstrate that it is not feasible to provide standard stairs.
The existing rule (existing § 1910.24(b)), which OSHA adopted in 1972 from ANSI A64.1-1968 pursuant to section 6(a) of the OSH Act (29 U.S.C. 655(a)), allows employers to use spiral stairs for “special limited usage” or as a secondary means of access but only where it is “not practical” for employers to provide standard stairs. The existing rule, however does not address either ship or alternating tread-type stairs.
The 1973 proposed rule would have allowed the use of ship stairs “in restricted spaces in which a fixed industrial stairway cannot be fitted” (38 FR 24300, 24304 (9/6/1973)), however, OSHA withdrew that proposal (41 FR 17227 (4/23/1976)). In a 1982 letter of interpretation, though, OSHA said if employers use ship stairs in accordance with the 1973 proposal, the Agency would consider it to be a
That year OSHA issued Instruction STD 01-01-011 (April 26, 1982) allowing the use of and establishing guidelines for “a newly developed alternating tread-type stair”
• The stairs are installed at a 70 degree angle or less;
• The stairs are capable of withstanding a minimum uniform load of 100 pounds per square foot with a design factor of 1.7 and the treads are capable of carrying a minimum concentrated load of 300 pounds at the center of any treadspan or exterior arc with a design factor of 1.7. If the alternating tread-type stairs are intended for greater loading, the employer must ensure the stairs are constructed to allow for additional loading; and
• The stairs are equipped with a handrail on each side to assist employees climbing or descending the stairs.
OSHA announced in both STD 01-01-011 and the 1982 letter of interpretation that it would include provisions on ship stairs and alternating tread-type stairs in the subpart D rulemaking. The 1990 proposal included provisions allowing employers to use spiral, ship, and alternating tread-type stairs and establishing design specifications for each type of stair (55 FR 13360, 13400 (4/10/1990)). No final rule came from that proposal either.
In 2002, in response to an Office of Management and Budget (OMB) request for comment on its Draft Report to Congress on the Costs and Benefits of Federal Regulations, the Copper and Brass Fabricators Council (CBFC) urged OSHA to revise the existing rule (§ 1910.24(b)) to allow the use of ship and spiral stairs in a broader range of situations:
OSHA regulations under some circumstance require the use of fixed ladders when spiral stairways or ship stairs would be safer . . . [S]ection 1910.24(e) prohibits any stairs with an angle of rise greater than 50 degrees. Unfortunately, it is very common to have a tight location in industry where there is insufficient space for stairs with an angle of 50 degrees or less. Traditionally, these areas would use ship stairs that have separate handles from the stair rail but steps that are less deep than the traditional 8 inch to 12 inch step. Otherwise, a spiral stair was used which allowed a deeper tread. Under the present regulation, industries are required to use rung ladders in these locations which is less safe than spiral stairs or ship stairs (Ex. 4).
The 2010 proposed rule expanded the existing standard to allow employers to use spiral, ship, and alternating tread-type stairs. Similar to the existing rule, the proposal allowed employers to use non-standard stairs for “special limited usage” and “secondary access,” but only when the employer can demonstrate it is “not practical” to provide standard stairs in either situation (proposed paragraph (b)(9)). The proposed rule did not define any of these terms. Also, A1264.1-2007 did not define “special limited use,” but OSHA explained in the preamble to the proposed rule that the International Building Code (IBC)-2009 identified “special limited usage” area as a space that is no more than 250 square feet (23 m
Final paragraph (b)(8) differs from the proposed rule in several ways. First, final paragraph (b)(8) deletes the language in the proposed rule limiting the use of non-standard stairs to “special limited usage” areas and as a secondary means of access. Although the existing, proposed, and A1264.1-2007 standards permit employers to use non-standard stairs in special limited usage areas and for secondary access, none of these standards defines either term. OSHA believes eliminating those undefined terms makes the final rule easier to understand.
Second, the final rule replaces the proposed language (
Third, the Agency believes the performance-based language in the final rule does a better job of targeting the areas where it is not possible to use standard stairs and, thus, provides more protection for workers than the existing and proposed rules. The final rule limits the use of non-standard stairs to those situations in which it is not possible to use standard stairs. For example, under the final rule, employers must use standard stairs in special limited usage areas if it is possible to install them.
OSHA requested comment on proposed rule, including whether the final rule also should identify additional or specific limited usage areas where employers can use non-standard stairs (75 FR 28882). Two stakeholders said OSHA should narrow the situations in which employers may use non-standard stairs (Exs. 97; 159). For example, NFPA stated:
[I]t appears that OSHA is proposing to allow other than Standard Stairs to be used as long as the employer shows a Standard Stair cannot be used. However, no criterion as to why a standard stair could not be used is provided. Section 1910.25(a)(9) seems to allow spiral stairs, ship stairs or alternating tread devices without any limits. NFPA suggests OSHA establish a bracket of circumstances when such devices can be used (Ex. 97).
In particular, NFPA recommended that OSHA limit the circumstances in which employers may use non-standard stairs to the following list, which are the circumstances where NFPA 101 Life Safety Code allows the use of non-standard stairs, such as alternating tread-type stairs:
• As a means to access unoccupied roof spaces;
• As a second means of egress from storage elevators;
• As a means of egress from towers and elevated platforms around machinery or similar spaces, and occupied by no more than three persons at the same time; and
• As a secondary means of egress from boiler rooms or similar spaces, and occupied by no more than three persons at the same time (NFPA 101-2009, Section 7.2.11.1).
NFPA added that incorporating the NFPA 101-2009 list would “close the gap created by the proposed language and greatly limit the circumstances by which `non-standard' stairs are acceptable for use” (Ex. 97).
Similarly, Jacqueline Nowell, of the United Food and Commercial Workers Union (UFCW), recommended that OSHA adopt a definition of special limited usage that is narrower than the IBC-2009 definition:
The Agency refers to the ICC Building Code definition [of special limited usage] as “a space not more than 250 square feet (23m\2\) in area and serving not more than five occupants.” Work platforms in many packaging houses would meet this definition of “special limited usage.” By allowing the use of spiral stairs or other non-standard stairs, OSHA would be introducing a new and unnecessary hazard to the workers who must climb up and down from these platforms multiple times a day, wearing heavy and bulky layers of personal protective equipment. I urge OSHA to develop a more restricted definition of “special limited usage” in order to prevent falls and other injuries to these workers (Ex. 159).
On the other hand, Southern Company (Ex. 192) said the definition of “special limited usage” in IBC-2009 (
OSHA believes the performance-based language in final paragraph (b)(8) addresses many of the concerns the stakeholders raised. The language in the final rule provides the increased flexibility that Southern Company supports. At the same time, the final rule limits the use of non-standard stairs to those circumstances where, based on specific case-by-case evaluations and demonstrations, it is not possible to use standard stairs. Thus, for example, if it is possible to use standard stairs in a space that is less than 250 square feet, the employer is not permitted to use non-standard stairs under the final rule. In conclusion, OSHA adopts final paragraph (b)(8) as discussed.
Final paragraph (b)(9), which is a new provision, requires employers to ensure that non-standard stairs are installed, used, and maintained in accordance with manufacturer's instructions. Since 1982, OSHA Instruction STD 01-01-011 has applied this requirement to alternating tread-type stairs. Although final § 1910.22(d) already requires that employers inspect and maintain walking-working surfaces in a safe condition, OSHA believes that specifically requiring that non-standard stairs comply with the instructions or provisions the manufacturer has issued for the installation, use, and maintenance is critical to ensure that unique aspects of these stairs are identified and addressed. OSHA also believes this requirement is necessary to minimize potential risks inherent in spiral, ship, and alternating tread-type stairs (
Finally, the Agency notes the requirements for spiral, ship, and alternating tread-type stairs in final paragraphs (b)(8) and (9) that employers must follow are in addition to the other general requirements in final paragraph (b) and specific requirements in final paragraphs (d), (e), and (f), which also apply to non-standard stairs.
Paragraph (c) of the final rule, like proposed paragraph (b), establishes specific requirements for standard stairs that apply in addition to the general requirements in final paragraph (b). OSHA believes these specific requirements are the minimum criteria necessary to ensure workers can negotiate standard stairs safely. The requirements in final paragraph (c) generally are consistent with the A1264.1-2007 standard and most of the requirements are in the existing rule.
Final paragraph (c)(1), like proposed paragraph (b)(1) and existing § 1910.24(e), requires employers to install standard stairs at angles between 30 and 50 degrees from the horizontal. The final rule is consistent with
Final paragraphs (c)(2) and (3), like proposed paragraphs (b)(2) and (3), require that employers ensure standard stairs have a maximum riser height and minimum tread depth of 9.5 inches.
The existing rule (§ 1910.24(e)) does not specify a maximum riser height or minimum tread depth for fixed stairs. Instead, it requires that fixed stairs be installed at an angle of 30 to 50 degrees from horizontal and allows employers to use any combination of uniform riser and tread dimensions that achieves a stairway angle within the required range. To assist employers, the existing rule (§ 1910.24(e), Table D-1) provides examples of riser height and tread depth combinations that will achieve the required angle range. The existing rule also specifies that employers may use riser and tread combinations other than those listed in Table D-1, provided they achieve a stairway angle that is within the required slope of 30 to 50 degrees.
Like the final rule, A1264.1-2007 (Section 6.5) requires a 9.5-inch maximum riser height and minimum tread depth. And like the existing rule, A1264.1-2007 also allows employers to use any combination of riser and tread dimensions that achieve a stair angle within the permissible range. OSHA notes that A1264.1-2007 (Section E6.4) specifies that the permissible angle range for “typical fixed stair” is 30 to 50 degrees, which is consistent with the existing and final rules.
OSHA believes that the riser height and tread depth requirements in final paragraphs (c)(2) and (3), respectively, are simpler, clearer, and easier to understand and follow than the existing rule. The final rule also makes it easier for employers to achieve the required stair angle range of 30 to 50 degrees in final paragraph (c)(1).
OSHA received several comments on the proposed riser height and tread depth requirements. For example, Ellis Fall Safety Solutions (Ex. 155) advocated that OSHA follow the maximum riser heights and minimum tread depths of 7 and 11 inches, respectively, in IBC-2009, stating, “If other locations in commerce are 7/11 why should we not find that at work too? Also it is less tiring for workers to climb a 7/11 stair . . . . OSHA should not be different than the IBC Building Code in this instance” (Ex. 155).
To reduce employer burdens, Ellis also suggested that the final rule include a provision grandfathering in the riser and tread dimensions of existing stairways until employers do “major renovation” of the stairs (Ex. 155). Southern Company agreed that OSHA should grandfather in existing stairways that have a tread depth of less than 9.5 inches, “[W]e have not seen data that an existing stairway with an 8 inch tread depth produces an increase in the fall exposure that would justify replacing these stairs. Absent data . . . we feel these stairs should be grandfathered” (Ex. 192).
NFPA, on the other hand, said there was “no technical justification” for allowing a tread depth of less than 9.5 inches, especially since it was more lenient than the 11-inch tread depth requirement in new IBC codes (Ex. 97).
OSHA agrees with NFPA that the 9.5-inch minimum tread requirement in the proposed, final, and A1264.1-2007 standards provides stepping space that is adequate to protect workers from falling. Although A1264.1-2007 (Section 6.5) requires a 9.5 maximum riser height and minimum tread depth, an explanatory note also suggests that employers consider the riser and tread requirements in IBC codes. OSHA notes that employers who have or install standard stairs with an 11-inch tread depth, which IBC-2009 requires, are in compliance with the final rule. Moreover, as mentioned above, OSHA grandfathers in the riser heights and tread depths of existing stairs even if they are less than 9.5 inches, which addresses the concerns of Southern Company.
OSHA removed from final paragraph (c)(3) the proposed exception from the minimum tread-depth requirement for stairs with open risers. OSHA adopted the proposed exception from the 9.5-inch tread-depth requirement for open risers from A1264.1-2007. A note to that standard explained: “Open risers are needed on certain narrow tread and steep angled stair systems and exterior structures” (Section E6.13.).
NFPA opposed the proposed exception, saying that allowing a tread depth of less than 9.5 inches for open risers is problematic in two ways:
(1) Where open risers are present, not only does the specific 9.5-inch not apply, but no minimum tread depth is specified. The tread depth could be as little as 3-4 inches. (2) Stairs are used for travel in the downward direction at least as much as they are used for travel in the upward direction. An open riser might help to provide some extra “effective” tread depth for persons using the stair for upward travel. . . . [However,] [a]n open riser does not create greater effective tread depth for persons using the stair for downward travel (Ex. 97).
Final paragraph (c)(4), like proposed paragraph (b)(4), requires that employers ensure standard stairs have a minimum width of 22 inches between vertical barriers. Examples of vertical barriers include stair rails, guardrails, and walls. The added language makes the final provision more protective than the existing rule (§ 1910.24(d)), which also requires a tread width of 22 inches but does not specify how to measure the width. The additional language makes the final rule consistent with A1264.1-2007, which requires a minimum clear width of 22 inches. OSHA did not receive any comments on the proposed provisions and adopts the provision as proposed.
The requirements for non-standard stairs in final paragraphs (d) (spiral stairs), (e) (ship stairs), and (f) (alternating tread-type stairs) parallel most of the provisions established for standard stairs in paragraph (c). Like the requirements for standard stairs, the requirements for spiral, ship, and alternating tread-type stairs represent the minimum requirements OSHA believes are necessary to ensure that
Final paragraph (d), like proposed paragraph (c), establishes specific requirements for spiral stairs. As mentioned earlier, these requirements apply in addition to the general requirements in paragraph (a). OSHA adopted most of the requirements in final paragraph (d) from NFPA 101-2012. OSHA believes that the vast majority of spiral stairs currently in use already meet the requirements in final paragraph (d) because these spiral stairs conform to the current industry practice expressed in this NFPA standard. Therefore, OSHA believes employers will not have difficulty complying with the final rule.
Final paragraph (d)(1), like paragraph (c)(1) of the proposed rule, requires that employers ensure spiral stairs have a minimum clear width of 26 inches. The “clear” width requirement in final paragraph (d)(1) is similar to the approach in final paragraph (c)(4) and A1264.1-2007 (Section 6.3). That is, the width is measured from the vertical barrier on the outside of the stairway to the inner pole onto which the treads are attached. Spiral stairs need a greater width than standard stairs because only the outside portion of the stairs can be stepped on since the inner part of treads are too short in depth. OSHA did not receive any comments on the proposed provision and adopts the provision as proposed.
Final paragraph (d)(2), like proposed paragraph (c)(2) and final paragraph (c)(3), requires that employers ensure that spiral stairs have risers with a maximum height of 9.5 inches. OSHA did not receive any comments on the proposed provision, and the final rule adopts the provision as proposed.
Final paragraph (d)(3) requires that employers ensure spiral stairs have a minimum headroom above the spiral stair treads of at least 6 feet, 6 inches. The final rule also requires that employers measure the vertical clearance from the leading edge of the tread. This requirement means that, at any and every point along the leading edge, the minimum headroom must be at least 6 feet, 6 inches. The proposed rule (paragraph (c)(3)) specifies that same minimum headroom, but proposed to measure it at the center of the leading edge of the tread. OSHA believes it is necessary to revise the method for measuring the vertical clearance to prevent injury to workers when using spiral stairs. The minimum headroom the final rule requires for spiral stairs is two inches less than the headroom final paragraph (b)(2) requires for all other stairways. Because the required headroom is less, OSHA believes it is important that employers measure the required minimum headroom at all points along the leading edge. OSHA did not receive any comments on the provision and adopts the proposed provision with the change discussed.
To ensure that workers are able to maintain safe footing while using spiral stairs, final paragraph (d)(4), like proposed paragraph (c)(4), requires that employers ensure spiral stairs have a minimum tread depth of 7.5 inches. Because the tread depth on a spiral stair is not the same across the width of the tread, the final rule also requires that employers measure the minimum tread depth at a point 12 inches from the narrower edge. This requirement ensures that workers will have adequate space at the point on the tread where they are most likely to step.
Although the minimum tread depth final paragraph (d)(4) requires is less than that for standard stairs, OSHA has several reasons for concluding that the minimum 7.5-inch tread depth is adequate to provide safe footing for workers. First, spiral stairs usually have open risers that provide additional space for the foot. Second, employers use spiral stairs where space restrictions make the use of standard stairs infeasible. In restricted-space situations, there may be insufficient room for stairways with 9.5-inch tread depths. Third, final paragraph (d)(4) is consistent with NFPA 101-2012. OSHA did not receive any comments on the proposal and adopts the provision as proposed.
Final paragraph (d)(5), like proposed paragraph (c)(5), requires that employers ensure spiral stairs have a uniform tread size. As OSHA mentioned in the discussion of paragraph (b)(3), this requirement is necessary because, in the Agency's experience, even small variations in tread size and shape may cause trips and falls. OSHA did not receive any comments on the proposed rule and adopts it as proposed.
Final paragraph (e), like proposed paragraph (d), provides specific requirements employers must follow in situations where they may use a type of stair commonly referred to as a “ship stair” or “ship ladder.” Employers often use ship stairs as a means to bypass large equipment, machinery, or barriers in tight spaces. OSHA drew some of the provisions in final paragraph (e) from the A1264.1-2007 standard.
The requirements in final paragraph (e) apply in addition to the general requirements specified in paragraph (a) above. In addition, OSHA is reorganizing some of the provisions in final paragraph (e) to make the paragraph easier to follow and understand. For example, OSHA is grouping the riser requirements into one provision (final paragraph (e)(2)).
OSHA notes that the requirements in final paragraph (e) apply only to ship stairs used in general industry. Some commenters raised concerns about whether OSHA was applying the requirements in paragraph (e) to ship stairs used on vessels. For example, Northrop Grumman Shipbuilding (NGS) said:
OSHA has included a definition (§ 1910.21(b)) and design requirements for ship stairs. . . . [W]e wish to clarify that despite the inclusion of the term “ship stairs” in the standard, OSHA is not attempting to extend application of the design criteria for ladders, stairs or other walking-working surfaces to vessels, which we believe are under the regulatory authority of the United States Coast Guard (Ex. 180).
Mercer believes that OSHA intends to apply this definition to a particular stair or ladder configuration wherever it is found, whether on a ship or in a land-based facility. However, if one reads the definition literally (which should be possible with regulations), one might easily conclude that unless the stairs or ladder are actually aboard a ship, they do not fit the regulation (Ex. 254).
Using the longstanding industrial term “ship stairs” does not mean that this final rule applies to any industry sectors or workplaces beyond general industry, or working conditions regulated by other agencies. As mentioned in § 1910.21, OSHA considers “ship stairs” to be a term of art for a type of stairway used when standard stairs are not feasible. OSHA recognizes that, historically, vessels used ship stairs to access different levels in restricted spaces. Today, however, employers use these stairs in other situations, including general industry workplaces. OSHA continues to use the term in the final rule to refer to a particular stair design, and not to designate where employers install or use them (see discussion of ship stairs in § 1910.21(b)).
Final paragraph (e)(1), like paragraph (d)(1) of the proposed rule, requires that employers ensure ship stairs are installed at a slope of 50 to 70 degrees from the horizontal. As A1264.1-2007 indicates, this slope range is standard
Final paragraph (e)(2), like paragraph (d)(2) of the proposed rule, addresses risers on ship stairs. First, the provision requires that employers ensure ship stairs have open risers. The final rule is consistent with A1264.1-2007 (Section 6.13), which requires that ship, spiral, and alternating tread-type stairs having a tread depth of less than 9.5 inches must have open risers. The A1264.1-2007 standard explains that open risers are necessary for stairs with narrow tread depth, such as stairs used in restricted space (Sections E6.5 and E6.13). An open riser gives workers additional space to ensure they are able to maintain safe footing on treads that have a narrow tread depth due to the limited space.
Second, final paragraph (e)(2), like proposed paragraph (d)(3), requires that employers ensure ship stairs have a vertical rise between tread surfaces of at least 6.5 inches and not more than 12 inches. For clarity, OSHA moved the proposed requirement to paragraph (e)(2) because it also addresses stair risers. OSHA did not receive any comments on the proposed ship stair requirements for open risers and acceptable riser height and adopts the provision as proposed.
Final paragraph (e)(3), like proposed paragraph (d)(3), requires that employers ensure ship stairs have a minimum tread depth of 4 inches. Employers must apply final paragraph (e)(3) in combination with paragraph (e)(2). Although the required 4-inch minimum tread depth for ship stairs is less than the 9.5-inch minimum tread depth required for standard stairs (final paragraph (c)(3)), nevertheless, OSHA believes the tread depth is adequate to ensure that workers have a safe stepping area because final paragraph (e)(2) requires that ship stairs have open risers. As discussed, open risers give workers additional space to maintain safe footing on ship stairs. Also, together the riser and tread requirements in final paragraphs (e)(2) and (3), respectively, set the necessary framework for employers to achieve the required 50- to 70-degree angle range for ship stairs. OSHA did not receive any comments on the proposed provision and adopts the provision as discussed.
Final paragraph (e)(4), like proposed paragraph (d)(3), requires that employers ensure ship stairs have a minimum tread width of 18 inches. Although the required tread width for ship stairs is 4 inches less than that specified in final paragraph (c)(4), OSHA believes this width is adequate for stairs that employers may use only in certain limited situations, such as in restricted spaces where it is not feasible to use standard stairs. OSHA notes that the final rule makes the tread-width requirement a stand-alone provision, which makes paragraph (e)(4) consistent with the other tread-width provisions in § 1910.25. The Agency did not receive any comments on the proposed tread width provision and adopted it as proposed.
Final paragraph (f), like proposed paragraph (e), establishes specific requirements for those situations in which employers may use alternating tread-type stairs. The requirements in final paragraph (f) apply in addition to the general requirements in final paragraph (b). The Agency based the requirements on OSHA Instruction STD 01-01-011 and three national consensus standards (A1264.1-2007, NFPA 101-2012, and IBC-2012).
Final paragraph (f)(1), like proposed paragraph (e)(1), requires that employers ensure the series of treads installed in alternating tread-type stairs have a slope of 50 and 70 degrees from the horizontal. As A1264.1-2007 indicates, this slope range is standard for alternating tread-type stairs (see Figure 6.4). Final (f)(1) also is consistent with OSHA Instruction STD 01-01-011, which specifies that alternating tread-type stairs must have a slope angle of 70 degrees or less. OSHA did not receive any comments on the proposed requirement and adopts the provision as proposed.
Final paragraph (f)(2), like proposed paragraph (e)(2) and proposed § 1910.28(b)(11)(iii), specifies the required horizontal distance between handrails. It requires that employers ensure the distance between the handrails on alternating tread-type stairs is not less than 17 inches and not more than 24 inches.
OSHA Instruction STD 01-01-011, which allows employers to use alternating tread-type stairs, does not specify a minimum width between handrails. The existing (§ 1910.24(d)), proposed (proposed paragraph (b)(4)), and final rules (final paragraph (c)(4)) require that employers ensure standards stairs have a minimum 22-inch tread width between vertical barriers (
OSHA believes the handrail distance requirement in the final rule better effectuates the purposes of the OSH Act than A1264.1-2007. First, alternating tread-type stairs can pose unique issues. OSHA believes the 17- to 24-inch handrail distance is appropriate and provides needed flexibility to address those issues. For example, as A1264.1-2007 (Section E6.1.1) points out, some alternating tread-type stairs are built so that workers need to descend facing away from the stairs, which makes three-point contact “a necessity.” For those stairs, OSHA believes that the distance between handrails may need to be adjusted so workers are able to maintain critical three-point contact while they are descending the stairs.
Second, the final 17- to 24-inch handrail distance requirement is established specifically for the alternating tread-type stairs. By contrast, the 22-inch width requirement in A1264.1-2007 applies to all fixed stairs and does not take into consideration the issues and limitations involved with alternating tread-type stairs. Therefore, OSHA believes the flexibility that final paragraph (f)(2) provides, combined with its specific consideration of the issues involving alternating tread-type stairs, ensures that the final rule will provide appropriate protection.
Finally, adopting a 17- to 24-inch handrail distance is consistent with the NFPA 101-2012 requirement for alternating tread-type stairs (Section 7.2.11.2). Unlike A1264.1-2007, the NFPA 101 standard establishes handrail width requirements specific to alternating tread-type stairs and the unique issues and limitations those stairs involve. OSHA is therefore following the NFPA 101-2012 standard in accordance with section 6(b)(8) of the OSH Act (29 U.S.C. 655(b)(8)).
OSHA notes that since 1986, OSHA Instruction STD 01-01-011 has required that alternating tread-type stairs “be equipped with a handrail on each side” to assist workers using the stairs. Final paragraph (f)(2) (
Final paragraphs (f)(3) and (f)(4) address tread depth for alternating tread-type stairs. Final paragraph (f)(3), like proposed paragraph (e)(3), requires that employers ensure alternating tread-type stairs have a tread depth of at least 8.5 inches. However, if the tread depth is less than 9.5 inches, final paragraph (f)(4), like proposed paragraph (e)(4), requires that employers ensure alternating tread-type stairs have open risers. The A1264.1-2007 standard
Final paragraph (f)(5), like proposed paragraph (e)(5), requires that employers ensure that each tread has a minimum width of 7 inches measured at the leading edge (nosing) of the tread. The measurement is taken at the leading edge of the tread because treads on many of these types of stairs narrow at the back of the tread. This requirement is based on a requirement in the IBC-2012 (§ 1009.13.2). OSHA did not receive any comments on the proposed requirements and adopts the provisions as proposed.
Section 1910.26 of the final rule establishes requirements for the design, performance, and use of dockboards. The final rule updates the existing requirements for dockboards (existing § 1910.30(a)).
• American National Standards Institute (ANSI)/Industrial Truck Standards Development Foundation (ITSDF) B56.1-2012, Trucks, Low and High Lift, Safety Standard (B56.1-2012) (Ex. 384);
• ASME/ANSI MH14.1-1987, Loading Dock Levelers and Dockboards (MH14.1-1987) (Ex. 371);
• ANSI MH30.1-2007, National Standard for the Safety Performance, and Testing of Dock Loading Devices (MH30.1-2007) (Ex. 372); and
• ANSI MH30.2-2005, Portable Dock Loading Devices: Standards, Performance, and Testing (MH30.2-2005) (Ex. 20).
Both the proposed and final rules adopted provisions that generally are consistent with these national consensus standards. Final § 1910.26 applies to all dockboards unless a provision states otherwise.
The final rule (final § 1910.12(b)) defines a dockboard as a portable or fixed device used to span a gap or compensate for a difference in height between a loading platform and a transport vehicle. Dockboards may be powered or manual, and include, but are not limited to, bridge plates, dock levelers, and dock plates.
“Loading platforms,” as used in the definition of dockboards, include loading docks, interior floors, driveways or other walking or working surfaces. “Transport vehicles,” as used in the definition and in the final rule, are cargo-carrying vehicles that workers may enter or walk onto to load or unload cargo and materials. Transport vehicles include, but are not limited to, trucks, trailers, semi-trailers and rail cars. Employers primarily use transfer vehicles on dockboards in order to move cargo and materials on and off transport vehicles. “Transfer vehicles,” which are mechanical powered or non-powered devices to move a payload, include, but are not limited to, powered industrial trucks, powered pallet movers, manual forklifts, hand carts, hand trucks, and other types of material-handling equipment. Transfer vehicles include all mechanical handling equipment that 29 CFR part 1910, subpart N, covers.
These descriptions of transport vehicles and transfer vehicles are consistent with the definitions of those terms in the MH30.1-2007 and MH 30.2-2005 consensus standards. In proposed § 1910.26(d), OSHA used the term “equipment” to reference all types of transfer vehicles. OSHA believes the term “transport vehicle” more accurately describes the types of equipment OSHA intends to cover in final § 1910.26.
Paragraph (a) of the final rule, like proposed paragraph (a), requires that employers ensure that the dockboards are capable of supporting their maximum intended load. Section 1910.21(b) of the final rule defines “maximum intended load” as the total load (weight and force) of all workers, equipment, vehicles, tools, materials, and other loads that the employer “reasonably anticipates” to be applied to a walking-working surface at any one time. OSHA recognizes that not all dockboards are equal, and some employers may have multiple dockboards with different capacities. Some dockboards are made of lightweight materials, such as aluminum, designed to support lighter loads such as those that typically occur with manual material handling methods. Other dockboards, such as those made of steel, are typically designed to accommodate a heavier load, such as a laden powered industrial truck. Additionally, portable dockboards may be carried on transport vehicles for use at various loading platforms and subjected to a wide range of anticipated loads.
The final rule differs from existing § 1910.30(a)(1) in that the existing rule requires dockboards to be strong enough to carry the load imposed on them. As OSHA explains in the discussion of final § 1910.21(b), the term “maximum intended load” applies not only to total loads currently applied to a walking-working surface, such as a dockboard, but also to total loads that the employer has a reasonable anticipation will be placed on the walking-working surface.
The provision for loads in final § 1910.22(b) requires that employers ensure all walking-working surfaces are capable of supporting the maximum intended load that will be applied to that surface. OSHA believes it is important for clarity to include this performance-based requirement in § 1910.26. OSHA included the provision in final § 1910.26(a) to emphasize that the final rule revised the load criteria in the existing rule from “load imposed” to “maximum intended load.” Also, OSHA included the load requirement in this section to emphasize that it applies to all dockboards that workers use, regardless of whether the employer or some other entity owns or provides the dockboard; whether the dockboard is portable, fixed, powered, or manual; or whether the employer uses the dockboard as a bridge to a transport vehicle. Finally, OSHA included the requirement in this section to stress that, consistent with MH14.1-1987 (Section 2), the design and construction of all load-supporting parts of the dockboard must ensure that the dockboard unit as a whole, when under load, is capable of supporting the maximum intended load.
The national consensus standards also provide guidance to help employers comply with final paragraph (a). For example, MH14.1-1987 and MH30.2-2005 identify factors and circumstances employers should consider when ensuring their dockboards meet the load requirement in final paragraph (a): “In selecting dock leveling devices, it is important [for employers/owners] to consider not only present requirements but also future plans or adverse environments” (MH14.1-1987 (Section 3.1(j) and MH30.2-2005 (Section 6.2.9))).
The MH14.1-1987 standard requires that load-supporting parts of dockboards, including structural steels
Final paragraph (b)(1), like the proposed rule, requires employers to ensure that dockboards put into initial service on or after the effective date of the final rule, January 17, 2017, are designed, constructed, and maintained to prevent transfer vehicles from running off the dockboard edge. In other words, dockboards put into service for the first time starting on the effective date of the final rule must have run-off protection, guards, or curbs. A “run-off guard,” as defined in the MH14.1-1987 standard, is “a vertical projection running parallel with the normal traffic flow at each side extremity of the dockboard. Its intent is to avoid accidental side exit” (Section 1.3;
OSHA believes this provision is necessary to protect workers. A transfer vehicle that runs off the side of a dockboard could kill or injure employees working on or near it. For example, forklifts used to load items onto a transport vehicle could seriously injure or kill the operator and nearby workers if the forklift runs off the side of the dockboard. In addition, workers using hand trucks to load and unload materials from a truck could lose their balance and fall if there is no run-off guard to prevent the hand truck from running off the side of the dockboard.
Final paragraph (b)(1) is a performance-based version of the run-off protection requirements in national consensus standards. To illustrate, the MH14.1-1987 standard specifies:
Run-off guards shall be used for units that bridge an opening in excess of 36 in. (910 mm) from the face of the dock. The minimum run-off guard height shall be 2
The MH30.1-2007 and MH30.2-2005 standards also contain similar specifications (MH30.1-2007 (Sections 5.3.2, 5.3.3) and MH30.2-2005 (Section 6.1.4)) to prevent transfer equipment from accidentally running off the side of the dockboard. OSHA will deem employers that comply with the run-off protection specifications in MH14.1-1987, MH30.1-2007, or MH30.2-2005 as being in compliance with final paragraph (b)(1). OSHA also will consider employers that follow a different approach, or use dockboards with run-off guards of a different height, to be in compliance with the final rule, provided the run-off guards they use are effective in preventing transfer vehicle from running off the dockboard side.
OSHA made several revisions to proposed paragraph (b) in the final rule. First, final paragraph (b)(1) clarifies that this provision is prospective only, that is, it only applies to dockboards put into “initial service” on or after the effective date of the final rule. The final rule grandfathers existing dockboards (75 FR 29009-10), meaning employers do not have to replace or retrofit dockboards currently in use.
Second, OSHA revised the compliance deadline for this provision. The effective date specified by the proposed rule was 90 days after the effective date of the final rule. After reviewing the record, OSHA does not believe that the longer proposed compliance phase-in period is necessary because the national consensus standards on which OSHA based final paragraph (b) have been in place for many years. As such, OSHA believes many dockboards currently in use, and virtually all dockboards manufactured today, already have run-off guards. Therefore, OSHA does not believe the compliance date in final paragraph (b) will impose an undue burden on employers.
Third, OSHA added an exception (final paragraph (b)(2)) in response to a comment the Agency received on the proposed provision. The American Trucking Associations, Inc., (ATA) (Ex. 187) said the proposed rule was “very broad” and opposed the requirement that all dockboards have run-off protection:
To load or to unload, the driver of the commercial motor vehicle backs up to the dock slowly and does not stop until contacting the dock or the installed dock bumper blocks. In most cases, the gap between the vehicle and the loading dock is no more than a few inches. Either a dock leveler or portable dockboard is used to reduce even this minimal amount of space. There is insufficient space between the terminal and the truck to permit a powered industrial truck loading or unloading freight to fall to the ground.
OSHA's proposed requirement that portable dockboards and dock plates be provided with edging and curbing is ill-conceived. Moreover, there is no space between the side of the truck and the edge of dock bay opening to allow for a forklift truck to run off of the edge to cause death or injury to the employee.
Further, this requirement actually would reduce safety for employees in the trucking industry, as providing curbing on dock plates would create a tripping hazard for employees walking on the plates (Ex. 187).
Accordingly, ATA recommended that OSHA revise paragraph (b) to specify:
[C]urbing on dockplates to prevent a vehicle from running off the edge of a ramp or bridging device is not required where there is insufficient space for a vehicle using the device to run off the edge and drop to the ground. Any requirement for curbing on the edges of ramps and bridging devices should be limited to those working environments where a true fall-off hazard exists (Ex. 187).
The Agency agrees with ATA that run-off protection is not necessary when there is insufficient space for equipment to run off the side of the dockboard. Accordingly, OSHA added an exception to final paragraph (b)(1) specifying that employers do not have to use dockboards equipped with run-off guards if there is no fall hazard to guard against. This exception is consistent with MH14.1-1987, MH30.1-2007, and MH30.2-2005, which only require run-off guards when the opening the dockboard bridges exceeds 36 inches (MH14.1-1987 (Sections 3.2(a), 3.4(c), 3.5, 3.6) and MH30.2-2005 (Section 6.1.4)). Unlike the national consensus standards, final paragraph (b)(1) does not specify what size of opening on the dockboard constitutes a run-off hazard. In some circumstances, an opening of less than 36 inches may pose a fall hazard. As such, OSHA believes the most effective way to determine whether a hazard exists is for employers to evaluate whether a particular opening poses a hazard, including considering factors such as the type and size of transfer vehicle the worker is using.
Paragraph (c) of the final rule, like existing § 1910.30(a) and the proposed rule, requires employers to secure portable dockboards by anchoring them in place or using equipment or devices to prevent the dockboard from moving out of a safe position. The final rule also specifies that, when the employer can demonstrate that it is not feasible to
OSHA believes this provision is necessary to protect workers from injury or death. If the employer does not securely anchor the dockboard or equip it with a device that prevents movement, it could slide or drop off of the loading platform or transport vehicle, and the worker could fall. Workers also could fall if the dockboard moves or slides while they are on it. In addition, failure to secure a dockboard could expose workers to crush or caught-in hazards if the dockboard moves, and pins or strikes the worker, or causes the load the worker is moving to shift or fall against the worker.
Final paragraph (c) is consistent with B56.1-2012. That standard also requires anchoring or equipping portable dockboards with devices that prevent the dockboards from slipping (Section 4.13.2). B56.1-2012 does not include any requirements for employers to follow when anchoring or equipping portable dockboards from slipping is not feasible. It does require, like final paragraph (c), dockboards of all types be designed and maintained so the ends have “substantial contact” with the dock and transport vehicle to prevent the dockboard from “rocking or sliding” (Section 4.13.5). Similarly, MH14.1-1987 (Section 3.7(b)), MH30.1-2007 (Section 5.1.7), and MH30.2-2005 (Section 6.2.2) require at least 4-inch overlap between the edge of a dockboard and the edge of the supporting surface (
Final paragraph (d), like the proposed rule, requires that employers provide and use measures (
The proposed and final rules expand the existing rule (§ 1910.30(a)(5)), which only requires that employers prevent “rail cars” from moving when workers are using dockboards to load/unload cargo. However, workers also are exposed to fall hazards when they use dockboards to load/unload other types of transport vehicles. As a result, OSHA expanded the existing rule to ensure that workers are protected whenever they use dockboards, regardless of the type of transport vehicle workers are loading/unloading.
The final rule gives employers flexibility in selecting measures to prevent the transport vehicle from moving. Employers must ensure whatever measures they use are effective in preventing movement, regardless of the type of transport vehicle the employer is loading/unloading. For example, for wheel chocks, which are one of the most frequently used measures to prevent transport vehicles from moving, the size of the transport vehicle wheel determines the size of the wheel chock that will be effective to prevent the vehicle from moving.
OSHA received one comment on the proposed rule. ATA said the requirement is both unnecessary and conflicts with section (4)(b)(1) of the OSH Act (29 U.S.C. 653(b)(1)):
FMCSA's [Federal Motor Carrier Safety Administration] brake regulations address this condition and preclude OSHA's wheel chocking requirements. Jurisdiction in this matter was asserted in a 2001 letter from then FMCSA Acting Deputy Administrator Julie Cirillo to OSHA officials. The letter clearly asserts FMCSA's exclusive jurisdiction over the immobilization of parked vehicles in stating that FMCSA's parking brake regulations were “written specifically to protect truck drivers and anyone else who might be injured by inadvertent movement of a parked commercial motor vehicle.” . . . We believe [FMCSA] brake regulations constitute an `exercise of statutory authority' to prescribe or enforce standards or regulations affecting occupational safety or health (Ex. 187).
Department of Transportation (DOT) regulates interstate transportation of “commercial motor vehicles” (CMV) traveling on public roads, thus, pursuant to section 4(b)(1) of the OSH Act, OSHA is preempted. DOT regulations define a CMV, in part, as a self-propelled or towed vehicle used on the highways in interstate commerce, if the vehicle:
• Has a gross vehicle weight rating or gross vehicle weight of at least 10,001 pounds, whichever is greater; or
• Is used in transporting materials found by the Secretary of Transportation to be hazardous as defined by DOT regulations and transported in a quantity requiring placarding under DOT regulations (49 U.S.C. 31132).
DOT regulations do not apply to transport vehicles that do not meet the definition of CMV, do not operate in interstate transportation, or are not used on public roads. OSHA continues to have authority over:
• Transport vehicles that do not meet the definition of CMV; and
• CMVs not operated in interstate commerce, which includes CMVs that transport materials on private roads or within a work establishment.
OSHA has the authority to enforce chocking requirements in these situations, which the Agency outlined in two letters of interpretation (Letter to Mr. Turner, November 8, 2005
Final paragraph (e), like existing § 1910.30(a)(4) and the proposed rule, requires that employers equip portable dockboards with handholds or other means that permit workers to safely handle the dockboard. Handholds and other means of gripping are necessary so workers are able to move and place dockboards without injuring themselves or others. If workers cannot handle or grip a dockboard safely, they could drop it on their feet, crush their fingers while putting the dockboard into place, or fall. Handholds also make it possible to place dockboards into the proper position (
Final paragraph (e) is essentially the same as existing § 1910.30(a)(4) and is consistent with B56.1-2012 (Section 4.13.3), MH14.1-1987 (Section 3.2.(b)), MH30.1-2007 (Section 5.2.1), and MH30.2-2005 (Section 6.1.6). OSHA notes that these national consensus standards also specify that, when handling a portable dockboard
Final § 1910.27, like the proposed rule, addresses scaffolds and rope descent systems (RDS) used in general industry. The purpose of § 1910.27 is to protect workers whose duties require them to work at elevation, whether on scaffolds or RDS. The existing standards (§§ 1910.28 and 1910.29) address scaffolds, but not RDS. Prior to the final rule, OSHA regulated the use of RDS under the general duty clause (29 U.S.C. 654(a)(1)) and through written policy statements that established minimum expectations for employers who use RDS.
For two reasons, OSHA divided the final rule into separate paragraphs for scaffolds and RDS. First, the record shows that the hazards involved in working on scaffolds are different from the hazards associated with using an RDS (Exs. 66; 122; 221). Second, based on comments received in the record, OSHA believes that the final rule should not regulate RDS as a type of suspended scaffold. Uniformly, commenters said RDS are not suspended scaffolds (Exs. 122; 163; 205). For example, Mr. Matt Adams, with Rescue Response Gear, stated: “Rope descent systems are described in this document as representing a variation of the single-point adjustable suspension scaffold. This is a terribly antiquated view of what rope work really is, and does not adequately acknowledge the extreme versatility and safety record of rope access” (Ex. 122). The Society of Professional Access Technicians (SPRAT) had similar concerns, noting:
Permitting rope descent systems to be regulated as suspended scaffolds is potentially hazardous in that this does not adequately address the versatility, safety, and training required to achieve safety while working suspended on rope. The hazards associated with suspended scaffolds do not in any way emulate the hazards associated with roped access work, and as a result the mitigation measures, training, and equipment requirements also differ (Ex. 205).
For the reasons discussed above, OSHA also revised the title of this section of the final rule to “Scaffolds and Rope Descent Systems” from the proposed “Scaffolds (including rope descent systems).” OSHA agrees with commenters that the proposed title may mistakenly imply that RDS are a type of scaffold (Exs. 122; 221). The only purpose of the proposed title was to indicate that RDS, like scaffolds, involve working at elevated work locations.
OSHA notes that a number of stakeholders who commented on various provisions of proposed § 1910.27 submitted almost identical comments. OSHA does not cite to all of these comments when discussing each provision of the final rule. Instead, OSHA cites to samplings of those comments when addressing an issue.
OSHA drew the rope descent system requirements in the final rule from the following sources:
• 1991 OSHA memorandum to regional administrators allowing the use of RDS when employers follow all of the provisions outlined therein (Ex. OSHA-S029-2006-0062-0019);
• American National Standards Institute/American Society of Safety Engineers ANSI/ASSE Z359.4-2012 Safety Requirements for Assisted-Rescue and Self-Rescue Systems, Subsystems and Components (ANSI/ASSE Z359.4-2012) (Ex. 387); and
• American National Standards Institute/International Window Cleaning Association I-14.1-2001—Window Cleaning Safety (I-14.1-2001) (Ex. 14).
SEIU Local 32BJ objected to OSHA's reliance on I-14.1-2001, arguing that the ANSI/IWCA I-14 committee did not operate by consensus and misrepresented votes (Ex. 316, 324, Ex. 329(1/19/2011), pgs. 5-8). The Local submitted a number of documents purportedly substantiating this claim (see Ex. 316-320). However, ANSI has due process requirements that standards developers must follow. Because the I-14 committee was accredited by ANSI and the I-14.1-2001 standard was approved by ANSI, OSHA presumes those requirements were followed. ANSI's requirements include procedures for dealing with the sort of objections Local 32BJ has made, and nothing in these documents show that Local 32BJ presented its claims to ANSI, through an appeal or otherwise. OSHA is unable to ascertain from the Local's documents that the I-14 committee did not follow the ANSI rules.
Final paragraph (a), like the proposed rule, requires that employers ensure scaffolds used in general industry meet the requirements in the construction scaffold standards (29 CFR 1926, subpart L (Scaffolds)), and, as a result, the final rule deletes the existing general industry scaffold requirements (existing §§ 1910.28 and 1910.29). The construction scaffold standards, which OSHA updated on August 30, 1996 (61 FR 46104; 61 FR 46107; 61 FR 46116)), are more current than the general industry standards, which OSHA first adopted in 1974 (39 FR 23502), and last updated in 1988 (53 FR 12121 (4/12/1988)).
The final rule, similar to the proposed and construction scaffold rules, defines scaffold as a “temporary elevated or suspended platform and its supporting structure, including anchorage points, used to support employees, equipment, materials, and other items” (§ 1910.21(b)). For the purposes of final subpart D, scaffolds do not include crane-suspended or derrick-suspended personnel platforms or RDS. OSHA's standard on powered platforms for building maintenance (§ 1910.66) addresses personnel platforms used in general industry.
Commenters supported making OSHA's general industry and construction standards consistent. For example, Mr. Bill Kojola with the AFL-CIO, said: “We believe that it is important to have consistent standards that address scaffolds so that all workers, regardless of the industry in which they work, have equal or equivalent protection from the hazards that are associated with scaffolds” (Ex. 172). At the hearing on the proposed rule, Mr. Kojola added:
OSHA is proposing that general industry comply with the construction industry's scaffold standards in 29 CFR 1926(L). . . . By requiring employers in general industry to comply with the construction scaffold standards, consistency will be achieved as well as a decrease in any confusion that . . . would likely arise if the standards were different between these two industries (Ex. 329 (1/20/2011, p. 222)).
OSHA believes that the final rule will ensure consistent application of the general industry and construction standards, and increase understanding of, and compliance with, the final rule by employers who perform both general industry and construction work. The record indicates that many general industry employers who use scaffolds also perform construction work on scaffolds; therefore, they already are familiar with the construction scaffolds standards. OSHA believes that having those employers comply with a single set of requirements will facilitate
Final paragraph (b), similar to the proposed rule, establishes requirements for rope descent systems (RDS) when employers use them. The final rule defines an RDS as a “suspension system that supports an employee in a chair (seat board) and allows the employee to descend in a controlled manner and, as needed, stop at any point during the descent” (§ 1910.21(b)). An RDS, sometimes referred to as controlled descent equipment or apparatus, usually consists of a roof anchorage, support rope, descent device, carabiner(s) or shackle(s), and a chair (seat board) (§ 1910.21(b)). The final rule definition also expressly states that an RDS does not include industrial rope access systems.
The use of RDS is prevalent in the United States today. Employers frequently use RDS in building cleaning (including window cleaning), maintenance, and inspection operations. As far back as 1990, OSHA noted that, according to some estimates, 60 percent of all window cleaning operations used RDS (55 FR 92226). In 2010, Valcourt Building Services (Valcourt) stated that about 70 percent of all window cleaning operations in high-rise buildings in the United States used RDS (Ex. 147).
OSHA's existing general industry and construction standards do not address the use of RDS.
The 1991 RDS memorandum specified that employers must use RDS in accordance with the instruction, warnings, and design limitations that the manufacturer or distributor sets. In addition, the 1991 RDS memorandum specified that employers must implement procedures and precautions including employee training; equipment inspection; proper rigging; separate fall arrest systems; equipment strength requirements; prompt employee rescue; padding of ropes; and stabilization. OSHA based the proposed rule on the provisions in the 1991 RDS memorandum. OSHA notes that the International Window Cleaning Association (IWCA) also based its standard, ANSI/IWCA I-14.1-2001—Window Cleaning Safety (I-14.1-2001), on the 1991 RDS memorandum. Commenters overwhelmingly supported, and already comply with, the requirements in that memorandum and I-14.1-2001 (Exs. 138; 147; 163; 184; 221; 242).
OSHA received many comments on RDS, most of which supported allowing employers to use those systems (Exs. 138; 151; 153; 205; 219; 221; 222; 227; 241; 243). First, many commenters said RDS are safe and, as a number of commenters claimed, safer than using suspended scaffolding (Exs. 163; 184; 221; 227; 242; 243; 329 (1/19/2011, pgs. 326-329)). Mr. Stephan Bright, with IWCA and chair of the I-14.1 committee, said that RDS are safe, particularly when used in accordance with the I-14.1-2001 standard, which has established “accepted safe practices” for using RDS (Ex. 329 (1/19/2011, p. 466)). He also indicated that OSHA must believe RDS are safe to use because the Agency “has been referencing this standard since its publication and has used this standard as a guideline to enforce rope descent system safety in over 100 citations against window cleaning contractors in the last 10 years” (Ex. 329 (1/19/2011, p. 466)). Mr. Bright said that the decreases in injuries and fatalities associated with RDS use since the IWCA issued the I-14.1-2001 standard “clearly reveal that RDS is a safe and viable means to use when the eight provisions of OSHA's memorandum and the I-14 Standard are met. Enforcement of the same by OSHA only increases the level of safety” (Ex. 329 (1/19/2011, p. 467)).
Mr. Sam Terry, owner and president of Sparkling Clean Window Company (Sparkling Clean), said his analysis of more than 350 incidents (125 involving window cleaning) showed that RDS are safer than suspended scaffolding (Exs. 163; 329 (1/19/2011, pgs. 326-329)). In particular, he said the analysis indicated that the RDS provisions of the proposed rule would prevent almost every RDS incident, while more than 80 percent of the suspended scaffolding incidents resulted from equipment failure that was “beyond the control” of the employer or workers using the equipment (Exs. 163; 329 (1/19/2011, pgs. 326-329)).
Commenters also said RDS are safer than suspended scaffolds because they said RDS do not involve the “ergonomic consequences” that suspended scaffolding does (Exs. 163; 184; 221; 242). These commenters pointed out that, in many cases, moving and assembling suspended scaffolding components requires lifting heavy weights, such as davit masts (weighing up to 160 pounds), davit bases (weighing up to 145 pounds), and davit booms (weighing up to 98 pounds).
Second, some commenters supported allowing RDS because RDS give employers greater control over the safety of workers and the public than suspended scaffolding (Exs. 163; 227; 243). With regard to worker safety, Mr. Terry said workers using RDS are able to descend to the ground or “get themselves and their equipment out of harm's way” more quickly than workers using suspended scaffolding (Exs. 163). Commenters said this advantage is particularly important if sudden or unexpected dangerous weather hazards appear (Exs. 138; 163; 184; 221; 242). Sparkling Clean said:
Moreover, Sparkling Clean maintained that the adverse weather does not affect using RDS any more than using suspended scaffolding (Ex. 163).
With regard to protecting the safety of the public and other workers on the ground, commenters indicated that RDS are safer because suspended scaffolding requires assembling components, often done on narrow ledges without fall protection, and these components could fall and strike individuals below (Exs. 163; 184; 221; 242).
Third, commenters supported allowing employers to use RDS because acceptance of RDS increased over the last 20 years since OSHA issued the 1991 RDS memorandum and the IWCA adopted its I-14.1 standard, which addresses RDS (Ex. 147). As noted earlier, Mr. Bruce Lapham, of Valcourt, mentioned that, nationally, about 70 percent of all window cleaning operations in high-rise buildings use
Finally, several commenters urged OSHA to allow employers to use RDS because they are less expensive than suspended scaffolding (Exs. 163; 184; 221; 242). Some commenters said that using suspended scaffolding can cost as much as 30 percent more than using RDS (Ex. 329 (1/19/2011, pgs. 209, 314)). Other commenters said using RDS was less costly even if the building has an existing suspended scaffold system (Exs. 163; 184; 221; 242). Mr. Terry explained:
The time involved in setting up a powered platform system and riding the scaffold up and down at 30 feet per minute is typically much slower than using [RDS]. The largest cost we incur in providing our services is labor by a significant percentage. Therefore, in many cases, it is actually less expensive to access the side of the building using [RDS] . . . (Ex. 163).
Commenters also said OSHA should allow employers to use RDS even if the design of the building or structure permits the use of other means and methods to perform window cleaning or other maintenance activities (Exs. 163; 184; 221; 242).
OSHA notes that many commenters provided support for the use of RDS, saying that OSHA should allow employers to use RDS, but only if employers follow all of the provisions in OSHA's 1991 RDS memorandum, as well as those in I-14.1-2001, including the 300-foot RDS height limit (Exs. 138; 147; 215; 245; 331).
A number of commenters, primarily workers and worker organizations, opposed allowing employers to use RDS (Exs. 311; 313; 316; 329 (1/19/2011, pgs. 5-8, 17-19)); 329 (1/20/2011, p. 222)). For example, the Service Employees International Union (SEIU) Local 32BJ members opposed allowing RDS because they said RDS were not safe (Exs. 224; 311; 313; 316; Ex. 329 (1/19/2011, pgs. 5-8)). At the hearing, Mr. John Stager, former SEIU Local 32BJ president, said:
I wonder whether OSHA has seriously studied the hazards and evaluated the history of this rulemaking; and if so, I do not understand how OSHA could have decided that unrestricted use of RDS is compatible with OSHA's mission of adopting fully protective safety standards. I understand that OSHA's [1991 RDS memorandum] was much less than a fully protective standard; rather, it was the way that OSHA deals with hazards for which no standards exist. We disagreed with the terms of the [1991 RDS memorandum] then, and still do today . . . . But, to incorporate the terms of [the 1991 RDS memorandum], or terms like them, in a permanent standard is completely inadequate and flawed. In fact, it flies in the face of the Supreme Court's decision that OSHA must place pre-eminent value on assuring employees a safe and healthful working environment limited only by the feasibility of achieving such an environment (Ex. 329 (1/19/2011, pgs. 5-6)).
My comparisons and recommendations will ultimately show that even if these proposed safety standards are adopted, controlled descent devices cannot adequately ensure worker safety to the same extent as scaffolding. A major difference between scaffolding and rope descent systems is the type of rope used. The wire rope utilized in scaffolds is never subject to failure due to abrasions; unlike RDS ropes that are constantly at risk of abrasion once it goes past the entry point. There was also no reliable mechanism for protecting RDS rope from abrasion points between the point of entry and the ground; for example, cornices and signs, et cetera (Ex. 329 (1/19/2011, pgs. 17-19)).
The protection gap [for RDS] increases with the length of the rope. The more rope, the more movement. The wind can push you around much more [when using an RDS rather than suspended scaffolding]. When I was about 10 stories, I have swayed as much as 3 windows apart from sudden wind. And I have been pushed by the wind when I was as little as 5 or 6 stories down.
Once, I was working by myself, and the rope below me got caught in a fan. I had to climb down the lifeline rope to get out of the [RDS]—about three stories. . . . Entry over the side [of the roof] is very dangerous. Sometimes, I have even had to jump with my chair to the edge of the building, and then over the side, which could crack the chair (Ex. 311).
Please do not allow the contractors and the building owners to use RDS. Sure, sometimes there will be places where you just cannot hang a scaffold. But if there is any way to safely hang a scaffold, it is so much safer that there is no good reason to allow [RDS]. I know it's cheaper for the building owner. But so what—isn't my life worth something too (Ex. 311)?
Mr. Hector Figueroa, SEIU Local 32BJ secretary-treasurer, mentioned the New York regulation prohibiting RDS use on buildings above 75 feet as the best proof that RDS are dangerous, and that OSHA should not allow their use (Ex. 224). SEIU also urged that federal OSHA allow the New York regulation to continue without federal preemption, because they believed it is far more protective than the proposed standard. (See the discussion of the preemption issue in the Federalism section.)
OSHA disagrees with Local 32BJ, and has decided against banning all RDS use. The record shows that RDS is a useful method of accessing the sides of building and necessary, at least in certain circumstances. Further, the record shows that RDS use can be conducted safely if proper precautions are followed.
For more than 20 years OSHA has permitted employers to use RDS, provided that employers follow all of the requirements in the 1991 RDS memorandum. Stefan Bright, with IWCA, provided evidence supporting the inference that the 1991 RDS memorandum protects workers:
A survey of IWCA membership was conducted in 1996 and it revealed the following facts: . . . that approximately 800 systems were being used on a day to day basis with an average of 8,000 descents a day and over the course of that nine-month season, which fluctuates because [in] the warmer states, it's 12 months, the states like here in the North are about nine, 800 workers performed 1,584,000 descents in 1996. In 1996, there was one fatality by a window cleaner using a rope descent system.
In 1991, OSHA published the infamous eight-step RDS memorandum. In the six years prior to this publication, 1985 to 1991, there were 19 fatalities by window cleaners using RDS to perform an estimated nine million descents using the previous information. In the six years after the memorandum was published, 1991 to 1996, only 11 fatalities occurred when window cleaners were using RDS to perform the same number of descents. So that was a significant drop, almost 50 percent reduction (Ex. 329 (1/19/2011, pgs. 463-465)).
The final rule incorporates all of the requirements in the 1991 RDS memorandum. In addition, the final rule adopts additional requirements, including anchorage requirements, a 300-foot RDS height limit, prohibition
In the final rule, OSHA added language to the definition of RDS expressly specifying that RDS do not include industrial rope access systems (IRAS) (§ 1910.21(b)). As such, final § 1910.27 does not cover or apply to IRAS. However, other sections of the final rule, including § 1910.28, do cover IRAS.
OSHA agrees with commenters who said IRAS and RDS are different (Exs. 69; 129; 205). For example, Ms. Loui McCurley, of SPRAT, said:
I would like to point out that rope access is not the same thing as controlled descent, rope descent systems, any other big bucket that you might want to put it in. Rope access systems and rope access technicians vary greatly from just a controlled descent or a rope descent system (Ex. 329 (1/19/2011, pgs. 135-138)).
Commenters also pointed out other differences between the two systems. Global Ascent said that IRAS use a two-rope system (Ex. 129). They stated the two-rope system consists of a working line and a safety line, whereas RDS use only a working line (Ex. 129). Accordingly, Global Ascent noted that IRAS have built-in fall arrest by virtue of the dual-ropes (Ex. 129). Several commenters also said that the training requirements necessary for IRAS use and RDS use are much different (Exs. 78; 129; 205). They also said IRAS users need more training than RDS users. Based on these comments, OSHA concluded that IRAS differ significantly from RDS and did not include them in the RDS requirements in final § 1910.27(b).
Final paragraph (b)(1) adds new requirements for anchorages to secure RDS. The final rule defines anchorage as a secure point of attachment for equipment such as lifelines, lanyards, deceleration devices, and rope descent systems (final § 1910.21(b)). The proposal would have required that employers use “sound anchorages,” and OSHA noted that they are “essential to the safety of RDS” (proposed § 1910.27(b)(2)(iv); 75 FR 28886). OSHA also noted that the 1991 RDS memorandum required that employers rig RDS properly, including having “sound anchorages” (75 FR 28869). Although the proposed rule did not include specific requirements on anchorages for RDS, proposed § 1910.140(c)(12) contained a requirement for a separate anchorage for personal fall arrest systems. The Agency requested comment on whether its proposed approach was sufficient to ensure the safety of anchorages.
OSHA also noted in the proposed rule that the Agency raised the issue of anchorages, and also requested comments in the 1990 proposal (55 FR 29224 (7/18/1990)). At that time, IWCA and window cleaning companies told OSHA that there often were no anchorages on building rooftops (75 FR 28869; OSHA-S041-2006-0666-0543; OSHA-S041-2006-0666-1252; OSHA-S041-2006-0666-1253). Since the companies did not own or have control over the building, they had no control over whether or where building owners would place anchorages. Therefore, they urged OSHA to require building owners to install anchorages and test, inspect, maintain, and certify that the anchorages are capable of holding the RDS, worker, and all equipment. As noted, OSHA did not finalize the 1990 proposed rule.
Today, OSHA continues to believe anchorage requirements are necessary because, as the Final Economic Analysis indicates, anchorage failure is one of the primary causes of window cleaning accidents involving RDS. Data that Mr. Terry, president of Sparkling Clean, compiled and analyzed also showed that lack of sound anchorages accounted for 65 (more than 50 percent) of the 125 window cleaning incidents involving RDS (Ex. 163). Mr. Stefan Bright, with the IWCA, said their analysis of window cleaning fatalities revealed that 95 percent were due to lack of sound anchorages (Ex. 329 (1/19/2011, p. 465)). In addition, commenters uniformly supported adding specific requirements on anchorages to the final rule (Exs. 163; 184; 221; 242).
Final paragraph (b)(1)(i) requires that, before the employer uses any rope descent system, the building owner informs the employer in writing that the building owner has identified, tested, certified, and maintained each anchorage so it is capable of supporting at least 5,000 pounds in any direction, for each worker attached. The final rule also requires that the building owner base the information provided to the employer on:
• An annual inspection; and
• A certification of each anchorage, as necessary, and at least every 10 years.
The building owner must ensure that a “qualified” person conducts both the inspection and certification. The final rule defines qualified as a person who, by possession of a recognized degree, certificate, or professional standing, or who by extensive knowledge, training, and experience has successfully demonstrated the ability to solve or resolve problems relating to the subject matter, the work, or the project (§ 1910.21(b)).
For the purposes of final paragraph (b)(1)(i), the term “as necessary” means when the building owner knows or has reason to believe that recertification of the anchorage is needed. The final rule gives building owners flexibility in determining when anchorage recertification is necessary. Factors or conditions indicating that recertification may be necessary include, but are not limited to, an accident involving a worker using an RDS, a report of damage to the anchorage, major alteration to the building, exposure of the anchorage to destructive industrial substances, and location of the building in an area of high rainfall or exposure to sea air and humidity that might accelerate corrosion.
OSHA requested comment on adding more provisions ensuring the safety of anchorages in the final rule. In particular, the Agency asked whether it should adopt the information disclosure requirements of § 1910.66.
• Paragraph (c)(1) of § 1910.66 requires that building owners of new installations inform employers in writing that installations meet the requirements of paragraphs (e)(1) and (f)(1) of that section and additional design criteria contained in the other provisions of paragraphs (e) and (f).
• Paragraph (c)(2) of § 1910.66 requires that building owners base the information required in paragraph (c)(1) on the results of a field test of the installation before being placed into service and following any major alteration to an existing installation, and on all other relevant available information, including, but not limited to, test data, equipment specification, and verification by a registered professional engineer.
• Paragraph (c)(3) of § 1910.66 requires that building owners of all installations, new and existing, inform employers in writing that the installation has been inspected, tested, and maintained in compliance with the requirements of paragraphs (g) (inspection, tests, and certification) and (h) (maintenance) of the section and that all protection anchorages meet the requirements of paragraph (I)(c)(10) of appendix C (fall protection anchorages must be capable of supporting 5,000 pounds).
Paragraph (e) of that rule specifies that structural supports, tie-downs, tie-in guides and affected parts of the building included in the installation shall be designed by or under the direction of a registered professional engineer experienced in such design (§ 1910.66(e)(1)(i)).
In addition, the I-14.1-2001 standard requires that building owners provide window cleaning contractors with the following written information:
• The installation or structure has been inspected, tested and maintained in compliance with the requirements of I-14.1-2001;
• All equipment dedicated to the building meets the requirements in Part B (
• Specified load ratings, intended use and limitations to fixtures permanently dedicated to buildings; and
• Manufacturer's instructions for installations, anchorages and fixtures permanently dedicated to the building (Section 1.6.2 (a)-(d)).
Overwhelmingly, commenters supported requiring that building owners identify, test, and maintain anchorages, and certify that those anchorages are capable of supporting 5,000 pounds in each direction for each attached worker.
Many commenters said the anchorage provision is necessary because the lack of “sound anchorages” was the leading cause of fatalities and incidents involving RDS (Exs. 138; 163; 184; 221; 222; 243). Valcourt said:
[W]orkers that use Rope Descent Systems deserve a safe place to work. . . . There is no greater contributing factor to having a safe workplace in which to use an [RDS] than having identified and certified anchorage points in which to tie to. In its 26-year existence, Valcourt has seen both building owners and window cleaners come to a greater understanding of this fact, leading to much safer working conditions (Ex. 147).
Another commenter, 20/20 Window Cleaning of NC, said the new anchorage requirement would prevent accidents and save lives (Ex. 153). IWCA noted that, without the new provision, workers using RDS would not have an equivalent level of protection than do workers who use permanent powered platforms (Ex. 138).
Commenters also said the anchorage requirement is necessary because many building owners do not provide certified anchorages, even though IWCA issued the I-14.1-2001 standard more than 10 years ago (Exs. 147; 163; 245; 329 (1/19/2011, pgs. 218-219)). Valcourt said about 75 percent of the buildings they service do not have certified anchorages, while LWC Services said less than 5 percent of the buildings they service have them (Exs. 147; 245). LWC Services also estimated that seven percent of mid- and high-rise buildings have certified anchorages (Ex. 245). Finally, LWC Services said their most significant problem is finding anchorage points to allow suspension of equipment, and they questioned how they could install anchorages when they only work at a particular location for a couple of days per year, inferring infeasibility (Ex. 245).
Most commenters said they think permanent anchorages are the responsibility of building owners, and they urged OSHA to require that building owners provide anchorages, and to inspect, test, certify, and maintain them (Exs. 138; 147; 163; 184; 193; 221; 242; 329 (1/19/2011; pgs. 378-388)). Valcourt said OSHA needed to mandate that building owners provide anchorages because building owners will not provide and certify anchorages if it is voluntary:
If OSHA . . . [omits] the requirement of building owners to have their roof anchorage systems initially certified . . . and inspected by a qualified person annually, many building owners will simply state that it is not a requirement of OSHA and not [do it]. This would make the marketplace more dangerous and be a regression of 20 years in window cleaning safety for both the window cleaning and building owner industries (Ex. 147; 329 (1/19/2011, pgs. 378-388)).
Commenters were about evenly divided on whether OSHA should codify the language in § 1910.66(c) or the I-14.1-2001 standard. Regarding his support for following the approach in § 1910.66, Mr. Terry, of Sparkling Clean, said:
I agree that building owners should provide employers with the same information required by 1910.66; a certificate of inspection, testing, and maintenance of anchorages for rope access and suspended scaffolding used in building maintenance, and that an existing certificate for powered platform anchorages would suffice for the same anchorages to be used for rope access. This would allow for rope access to be utilized on buildings with systems or anchorages originally designed for suspended scaffold use without any new requirements or expenses on the building owner (Ex. 329 (1/19/2011, pgs. 224-226)).
Commenters provided recommendations for specific language and items the final requirement on anchorages should contain. For example, Penta Engineering said OSHA should require load testing of all anchorages and davits (Ex. 193). Martin's Window Cleaning (Martin's) said OSHA should require that employers ask for and obtain verification of anchorage certification (Ex. 65).
Several commenters recommended specific timelines for anchorage inspection and certification. Martin's recommended inspections every year, and certifications every 10 years (Ex. 65). Penta Engineering Group agreed, and recommended that OSHA also require anchorage recertification after building owners install new roof systems (Ex. 193).
One commenter urged OSHA to require that building owners ensure qualified persons conduct the annual inspections and certifications (Ex. 204). Other commenters said that professional engineers should perform those tasks (Exs. 65; 193; 329 (1/19/2011, pgs. 378-388)). LJB Inc., noted that it may be a violation of local and state building codes to have anyone other than a professional engineer certify anchorages (Ex. 204). OSHA notes that, under the final provision and the final definition of qualified, building owners are free to use professional engineers to inspect and certify anchorages.
OSHA did not receive any comments opposing an anchorage requirement. OSHA notes that the Building Owners and Managers Association (BOMA) did not submit any comments on the proposed rule or testify at the rulemaking hearing, but they did oppose the requirement in the 1990 proposed rule that building owners provide anchorages. OSHA also notes BOMA was a member of the I-14.1-2001 committee that approved the national consensus standard, which includes anchorage requirements building owners must meet. OSHA agrees with many of the comments and recommendations submitted to the record, and incorporated many of them into the final rule. For example, given that outside contractors generally perform building maintenance (such as window cleaning), and that these
Final paragraph (b)(1)(ii) establishes a new provision that requires employers to ensure that no employee uses any anchorage before the employer obtains written information from the building owner that the anchorage meets the requirements of final paragraph (b)(1)(i). In other words, the final rule requires that employers ensure no employee uses an RDS until the employer obtains written information that the building owner identified, tested, certified, and maintained each anchorage so it is capable of supporting at least 5,000 pounds in any direction for each worker attached. The final rule also requires that the employer keep the written information from the building owner for the duration of the job.
OSHA's powered platforms standard contains a requirement similar to the final rule (§ 1910.66(c)(4)). Also, the I-14.1-2001 standard requires that employers (
OSHA believes the final rule will ensure that each anchorage to which workers attach an RDS meets the inspection, testing, certification, and maintenance requirements of the final rule before workers attach to it. Under the final rule, employers are not to allow workers to attach to an anchorage and begin work if the employer did not receive written certification that the anchorage is capable of supporting 5,000 pounds. Specifically, final paragraph (b)(1)(ii) prohibits employers, when there are no certified anchorages, from “making do” or attaching RDS to alternative structures, making the assumption that these structures are capable of supporting 5,000 pounds.
OSHA acknowledges that employers currently attach RDS to other structures if there are no certified anchorages available. For example, Mr. Charles Adkins, of Corporate Cleaning Services (Corporate Cleaning), explained what his company does at the 30 to 40 percent of the buildings they service that don't have certified anchorages:
They go up and they select it with the assistance of the foreman who is—we have—we've heard some mention of supervision here and we totally agree that that's a very important fact and that's why we have four salaried foremen, plus an operations manager, who focus exclusively on supervision.
They go up and select them. There are a number of alternatives. They can attach them to the permanent part of the building. They can use parapet clamps if they have a way to properly attach the tieback and the safety line to it and just about every building is different. Sometimes we can use weights to keep them from—to help hold the ropes (Ex. 329 (1/19/2011, pgs. 218-219)).
Finally, OSHA believes that the written information on anchorages that building owners must provide to employers will be helpful for employers throughout the job. Employers can use the information to keep workers continuously informed about which anchorages have proper certification. The information also will be helpful if there are work shift-related changes in personnel, if the employer brings new workers to the job, or if there is a change in site supervisors. Therefore, the final rule is requiring employers to retain the written information on anchorages they obtained from building owners for the duration of the job at that building.
In final paragraph (b)(1)(iii), OSHA provides employers and building owners with additional time to implement the requirements in final paragraphs (b)(1)(i) and (ii). The final rule gives employers and building owners one year from November 18, 2016 to meet the new requirements in final paragraphs (b)(1)(i) and (ii). This means that building owners must identify, inspect, test, certify, and maintain each anchorage by the compliance date.
OSHA believes the additional compliance time is necessary because a number of commenters said most buildings where they use RDS do not have certified anchorages (Exs. 147). For example, Mr. Lapham, of Valcourt, said that their company services 3,850 buildings in 14 states (Ex. 147). Of the buildings Valcourt cleans, Mr. Lapham said almost 75 percent did not have certified anchorages, more than 20 years after OSHA issued the final Powered Platforms standard (§ 1910.66) (Ex. 147).
Mr. Charles Adkins, of Corporate Cleaning Services, the largest window cleaning company in the Chicago area, said that they perform window cleaning services on more than 1,200 buildings (Ex. 329 (1/19/2011, p. 201)). He estimates that about 60 to 70 percent of those buildings already have certified anchorages (Ex. 329 (1/19/2011, pgs. 218-219)).
In the 1990 rulemaking, BOMA objected to requiring building owners to provide anchorages, but agreed that new buildings completed two to five years after the effective date of the final rule should have anchorages (75 FR 28862, 28879; Ex. OSHA-S041-2006-0666-1212).
It is now 24 years since OSHA first proposed a rule addressing RDS, and 23 years since OSHA's 1991 RDS memorandum allowed the use of RDS provided they have “sound anchorages.” OSHA does not believe building owners, at this late date, need another two to five years to identify, inspect, test, certify, and maintain anchorages in new or existing buildings. OSHA believes that giving building owners an additional year to meet the requirements of final paragraph (b)(1)(i) is adequate.
Final paragraph (b)(2) establishes RDS design and work-practice requirements that employers must follow to ensure their workers' safety when using an RDS. OSHA drew most of the requirements from the 1991 RDS memorandum and the I-14.1-2001 national consensus standard. Many commenters who supported allowing the use of RDS also supported requiring employers to comply with all of the provisions in the 1991 RDS memorandum and I-14.1-2001 (Exs. 138; 151; 219).
Final paragraph (b)(2)(i), like proposed paragraph (b)(1) and the I-14.1 standard (Section 5.7.12), requires that employers ensure no RDS is used at heights greater than 300 feet (91 m) above grade. The final rule includes two exceptions to the 300-foot height limit, discussed extensively below.
Many stakeholders supported the proposed 300-foot height limit (Exs. 138; 147; 168; 206; 215; 300; 329 (1/19/2011, pgs. 253-254, 401); 329 (1/21/2011, pgs. 98, 474, 477); 331). They said using an RDS at heights above 300 feet was dangerous for workers, and establishing a height limit was an important “safety issue” (Exs. 147; 215). Mr. John Capon, of Valcourt, said, “I think anything above 300 feet is preposterous, to be honest with you. The risks associated with it, just the height, all the conditions, are just overly-dramatic at that height” (Ex. 329 (1/19/2011, p. 401)). Mr. LaRue Coleman, of JOBS Building Services (JOBS), also said worker safety mandated that employers not use RDS over 300 feet, noting: “Contractors will always use the excuse that an area cannot be accessed in any other manner [than RDS] to save the building money. This is a safety issue and should not be left up to an individual employer or
Mr. Lapham, of Valcourt, said their experience indicated that the following factors necessitated limiting RDS use to a maximum of 300 feet:
• The significant increased effect of wind at heights above 300 feet;
• The significant increased length and weight of ropes required for using RDS above 300 feet; and
• The increased potential that moving the weightier ropes will “literally pull a window cleaner over the edge of the building” roof (Ex. 147).
Other commenters agreed with Valcourt's analysis. Ms. Kelley Streeter, of Vertical Access, said ropes longer than 300 feet are heavy and moving or working with such lengths can be hazardous and strenuous for workers (Ex. 329 (1/21/2011, p. 98)). Mr. Brian Gartner, of Weatherguard Service, Inc. (Weatherguard), agreed, and identified additional factors that contributed to the danger of using RDS above 300 feet:
In my opinion, based on testing and evaluation and basic engineering concepts, 300 feet is at the high end of the safe use range. Suspensions over 225 feet start responding to the effects of wind on the ropes and the worker. The longer the rope, the more surface area is exposed to the wind. The wind effect is variable. The lower the worker is from the roof, there is more rope above him or her that can be subjected to the wind, thus the higher the suspension, the more the worker is free to move.
The longer the suspension the greater the “spring” in the suspension and safety ropes. This springiness is in all synthetic ropes that are in the diameter ranges that are used for this purpose whether they are static type ropes or other rope types. There are many other factors that contribute to the dangers of rope descents above 300 feet. For every foot of increased suspension, the dynamics and conditions change and become more problematic (Exs. 329 (1/19/2011, pgs. 253-254); 331).
Mr. Gartner added that there is a marked difference in handling RDS ropes (support and fall arrest) on buildings less than 300 feet compared to buildings above 300 feet: “[T]he differences of how the winds affect [the ropes] and you, on the roof, and the trouble discerning what is happening with the ropes will speak volumes regarding the safety issues of building height and rope descent” (Ex. 331;
Some commenters said the 300-foot height limit would not be a burden on most employers. Mr. Gartner said, “The [number] of buildings in the United States taller than 300-feet is miniscule when compared to the [number] of buildings under 300 feet in height” (Ex. 331). Mr. Coleman said that the 300-foot limit would affect only six percent of office buildings in the 19 largest national markets:
If you were to take the study out to additional markets the effect would be even less since smaller/shorter buildings are typically built in these markets. If you were to add schools, hospitals and hotels to a study the effect would be even less since again these types of structures are typically shorter except when located in a major metropolitan area. Of the 6% of buildings over 11 floors the vast majority of them will have either permanent rigging or building owned davits and tie-backs thereby reducing the cost effect of lowering the height (Ex. 215).
Finally, commenters said OSHA should adopt the 300-foot height limit because the I-14.1-2001 national consensus standard requires it. Mr. Lapham, of Valcourt, who was one of the members of I-14.1-2001 committee, said it took “multiple decades” for the industry to agree to the 300-foot limit in the I-14.1-2001 standard, so OSHA should not eliminate it “under any circumstance” (Ex. 147). Mr. Gartner, of Weatherguard, and also a member of the I-14.1-2001 committee, said that Ontario, Canada, also adopted the I-14.1-2001 standard's 300-foot limit for RDS:
Canada spent much time and money in the establishment of their Code with respect to the height limit of 300 feet.
Many commenters opposed the proposed 300-foot RDS height limit for various reasons (Exs. 126; 151; 163; 178; 184; 205; 218; 219; 221; 222; 242). Most of those commenters said there was no safety-related reason to impose the height restriction, claiming that using RDS at heights above 300 feet is safe (Exs. 151; 163; 184; 218; 242). Mr. Terry, of Sparkling Clean, said using RDS “at all heights is routinely performed safely [and] successfully . . . in many parts of the country” (Ex. 163). He considered using RDS at any height to be so safe that “I believe the proposed 1910.27(b) should actually read [that using RDS] is encouraged at any height” (Exs. 163; 329 (1/19/2011, p. 330)). He added that OSHA's final rule also should allow employers to use RDS as a substitute to the means and methods originally designed into the building or structure when the design of the building or structure will safely support the use of the RDS (Ex. 163).
A number of commenters said their injury data also demonstrated that RDS are safe to use at any height. These commenters said that they had no recordable incidents related to using RDS on taller buildings (Exs. 163; 184; 242). Mr. Terry said his analysis of nine RDS incidents that involved RDS use over 300-feet indicated that none of the cases involved the height of the work as the cause of the incident (Ex. 163).
Many commenters said they considered RDS to be safer than powered platforms at any height, including above 300 feet, and, thus, there was no reason for OSHA to impose the 300-foot height limit on their use. For example, Corporate Cleaning said RDS are safer than powered platforms at all heights below 700 feet because they are more maneuverable, and allow workers to descend more quickly in an emergency (Ex. 126).
Other commenters disputed the argument that the effects of wind on RDS used above 300 feet are greater than for suspended scaffolding/powered platforms. Some commenters said there was no difference in the effects of wind on RDS use than on powered platforms at any height (Exs. 163; 205). For instance, Ms. McCurley, of SPRAT, said:
We . . . find that the height restrictions and the wind exposure to be. . . unfounded. In practical living and in practical working, we find that all of these things are a matter of skills, knowledge and good decision-making. If the wind is too high that day, if there is ice out there that day, you just don't go. And that's true of whether you are using a scaffold or a powered platform or a ground-based system or whatever. You just have to
Some commenters who opposed the proposed 300-foot RDS height limit claimed it was “arbitrary.” For instance, Mr. Ken Diebolt, of Vertical Access, said:
My primary objection is to the 300-foot limit . . . [is] it seems to us completely arbitrary. I mean, once you're X number of feet off the ground, once you're 10 feet off the ground, 50 feet, 100 feet, it doesn't really—you're no safer at 300—at 100 feet than you are at 300 feet or 500 feet if you're doing the work well. And I wonder where this came from. It comes from the window washing industry but I have no history of that and I don't know (Ex. 329 (1/21/2011, p. 138)).
Mr. Adkins, of Corporate Cleaning, agreed:
We urge you not to adopt that limitation, especially as it is written in your proposals. . . . It appears to be an arbitrary limit and does not, is not based on any kind of empirical research to determine that there is a problem in fact with the use of ropes in excess of 300 feet. In fact, I haven't been able to find any evidence of any accidents or any serious incidents where the length of the rope had anything to do with it (Ex. 329 (1/19/2011, p. 204)).
In addition, several commenters disputed there was consensus supporting the RDS height limit. For example, Mr. Adkins said:
[T]here is an implication there's a consensus in this industry supporting the 300-foot rule. I think a lot of testimony we've had here today makes it clear that that is not the case. Not only do I not believe it, not only will you hear from other individuals in the window washing industry who do not support that, you also heard from people on the other side, Mr. Stager from the Union who doesn't believe there's been an effective consensus developed on it (Ex. 329 (1/19/2011, pgs. 203-212)).
However, Mr. Bright, chair of the I-14.1-2001 committee, said there was “broad agreement” among the committee to include a 300-foot RDS height limit, which is ANSI's definition of “consensus” (Ex. 329 (1/19/2011), pgs. 244-46).
Commenters opposing the RDS height restriction also said the IWAC based the I-14.1-2001 requirement more on emotions and economics than on safety (Ex. 163; 184; 221; 222; 241). The comment of Mr. Sam Terry, of Sparkling Clean, was representative of those stakeholders:
It is my contention that the 300' limitation is based more on the following two issues:
• The emotions of the untrained observer who thinks [RDS] looks scary
• The financial benefit to the manufacturer, designer, installer or equipment associated with suspended scaffolding and the large window cleaning companies who can limit their competition by restricting the use of the less expensive option of [RDS] (Ex. 163).
Mr. Adkins agreed:
Now like I said, those people worked very hard on it, I don't dispute that, but the I-14 Committee or 50 percent of them were not window washers. They are from other industries and they are very honest, hard-working people of integrity but they have legitimate business interests to look at enforcing a 300-foot limitation or eliminating it all together and that has to be considered, I am sure (Ex. 329 (1/19/2011, pgs. 203-212)).
Mr. Adkins also said that restricting RDS use would lead to economic hardship for some window cleaning companies and to higher unemployment (Ex. 329 (1/19/2011, p. 220), but he did not have knowledge of any companies that experienced economic hardship by following the I-14.1-2001 height restriction on RDS use. However, Diamond Window Cleaning said the RDS height limit would give unfair competitive advantage to larger companies that have, and only use, powered platforms or systems installed on buildings (Ex. 219). Some commenters said using RDS is less costly than using powered platforms, and requiring companies to use powered platforms would be costly (Ex. 219). Mr. Terry explained:
Of the buildings in my marketplace, the buildings taller than 300 feet typically do not have permanently-installed powered platforms for access to the exterior of the building. Most of those buildings were designed and built in the last five years and do not have permanently installed powered platforms for access to the exterior of the building (Ex. 163).
After reviewing the rulemaking record, OSHA has decided to retain the proposed requirement that employers not use RDS at heights above 300 feet above grade. OSHA continues to believe that using RDS above 300 feet is hazardous, and that adopting the height limit in the final rule will help protect workers from injury and death.
OSHA agrees with commenters who said that there are many factors that contribute to the dangers of operating RDS above 300 feet. First, as the proposed preamble and commenters discussed, OSHA believes that using RDS at greater heights increases the potential effects of wind (
Second, using RDS above 300 feet requires the use of longer ropes. OSHA said in the proposed rule, and IWCA (Ex. 138) agreed, that the greater the length of rope used for descent, the greater the effect of winds (
Third, OSHA agrees with Mr. Lapham, of Valcourt, and Ms. Streeter, of Vertical Access, who said that longer ropes needed for RDS use above 300 feet are heavier, and moving them can be hazardous (Ex. 147; 329 (1/21/2011, p. 98)). Taken together, OSHA finds convincing the arguments that workers are at an increased risk of harm when using RDS over 300 feet, and that the RDS height limit in the final rule is necessary to protect them.
OSHA also retained the RDS height limit in the final rule because the I-14.1-2001 national consensus standard included the same limit. The American National Standards Institute (ANSI) approved the I-14.1-2001 standard, and industry widely uses it. OSHA believes the national consensus standard reflects industry best practices. Commenters, including some who were members of the I-14.1 committee, said there was broad agreement to include the 300-foot RDS height limit in the I-14.1 standard (Ex. 147; 329 (1/19/2011, pgs. 210-211, 253, 267-268)).
Since IWCA issued the I-14.1-2001 standard, several jurisdictions have adopted the 300-foot RDS height limit. Minnesota (5205.0730, Subpart 6(A)) and Washington (WAC-296-878-20005) issued regulations limiting RDS use to 300 feet, while California now limits RDS use to 130 feet (Cal. Code Regs., Tit. 8, § 3286 (2012)). Additionally, OSHA believes the experience of Canada (Ontario province) deserves consideration (R.R.O. 1990, Regulation 859). According to Mr. Brian Gartner, of Weatherguard Service, who was a member of the I-14.1 committee:
Canada invested much time and money in the establishment of their code with respect to the height limit of 300 feet. They did studies, hired consultants, and deliberated at length. Their code was promulgated due to the high death toll of their window cleaners. They had one fatality a month before the code was enacted (Ex. 331).
With regard to commenters' claims that economics was the basis for supporting or opposing the RDS height limit in I-14.1-2001 (as well as OSHA's proposed rule), OSHA notes that commenters on both sides of the issue claimed that the other side was seeking an economic advantage. Those commenters who supported the RDS height limit said employers were using RDS above 300 feet to win bids for window cleaning and save money (Ex. 215). For example, Mr. Gartner noted: “RDS is the least expensive method to service a building, saving the building owner money while allowing for the largest profit margin for a window cleaning contractor” (Ex. 331).
Commenters who opposed the 300-foot RDS height limit said large window cleaning companies that use powered platforms instead of RDS were pushing for the height restriction to gain an “unfair competitive advantage.” Those commenters also said that prohibiting the use of RDS above 300 feet would result in loss of jobs, higher unemployment, and loss of income because it costs more to use powered platforms.
During the rulemaking hearing, OSHA asked Mr. Coleman, of JOBS, whose company only uses powered platforms, why the company did not support prohibiting the use of RDS since such a prohibition would be in his company's best economic interests. He replied: “Because . . . I understand the reality that it's here. It's going to be used and so I understand the importance of some regulation that's definite. Nothing that leaves a loophole, that leaves it up to the people in the field” (Ex. 329 (1/19/2011, pgs. 315-316)). Moreover, Mr. Coleman said the company did not lay off any employees or lose business when they decided in 1985 to only use suspended scaffolding for suspended work (Ex. 329 (1/19/2011, p. 313)). Mr. Coleman testified that the company initially lost income because they did not change their prices even though using suspended scaffolding cost as much as 30 percent more than RDS use. He further noted that, the company eventually passed the cost to customers, “the building owners did not really flinch when they understood that we were not going to use a device that there was no OSHA regulation for. They saw their liability rise. So . . . window cleaning on a building, if you put it on a chart, probably won't even measure as a measurable cost for most buildings” (Ex. 329 (1/19/2011, p. 314)).
In conclusion, based on analysis of comments and the record as a whole, OSHA believes there is substantial evidence to support retaining the 300-foot height limit for RDS use.
Mr. Adkins, of Corporate Cleaning Services, recommended that OSHA, instead of prohibiting the use of RDS for heights greater than 300 feet, limit their use based on wind speeds
The rulemaking record, however, does not support Mr. Adkins' model or recommendation to replace the 300-foot RDS height limit with wind speed limits. First, according to a study, “Wind Effects on a Window Washer Suspended on a Rope,” a 250-pound window cleaner hanging 75 feet down from a 300 foot building in a steady 25 mph wind would be displaced/deflected as much as 40 feet, which is far greater than the 5 feet Mr. Adkins' model predicts (Exs. 300; 352). Moreover, changes in wind speed (
Second, many stakeholders did not support limiting RDS based on wind gusts instead of height (
Now, in actual fact, I've never had anybody work at 15 mph and never will because that, in my opinion, is too high for . . . a boatswain's chair, a swingstage, [and] a scaffold (Ex. 329 (1/19/2010, p. 213)).
Thus, OSHA does not believe there is sufficient evidence that Mr. Adkins' wind speed/rope length alternative would adequately protect of workers using RDS, and the final rule does not adopt that approach.
Final paragraph (b)(2)(i) includes two exceptions to the 300-foot height limit for using RDS. Employers may use RDS above 300 feet when they demonstrate (1) it is not feasible to access heights above 300 feet by any other means; or (2) other means pose a greater hazard than using RDS. The proposed rule would have allowed employers to use RDS at any height when the employer can demonstrate that “access cannot otherwise be attained safely and practicably,” which is consistent with I-14.1-2001.
OSHA received a number of comments on the proposed exceptions. Some commenters opposed the proposed exceptions (Exs. 147; 215; 331). For example, Valcourt said:
In no case should a window cleaning contractor be allowed to determine when RDS is acceptable over 300 feet. . . . The determination that RDS can be utilized on a per case basis on descents over 300 feet
Mr. Coleman, of JOBS, agreed with Valcourt, stating, “This is a safety issue and should not be left up to an individual employer or employee to make an onsite decision of this nature” (Ex. 215).
Mr. Gartner, of Weatherguard, said OSHA's proposed exception allowing RDS use above 300 feet when employers cannot attain access “safely and practicably” was subjective and difficult to enforce (Ex. 329 (1/19/2011, pgs. 255-256)). He said, “What is practical for me may not be practical for you and what I deem to be safely is not necessarily what you consider safely” (Ex. 331).
OSHA agrees with the commenters and revised the language in the final rule to make it consistent with established legal tests and defenses under the OSH Act.
Final paragraph (b)(2)(ii) requires employers to ensure RDS use is:
• In accordance with manufacturer instructions, warnings, and design limitations (hereafter collectively referred to as “instructions”), or
• Under the direction of a qualified person.
The final rule (§ 1910.21(b)) defines qualified as someone who, by possession of a recognized degree, certificate, or professional standing, or who by extensive knowledge, training, and experience has successfully demonstrated the ability to solve or resolve problems relating to the subject matter, the work, or the project.
The I-14.1-2001 standard also requires that employers use RDS in accordance with manufacturer's instructions. In addition, the standard specifies that employers follow design requirements in I-14.1-2001 (Section 5.7.1).
OSHA believes that following manufacturer's instructions is critical to ensure the safety of workers who use RDS. To illustrate, manufacturers may design and sell ropes and equipment rated appropriately for recreational, but not industrial, use. The final rule requires that employers ensure they use only equipment that the manufacturer rated for industrial use. Similarly, under the final rule, employers must ensure that, if they replace elements of one manufacturer's RDS with the components of another manufacturer's system, the instructions specify that the components are compatible. Using incompatible systems or components could endanger the safety of workers and result in fatal accidents.
Proposed paragraph (b)(2)(i)), like the 1991 RDS memorandum, would have required that employers use RDS in accordance with manufacturer or distributor instructions, and did not include the qualified person option. In the preamble to the proposed rule, OSHA requested comment about whether to allow employers to act in accordance with the instructions of either the manufacturer or a qualified person, as defined in § 1910.21(b) (75 FR 28886).
Commenters overwhelmingly supported adding the qualified person option and removing distributors (Exs. 138; 150; 153; 163; 184; 221; 220; 241; 242; 243; 245). For instance, Martin's said it was appropriate to allow employers to rely on qualified persons because they are “able to solve relevant problems” (Ex. 222). Mr. Gene Donaldson, of Sunlight Building Services (Sunlight), also preferred qualified persons because they “must have a recognized degree, certificate, etc., or extensive experience and ability to solve subject problems, at the worksite” (Ex. 227). Mr. Lawrence Green, president of Clean & Polish, said he supported replacing distributors with qualified persons “because distributors primarily sell the product to the end user and are not responsible for the safety, design and training of the personnel using them” (Ex. 242).
OSHA agrees with the commenters and revised final paragraph (b)(2)(ii) by adding qualified person and deleting distributor. The Agency believes the revised language in the final rule provides greater flexibility for employers, while ensuring that RDS use is at the direction of a person who is qualified.
Final paragraph (b)(2)(iii), like proposed paragraph (b)(2)(ii) and the 1991 RDS memorandum, requires employers to ensure that each worker who uses an RDS receives training in accordance with § 1910.30. This requirement means that the employer must train each worker who uses an RDS in the proper rigging, use, inspection, and storage of an RDS before the worker uses the RDS. In addition, since the final rule requires that each worker who uses an RDS also uses an independent personal fall arrest system (§ 1910.27(b)(2)(vi)), the employer must ensure that each worker receives fall hazard training before that worker uses an RDS in an area where the worker may be exposed to fall hazards (§ 1910.30(a)(1)). As final § 1910.30 specifies, the fall hazard training must include the nature and recognition of the fall hazards in the work area; the procedures to follow to minimize the hazards; the correct procedures for installing, inspecting, maintaining, disassembling, and operating the fall protection systems workers will use, such as proper hook-up, anchoring, and tie-off techniques; and methods of inspection and storage of the equipment the manufacturer specifies (§ 1910.30(a)(1) and (3)). Moreover, to ensure that the RDS training meets the requirements of § 1910.30, employers also must provide retraining when they have reason to believe the workers do not have the understanding and skill needed to use RDS safely.
OSHA notes that the final provision is similar to the I-14.1-2001 standard, which requires that employers train workers who use RDS so they understand the manufacturer's instructions, inspection of components, accepted rigging practices, identifying anchorages, descending, fall arrest requirements, rescue considerations, and safe working conditions (Section 5.7.2).
OSHA believes that the final provision is necessary. Evidence in the record indicates that some employers do not train their workers who use RDS (Ex. 329 (1/19/2011, pgs. 86, 100)). OSHA believes, and commenters agreed, that workers are able to safely use RDS only if they are thoroughly knowledgeable in the equipment and its proper use (Exs. 66; 138; 151; 163; 153; 184; 216; 221; 222; 242; 243; 245; 329 (1/19/2011, pgs. 22-24, 433)). A number of commenters said proper training is the most important aspect of using RDS safely (Exs. 163; 184; 221; 242; 329 (1/19/2011, p. 252)). Those commenters also said that proper training would prevent most, if not all, of RDS incidents they identified (Exs. 163; 184; 221; 242). Similarly, Mr. Capon, of Valcourt, credited their training program as the reason their company did not have a fatality during its 25 years of operation (Ex. 329 (1/19/2011, pgs. 419-420)). Some commenters recommended that OSHA also require that employers use professional organizations to train and certify their workers (Exs. 123; 205). The performance-based approach in the final rule clearly allows employers to use professional organizations to provide training, and to require that workers receive certification to operate RDS. However, the performance-based approach of the final rule gives employers flexibility to determine how to train their workers, provided the training and the training contents meet the requirements of § 1910.30. Accordingly, OSHA does not believe it is necessary to adopt the commenters'
Final paragraph (b)(2)(iv), like proposed paragraph (b)(2)(iii), requires that employers ensure inspection of each RDS at the start of each workshift in which their workers will use it. Additionally, the employer must ensure damaged or defective equipment is removed from service immediately and replaced. The equipment inspection must include every component of the RDS, including safety devices, ropes, rope grabs, lanyards, descent devices, harnesses, seat boards, carabiners and other hardware. When replacing damaged or defective equipment, the replacement component or system must be compatible, undamaged and not defective. Overwhelmingly, commenters supported the requirement to inspect RDS equipment (Exs. 138; 151; 153; 163; 184; 221; 222; 242; 243; 245).
The final rule revises the proposed paragraph to clarify the regulatory language. First, OSHA drafted the final provision to specify that employers must inspect each RDS “at the start of each workshift that it is to be used” rather than “each day before use” as in the proposed rule. Therefore, the final rule specifies that employers must inspect each RDS before a worker uses it in their workday. Thus, to the extent that there is more than one workshift in a work day, the RDS needs to be inspected to ensure it is safe for each worker to use during their workshift. The inspection of RDS equipment at the start of each workshift ensures that any damage (such as abrasions and cracks) that may have occurred when using the RDS during the last workshift is identified, and appropriate action is taken before another worker uses the RDS. In addition, employers need only inspect an RDS if a worker will use it during a workshift, rather than each day. The language in the final rule clarifies this requirement.
Second, the final rule requires that employers remove both damaged and “defective” equipment from service, while the proposed rule only specified removal of damaged equipment. OSHA added “defective” because, regardless of whether an inspection reveals that equipment was damaged during use or defectively manufactured, OSHA considers such equipment to be unsuitable for continued use.
Third, OSHA added language to the final rule specifying that employers remove damaged or defective equipment from service “immediately.” This addition is consistent with the I-14.1-2001 standard (Section 5.7.3).
Finally, the final rule revises the proposed rule to specify that employers must replace damaged or defective equipment removed from service. OSHA believes this language clarifies that improvised repairs are not allowed, consistent with I-14.1-2001 (Section 5.7.3). Replacing damaged or defective components is necessary to ensure that RDS are restored to their original condition and capacity. For these reasons, OSHA adopts the final provision as discussed.
Final paragraph (b)(2)(v), like proposed paragraph (b)(2)(iv) and the 1991 RDS memorandum, requires that employers ensure the RDS has proper rigging, including proper anchorages and tiebacks. The final rule also requires that employers ensure that RDS rigging emphasizes providing tiebacks when using counterweights, cornice hooks, or similar non-permanent anchorage. The I-14.1 standard addresses proper rigging by requiring that employers train workers in “correct” and “accepted” rigging practices (Section 5.7.2).
Proper rigging of RDS equipment is essential to ensure that the system is safe for workers to use. To ensure proper RDS rigging and safe use, OSHA believes that employers also must take into consideration and emphasize the specific conditions present. For example, OSHA believes that giving particular emphasis to providing tiebacks when using counterweights, cornice hooks, or similar non-permanent anchorages is an essential aspect of proper rigging and necessary to ensure safe work. To illustrate, when tiebacks and anchorages are not perpendicular to the building face, it may be necessary for worker safety for employers to install opposing tiebacks to support and firmly secure the RDS, have at least a 30-degree sag angle for opposing tiebacks, or ensure that no angle exists on single tiebacks. In addition, as the final rule specifies, OSHA believes that employers also must place emphasis on non-permanent anchorages because of the possibility of damage during transport and installation.
Finally, some commenters recommended that OSHA include additional rigging requirements in the final rule. For example, Vannoy & Associates recommended that OSHA include a requirement for angle of attachment (Ex. 213). OSHA believes that the term “proper rigging” includes the angle of attachment and, therefore, needs no further elaboration. For the reasons discussed above, OSHA adopts the provision as discussed.
Final paragraph (b)(2)(vi), like proposed paragraph (b)(2)(v) and the 1991 RDS memorandum, requires that each worker uses a separate, independent personal fall arrest system, when using an RDS. Final § 1910.140(b) defines personal fall arrest system as “a system used to arrest an employee in a fall from a walking-working surface.” A personal fall arrest system consists of at least an anchorage, connector, and a body harness, but also may include a lanyard, deceleration device, lifeline, or suitable combination of these devices (§ 1910.140(b)). The final rule requires that the personal fall arrest system meets the requirements in 29 CFR part 1910, subpart I, particularly final § 1910.140. This final rule is consistent with other existing OSHA standards (
OSHA believes the provision is essential to protect workers from injury or death if a fall occurs. As the 1991 RDS memorandum mentions, requiring workers to use personal fall arrest systems that are completely independent of RDS ensures that any failure of the RDS (
Commenters uniformly supported the proposed provision (Exs. 138; 151; 153; 184; 221; 222; 242; 243). Also, Surface Solutions pointed out that 91 of 125 RDS incidents they reviewed as far back at 1977 resulted from the lack of an independent personal fall arrest system (Ex. 184). OSHA finds the comments and data persuasive and, therefore, adopts the requirement as proposed with only minor editorial change, for clarity.
Final paragraph (b)(2)(vii) requires that employers ensure all components of each RDS, except seat boards, are capable of supporting a minimum rated load of 5,000 pounds. For seat boards, the final rule requires that they be capable of sustaining a live load of 300 pounds. In accordance with section 6(b)(8) of the OSH Act (29 U.S.C. 655(b)(8)), OSHA revised the final provision in three ways to make it consistent with the I-14.1-2001 national consensus standard.
First, the final rule revised the proposal (proposed paragraph (b)(2)(vi)) to require that employers ensure “all components” of each RDS, except seat boards, are capable of supporting a 5,000-pound minimum rated load. As the final definition of RDS specifies, these systems usually consist of the following components: Roof anchorage, support rope, descent device, carabiner(s) or shackle(s), and chair
However, like I-14.1-2001, OSHA believes that requiring all RDS components, except seat boards, be capable of supporting the required minimum rated load is essential to ensure that these systems are safe for workers to use. It makes no difference if RDS lines and ropes are capable of supporting the minimum 5,000-pound required load if RDS connectors, anchorages, and other components cannot sustain such a load. In other words, all components must be able to support the required load because RDS are only as strong as their weakest component. Thus, applying the final load requirement to all RDS components will ensure that none of the critical components will break or fail when supporting a significant load. OSHA notes that commenters overwhelmingly support the minimum 5,000 load requirement as essential to ensure RDS are safe to use (Exs. 138; 151; 153; 184; 221; 222; 242; 243).
Second, in final paragraph (b)(2)(vii), consistent with I-14.1-2001 (Section 14.1.4), OSHA does not apply the 5,000-pound rated load requirement to seat boards. Instead, OSHA incorporates language from I-14.1-2001 (Section 14.3.1(c)) specifying that seat boards must be capable of supporting a live load of at least 300 pounds. I-14.1-2001 (Section 14.3.1(a)) specifies that seat boards must be made of “wood or other suitable material,” which cannot and does not need to support a rated load of 5,000 pounds. OSHA notes that final paragraph (b)(2)(vi), as mentioned, requires that employers ensure each employee who uses an RDS also uses a “separate, independent personal fall arrest system” that meets the requirements in final § 1910.140.
Third, the final rule, consistent with I-14.1-2001 (Section 14.1.4), revises the proposed rule to require that RDS components be capable of sustaining a minimum “rated load” of 5,000 pounds. The proposed rule specified that RDS lines be able to sustain a minimum “tensile load” of 5,000 pounds. OSHA believes that “rated load” or “rated strength” is the appropriate term to specify the ability of all RDS components to support a load and is consistent with the I-14.1-2001 standard. I-14.1-2001 (Section 2) broadly defines “rated load” as “the combined weight of the [workers], tools, equipment, and other materials which the device is designed and installed to lift.” Tensile load, on the other hand, is the maximum stress that material can withstand while being stretched before breaking or failing. While the term is appropriate to use for identifying the required strength of ropes or lines, it is not a standard measure for components that do not stretch.
OSHA notes that the final rule does not preclude the use of lines or ropes that have a knot, swage, or eye splice, which could reduce the tensile strength of a rope or line. However, under final paragraph (b)(2)(vii), even if an employer uses a line or rope that has a knot, swage, or eye split, the rope or line still must be capable of supporting a minimum rated load of 5,000 pounds. Several commenters supported this interpretation of the final paragraph (b)(2)(vii).
In conclusion, OSHA believes that employers should not have difficulty complying with the final paragraph (b)(2)(vii) as revised. Virtually all RDS manufactured today meet the design requirements in I-14.1-2001 (Section 14) (See
Final paragraph (b)(2)(viii), like proposed paragraph (b)(2)(vii), requires that employers provide for prompt rescue of each worker in the event of a fall. The final rule is almost the same as the 1991 RDS memorandum and § 1910.140(c)(21), and generally consistent with the I-14.1 standard (Section 5.7.11).
Like § 1910.140(c)(21), final paragraph (b)(2)(viii) establishes two fundamental points—(1) employers must provide for the rescue of workers when a fall occurs, and (2) the rescue must be prompt. First, providing for rescue means employers need to develop and put in place a plan or procedures for effective rescue. The plan needs to include making rescue resources available (
Appendix C to § 1910.140 provides guidance to employers on developing a rescue plan (appendix C, Section (h)). For example, appendix C recommends that employers evaluate the availability of rescue personnel, ladders, and other rescue equipment, such as mechanical devices with descent capability that allow for self-rescue and devices that allow suspended workers to maintain circulation in their legs while they are awaiting rescue. OSHA's Safety and Health Information Bulletin on Suspension Trauma/Orthostatic Intolerance identifies factors that employers should consider in developing and implementing a rescue plan, including being aware of signs and symptoms of suspension trauma and factors that can increase the risk of such trauma, rescuing unconscious workers, monitoring suspended and rescued workers, and providing first aid for workers showing signs and symptoms of orthostatic intolerance (SHIB 03-24-2004).
Although an increasing number of employers train workers and provide devices that allow workers to rescue themselves (Exs. 227; 242), the employer's rescue plan still needs to make provisions for appropriate rescue personnel and equipment because self-rescue may not be possible in some situations. For example, unconscious workers will not be able to move and, therefore, cannot pump their legs to maintain circulation or relieve pressure on the leg muscles. The same may be true for seriously injured workers or workers who are in shock. When RDS ropes get caught on structures or entangled, workers may not be able to self-rescue (see analysis of RDS and suspended scaffolding incidents in Ex. 163).
Second, the final rule requires that employers provide “prompt” rescue of workers suspended after a fall. Sunlight Building Services commented that “prompt” is ambiguous, and asked whether OSHA defines it to mean “immediately” or “quickly” (Ex. 227). The International Safety Equipment Association (ISEA) and Capital Safety Group (CSG) urged OSHA to require that rescue of suspended workers occur “quickly,” pointing out the life-threatening dangers of suspension trauma/orthostatic intolerance (Exs. 185; 198).
OSHA agrees with ISEA and CSG. OSHA's definition of “quick” or “prompt” is performance-based. Prompt means that employers must act quickly enough to ensure that the rescue is effective; that is, to ensure that the worker is not seriously injured. If the worker is injured in the fall, the employer must act quickly enough to
Orthostatic intolerance may be experienced by workers using fall arrest systems. Following a fall, a worker may remain suspended in a harness. The sustained immobility may lead to a state of unconsciousness. Depending on the length of time the suspended worker is unconscious/immobile and the level of venous pooling, the resulting orthostatic intolerance may lead to death. . . . Unless the worker is rescued promptly using established safe procedures, venous pooling and orthostatic intolerance could result in serious or fatal injury, as the brain, kidneys, and other organs are deprived of oxygen.
Prolonged suspension from fall arrest systems can cause orthostatic intolerance, which, in turn, can result in serious physical injury, or potentially, death. Research indicates that suspension in a fall arrest device can result in unconsciousness, followed by death, in less than 30 minutes (SHIB 03-24-2004).
In sum, prompt rescue means employers must be able to rescue suspended workers quickly enough to ensure the rescue is successful,
Commenters uniformly supported the proposed provision (Exs. 138; 153; 184; 221; 222; 242; 243). Clean & Polish said, “It is a documented fact that there is a great risk of suspension trauma when hanging from a harness.” Accordingly, they recommended that a team of at least two workers should perform every job assignment and that workers receive training in self-rescue (Ex. 242). Sunlight also supported self-rescue, saying it is the quickest form of rescue, followed by assistance from a coworker trained in rescue. Sunlight added that, in a medical emergency, they recommend calling the local fire department (Ex. 227). A number of commenters said they train their own workers in rescue and require them to practice/demonstrate their rescue capabilities at least twice a year (Exs. 184; 221; 227; 243).
The final rule is performance-based and gives employers flexibility to select the rescue methods that work best for their workers and worksite. However, OSHA emphasizes that, whatever rescue methods employers use, they are responsible for ensuring that it provides prompt rescue. Some commenters said they rely on calling local emergency responders, which may or may not be adequate. If employers rely on this method of rescue, they need to ensure that the responders have the appropriate equipment to perform a high angle rescue and are trained and qualified to do so. (Also see the discussion of prompt rescue in final § 1910.140 below.)
Final paragraph (b)(2)(ix), consistent with proposed paragraph (b)(2)(viii), the 1991 RDS memorandum, and I-14.1 (Section 5.7.5), requires that employers ensure the ropes of each RDS are effectively padded or otherwise protected where they contact edges of the building, anchorage, obstructions, or other surfaces to prevent them from being cut or weakened. Padding protects RDS ropes from abrasion that can weaken the strength of the rope. If employers do not protect RDS ropes, the ropes can wear against the sharp edges of buildings (
The final rule requires that employers ensure the rope padding is “effective.” To be effective, padding needs to be, for example, firmly secured in place and strong and thick enough to prevent abrasion. To ensure the padding remains effective, employers also need to inspect it “regularly and as necessary” (final § 1910.22(d)(1)).
OSHA added language to the final rule specifying that employers may ensure that ropes are padded or “otherwise protected.” OSHA believes the added language gives employers greater flexibility in complying with final (b)(2)(ix). OSHA recognizes that padding may not be the only effective measure available to employers. For example, several commenters said that parapet carpets and rope-wrapper protection are effective rope protection devices (Exs. 138; 153; 184; 221; 242). Other available measures include rubber hoses and polyvinyl chloride (PVC) piping. OSHA believes that various materials are readily available and used in common industry practice; thus, employers should not have significant problems complying with the final rule.
Overwhelmingly, commenters supported the provision (Exs. 138; 153; 184; 221; 222; 242; 243), and OSHA did not receive any comments opposing the requirement. Therefore, OSHA adopts the provision as discussed.
Final paragraph (b)(2)(x), like proposed paragraph (b)(2)(ix), requires that employers provide stabilization at the worker's specific work location whenever descents are greater than 130 feet. The purpose of the stabilization requirement is to reduce the risks of worker injury when longer descents are made using a RDS.
For purposes of final paragraph (b)(2)(x), the worker's “specific work location” refers to the location in the descent where the worker is performing the work tasks that necessitate the use of an RDS. For example, a window cleaner's specific work location is the window the worker is cleaning. While using an RDS, workers may have many specific work locations during a descent, and they must be stabilized at each of those locations when the descent is greater than 130 feet.
OSHA uses a performance-based approach in final paragraph (b)(2)(x). It gives employers the flexibility to use intermittent or continuous stabilization. In addition, the final rule allows employers to use any method of stabilization (
OSHA notes that the 1991 RDS memorandum included a requirement for “intermittent” stabilization on descents in excess of 130 feet.
In the proposed rule, OSHA requested information on commonly used methods of stabilization and on other methods that may increase worker safety. The vast majority of commenters
Sunlight said that some buildings have permanent rail or track systems to provide stabilization (Ex. 227). TRACTEL North America (TRACTEL) also said they use “mulling and track,” designed for use by powered platforms for stabilization, to stabilize RDS (Ex. 329 (1/19/2011, p. 436)). TRACTEL added that mulling and track stabilization systems provide greater protection because the stabilization is continuous, while suction cups only provide intermittent protection (Ex. 329 (1/19/2011, p. 436)).
Many commenters supported the RDS stabilization requirement for work operations involving descents greater than 130 feet (Exs. 138; 147; 151; 215; 222; 241; 227; 356), and a number of commenters supported the use of suction cups as an effective stabilization method (Exs. 138; 151; 152; 222; 241).
However, a number of commenters said stabilization is not necessary. They indicated there was no need for a stabilization requirement because the prohibition against using RDS in adverse or hazardous weather is adequate and a more protective approach (Exs. 163; 184; 221; 227; 241; 242; 243). Mr. Terry, of Sparkling Clean, explained:
Every incident that can be partially abated by stabilization can be totally abated by substituting a restriction from working in adverse weather restrictions. Suspended workers using [RDS] only need stabilization during adverse weather conditions. . . .
[Suction cups] can certainly be used for stabilization, if a worker chooses to work in adverse conditions that should have been avoided in the first place . . . (Ex. 163).
Ms. McCurley, of SPRAT, also said the proposed requirement was not necessary:
Sometimes stabilization is required, and when stabilization is required, the stabilization needs to be adequate to the situation. But, stabilization is not necessarily required just as a matter of course. . . . [T]hat requirement tends to come from the scaffold industry, which does require stabilization all the time, because that's what scaffolds do. They have to have stabilization. But, because of the individual not having nearly the wind load—a wind load on this table, because it looks a lot like an airplane wing, is going to have a much different effect than the same wind load on your body standing there (Ex. 329 (1/19/2011, pgs. 167-168)).
Nevertheless, Mr. Terry and other commenters said they provide stabilization devices (primarily suction cups) and use them on descents as short as 10 feet (Exs. 163; 184; 221; 242; 329 (1/19/2011, p. 62)). Mr. Terry pointed out that his company uses the suction cups “for positioning to keep us in front of the glass, not for stabilization against the effects of the wind” (Ex. 329 (1/19/2011, p. 337)).
Mr. Diebolt, of Vertical Access, did not oppose the concept of stabilization, but opposed OSHA's 130-foot trigger:
Now, the 130-foot tie-offs, I have essentially the same objections. It seems arbitrary for the kind of work at least that we do, it's unnecessary. . . . Granted we're doing light work, making observations and notes and that sort of thing. Occasionally, we have done some work like take core samples out of a concrete structure using a coring rig drill rig hung from a separate line. And under those conditions, you do actually have to put in a bolt or something to hold you to the building . . . when you're on a long pendulum, when you're on a long tether.
But making it mandatory seems arbitrary and sort of eliminates the possibility of the flexibility of doing the work (Ex. 329 (1/21/2011, pgs. 139-140)).
However, the major objection to the proposed rule was not to the proposed regulatory text, but rather with the use of suction cups as a stabilization method. The Glass Association of North America (GANA), a trade association representing the architectural and glazing industry, recommended that OSHA not to allow the use of suction cups for worker stabilization:
Glass is a brittle material and, as such, can break without warning and vacate the window framing system. Glass installed in commercial and residential buildings is designed to withstand external loads, primarily wind events, with a certain safety factor. . . . In other words, breakage cannot be eliminated in brittle materials like glass. There is no way to guarantee a specific lite of glass will not break under the loads exerted by workers as they move vertically and horizontally back and forth across the glass lites. . . . The use of suction cups may be sufficient in certain conditions to cause the glass to break and vacate the opening, particularly in the event the RDS fails and the worker is left to rely upon the suction cups used for stabilization . . . to support his/her weight.
GANA urges OSHA, in its final rule, to reject the use of suction cups as an approved employee work location stabilization device for RDS. . . . Their use does not satisfy the safety criteria OSHA has established for this rulemaking proceeding: “to be effective, fall protection systems must be both strong enough to provide the necessary fall protection and capable of absorbing fall impact so that the forces imposed on employees when stopping falls do not result in injury or death” (Ex. 252).
Mr. Gartner, of Weatherguard, and Mr. Coleman, of JOBS, opposed the use of suction cups for the same reasons as GANA (Ex. 215; 329 (1/19/2011, pgs. 259-260)). Mr. Gartner said:
The use of suction devices for stabilization is problematic. The glass industry strongly discourages them and the window wall people are robustly against them. They are devices used at whim. The loads that they apply to a surface are totally unknown as there are numerous barrier bowls that influence them and they're applied to surfaces that have never been rated for these pinpoint concentrated loads.
Applying a device to glass seems reckless when we're all aware of glass's characteristics and lack of strength. Furthermore, as glass ages, it becomes more brittle and it loses strength, just another variable to make their use totally uncontrolled (Ex. 329 (1/19/2011, pgs. 259-260)).
Mr. Coleman also stated:
In order for Work Station Stabilization to be safe, the worker must attach to a component of the building curtain wall that is designed for and capable of providing the stabilization required. Presently most Work Station Stabilization is done by using suction cups attached to the glass pane. The glass is typically not designed for such point loading; it is designed for a wind load spread out over the entire surface of the glass (Ex. 215).
Several workers, based on personal experience, also opposed the use of suction cups, calling the devices “unsafe” (Exs. 311; 316; 329 (1/19/2011, pgs. 5, 8, 15, 18, 19, 61, 62); 329 (1/20/2011, p. 222)). For instance, Mr. Rosario, of SEIU Local 32BJ, stated:
I believe the use of suction cups fails to provide adequate protection. Suction cups are unreliable because they get dirty and fail to maintain suction. I remember having to clean 20-story buildings, sometimes with multiple stops per floor. At least half the time I applied the [suction] cup, it released during the cleaning and I had to apply it again (Ex. 311).
Mr. Rosario also said the support offered by suction cups “usually only lasts for a few seconds” (Ex. 329 (1/19/2011, p. 19)). Mr. Rosario added that
After reviewing the rulemaking record, OSHA decided, for several reasons, to adopt the stabilization requirement as proposed. First, OSHA believes, and many commenters agreed, that stabilization of RDS is necessary to protect workers on descents greater than 130 feet. The effects of wind gusts, microbursts, and tunneling wind currents on longer RDS ropes is particularly severe and likely to increase the risk of injury to workers. For instance, increases or changes in the wind can cause a significant pendulum effect on the long RDS ropes, and will cause workers not stabilized to swing a great distance away from or into the building, possibly causing injury or death. For example, the RDS accident data analysis Mr. Terry submitted indicated that strong wind gusts (more than 35 mph) swung two workers using RDS 30 feet away from a building (Ex. 163).
In addition, even a single wind gust or a sudden drop in the wind speed can initiate this pendulum effect on RDS ropes and destabilize the workers using them. Moreover, when RDS ropes are long, the slightest wind movement also can cause the ropes to sway (
Mr. Terry's accident analysis demonstrates what can happen when workers are not using stabilization, and how using stabilization could prevent such cases. Three RDS accidents in that analysis involved wind:
• Window cleaner cleaning 50-story building became stranded in descent equipment line as a result of a wind gust;
• Window cleaner was stuck between 12th and 13th floor and managed to rest on narrow window ledge. Winds that were gusting 35 mph caught his ropes and wrapped them around an antenna on the west side of the building so worker was unable free to himself; and
• Two window cleaners were left dangling from a building when their lines became tangled during a windy rain shower. Wind was gusting about 36 mph. The workers were stuck between the 11th and 14th floors and blown 30 feet away from the building (Ex. 163).
OSHA believes that stabilization, as required by this final standard, could prevent many such incidents.
Second, while OSHA agrees that employers must not allow workers to perform suspended work in hazardous weather and gusty or excessive winds, the Agency also recognizes that adverse conditions can suddenly occur without warning. When such conditions occur, employers must ensure that workers using RDS have stabilization methods immediately available so they can protect themselves from the effects of the wind, even if all they are doing is descending to stop work due to hazardous weather conditions. OSHA notes that even those commenters who asserted that stabilization is not necessary because weather restrictions can totally abate the hazard, also noted that they regularly use and rely on stabilization devices, even on descents as short as 10 feet (Exs. 163; 184; 221; 242).
Third, the final rule is consistent with the I-14.1-2001 national consensus standard. The I-14.1-2001 standard also requires that employers ensure workers using RDS have stabilization at their work station on all descents greater than 130 feet (Section 5.7.12). The I-14.1-2001 standard reflects best industry practices.
With regard to suction cups, for the following reasons OSHA decided not to prohibit their use under the final rule. First, OSHA believes that suction cups provide effective stabilization for workers using RDS, particularly in long descents. The record shows that suction cups are an effective and easy-to-use device that helps keep workers positioned or stabilized at their specific work location (Exs. 137; 138; 147; 153; 163; 184; 298).
OSHA received a comment from GANA stating that suction cups are not safe or effective to use for stabilization (Ex. 252). GANA's comment appears to indicate that they believe suction cups are a type of personal fall protection system, and concludes suction cups are not effective because the cups are not “strong enough to provide the necessary fall protection and capable of absorbing fall impact so that the forces imposed on employees when stopping falls do not result in injury or death” (Ex. 252). GANA also says suction cups are not effective because they cannot support the worker's weight if the RDS and personal fall arrest system both fail (Ex. 252). However, OSHA agrees with IWCA's post-hearing comments that GANA's description of the purpose and use of suction cups is not accurate (Ex. 346). As IWCA points out, and OSHA agrees, “Suction cups are not intended to be part of the fall protection system and they are not part of the fall protection system” (Ex. 346).
The second reason for allowing suction cups is that OSHA believes suction cups can provide stabilization and protection when sudden weather conditions occur while the worker is using an RDS, even if workers use the suction cups only to safely descend due to excessive wind. As Mr. Terry said, “In the event of a sudden unforeseen weather hazard, the [RDS user] . . . can very easily . . . utilize the suction cup. . . . This method of stability can even be performed while descending out of harm's way” (Ex. 329 (1/19/2011, p. 329)).
Third, OSHA believes that suction cups are widely used and accepted by employers and workers who use RDS, even by those employers who doubt the need for stabilization, because the devices have a track record of being effective, and economical. As far back as July 31, 1991, OSHA allowed employers to use suction cups to meet the stabilization requirement in the 1991 RDS memorandum. IWCA said that, since 1991, the use of suction cups in conjunction with RDS is widespread among window cleaning companies and workers in the United States and other countries (Ex. 346). Over that period, neither OSHA nor IWCA are aware of any data or evidence indicating that a significant problem exists with using suction cups. Although GANA said it is not safe to use suction cups on glass, they did not provide any data indicating that suction cups are causing glass windows to break (Ex. 252). Moreover, according to IWCA, a 2010 GANA press release said their members did not have any record of windows breaking when window cleaners were using suction cups (Ex. 346). OSHA notes that a review of the rulemaking record failed to show that suction cups cause anything more than a few isolated cases of window breakage. For example, Mr. John Capon, of Valcourt, reported that each year his company only had to replace 15 to 20 windows on the approximately 4,000 buildings they clean 2-3 times each year because of suction cup-related damage (Ex. 329 (1/19/2011, p. 372, 399)).
Finally, the performance-based final rule allows, but does not require, the use of suction cups for stabilization. Employers are free to use other devices, and some commenters said they use other stabilization methods, such as rail
Final paragraph (b)(2)(xi) is a new provision added to the final rule that requires employers to ensure no worker uses an RDS when “hazardous weather conditions” are present. The final provision also identifies some examples of weather conditions that OSHA considers hazardous for workers using RDS: Storms and gusty or excessive wind.
OSHA's general industry standard on powered platforms (§ 1910.66) and construction standard on scaffolds (§ 1926.451) also prohibit elevated work when certain weather conditions are present. Specifically, the powered platforms standard prohibits using powered platforms in winds in excess of 25 mph, and requires that employers determine wind speed based on “the best available information, which includes on-site anemometer readings and local weather forecasts, which predict wind velocities for the area” (§ 1910.66(i)(2)(v)). The construction standard prohibits work on scaffolds during storms or high winds “unless a competent person has determined that it is safe for employees to be on the scaffold and those employees are protected by personal fall arrest systems or wind screens” (§ 1926.451(f)(12)).
The I-14.1 standard also prohibits window cleaning operations and RDS use when the “work area is exposed to excessive winds,” which the standard defines as “any wind which constitutes a hazard to the worker, public or property” (Sections 3.7 and 5.7.12). The I-14.1 also requires that employers train workers in the effects of wind on RDS operations, and make workers aware of “the potential of sudden climatic changes such as wind gusts, micro bursts or tunneling wind currents” when they perform descents over 130 feet (Section 5.7.11(a)).
In the preamble to the proposed rule, OSHA requested comment on a number of issues regarding hazardous weather conditions including the following (75 FR 28886):
• Should the final rule prohibit RDS use in certain weather conditions? If so, what conditions?
• How should employers determine whether weather conditions are hazardous?
• How should OSHA define excessive wind?
• Should the final rule prohibit RDS use if winds reach a specific speed? If so, what speed?
• Should the final rule require that employers monitor winds speeds? If so, how?
Overwhelmingly, commenters supported prohibiting the use of RDS, as well as suspended scaffolding, in inclement or hazardous weather (Exs. 151; 163; 184; 221; 222; 227; 241; 242; 243; 329 (1/19/2011, p. 329)). They also agreed that conditions such as “thunderstorms, lightning; hail, high winds, hurricane, snow and ice storms” were hazardous. Sunlight added that heavy rain and extreme cold also make RDS use hazardous: “Rain can affect the operation of the working line but the use of rope that is essentially waterproof can negate this problem. Very cold weather stiffens the rope and especially wet rope can be a hazard” (Ex. 227).
In addition, some commenters said that as the length of rope during a drop increases, the effects of wind on RDS can increase (Exs. 147; 329 (1/19/2011, pgs. 253, 291-292)). As mentioned in the proposed rule, the greater the length of rope used for a descent, the greater the adverse effects of environmental factors such as wind gusts, microbursts, or tunneling wind currents, and the greater the risk of injury to workers (75 FR 28886). OSHA notes that some window cleaning companies disagreed that greater heights pose greater wind effects on RDS (Exs. 222; 247; 329 (1/19/2011, p. 329)). Dana Taylor, of Martin's, said their accident analysis files did not show any RDS accidents occurring due to excessive wind (
The adverse effects of environmental factors do not affect rope access any more than they affect suspended scaffolding. In actuality, users of rope access have the ability to get themselves and their equipment out of harm's way should unexpected weather hazards suddenly appear much quicker than users of suspended scaffolding.
In the event of a sudden unforeseen weather hazard, the user of rope access can very easily use their hands, arms, legs, and feet to hold on to parts of the building or structure or to utilize the suction cup as long as a smooth surface is available. This method of stability can even be performed while descending out of harm's way. (Ex. 329,1/19/2011, p. 329)).
Commenters also had different viewpoints about defining “excessive” wind. Some commenters said winds were excessive and dangerous when they reached 25 mph (Exs. 227; 329(1/19/2011, p. 411)), while others said winds in excess of 15 mph were too high to use RDS (Exs. 138; 151; 152; 222; 329 (1/19/2011, p. 329)). For instance, John Capon of Valcourt said: “I don't work . . . in more than 10 or 15 miles per hour [wind] and I almost look at that as normal. That seems a little awkward to me because that's not very windy at all. When it gets to 20 and 25 miles per hour, to me it gets very dangerous” (Ex. 329 (1/19/2011, p. 411)).
Several stakeholders in the window cleaning industry indicated that including a 15-mph or 25-mph wind speed limit in the final rule was not necessary. Texas Window Cleaning Company said: “Not many window cleaners are going to risk their health on wind, storm or other increments of bad weather. They know and are trained when, where and how to postpone the cleaning” (Ex. 218).
Other window cleaning companies indicated that water “blowback” stops window cleaning operations long before winds reach 15 mph to 25 mph (Exs. 151; 163; 329 (1/19/2011, pgs. 213-214)). Mr. Adkins, of Corporate Cleaning, explained:
I've never had anybody work at 15 miles an hour and never will because that, in my opinion, is too high, both for a boatswain's chair, a swingstage, a scaffold. Also, I might add there's something else that happens with window washing and that's the blowback effect. Window washers don't like to do their work over, and at a certain level of wind, you wind up with dirty water blowing on clean windows . . . which, of course, the customer doesn't like. They want us to come back, do it over. So, consequently, that's a lower level normally than anything where you have to worry about safety. Most normal window washers will shut down and we support this, we fully support this because I don't want the phone call from the property manager. Most window washers will shut down before they reach an unsafe level, before they come anywhere near it. The most I think I've ever seen our company working is in 15-mph winds (Ex. 329 (1/19/2011, pgs. 213-214)).
For companies that use RDS to perform operations that do not have the “built-in monitoring” capability for blowback of water, several commenters said, “[I]t would seem to me that a 15 mph limit is reasonable” (Exs. 163; 221).
The American Wind Energy Association (AWEA), however, opposed adding any wind-speed restriction to the final rule because it would be “detrimental” to the wind energy industry, which works in windy areas (Ex. 178). AWEA said that OSHA should allow employers to establish their own “detailed policies and [job hazard analyses] for work in inclement weather” (Ex. 178). Mr. Diebolt, of Vertical Access, also agreed that employers should be able to set their own weather policies:
Just a word about weather and changing site conditions. Wind has been a concern and understandably. But you can understand after AWEA's testimony this morning that a wind effect of somebody hanging on the outside of a turbine or working on top of a nacelle is entirely different from somebody working on a bridge, pier, abutment or the side of a building (Ex. 329 (1/21/2011, pgs. 139-140)).
OSHA agrees with commenters who said the final standard must prohibit the use of RDS when weather conditions are hazardous for workers and the equipment. As the record and OSHA standards indicate, workers using RDS are vulnerable to sudden weather changes such as wind gusts, microbursts, and wind tunneling. Gusty and excessive winds can cause workers using RDS to swing into buildings, resulting in possible injury or death.
OSHA believes that employers' support of a mandatory prohibition on RDS during windy weather indicates that they are aware of the hazards posed by inclement weather. That said, the record indicates that what constitutes “hazardous” weather and “excessive” wind is dependent on the type of work performed when using RDS. For window cleaning, the record shows that water blowback acts as a reliable sign that winds have become excessive, even if they are well below 15 mph. However, for other jobs it may be safe to use RDS at higher wind speeds, depending on the type of job performed. For instance, the record indicates that using an RDS below 130 feet may be safe when winds approach 25 mph, but hazardous when using RDS at heights approaching 300 feet, or when the length of the descent rope is long.
In light of the many variables of RDS use, OSHA decided that using a performance-based approach in the final rule is the most effective way to cover varying worksite and job conditions. Under the performance-based final rule, employers must evaluate or analyze the worksite and job variables in light of existing weather conditions. If that analysis indicates that weather conditions are hazardous and winds are excessive, the employer must ensure that no employee uses an RDS. OSHA believes this approach will best ensure that employers provide an adequate level of safety, and take appropriate measures to protect workers in each specific work operation. Moreover, OSHA believes the performance-based final rule will not impose significant burdens on employers. The record shows that employers said they already monitor on-site weather conditions to determine whether to proceed with or postpone the job.
OSHA also believes the performance-based approach obviates the need to require in the final rule that employers conduct on-site weather monitoring or use specific weather-monitoring systems. The record shows that many employers currently use various electronic tools to monitor local weather forecasts.
Final paragraph (b)(2)(xii), like proposed paragraph (b)(2)(x), requires that employers ensure equipment is secured by a tool lanyard or similar method to prevent it from falling. Examples of equipment include tools, squeegees, and buckets. The purpose of this provision is to protect workers and the public below from being struck by falling equipment. The final rule is consistent with the I-14.1-2001 standard (Sections 3.10 and 5.7.15), and supplements the falling object requirements in final § 1910.28(c) (Protection from falling objects).
Several commenters, including IWCA, supported the requirement (Exs. 138; 151; 153). However, Mr. Donaldson, of Sunlight, said the provision was not practical or needed (Ex. 227). In particular, he stated that tool bungees are imperative to the window cleaning business, but a serious impediment to the use of squeegees or other tools. Therefore, he suggested the following alternative to the final rule:
The danger of workers below being struck by falling equipment is minimal. Workers rarely work directly below other workers. The tools themselves are light and blunt and could not cause serious injury unless dropped from a great height. . . . Requiring window cleaners to wear hard hats would be a more practical solution than tool bungees (Ex. 227).
[T]here are various ways to protect workers from falling objects in the wind industry. Workers are prohibited to work below other workers when using items that can fall. In addition, workers often use tool tethers for equipment. Typically, tools are hoisted in tool buckets versus being carried by workers. This practice allows the trained employee free use of his hands and mitigates the potential for tools falling out of workers' pockets (Ex. 329 (1/21/2011, p. 12)).
OSHA does not agree with Sunlight's comment for several reasons. First, OSHA believes the performance-based approach in the final rule assures that employers have maximum flexibility in meeting the requirement to secure equipment (
Second, Mr. Donaldson did not provide any explanation about how or why tool bungees are a “serious impediment” to using squeegees and other tools. OSHA did not receive any other comments supporting Mr. Donaldson's claim.
Third, OSHA disagrees with Mr. Donaldson's assertion that falling tools will not cause serious injury if they hit workers below. Many of the tools employees use in suspended work can be heavy and sharp (
With regard to the controls AWEA identified, OSHA believes that tethering controls is one way employers can comply with the final rule. As to the other controls AWEA suggested, OSHA believes that securing equipment is the most protective option because it removes the hazard of equipment falling and hurting workers. Putting tools in buckets and prohibiting employees from working below other workers, as AWEA suggests, does not prevent equipment from dropping and, in the case of prohibiting work below the worker, requires ongoing monitoring by the employer to be effective. Thus, OSHA believes that the final rule establishes the most protective control, and likely the most efficient one. Accordingly, OSHA adopts the requirement that employers ensure that equipment used in RDS work is secure to prevent it from falling and injuring workers and the public.
Final paragraph (b)(2)(xiii), like proposed paragraph (b)(2)(xi), requires
The performance-based approach in final paragraph (b)(2)(xiii) gives employers flexibility in determining how to protect RDS ropes from damage. OSHA believes that this approach is appropriate for the final rule because there are various controls available to protect RDS ropes from damage. This approach also is consistent with the I-14.1-2001 standard, which prohibits the use of hazardous or corrosive materials that could “endanger the . . . safety of the worker or may affect the safe operation of equipment” (Section 3.5).
A number of commenters supported the provision (Exs. 138; 151; 153; 184; 221; 222; 243), and OSHA did not receive any comments opposing the provision, and finalizes the provision as proposed.
Final § 1910.28 is the first of three new sections in subpart D that consolidate requirements pertinent to fall protection and falling object protection. The new sections are:
Final § 1910.28 specifies the areas and operations where employers must ensure that workers have fall and falling object protection and what type(s) of protection employers may use. The criteria for fall and falling object protection that employers use to comply the duties imposed by § 1910.28, and the training workers who use those systems must receive are in §§ 1910.29 and 1910.30, respectively. OSHA notes that § 1910.140 specifies criteria for personal fall protection systems that employers must meet when their workers use these systems.
OSHA believes these sections along with the general requirements in § 1910.22, taken together, establish a comprehensive approach to fall and falling object protection. OSHA believes this approach will ensure a better understanding of the final rule, fall hazards, and fall protection systems; provide flexibility for employers when choosing a fall protection system and falling object protection; ensure the systems they choose will be effective; and most importantly, will reduce significantly the number of fall injuries and fatalities in general industry.
Final § 1910.28, like the proposed rule, consolidates most of the general industry fall and falling object protection requirements throughout subpart D. OSHA patterned this section after the construction fall protection standard (29 CFR 1926.501, Duty to have fall protection). OSHA draws the range of fall protection options in the final rule, for the most part, from the construction standard. These options include engineering controls (
There are several ways in which OSHA made the final rule consistent with the construction fall protection standard. For example, the final rule provides for control flexibility. This rule, like the construction fall protection standard, allows general industry employers, similar to construction employers, to protect workers from fall hazards by choosing from a range of accepted conventional fall protection options. The existing general industry standard does not allow this flexibility and mandated the use of guardrail systems as the primary fall protection method (
The 1990 proposed revision of subpart D continued to require the use of guardrail systems. However, in the 2003 notice reopening the record, OSHA acknowledged that it may not be feasible to use guardrails in all workplace situations (68 FR 23528, 23533 (5/2/2003)) and requested comment on whether the Agency should allow employers to use other fall protection systems instead of guardrails. Commenters overwhelmingly favored this approach, which the construction fall protection standard adopted in 1994. In response to comments and OSHA's history and experience with the construction fall protection standard, the Agency proposed in 2010 to allow employers to select from a range of fall protection options instead of requiring employers to comply with the existing mandate to use guardrail systems.
OSHA is adopting the proposed approach for several reasons. First, the final rule's control flexibility reflects longstanding OSHA policy first incorporated in the 1994 construction fall protection standard. OSHA's history and experience with the construction standard indicates that its control flexibility approach has been effective. In addition, stakeholders responding to the proposed rule overwhelmingly supported this approach and there was little opposition to providing greater flexibility in controlling fall hazards.
Second, the fall protection systems that the final rule allows employers to use (guardrail systems, safety net system, personal fall protection systems) are accepted conventional fall protection systems that OSHA has determined provide an appropriate and equal level of safety. Moreover, allowing employers to select the least costly fall protection system from those controls that provide equal protection also ensures the final rule meets OSH Act requirements that a standard be cost effective (
Third, OSHA believes giving employers greater control flexibility in selecting fall protection systems allows them to select the system or method that they determine will work best in the particular work operation and location and draw upon their experience successfully protecting workers from fall hazards. OSHA believes that the process of determining the best fall protection system for the specific work activity will improve safety because employers will need to evaluate the conditions present in each specific workplace and consider factors such as exposure time, availability of appropriate attachment points, and feasibility. Similarly, it also will allow employers to consider and select the fall protection system that enables workers to perform the job most efficiently, thereby reducing workers' exposure to fall hazards.
Fourth, providing control flexibility allows general industry employers to take advantage of advances in fall protection technology developed since OSHA adopted the existing rule. For example, neither safety net systems nor personal fall protection systems were developed until after OSHA adopted the existing rule.
Fifth, greater control flexibility makes the final rule consistent with the construction fall protection standard, which makes it easier for employers to comply with the final rule and thereby should increase compliance. To illustrate, making the final rule consistent with the construction standard ensures that employers who
Finally, as mentioned, providing greater control flexibility is part the final rule's comprehensive approach to fall protection that also includes new requirements on system criteria and use; regular inspection, maintenance and repair; and fall hazard and equipment training. OSHA believes this comprehensive approach will provide equivalent or greater protection than the existing rule. As a result, OSHA believes that the additional flexibility and consistency achieved by this final rule in providing fall protection will reduce worker deaths and injuries. OSHA's history and experience with the construction standard confirms that its comprehensive approach to fall protection has been effective.
As mentioned, stakeholders supported incorporating control flexibility in the final rule (
We applaud the agency's work to recognize modern methods and technologies that are now available to ensure adequate fall protection for employees. Our experience is that no single method is effective in all potential fall situations and that a menu of proven methods and techniques . . . works best (Ex. 180).
Uniseal, Inc. said:
OSHA should allow employers to responsibly choose any type of fall protection in proposed Sec. 1910.28 that the employer can demonstrate will be appropriate for the specific work location and activities being performed (Ex. OSHA-S029-2006-0662-0345).
Clear Channel Outdoor agreed, saying:
Clear Channel Outdoor and employers in the outdoor advertising industry should be permitted to choose appropriate fall protection, depending upon the location and type of structure. (Ex. OSHA-S029-2006-0662-0308)
The National Grain and Feed Association (NGFA) said:
OSHA should not require guardrails as the primary means of fall protection but allow employers the flexibility to choose the most appropriate fall protection system that is appropriate to the specific work situation and activities being performed.
[E]mployers evaluate each work situation to determine which option (
Duke Energy said OSHA should allow general industry employers to “select from the list of options” like the construction fall protection standard:
The construction industry standard allows employers to select fall protection from a list of options. All of the options provide equivalent protection. Employers should be allowed to use the option that fits the specific situation. The factors that employers use when selecting fall protection options include (1) duration of the job; (2) experience of the workers involved; (3) installation costs; (4) availability of fall protection at the location. There are times when the installation of guardrails is technically “feasible” but adds costs that are unnecessary, since other systems (such as a personal fall arrest system) provide equivalent protection (Ex. OSHA-S029-2006-0662-0310).
Some stakeholders, however, raised concerns about providing greater control flexibility. The American Federation of State, County and Municipal Employees (AFSCME) commented, “Although we understand the need for flexibility, we believe employers should use guardrail systems and other engineering controls whenever possible, as is stated in the existing standard” (Ex. 226). Thomas Kramer of LJB, Inc., expressed concerns that the proposed control flexibility would not be as protective as the existing rule's requirement to use guardrail systems to protect workers from fall hazards, stating:
The hierarchy of control is something that is essential in the area of safety, and OSHA's failure to include something on this . . . is a significant omission. While there are a number of effective abatement options in the proposed regulation—and I understand that many considerations are involved in the cost/benefit analysis for hazard abatement—I still believe that it is a material oversight to remove the hierarchy and state that the options outlined provide “equivalent protection.”
The hierarchy of control clearly compares the effectiveness and “defeatability” of a protective system. Employing the hierarchy of control to evaluate abatement options is fundamental, and eliminating its application will lead to more use of a harness and lanyard than ever before. Although this can be an effective way to protect someone from a fall hazard, personal protective equipment is definitely not the safest and is not equal to engineering controls or passive fall protection (Ex. 204).
As discussed above, OSHA believes the comprehensive approach to fall protection that the final rule, like the construction fall protection standard, incorporates will provide equivalent or greater protection than the existing rule. OSHA is only permitting employers to use those accepted conventional fall protection systems that the Agency has determined to provide an appropriate and equal level of protection. The greater flexibility the final rule affords employers will allow them to select from those fall protection systems that provide equal protection the option that works best in the specific situation and is the most cost-effective protective measure capable of reducing or eliminating fall hazards. Moreover, the comprehensive approach in the final rule, like the construction fall protection standard, recognizes that, in some instances, it may not be possible to use guardrail systems or safety net systems to protect workers from falls. For example, some commenters said employers may not be able to install permanent systems such as guardrails when they do not own the building or structure on which their workers are working. OSHA believes the final rule addresses the concerns of these commenters without limiting employer flexibility or compromising worker safety.
OSHA notes that the final rule also limits fall protection choices in some situations where the Agency determined that guardrail systems are necessary to protect workers from falling. For example, in final paragraphs (b)(4) and (5) of this section, OSHA specifically requires the use of guardrails on dockboards and runways and similar walkways, respectively.
In addition to control flexibility, there are other ways in which OSHA made the final rule consistent with the construction fall protection standard. OSHA increased the consistency between the general industry and construction fall protection standards by including a provision similar to the construction standard addressing work on low-slope roofs (final paragraph (b)(13)). Workers on these walking-working surfaces perform both construction and general industry activities and OSHA believes that uniform requirements should apply to both activities. Final paragraph (b)(13), like the construction fall protection standard, allows employers to use designated areas instead of conventional fall protection systems when workers are performing work that is both infrequent and temporary at least six feet from the edge of a low-slope roof, while also ensuring that employers protect workers working closer to the edge using conventional systems (
Consistent with the construction standard, the final rule requires that employers also must train their workers working in designated areas in the use of warning lines (see final §§ 1910.29(d) and 1910.30(a)).
Finally, OSHA increased the consistency of the general industry standard with the construction fall protection standard by organizing this final rule in a format that is similar to the construction standard. OSHA believes that the reorganized format will increase employer understanding of, and compliance with, the final rule.
Many commenters supported making the general industry and construction industry fall protection rules consistent (Exs. 111; 157; 165; 176; 212; 225; 236). For example, American Airlines (AA) supported making the general industry and construction standards uniform because they said it is “nonsensical to have different fall protection requirements for similar—and sometimes identical—hazards across construction and general industries” (Ex. 194).
However, Mr. Kramer, of LJB, Inc., expressed doubts about whether making the final rule similar to the construction fall protection standard will produce a significant decrease in fatalities. He claimed that fatality data in the years following adoption of the construction fall protection standard showed an increase in fall fatalities. OSHA does not find his argument convincing. Mr. Kramer does not clearly identify the source or scope of the data. At one point he suggests the data are from BLS, and at another point he indicates the data are from another source. In addition, it is unclear whether the data to which he refers are for construction or for all private industry fatalities. He did not provide any of the data itself. In any event, as explained in more detail in the Analysis of Risk and FEA (Sections II and V), there are a significant number of fall fatalities in general industry, and OSHA believes the final rule will be effective in reducing those numbers.
The final rule also establishes criteria and work practices addressing personal fall protection systems (§ 1910.140). These criteria include minimum strength and load, locking, and compatibility requirements for components of personal fall protection systems, such as lines (vertical lifelines, self-retracting lines, and travel restraint lines), snaphooks, and anchorages. The work practices include requiring employers to ensure inspection of personal fall protection systems before each use, and to ensure that a competent or qualified person inspects each knot in a lanyard or vertical lifeline. OSHA believes these criteria and work practices, in conjunction with the training and retraining requirements in the final rule, provide a combination of controls and redundancies that will help to ensure that personal fall protection systems are effective in protecting workers from falls hazards.
Final paragraph (a)(1), like the proposed provision, requires employers to provide protection for workers exposed to fall and falling object hazards. It also specifies that, unless stated otherwise, the protection employers provide must comply with the criteria and work practices set forth in § 1910.29, Fall protection systems and falling object protection—criteria and practices. In addition, final paragraph (a)(1) clarifies that personal fall protection systems must comply with the criteria and work practices in § 1910.140, Personal fall protection systems.
Fall hazard identification is particularly important when workers work in a “designated area” or under other work situations where employers do not provide conventional fall protection systems. Additionally, when general industry employers contract with other employers to perform jobs and tasks at the worksite, OSHA also requires that the host employer and contract employer work together to identify and address fall hazards. One method of accomplishing this requirement is to follow the guidance specified by appendix B of 29 CFR part 1910, subpart I, Non-Mandatory Compliance Guidelines for Hazard Assessment and Personal Protective Equipment Selection. National consensus standards provide another resource for identifying and controlling fall hazards. For example, ANSI/ASSE Z359.2-2007, Minimum Requirements for a Comprehensive Managed Fall Protection Program, provides procedures for eliminating and controlling fall hazards (Ex. 29).
OSHA notes that the requirements in proposed paragraph (a)(2), which address the strength of walking-working surfaces, have been moved to final § 1910.22(b), which establishes requirements for maximum intended loads applied to walking-working surfaces. OSHA believes this change more clearly emphasizes that all walking-working surfaces must have the strength and structural integrity to support workers safely, not just those surfaces and work conditions requiring fall protection.
Final paragraph (a)(2) lists seven situations in which the requirements in § 1910.28 do not apply:
• Portable ladders (final paragraph (a)(2)(i));
• When the employer is inspecting, investigating, or assessing workplace conditions or the location at which work is to be performed prior to the start of work or after all work has been completed. However, this exception does not apply when fall protection systems or equipment meeting the requirements of § 1910.29 have been installed and are available for workers to use. If fall protection systems are present, workers must use them while conducting pre-work and post-work inspections, investigations, or assessments of workplace conditions (final paragraph (a)(2)(ii));
• Fall hazards presented by the exposed perimeters of entertainment stages and the exposed perimeters of rail-station platforms (final paragraph (a)(2)(iii));
• Powered platforms covered by § 1910.66(j) (final paragraph (a)(2)(iv));
• Aerial lifts covered by § 1910.67(c)(2)(v) (final paragraph (a)(2)(v));
• Telecommunications work covered by § 1910.268(n)(7) and (n)(8) (final paragraph (a)(2)(vi)); and
• Electric power generation, transmission, and distribution work covered by § 1910.269(g)(2)(i) (final paragraph (a)(2)(vii)).
The first two exceptions, specified in final paragraphs (a)(2)(i) and (ii), are new additions to the final rule. OSHA added language specifically excepting portable ladders to clarify that employers only have to provide fall protection on fixed ladders. The National Chimney Sweep Guild (NCSG) (Exs. 150; 240; 268; 269; 329 (1/18/2011, pgs. 254-348); 365) pointed out that in the proposed rule OSHA did not exclude portable ladders from the duty to have fall protection, and expressed concern that, by default, the rule would cover portable ladders under the “catch-all” provision (final paragraph (b)(15), Walking-working surfaces not otherwise addressed). The fall protection requirements in the proposal were to apply only to fixed ladders, not portable ladders. Therefore, OSHA agrees with NCSG that adding a specific exception
The final rule also adds an exception when workers are inspecting, investigating, or assessing (collectively referred to as “inspecting”) workplace conditions prior to the start of any work or after completing all work. However, once any work begins, employers must provide workers performing inspections (inspectors) with, and ensure that they use, fall protection where required by this section. Moreover, this exception does not apply when properly installed fall protection systems or equipment meeting the requirements of § 1910.29 are available for use. The existing rule does not exclude pre-work or post-work inspections from fall protection requirements. OSHA drew the exception from the construction fall protection standard (§ 1926.500(a)(1)).
Several commenters urged OSHA to add this exception to the final rule (Exs. 111; 150; 157; 176; 177; 212; 225; 240; 268; 269; 329 (1/18/2011, pgs. 254-348); 365). First, some commenters said it was not necessary for workers conducting pre-work or post-work inspections to use fall protection. For example, American Insurance Association (AIA) said the final rule should recognize that certain tasks that workers (
Littler Mendelson, P.C., said, “Employees who inspect, investigate or assess workplace conditions and perform no physical work should be exempt from the requirements of fall protection, provided the employee has received the training specified in Section 1910.30” (Ex. 111). AIA added that all of their workers who perform inspections receive training in safe roof access, and are well aware of the proximity of unprotected sides (Ex. 157). Allstate also said that workers performing inspections are more aware of their location than other workers (Ex. 212).
A number of commenters said OSHA should add an exception because requiring inspectors to use fall protection would expose them to greater, and additional, hazards (Exs. 111; 150; 157; 177; 212; 225; 240; 268; 365). For instance, Littler Mendelson said, “By allowing such employees to perform their inspection duties without fall protection, OSHA would avoid the greater fall hazards incurred by employees who must access elevations carrying the tools and materials required to install fall protection for the inspectors” (Ex. 111). Commenters also said that requiring inspectors to use fall protection would pose greater hazards because it would expose them to fall hazards for greater periods of time. Littler Mendelson said requiring inspectors to use fall protection would expose them to fall hazards for longer than it takes to perform the inspection (Ex. 111). NCSG agreed, explaining that it would take longer to get to, install, and remove anchors than the time it takes to conduct the inspection (Exs. 150; 240; 268; 269; 329 (1/18/2011, pgs. 254-348); 365). NCSG said the vast majority of their work is chimney cleaning and inspection in which chimneys are cleaned from the ground and workers only access the roof for a few minutes to inspect the chimney at the conclusion of the job to verify the cleaning operation is complete (Ex. 150). NCSG also said that chimney sweeps perform pre-inspections on roofs to identify whether repairs or other maintenance work may be needed. The fall protection exception in final paragraph (a)(2)(ii) would cover both of these inspections.
Similarly, Roofing Consultants Institute, Inc. (RCI) said that complying with the proposed rule would require spending increased time on roofs to anchor and position fall protection systems, therefore increasing worker exposure to falls (Ex. 225). AIA, Allstate, Confrere Strategies on behalf of the National Association of Mutual Insurance Companies (Confrere Strategies), and Farmers Insurance Group of Companies (Farmers) also voiced the same argument (Exs. 157; 176; 177; 212).
Several commenters complained that requiring inspectors to use fall protection would be infeasible and “unduly burdensome” (Exs. 150; 157; 176; 177; 212; 235). Allstate said the proposed requirement was infeasible because the insurance company does not own or control the properties that its adjusters inspect and does not have permission to install fall protection systems (Ex. 212). AIA indicated that the proposed requirement was infeasible, and that an exception was necessary for the insurance industry to continue its work. However, AIA did not provide any explanation regarding why the proposed requirement was infeasible (Ex. 157). RCI said the proposed rule was unreasonably burdensome because it did not provide any discernible benefits (Ex. 225).
Two commenters, Allstate and Farmers, indicated that inconsistency between the proposed rule and the construction fall protection standard, and lack of clarity about which standard would apply to inspectors, would cause confusion and pose an unreasonable burden on employers (Exs. 157; 176). Specifically, Allstate believed that the construction exception covered the activities of insurance adjusters, but was unsure whether inspecting damaged property is subject to the general industry rule or the construction rule. Farmers pointed out:
Currently, neither the Proposed Rule nor the construction fall protection requirements make clear whether a claims adjuster's inspection and assessment of damaged property before and after construction is considered “construction work” covered by 29 CFR § 1926.500(a) or whether such inspection activities would be subject to the General Industry Standards under the Proposed Rule (Ex. 176).
Finally, some commenters said OSHA's rationale for allowing the exception for the construction industry also should apply to general industry inspectors (Exs. 157; 177; 212; 225). For example, RCI said, “[W]ork practices used by RCI members performing site visits . . . such as [on] roofs would most likely be identical for both general and the construction industry” (Ex. 225). Confrere Strategies said:
The 1994 rationale for the insurance and inspection exception remains today. Subjecting inspectors and adjusters to fall protection standards would be overly burdensome and infeasible and would subject employees to fall hazard for greater periods of time. Incorporation of specific exemption language in Subpart D is consistent with prior regulations, reflects the realities of insurance inspection and claims adjustment operations and would eliminate any potential confusion related to the definition of “construction activities” (Ex. 177).
OSHA recognizes that requiring workers to use fall protection when conducting inspections prior to, and after completion of, work may not be feasible in some isolated or limited situations. For example, as Allstate said, the insurance companies are unlikely to own the structures the inspectors are
However, as mentioned earlier, unlike the exception in the construction fall protection standard, final paragraph (a)(2)(ii) does not apply when fall protection systems or equipment already are installed on the structure where an inspector will conduct a pre-work or post-work inspection, that is, when fall protection systems are installed, workers performing pre-work and post-work inspections, like all other workers, must use them.
OSHA believes that limiting the application of the exception to pre-work and post-work is appropriate. The Agency believes that, where fall protection equipment already is installed, there is no reason why inspectors should not use it like all other workers working on the same walking-working surface must. To illustrate, where anchors and self-retracting lifelines meeting the requirements of § 1910.29 already are installed on a roof, OSHA believes that attaching a harness should not increase inspectors' exposure to the fall hazard in any appreciable way, while taking this action ensures that they can safely conduct the inspection. When inspectors have to climb fixed ladders equipped with ladder safety systems or self-retracting lifelines for personal fall arrest systems to inspect damage or assess maintenance needs, OSHA believes it is feasible for these workers to attach their harnesses to the existing equipment without difficulty or increasing exposure time.
OSHA notes that evidence in the record indicates that an increasing number of buildings and fixed ladders are equipped with anchorages and ladder safety or personal fall arrest systems, respectively. Unlike pre-work and post-work inspections in the construction industry, in general industry, buildings and structures already exist and already may have fall protection equipment installed. Therefore, OSHA believes that a number of situations currently exist in which it may be feasible to use fall protection when conducting pre-work and post-work inspections, and that these situations are likely to continue increasing.
The third exception to the requirement to provide fall protection, specified in final paragraph (a)(2)(iii), applies to fall hazards presented by exposed perimeters of entertainment stages and rail station platforms; OSHA carried this exception over from the proposed rule. The use of guardrails or other fall protection systems could interfere with performances on stage, or create a greater hazard to the performers than would otherwise be present. OSHA recognizes that there may be circumstances when fall protection may be feasible in these occupational settings, and encourages employers in these settings to use fall protection when possible, such as during rehearsals. OSHA did not receive any comments opposing this exception, and adopted it as proposed.
Paragraphs (a)(2)(iv) through (vii), like the proposed rule, specify that the final rule does not apply to powered platforms (§ 1910.66), aerial lifts (§ 1910.67), telecommunications (§ 1910.268), or electric power generation, transmission, and distribution (§ 1910.269). Other general industry standards address those operations and equipment, and include provisions requiring employers to provide and ensure workers have and use fall protection. OSHA received one comment on these exceptions. Ameren Corporation agreed that final § 1910.28 should not apply to work that § 1910.269 covers (Ex. 189). OSHA adopted the proposed exceptions with only minor editorial changes, for clarity.
Final paragraph (b), like the proposed rule, sets forth the requirements on the types of fall protection systems that employers must select and use to protect workers from fall hazards while working in specific workplace areas, situations, and activities (final paragraph (b)(1) through (15)). The final rule allows employers to use any one or more of the fall protection systems listed for the particular area, situation, or activity, including:
•
•
•
•
•
•
•
•
•
After reviewing the rulemaking record, as well as OSHA's letters of
Applying the rationale in the construction standard to general industry, the final rule limits the use of designated areas to work on low-slope roofs (final paragraph (b)(13)). OSHA believes that the use of designated areas is appropriate on flat or gently sloping surfaces or when workers and work are located a safe distance from a fall hazard, such as a roof edge. However, OSHA does not believe that designated areas provide adequate protection from fall hazards on steep or vertical surfaces or for work performed near an unprotected edge or side, such as narrow walking-working surfaces. (See further discussion of designated areas in final paragraph (b)(13), below.)
OSHA received several comments on the use of designated areas. David Hoberg, with DBM Consultants, supported limiting the use of designated areas because “it is a huge opening for abuse” (Ex. 206). He suggested limiting the use of designated areas to those situations that existed prior to publication of this final rule, are unique to the work such that the same work is not done at other locations using standard methods, and when a certified safety professional or professional engineer with experience in the work and conditions approves use of a designated area (Ex. 206). As discussed in more detail below (final § 1910.28(b)(13)), OSHA is limiting the use of designated areas to low-slope roofs and to work more than 6 feet from the edge. Employers may use designated areas for work that is more than 6 feet and less than 15 feet from the edge if it is both infrequent and temporary. If the work is not temporary or infrequent, the employer may use a designated area if the work is more than 15 feet from the roof edge. The Agency believes this clarification addresses Mr. Hoberg's concerns.
Several commenters objected to the designated area approach because it was too different from the construction standard's requirements for residential roofs, and instead asked that OSHA synchronize the general industry requirements with the construction standard for those roofs (See,
In addition to establishing fall protection options for specific workplace areas and situations, final paragraph (b) also establishes the height that triggers the employer's obligation to provide fall protection. The final rule, like the existing and proposed rules, generally requires that employers provide fall protection when workers work at levels that are four feet or more above a lower level. The final rule, like the proposal, defines “lower level” as an area to which a worker could fall (§ 1910.21(b)). The definition also includes examples of lower levels, including ground levels, floors, excavations, pits, tanks, materials, water, equipment, and similar surfaces and structures, or portions thereof.
Employers' duty to provide fall protection when workers can fall four feet or more to a lower level is not new. As mentioned earlier, the existing rule, which OSHA adopted in 1971, has a four-foot trigger height (
Since OSHA adopted the general industry four-foot trigger, the Agency consistently reinforced the requirement in numerous public statements and Agency interpretations (
In 1994, the construction fall protection standard, with some exceptions, set a six-foot trigger height for construction work (59 FR 40672 (8/19/1994)). In 2003, when OSHA reopened the record for comment on subpart D, comments received by the Agency indicated that some stakeholders mistakenly believed that the general industry fall protection trigger height is the same as the construction fall protection standard. To address this confusion, OSHA clearly pointed out in the 2010 proposed rule that the four-foot trigger height for general industry “has been standard industry practice for more than 75 years” (75 FR 28887).
OSHA did not propose to revise the four-foot trigger height, noting that the existing rule is a long-standing requirement and standard industry practice. OSHA also said the results of a 1978 University of Michigan study supported the four-foot fall protection trigger height (Ex. OSHA-S041-2006-0666-0004). OSHA requested comment on the four-foot trigger height, including information on any recent studies and information that “support or contradict” the four-foot trigger height (75 FR 28887).
A number of commenters supported retaining the existing four-foot trigger height (Exs. 65; 172; 226). In particular, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) stated, “The 4-foot rule maintains a long-standing OSHA requirement and industry practice that we believe is important for protecting workers against fall hazards to a lower
The American Society of Safety Engineers (ASSE) urged OSHA to conduct research that would support a single trigger height for fall protection in general industry and construction, noting:
As OSHA ably recognizes in its discussion [in the proposed rule], research supports the conclusion to maintain its current 4-foot trigger height for general industry. In the same discussion, however, OSHA also recognizes that a 6-foot trigger height is the standard for construction. Despite the long-established traditions behind these different trigger heights, we would encourage OSHA to work with NIOSH to determine if appropriate research can be conducted that would help lead the occupational safety and health community to a single trigger height. If a single trigger height could become widely accepted, ASSE believes there would be significant gains in understanding the importance of fall protections and ways to protect employers. Given the continued high incidence of injuries from heights, it would be prudent to at least examine whether a single trigger height would be helpful (Ex. 127).
ORC Mercer also supported a single fall protection trigger height for general industry and construction, although it was “not arguing that OSHA should set the trigger for fall protection to six feet for all general industry work” (Ex. 254). However, they said OSHA needed to provide a “better explanation/justification for the disparity in the trigger for fall protection in General Industry maintenance work versus Construction work,” stating:
The proposed rule retains the historic disparity of a 4-foot trigger for fall protection in General Industry and a 6-foot trigger for fall protection in Construction. Although the proposal makes a number of arguments regarding the history of its adoption of the four-foot trigger for General Industry work and states that the four-foot rule has been used in consensus standards for more than 75 years, OSHA has not addressed the difficulties for employers who may have General Industry maintenance work going on within only a few feet of activities that meet the definition of Construction work. The definition of what constitutes construction work versus work that falls under the General Industry [standard] continues to confuse employers seeking to set a consistent standard in their workplaces. Simply telling a construction contractor (who is performing work at a manufacturing site) that he must protect his employees whenever they may fall more than four feet above a lower level (because the host employer wishes that all workers on the site to adhere to a uniform standard) is likely to be met with resistance as the construction contractor's employees will have been trained and equipped to work with the 6-foot trigger. Hence many employers have simply adopted the six-foot trigger for all non-routine or maintenance work (Ex. 254).
Others stakeholders also supported a single trigger height, but argued that the single height should be six feet instead of four feet (Exs. 165; 202; 236). The Mechanical Contractors Association of America (MCAA) said, “Construction workers performing work at existing facilities often have to comply with both standards, which creates confusion, and therefore, opportunity for unintentional noncompliance” (Ex. 236). MCAA added that making the general industry trigger height consistent with the construction standard “would eliminate the confusion and simplify compliance requirements without compromising worker safety,” noting:
This section proposes to keep the previously established four foot fall protection/prevention rule in place for general industry. However, employers are often unclear about what OSHA considers to be maintenance and repair, which falls under the agency's general industry standards (29 CFR 1910), vs. construction work, which falls under the construction standards (29 CFR 1926). In addition, inconsistencies between the two sets of standards often require employers to comply with both sets of standards for the same application (Ex. 236).
Mr. Kramer, of LJB, Inc., raised concerns about the availability and effectiveness of personal fall arrest systems in situations where the fall hazard is only four feet, stating:
It is clear from the proposed regulation that a personal fall arrest system can be used in situations where the fall hazard is 4 feet. I acknowledge that it is possible to rig a fall arrest system to protect a worker from a fall where the allowable fall distance is 4 feet. However, without a direct and in-depth discussion on fall clearance requirements, the statement by OSHA can be very misleading. Falls occurring while attached to a horizontal lifeline can result in total fall distances as large as 15 feet. OSHA risks having employers simply provide their employees with a harness, lanyard and anchorage when they are four feet above a lower level. In this case, the employee is not protected. The stated goal of reducing fatalities and injuries due to a fall has not been achieved and it is clear in these circumstances that a personal fall arrest system does not provide equivalent protection to a guarded platform (Ex. 204).
However, other commenters said there is personal fall protection equipment available that can limit falls to four feet. In this regard, Capital Safety Group (CSG) and the
ASSE is currently working on a standard for self-retracting lanyards that includes a class of [self-retracting line] that when anchored overhead is designed to protect workers in situations where fall clearance is very limited such as the case when exposed to a 4-foot fall. OSHA should include a reference to this standard when it becomes available (Exs. 185; 198).
Comments and testimony submitted in this rulemaking record have not persuaded OSHA that adopting a fall protection trigger height greater than four feet would provide equivalent or greater protection than the current trigger. As mentioned, existing national consensus standards require that employers provide fall protection where unprotected sides or edges are more than four feet above a lower level. Section 6(b)(8) of the OSH Act specifies that OSHA follow the requirements in national consensus standards unless the Agency can show why a rule that differs substantially from consensus standard “will better effectuate the purposes” of the OSH Act than the national consensus standard. None of the stakeholders arguing that OSHA should change its longstanding general industry four-foot trigger height provided any recent studies, data, or other information to support changing the trigger height to six feet. OSHA believes increasing the height at which employers must provide fall protection may expose workers to additional risk of injury, reduce worker safety, and decrease the protection afforded to workers by OSHA's general industry fall protection standards (75 FR 28887).
With regard to comments arguing that different fall protection trigger heights for general industry and construction would cause confusion and non-compliance, OSHA's experience and the rulemaking record do not bear that out. The general industry and construction fall protection trigger heights have been in place for years. OSHA's enforcement experience with both standards does not indicate that employers are confused about or not been able to comply with applicable fall protection height requirements. In addition, stakeholders did not submit comments in this
Final paragraph (b), like the proposal, includes the following four exceptions
• When using motorized equipment on dockboards (final paragraph (b)(4)(ii));
• Over dangerous equipment (final paragraph (b)(6));
• Around repair, service, and assembly pits (final paragraph (b)(8)); and
• On fixed ladders (final paragraph (b)(9)).
More specifically, for work performed on dockboards, the final rule establishes a trigger height of greater than 10 feet for guardrails or handrails when dockboards are used solely for materials-handling operations using motorized equipment. For work performed over dangerous equipment, the final rule, like the proposal, requires that employers protect workers from falling onto or into dangerous equipment regardless of the height at which the workers are working above the dangerous equipment. For work around repair, service, and assembly pits, the use of fall protection is not required for pits that are less than 10 feet deep, provided the employer limits access to the edge of the pit to trained, authorized employees, marks the floor around the edge of the pit in contrasting colors (or places a warning line at least 6 feet from the pit edge), and posts readily visible caution signs around the pit that warn workers of the fall hazard. For fixed ladders, the final rule adopts the proposed requirement that employers must provide fall protection when the ladder extends more than 24 feet above a lower level. (See the detailed discussion of these exceptions below.)
As mentioned earlier, final paragraph (b) also adds a new provision for work on low-slope roofs (final paragraph (b)(13)). In addition, the final rule moves work on platforms used in slaughtering facilities into a separate provision (final paragraph (b)(14)). The proposed rule addressed these platforms as part of proposed paragraph (b)(1), Unprotected sides and edges.
Final paragraph (b)(1)(i), similar to the construction fall protection standard (§ 1926.501(b)(1)), specifies that employers may use one or more of the following fall protection options to protect workers from fall hazards at unprotected sides and edges:
• Guardrail systems (final paragraph (b)(1)(i)(A));
• Safety net systems (final paragraph (b)(1)(i)(B));
• Personal fall protection systems, such as positioning, travel restraint, and personal fall arrest systems (final paragraph (b)(1)(i)(C)).
Final paragraph (b)(1)(i) differs from the proposed rule in two ways. First, the final rule allows employers to use positioning systems, in addition to using personal fall arrest and travel restraint systems. Neither the proposed rule nor the construction fall protection rule (§ 1926.501(b)(1)) included positioning systems in the list of personal fall protection systems that employers may use. However, OSHA believes positioning systems are effective to protect workers from falling when they are working in a fixed location above a lower level. OSHA notes that some employers equip their workers with both systems, especially when the workers climb and work on fixed ladders. That is, employers provide personal fall arrest systems to protect workers during climbing and positioning systems to protect workers when they work while standing on the ladder.
Second, as discussed, final paragraph (b)(1)(i) eliminates the use of “designated areas” to protect workers from fall hazards on any unprotected side or edge, which proposed paragraph (b)(1)(ii) would have allowed. As discussed, the use of designated areas is intended for a very few specific and limited situations rather than all unprotected sides or edges.
General industry work on residential roofs. In final paragraph (b)(1)(ii), which was not in the proposed rule, OSHA adds a provision from the construction fall protection standard (§ 1926.501(b)(13)) that applies to construction on residential roofs. Final paragraph (b)(1)(ii) specifies that when employers can demonstrate it is infeasible or creates a greater hazard to use any type of conventional fall protection system (
At the outset, and discussed in detail below, OSHA notes that many stakeholders, including NCSG, urged OSHA to add the construction fall protection plan requirements to the final rule (Exs. 149; 150; 240). These stakeholders, many of whom perform both general industry and construction activities, said making the final rule consistent with the construction standard would make it easier for them to protect workers performing both types of activities. In addition, stakeholders indicated the specific requirements of the fall protection plans give employers a clear blueprint for protecting their workers and achieving compliance when conventional fall protection is infeasible or creates a greater hazard.
OSHA limits final paragraph (b)(1)(ii) to work employers perform on “residential roofs.” OSHA's definition of “residential roof” incorporates the principles established in its Compliance Guidance for Residential Construction (STD 03-11-002 (6/6/2011)):
The Agency's interpretation of “residential construction” for purposes of 1926.501(b)(13) combines two elements—both of which must be satisfied for a project to fall under that provision: (1) the end-use of the structure being built must be as a home,
Recently it has become more common to use metal studs for framing in residential construction rather than wood. . . . OSHA will consider it within the bounds of “traditional wood frame construction materials and methods” to use cold-formed sheet metal studs in framing.
And finally, OSHA is aware that many homes and townhouses, especially in the southern and southwestern regions of the country, have usually been built using traditional wood frame construction throughout the structure except for the exterior walls, which are often built with masonry brick or block. . . . Because the same fall protection methods are likely to be used in the construction of homes built with wood framed and masonry brick or block exterior walls, the Agency has decided that it is consistent with the original purpose of 1926.501(b)(13) to treat the construction of residences with masonry brick or block in the exterior walls as residential construction.
In accord with the discussion above, and for purposes of the interpretation of “residential construction” adopted herein, “traditional wood frame construction materials and methods” will be characterized by:
Consistent with the construction standard, final paragraph (b)(1)(ii) does not apply to nursing homes, hotels, and similar facilities, even though they are homes or dwellings. As OSHA explained in Compliance Guidance for Residential Construction:
Construction of nursing homes, hotels, and similar facilities typically involves the use of the following materials in the framework of the structure: precast concrete, steel I-beams (beyond the limited use of steel I-beams in conjunction with wood framing, described above), rebar, and/or poured concrete. These materials are not used in traditional wood frame construction, and buildings constructed using these materials will not be considered “residential construction” for purposes of § 1926.501(b)(13) (STD 03-11-002 (6/6/2011).
OSHA does not intend for final paragraph (b)(1)(ii) to apply to low-slope residential roofs. Employers performing work on low-slope residential roofs must comply with final § 1910.28(b)(13), which requires the use of conventional fall protection in certain locations (within 6 feet of the roof edge) and allows employers to use designated areas further from the roof edge. OSHA does not believe these residential roofs pose the same types of hazards and potential feasibility issues as work performed on residential roofs that have a greater slope. OSHA notes that final paragraph (b)(1)(ii) applies to the vast majority of residential roofs because they do not meet the final rule's definition of low-slope roof: “a roof having a slope less than or equal to 4 in 12 (vertical to horizontal)” (§ 1910.21(b)).
As mentioned, final paragraph (b)(1)(ii), like the construction standard, requires that employers use a fall protection plan but only where they demonstrate that all of the fall protection systems specified in final paragraph (b)(1)(i) are infeasible or present a greater hazard in a specific location on a residential roof. The final rule adopts the definition of “infeasible” in the construction fall protection standard, which states that “infeasible” means that it is impossible to perform the construction work using a conventional fall protection system (
To establish that an OSHA standard creates a greater hazard, an employer must prove, among other things, that the hazards of complying with the standard are greater than those of not complying, and no alternative means of employee protection are available (
Final paragraph (b)(1)(ii), like the construction standard, includes a note specifying there is a presumption that using at least one of the fall protection systems final paragraph (b)(1)(i) specifies is feasible and will not create a greater hazard. The record includes information and examples of conventional fall protection controls that employers currently are using or are available for work on residential roofs (Exs. 150; 240; 347). For example, the NCSG acknowledged there are personal fall protection anchorages available that work on residential roofs (Ex. 150). Some of these systems have been available and in use since OSHA issued the construction fall protection standard in 1994 (59 FR 40694-95). Based on the rulemaking record, OSHA believes there is substantial evidence that employers can protect workers from falling with conventional fall protection systems in virtually all work operations performed on residential roofs. For example, NCSG indicates that it is feasible to use conventional fall protection in substantial and major installation and repair jobs. Thus, OSHA believes it is appropriate to include the note to underscore that employers have the burden to prove in the particular roof operation all of the controls in final paragraph (b)(1)(i) are infeasible or pose a greater hazard.
• A written fall protection plan that meets the requirements of § 1926.502(k), including implementing other control measures (§ 1926.502(k)(6) and (8)); and
• Training that meets the requirements of § 1926.503(a) and (c).
Section 1926.502(k) specifies that the employer's fall protection plan must:
• Be prepared by and have any changes approved by a “qualified” person (§ 1926.502(k)(1) and (2)). The final rule defines qualified as a person who, by possession of a recognized degree, certificate, or professional standing, or who, by extensive knowledge, training, and experience has successfully demonstrated the ability to solve or resolve problems relating to the subject matter, the work, or the product (final § 1910.21(b));
• Be developed specifically for the site where the employer will perform work on residential roofs (§ 1926.502(k)(1));
• Be maintained up to date (§ 1926.502(k)(1)), which OSHA said in the construction fall protection standard “provides clear notice to employers that they have an ongoing responsibility” to monitor conditions and address any changes or deficiencies (59 FR 40718);
• Be maintained at the job site (§ 1926.502(k)(1) and (3)), which gives workers the opportunity to inspect the fall protection plan and provides them with needed reassurance that the employer is taking appropriate measures to reduce or eliminate exposure to fall hazards when conventional fall
• Be implemented under the supervision of a “competent person” (§ 1926.502(k)(4)). The construction standard defines competent person as a person who is capable of identifying existing and predictable hazards in the surrounding or working conditions which are unsanitary, hazardous, or dangerous to employees, and who has authorization to take prompt corrective measures to eliminate them (§ 1926.32(f));
• Identify each location where conventional fall protection cannot be used and document the reasons why the use of conventional fall protection systems is infeasible or would create a greater hazard (§ 1926.502(k)(5) and (7)).
• Discuss other measures that the employer will take to eliminate or reduce the fall hazard for workers where conventional fall protection is infeasible or creates a greater hazard (§ 1926.502(k)(6));
• Implement control measures to reduce or eliminate hazards or implement a safety monitoring system that complies with § 1926.502(h) (§ 1926.502(k)(8));
• State the name or other method of identification for each worker who works in a location where a fall protection plan is implemented (§ 1926.502(k)(9)); and
• Investigate the circumstances of any fall or other serious incident that occurs to determine whether the employer needs to change the fall protection plan and implement those changes (§ 1926.502(k)(10)).
In the preamble to the construction fall protection standard, OSHA said the fall protection plan requirements gives employers a “clear direction” about what they must do and how they must proceed if conventional fall protection cannot be used (59 FR 40718). Requiring employers to comply with all of the requirements of the fall protection plan, including implementing other control measures, reflects the Agency's position that any deviation from the general requirements for fall protection must be construed as narrowly as possible” (59 FR 40720). OSHA believes that requiring employers to strictly comply with all of the requirements in § 1926.502(k) when conventional fall protection is not feasible or creates a greater hazard “will provide the best opportunity to avert employee injury and death” (59 FR 40718).
The construction fall protection standard requires that employers develop and implement a fall protection plan for the specific site where they are performing work on a residential roof (§ 1926.502(k)(1)). OSHA notes that a fall protection plan an employer develops for repetitive use for a particular style or model of a residential structure will be considered site-specific for other sites, but only if the plan “fully addresses all issues related to fall protection at that particular site” (STD 02-11-002). For example, chimney sweep companies may use a fall protection plan they develop for a particular type of residential roof (
OSHA stresses that after employers have identified where and why conventional fall protection cannot be used (§ 1926.502(k)(5)), it will not be acceptable for employers' fall protection plans to simply state that they will not be implementing any measures to reduce or eliminate the fall hazard in those locations. Employers must implement other measures to reduce or eliminate fall hazards for workers in those locations (§ 1926.502(k)(6)). The construction fall protection standard identifies a number of measures employers can use to reduce fall hazards when conventional fall protection cannot be used, such as scaffolds, ladders, bucket trucks, and vehicle mounted platforms (§ 1926.502(k)(6)). To reduce the risk of falls in “ladder to roof transitions,” which NCSG said was “one of the highest hazards,” employers can use equipment (
Stakeholders who recommended adding the fall protection plan provision to the final rule, indicate that they are using the measures identified above (Exs. 150; 342). NCSG, for example, said they use scaffolds and bucket trucks for some chimney sweep operations, particularly significant and major repairs and installations that may takes days to a week to complete (Ex. 329 (1/18/2011), pgs. 268-69, 278-80). Chimney sweep companies also work from ladders where possible because, according to NCSG, doing so reduces the fall hazards associated with transitioning from the ladder to the roof (Ex. 150).
Where no other measures can be implemented, the construction fall protection standard requires that employers implement a safety monitoring system that complies with § 1926.502(h). In the preamble to the construction fall protection standard, OSHA indicated that using safety monitoring system is a last resort “when no other, more protective measures can be implemented” (59 FR 40719-20 (“OSHA has determined that the employer must do what it can to minimize exposure to fall hazards before turning to the use of safety monitoring systems”)).
Section 1926.502(h)(1) requires that safety monitoring systems must designate a competent person to be the safety monitor for employees working in areas where no other fall protection measures are used. Section 1926.502(h)(1) also specifies, among other things, that safety monitors must be on the same walking-working surface be within visual sight of workers, close enough to orally communicate with the workers they are monitoring, and not have any other responsibilities that could take their attention away from the workers they are monitoring. In addition, safety monitors must warn workers when it appears that the workers are not aware of fall hazard or are acting in an unsafe manner.
OSHA believes that many employers will not use safety monitoring systems as alternate control measures because
In addition to implementing other measures to eliminate or reduce worker exposure to fall hazards, final paragraph (b)(1)(ii) also requires that employers using fall protection plans must develop and implement a training program and retraining for each employee who works in a location where conventional fall protection cannot be used. The training must meet the requirements in § 1926.503(a) and (c). Section 1926.503(a) requires that employers ensure, among other things, their fall protection plan training program “enables each employee to recognize the hazards of falling and . . . train each employee in the procedures to be followed in order to minimize the hazards” (§ 1926.503(a)(1)). The retraining requirements in § 1926.503(c) are essentially the same at those in final § 1910.30(c).
As stated above, OSHA believes, based on the rulemaking record and the Agency's experience with the construction fall protection standard, that in most, if not virtually all, jobs performed on residential roofs employers can protect workers from falls by using conventional fall protection systems (
Allowing employers who perform both general industry and construction activities to follow the same standard makes it easier and more efficient for employers to safely perform both types of activities, and thereby, facilitates compliance and reduces potential for confusion about which standards apply to a particular operation.
Throughout this rulemaking, stakeholders have repeatedly urged OSHA to harmonize the general industry and construction fall protection standards, particularly with respect to the fall protection plan requirements in the construction standard (Exs. 124; 149; 150; 240; 329 (1/18/2011, p. 279); 342; 365). For example, SBA Office of Advocacy said small business representatives (SERs) who attended a roundtable discussion on the proposed rule, recommended that “OSHA should further synchronize the proposed general industry rule with the existing construction standard” (Ex. 124). According to SBA Office of Advocacy, SERs expressed concern that “[t]wo employees could be working side by side on similar tasks, but one could be covered by the general industry standard and the other by the construction standard” (Ex. 124). SBA Office of Advocacy added that SERs were confused about “the difference between maintenance and repair (general industry) and construction activities” and “which standards applied under what circumstances” (Ex. 124). To illustrate, NCSG said it can be difficult to figure out whether certain chimney sweeps operations (
OSHA notes the construction fall protection plan requirements have been in place since 1994, therefore, general industry employers who perform construction activities (
OSHA also is adopting final paragraph (b)(1)(ii) to address the concerns stakeholders raised (
NCSG and the National Association of Home Builders (NAHB) both argued that it is not possible to use conventional fall protection systems on residential roofs because there are not suitable attachment or anchorage points and it is not possible to install them (Exs. 149; 150; 342). For instance, NAHB said it is not possible to penetrate tile or metal roofs to secure an anchor (Ex. 149). In addition, NAHB and NCSG said homeowners would not permit contractors to nail anchorages into the roof or install guardrails because of concern that such installation would cause damage.
OSHA notes that NCSG's own materials suggest some flexibility in the use of nails in particular. In their “successful chimney sweep training” booklet, NCSG recommends securing ladders by “driv[ing] a nail into the roof and secur[ing] the ladder with rope. If you choose this method, remember to remove the nail and to seal the hole before leaving the rooftop” (Ex. 342). NCSG offers no explanation as to why homeowners would allow ladders to be secured to the roof with nails but not roof anchorages. In addition, CSG and ISEA said temporary roof anchors can be mounted to common roof structural materials by clamps or screws, which would not damage the roof (Exs. 185; 198).
OSHA recognizes that, where homeowners will not allow employers to install temporary or permanent anchors or other fall protection (
As mentioned, stakeholders, including NCSG, have argued they should be allowed to use fall protection plans and other control measures where they demonstrate conventional fall protection would create a greater hazard. NCSG said requiring the use of conventional fall protection would result in extended exposure to fall hazards, and thereby create a greater hazard, because it may take longer to install and remove fall protection (
Stakeholders also said requiring the use of conventional fall protection in residential rooftop operations would create a greater hazard because workers would have to carry extra equipment to the roof, which they said would “increase the number of ground to roof trips” (Ex. 150). NCSG pointed out that chimney cleaning and inspection typically is done in one climb; however, they also acknowledged that fall protection can be brought to the roof during the initial climb and even minor repairs and installations can involve multiple climbs (Ex. 150). As the examples above illustrate, rooftop work varies widely in the duration and climbs. Employers will have to demonstrate that using conventional fall protection in the specific operation makes it more dangerous for workers than working without that protection.
Some commenters opposed allowing any exemptions from using conventional fall protection systems (Exs. 185; 198; 329 (1/18/2001), pgs. 82-83, 107). For example, Tom Wolner, of CSG, said:
Certain segments within general industry have requested that OSHA provide broad exemptions from proposed fall protection regulations, by citing things such as hardships that the use of fall protection would create, safe work histories or feasibility concerns. Capital Safety is opposed to granting such general exemptions within the regulation. It is our opinion that it is feasible and practical to provide workers with active or passive means of fall protection in nearly every work situation. A variety of all fall protection equipment available today, combined with our ability and the ability of others like us within the fall protection industry to customize or tailor fall protection equipment to specific needs often eliminates the need for exemptions (Ex. 329 (1/18/2011, pgs. 82-83)).
OSHA agrees with Mr. Wolner that it is feasible for employers to provide workers with conventional fall protection systems in “nearly every work situation.” However, OSHA does not agree with Mr. Wolner that final paragraph (b)(1)(ii) is an overly broad exemption or unprecedented. In enforcement action, employers always are permitted to raise affirmative defenses, such as a claim that the required controls are not feasible or pose a greater hazard.
Final paragraph (b)(1)(iii), similar to proposed paragraph (b)(1)(vi), excepts employers from providing the fall protection specified in final paragraph (b)(1)(i) when employers can demonstrate that it is not feasible for workers to use fall protection on the working side of platforms used at loading racks, loading docks, and teeming platforms. The “working side” is the side of the platform where workers are in the process of performing a work operation. The final rule, similar to the proposed rule, specifies that the working side exception to providing fall protection only applies when the employer demonstrates infeasibility and:
• The work operation for which fall protection is infeasible is in process (final paragraph (b)(1)(iii)(A));
• The employer limits access to the platform to “authorized” workers (final paragraph (b)(1)(iii)(B)), which the final rule defines as a worker who the employer assigns to perform a specific type of duty, or allows to be in a specific location or area (final § 1910.21(b)); and
• The employer trains authorized workers in accordance with final § 1910.30 (final paragraph (b)(1)(iii)(C)). Section 1910.30 requires, among other things, that employers train workers, including authorized workers, to recognize fall hazards and the procedures to follow to minimize them.
OSHA notes that, in limited cases, it may not be possible for workers to perform work operations if fall protection, such as guardrails, interferes with access to the work operation. However, as the final rule specifies, the issue of blocking access to the work operation is a concern only when workers are in the process of performing the work operation. As a result, fall protection, such as guardrails, must be in place or used when workers are not performing a work operation on the working side of a platform. OSHA believes that fall protection does not interfere with performing tasks such as maintenance, cleaning, and similar tasks; therefore, when workers are performing these tasks, employers must provide fall protection.
Final paragraph (b)(1)(iii) differs from the proposal in two respects. First, the final rule deletes the proposed exception for the “working side” of slaughtering facility platforms (proposed paragraph (b)(1)(iv)). Based on evidence in the record, OSHA decided to regulate those platforms separately in final paragraph (b)(14).
Second, the exception in the final rule only applies when the employer demonstrates that no fall protection system is feasible. The proposed rule applied the exception when the employer demonstrates guardrail systems are not feasible (proposed paragraph (b)(1)(vi)). Therefore, to the extent fall protection systems other than guardrails are feasible, such as travel restraint or personal fall arrest systems, the employer would have to provide those systems and the exception would not apply.
By 2004, the American Iron and Steel Institute (AISI) and Precast/Prestressed Concrete Institute (PCI) had raised the issue of fall protection on stacked materials (75 FR 28868; Exs. 5; 41). In general, they both said using fall protection, such as “guardrails or tie-off protection,” on stacked materials was infeasible or creates a greater hazard (75 FR 28868). AISI said workers at steel and steel product companies “need to stand on `stacks' of product that have a large surface area in order to rig bundles for crane lifts and similar activities” or “[load] products onto truck trailers and railcars” (Ex. 5, AISI's comments on the Office of Management and Budget “Draft Report to Congress on the Costs and Benefits of Federal Regulations”). They characterized the solutions OSHA recommended to protect those workers (
PCI, in a January 3, 2000, letter requesting an exception from existing fall protection requirements for loading/unloading precast concrete products on motor vehicles and for stacking, storing, and loading/unloading precast concrete products in the plant, said workers need to access the top of concrete products for only “very short periods of time” to connect/disconnect lifting devices or rigging (Ex. 41). They said installing a fall protection system, by contrast, would expose employees to fall hazards for “an extended period of time” and,
AISI and PCI recommended that OSHA allow employers to use alternative measures, such as safe work practices and training, including a “mentor system hands-on process for training” (Exs. 5; 41). AISI said OSHA should require guardrails or tie-off protection only “where practical” and be permitted to use an “alternative practice” and provide training where it is not (Ex. 5). However, AISI did not identify any alternative practices that would provide adequate protection for employees working on stacked materials. PCI said employers should be allowed to provide “individual instruction as well as have a mentor system hands on training process” instead using fall protection systems on stacked materials (Ex. 41). PCI also recommended that employees perform “corrective and detail work” at the ground level or from a ladder or mobile-elevating work platform instead of on the stacked materials.
OSHA received a number of comments in response to the proposed rule, most of which supported requiring the use of fall protection on stacked materials (Exs. 127; 155; 161; 185; 198; 205; 238). For example, ASSE stated:
ASSE cannot agree with “some commentators (who) have recommended that OSHA allow the use of safe work practices by trained employees in lieu of conventional fall protection for certain activities,” . . . . If employers are going to ask employees to climb on stacked materials where there are fall hazards and, typically, exposure to falls off the sides to lower levels, employers have the duty to warn, train and protect workers from falls. In our members' experience, this is not infeasible or unreasonable to ask (Ex. 127).
The Society of Professional Rope Access Technicians (SPRAT) said “the prevalence of incidents that have occurred in these situations” warrants a requirement to use “fall protection of some sort” on stacked materials (Ex. 205). SPRAT recommended allowing employers to use industrial rope access systems (IRAS) to protect employees because they said it would mitigate any difficulty or impossibility of using “measures previously recognized by OSHA as being `conventional' ” (Ex. 205). SPRAT further recommended:
[I]f OSHA's language toward protection against falls were less method-specific and more results-oriented, competent and qualified persons would have greater latitude in creating protective systems that would be very protective without having to use a proscribed method. OSHA would be well-advised to permit use of such systems so long as they are approved by a Qualified Person, created by a Competent Person, and appropriate training [is] provided to the Authorized Person (Ex. 205).
OSHA did not propose to cover IRAS and the final rule clarifies that IRAS are not rope descent systems (§ 1910.21(b)). Given that, OSHA is not adopting SPRAT's recommendations.
Several commenters said fall protection systems to protect employees working on stacked materials are feasible and currently in use in general industry (Exs. 155; 185; 198). For instance, ISEA and CSG said fall protection manufacturers have developed and are supplying employers with such systems, including “trailer-mounted systems, A-frames, rope grab systems, and ropes at tie-off points” (Exs. 185; 198). They added that manufacturers also create custom fall protection systems (Exs. 185; 198). Ellis Fall Safety Solutions (Ellis) said that temporary and permanent wheeled and fork‐lifted devices with railed personal fall protection anchorages are available for loading/unloading operations and should be required for stacked materials (Ex. 155;
PCI and the International Sign Association (ISA), in response to the proposed rule, submitted comments opposing any requirement for fall protection on stacked materials (Exs. 161; 238). PCI said in the 14 years since their request for an exception from the existing fall protection requirements they had “not learned of any system or device” that would change their position that requiring the use of fall protection on stacked materials is infeasible and would create a greater hazard (Ex. 238).
ISA, like PCI and AISI, argued that it is infeasible to require the use of fall protection on stacked cargo and motor vehicles (Ex. 161). In particular, ISA said permanent attachment of fall protection equipment to motor vehicles is not feasible because the area of the truck bed normally available for walking or working is usually quite small and such equipment would interfere with the utility of trucks as cargo-carrying vehicles. Like PCI and AISI, ISA also recommended that OSHA “should provide flexibility for employers in terms of implementing alternative practices, appropriate training, or both” (Ex. 161).
ISA also appeared to suggest that installing fall protection for employees working on stacked materials would create a greater hazard. ISA said employees stand or work on stacked materials only “occasionally” and “temporarily” to perform operations that “are strictly associated with rigging of cargo items for hoisting,” implying that rigging stacked cargo only exposes employees to fall hazards for a very brief period of time compared to the time necessary to install fall protection systems (Ex. 161).
After reviewing the rulemaking record, OSHA does not agree that requiring fall protection on stacked materials is infeasible or could create a greater hazard. OSHA finds there is substantial evidence showing that a number of fall protection systems for stacked materials are available and already are in use in general industry (Exs. 155; 185; 198). For example, commenters said wheeled, trailer-mounted and fork-lifted overhead anchor and retractable line systems are available and in use to protect employees working on stacked materials (Exs. 155; 185; 198.
Finally, OSHA also concludes that the final rule does not need to include specific or separate requirements addressing stacked materials. OSHA believe that final § 1910.28(b)(1) (Unprotected sides and edges) and (b)(15) (Walking-working surfaces not otherwise addressed) adequately address fall protection on stacked materials.
Final paragraph (b)(2)(i) requires employers to protect workers in hoist areas from falls by:
• Guardrail systems (final paragraph (b)(2)(i)(A));
• Personal fall arrest systems (final paragraph (b)(2)(i)(B)); or
• Travel restraint systems (final paragraph (b)(2)(i)(C)).
The construction fall protection standard includes a similar provision requiring that employers provide guardrail or personal fall arrest systems to protect workers in hoist areas that are six feet or more above a lower level (§ 1926.501(b)(3)). This final rule provides greater control flexibility than the construction standard because it also allows employers to provide travel restraint systems to protect workers. OSHA received no comments on the proposed provision and it is finalized as discussed.
Final paragraph (b)(2)(ii), like the proposed and construction rules (§ 1926.501(b)(3)), requires that, if removing any portion of a guardrail system, gate, or chains and if the worker leans through or over the edge of the access opening to facilitate hoisting, the employer must protect the worker from falling by a personal fall arrest system. The proposed rule required that employers provide “grab handles” on each side of a hoist area opening, in addition to a personal fall arrest system, if removing the guardrail, gate, or chains and if the worker leans out the access opening. The existing rule does not have a specific provision addressing hoist areas. However, the existing provisions on wall openings and holes requires that both sides of openings and holes have grab handles if the rail, half door, or other equivalent barrier is removed (existing § 1910.23(b)(1)). In addition, where the structure has extension platforms onto which employers may place hoisted materials, the existing rule requires that employers provide side rails or equivalent guards to protect workers (existing § 1910.23(b)(ii)). OSHA notes that it adopted the existing rule in 1971, before personal fall arrest systems were widely available.
OSHA only received one comment on the proposed provision. Ameren recommended that OSHA define what would qualify as a grab handle to ensure the final rule does not result in confusion or misinterpretation (Ex. 189). After further consideration, OSHA believes it is not necessary for employers to provide grab handles in addition to personal fall arrest systems if removing guardrails, gates, or chains and if workers look through or over the edge of an access opening to facilitate hoisting. OSHA believes that personal fall arrest systems provide adequate worker protection, and better protection than grab handles, therefore, OSHA does not carry forward the proposed requirement on grab handles. Of course, employers are free to provide grab handles or other handholds in addition to personal fall arrest systems in those situations. OSHA believes that the revisions in the final rule address Ameren's concern and the provision is finalized as discussed.
Final paragraph (b)(2)(iii), specifies that if grab handles are installed at hoist areas, they must meet the requirements of § 1910.29(l). Employers are not required to install grab handles at hoist areas; however, if they do install grab handles, the handles must meet the criteria specified in § 1910.29(l). Although OSHA believes it is not necessary to install grab handles at hoist areas when workers use a personal fall arrest system, the Agency recognizes grab handles can provide some security when workers must lean out from a hoist area. In those cases, OSHA believes it is important for grab handles to be of a certain size, have sufficient clearance, and be capable of withstanding the forces placed on them.
OSHA believes that consolidating the requirements for protecting workers from falling into or tripping on a hole is appropriate because the hazards generally associated with these conditions, and the methods to address these hazards, are the same. Moreover, consolidating the provisions makes the final rule easier to understand and follow, which will enhance employer compliance.
In the final rule, OSHA moved the proposed requirement (proposed paragraph (b)(3)(iii)) to protect workers on walking-working surfaces from being hit by objects falling through overhead holes to final paragraph (c), Protection from falling objects. The final rule consolidates all requirements addressing falling object hazards in final paragraph (c).
OSHA received one general comment on the proposed requirements to protect workers from falling or stepping into, or tripping on, holes. Ellis Fall Safety Solutions (Ellis)
Final paragraph (b)(3)(i) requires that employers ensure workers are protected from falling through any hole (including skylights) that is four feet or more above a lower level using one or more of the following:
• A cover over the hole (paragraph (b)(3)(i)(A));
• A guardrail system around the hole (paragraph (b)(3)(i)(B));
• A travel restraint system (paragraph (b)(3)(i)(C)); or
• A personal fall arrest system (paragraph (b)(3)(i)(D)).
Final paragraph (b)(3)(i) is the same as the proposed rule, and provides greater
Final paragraph (b)(3)(ii) requires that employers ensure workers are protected from tripping into or stepping into or through any hole that is less than four feet above a lower level by covers or guardrail systems. The final rule differs from the proposal in two ways. First, final paragraph (b)(3)(ii) clarifies that OSHA intended that the proposed requirement only applied to holes that are less than four feet above a lower level. Where a hole is four feet or more above a lower level, the requirements in final paragraph (b)(3)(i) apply and ensure that workers do not step or trip into the hole or fall into it. Second, final paragraph (b)(3)(ii) provides greater control flexibility than the proposal and the construction fall protection standard because it adds guardrail systems as an alternative option employers may use to protect workers from tripping or stepping into holes. Proposed paragraph (b)(3)(ii) and the construction standard (§ 1926.501(b)(4)(ii)) only permit employers to use covers to prevent stepping or tripping into holes.
Final paragraph (b)(3)(iii), like the existing standard (§ 1910.23(a)(1)) and the proposed rule (proposed paragraph (b)(14)(i)), requires that employers ensure workers are protected from falling into stairway floor holes by a fixed guardrail system erected on all exposed sides, except at the stairway entrance. The final rule also carries forward, with revisions, the existing and proposed exception for stairways when (1) used less than once a day and (2) traffic across the opening prevents the use of a fixed guardrail system (
OSHA also clarifies the “infrequently used” language in the existing exception by incorporating the language in a note in the proposed rule stating that “infrequently used” means using the stairways “on less than a daily basis.” The exception in the final rule also clarifies the language in the existing and proposed rules requiring that the hinged floor-hole cover be of “standard strength and construction” by specifying that the cover must meet the criteria in final § 1910.29, specifically § 1910.29(e). OSHA believes the language in the final rule will make the rule easier for employers to understand and follow. For example, requiring that the hinged floor-hole cover meet the requirements in § 1910.29 ensures that they will support, without failure, at least twice the maximum intended load that may be imposed on the cover (final § 1910.29(e)(1)). This is important because a hinged floor-hole cover, like all covers, need an adequate margin of safety to ensure they are capable of supporting intended loads, and to account for the possibility of unforeseen traffic across the cover.
In addressing stairways used less than once a day, OSHA requested information and comment in the proposed rule on using automatically rising railings that come into position when a load-bearing hinged floor-hole cover opens (75 FR 28892). Explanatory paragraph E3.1 in ANSI/ASSE A1264.1-2007 states that the removable guardrail system required for infrequently used stairways should be “hinged or otherwise mounted so as to come into position automatically with the opening of the [hinged floor-hole] cover.” Ameren commented, “As long as the automatic rising railings are an option and not the only method of protection this provision would be feasible” (Ex. 189). OSHA did not receive any comments supporting making automatically rising guardrails mandatory, and the final rule does not include such a requirement.
Final paragraph (b)(3)(iv), similar to the existing (§ 1910.23(a)) and proposed (proposed paragraph (b)(14)(ii)) rules, requires that employers ensure they protect workers from falling into ladderway floor holes or ladderway platform holes by providing a guardrail system and toeboards on all exposed sides, except at the hole entrance. In addition, the final rule requires that employers protect the access opening in the guardrail system by using a “self-closing” gate or an offset so workers cannot walk or step into the hole.
Final paragraph (b)(3)(iv) substitutes “self-closing” gate for “swinging” gate language in the existing and proposed rules. The purpose of these gates, when open, is to provide a means of access to ladderway floor holes and, when closed, to provide guardrail protection that meets of all the criteria in final paragraph (b). The term “swinging” gate, as used in the existing and proposed rules, refers to gates that automatically swing back into a closed position when the opening is not being used for access to prevent workers from falling into the ladderway hole. These are sometimes called “safety gates” (Ex. 68). If gates do not swing automatically into a closed position, they do not provide the required guardrail protection.
OSHA is aware that, in addition to swinging gates, there are automatically closing sliding gates that are currently manufactured, readily available, and in use to protect workers from falling into ladderway floor and platform holes. OSHA believes these sliding gates provide protection that is as effective as the protection swinging gates provide. Therefore, to give employers the flexibility to use the type of automatically closing gate that works best for them, OSHA uses the term “self-closing” gates in final paragraph (b)(3)(iv).
OSHA received one comment on the proposed requirement. Edison Electric Institute (EEI) recommended that OSHA allow employers to use double chains “around holes used as points of access (such as ladderways)” (Ex. 207). “Many industrial facilities use double chains instead of swinging gates or guardrails at the top of fixed ladders,” EEI said. “These have been effective for a number of decades” (Ex. 207). EEI also pointed out that the 1990 proposed rule would have allowed the use of chains, in addition to swinging gates and offsets, at the access openings in the guardrail systems.
[T]he [1990] proposed paragraph at 1910.28(b)(6) permits the use of movable guardrail sections such as gates, chains, and other means, which, when open, provide a means of access and, when closed, provide the guardrail protection that meets the proposed paragraphs 1910.28(b)(1) through (b)(5). An employer's compliance with the proposed rule, in lieu of compliance with an existing rule [1910.23(a)(2)], is considered as a de minimis violation.
This letter available on OSHA's website at:
OSHA has not adopted EEI's recommendation. In the preamble to the 2010 proposed rule, OSHA said the new proposed rule replaces the 1990 proposal (75 FR 28863). Unlike the 1990 proposal, proposed paragraph (b)(14)(ii)
Final paragraph (b)(3)(v), like proposed paragraph (b)(14)(iii), requires that employers ensure workers are protected from falling through hatchway and chute-floor holes by one of the following:
• A hinged floor-hole cover and a fixed guardrail system that leaves only one exposed side.
• A removable guardrail system and toeboards on not more than two sides of the hole and a fixed guardrail system on all other exposed sides. The employer must ensure the removable guardrail system remains in place when the hole is not in use (final paragraph (b)(3)(v)(B)); or
• A guardrail system or travel restraint system when the work operation necessitates passing material through a hatchway or chute floor hole (final paragraph (b)(3)(v)(C)).
With one exception (final paragraph (b)(3)(v)(C)), the final rule generally is consistent with existing § 1910.23(a)(3) and A1264.1-2007 (Section 3.1). Final paragraph (b)(3)(v)(C) adds a requirement that employers provide a guardrail system or travel restraint system when workers need to pass materials through a hatchway or chute-floor hole. The existing and ANSI rules only state that “protection shall be provided to prevent a person from falling through the opening,” but do not specify what protection is needed. OSHA believes the final rule is more protective and clearer than these rules because it specifies how employers must protect workers. OSHA adopts final paragraph (b)(3) as discussed.
Final paragraph (b)(4)(i), like the proposal, requires that employers ensure each worker on a dockboard is protected from falling four feet or more to a lower level by a guardrail system or handrails. The final rule limits the fall protection options that employers may use. OSHA believes guardrails and handrails will provide adequate protection for workers. In addition, employers can use them on dockboards while other options may not work. For example, it may not be possible to install anchorages on dockboards that would support the use of personal fall arrest systems.
OSHA notes that in some situations there may be insufficient space between the dock and the transport vehicle for a worker to fall and, therefore, no fall hazard would exist. In that situation, final paragraph (b)(4)(i) would not apply.
Final paragraph (b)(4)(ii), like the proposal, includes an exception specifying that employers do not have to provide a guardrail system or handrails when:
• Using the dockboard solely for materials-handling operations using motorized equipment (final paragraph (b)(4)(ii)(A));
• Workers engaged in motorized material-handling operations are not exposed to fall hazards greater than 10 feet (final paragraph (b)(4)(ii)(B)); and
• Employers train those workers in accordance with § 1910.30 (final paragraph (b)(4)(ii)(C)).
Final paragraph (b)(4)(ii)(C) does not include the proposed language identifying the subjects that training must address. The requirements in final § 1910.30 cover all of the topics OSHA proposed, thus, OSHA does not believe it is necessary to repeat them in this provision.
OSHA believes the exception in final paragraph (b)(4)(ii) is appropriate. Employers often use motorized equipment to move large and heavy material across dockboards. However, such equipment may not fit on a dockboard that has guardrails or handrails. Preventing workers from using motorized equipment to move the material may expose them to other hazards, such as risk of injury associated with lifting and carrying heavy materials. OSHA did not receive any comments on the proposed dockboard requirements, and finalizes the provisions as discussed.
Final paragraph (b)(5)(i), like the proposed rule, retains the existing requirement (§ 1910.23(c)(2)) that employers must protect workers on runways or similar walkways from falling four feet or more to a lower level by a guardrail system. The final rule generally is consistent with the construction fall protection standard (§ 1926.501(b)(6)). Like dockboards, the final rule limits the fall protection options employers may use. OSHA believes that guardrails will provide adequate protection from falls, and that other options may not work on runways. For example, it may not be possible for employers to install anchorages and other components of personal fall protection systems that would protect workers from falling off runways while still allowing them to walk on the runway.
Final paragraph (b)(5)(i) no longer includes the existing and proposed requirement that employers provide toeboards on both sides of runways if workers are likely to use tools, machine parts, or other objects on the runway. The primary purpose of requiring toeboards is to prevent objects from
Final paragraph (b)(5)(ii), which is similar to the proposed rule, addresses runways used exclusively for special purposes, such as filling tank cars. The final paragraph requires that when the employer can demonstrate that it is not feasible to have guardrails on both sides of special purpose runways, the employer may omit the guardrail on one side, provided the employer:
• Ensures that the runway is at least 18 inches wide (final paragraph (b)(5)(ii)(A)); and
• Provides each worker with, and ensures that each worker uses, a personal fall arrest system or travel restraint system (final paragraph (b)(5)(ii)(B)).
The final rule clarifies two points in the proposed rule. First, the final rule clarifies that guardrails may be omitted from a special purpose runway only when the employer can demonstrate that it is not feasible to have guardrails on both sides of the runway. Feasibility is the standard test of whether employer action is possible, and OSHA believes employers are familiar with, and understand, it.
Second, final paragraph (b)(5)(ii)(B) clarifies the language in the proposed rule requiring that employers ensure “the proper use of personal fall arrest systems or travel restraint systems.” This provision means that employers may omit a guardrail on one side of a special purpose runway only when the employer both provides and ensures that each worker properly uses a personal fall arrest system or travel restraint system.
OSHA notes that the final rule provides greater protection for workers than both the existing rule (§ 1910.23(c)(2)) and A1264.1-2007 (Section 5.2). Although these standards specify that employers may omit a guardrail on one side of a special use runway only if they use a runway that is at least 18 inches wide (consistent with final paragraph (b)(5)(ii)(A)), the standards do not require that employers provide, and ensure that workers use, personal fall arrest or travel restraint systems while on those runways.
OSHA received no comments on the proposed runway requirements, and adopts them with the revisions discussed above.
This final rule, like the proposed rule, includes requirements for protecting workers who are working less than four feet above dangerous equipment. OSHA believes it is necessary to protect workers from falling onto or into dangerous equipment regardless of how far above the equipment they are working. Falling less than four feet into or onto equipment that has sharp, protruding, or moving parts could kill or seriously injure a worker.
When workers are less than four feet above dangerous equipment, final paragraph (b)(6)(i), like the proposed rule, requires that employers protect workers from falling into or onto the dangerous equipment using a guardrail system or a travel restraint system, unless the equipment is covered or guarded to eliminate the hazard. The existing rule in § 1910.23(c)(3) requires that, regardless of height, employers must protect workers who are working above dangerous equipment using guardrails and toeboards. The construction fall protection standard contains a provision requiring guardrails or equipment guards when workers are working less than six feet above dangerous equipment (§ 1926.501(b)(8)).
OSHA believes final paragraph (b)(6)(i), which allows employers to protect their workers by providing either guardrails or travel restraint systems, but does not require toeboards, provides greater control flexibility than the existing rule without compromising worker safety. OSHA believes that either guardrails or travel restraint systems provide sufficient protection for workers above dangerous equipment. Therefore, OSHA does not believe that toeboards, which primarily protect workers from falling objects from higher levels, are necessary. Accordingly, OSHA deleted the existing toeboard requirement, but notes that final paragraph (c)(1) of this section requires that employers provide toeboards to protect workers from objects falling from higher levels and hitting them.
OSHA notes that the final rule does not permit employers to use safety nets or personal fall arrest systems when workers are less than four feet above dangerous equipment. At these heights, safety nets and personal fall arrest systems may not be safe to use because there may not be sufficient stopping distance to prevent a falling worker from making contact with the dangerous equipment.
Final paragraph (b)(6)(i), like the proposal, does not require employers to use guardrails or travel restraint systems if the employer covers or guards dangerous equipment and the worker is less than four feet above the equipment. OSHA believes that covering or guarding dangerous equipment that is less than four feet below workers adequately eliminates the hazard.
When workers are four feet or more above dangerous equipment, final paragraph (b)(6)(ii), like the proposed rule, requires that employers protect workers from falling by providing:
• Guardrail systems (final paragraph (b)(6)(ii)(A));
• Safety net systems (final paragraph (b)(6)(ii)(B));
• Travel restraint systems (final paragraph (b)(6)(ii)(C)); or
• Personal fall arrest systems (final paragraph (b)(6)(ii)(D)).
Final paragraph (b)(6)(ii) provides more control flexibility for employers than the existing rule, which requires that employers protect workers from falling onto or into dangerous equipment by providing a guardrail system. OSHA believes that allowing employers to use a range of fall protection options ensures that employers will be able to select the fall protection option that best fits the particular workplace situation and conditions.
OSHA received two comments on the proposed provision. Verallia recommended that OSHA delete the requirement because they said the proposal was “too subjective and vague” and “could be interpreted differently” (Ex. 171). However, Verallia did not provide examples or further explain its recommendation. As mentioned earlier, this final rule adds a definition of dangerous equipment, which also includes examples of specific equipment OSHA considers to be dangerous. The final rule specifically
The second commenter, NGS, said the proposed rule was not as protective as the existing rule and would not provide an equivalent level of protection from “open pits, vats, etc.” as existing § 1910.22(c) (Ex. 180). NGS recommended that “standard guardrails be required around open tanks” and “vats that contain hazardous substances that pose an immediate threat to life” (Ex. 180). OSHA does not believe including NGS's recommendations are necessary in this final rule. First, although final paragraph (b)(6) does not retain existing § 1910.22(c) as a separate provision, OSHA incorporated into the final definition of dangerous equipment all of the equipment § 1910.22(c) covers, including the equipment NGS mentioned. The final rule does not leave any dangerous equipment unaddressed, and, therefore, the Agency believes the final rule provides protection equivalent to that in existing § 1910.22(c).
Second, the final rule allows employers to use controls that provide equivalent or greater protection than the controls specified in existing § 1910.22(c). OSHA believes that giving employers flexibility in choosing what protection to use will enable them to select the measure that works best, and is the most effective, in the particular work situation. Third, the final rule recognizes that it may not be possible to use guardrails in a particular situation and provides employers with alternatives that will protect their workers in those cases.
Fourth, where dangerous equipment is not covered or guarded, final paragraph (b)(6)(i) requires that employers use guardrails or travel restraint systems to protect workers from falling onto the dangerous equipment, when the height of the fall is less than four feet. OSHA notes that employers are free to use guardrails when an employee works at any height above dangerous equipment.
The final rule requires that employers protect workers on walking-working surfaces near openings (including openings with a chute attached) if the inside bottom edge of the opening is less than 39 inches above the walking-working surface and the outside bottom edge of the opening is four feet or more above a lower level. The employer must protect workers from falling through those openings by providing:
• Guardrail systems (final paragraph (b)(7)(i));
• Safety net systems (final paragraph (b)(7)(ii));
• Travel restraint systems (final paragraph (b)(7)(iii)); or
• Personal fall arrest systems (final paragraph (b)(7)(iv)).
The final rule, unlike the proposal (proposed paragraph (b)(7)(ii)), does not allow employers to use designated areas instead of providing conventional fall protection to protect workers from falling through openings. As discussed above, the final rule limits the use of designated areas to the limited and specific situation of work on low-slope roofs. Deleting the option of designated areas from final paragraph (b)(7) makes the provision consistent with the construction standard, which also does not allow the use of designated areas to protect workers from falling through openings (§ 1926.501(b)(14)).
The final rule simplifies, updates, and increases the control flexibility of the existing rule. For example, the final rule establishes one set of requirements that apply to all openings, while the existing rule, in § 1910.23(b), contains different provisions for different types of wall openings (
Finally, in several ways the final rule provides more flexibility than the existing rule. First, the final rule only requires employers to provide fall protection when the inside bottom edge of the opening is less than 39 inches above the floor or other type of walking-working surface, while the existing rule, with one exception, generally requires employers to protect wall openings regardless of the height of the bottom inside edge of the opening.
As discussed in the preamble to the proposed rule, when work operations require that workers reach through wall openings to facilitate hoisting materials, OSHA considers the opening to be a “hoist area” covered by final paragraph (b)(2), and not a wall opening. OSHA believes this distinction is important. Final paragraph (b)(7) allows employers to use guardrail, personal fall arrest, travel restraint, or safety net systems to protect workers from falling through wall openings. However, it is not always possible to use a safety net system to protect workers from falling when they are hoisting materials through an opening because a safety net system may interfere with materials being hoisted or may not provide a sufficient stopping distance to prevent a falling worker from making contact with the lower level. Accordingly, final paragraph (b)(2) specifies that employers must protect workers using only a guardrail, personal fall arrest, or travel restraint systems. Moreover, when workers need to lean out or over the edge of the hoist area, final paragraph (b)(2) requires that employers protect workers with personal fall arrest
• Limits access within six feet of the pit edge to authorized workers trained in accordance with final § 1910.30 (final paragraph (b)(8)(i));
• Applies floor markings or warning lines and stanchions, or a combination thereof, at least six feet from the pit edge. Floor markings must be a color that contrasts with the surrounding area and warning lines and stanchions must be capable of resisting, without tipping over, a force of at least 16 pounds that is applied horizontally against the stanchion at a height of 30 inches (final paragraph (b)(8)(ii)); and
• Posts readily visible caution signs that state “Caution—Open Pit” and meet the requirements of § 1910.145, Specifications for Accident Prevention Signs (final paragraph (b)(8)(iii)).
Final paragraph (b)(8) only applies to service, repair, and assembly pits that are less than 10 feet deep. For deeper pits, employers must provide a conventional fall protection system specified in final paragraph (b)(1), Unprotected sides and edges.
Neither the existing nor construction fall protection rules contain a similar provision on service, repair, and assembly pits. Historically, OSHA addressed these hazards through Section 5(a)(1) (General Duty Clause) of the OSH Act (29 U.S.C. 654).
The final rule recognizes that protecting workers from falling into service, repair, and assembly pits can present some unique issues. For example, for vehicle service and repair pits, the fall hazard is present only when a vehicle is not over the pit. Driving a vehicle over the pit normally eliminates the fall hazard. In addition, conventional fall protection systems may not work at service, repair, and assembly pits. For instance, using guardrails can interfere with driving vehicles over or away from a pit, and personal fall arrest and travel restraint systems may prevent workers from reaching the area where they need to perform work. Finally, it is OSHA's understanding that workers are unlikely to be near service, repair, and assembly pits when they are not working on vehicles.
OSHA believes the final rule strikes an appropriate balance between protecting workers and ensuring that they can repair, service, or assemble vehicles. The Agency believes that establishing well-marked areas (that is, floor markings or warning lines and stanchions, or both), along with posting caution signs, will be effective in warning authorized workers that they are about to enter a hazardous area, and other workers that they need to keep out of the area. In addition, limiting access within six feet of pits to those workers who the employer specifically assigns or allows to be in the area, and who, as a result of training, recognize the applicable fall hazards, will keep worker exposure to these hazards to a minimum.
OSHA received comments on the proposed provision from the American Trucking Associations, Inc. (ATA) and the American Truck Dealers Division of the National Automobile Dealers Association (NADA). Both organizations supported the proposed rule (Exs. 181; 187). NADA said, “These proposed requirements should serve to adequately address the potential for fall
OSHA added a sentence to the final rule addressing the situation where two or more pits are in a common area and are not more than 15 feet apart. It specifies that OSHA employers may comply with final paragraph (b)(8)(ii) if they place contrasting floor markings at least six feet from the pit edge around the entire area of the pits. OSHA added the sentence to respond to a comment from ATA, which stated:
OSHA should include a provision stating that when two or more pits are in a common area, a perimeter marking and the posting of appropriate warnings around the entire area will meet the requirements of this section. In addition, when the distance from a building entrance to the pit is less than 6 feet, a floor marking and warning sign at the entrance will satisfy the requirements (Ex. 187).
Final paragraph (b)(9), like the proposal, only requires that employers provide fall protection to those fixed ladders that extend more than 24 feet above a lower level. The existing rule (§ 1910.27(d)(1)(ii)) requires that fixed ladders more than 20 feet above a lower level be equipped with cages or wells. Changing the fall protection trigger height to 24 feet makes the final rule consistent with ANSI/ASC A14.3-2008 and OSHA's construction ladder standard (§ 1926.1053(a)(18) and (19)), which is one of the Agency's goals in this rulemaking. This change allows workers who perform both general industry and construction activities to use fixed ladders with the same fall protection trigger height.
Siebe North, Inc., a manufacturer of ladder safety systems and personal fall arrest systems, supported the proposed change in the fall protection trigger height for fixed ladders (Ex. OSHA-S041-2006-0666-0198). CSG and ISEA, on the other hand, argued that OSHA should require fall protection on fixed ladders from the ground up (Exs. 185; 198). As discussed above, limiting fall protection to fixed ladders that extend more than 24 feet above a lower level makes the final rule consistent with both OSHA's construction rule and the long-standing ANSI standard (A14.3). In any event, OSHA does not believe the change from the existing rule will affect worker safety substantially because fixed ladders that extend more than 24 feet must have fall protection systems that protect workers from the ground up even if workers climb the ladder less than 24 feet above the lower level.
In final paragraph (b)(9)(i), OSHA revises the existing fall protection requirements for fixed ladders. The final rule requires that employers equip fixed ladders with ladder safety systems or personal fall arrest systems to protect workers from falling to a lower level, which could result in death or serious injury. Final paragraph (b)(9)(i) establishes a new framework to protect
• For existing fixed ladders (that is, for ladders erected before November 19, 2018)—employers have up to 20 years to install ladder safety or personal fall arrest systems (final paragraph (b)(9)(i)(A));
• For new fixed ladders (that is, for new ladders erected on or after November 19, 2018)—the employer must equip the new ladder with a ladder safety or personal fall arrest system (final paragraph (b)(9)(i)(B));
• For ladder repairs and replacements—when an employer replaces any portion of a fixed ladder the replacement must be equipped with a ladder safety or personal fall arrest system (final paragraph (b)(9)(i)(C)); and
• The final deadline for all fixed ladders—on and after November 18, 2036 all fixed ladders must be equipped with a ladder safety or personal fall arrest system (final paragraph (b)(9)(i)(D)). (See further discussion of phase-out schedule below.)
The gradual phasing out of cages and wells means that employers may continue to use existing fixed ladders during the 20-year phase-out period, even if the existing fixed ladders are equipped only with cages and wells. However, during the 20-year phase out period, when employers install new fixed ladders or replace a portion of a section on an existing fixed ladder, final paragraphs (b)(9)(i)(B) and (C) require them, respectively, to install a new fixed ladder equipped with a ladder safety or personal fall arrest system (when replacing the entire ladder) or equip the replacement section (
The proposed rule would have allowed employers to use cages, wells, ladder safety systems, or personal fall arrest systems when the length of a climb is less than 24 feet regardless of the height of the ladder (proposed § 1910.28(b)(9)(i)). When the total length of a climb on a fixed ladder is at least 24 feet, the proposed rule would have allowed employers to equip the fixed ladder with a ladder safety system, personal fall arrest system, cage or well (proposed § 1910.28(b)(9)(ii)). OSHA is phasing in the requirement to equip fixed ladder with ladder safety systems/personal fall arrest systems and phasing out the use of cages and wells as a means of fall protection because there is wide recognition in general industry that cages and wells neither prevent workers from falling off ladders nor protect them from injury when a fall occurs (
As far back as 1990, when OSHA first raised the question about the effectiveness of cages and wells as a means of fall protection on fixed ladders, Siebe North, Inc., a manufacturer of ladder safety and personal fall protection systems, said OSHA should require that fixed ladders be equipped with ladder safety systems or personal fall arrest systems:
Except to the extent that a cage or well will change the trajectory of a fall so that the victim falls directly to the base of the ladder, we are unaware of
As already noted, except to the extent that it directs the victim's falling body to the base of the ladder, a cage or well provides no protection for the falling climber. On the other hand, where a ladder safety device is used, a climber's fall is stopped in 2 feet or less, with no trauma from this short fall. When a fall
[C]ages should not be used as an individual method of fall protection, but only in conjunction with a personal fall arrest/cable-and-rail system or a twin-leg lanyard. CSG recognizes that a cage system allows a measure of security. However, if a person does fall in a cage, OSHA is correct that the cage will direct the person to the ground, likely resulting in a severe injury or fatality (Ex. 198).
ISEA agreed with CSG (Ex. 185). The Oregon Department of Transportation (DOT) added:
Ladder cages are an old technology used for decades before ladder safety systems were ever developed . . . [C]ages and wells are designed to “. . . contain employees in the event of a fall and direct them to a lower landing.” Cages provide little fall protection and no fall prevention. They do give a sense to the climber of being contained, and do provide a surface to rest against for a winded climber, but will not prevent a fall. Falls in cages can be very gruesome with the faller entangling themselves in the cage as they fall, sometimes tearing off body parts (Ex. 113).
Similarly, Ellis testified that OSHA should prohibit the use of cages and wells for fall protection because he said they are ineffective:
[T]his may be the time to withdraw cages since they are ineffective. I refer to the [Health and Safety Executive] Report on their website relating to cages and the testing that's being done to show that they're incapable of stopping falls. It may not be OSHA's best move to keep citing a device that fails to work which most people would admit that you're not get stopped in a fall. The best that happens in a fall inside a cage is to be a—have a feeling of being contained. . . . (Ex. 329 (1/21/2011, p. 259)).
The Health and Safety Executive (HSE) report Ellis cited was
After studying the information from the references, the survey, from the accident database and the results from testing, it seems clear that caged ladders cannot provide positive fall-arrest capability, especially in the case of the three-upright design which was tested as part of this research. There is every possibility of a fall down the cage to the ground or other platform.
There would appear, or so it seems, a possibility to stop the fall of a worker in certain circumstances, but this depends upon the attitude of the worker both before the fall and during the fall, and whether or not the worker manages to catch part of his or her body in one of the cage apertures, or manages to trap themselves in the cage some other way. In any event, it is a chance occurrence, and the opinion is that even if the worker could be caught by the cage, it could lead to significant if not fatal injury.
The accidents reviewed indicate that workers fall down cages to the next level and are rarely caught. Injuries have been reported. Even if a fall is halted by limb entanglement within a cage, rescue would be extremely difficult process to carry out successfully (Ex. 392).
OSHA believes there is substantial evidence in the rulemaking record to support eliminating the use of cages and wells as a means of fall protection on fixed ladders. Therefore, for the reasons discussed above, OSHA is phasing out their use and requiring that employers equip fixed ladders with ladder safety systems or personal fall arrest systems according to the schedule established in final paragraph (b)(9)(i).
OSHA believes that gradually phasing out the use of cages and wells as a means of fall protection over 20 years and requiring employers to provide ladder safety systems/personal fall arrest systems prospectively (that is, when installing new fixed ladders or replacing a portion of an existing fixed ladder section) is a safe, cost-effective way to increase worker protection beyond the existing and proposed rules, and will not pose difficulties or undue burdens for employers. For example, ladder safety and personal fall arrest systems generally are less costly and easier to install on fixed ladders than cages and wells. OSHA believes that providing 20 years to phase out cages and wells gives employers ample time to plan and carry out this transition as part of their normal business and replacement cycles, instead of retrofitting fixed ladders. According to the FEA, the useful life of a large majority of fixed ladders will be exhausted within 20 years.
Several stakeholders specifically recommended that OSHA prospectively require new fixed ladder be equipped with ladder safety systems/personal fall arrest systems (Exs. OSHA-S041-2006-0666-0198; 113; 329 (1/21/2011), p. 18-19). For example, Siebe North supported installing ladder safety systems/personal fall arrest systems “in the design stage” because “ladder safety devices can be engineered into and installed as part of the original ladder installation without any extra hazardous exposure to the installation workers,” adding that “well or cage installations hazards will always be significantly greater than the installation hazards for ladder safety devices” (Ex. OSHA-S041-2006-0666-0198). The American Wind Energy Association said:
Technology in fall protection has developed to the point where suitable solutions exist for the protection of climbers for fixed ladders. At a minimum, new installation of fixed ladders, that meet the trigger heights and length listed, should include falling-object for workers regardless of the industry. The wind industry is an example of a new industry that has embrace ladder-climbing systems across-the-board (Ex. 329 (1/21/2011), pgs. 18-19).
Siebe North also indicated that requiring employers to install ladder safety systems/personal fall arrest systems instead of cages/wells was cost effective, “For a 50-foot climb, a ladder safety device would cost about $500 installed, but a case or well would cost in excess of $1,500” (Ex. OSHA-S041-2006-0666-0198). Clear Channel Outdoor indicated that equipping billboard ladders with ladder safety systems/personal fall arrest systems would cost significantly less than installing cages and wells (Ex. 329 (1/18/2011), pgs. 134-35). Ameren Corporation recommended grandfathering in all existing ladders “due to the potential financial impact” (Ex. 189).
As mentioned, OSHA believes the prospective application of the requirement to equip fixed ladders with ladder safety systems or personal fall arrest systems will not pose financial hardship on employers. According to CSG, it is “common” for fixed ladders manufactured today to be equipped with ladder safety systems (Ex. 329 (1/18/2011), p. 104).
As mentioned, final paragraph (b)(9)(i) also establishes the cage and well phase-out dates for existing, new, replacement, and eventually all fixed ladders (
• A cage;
• A well;
• A ladder safety system; or
• A personal fall arrest system.
Although the existing rule requires that employers already must have installed cages or wells on fixed ladders, the record indicates some have not. Therefore, OSHA is giving employers two years to come into compliance with the existing rule (existing § 1910.27). Providing two years will ensure that employers have adequate time to order and install devices on fixed ladders and will reduce costs for employers who have ordered and not yet installed new fixed ladders equipped with cages or wells. Although the final rule is phasing out the use of cages and wells as a fall protection device, final paragraph (b)(9)(i) allows employers to continue to use existing fixed ladders that have a cage or well, but not ladder safety or personal fall arrest system, until:
• The fixed ladder, cage, or well, of portion of it is replaced (final paragraph (b)(9)(i)(C)); or
• November 18, 2036 (final paragraph (b)(9)(i)(D)), whichever comes first.
This means that employers may not have to install ladder safety or personal fall arrest systems on their existing fixed ladders for up to 20 years. However, OSHA believes that many employers already have installed ladder safety systems and personal fall arrest systems or will install those systems long before the 20-year deadline comes due.
Like final paragraph (b)(9)(i)(A), ANSI/ASC A14.3-2008 (Section 1.6.1) generally permits employers to use existing fixed ladders without change. The requirements of ANSI/ASC A14.3-2008 do not apply to existing fixed ladders, provided that the ladder was in compliance with a Federal, state, or national consensus standard at the time it was installed and there is documentation available to substantiate that (Section 1.6.1(1)), or a person competent in structural design determines that any differences in the existing ladder are such that its performance “will not substantially deviate from the requirements” of ANSI/ASC A14.3-2008 (Section 1.6.1(2)).
OSHA believes that most fixed ladders, except for some used in outdoor advertising, already have at least one of the four devices final paragraph (b)(9)(i)(A) requires and, therefore, will be able to continue using those ladders under the final rule. At a minimum, OSHA believes that most existing fixed ladders have cages or wells, which the existing rule (§ 1910.27(d)(1)(i)) has required since the Agency adopted it pursuant to section 6(a) of the OSH Act (29 U.S.C. 655(a)). Evidence discussed in the FEA also indicates that a significant percentage of employers already have ladder safety or personal fall arrest systems on existing fixed ladders.
For fixed ladders that do not have any fall protection, which appears to be the case in the outdoor advertising industry, final paragraph (b)(9)(i)(A) requires that employers install a cage, well, ladder safety system, or personal fall arrest system before November 19, 2018. OSHA believes that most of those employers will install ladder safety or personal fall arrest systems during that time. First, according to the FEA, those systems generally are less expensive than cages or wells. Second, even ANSI/ASC A14.3-2008 requires the use of ladder safety systems for some climbs (Sections 4.1.3, 4.1.4, 4.1.4.2). However, the Agency notes that employers also will be in compliance if they install cages or wells on existing fixed ladders during the first two years after the final rule is published.
One commenter, Ameren, said OSHA should make allowances for employers who have ordered fixed ladders but not yet received and installed them (Ex. 189). They said that it may take up to one year to receive a fixed ladder after placing the order. Final paragraph (b)(9)(i)(A) gives employers two years to install fall protection devices on their fixed ladders. As mentioned, OSHA considers ladders installed during this two-year period to be “existing fixed ladders,” which means employers may install any of the four devices specified in final paragraph (b)(9)(i)(A). Thus, employers will not have to change their orders if they purchased fixed ladders equipped with a well or cage. That said, OSHA believes many employers will change their orders to ladder safety or personal fall arrest systems which are less expensive than cages and wells and brings employers into compliance with final paragraph (b)(9)(i)(D) without having to make changes when the final phase-out deadline comes due.
OSHA believes virtually all new fixed ladders manufactured and installed today are available with ladder safety and personal fall arrest systems. Allowing employers two years to begin equipping new fixed ladders with ladder safety or personal fall arrest systems gives employers adequate time to identify companies that manufacture fixed ladders equipped with these systems. OSHA notes that the 2-year phase-in also gives ladder manufacturers time to ensure their ladder safety and personal fall arrest systems comply with the personal fall protection system criteria in the final rule (final § 1910.29).
OSHA points out that final paragraph (b)(9)(i)(B) does not prohibit employers from also installing cages and wells on new fixed ladders in addition to ladder safety or personal fall arrest systems. Cages and wells can provide a way for workers to rest while they are climbing and working on fixed ladders. However, OSHA stresses that employers may not use cages and wells instead of providing ladder safety and personal fall arrest systems. In addition, employers must ensure that the cages and wells are compatible with and do not interfere with the ladder safety or personal fall arrest systems. (See final paragraph (b)(9)(iv) for further discussion.)
Unlike final paragraph (b)(9)(i)(B), ANSI/ASC A14.3-2008 does not require that employers ensure new fixed ladders they install are equipped with ladder safety systems or personal fall arrest systems; but rather allows employers to install new ladders that only have cages or wells in some situations. For example, that standard allows employers to install new fixed ladders equipped with only cages where the length of any climb is less than 24 feet even though the top of the ladder is at a distance greater than 24 feet above a lower level (Section 4.1.2). Similarly, A14.3-2008 allows employers to install only cages or wells on new multiple-section fixed ladders that do not have a single length of climb exceeding 24 feet, provided each ladder section is offset horizontally from adjacent sections and there is a landing platform for safe access/egress (Section 4.1.4.1). That standard only requires employers to use ladder safety systems when a single length of climb exceeds 24 feet (Section 4.1.3) or the length of climb on multiple section ladders exceeds 50 feet (Section 4.1.4.2).
Final paragraph (b)(9)(i)(B) does not adopt the approach in ANSI/ASC A14.3-2008. As discussed above, evidence in the record shows that cages and wells do not prevent workers from falling off ladders or protect workers from injury if they fall (
Final paragraph (b)(9)(i)(C) does not require that employers install ladder safety or personal fall arrest systems when they make minor repairs to fixed ladders, cages, or wells, such as replacing a bolt or repairing a weld on a cage. However, when employers determine that they cannot simply make a repair to a section or a portion of a section of a fixed ladder, cage, or well but must replace that portion or section, employers must ensure the replacement is equipped with a ladder safety or personal fall arrest system. OSHA believes the inspection requirement in final § 1910.22(d) will help employers identify when simple repairs or corrections will be adequate and when the situation, such as a condition that affects the structural integrity of the fixed ladder, cage, or well, necessitates replacement of the fixed ladder, cage, or well section.
OSHA also notes that when “a portion of a section” of a fixed ladder, cage, or well needs replacement, the final rule only requires the employer to install a ladder safety or personal fall arrest system in that “section of the fixed ladder, cage, or well where the replacement is located.” The final rule
The approach ANSI/ASC A14.3-2008 follows when existing fixed ladders are replaced, modified, or repaired differs from the final rule in two respects. First, when existing fixed ladders are replaced, modified, or repaired, the ANSI/ASC standard specifies that employers may install cages or wells instead of ladder safety systems or personal fall arrest systems in some situations (see discussion of final paragraph (b)(9)(i)(B)). Second, the ANSI/ASC standard requires that employers only have to install cages, wells, or ladder safety systems when they make repairs to more than 25 percent of the whole ladder. OSHA believes that requiring employers to install personal fall arrest or ladder safety systems when repairs necessitate replacement of a portion of a fixed ladder, cage, or well is more protective than allowing employers to wait until more than 25 percent of the fixed ladder is in need of repair. In fact, the final rule prohibits that approach. Section 1910.22(d)(2) requires that hazardous conditions be repaired immediately and, if that is not possible, guarded so workers cannot use the walking-working surface until it is fixed (final § 1910.22(d)(2)). Moreover, as discussed above, the record indicates that installing ladder safety systems or personal fall arrest systems instead of cages or wells also is more protective.
Again, this provision does not prohibit employers from keeping those portions of a cage or well that are functioning properly, or installing a new cage or well, provided the employer also installs a personal fall arrest or ladder safety system as final paragraph (b)(9)(i)(B) requires, and the cage or well does not interfere with the fall protection system.
OSHA set the extended phase-out period to take into account normal replacement and average useful life of fixed ladders, cages, and wells. After 20 years, OSHA estimates that the large majority of fixed ladders will have been replaced or in need of replacement. Even ANSI/ASC A14.3-2008 notes that while “[fixed] ladders are designed for extended service,” they “are neither designed nor intended to possess an infinite safe useful life” (Section 9.1.3).
OSHA also believes the extended phase-out lessens the compliance burden on employers, provides a smooth transition to update ladder systems, and allows employers to install ladder safety and personal fall arrest systems according to normal replacement schedules. In addition, OSHA believes that, through replacement and new installations, the vast majority of fixed ladders will have ladder safety or personal fall arrest systems before the time the final deadline arrives.
Final paragraph (b)(9)(ii) adds new requirements for one-section fixed ladders that are equipped with personal fall arrest systems or ladder safety systems and fixed ladders equipped with those systems on more than one ladder section. For these ladders, the final rule requires that employers ensure:
• The personal fall arrest or ladder safety system provides protection throughout the entire vertical distance of the ladder, including all ladder sections (final paragraph (b)(9)(ii)(A)); and
• The ladder has rest platforms provided at least every 150 feet (final paragraph (b)(9)(ii)(B)).
In final paragraph (b)(9)(ii)(A), OSHA clarified the proposed language (“vertical distance”) so the Agency could eliminate the need for the proposed note to paragraph (b)(9). OSHA stresses that the entire vertical distance of a fixed ladder includes all sections of a ladder, as well as any vertical distance in between ladder sections (sometimes referred to as “entire length of climb”). This means that employers must protect workers for the entire vertical distance of fixed ladders equipped with ladder safety or personal fall arrest systems. The final provision also addresses the hazard of attempting to connect to a ladder safety or personal fall arrest system part way through a climb (
OSHA notes that final paragraph (b)(9)(ii)(A) does not apply when only one section of a multiple-sectioned fixed ladder has a personal fall arrest system or ladder safety system and the other sections have only cages or wells. In this case, final paragraph (b)(9)(i)(C) applies, and employers need only ensure that the ladder safety or personal fall arrest system protects the worker during that section of the climb. However, when one-section fixed ladders and multiple sections of a fixed ladder have a ladder safety or personal fall arrest system, final paragraph (b)(9)(ii)(A) applies, and the employer must ensure the system protects the worker throughout the entire climb. The Agency does not believe that complying with final paragraph (b)(9)(ii)(A) should pose difficulties for employers. Rather, OSHA believes that if employers must install a ladder safety or personal fall arrest system, it is likely they will install the system on the entire fixed ladder (including all ladder sections). This is particularly true if the employer anticipates that other sections of the fixed ladder, cage, or well also will need replacement at some point.
Paragraph (b)(9)(ii)(B), like the proposal, requires that employers ensure fixed ladders that have personal fall arrest or ladder safety systems also have landing platforms at intervals of at least every 150 feet. This final provision generally is consistent with OSHA's construction ladder standard and ANSI A14.3-2008. OSHA's ladder standard for construction requires that fixed ladders with self-retracting lifelines have rest platforms every 150 feet, while the ANSI standard requires that fixed ladders equipped with ladder safety systems have rest platforms at the same intervals (Section 4.1.4.2). OSHA received no comments on the proposed provision and finalizes it as discussed.
Final paragraph (b)(9)(iii), like proposed paragraph (b)(9)(ii)(C), applies during the gradual phase out of cages and wells. The final rule requires that employers ensure ladder sections that have cages or wells:
• Are offset from adjacent sections (final paragraph (b)(9)(iii)(A)); and
• Have landing platforms provided at maximum intervals of 50 feet (final paragraph (b)(9)(iii)(B)).
Final paragraph (b)(9)(iii) is the same as the ladder standard for construction (§ 1926.1053(a)(19)(iii)). ANSI/ASC A14.3-2008 requires that each section of multiple section ladders equipped with only cages or wells be horizontally offset from adjacent sections and have landing platforms to provide safe access/egress (Section 4.1.4.1). Figure 5a in the A14.3 standard specifies platform landings at intervals of at least 50 feet. The existing rule in § 1910.27(d)(2), however, requires landing platforms at 30-foot intervals if the fixed ladder has a cage or well, and at 20-foot intervals when there is no cage or well. OSHA based the existing rule on the ANSI A4.13-1956 rule in effect at the time. OSHA believes that making final paragraph (b)(9)(iii) consistent with the construction ladder requirements and the current ANSI A14.3-2008 standard will allow workers who perform both general industry and construction activities to use the same fixed ladders while cages and wells are being phased out. OSHA notes that once employers equip fixed ladders with a ladder safety or personal fall arrest system this provision no longer applies, even if the ladder also still has the cage or well.
David Hoberg, with DBM Consultants, supported the provision requiring that fixed ladders have landing platforms, stating:
[H]aving climbed ladders of up to 125 feet and supervised persons using them, you would not believe the difference a landing makes. A hand cramping stops the climb. And try climbing a ladder as a first responder wearing 100 lbs. of gear where there is no landing to stage equipment or rest or take action (Ex. 206).
Final paragraph (b)(9)(iv) is a new provision OSHA added to the final rule that allows employers to use cages and wells in combination with personal fall arrest and ladder safety systems, provided the cages and wells do not interfere with the operation of the system. The proposed rule did not specifically address this issue, but ANSI A14.3-2008 (Section 4.1.6) allows the use of ladder safety systems in combination with a cage. OSHA is adding this provision to clarify that employers do not have to remove cages or wells when they install a required ladder safety or personal fall arrest system, provided the cage or well does not interfere with the operation of the required ladder safety or fall protection system. If a cage or well prevents a personal fall arrest or ladder safety system from operating properly, then the employer must remove the cage or well to protect workers from falling or otherwise incurring an injury.
OSHA received one comment about using ladder safety or personal fall arrest systems in combination with cages or wells. Ellis urged that OSHA prohibit the use of ladder safety devices inside ladder cages because the rear bars of ladder cages can “pitch the body forward which is tantamount to free fall” (Ex. 155). The Agency believes that the language addressing interference in final paragraph (b)(9)(iv) resolves Ellis' concern without limiting employer flexibility or compromising worker safety.
The effect of the final rule is to phase out the fall protection exception that OSHA established in the 1991 Gannett variance (56 FR 8801 (3/1/1991)) and the 1993 directive extending the variance to the entire outdoor advertising industry (Fixed Ladders Used on Outdoor Advertising Structures/Billboards in the Outdoor Advertising Industry, STD 01-01-014 (1/26/1993)). (Hereafter, the Gannett variance and OSHA directive are collectively referred to as “outdoor advertising directive.”) The outdoor advertising directive excepted that industry from complying with existing requirements that fixed ladders have cages or wells (existing § 1910.27(d)(1)(ii)), and landing platforms (existing § 1910.27(d)(2)). The effect of the directive is that workers in the outdoor advertising industry may climb fixed ladders, in some situations, without conventional fall protection (
• Each worker wears a safety belt or harness with an appropriate 18-inch rest lanyard when climbing up to 50 feet or heights up to 65 feet from grade on a combination ladder consisting of a portable ladder and a fixed ladder;
• Each worker keeps both hands free of tools or materials when climbing;
• Each worker uses a ladder safety system for climbs on fixed ladders that exceed 50 feet or when the ladder ascends to heights that exceed 65 feet above grade;
• Each worker who climbs fixed ladders equipped with ladder safety devices uses those devices properly and follows appropriate procedures for inspection and maintenance of those devices;
• The employer ensures proper maintenance and use of ladder safety devices that are installed on fixed ladders;
• Each worker uses an appropriate fall protection system after reaching the work position; and
• Each qualified climber receives training and demonstrates the physical capability to perform necessary climbs safely. In this regard, the employer must ensure that: The worker's physical condition is such that climbing will not impair the worker's health or safety; the worker completes training consisting of classroom training, observing an experienced qualified climber, and actual climbing under close supervision using redundant safety equipment; and the worker works without fall protection only after demonstrating the necessary ability and skill in climbing (STD 01-01-014).
The proposed rule would have codified the specifications contained in the outdoor advertising directive, thus allowing outdoor advertising workers to continue climbing fixed ladders without fall protection so long as they complied with all of the provisions the directive included.
The final rule, however, does not adopt the proposal. Instead, final paragraph (b)(10)(i) specifies that the fall protection requirements for fixed ladders in final paragraph (b)(9) also apply to fixed ladders used in outdoor advertising. This means that outdoor advertising employers must ensure, in accordance with final paragraph (b)(9)(i)(A), that fixed ladders are equipped with a ladder safety system, personal fall arrest system, cage, or well before November 19, 2018. In addition, they must follow the schedule in final paragraph (b)(9)(i) for gradually phasing in the installation of ladder safety and personal fall arrest systems on fixed ladders.
Final paragraph (b)(10)(i) also requires that employers in outdoor advertising follow other provisions in revised subparts D and I, such as the inspection and maintenance requirements in final § 1910.22, the training requirements in final § 1910.30, and the criteria for personal fall protection systems in § 1910.140.
Final paragraph (b)(10)(ii) establishes the requirements that outdoor advertising employers must follow during the phase-in period (two years) they have to install a cage, well, ladder safety system or personal fall arrest system. During this period when outdoor advertisers have not yet installed fall protection, employers must ensure that each worker:
• Receives training and demonstrates the physical capability to perform the necessary climbs in accordance with final § 1910.29(h) (final paragraph (b)(10)(ii)(A));
• Wears a body harness equipped with an 18-inch rest lanyard (final paragraph (b)(10)(ii)(B));
• Keeps both hands free of tools or material while climbing the fixed ladder (final paragraph (b)(10)(ii)(C)); and
• Is protected by a fall protection system upon reaching the work position (final paragraph (b)(10)(ii)(D)).
The requirements in final paragraph (b)(10)(ii) are limited and temporary. First, they only apply to fixed ladders used in outdoor advertising that are not equipped with any type of fall protection. Once a fixed ladder used for outdoor advertising is equipped with one of these systems, the requirements in final paragraph (b)(10)(ii) no longer apply. Instead, the requirements in final paragraphs (a) and (b)(9), final § 1910.29, and final § 1910.140 apply to outdoor advertising employers and fixed ladders used in outdoor advertising.
Second, final paragraph (b)(10)(ii) is only a temporary provision. It is applicable only before November 19, 2018. As of November 19, 2018, final paragraph (b)(9)(i)(A) requires that employers must ensure all existing fixed ladders, including those used for outdoor advertising activities, are equipped with a cage, well, ladder safety system, or personal fall arrest system. Thus, as of November 19, 2018, the requirements in final paragraph (b)(10)(ii) no longer apply and the provision, in essence, expires. In their place, as stated above, the requirements in paragraphs (a) and (b)(9), as well as other fall protection system requirements in the final rule, apply to outdoor advertising employers. OSHA notes that the requirements in final § 1910.29(h), which apply when workers climb fixed ladders without fall protection to perform outdoor advertising activities, also are temporary. As of November 19, 2018, the requirements in § 1910.29(h) no longer will apply since, in accordance with final paragraph (b)(9)(i)(A), all fixed ladders used for outdoor advertising will be required to be equipped with a personal fall arrest system, ladder safety system, cage, or well.
Final paragraph (b)(10)(ii)(A) requires that outdoor advertising employers ensure that each worker who climbs a fixed ladder that is not equipped with a personal fall arrest system, ladder safety system, cage, or well, receives training and demonstrates the physical ability to climb fixed ladders. Employers may comply with the training final paragraph (b)(10)(ii)(A) requires by ensuring that workers have completed a training or apprenticeship program, provided the program includes hands-on training on climbing ladders safely, performance observation combined with formal classroom or on-the-job training, and retraining as necessary (final § 1910.29(h)(2) and (3)).
OSHA notes that employers must ensure the requirement in final paragraph (b)(10)(ii)(A) to demonstrate physical capability must include either a physical examination or observation of the worker performing actual climbing activities (final § 1910.29(h)(1)). Final § 1910.29(h) discusses in detail the training and physical capacity requirements in final paragraph (b)(10)(ii)(A). OSHA notes that this training is in addition to the training outdoor advertising employers must provide to their workers under final § 1910.30.
Final paragraph (b)(10)(ii)(B) requires that outdoor advertising employers ensure workers who climb fixed ladders without fall protection wear body harnesses equipped with an 18-inch rest lanyard. OSHA's intention in requiring that outdoor advertising workers wear body harnesses with rest lanyards is that employers must ensure workers tie off to the fixed ladder when they need to rest during the climb.
The final rule differs from proposed (b)(10)(i) and outdoor advertising directive, both of which permit outdoor advertising employers to provide a body harness or body belt for workers to use for resting during a climb. However, as discussed in final § 1910.140, the final rule does not permit the use of body belts as a part of a personal fall arrest system; thus, OSHA deleted body belts from final paragraph (b)(10)(ii)(B). This revision also makes the final provision consistent with OSHA's construction industry rule, which also does not allow use of body belts for personal fall arrest (§ 1926.502(d)).
Final paragraph (b)(10)(ii)(C) requires employers to ensure that workers engaged in outdoor advertising keep both hands free of tools or material when climbing fixed ladders. This requirement ensures that workers use their hands exclusively for climbing and not carrying tools and material up and down fixed ladders. When workers climb fixed ladders without fall protection, it is essential that they maintain balance and body control. Carrying tools and materials in their hands while they climb may cause workers to lose their balance, which could result in a fall. Both the proposed rule at paragraph (b)(10)(vi) and the outdoor advertising directive include this requirement. In addition, it is consistent with final paragraphs § 1910.23(b)(12) and (13), the construction standard (§ 1926.1053(b)(21) and (22)), and ANSI A14.3-2008 (Section 9.2.1 and 9.2.2).
Final paragraph (b)(10)(ii)(D), like the proposed rule at paragraph (b)(10)(vii) and the outdoor advertising directive, requires outdoor advertising employers to provide workers who climb fixed ladders with, and ensure that they use, a fall protection system once they reach the work position/platform. Thus, when workers step onto the work platform, they must be tied off or otherwise protected from falling (
OSHA requested comment in the proposed rule about eliminating the qualified climber exception for the outdoor advertising industry and instead require fixed ladders used in outdoor advertising to be equipped with the same fall protection as other fixed ladders under the general industry standard (75 FR 28869). In response, OSHA received many comments. A number of commenters, including several fall protection equipment manufacturers, safety organizations, and safety professionals who provide fall protection services, opposed retaining the qualified climber exception in the final rule (Exs. 155; 185; 198; 250). For several reasons, these commenters opposed including in the final rule a qualified climber exception for any industry. These reasons included the dangers of climbing without fall protection; the questionable need for the qualified climber exception in the outdoor advertising industry when compared to other industries; and the ready availability of feasible and easy to use fall protection (
The idea that it is somehow acceptable to climb high distances without fall protection contradicts OSHA's proposed fixed ladder standard requiring a ladder safety system or a cage/well when the total length of a climb exceeds 24 feet. Our members fail to understand why fixed ladders between 24-50 feet in height used in outdoor advertising should be different than other industry ladders used at the same heights. Further, the technology is readily available to provide protections for the fixed ladder (Ex. 127).
ISEA and CSG also voiced opposition to a qualified climber exception for outdoor advertising:
Their situation is not unique. Right now there are many systems available to provide fall arrest as soon as these workers leave the ground. In fact, this type of equipment is used today, so the burden on employers is slight.
OSHA asks about technological and economic feasibility of fall protection for this type of work. Because this industry is constantly improving its offerings and developing new solutions for employers and employees, it is safe to say there has been marked improvement in ladder systems over the past 20 years. In addition, ladder climbing systems are becoming increasingly common.
Finally, Assistant Secretary Michaels has been speaking about fostering a greater culture of safety in U.S. workplaces. Providing an exemption from use of fall protection for those working at dangerous heights seems to run counter to this message (Exs. 185; 198).
This concept of a safe climber who does not need fall protection on ladders or step bolts for climbing towers is a timeworn concept whose day has passed. Protection should be required. Use of rope access teams for work at heights . . . and always using fall protection is what has already arrived in many countries of the world including most of Europe, Australia and South Africa (Ex. 155).
Finally, Damon, Inc., opposed the qualified climber exception because it suggests that older, experienced workers climb better with age while data actually shows that “older workers have a disproportionate share of fatal falls from ladders” (Ex. 250).
Many commenters, primarily those in the outdoor advertising industry (Exs. 121; 260; 359; 369) and employees of Lamar Advertising (Lamar) (
Several commenters said that OSHA should codify the qualified climber exception for outdoor advertising because they have not experienced any fatalities related to climbing fixed ladders without fall protection, and falls are “extremely rare” (Exs. 106; 260; 329 (1/18/2011, pgs. 113-19); 369). For example, Mike Gentile, another Lamar operations manager, said, “There has been over a million climbs made by all billboard personnel in California in the past ten (10) years on fixed ladders. To date, I am not aware of one single fall” (Ex. 106). CCO, which asserted in its comments on the proposed rule that “CCO employees simply do not fall from fixed ladders” (Ex. 121), expanded on this assertion in its post-hearing comments, stating:
The past eighteen years has clearly established that the Gannett Variance works very well for this industry. There have been zero fatalities and industry is aware of only one fall from a fixed ladder, one, despite literally millions of climbs. The hard evidence proves that the variance works and the numbers could only get worse if the variance is not codified into the new regulations (Ex. 369).
OAAA, reporting on information from industry members, said, “From a safety standpoint, our companies report that no deaths due to falls from fixed ladders have occurred in the past five years; of the 15,840,000 climbs over the past 5 years, our companies are aware of only one fall from a fixed ladder” (Ex. 260). OAAA estimated that its members, which it said comprise 90 percent of the market, have a total of 1,800 climbers.
The International Sign Association (ISA) also supported retaining the qualified climber exception because of the industry's safety record, noting, “It is our understanding that the safety record of outdoor advertising professionals has been excellent over the last decade, and that changing the rule would impose unnecessary costs and technical requirements” (Ex. 161).
CCO said it would be too costly to retrofit fixed ladders with fall protection (Exs. 121; 369). They claimed that it would cost the company in excess of $80 million to retrofit its 60,000 existing structures (Ex. 121).
Clear Channel Outdoor is one of the largest outdoor advertising businesses in the USA. Many of the remaining companies are very small “mom and pop” types of operations. While Clear Channel has always met or exceeded regulatory requirements, the additional cost to comply would not only be a significant impact on the company, it could potentially put the smaller operations out of business due to additional financial burden to meet the new requirements.
Clear Channel Outdoor has in excess of 20,000 structures domestically. If one were to remove the structures greater than fifty feet that were address[ed] earlier in these
Additionally, guardrails, cages and wells could potentially obscure advertising copy. This could result in a diminishment of sales and possibly have a catastrophic financial impact on all outdoor advertisers (Ex. 369).
Citizens for a Scenic Wisconsin, Inc. (CFSW), raised a similar concern about requiring fall protection on fixed ladders used for outdoor advertising. CFSW pointed out that the Federal Highway Administration allows catwalks or handrails for non-conforming billboards, and the Highway Beautification Act (HBA) of 1965 allows non-conforming billboards to remain in place until they are destroyed, abandoned, discontinued, or removed. CFSW concluded, “If existing non-conforming billboards cannot be safely serviced then their advertising message will eventually become obsolete or so weathered and worn that it will become discontinued or abandoned, and ordered removed without compensation as the HBA intended” (Ex. 217).
Two commenters supported applying the qualified climber option to industries other than outdoor advertising. For example, Verallia said limiting the qualified climber option only to outdoor advertising was “too restrictive,” and recommended that OSHA expand the qualified climber provision to other industries, stating:
There are many other tasks that are routinely performed in general industry that are comparable. Without attempting to provide a comprehensive list of such tasks, one example is the infrequent, but not uncommon, need to climb a “smoke stack” in order to perform emissions testing. The “stack tester” is only at the elevated level for a relatively short amount of time. This task, and surely many others, are comparable to that of the “outdoor advertiser” and should also come within the proposed standard at 1910.28(b)(10) (Ex. 171).
OSHA notes that neither CCO nor OAAA supported allowing existing fixed ladders used for outdoor advertising to remain in place and prospectively applying the fall protection requirements to fixed ladders erected in the future. OAAA said, “It could be difficult to support a grandfather provision due to the fact that a new regulatory requirement could foster inconsistent application of climbing methods which ultimately could increase overall risk to climbers. Essentially a double standard is created” (Ex. 359). OAAA stated further that “[t]here is concern that two training systems will be required in the future, one for grandfather structures and another separate program for new structures and fixed ladders. Thus, this can be costly as well as potentially strain overall company safety efforts” (Ex. 359). Finally, OAAA noted that “[w]e concur with the use of new technologies to protect our workers and professional climbers,” but “recommend that OSHA not list specific equipment in the standard so as to give employers the flexibility to use new technologies as they become available” (Ex. 260). A number of Lamar employees agreed, saying that listing fall protection system in the final rule would make the rule “outdated as soon as it was published” (
For a number of reasons, OSHA believes that it is necessary and appropriate to eliminate the qualified climber exception in the outdoor advertising industry. First, workers are at risk of death and injury climbing to elevated heights on fixed ladders without fall protection (no matter how often) and OSHA believes employers in outdoor advertising are aware of these risks. For example, CCO, one of the largest companies in the outdoor advertising industry, said they already have equipped a number of fixed ladders with fall protection systems (Ex. 369). CCO added that the average height at which those fall protection systems protect their workers is 18 feet, which is well below the height at which fall protection is required in the outdoor advertising directive. OSHA also notes that the outdoor advertising industry did not oppose the proposal's requirement that fixed ladders used in outdoor advertising be equipped with ladder safety systems or personal fall arrest systems when those ladders exceed 50 feet or for climbs that exceed 65 feet, which is an acknowledgement that workers climbing fixed ladders without fall protection are exposed to great risk.
As demonstrated in the FEA, falls from ladders are a significant cause of worker deaths and injuries. The FEA indicates that on average, falls kill 47 general industry workers and injure 10,716 workers each year. OAAA said their member companies reported no deaths and only one fall involving their 1,800 climbers for the years 2005 to 2010 (Ex. 260). OSHA's Integrated Management Information System (IMIS) data indicate that since the 1991 Gannett Variance there have been at least three falls from fixed ladders in the outdoor advertising industry, one of which resulted in death.
The referenced falls are in Ex. 393 under the following inspection numbers: 310696489; 126063924; and 126062694.
The IMIS data also show a large number of falls, in servicing outdoor advertising structures; however, the data do not identify the location of the workers on the structures when they fell (Ex. 393). Therefore, OSHA cannot determine definitively whether the falls were from fixed ladders. However, OSHA believes that at least some of these falls could have occurred while workers were climbing the fixed ladder or transitioning from the fixed ladder to the work platform because the incident narratives state that workers were not using fall protection (or were not tied off) when they fell. Since the outdoor advertising directive requires that employers ensure their workers use fall protection at all times when they are on work platforms, OSHA believes that workers may have been on fixed ladders or transitioning from fixed ladders to the work platform when they fell. As such, OSHA believes that there may actually be more than the three falls (noted above) related to climbing without fall protection.
Second, OSHA believes that requiring outdoor advertising employers to ensure their workers use ladder safety systems or personal fall arrest systems when they are on fixed ladders will reduce the risk of falls when workers are transitioning from fixed ladders to work platforms (or from the work platform to the fixed ladder). Stakeholders, including many Lamar Advertising workers, admitted that transitioning from fixed ladders to work platforms is an “important” safety concern (
Third, OSHA believes that requiring outdoor advertising employers to use fall protection on fixed ladders will help to ensure that their workers also continue to use fall protection (
OSHA notes that requiring that workers in outdoor advertising use fall protection when they climb fixed ladders makes the final rule consistent with the construction ladder standard (§ 1926.1053(a)(18) and (19)) and other standards the Agency recently revised (§§ 1910.269 and 1926.954). Those standards require that workers, including specially trained workers similar to qualified climbers in outdoor advertising, use fall protection while climbing fixed ladders, poles, towers, and similar structures. For example, the construction ladder standard requires that employers provide workers climbing fixed ladders above 24 feet with, and ensure that they use, ladder safety devices, self-retracting lifelines (
OSHA's revised general industry (§ 1910.269) and construction (29 CFR part 1926, subpart V) electric power generation standards added a requirement that qualified employees must use fall protection while climbing or changing locations on poles, towers, or similar structures, unless the employer can demonstrate that fall protection is not feasible or presents a greater hazard to the employees (§§ 1910.269(g)(2)(iv)(C)(
OSHA is requiring that outdoor advertising employers provide fall protection on fixed ladders because it is clear that, like the utility industry, there are technologically feasible means of fall protection available that are currently in use to protect workers in outdoor advertising. Indeed, since 1993 the outdoor advertising directive has required that employers install ladder safety systems, and ensure that workers use them, when climbs on fixed ladders exceed 50 feet or when the fixed ladder ascends to a height of more than 65 feet above grade. During the period since OSHA issued the directive, manufacturers developed new types of personal fall protection systems, specifically personal fall arrest systems, for climbing fixed ladders, and these systems are readily available, effective, and easy to use (
The record also shows that it is economically feasible for the outdoor advertising industry to comply with the final requirement to ensure that employers provide and ensure their workers use fall protection systems while climbing fixed ladders in outdoor advertising. Many, if not most, fixed ladders manufactured today have ladder safety systems or personal fall arrest systems (
OSHA also believes the fall protection requirement is economically feasible because the FEA estimates that employers will need to equip only a small percentage of existing outdoor advertising structures with fall protection. OAAA estimates there are approximately 450,000 existing structures (Exs. 260; 359; 369). Employers in outdoor advertising will not have to install fall protection on fixed ladders that do not extend more than 24 feet above a lower level (final paragraph (b)(9)(i)(A)) or that already are equipped with fall protection. As such, in the FEA, OSHA estimates that employers will need to equip only about 21,000 existing outdoor advertising structures with a fall protection system by November 19, 2018. In the Preliminary Economic Analysis (PEA) of the proposed rule, OSHA included a similar estimate (
The framework of the final rule, when read in the context of final paragraph (b)(9)(i) of this section, provides employers with substantial control flexibility, which further ensures the final rule is economically feasible. Specifically, the final rule allows outdoor advertising employers to equip existing ladders (that have no fall protection) with a cage, well, ladder safety system, or personal fall arrest system (final paragraph (b)(9)(i)(A)), while the existing rule, absent the outdoor advertising directive, would require outdoor advertising employers to equip the fixed ladders with cages or wells (existing § 1910.27(d)(1)(ii)). As mentioned earlier in this preamble, this flexibility allows employers to equip fixed ladders with the least costly fall protection system, which the record indicates are ladder safety or personal fall arrest systems (Ex. 369;
In addition, giving employers in outdoor advertising two years to install a fall protection system on fixed ladders lessens the economic impact of the final rule and further shows the requirement is economic feasible. For example, it gives employers time to identify and evaluate various types of fall protection systems, negotiate with manufacturers and vendors to select the most cost-effective system that best satisfies their needs, and train workers in the use of that equipment. Moreover, OSHA notes that the final rule gives outdoor advertising employers two years to comply with the requirement that their workers use fall protection while climbing fixed ladders while revised § 1926.954 gave employers only one year to comply with the fall protection requirement.
Gradually phasing in over 20 years the requirement that fixed ladders be equipped with ladder safety systems or personal fall arrest systems also significantly lessens the economic impact on employers, including those in outdoor advertising. To illustrate, if outdoor advertising employers currently use fixed ladders equipped only with cages or wells, the final rule gives these employers 20 years to install ladder safety or personal fall arrest systems. This extended phase-in period allows employers to install fall protection systems as part of their normal replacement or business cycles rather than retrofitting fixed ladders immediately. In sum, OSHA believes the combination of flexibility to use controls that are less expensive than those the existing rule required, extended compliance time, and gradual phase-in of ladder safety systems and personal fall arrest systems ensures the final rule is economically feasible and will not threaten the industry's “long-term profitability” or substantially alter its competitive structure. (
Finally, OSHA believes requiring employers in outdoor advertising to provide and ensure that workers use fall protection when climbing fixed ladders is reasonable and appropriate because, as a number of commenters said, the outdoor advertising industry and the fixed ladders it uses are not unique with regard to fall protection (Exs. 155; 185; 198). Therefore, OSHA believes that it is no longer necessary or warranted for it to except the outdoor advertising industry from the requirements to use fall protection while climbing fixed ladders. Stakeholders in the outdoor advertising industry did not argue that the elevated heights encountered in outdoor advertising are not dangerous, or that fall hazards or work conditions in outdoor advertising are unique compared to other industries. Moreover, they did not argue that the fall protection systems used by workers in other industries when climbing fixed ladders will not work, or are not a feasible means of worker protection, in the outdoor advertising industry.
Regarding comments recommending that OSHA not list specific fall protection systems in the final rule because such a list would soon become outdated, OSHA notes that the Agency has dealt with issues like this in the past. If an employer has information about a new method of fall protection that will provide worker protection equivalent to the protection afforded to workers by the final rule, it can approach the Agency and seek permission to use it through a request for interpretation or a variance.
Final paragraph (b)(11)(i), like the proposal, requires that employers ensure each worker exposed to an unprotected side or edge of a stairway landing that is four feet or more above a lower level is protected by a guardrail
Final paragraph (b)(11)(ii), consistent with existing § 1910.23(d)(1) and proposed paragraph (b)(11)(ii), requires that employers ensure each flight of stairs having at least three treads and at least four risers is equipped with a stair rail system and handrails as specified in Table D-2. Table D-2 specifies the type and number of stair rails and handrails employers must provide based on the width and configuration of the stairs.
NFPA commented on the proposed table, saying that it was potentially misleading (Ex. 97). In particular, NFPA said the third column (“One open side”) did not clearly specify that, in addition to providing a handrail on the “one open side,” employers also must provide a handrail on the “enclosed side” (Ex. 97). NFPA noted that OSHA should not expect employers to know that they must meet the requirements for both the “enclosed side” and for “one open side” to be in compliance with the final rule. NPFA, therefore, made the following two recommendations to revise the third column of the proposed table: (1) For stairways that are 44-88 inches wide, NFPA recommended, “One stair rail system with handrail on open side and one handrail on enclosed side”; and (2) for stairways that are greater than 88 inches, NFPA recommended, “One stair rail system with handrail on open side, one handrail on enclosed side, and one intermediate handrail located in the middle of the stair.” OSHA agrees that NFPA's recommendations clarify the information provided in the proposed table, and incorporates them in final Table D-2.
Final paragraph (b)(11)(iii), like the proposal, requires that employers ensure ship stairs and alternating tread-type stairs are equipped with handrails on both sides. Both of those types of stairs have slopes that are 50 to 70 degrees from the horizontal, and OSHA believes that workers need handrails on both sides to safely climb those stairs. This requirement is consistent with IBC-2012 (Section 1009.13 and .14) and NFPA 101-2012 (Section 7.2.11). OSHA did not receive any comments on the proposed provision and adopts paragraph (b)(11) with only minor changes for clarity.
Final paragraph (b)(12)(i), like the proposal, makes the general industry standard consistent with the construction standard by requiring the employer to ensure that workers on scaffolds are protected from falling in accordance with 29 CFR part 1926, subpart L. The final rule deletes the existing general industry scaffold provisions and, instead, requires that employers comply with the requirements in the construction scaffold standards. The requirements in the construction scaffold standard are more comprehensive and up to date than the existing rule, which OSHA adopted in 1971. OSHA notes the existing rule, like the construction standard, requires that employers provide fall protection when workers on scaffolds are 10 feet or more above a lower level (see
Final paragraph (b)(12)(ii), like the proposal, requires that employers ensure workers using rope descent systems four feet or more above lower levels are protected from falling by a personal fall arrest system. OSHA reminds employers that if they use vertical lifelines to protect workers using RDS, the lifeline must be attached to a separate anchorage (see final § 1910.140(c)(12)). The construction fall protection standard includes a similar requirement (§ 1926.502(d)(15)). OSHA did not receive any comments on the proposed provision and finalizes it with only minor editorial change.
The final rule defines low-slope roof as “a roof having a slope less than or equal to 4 in 12 (vertical to horizontal)” (§ 1910.21(b);
Under paragraph (b)(13), the type of fall protection measures employers must use on low-slope roofs depends upon the distance they work from the roof edge.
• Work performed less than 6 feet from the roof edge;
• Work performed 6 feet to less than 15 feet from the roof edge; and
• Work performed 15 feet or more from the roof edge.
• A conventional fall protection system; or
• A designated area, but only when the employer is performing work “that is both infrequent and temporary.”
The final rule defines “designated area” as “a distinct portion of a walking-working surface delineated by a warning line in which employees may perform work without additional fall protection” (final § 1910.21(b)). The definition of designated area is similar to the construction standard's “warning line system,” defined as a barrier erected on a roof to warn employees that they are approaching an unprotected roof side or edge, and which designates an area in which roofing work may take place without the use of guardrail, body belt, or safety net systems to protect employees in that area (§ 1926.500(b)).
In the preamble to the construction fall protection standard, OSHA explained how warning line systems work:
[A] warning line “serves to warn and remind employees that they are approaching or working near a fall hazard by providing direct physical contact with the employee. The contact attracts the employee's attention, enabling the employee to stop in time to avoid falling off the roof” (59 FR 40672, 40689 (8/9/1994)).
The use of designated areas in the final rule is very limited. Final paragraph (b)(13)(ii), like the construction standard, only allows employers to use designated areas for work performed at least six feet from the roof edge. When work that is at least 6 feet from the edge of a low-slope roof, OSHA believes the use of fall protection alternatives is appropriate in certain situations. As far back as the 1990 proposed rule, OSHA said that working a “six foot (1.8m) distance [from the edge of a low-slope roof] is sufficient to allow an employee to stop moving toward the fall hazard after realizing the perimeter has been contacted” (55 FR 13360, 13376 (4/10/1990)).
That said, working as close as 6 feet from the edge of a roof, even a low-slope roof, may pose some risk of falling. To address that risk, the final rule further limits the use of designated areas at that distance to work that is “both infrequent and temporary” (final § 1910.28(b)(13)(ii)). The proposed rule limited designated areas to work “of a temporary nature” (proposed § 1910.29(d)(1)(ii)). In the preamble to the proposed rule, OSHA said, “Designated areas may only be used for temporary, relatively infrequent work” (75 FR 28895). OSHA believes the language in the final rule more clearly expresses OSHA's proposed intent.
For purposes of the final rule, “temporary” means that the duration of the task the worker performs is brief or short. Temporary and brief or short tasks generally include those that a worker is able to perform in less time than it takes to install or set up conventional fall protection. When the duration of a task is this short and the work is performed at least 6 feet from the edge of a low-slope roof, OSHA believes worker exposure to fall hazards is very limited. OSHA agrees with stakeholders who said that requiring employers to install conventional fall protection in these instances could increase worker exposure substantially (
Temporary tasks also include those that workers are able to complete at one time rather than repeatedly climbing up or returning to the roof or requiring more than one workshift to complete. When jobs take that long to complete or involve repeated exposure, OSHA believes the risk of falls increases significantly. For purposes of the final rule, OSHA intends that “temporary” tasks generally are limited to “simple” tasks and “short-term . . . scheduled maintenance or minor repair activities” (Ex. 165). OSHA agrees with SMACNA's comment that temporary and simple tasks are those that do not require “significant equipment, personnel, and other resources” or a level of exposure that “long-term” or “complicated” maintenance and repair work does (Ex. 165).
Although the final rule does not place a specific time limit on what constitutes a temporary task, OSHA agrees with SMACNA that short duration tasks generally are those that take less than “1-2 hours” to complete (Ex. 165;
The term “infrequent,” for purposes of the final rule, means that the task or job is performed only on occasion, when needed (
By contrast, tasks performed or repeated on a daily, routine or regular basis are not infrequent activities within the meaning of the final rule. Infrequent jobs also do not include those that workers perform as a primary or routine part of their job or repeatedly at various locations during a workshift. A task may be considered infrequent when it is performed once a month, once a year, or when needed.
The designated area provision in final paragraph (b)(13)(ii) generally is modelled on the construction fall protection standard, which allows employers to use “warning line systems” when they perform roofing work at least six feet from the edge of a low-slope roof (§ 1926.501(b)(10)). However, the final rule also differs from the construction standard in several respects. The construction provision is limited to “roofing work,” which that standard defines as “the hoisting, storage, application, and removal of roofing equipment and materials, including related insulation, sheet metal and vapor barrier work, but not the construction of roof decks” (§§ 1926.500(b)). Roofing jobs typically take a significant amount of time to complete (hours or days). As a result, workers have prolonged exposure to fall hazards. Therefore, the construction standard requires that employers performing roofing work as close as 6 feet from the roof edge must use conventional fall protection systems, warning line systems used in combination with conventional fall protection, or warning line systems in combination with safety monitoring systems. The construction standard included alternative fall protection options for roofing work because the “Agency recognized [conventional fall protection] systems could pose feasibility problems during roofing work; therefore, the rule allows other choices of fall protection methods” (Letter to Mr. Anthony O'Dea(12/15/2003); 59 FR 40688-89).
OSHA is including the designated area provision in final paragraph (b)(13)(ii) for work that is both temporary and infrequent primarily for other reasons. First, as mentioned, adding the designated area provision for work on low-slope roofs makes the final rule more consistent with the construction fall protection standard, which is one of the main goals of this rulemaking. In addition, making the general industry and construction standards more consistent will make compliance easier for employers who perform both general industry and construction activities. Many stakeholders supported including the designated area provision for this reason (
Second, when the slope of the roof is low, workers are at least 6 feet from the
Third, when the duration of the task is very short, OSHA believes the physical reminder that warning lines provide can effectively alert and remind workers that they are approaching the roof edge and must not get any closer. Fourth, OSHA agrees with stakeholders that requiring employers to spend the time installing conventional fall protection in instances when the task is brief and infrequent may pose a greater risk of falling than the task itself (Exs. 124; 165; 171).
Fifth, allowing employers to use designated areas instead of conventional fall protection when they perform tasks that require less time to complete than installing conventional fall protection significantly limits the duration of the job, thereby increasing efficiency and cost-effectiveness. Allowing employers to use designated areas reduces the cost of the job and also makes it easier for them to assign one-person jobs, which a number of stakeholders do (
Finally, the final rule allows the use of designated areas only in very limited situations. The proposed rule would have allowed greater use of designated areas. OSHA believes that the limitations incorporated in final paragraph (b)(13)(ii) (
OSHA believes the designated area provision in the final rule also is more protective than the construction standard. As mentioned, the construction standard allows employers to use warning line systems in combination with a safety monitoring system when performing roofing work (
OSHA notes that some commenters (Exs. 124; 165; 171) opposed requiring employers to establish designated areas (
Where is the hazard if the HVAC work does not require the worker to be within 15 feet of the roof edge . . . and the worker is only on the roof for a specific purpose (repair or maintain equipment) and for a shorttime . . . ? (Ex. 165).
OSHA disagrees with SMACNA. When employers perform any work, including work that is both temporary and infrequent in nature, as close as 6 feet from the edge of a low-slope roof, the Agency believes that some protection is necessary because there is or may be some risk of falling.
SBA Office of Advocacy said requiring employers to erect warning lines for short duration tasks could “present an independent hazard” (Ex. 124). They reported, “[Small business representatives] expressed concern about situations where employees are working on rooftops during simple, short-duration projects and would be required to construct physical barriers as `Designated Areas' that may actually increase the risk of falls and introduce other safety hazards” (Ex. 124;
OSHA's experience with warning line systems in the construction industry does not support SBA Office of Advocacy's claim that using designated areas for brief tasks poses a greater hazard and the commenter did not provide any evidence to support their claim. Moreover, SBA Office of Advocacy recommended that OSHA make the final rule consistent with the construction fall protection standard, which, as mentioned, does not exempt “short duration projects” from providing any fall protection (conventional or designated areas) at this distance from the edge of low-slope roofs the requirements to provide fall protection. That said, OSHA believes the allowances that final paragraphs (b)(13)(ii) and (iii) include for employers who perform work that is both infrequent and temporary, provides substantial flexibility and should not pose any significant compliance difficulties.
• Using a conventional fall protection system or a designated area. If, however, the work is both infrequent and temporary, employers do not have to provide any fall protection (final paragraph (b)(13)(iii)(A)); and
• Implementing and enforcing a work rule prohibiting employees from going within 15 feet of the roof edge without using fall protection in accordance with final paragraphs (b)(13)(i) and (ii) (final paragraph (b)(13)(iii)(B)).
Final paragraph (b)(13)(iii) generally is consistent with OSHA's longstanding enforcement policy regarding construction work performed at least 15 feet from the edge of low-slope roofs (see
At 15 feet from the edge [of a roof] . . . , a warning line, combined with effective work rules, can be expected to prevent workers from going past the line and approaching the edge. Also, at that distance, the failure of a barrier to restrain a worker from unintentionally crossing it would not place the worker in immediate risk of falling off the edge. Therefore, we will apply a
1. A warning line is used 15 feet or more from the edge;
2. The warning line meets or exceeds the requirements in § 1926.502(f)(2);
3. No work or work-related activity is to take place in the area between the warning line and . . . the edge;
4. The employer effectively implements a work rule prohibiting the employees from going past the warning line.
In one respect, final paragraph (b)(13)(iii) differs from and provides more flexibility than the construction enforcement policy. When employers perform work that is both temporary and infrequent at least 15 feet from the roof edge, the final rule does not require them to provide any fall protection (using conventional fall protection or warning lines). OSHA believes this limited exception eases compliance for employers without compromising worker safety.
Comments in the record support an exception for work that is temporary and infrequent and performed at least 15 feet from the roof edge (Exs. 165; 207). For example, SMACNA said:
EEI noted, “Some flat roofs in general industry settings could be the size of several football fields” (Ex. 207). OSHA agrees that requiring employers to erect a warning line in that situation could take more time than simply performing a very brief task.
Many stakeholders supported the use of the use of designated areas “where work is performed away from the immediate fall hazard, such as in the center of the rooftop” (Ex. 180;
Other stakeholders, however, said OSHA should not require any fall protection, including a warning line, for any task performed “a safe distance” from the edge of a low-slope roof (Exs. 165; 207; 236; 254). For example, MCAA, whose member companies construct, install, and service mechanical systems (
Most of the time, [HVAC] units are a safe distance from the edge of the roof and/or skylights, and can be accessed and serviced safely without the use of a “designated area” or other fall protection/prevention systems. Under this proposed rule . . . HVAC technicians would have to erect a temporary, designated area perimeter line to comply with the standard. MCAA believes that this requirement would create unintended hazards, which would be much more likely to cause injury or death to workers (Ex. 236).
MCAA's argument is not persuasive. MCAA did not provide any data or other information to support its claim that requiring employers to erect a warning would be more likely to cause injury or death than working without any protection. Moreover, MCAA recommended that OSHA make the final rule consistent with the low-slope roof provision in the construction standard. That provision requires employers to use designated area perimeter lines for all roofing work if the employer does not use conventional fall protection.
In conclusion, OSHA believes that the limitations on the use of designated areas in final paragraphs (b)(13)(i), (ii) and (iii), taken together, provide appropriate protection from fall hazards while affording employers greater control flexibility.
Final paragraph (b)(14)(i) requires that employers protect workers from falling off the unprotected working side of slaughtering facility platforms that are four feet or more above a lower level. Employers must protect those workers by providing:
• A guardrail system (final paragraph (b)(14)(i)(A)); or
• A travel restraint system (final paragraph (b)(14)(i)(B)).
The proposed rule in § 1910.28 addressed slaughtering facility platforms, as well as the working sides of loading racks, loading docks, and teeming platforms, in paragraph (b)(1). Proposed paragraph (b)(1)(vi) required that employers provide guardrail systems on the working side of slaughtering house platforms unless they could demonstrate that providing guardrail systems was infeasible. If an employer could demonstrate infeasibility, workers could work on the working side of these platforms without guardrails or any other fall protection when: the work operation on the working side is in progress (see proposed paragraph (b)(1)(vi)(A)); the employer restricts access to the platform to authorized workers (proposed paragraph (b)(1)(vi)(B)); and the employer trained the authorized workers in accordance with proposed § 1910.30(b)(1)(vi)(C).
OSHA proposed the exception for the working sides of these platforms because information available to the Agency at the time indicated that there may be technological feasibility issues with using guardrail systems while workers are working on certain platforms. OSHA requested comment on this issue, including whether there are other feasible means to protect workers working on the unprotected side of platforms (see 75 FR 28889).
Commenters said employers often use travel restraint systems on the working side of slaughtering facility platforms, and, therefore, OSHA should not provide an exception. For example, Damon, Inc., said, “I have worked with several packing houses that have successfully implemented restraint systems” (Ex. 251). Likewise, the representative of the United Food and Commercial Workers Union (UFCW) commented:
My gravest concern is with 1910.28(b)(vi), specifically OSHA's proposed exception to the requirement for guardrails or other fall protection on the working side of platforms in slaughtering facilities. This exception is inappropriate and not protective of the thousands of workers who would be affected. Work platforms in the meatpacking industry are becoming increasingly common and are built to greater heights. Many employers, including Cargill Meat Solutions in Dodge City, KS have successfully implemented travel restraint systems for use on these platforms. Just as there is no question about the feasibility of these systems, there should be no question about the compelling need for them. There is a compelling need in meatpacking plants. Falls from platforms in slaughtering facilities are especially dangerous because of the universal use of knives and other sharp instruments (Ex. 159).
These comments and other information in the record convince OSHA that using fall protection on the working side of slaughtering facility platforms is feasible. Therefore, to eliminate any confusion, OSHA decided to specify fall protection requirements for slaughtering facility platforms in a separate provision in the final rule.
Final paragraph (b)(14)(ii) specifies that when the employer can demonstrate it is infeasible to use guardrail or travel restraint systems, they can perform the work on slaughtering facility platforms without a guardrail or travel restraint system, provided:
• The work operation for which fall protection is infeasible is in process (final paragraph (b)(14)(ii)(A));
• The employer restricts access to the platform to authorized workers (final paragraph (b)(14)(ii)(B)); and
• The employer ensures authorized workers receive training in accordance with final § 1910.30 (final paragraph (b)(14)(ii)(C)).
The language in final paragraph (b)(14)(ii) is the same as the language in the exception for working sides of loading rack, loading dock, and teeming platforms (final paragraph (b)(1)(ii)).
• Guardrail systems (final paragraph (b)(15)(i));
• Safety net systems (final paragraph (b)(15)(ii)); or
• Personal fall protection systems, such as personal fall arrest systems, travel restraint systems, and positioning systems (final paragraph (b)(15)(iii)).
Final paragraph (b)(15) does not retain the proposed fall protection measure of designated areas (proposed paragraph (b)(13)(ii)). However, final paragraph (b)(15) still gives employers the same level of control flexibility that proposed and final paragraph (b)(1)(i) provides for all unprotected sides and edges. The final rule also is consistent with the construction fall protection standard (§ 1926.501(b)(15)).
OSHA included this provision in the final rule to protect workers from all fall hazards in general industry regardless of whether final paragraph (b) in this section specifically mentions the particular walking-working surface or fall hazard. Therefore, this provision ensures that general industry employers will protect their workers from falling whenever and wherever a fall hazard is present in their workplaces. OSHA did not receive any comments on the proposed provisions and adopts it as discussed.
Final paragraph (c), like the proposed rule, requires that employers protect workers from being struck by falling objects, such as objects falling through holes or off the sides or edges of walking-working surfaces onto workers below. When workers are at risk of being struck by falling objects, the final rule requires that employers ensure that workers wear head protection meeting the requirements of 29 CFR part 1910, subpart I. In addition, final paragraph (c) requires that employers protect workers using one or more of the following:
• Erecting toeboards, screens, or guardrail systems to prevent objects from falling to a lower level (final paragraph (c)(1));
• Erecting canopy structures and keeping potential falling objects far enough from an edge, hole, or opening to prevent them from falling to a lower level (final paragraph (c)(2)); or
• Barricading the area into which objects could fall, prohibiting workers from entering the barricaded area, and keeping objects far enough from the edge or opening to prevent them from falling to the lower level (final paragraph (c)(3)).
Final paragraph (c) simplifies the rule by consolidating into a single paragraph all of the provisions that address falling objects in the existing standard (§ 1910.23(b)(5) and (c)(1)) and the proposed rule (paragraphs (b)(3)(iii), (b)(5)(i), (b)(14)(ii)). The final rule is consistent with the proposal and patterned on the construction standard (§ 1926.501(c)). OSHA did not receive any comments on the proposed protection from falling object requirements and adopts final paragraph (c) as discussed.
Final § 1910.29, like the proposed rule, establishes system criteria and work-practice requirements for fall protection systems and falling object protection specified by final § 1910.28, Duty to have fall protection systems and falling object protection,
As discussed earlier in this preamble, final §§ 1910.28, 1910.29, 1910.30, and 1910.140 establish new provisions that provide a comprehensive approach to fall and falling object protection in general industry. Final § 1910.28 specifies that employers must provide fall and falling object protection for workers exposed to fall and falling object hazards, and select a system that the final rule allows them to use in particular situations or operations.
Final § 1910.29 requires that employers ensure the fall protection system and falling object protection they select meet the specified criteria and practice provisions. Finally, § 1910.30 requires that employers ensure workers exposed to fall and falling object hazards and who must use fall protection systems and falling object protection receive training on those hazards and how to use the required protection properly. OSHA notes that the final rule adds a requirement that employers provide training for personal fall protection systems to existing § 1910.132.
In general, OSHA patterned the system criteria and work practice requirements in final § 1910.29 to be consistent with its construction standards (§§ 1926.502 and 1926.1053). OSHA believes that making the general industry fall protection system and falling object protection criteria requirements consistent with the construction standards will make the final rule easier to understand than the existing general industry standard, and make compliance easier for employers who perform both general industry and construction activities. In many situations employers should be able to use the same fall protection systems and falling object protection for both activities, which helps to minimize compliance costs. As mentioned in the preamble to final § 1910.28, many commenters supported making the general industry fall and falling object protection requirements consistent with those in the construction industry.
Final § 1910.29, like the proposed rule, reorganizes the existing rule so that the format of the final rule is consistent with the format in the construction fall protection standard in § 1926.502. OSHA believes this reorganization will make the final rule easier to understand and follow because many employers already are familiar with and follow the construction requirements.
Final § 1910.29 also draws provisions from, and is consistent with, national consensus standards addressing personal fall protection systems and falling object protection, including:
• ANSI/ASC A14.3-2008, American National Standards for Ladders-Fixed (A14.3-2008) (Ex. 8);
• ANSI/ASSE A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Roof Openings; Stairs and Guardrails Systems (A1264.1-2007) (Ex. 13); and
• ANSI/ASSE A10.18-2012, Safety Requirements for Temporary Roof and Floor Holes, Wall Openings, Stairways, and Other Unprotected Edges in
• National Fire Protection Association (NFPA) 101-2012, Life Safety Code (NFPA 101-2012) (Ex. 385).
Final paragraph (a) establishes general requirements that are applicable to the fall protection systems and falling object protection covered by final 29 CFR part 1910.
In final paragraph (a)(1), OSHA specifies that employers ensure all fall protection systems and falling object protection that 29 CFR part 1910 requires meet the requirements in § 1910.29. Accordingly, the requirements of § 1910.29 apply to fall protection systems and falling object protection that other part 1910 standards require if those standards do not establish specific criteria and work practices. For example, final paragraph (a)(1) requires that ladder safety systems on fixed ladders used at sawmills (§ 1910.265)) must comply with requirements in § 1910.29(i) because § 1910.265 does not specify criteria that ladder safety systems must meet.
When employers elect to use a personal fall protection system, final paragraph (a)(1) specifies that employers must ensure those systems meet the applicable requirements in 29 CFR part 1910, subpart I, namely final §§ 1910.132, General requirements, and 1910.140, Personal fall protection equipment. Final § 1910.140 establishes personal fall protection system criteria and work practice requirements, while § 1910.132 establishes provisions that apply to all personal protective equipment (PPE), including personal fall protection systems. For example, § 1910.132(a) requires that employers provide, use, and maintain PPE, including personal fall protection systems, in a reliable condition, and § 1910.132(c) specifies that employers ensure that the design and construction of PPE is safe for the work the employee is performing. In addition, § 1910.132(d) requires that employers perform a hazard assessment and “[s]elect PPE that properly fits each affected employee,” while § 1910.132(h) requires, with a few exceptions, that employers must provide PPE, including personal fall protection systems, at no cost to the worker.
Final paragraph (a)(1) revises the proposed rule slightly by deleting the reference to “body belts and body harnesses,” because they are components of personal fall protection systems. OSHA did not receive any comments on proposed paragraph (a)(1) and adopts the provision with the change discussed.
Final paragraph (a)(2) specifies that employers must provide and install all fall protection systems and falling object protection required by final subpart D, and comply with all other applicable requirements of final subpart D, before any worker begins work that necessitates fall or falling object protection. Final paragraph (a)(2), requires that employers take a proactive approach to managing fall and falling object hazards by installing, for example, fall protection systems or components (
OSHA believes such proactive planning and action already are part of the standard operating procedures for many employers. OSHA also believes that such pre-planning will encourage and guide employers to use the most effective and protective measures to address fall and falling object hazards. OSHA did not receive any comments on proposed paragraph (a)(2) and adopts the provision with the clarification discussed above.
Final paragraph (b) contains system requirements employers must follow to ensure guardrail systems they use will protect workers from falling to lower levels. In developing final paragraph (b), OSHA carried forward, with some revision, many of the requirements from the existing rule (
The Agency believes that the revised guardrail requirements make the final rule easier to understand than the existing general industry rule, reflect current technology and work practices, and ensure consistency among guardrail requirements throughout general industry. For example, OSHA reorganized the final rule so the same guardrail system requirements (final paragraph (b)) apply uniformly to all walking-working surfaces, in turn making the requirement easier to understand than the existing general industry rule, which separately lists the guardrail requirements for floor holes, open-sided floors, platforms, runways, and stairways. In addition to the explanations below for each of the guardrail system requirements, OSHA notes that the preamble to § 1926.502 (59 FR 40733) also provides useful explanatory material for each of the guardrail system provisions in § 1926.502(b).
Final paragraph (b)(1) specifies requirements for the minimum and maximum height of guardrail systems. Final paragraph (b)(1) carries forward the existing requirement (existing § 1910.23(e)(1)) that employers must ensure the top edge of the top rails of guardrail systems is 42 inches above the walking-working surface, which is consistent with the proposal and the construction fall protection standard (§ 1926.502(b)(1)). The final rule allows the height of guardrails to deviate from the 42-inch required height by up to three inches, plus or minus, which also is consistent with the construction standard. Final paragraph (b)(1) clarifies in objective terms (“plus or minus 3 inches”) the language in the existing provision that the guardrail height may deviate from 42 inches by a “nominal” amount. OSHA believes that a deviation of no more than three inches from the 42-inch guardrail height constitutes a “nominal” deviation that will not compromise worker protection. The Agency believes that continuing this allowance provides flexibility for employers if they make changes to walking-working surfaces (
Final paragraph (b)(1) also is consistent with A10.18-2012 (Section 4.1.2) and A1264.1-2007 (Section 5.4). A1264.1-2007 (Section 5.4) requires that guardrails have a minimum height of 42 inches, but does not specify a maximum height. A note to that standard explains that, generally, “guardrails are 42 to 45 inches in height” (Section E5.4).
Final paragraph (b)(1) also revises the existing rule (existing § 1910.23(e)(1)) to allow employers to erect guardrail systems that exceed the 45-inch height limit, provided the employer ensures that the higher guardrails comply with all other requirements in paragraph (b). The final rule is consistent with the requirement in the construction fall protection standard (§ 1926.502(b)(1)), which permits an increase in the top rail height “when conditions warrant.” OSHA believes that such conditions also exist in general industry, and that exceeding the 42-inch height
In the preamble to the proposed rule, OSHA said it was considering adding a provision that would allow employers to use barriers “as the functional equivalent of guardrails” (75 FR 28894). Such a provision would permit employers to use barriers as guardrails even if the height of the barriers is as low as 30 inches provided the total sum of the height and depth of the barrier is 48 inches. Using this formula, an employer could use a barrier with a height of 36 inches if the depth of the barrier were at least 12 inches. OSHA notes that the 1990 proposal, which the Agency did not adopt, included the provision as an alternative means of complying with the 42-inch guardrail height requirement (55 FR 13374). The preamble to the 1990 proposal explained that the National Bureau of Standards recommended a formula from its 1976 report, “A Model Performance Standard for Guardrails.”
OSHA received one comment about the potential provision. Thomas Kramer, of LJB, Inc., supported incorporating the provision in the final rule, stating, “This reference would allow a number of parapets associated with roof fall hazards to be used as a compliant physical barrier. It would have the added value of providing the building owner with a very low cost, if any cost at all, solution to protecting workers on a roof,” and further commenting that “[c]learly, this proposed revision is technologically feasible” (Ex. 367).
For the following reasons, OSHA decided not to add a provision allowing the use of barriers as functional equivalents of guardrail systems. First, incorporating the provision would make the final rule inconsistent with the construction fall protection standard, which is contrary to a major goal of the rulemaking. Similarly, neither A10.18-2012 nor the A1264.1-2007 include the provision.
Second, the formula from the 1976 report “A Model Performance Standard for Guardrails,” which forms the basis for the potential provision, is almost 40 years old. The documents and codes the report references are even older. OSHA believes that industry practices over the last 40 years overwhelmingly complied with the 42-inch guardrail requirement in the existing rule as well as the construction fall protection and ANSI standards, eliminating the need for this alternative.
Finally, OSHA does not believe the provision will provide fall protection that is as effective as the final rule. The Agency believes there is a risk of workers falling over barriers that are one-half foot or more lower than the required 42-inch guardrail height. In particular, OSHA does not believe a barrier with a height of 36 inches provides adequate protection from falls even when the barrier depth is 12 inches. OSHA believes it would be too easy for workers to fall over barriers that are one-half foot lower than the required height, and that the 12-inch barrier depth would not provide adequate protection from going over the barrier. OSHA expressed much the same rationale when it decided not to propose a provision that would allow existing guardrails that are 36 inches in height. In the proposed rule OSHA said that it did not consider 36-inch high guardrails to be as safe as the required 42-inch high guardrails (75 FR 28894).
OSHA notes that the 1990 proposed rule would have allowed a 36-inch minimum height for existing guardrail systems instead of the required 42 inches (55 FR 13360 (4/10/1990)). In particular, the earlier proposal would have codified the 1981 OSHA directive classifying as a
OSHA received several comments recommending that the Agency not rescind the directive and instead adopt a provision allowing employers to continue using existing guardrails that have a height of 36 inches. Mercer ORC questioned OSHA's statement in the proposal that guardrails 36 inches in height are not as “equally safe” as guardrails with a height of 42 inches (Ex. 254). However, they provided no evidence to support deviating from the height requirements in the construction fall protection standard and both A10.18-2012 and A1264.1-2007. Mercer ORC also said OSHA should estimate the costs associated with replacing the lower-height guardrails and the number of injuries prevented by having guardrails that are 39 inches in height (Ex. 254). Mercer ORC stated:
Clearly, if people have been writing to OSHA to ask about guardrails that are less than the “42 inches nominal” in the existing rule, there are likely to be significant numbers of workplaces that have these non-standard guardrails in place. OSHA should either quantify the benefits and costs of this rule change or grandfather those guardrail installations that occurred prior to the effect date of the new rules (Ex. 254).
The New York City Department of Environmental Protection (NYCDEP) commented that requiring 42-inch guardrails would “impact” many NYCDEP facilities (Ex. 191). They said the 42-inch height requirement “will not provide a benefit to our employees commensurate with the costs and will encumber funds that could be used for more efficacious health and safety initiatives.”
OSHA does not agree with Mercer ORC and NYCDEP that requiring guardrails to be 42 inches in height will impose significant costs to a substantial number of workplaces. They did not provide any evidence showing that a 36-inch guardrail height better effectuates the purposes of the OSH Act than the proposed 42-inch height. In fact, the requirement that employers ensure guardrails be 42 inches high (plus or minus 3 inches) has been in place since OSHA adopted the Walking-Working Surfaces standards in 1972 from then-existing national consensus standards (ANSI A12.1-1967, Section 7.1) (38 FR 24300 (9/6/1973)). Moreover, the guardrail height requirements in those consensus standards were adopted years before 1972. A1264.1-2007 and A10.18-2012 also require that guardrail heights be at least 42 inches.
OSHA points out the directive OSHA issued in 1981 allowing guardrails to have a minimum height of 36 inches instead of 42 inches only applied to guardrails existing at that time. OSHA believes that the vast majority of guardrails in use today are 42 inches (plus or minus 3 inches) in height. Therefore, OSHA does not believe that employers will experience significant difficulty bringing any remaining
Mr. M. Anderson raised a different point regarding the 42-inch guardrail height requirement, saying that the requirement will pose a problem for historic buildings, which often have low guardrails:
This will present an infeasible-to-fix problem for historic sites. Many historic balustrades are less than the required 42 [inches]. In order to comply with this height requirement, balustrades will have to be replaced thereby changing the historic aesthetic of the building. This seems to go against the Historic Preservation Act (Ex. 139).
OSHA did not receive comments from any other stakeholders concerning historic buildings and historic preservation requirements. To the extent that any employer encounters such a problem, the employer may use one of the other means of fall protection authorized by § 1910.28 (
Final paragraph (b)(2), like the proposed rule, requires that employers install intermediate protective members, such as midrails, screens, mesh, intermediate vertical members, solid panels, or equivalent intermediate members between the walking-working surface and the top edge of the guardrail system when there is not a wall or parapet that is at least 21 inches (53 cm) high. Whatever intermediate protective member employers use, the final rule requires that employers install them as follows:
• Install midrails midway between the top edge of the guardrail system and the walking-working surface. Since the final rule requires that guardrail systems be 42 inches high (plus or minus three inches), employers must install midrails approximately 21 inches above the horizontal walking-working surface (final paragraph (b)(2)(i));
• Install screens, mesh, and solid panels from the walking-working surface to the top rail and along the entire opening between top rail supports (final paragraph (b)(2)(ii));
• Install intermediate vertical members, such as balusters, no more than 19 inches apart (final paragraph (b)(2)(iii)); and
• Install other equivalent intermediate members, such as additional midrails and architectural panels, so that openings are not more than 19 inches wide (final paragraph (b)(2)(iv)).
OSHA drew the requirements in final paragraph (b)(2) from the construction fall protection standard in § 1926.502(b)(2), which has almost identical requirements. The existing rule in § 1910.23(e)(1) and (e)(3)(v)(
OSHA received one comment on proposed paragraph (b)(2). Ellis Fall Safety Solutions (Ellis), recommended that guardrails made of wire cable use at least three wires so the space between cables does not exceed 19 inches (Ex. 155). OSHA does not believe it is necessary to add such language to the final rule. The requirements on “intermediate members” and “other equivalent intermediate members” include wire cables; thus, the final rule in paragraphs (b)(2)(iii) and (iv) already require that wire cable installed in a guardrail system leave no opening in the system that exceeds 19 inches.
OSHA added language to final paragraph (b)(2) to clarify that solid panels are an example of a protective intermediate member. This addition makes the final provision consistent with final paragraph (b)(5).
Final paragraphs (b)(3) and (4) are companion provisions that establish strength requirements for guardrail systems. Final paragraph (b)(3), like the proposed rule, requires that employers ensure guardrail systems are capable of withstanding, without failure, a force of at least 200 pounds applied in a downward or outward direction within two (2) inches of the top edge, at any point along the top rail. Final paragraph (b)(3) generally is consistent with the existing rule in §§ 1910.23(e)(3)(iv) and (e)(3)(v)(
The term “failure,” as defined in final § 1910.21(b), means a load refusal (
OSHA also has removed the language in the existing standard that requires supporting posts to be spaced not more than 8 feet apart. OSHA believes the performance language of final paragraph (b)(3) is adequate, and also provides greater flexibility. In some cases an 8-foot distance between posts may not be adequate to meet the 200-pound strength requirement, while in other situations and with certain materials, the guardrail will maintain a 200-pound force with the supporting posts installed at distances greater than 8 feet apart. Employers must install supporting posts at whatever distance is necessary to meet the strength requirement of the final rule, without failure.
OSHA received two comments on proposed paragraph (b)(3). Peter Catlos recommended that the final rule, at a minimum, specify test methods or requirements for load concentrations and rates when applying the 200-pound test load (Ex. 203). Without specifying load concentrations and rates, or test methods, Mr. Catlos said the referenced 200-pound minimum load requirement “is not definitive” (Ex. 203).
Consistent with Section 6(b)(5) of the OSH Act, final paragraphs (b)(3) and (4) use a performance-based approach that establishes the strength objective employers must meet when testing a guardrail. The A10.18-2012 standard (Section 4.1.4) and the A1264.1-2007 standard (Section 5.6.1) follow a similar approach. As such, OSHA believes the strength requirement, which also is identical to the requirement in the construction fall protection standard, is protective, clear, and functional.
Final paragraph (b)(3) gives employers flexibility to use whatever test methods or manufacturer information they want so long as those methods and
The other commenter, Ellis, recommended that OSHA revise the 200-pound strength requirement to 276 pounds (
Finally, Ellis said OSHA should prohibit using guardrail systems as anchorages for personal fall protection systems unless a registered structural engineer approves, marks, or labels the systems for such use. OSHA does not believe it is necessary to add Ellis' recommendation to the final rule because § 1910.140 requires that personal fall protection system anchorages be capable of supporting 5,000 pounds. However, final paragraph (b)(3) only requires that guardrail systems be capable of withstanding a force of at least 200 pounds, which means that guardrail systems are not capable of serving as anchorages unless they also meet the requirements anchorages in final rule § 1910.140. OSHA, received no other comments and is adopting in this final rule paragraph (b)(3) as discussed.
Final paragraph (b)(4), like the proposed rule, requires that employers ensure that when the 200-pound test load is applied in a downward direction, the top rail of the guardrail system does not deflect to a height of less than 39 inches above the walking-working surface. Deflection refers to the distance or degree a structure moves or displaces when a load is applied to the structure. To illustrate, employers must ensure that application of the required minimum test load to the top rail of a 42-inch guardrail system does not reduce its height by more than three inches. If the load or stress placed on a guardrail system, regardless of its height, reduces the height of the system to less than 39 inches, it is not likely to be tall enough to prevent workers from falling over the top rail. Therefore, final paragraph (b)(4) specifies that employers must ensure the height of their guardrail systems, deflected or not, is never less than 39 inches high.
Final paragraph (b)(4) is almost identical to the construction fall protection standard in § 1920.502(b)(4). The A10.18-2012 standard (Section 4.1.4) specifies that guardrails shall not deflect more than 3 inches in any direction. Since that standard does not allow any nominal deviation in the guardrail height, it means that standard limits the deflected height to not less than 39 inches high.
OSHA received comments from Mr. Catlos and Ellis on proposed paragraph (b)(4). Ellis opposed allowing the guardrail system to deflect as much as 3 inches, stating, “[Three inches of] movement specified in 1926.502 is too great and 1.5 [inches] should be [the maximum] when over half the male worker [center of gravity] exceeds 39 [inches]” (Ex. 155). OSHA believes that a guardrail system that has a height of at least 39 inches, as final paragraph (b)(4) requires (
Mr. Catlos raised concerns that the proposed language on deflection does not include a horizontal deflection allowance or limit (Ex. 203). He pointed out that proposed paragraph (b)(3) includes both vertical and horizontal load test requirements, and he said that, for consistency, final paragraph (b)(4) should include a horizontal load test and deflection allowance, in addition to the vertical allowance. OSHA disagrees with the commenter for the following reasons. First, the final rule focuses on ensuring that guardrail systems maintain a minimum height, so that if workers fall into or onto the guardrail they are protected from falling over the top rail.
Second, Mr. Catlos did not say what would constitute an appropriate horizontal load test deflection allowance and OSHA believes that allowing a horizontal deflection in addition to the vertical allowance, may result in failure of the guardrail system to protect workers from falling. For example it may break or permanently deform in a way that affects the structural integrity of the guardrail system. Such deformation may adversely affect the structural integrity or support capabilities of the system when workers lean on or fall into the top rail of a guardrail that is not perpendicular to the horizontal walking-working surface. In this regard, Mr. Catlos did not provide any data indicating that horizontal deflection of the guardrail system would not result in system failure. Additionally, OSHA is concerned that after repeated horizontal deflection, the guardrail could be reduced in height to below 39 inches, which is below the minimum height requirement that final paragraph (b)(1) requires.
Third, OSHA believes that allowing a horizontal deflection when vertical deflection already reduces the height of guardrail systems may put workers at risk of falling over the top rail. This is true especially when vertical deflection reduces the height of the top edge of a guardrail system to 39 inches. OSHA does not believe Mr. Catlos presented a compelling argument to support deviating from the construction fall protection standard § 1926.502(b)(4) by adding a horizontal deflection allowance to final paragraph (b)(4). Therefore, OSHA is adopting in this final rule paragraph (b)(4) as discussed.
Final paragraph (b)(5), like the proposal, requires that employers ensure midrails, screens, mesh, intermediate vertical members, solid panels, and other equivalent members, are capable of withstanding, without failure, a force of at least 150 pounds applied in any downward or outward direction at any point along the intermediate member.
The existing standard does not contain a strength requirement for midrails and this omission has resulted in confusion. OSHA drew the proposed requirement from the construction fall protection standard in § 1926.502(b)(5). In the preamble to that rule, OSHA explained that a strength test of 150 pounds was adequate for intermediate structures because they do not serve the same purpose as the top rails of guardrail systems (59 FR 40672, 40697 (8/9/1994)). Workers often place forces on top rails (
The A1264.1-2007 standard (Section 5.6.1) requires that intermediate
Final paragraph (b)(6), like the proposed rule, requires that employers ensure guardrail systems are smooth-surfaced to protect workers from injury, such as punctures or lacerations, and to prevent catching or snagging of workers' clothing. The final rule is based on the existing requirement in § 1910.23(e)(1) and (e)(3)(v)(
The Agency believes it is important that guardrail systems have smooth surfaces to prevent injuries. For example, workers can cut or puncture their hands or other parts of their bodies, when they grab or lean against guardrails that have protruding nails. Similarly, protruding nails can catch workers' clothing which can damage protective clothing or cause workers to trip or fall. OSHA did not receive any comments on the proposed rule and adopts it with the changes discussed above.
Final paragraph (b)(7), like the proposed rule, requires that employers ensure the ends of top rails and midrails do not overhang the terminal posts, except where the overhang does not pose a projection hazard for workers. Top and midrails that extend past the terminal post may cause a worker's clothing or tool belt to catch which could result in a fall. However, the final rule allows top rails and midrails to overhang the terminal posts provided they do not pose a projection hazard. For example, employers may shape top rails and midrails so snag hazards do not exist. The provision is almost identical to the existing rule in § 1910.23(e)(1) and the construction fall protection standard in § 1926.502(b)(7). The final rule is consistent with the A1264.1-2007 standard at Sections 5.4 and 5.6.3. OSHA did not receive any comments on the proposed provision and OSHA adopts the requirement as proposed.
Final paragraph (b)(8), like the proposed and construction fall protection standards(§ 1926.502(b)(8)), prohibits employers from using steel and plastic banding for top rails or midrails in guardrail systems. The preamble to the construction fall protection standard explained that although banding, particularly steel banding, often can withstand a 200-pound load, it also can tear easily if twisted (59 FR 40698). In addition, workers can cut their hands when they seize steel or plastic banding, especially in a fall, since banding often has sharp edges. OSHA notes that, like the construction fall protection standard, final paragraph (b)(8) does not prohibit the use of steel or synthetic rope on top rails and midrails because rope does not have sharp edges. OSHA reminds employers, as discussed in final paragraph (b)(15) and similar to the construction rule, that manila or synthetic rope used for top rails must be inspected as necessary to ensure the rope meets the strength requirements of this section. OSHA did not receive any comments on the proposed provision and adopts it as discussed above.
Final paragraph (b)(9), like the proposed rule, requires that employers ensure top rails and midrails of guardrail systems are at least one-quarter inch in diameter or thickness. The final rule applies to all top rails and midrails, regardless of the material employers use for those rails. The final rule uses both “diameter” and “thickness” because top rails and midrails may have different shapes (
OSHA based final paragraph (b)(9) on the construction fall protection standard (§ 1926.502(b)(9)). The final paragraph ensures that whatever material an employer uses for top rails or midrails, it is not so narrow that workers grabbing onto the top rail or midrail may cut their hands. Such injuries could occur if employers use narrow, high strength rope or wire for top rails or midrails. To eliminate the possibility of injury, employers must ensure that all top rails and midrails are at least one-quarter inch in diameter/thickness. OSHA did not receive any comments on the proposed provision and adopts it is discussed above.
Final paragraph (b)(10) requires that employers using guardrail systems at hoist areas place a removable guardrail section or, in the alternative, chains or a gate consisting of a top and midrail, across the access opening between guardrail sections when workers are not performing hoisting operations. This requirement ensures workers do not fall through an opening accidentally when materials are not being hoisted. It also gives employers flexibility in determining how to effectively guard access openings at hoist areas.
OSHA stresses that employers may use chains and gates as an alternative to removable guardrails, but only when the chains and gates provide a level of safety that is “equivalent” to the level of protection provided by removable guardrails. As defined in final § 1910.21(b), “equivalent” means that the alternative means “will provide an equal or greater degree of safety.”
OSHA clarified final paragraph (b)(10) in response to comments stakeholders raised on several issues. First, in response to a comment from Mercer ORC (Ex. 254), the final rule clarifies that employers may use any of the following three alternatives to guard openings to hoist areas:
• Removable guardrail sections;
• Chains that provide protection at least at the top and midrail level; or
• A gate consisting of a top rail and midrail.
A typographical error (
Second, on a related issue, Mercer ORC requested clarification about whether a “chain gate” must have one or two chains (Ex. 254). Final paragraph (b)(10) clarifies that any alternative the employer uses to guard the access area when workers are not performing hoisting operations must have a top rail and a midrail to provide workers with protection that is equivalent to a guardrail system. OSHA does not believe that a single bar or chain provides protection that is equivalent to a guardrail system. This clarification is consistent with OSHA's 1990 proposed rule and letters of interpretation on the use of gates and chains to protect workers from falling through access openings in hoist areas when they are not performing hoisting operations (
Finally, Ellis opposed the use of chains to guard access openings at hoist areas (Ex. 155). He said chains “cannot meet the sag requirements of the standard and an overbalance hazard can occur” (Ex. 155). OSHA does not agree with Ellis' recommendation, noting that neither the proposed nor final rules establish a sag requirement for chains used at hoisting areas. In addition, OSHA notes that Ellis does not explain or provide any information about what constitutes an “overbalance” hazard. Nevertheless, OSHA clarified the language in final paragraph (b)(10) to indicate that chains and gates are alternatives that employers may use instead of removable guardrail sections when they provide a level of safety equivalent to guardrails. However, if chains sag so low that they do not meet the minimum guardrail height requirements (see final paragraph (b)(1)), or are not as effective as a removable guardrail section in preventing workers from falling through access openings, employers would have to use removable guardrail sections or a gate instead.
The final rule is almost identical to the proposed rule and construction fall protection standard in § 1926.502(b)(10), and OSHA adopts it with the clarifications discussed above.
Final paragraphs (b)(11) through (13) establish criteria for the use of guardrail systems to protect employees working near holes. Final paragraph (b)(11) requires that employers ensure that when guardrail systems are used around holes, they are installed on all unprotected sides or edges of the hole. As discussed earlier in this preamble, final § 1910.21(b) defines “hole” as “a gap or open space in a floor, roof, horizontal walking-working surface, or similar surface that is at least 2 inches (5 cm) in its least dimension.”
The final rule consolidates into one provision the various requirements in the existing rule that pertain to criteria for protecting workers from falling through holes. Final paragraph (b)(11) is almost identical to the proposed rule, and OSHA's construction fall protection industry standard in § 1926.502(b)(11). OSHA did not receive any comments on the proposed provision and finalizes it as discussed.
Final paragraph (b)(12), like the proposed rule and construction fall protection standard (§ 1926.502(b)(12)), establishes requirements for guardrail systems erected around holes through which materials may be passed. The final rule requires:
• When workers are passing materials through a hole, employers must ensure that not more than two sides of the guardrail system are removed (final § 1910.29(b)(12)(i)); and
• When workers are not passing materials through the hole, employers must ensure a guardrail system is installed on all unprotected sides and edges, or close the hole with a cover (final § 1910.29(b)(12)(ii)).
The final rule reorganizes and revises the proposed provision to make it easier to understand and follow. Final paragraph (b)(12) also updates the existing rule in § 1910.23(a)(7), which does not contain a provision addressing guarding holes when workers pass materials through the holes. The final rule generally is consistent with A1264.1-2007 (Section 3.5) and A10.18-2012 (Section 7.1). OSHA notes the A1264.1 standard allows employers to use an attendant if a hole is uncovered and guardrails are removed. However, OSHA believes that requiring guardrails on all sides of the hole is more protective than using an attendant.
The final rule allows employers to remove guardrail sections on no more than two sides of a hole when materials are being passed through the hole (paragraph (b)(12)(i)). In other words, the final rule does not allow the other guardrail sections to be removed during the time materials are moving through the hole to protect other workers who may be in the area. Final paragraph (b)(12)(ii) also protects workers by requiring guardrails on all unprotected sides of the hole or covering it when workers are not passing materials through the hole. OSHA did not receive any comments on the proposed provision and finalizes it as discussed.
Final paragraph (b)(13), similar to the proposed rule and construction fall protection standard (§ 1926.502(b)(13)), requires that employers using guardrail systems around holes that are points of access, such as ladderway openings, protect workers from walking or falling into the hole by installing gates at the opening in the guardrail system (final paragraph (b)(13)(i)), or offsetting the opening from the hole so workers cannot walk or fall into the hole (final paragraph (b)(13)(ii)). The final rule also revises the proposed criteria for such gates by specifying that they:
• Must be self-closing;
• Must either slide or swing away from the hole; and
• Be equipped with top rails and midrails or equivalent intermediate members that meet the requirements in final paragraph (b) (final paragraph (b)(13)(i)).
The final provision is consistent with A1264.1-2007 (Section 3.2 and E3.2). The ANSI/ASSE standard requires that ladderway floor openings be guarded to prevent workers from falling into the hole and explicitly notes self-closing gates that swing away from the ladderway hole and offsets are two methods of guarding those openings.
OSHA revised the proposed criteria for guardrail opening gates for two reasons. First, the revisions make final paragraph (b)(13) consistent with final § 1910.28. As discussed, final § 1910.28(b)(3)(iv) replaced “swinging gate” with “self-closing gate” to give employers flexibility to use sliding gates at guardrail access openings. OSHA believes sliding gates that are self-closing are as effective as swinging gates that self-close and are readily available and in use today.
Second, the revisions in the final rule respond to stakeholder questions and recommendations urging OSHA to identify more clearly the criteria for access opening gates must meet (Exs. 68; 254; 366). For example, Eric Bredl, with Intrepid Industries Inc., a safety gate manufacturer, said the final rule needs to clarify and define “safety gate (swinging gate)” used at openings in guardrail systems used around points of access holes (
There have been many interpretations as to what constitutes a safety gate. It is not well defined, nor has it been well defined for several years (Ex. 68).
Mr. Bredl also requested that OSHA clarify whether gates used at guardrail openings must be equipped with midrails:
[T]he OSHA wording of this proposal does not clarify that the space to be protected must conform to the guardrail. Does OSHA want to allow a single member (chain or single bar) or two bars that are less than 19” apart as adequate protection for ladderway openings? (Ex. 366).
Similarly, Mercer ORC said OSHA needs to define the “specific type of gate” it intends to require for gates used for guardrail openings near points of access holes, and answer the following questions about midrails:
Must a “swinging gate” have both a top rail and midrail, like a standard railing? Or is a gate with only a top rail adequate to prevent an employee from walking “directly into the hole”? The existing rule is silent on the issue, but OSHA implied in the 1990 proposal and,
Mercer ORC opposed requiring that guardrail opening gates be equipped with midrails, saying that several companies and a safety gate manufacturer indicated that OSHA's “interpretation has not been accepted by a large number of employers” (Ex. 254).
Although Mr. Bredl acknowledged that when OSHA first issued the 1990 proposed rule, which would have required that guardrail opening gates comply with guardrail requirements (
The purpose of guardrail opening gates used around holes that serve as points of access (
OSHA believes that employers should not experience difficulty complying with the final rule. If an existing gate does not have a midrail or equivalent intermediate member, OSHA believes it is feasible for employers to add one. Therefore, OSHA adopts final paragraph (b)(13) with the revisions and clarification discussed above.
Final paragraph (b)(14), which is almost identical to the proposal, and the construction fall protection standard in § 1926.502(b)(14), requires that employers ensure guardrail systems on ramps and runways are installed along each unprotected side or edge. The existing rule in § 1910.23(c)(2) and A1264.1-2007 (Section 5.2) contain similar requirements for runways, but do not specifically address guarding ramps. OSHA believes it is appropriate to apply this provision to ramps as well as runways because both walking-working surfaces can have open sides. In addition, like runways, ramps can have open sides that are four feet or more above a lower level, which presents a fall hazard to workers. OSHA did not receive any comments on the proposal and adopts it as discussed above.
Final paragraph (b)(15), similar to the proposed rule, requires that employers ensure manila and synthetic rope
OSHA received two comments on the proposed provision. The National Institute for Occupational Safety and Health (NIOSH) recommended that OSHA incorporate in final paragraph (b)(15) the strength requirements for midrails (final paragraph (b)(5)) in addition to the strength requirements for top rails (final paragraph (b)(3)) (Ex. 164). OSHA agrees and incorporates the midrail strength requirements in final paragraph (b)(15).
Peter Catlos opposed allowing employers to use manila, plastic, or synthetic rope for top rails and midrails. He pointed out, “Based on the mechanical characteristics of these materials, such as high elongation and high elastic recovery, guardrails could be constructed that meet the requirements of the § 1910.29(b) as written, yet offer no practical restraint whatsoever, thereby creating an unsafe condition” (Ex. 203). OSHA believes that requiring employers to inspect ropes “as necessary” helps to ensure that the top rails and midrails made of such rope will continue to comply with the strength requirements in final § 1910.29(b)(3) and (5).
Final paragraph (b) includes an informational note that OSHA proposed as paragraph (b)(16). The note reminds employers that criteria and practice requirements for guardrail systems on scaffolds used in general industry are in the construction scaffold standards (29 CFR part 1926, subpart L, Scaffolds). This provision is a companion to final § 1910.28(b)(12)(i), which requires that employers protect employees working on scaffolds in accordance with the construction scaffold standards. These companion provisions ensure that employers who use scaffolds to perform both general industry and construction activities will have one consistent set of requirements to follow. OSHA believes this approach will increase understanding of, and promote compliance with, the final rule, a conclusion Ameren supported because it would promote consistent application for employers who use scaffolds to perform both general industry and construction activities (Ex. 189). OSHA did not receive any comments opposing the proposed provision and adopts the note as discussed.
Ellis recommended OSHA include additional guardrail criteria in the final rule (Ex. 155). He recommended prohibiting guardrails from being used as personal fall protection anchorages unless approved and marked by a registered structural engineer, and that horizontal rails in wood guardrails be attached on the inside of the posts so the nails are not pushed out in a fall.
With regard to using guardrails as personal fall protection anchorages, final § 1910.140 requires that anchorages be capable of supporting 5,000 pounds. Therefore, unless the guardrail is designed to meet all the requirements for anchorages in final § 1910.140, they already are prohibited from such use.
Although OSHA agrees with Ellis on the placement of wood rails, the Agency does not believe it is necessary to regulate guardrail systems to this detail. Employers are responsible for ensuring that guardrail systems are erected to meet the strength requirements specified in the final rule.
Final paragraph (c), like the proposed rule, requires that general industry employers ensure all safety net systems they use meet the criteria and practice requirements in 29 CFR part 1926, subpart M, Fall protection. Neither the existing subpart D nor other provisions in 29 CFR part 1910 address safety net systems.
Final § 1910.28 allows employers to use safety net systems to protect workers on several types of elevated walking-working surfaces, including unprotected sides and edges, wall openings, and low-slope roofs. To ensure that the requirements for safety net systems used in general industry are consistent with, and are as protective as, the construction requirements, OSHA requires employers working in general industry to follow the construction criteria and practice requirements for safety net systems. Incorporating by reference the construction safety net system requirements also eliminates unnecessary repetition of the construction requirements.
OSHA received two comments on this requirement, both of which supported making the general industry requirements for safety net system criteria and practices as protective as those in the construction fall protection standard in § 1926.502(c) (Exs. 155; 226). The American Federation of State, County and Municipal Employees (AFSCME) said the requirements for safety net systems used in general industry should be “no less” protective than the provisions in the construction standard (Ex. 226). In the same comment, AFSCME raised an issue about the difference in testing requirements for safety net systems and personal fall arrest systems and anchorages, saying the 400-pound drop-test requirement for safety net systems is “stricter” than the requirement for personal fall arrest systems and anchorages (Ex. 226). OSHA notes the 400-pound drop-test requirement is consistent with the construction fall protection standard in § 1926.502(c)(4)(i).
OSHA agrees with the commenters that the safety net system requirements in the final rule should be as protective as the requirements in the construction fall protection standard. In addition, OSHA believes that making the general industry and construction requirements consistent will make the rule easier to understand and follow for those employers who perform both general industry and construction operations.
In the proposal, OSHA also requested comment about whether the final rule should require that employers meet the requirements for safety net systems in the construction fall protection standard or list the specific construction safety net system requirements in the final rule (75 FR 28895). Ellis supported incorporating the construction standard by reference (Ex. 155). AFSCME, however, recommended that OSHA include the specific safety net system criteria and practice requirements in final § 1910.29(c), stating, “Referencing the construction standard, CFR § 1926.502(c), may not be helpful to employers who normally do not use the construction standards; therefore information on the requirements and testing of the safety net systems should be covered in the General Industry Standard” (Ex. 226).
After reviewing the record, OSHA decided to incorporate by reference into this final rule the safety net system requirements in the construction fall protection standard. OSHA notes that the final rule also incorporates by reference the construction scaffold requirements. OSHA does not agree with AFSCME that general industry employers who do not use construction standards will have a difficult time obtaining them. OSHA's construction standards are readily available online at
Ellis raised another issue about safety nets. He recommended that the final rule allow the use of “platform nets” in general industry, provided those nets also complied with the requirements in the construction standard in § 1926.502(c). He observed, “[Platform nets] are not only for catching falling workers they are also for working from if the mesh or fabric is tight enough to prevent the foot from going through. These nets . . . are finding considerable use around the world for construction and maintenance work and provide both access and a walking-working surface” (Ex. 155).
The final rule does not prohibit the use of platform nets. However, if employers also use platform nets for fall protection, the nets must meet the criteria and practice requirements in the construction fall protection standard.
Final paragraph (d), like the proposed rule, establishes criteria and practices for “designated areas,” which the final rule in § 1910.21(b) defines as “a distinct portion of a walking-working surface delineated by a warning line in which employees may perform work without additional fall protection.” Designated areas are non-conventional controls for addressing fall hazards.
As mentioned earlier in this preamble, final § 1910.28(b)(13) limits the use of designated areas to one situation: Work on low-slope roofs. The final rule in § 1910.21(b) defines “low-slope roof” as “a roof that has a slope less than or equal to a ratio of 4 in 12 (vertical to horizontal).” Final § 1910.28(b)(13) limits the use of designated areas to work on low-slope roofs performed at least six (6) feet from the roof edge and requires that employers use conventional controls (
Proposed § 1910.28(b)(1), (7), and (13) allowed general industry employers to use designated areas in additional situations: On unprotected sides and edges of walking-working surfaces, at wall openings, and on walking-working surfaces the final rule does not specifically address. However, as discussed in the preamble to § 1910.28, OSHA believes that employers must use designated areas, like warning line systems in the construction fall protection standard, only in “a few, very specific situations” (see,
Final paragraph (d)(1) establishes general criteria and practice requirements for the use of designated areas on low-slope roofs. Final paragraph (d)(1) revises the proposed requirements by deleting, as unnecessary, the language in proposed paragraph (d)(1)(iii) requiring employers use designated areas only on “surfaces that have a slope from horizontal of 10 degree or less,” since that is now contained in the definition of a low-slope roof.
Final paragraph (d)(1)(i), like the proposed rule, requires that employers ensure workers remain within the designated area during work operations. Going outside of the designated area will increase the risk of a worker falling off the roof edge. If workers must go outside the designated area, they must be protected by conventional fall protection systems. OSHA did not receive any comments on the proposed requirement and finalizes it as discussed.
Final paragraph (d)(1)(ii), similar to the proposed rule, requires that employers delineate the perimeter of designated areas with a warning line.
Final paragraph (d)(1)(ii) also specifies warning lines may consist of ropes, wires, tape, or chains that employers ensure meet the requirements of final paragraphs (d)(2) and (3). Final paragraphs (d)(2) and (3) contain specific requirements for warning lines, for example, they must be installed so the lowest point of the line, including sag, is not less than 34 inches (86 cm) and not more than 39 inches (99 cm) above the walking-working surface (final paragraph (d)(2)(i)).
The final rule generally is consistent with the requirements for warning line systems in the construction fall protection standard in § 1926.502(f)(1).
Northrop Grumman Shipbuilding (NGS) recommended that OSHA give employers more flexibility to demarcate designated areas by using materials other than ropes, wires, tape, chains, and supporting devices, stating:
[W]e recommend that a contrasting color marking on the floor or roof surface be another acceptable means of delineating the designated area. Note that this is similar to the options provided in proposed 1910.28(b)(8) for pits. Colored markings are the best means to permanently mark pathways and work areas for maintenance of rooftop equipment, thus eliminating the hazards associated with getting stanchions and rope or chain to the job site. Stanchions typically cannot be permanently attached to rooftops because they will damage the roof surface and they cannot be left in place because they pose a projectile hazard in the event of high winds (Ex. 180).
OSHA agrees that using warning line materials made of contrasting colors, such as brightly-colored ropes or tape makes the line “clearly visible,” which final paragraph (d)(2)(iv) requires. However, OSHA believes that painting the surface of the roof instead of attaching warning line materials to supporting devices does not provide a clearly visible perimeter throughout the designated area as required by final paragraph (d)(2)(iv). To be clearly visible, OSHA believes materials used to demarcate a designated area need to be high enough above the walking-working surface to be visible from a distance at least 25 feet away, as well as anywhere within the designated area, and not obscured by materials, tools, and equipment that may be in the designated area.
NGS also pointed out that the proposed rule would allow employers to apply floor markings, instead of erecting warning lines, to demarcate vehicle repair, services, and assembly pits (see proposed and final § 1910.28(b)(8)(ii)). OSHA does not consider the working conditions on low-slope roofs to be similar enough to the working conditions at vehicle repair, service, and assembly pits to permit the use of floor markings. OSHA allows employers to apply floor markings to delineate vehicle repair, service, and assembly pits that are less than 10 feet deep because the pits often are so close together that using warning lines would impede movement of vehicles and equipment around and over the pits, which is not true for work on low-slope roofs.
Final paragraph (d)(2) establishes criteria and practice requirements for warning lines. As part of these requirements, final paragraph (d)(2)(i) specifies that employers ensure warning lines have a minimum breaking strength of 200 pounds. The proposed rule in paragraph (d)(2)(ii) would have required that employers ensure the warning line has a 500-pound minimum breaking or tensile strength and, after being attached to the stanchions, is capable of supporting the loads applied to the stanchions as prescribed in proposed paragraph (d)(2)(i). Proposed paragraph (d)(2)(i) also would have required that stanchions be capable of resisting, without tipping over, a force of at least 16 pounds applied horizontally against the stanchion. The force would have been required to be applied 30 inches above the work surface. OSHA drew the proposed requirement from the construction warning line system requirements for roof work performed on low-slope roofs (see § 1926.502(f)(2)(iv)). OSHA explained in the proposal that the requirement would ensure the warning line is “durable and capable of functioning as intended, regardless of how far apart the stanchions are placed” (75 FR 28896). In addition, OSHA said the proposed strength requirement would ensure that employers use substantial materials for warning lines, such as chains, ropes, or heavy cord. OSHA also requested comment on the appropriateness of requiring warning lines to have a tensile strength of 500 pounds (similar to construction warning line system requirements), which “assures the line is made of material more substantial than string” (75 FR 28896).
Several stakeholders indicated carrying stanchions that meet the proposed strength requirement would be infeasible or create a greater hazard for workers (Exs. 165; 171; 296). For example, the National Chimney Sweep Guild (NCSG) said, “The technician would be exposed to a greater fall hazard while transporting numerous stanchions weighing over 50 pounds to the roof.” Later, NCSG stated, “Stanchions would not meet the specified stability criterion unless they were either weighted to the point where they create an unacceptable fall hazard or attached to the roof” (Ex. 296). The Sheet Metal and Air Conditioning Contractors' National Association (SMACNA) agreed, stating, “The placement of a designated area by the construction of a barrier system (rope, wire or chain supported by stanchions meeting specific design criteria) would create more safety hazards due to the transporting of barrier materials up to the roof” (Ex. 165). Verallia recommended that OSHA also reconsider the companion requirement in proposed paragraph (d)(2)(i) addressing the stability of stanchions, noting:
With respect to the specified size of the stanchions, 16 pounds resistance may be insufficient in some cases, while . . . completely unnecessary in others. The further the area is from the unprotected edge, the less is required to adequately protect (or warn) the affected employees.
The size and form of stanchions (or comparable barriers) should be left to the discretion of the employer, as long as they are effective in putting the employee on notice that a fall hazard may exist. . . . Moreover, there is an additional concern that the use and handling of 16-pound resistant stanchions could itself present an independent hazard and/or cause damage to roofs or working surfaces (Ex. 171).
In addition, in response to these commenters, the final rule also deletes the stanchion stability requirement specified by proposed paragraph (d)(2)(i), which would have required that employers ensure stanchions are “capable of resisting, without tipping over, a force of at least 16 pounds (71
Final paragraph (d)(2)(ii), like proposed paragraph (d)(2)(iv), requires that employers install warning lines so the lowest point, including any sag, is not less than 34 inches or more than 39 inches above the walking-working surface. The final rule is consistent with the warning line system requirement in the construction fall protection standard in § 1926.502(f)(2)(ii).
NGS recommended that the final rule permit employers to use contrasting color marking on the floor or roof instead of erecting warning lines at 34 to 39 inches above the walking-working surface (Ex. 180). As discussed above, the final rule does not include NGS' recommendation. OSHA believes the warning line height specified in the final rule is necessary to adequately warn workers that they are approaching the boundary of a designated area. At a height of between 34 to 39 inches, warning lines will be more visible than if employers paint them on the surface of the roof. Moreover, at the height the final rule requires, warning lines will be visible even if equipment, tools, or objects are near the warning line.
OSHA also rejects NGS's recommendation because painting warning lines on surfaces makes them permanent, thus suggesting that employers may use designated areas for any operation regularly or routinely performed on a low-slope roof, rather than performing work in these areas that is both temporary and infrequent. As discussed earlier in this preamble, employers must provide conventional fall protection for routine, regular, or frequent work performed within 15 feet of the edge of low-slope roofs.
Final paragraph (d)(2)(iii) requires that employers ensure warning lines are supported in such a manner that pulling on one section of the line will not result in slack being taken up in any adjacent sections causing the line to fall below the limit of 34 inches at any point, as specified in (d)(2)(ii). Proposed paragraph (d)(2)(iii) and the construction fall protection standard in § 1926.502(f)(2)(v) require that taking up slack in adjacent sections of a warning line must not cause the supporting devices to tip over. The final rule revises the proposed provision for two reasons. First, the revised language ensures that the warning line will be visible at all times because it will remain at the height specified in final paragraph (d)(2)(ii). Second, the revisions ensure employers remain in compliance with final paragraph (d)(2)(ii). OSHA did not receive any comments on the proposal and adopts the requirement with the revisions discussed above.
Final paragraph (d)(2)(iv) requires that employers ensure warning lines are clearly visible from a distance of 25 feet away and anywhere within the designated area. The final rule clarifies proposed paragraph (d)(2)(v) by recasting the provision in plain language that is easier to understand than the proposed paragraph.
The proposed rule would have required that employers ensure the warning line is clearly visible from any unobstructed location within the designated area up to 25 feet away, or at the maximum distance a worker may be positioned away from the warning line, whichever is less. The final rule states more clearly than the proposed provision that employers must erect warning lines that are clearly visible within the designated area, regardless of where the employee is working in that area. That is, the warning line must be clearly visible when the worker is approaching the line. Whether the designated area is large or small, the final rule also requires that the warning line be visible at least 25 feet away. For large designated areas, requiring that warnings lines be visible at least 25 feet away ensures that workers have adequate warning when approaching fall hazards. Such warning is particularly necessary when workers use mobile mechanical equipment that can cover distances quickly. If workers cannot clearly see warning lines until the mobile equipment they are operating is near the boundary of the designated area, they may not be able to stop in time to prevent going past the boundary or over the edge of the roof. For designated areas that are small and close to the roof edge (
As the proposal noted, there is a possibility that a portion of the warning line could be obstructed. This remains true in the final rule. As long as the boundaries of the designated area are clearly visible within 25 feet and anywhere within the area, obstructions of some portion of the line are permissible.
The construction fall protection standard in § 1926.502(f)(2)(i) and (g)(3)(i) requires employers to flag warning lines with high-visibility material at least every 6 feet to ensure that the lines are visible. OSHA believes there is a greater need for visibility aids in construction operations because the work may be at leading edges or other areas close to the roof edge. Also, construction work is more likely than work in general industry to shift from one part of the roof to another because construction work often involves performing tasks that are not temporary and infrequent. Therefore, OSHA believes that it is appropriate to give general industry employers greater flexibility to select the measures they believe will make the warning line “clearly visible.” Accordingly, employers are free to comply with the final rule by flagging warning lines.
Final paragraph (d)(2)(v), like proposed paragraph (d)(3)(i), requires that employers erect warning lines as close to the work area as the task permits. This provision, like final paragraph (d)(2)(iv), helps to make warning lines as clearly visible as possible without interfering with the work employees perform. It also eases compliance for employers. Instead of placing warning lines 6 feet or 15 feet around the entire roof, employers can simply erect the warning line around the specific area where employees are working. This will make compliance easier for many employers, one of whom said, “Some flat roofs in general industry settings could be the size of several football fields” (Ex. 207).
Finally, OSHA believes the performance-based approach in the final rule gives employers flexibility to determine the distance that makes the warning line most clearly visible, without interfering with the work being performed. OSHA did not receive any comments on the proposed requirement and adopts it with the clarification discussed above.
Final paragraph (d)(2)(vi), similar to proposed paragraph (d)(3)(ii), requires that employers erect warning lines not less than 6 feet (1.8 m) from the roof edge for work that is both temporary and infrequent, or not less than 15 feet (4.6 m) for other work. OSHA believes the minimum distance of six feet for work that is temporary and infrequent provides an adequate safety zone that allows workers to stop moving toward the fall hazard after reaching or
Final paragraph (d)(3), like proposed paragraph (d)(3)(iii), establishes minimum distances from an unprotected side or edge for erecting warning lines when workers use mobile mechanical equipment to perform work that is both temporary and infrequent in a designated area. In such cases, the final rule requires that employers erect warning lines: (1) Not less than 6 feet from the unprotected side or edge that is parallel to the direction in which workers are using the mechanical equipment; and (2) not less than 10 feet from the unprotected side or edge that is perpendicular to the direction in which workers are operating the mechanical equipment. When mobile mechanical equipment is used to perform other work, a warning line must be erected at least 15 feet from the roof edge.
The purpose of this final provision is to provide additional distance for the worker to stop the mechanical equipment from moving toward an unprotected side or edge. The 10-foot minimum distance provides a safety zone that takes into account the momentum of the equipment workers may be using. Final paragraph (d)(3), which OSHA renumbered in the final rule to make it easier to follow, is consistent with the construction fall protection standard in § 1926.502(f)(1)(ii). OSHA did not receive any comments on the proposed provision and finalizes it as discussed above.
Proposed paragraph (d)(4), which the final rule does not retain, required that employers provide clear access paths to designated areas. The proposal specified that the path have warning lines on both sides attached to stanchions that comply with the strength, height, and visibility requirements in proposed paragraph (d)(2). OSHA drew the proposed rule from the warning line system requirements in the construction fall protection standard in § 1926.502(f)(1)(iii) and (iv).
OSHA requested comment on whether the proposed requirement is necessary to protect general industry workers when they travel to and from designated areas. AFSCME supported the proposed requirement, stating, “We believe that such an access path to the designated area is absolutely necessary for work on roofs when other fall protection is not provided” (Ex. 226). Other commenters recommended that OSHA give employers more flexibility in delineating access paths to designated areas (Exs. 180; 189). In this regard, NGS recommended allowing employers to use contrasting color markings painted on the roof to designate access paths (Ex. 180), while Ameren said OSHA should consider allowing employers to use rubber mats for access paths (Ex. 189).
Several commenters recommended that OSHA delete the proposed requirement. Ameren urged OSHA to delete the proposed requirement because it “could be burdensome if the path of travel to a work area on a roof is down the center of the roof especially if the delineation must be along the entire route and not just around the `work area' ” (Ex. 189). Clear Channel Outdoor, Inc. (CCO) said the proposed requirement was not necessary:
Based upon CCO's experience that employees do not trip or fall when traversing to and from the access ladder, CCO does not believe that installing an access path with safety cables or stations adds to safety in any measurable way. Accordingly, CCO supports the designated work area concept, but does not believe that a designated access path is necessary (Ex. 121).
Based on stakeholder comments and other information in the record, OSHA decided not to retain proposed paragraph (d)(4) in the final rule. OSHA agrees with commenters that the proposed access path requirement is not necessary, especially on large roofs that require employers to erect long access paths. Evidence in the record suggests that many low-slope roofs in general industry are quite large. For example, Edison Electric Institute (EEI) commented that “[s]ome flat roofs in a general industry setting could be the size of several football fields” (Ex. 207). Although OSHA is deleting the proposed access path requirement, the Agency stresses that employers still must train workers, in accordance with final § 1910.30, about the potential fall hazards in the work area, which includes accessing the work area, and the proper set-up and use of designated areas.
Final paragraph (e) addresses criteria and practices for covers that employers use to protect workers from falling into a hole in a walking-working surface, including holes in floors, roofs, skylights, roadways, vehicle aisles, manholes, pits, and other walking-working surfaces. The final rule consolidates and updates the cover criteria and practice requirements in the existing rule (
Final paragraph (e)(1) requires that employers ensure any cover they use to prevent workers from falling into a hole in a walking-working surface is capable of supporting, without failure, at least twice the maximum intended load that may be imposed on the cover at any one time. The final rule clarifies and simplifies the proposed rule, and makes it consistent with other provisions in the final rule, by replacing the proposed language with “maximum intended load,” which OSHA consistently uses throughout the final rule. The final rule in § 1910.21(b) defines “maximum intended load” as the total load (weight and force) of all employees, equipment, vehicles, tools, materials, and other loads the employer reasonably anticipates to be applied to a walking-working surface at any one time; in this case, the walking-working surface is a cover. The final rule is consistent with A10.18-2012 (Section 7.1.1.4), which requires that trench and manhole covers support at least twice the maximum intended load.
The language in the final rule differs from the proposal, the construction fall protection standard, and the existing rule. The proposed and construction rules require that covers in roadways and vehicle aisles be capable of supporting “twice the maximum axle load of the largest vehicle expected to cross over the cover” (see proposed paragraph (e)(1) and § 1926.502(i)(1)), and that all other covers support “twice the weight of employees, equipment, and materials imposed on the cover at any one time” (proposed paragraph (e)(2)). The existing rule in § 1910.23(e)(7) states that trench, conduit, and manhole covers must support a truck rear-axle load of at least
OSHA believes that using the single, uniform term “maximum intended load” makes the final rule easier to understand than the proposed rule, and is consistent with a number of other requirements in the final rule. In addition, the term clearly states that covers must be capable of supporting twice the weight and force expected to be placed on them. By using the term “maximum intended load,” which includes the weight and force of all vehicles, equipment, tools, materials, workers, and other loads, OSHA consolidates the cover requirements into a single provision that applies the same, uniform criteria to all covers. OSHA also believes that establishing a uniform standard for all covers eliminates potential confusion and needless repetition.
Ellis commented that the proposed rule did not define the “adequacy and walkability” of covers (Ex. 155). The Agency believes that paragraph (e)(1) of the final rule establishes “adequacy” criteria using performance-based measures (
A cover may be a plywood board or perhaps OSB or temporarily and more dangerously a section of drywall to keep out dust and weakens when wet. The new to America Platform Nets should be accommodated for maintenance work to allow walkable fabric covers to be used for walking across holes and open spaces (Ex. 155).
Final paragraph (e)(2) (proposed paragraph (e)(3)) requires that employers secure covers to prevent accidental displacement. Accidental displacement of hole covers can occur due to a number of factors. For example, weather conditions such as wind, floods, snow, and ice can cause covers to become displaced. Heavy equipment running back and forth over covers also can loosen or displace them.
The final rule expands and revises both the existing and proposed rules. The final rule expands existing § 1910.23(a)(9), which only applies to “floor holes,” to include holes in any walking-working surface that employers protect with covers. Final paragraph (e)(2) expands and revises the proposed rule in two ways. First, the final rule eliminates, as unnecessary, the examples in proposed paragraph (e)(3) of conditions that may cause displacement of covers. Second, the final rule revises the proposed language to make clear that employers must keep covers firmly secured at all times. The proposed rule in paragraph (e)(3), like the construction fall protection standard in § 1926.502(i)(3), only specified that employers secure covers firmly “when installed.” However, in light of Ellis' comment that “[l]ong‐term covers which are acknowledged to be weak or degrade in the elements should have minimum requirements to follow for safety and structural inspection” (Ex. 155), OSHA believes it is important to clarify that employers ensure that covers remain firmly secured after installation.
The final rule does not retain proposed paragraphs (e)(4) and (5). Proposed paragraph (e)(4) required that employers ensure covers were color coded or marked with the word “HOLE” or “COVER” to warn workers of the hazard. Proposed paragraph (e)(5) specified that proposed paragraph (e)(4) did not apply to cast-iron manhole covers or steel grates, such as those on streets and roadways. OSHA drew both proposed requirements from the construction fall protection standard in § 1926.502(i)(4).
In the proposed rule, OSHA requested comment on the need to include proposed paragraph (e)(4) in the final rule and information on the extent to which employers already mark or color code covers. OSHA received one comment on the proposed requirement. NGS said the proposed requirement was not necessary because “[t]he proposed standard already requires that covers be properly designed, constructed and secured, thus engineering out the hazard” (Ex. 180). OSHA agrees with this comment; the requirements in final paragraphs (e)(1) and (2), that employers ensure covers are strong enough to support the weight to be placed on them and are secured in place at all times, eliminates the need to also color code or label them as a hazard. Covers that meet the requirements of the final rule are not hazards. Therefore, OSHA deletes proposed paragraph (e)(4) because it is unnecessary.
Since the final rule does not carry forward the proposed marking requirement, proposed paragraph (e)(5) exempting certain covers from that requirement is no longer necessary. NGS also said that proposed paragraph (e)(5) is not necessary (Ex. 180). They pointed out that “[m]anhole covers and steel grates are already exempt from the marking requirement” (Ex. 180). OSHA agrees. Final paragraphs (e)(1) and (2) provide adequate protection; therefore, the Agency is not carrying forward the provision in the final rule.
Final paragraph (f) sets criteria and practice requirements for handrails and stair rail systems. These requirements cover height, finger clearance, surfaces, stair rail openings, handholds, projection hazards, and strength. The final rule in § 1910.21(b) defines “stair rail system” as a barrier erected along the exposed or open side of stairways to prevent workers from falling to a lower level, while “handrails” are rails used to provide workers with a handhold for support.
In final paragraph (f)(1), which addresses handrail height criteria, OSHA revised the language on measuring height criteria to make it uniform and consistent throughout final paragraph (f)(1). For example, final paragraph (f)(1) incorporates uniform terminology (
Final paragraph (f)(1)(i) requires that employers ensure each handrail is not less than 30 inches and not more than 38 inches high, as measured from the leading edge of the stair tread to the top surface of the handrail. The height criteria in final paragraph (f)(1)(i) differs from the handrail height in both the existing and proposed rules. Existing § 1910.23(e)(5)(ii) requires that handrails be between 30 and 34 inches in height. The proposed rule required the height of handrails to be between 30 and 37 inches as measured from the upper surface of the top rail to the surface of the tread, in line with the face of the riser at the forward edge of the tread, which is consistent with both the
OSHA revised the final rule in response to a comment from the National Fire Protection Association (NFPA), which pointed out that the NFPA 101 Life Safety Code, an “ANSI-accredited national expert code,” permits a 38-inch maximum handrail height (Ex. 97). NFPA recommended that the final rule also allow a 38-inch handrail height so handrails built in accordance with the NFPA 101-2012, Life Safety Code (Ex. 385) would not be “non-compliant” (Ex. 97). NFPA also said that their recommendation was “technically sound as borne out by the research of Jake Pauls while he was on staff at the National Research Council Canada in the 1970s and 1980s” (Ex. 97). In addition, NFPA appeared to suggest a 38-inch maximum handrail height would provide support for a broader range or workers (
OSHA agrees that handrails built in accordance with NFPA 101 are acceptable, and is adopting this recommendation in the final rule; therefore, in the final rule the Agency increased the maximum handrail height by one inch, from 37 inches to 38 inches, which Figure D-12 illustrates. Since both the existing and proposed handrail height requirements come within revised final paragraph (f)(1)(i), OSHA does not expect that employers will have any problems complying with the final rule. The final rule simply provides employers with greater compliance flexibility.
Final paragraph (f)(1)(ii) establishes the height requirement for stair rail systems. Employers must ensure:
• The height of stair rail systems installed
• The height of stair rail systems installed
The final rule revises the requirements in both the existing and proposed rules. The existing rule in § 1910.23(e)(2) requires that the height of a stair railing be not less than 30 inches nor more than 34 inches as measured from the upper surface of the stair tread to the top edge of the top rail. The final rule eliminates the maximum height requirement for existing stair rail systems.
The proposed rule would have raised the minimum height of new and replacement stair rails to 36 inches. The final rule, however, requires that new and replacement systems be at least 42 inches in height. In the proposed rule, OSHA explained that a 36-inch minimum height would make the general industry requirement consistent with the construction stairways standard in § 1926.1052(c)(3), and would afford a reasonable level of safety to workers (75 FR 28897). However, OSHA also discussed a University of Michigan study indicating that the minimum stair rail system height should be 42 inches, and also suggested that even 42 inches may not be adequate (Ex. OSHA-S041-2006-0666-0004). OSHA also noted that A1264.1-2007 (Section 5.5) establishes a 42-inch maximum stair rail system height. The Agency requested comment about raising the minimum stair rail system height to 42 inches.
OSHA received one comment. NFPA recommended raising the minimum height of stair rail systems to 42 inches, which would make the final rule consistent with the NFPA 101 Life Safety Code (Ex. 97). NFPA indicated that a 42-inch minimum stair rail system height would be more protective than the proposed height, and that research supported the 42-inch minimum height. Accordingly, NFPA stated, “A minimum 42-inch high guard is needed to prevent a ninety-fifth percentile male from falling over the rail upon striking the side of a stair. This was documented in Jake Pauls' work of the 1970s and 1980s while he was on staff at the National Research Council Canada” (Ex. 97). NFPA also said that the University of Michigan study supported raising the minimum stair rail system height. OSHA agrees that NFPA's recommendation would make the final rule more protective for a broader range of workers than the proposed rule and, therefore, requires that stair rail systems installed on or after the effective date of the final rule be at least 42 inches as measured from the leading edge of the stair tread to the top surface of the top rail. OSHA notes A10.18-2012 (Sections 4.1.2 and 5.2) requires that stair rail systems be 42 inches, plus or minus three inches.
OSHA also requested comment about whether the final rule should establish a maximum height for stair rail systems like A1264.1-2007. In the preamble to the proposal, OSHA said the purpose of stair rail systems is to prevent workers from falling over the edge of open-sided stairways, and that eliminating a maximum height would give employers greater flexibility to install stair rail systems they considered to be safer (75 FR 28897).
OSHA notes that the 42-inch stair rail height (final paragraph (f)(1)(ii)(B)) is prospective. It only applies to new and replacement stair rail systems installed on or after January 17, 2017.
Under the proposed rule, the new height requirements would have taken effect 90 days after the effective date, and Ameren recommended lengthening the phase-in period, saying, “Lead time for material orders are often quite longer than three months often up to years to order material for large capital projects.” Ameren stated later, “Stipulations of `ordered' material should be imposed in regard to the date of the final rule because the time between ordering and placing into service is often greater than 90 days” (Ex. 189).
However, OSHA believes 60 days gives employers adequate time to come into compliance with the final rule and to change the specifications of any stair rail systems they have on order. The NFPA 101 Life Safety Code has been in place for a number of years, and the NFPA said that today stair rail systems “are being installed at a minimum 42-inch height for compliance with nationally-recognized, expert model codes like NFPA 101 Life Safety Code” (Ex. 97). Accordingly, OSHA believes most employers already are in compliance with the final rule, and the remainder will be able to comply with this prospective requirement when the final rule becomes effective. The final rule will not affect existing stair rail systems; therefore, there is no requirement to retrofit stair rail systems. The final rule will continue to allow stair rails installed before the new requirement takes effect to meet the existing requirement.
Finally, OSHA deleted the proposed note to paragraphs (f)(1)(i) and (ii) because it is unnecessary. The proposed note explained the criteria for measuring the height of handrails and stair rail systems. The final rule includes the measurement criteria in final paragraphs (f)(1)(i) and (ii). OSHA believes this deletion makes the final rule easier to read and follow than the proposal.
Final paragraph (f)(1)(iii) permits employers to use the top rail of stair rail systems as a handrail only when:
• The height of the stair rail system, which Figure D-13 illustrates, is not less than 36 inches and not more than
• The top rail of the stair rail system meets the other handrail requirements in final paragraph (f) of this section (final paragraph (f)(1)(iii)(B)).
The proposed provision was consistent with the construction stairways standard in § 1926.1052(c)(7), which also allows employers to use top rails of stair rail systems as a handrail under specified conditions. OSHA believes a top rail of a stair rail system, under some conditions, may effectively and safely perform the function of both a stair rail system and handrail. Allowing employers to use stair rail top rails as handrails under these conditions provides employers with compliance flexibility without compromising worker safety when employers comply with the required conditions of use.
In response to NFPA's comments, OSHA revised final paragraph (f)(1)(iii) in three ways. First, for the reasons discussed final paragraph (f)(1)(i), the final rule raises the required height of stair rail top rails used as handrails to not less than 36 inches, but not more than 38 inches, from the proposed height of not less than 36 inches, but not more than 37 inches. This change makes the final rule consistent with the NFPA 101 Life Safety Code, and will protect a broader range of workers (Ex. 97).
Second, because the final rule requires that all stair rail systems installed on or after the effective date, which is January 17, 2017, must be at least 42 inches in height, final paragraph (f)(1)(iii)(A) is only applicable to stair rail systems installed before the effective date. Third, OSHA adds to the final rule the requirement that employers may use stair rails as handrails only if the stair rails also meet the other requirements in paragraph (f). NFPA recommended that OSHA allow the use of stair rails as handrails only if they also meet the handhold requirements in proposed paragraph (f)(5). NFPA recommended an addition to the proposed provision, stating:
[The addition] recognize[s] the stair rail as an acceptable handrail not only based on height but if it additionally provides the handhold required of a handrail. The user would not otherwise know that the stair rail needs graspability as the provision of 1910.29(f)(5) is written to have applicability to handrails, not specifically to stair rails that are at an appropriate height so as to serve as a handrail (Ex. 97).
OSHA agrees with NFPA that the final standard should only allow employers to use stair rail top rails as handrails if the top rail “has the shape and dimension necessary so employees can grasp it firmly to avoid falling” (see final paragraph (f)(5)). However, OSHA also believes that employers can use stair rails as handrails only if the stair rails also meet other handrail requirements such as having smooth surfaces (see final paragraph (f)(3)) and no projection hazards (see final paragraph (f)(6)). OSHA revises the final rule accordingly.
Final paragraph (f)(2) requires that employers ensure there is a finger clearance of at least 2.25 inches between handrails (including the top rail of a stair rail system being used as handrails) and any other object (such as a wall). Workers need adequate clearance space so they are able to maintain a firm grasp on the handrail while they go up and down workplace stairs.
The proposed rule would have required a three-inch minimum clearance for handrails and stair rails. OSHA explained that the proposed minimum clearance would make the general industry rule consistent with the construction stairways standard (§ 1926.1052(c)(11)), which also requires a minimum clearance of three inches for handrails that will not be a permanent part of the structure being built.
In 1990, OSHA first proposed revising the existing three-inch finger clearance requirement to a minimum of 1.5 inches. OSHA explained that the revision would make the rule consistent with local building codes; ANSI A12.1-1973, Safety Requirements For Floor and Wall Openings, Railings, and Toeboards; draft revised A1264.1; and ANSI A117.1-1986, Providing Accessibility and Usability for Physically Handicapped People (Ex. OSHA-S041-2006-0666-0054). The A1264.1-2007 (Section 5.9) standard eventually adopted a 2.25-inch minimum finger clearance.
In the 2010 proposal, OSHA said it proposed to retain the existing three-inch minimum clearance so the general industry rule would be consistent with the construction stairways standard, thereby facilitating compliance for employers who perform both general industry and construction activities. OSHA also said the difference between the three-inch minimum clearance in the proposed, existing, and construction standards and the 2.25-inch minimum clearance in A1264.1-2007 was not “significant” (75 FR 28897). Nonetheless, OSHA asked for comment on whether the Agency should adopt the 2.25 inch requirement instead.
NFPA submitted a comment recommending that
(1) for consistency among the model codes [which require only a 2.25-inch finger clearance], (2) so that owners operators are not surprised with a violation after complying with the model codes, and (3) because there is no technical basis for requiring more than 2
NFPA also disagreed with the Agency's characterization of the difference between OSHA's existing and proposed three-inch minimum finger clearance and the 2.25 clearance in A1264.1-2007 as “not significant,” stating:
Where a 3-inch finger clearance is used for handrails at both sides of a stair in place of a 2
With the exception of NFPA's claim that a three-inch clearance will increase building construction costs, OSHA finds convincing NFPA's reasons for recommending a 2.25-inch minimum clearance space. A 2.25-inch minimum finger clearance will make the final rule consistent with NFPA 101 as well as ANSI/ASSE A1264.1-2007, and the International Building Code-2012 (IBC-2012). OSHA believes that following those consensus standards will prevent confusion and ensure the final rule complies with section 6(b)(8) of the OSH Act. In addition, since 2.25 inches is a minimum clearance, employers may continue to use a three-inch clearance. Therefore, OSHA believes the 2.25-inch minimum clearance in the final rule provides greater compliance flexibility for employers.
Final paragraph (f)(3) requires that employers ensure handrails and stair rail systems are smooth-surfaced to protect workers from injury, such as punctures or lacerations, and to prevent catching or snagging of clothing, including protective clothing. OSHA revises the final provision to make it consistent with final (b)(6), for guardrail systems.
The final provision is consistent with the existing rules for stair rails in § 1910.23(e)(3)(v)(
Final paragraph (f)(4), like the proposed rule, requires that employers ensure no opening in a stair rail system exceeds 19 inches at its least dimension. Final § 1910.21(b) defines “stair rail system” as a barrier erected along the “exposed or open side of stairways to prevent employees from falling to a lower level.” Stair rail systems, like guardrail systems, need to limit the openings in the exposed or open sides of stairways to prevent workers from falling through to a lower level. Limiting the openings also can prevent objects from falling through the opening and hitting workers who are below, although openings that are 19 inches apart may not prevent some objects from falling.
The final provision is consistent with the construction fall protection and stairways standards in §§ 1926.502(b)(2)(iii) and (iv) and 1926.1052(c)(4)(iii) and (iv), respectively, for openings in stair rail and guardrail systems. The existing rule in § 1910.23(e)(1) requires a midrail “approximately halfway between the top rail and the [walking-working surface].” OSHA did not receive any comments on the proposed provision and adopts it as discussed above.
Final paragraph (f)(5), like the proposed rule, requires that employers ensure handrails (including top rails of stair rail systems serving as handrails (final paragraph (f)(1)(iii)), have the shape and dimension necessary so workers can grasp the handrail firmly. The final rule is similar to the construction stairways standard in § 1926.1052(c)(9). The existing rule at existing § 1910.23(e)(5)(i) requires that handrails be of a rounded or other section that furnishes an adequate handhold to avoid falling. Similarly, the A1264.1-2007 standard (Section 5.8) requires that handrails be rounded with a cross sectional design that furnishes an adequate handhold for anyone grasping it to avoid failing. A10.18-2012 (Section 6.3) also requires a handhold to grasp to avoid falling.
OSHA received a comment from NFPA saying the proposed requirement was too vague. In its comment, NFPA stated:
The provision . . . requires someone to judge whether a handrail's shape and dimensions provide a firm handhold for employees. The requirement is too performance-based without providing guidance as to what is intended with respect to a `firm' handhold. Its enforcement will be subjective (Ex. 97).
Handrails conforming with one of the following features are deemed to comply with the requirement for handhold: (i) The handrail has a circular cross section with an outside diameter of not less than 1
OSHA does not believe it is necessary to add to final paragraph (f)(5) the specification language NFPA recommends. Requirements on handrail and stair rail system handholds have been in place for many years, and OSHA is not aware of any employers experiencing difficulties in ensuring handrails, and top rails serving as handrails, are of the size and dimension that provide a handhold that workers can grasp firmly. OSHA also believes that retaining the performance-based language gives employers flexibility to select the shape and size of handrail that will provide the most effective handhold in particular workplace situations. For example, the performance-based language allows employers to take advantage of anthropometric testing and research to select the size and shape of handrails that provide a firm grasp for the broadest range of workers. Although OSHA is not adopting the language NFPA recommends, the Agency notes that employers who install handrails and top rails of stair rails systems that meet the specification of the NFPA 101 Life Safety Code will be in compliance with final paragraph (f)(5).
Final paragraph (f)(6), like the proposed rule, requires that employers ensure the ends of handrails and stair rail systems do not present any projection hazard. OSHA drew the final provision from the existing general industry rule in § 1910.23(e)(5)(i) and the construction stairways standard in § 1926.1052(c)(10). The final rule also is consistent with A1264.1-2007 (Section 5.8).
OSHA believes it is necessary to prevent or eliminate projection hazards so workers do not walk or fall into a protruding handrail or stair rail system and get injured. Projection hazards also can snag or catch workers' clothing or equipment and cause workers to lose their balance and fall on, or down, the stairway. A fall on a stairway could seriously injure, or even kill, a worker. OSHA did not receive any comments on the proposed rule and adopts the provision as discussed above.
Final paragraph (f)(7), similar to the proposed rule, requires that employers ensure handrails, and the top rails of stair rail systems, are capable of withstanding, without failure, a force of at least 200 pounds applied in any downward or outward direction within 2 inches of any point along the top edge of the rail.
OSHA believes it is necessary that handrails and top rails on stair rail systems be able to withstand a force of at least 200 pounds to protect workers from falling to a lower level when they lean on or over handrails and top rails, or if they fall against a rail. If handrails and top rails cannot support a 200-pound force, workers could receive serious injuries or die from falling over the open or exposed side of the stairway.
The proposed rule required that handrails and top rails be capable of withstanding the specified test load “without permanent deformation or a loss of support.” The final rule replaces the proposed language with the term “without failure.” Final § 1910.21(b) defines “failure” as a load refusal, breakage, or separation of component parts. It is the point at which the ultimate strength is exceeded which encompasses loss of support. Failure does not include all “permanent deformation,” but rather deformation that reduces the structural integrity or support capability of a part or member. OSHA believes the term “without failure” clearly reflects the type of deformation the final rule addresses. In addition, OSHA uses the term “without failure” throughout the final rule (
The final rule is almost identical to the construction stairways standard in § 1926.1052(c)(5). The existing general industry rule included strength-criteria requirements (“200 pounds applied in any direction at any point”) for “completed” stair rail systems (see existing § 1910.23(e)(3)(iv)) and handrail mountings (see existing § 1910.23(e)(5)(iv)). Similarly, the A1264.1-2007 standard ( Section 5.6.1) specifies that completed railing systems must be able to withstand a concentrated load of 200 pounds “applied in any direction, except up, at the midpoint between posts without exceeding maximum allowable deflection.” OSHA did not receive any
Final paragraph (g) establishes criteria and practice requirements for cages, wells, and platforms used with fixed ladders. As discussed above in this preamble, final § 1910.28 limits, and eventually phases out, the use of cages and wells as a means of fall protection on fixed ladders. After the final phase-out deadline, employers must ensure all fixed ladders have ladder safety systems or personal fall arrest systems to protect workers from falling to a lower level. Final paragraph (g) includes an informational note reminding employers that final § 1910.28 establishes the requirements that employers must follow on the use of cages and wells as a means of fall protection. OSHA notes that the requirements in final paragraph (g) do not apply once a ladder safety system or personal fall arrest system has been installed on the fixed ladder as required by final § 1910.28(b)(9).
Final paragraph (g)(1), similar to the proposed rule, requires that employers ensure cages and wells installed on fixed ladders are designed, constructed, and maintained to permit easy access to, and egress from the ladder that they enclose. The final rule divides the other proposed requirements into separate provisions, which makes the final rule easier to understand and follow.
Consistent with the OSH Act (29 U.S.C. 655, 6(b)(5)), final paragraph (g)(1) replaces the specification requirements for cages and wells in existing § 1910.27(d) with performance-based language that specifies the performance objective of the final rule (
Final paragraph (g)(1) adds language specifying that employers ensure cages and wells, in addition to being designed and constructed to provide easy access to and egress from the fixed ladder, are maintained in that condition. This language reinforces the general maintenance and safe access and egress requirements in final § 1910.22. OSHA did not receive any comments on the proposed rule and adopts the provision with the clarifications discussed above.
Final paragraph (g)(2), like proposed paragraph (g)(1), requires that employers ensure cages and wells are continuous throughout the length of the fixed ladder, except for access, egress, and other transfer points. Requiring that cages and wells cover the entire length of the fixed ladder is necessary to ensure that cages and wells are effective in containing and directing workers to a lower landing.
Final paragraph (g)(2) recasts into plain language two provisions in the existing general industry rule and is consistent with the construction ladder standards that address the length of cages on fixed ladders. Both the existing general industry and construction standards require that cages extend along the fixed ladder to a point that is not less than seven feet nor more than eight feet above the base of the ladder (see existing § 1910.27(d)(1)(iv) and § 1926.1053(a)(20)(vii)). These standards also require that the tops of cages extend at least 42 inches above the top of the platform or the point of access at the top of the ladder (see existing § 1910.27(d)(1)(iii) and § 1926.1053(a)(20)(viii)). A14.3-2008 (Sections 6.1.2.4 and 6.1.2.5) also includes similar requirements. OSHA did not receive any comments on the proposed rule and adopts it with the revised performance-based language discussed above.
Final paragraph (g)(3), similar to proposed paragraph (g)(1), requires that employers ensure cages and wells are designed, constructed, and maintained so they contain workers in the event of a fall and direct them to a lower landing. Like final paragraph (g)(1), and consistent with the OSH Act (29 U.S.C. 655, 6(b)(5)), final paragraph (g)(3) replaces detailed specification requirements in the existing rule in § 1910.27(d) with performance-based language. OSHA believes the performance-based language gives employers greater flexibility in designing, constructing, and maintaining cages and wells than the existing standard. OSHA did not receive any comments on the proposed provisions and finalizes the provision as discussed above.
Final paragraph (g)(4), like existing § 1910.27(d)(2)(ii) and proposed paragraph (g)(2), requires that employers ensure landing platforms used with fixed ladders provide workers with a horizontal surface that is at least 24 inches by 30 inches. The final rule is consistent with ANSI A14.3-2002.
OSHA notes that fixed ladder platforms, like other walking-working surfaces, also must comply with the load requirements in final § 1910.22(b). That is, fixed ladder platforms must be capable of supporting the maximum intended load that employers will impose on them. OSHA did not receive any comments on the proposed requirement and adopts it as discussed.
Final paragraph (h) establishes temporary criteria and practice requirements for employers engaged in outdoor advertising (billboard) operations (hereafter referred to as “outdoor advertising operations” and “outdoor advertising employers”). As final § 1910.28(b)(9) and (10) specify, and the note to this paragraph reinforces through its reference to § 1910.28, outdoor advertising employers may allow their workers
The effect of final § 1910.28(b)(9) and (10) is to phase out the exception to the fall protection requirements that apply to climbing fixed ladders that OSHA provided in a variance granted in 1991 to Gannett Outdoor (56 FR 8801 (3/1/1991)), and extended to all outdoor advertising operations in a 1993 OSHA directive (Fixed Ladders Used on Outdoor Advertising Structures/Billboards in the Outdoor Advertising Industry, STD 01-01-014 (1/26/1993)) (Ex. 51).
Final paragraph (h) specifies the requirements that apply during the phase out period. OSHA drew the requirements in proposed and final paragraph (h) from the 1993 outdoor advertising directive. OSHA stresses that during the phase out period, outdoor advertising employers must: (1) Ensure workers climbing fixed ladders wear a body harness equipped with an 18-inch rest lanyard (final § 1910.28(b)(10)(ii)(B)); and (2) ensure workers are protected by a fall
Final paragraph (h)(1), like the proposed rule, requires that outdoor advertising employers ensure that each worker who climbs fixed ladders without fall protection is physically capable to perform those duties that employers may assign. To ensure that workers are physically capable, final paragraph (h)(1) requires that employers either observe workers performing actual climbing activities, or ensure workers undergo a physical examination.
Final paragraph (h)(1) clarifies the proposed rule by making explicit that the determination of a worker's physical capability, whether demonstrated by actual observation of climbing or by physical examination, must include whether workers are physically capable of climbing fixed ladders without fall protection as a regular part of their job duties. OSHA believes the key aspect of physical capability is the ability to climb without using fall protection. Such climbing requires particular strength, agility, and vigilance to prevent falling. Although most employers ensure workers are physically capable to do the job, OSHA believes that the additional language clarifies that the physical examination also must consider whether the worker has the physical ability to climb fixed ladders without fall protection. OSHA added the phrase “including climbing fixed ladders without using fall protection” to the final provision to clarify that one of the duties that workers in the outdoor advertising industry may be assigned is climbing fixed ladders that are not equipped with a ladder safety system or personal fall arrest system. Only after demonstrating the necessary ability and skill in climbing may employers allow workers to climb without using fall protection (see discussion in final § 1910.28(b)(10)).
OSHA received one comment on the proposed provision. Ellis said OSHA should eliminate the outdoor advertising exception “unless medical qualification is added;” however, he did not provide any explanation to support the recommendation (Ex. 155). If Ellis is recommending that physical examinations include a “medical qualification” component, OSHA believes that the vast majority of all standard physical examinations include medical tests. In addition, OSHA believes that appropriate physical examinations to determine physical ability to climb fixed ladders without fall protection include medical tests such as blood pressure, electrocardiogram, blood, pulmonary, vision, balance, reflex, and other similar medical examinations. As such, OSHA does not believe it is necessary to specify required medical tests in the final rule.
Ellis appears to be recommending that employers must ensure workers have both a physical examination and perform actual climbing activities to demonstrate they are physically capable of climbing fixed ladders without fall protection. OSHA believes the current requirement does not need to be changed because the Agency is phasing out climbing fixed ladders without fall protection. OSHA notes, however, that outdoor advertising employers are free to provide their workers with both a physical examination and have them perform actual climbing activities to demonstrate physical capability.
Final paragraphs (h)(2) and (3) are companion requirements that specify what training employers must provide (final paragraph (h)(2)) and how they must provide it (final paragraph (h)(3)) to ensure workers have the necessary skills to climb fixed ladders without fall protection. OSHA notes that the training outdoor advertising employers must provide in final paragraphs (h)(2) and (3) is in addition to the training they must provide under final § 1910.30.
Final paragraph (h)(2), similar to the proposed rule, requires that outdoor advertising employers ensure their workers who climb fixed ladders without fall protection (1) successfully complete a training or apprenticeship program that includes hands-on training for the safe climbing of ladders, (including fixed ladders without fall protection and portable ladders); and (2) receive retraining as necessary to ensure they maintain necessary skills.
Successful completion of a training or apprenticeship program means workers are proficient in all aspects of the job, including climbing without fall protection. For example, workers who successfully finish their training or apprenticeship program will know at least (1) how to safely transition from fixed ladders to work platforms and portable ladders; (2) the correct angle for safely climbing portable ladders; (3) how to properly attach to ladder safety systems and personal fall arrest systems at certain ladder heights and when transitioning to work platforms; and (4) the impacts of various environmental conditions on safely climbing fixed ladders without fall protection and what action to take. These training tasks address particularly dangerous climbing conditions, and OSHA believes completion of training or an apprenticeship program is only successful if workers are proficient in these types of tasks. If an employer observes, or has reason to believe, that workers are no longer proficient in climbing fixed ladders without fall protection, final paragraph (h)(2) requires that they provide retraining to restore the worker's proficiency.
OSHA notes that final paragraph (h)(2), like the proposal includes language specifying that employee training on safe climbing must include “hands-on” training. OSHA believes that workers must have opportunities to train on ladders and with the equipment they will use to perform their work (
Final paragraph (h)(3), like the proposed rule, requires that outdoor advertising employers ensure workers possess the skill to climb ladders safely as demonstrated through:
• Formal classroom training or on-the-job training; and
• Performance observations.
To develop the necessary skills and proficiency to climb fixed ladders without fall protection, OSHA believes that worker training must consist of two components: Formal classroom training or on-the-job training on safe climbing of ladders, and worker demonstration of proficiency of ladder climbing skills. Employers must ensure workers receive formal classroom or on-the-job training, and then are personally observed demonstrating their skills and proficiency before considering a training or apprenticeship program to be “successfully completed.” OSHA stresses that workers must successfully complete the training and demonstration of climbing skills and proficiency before employers may allow or assign workers to climb ladders unsupervised as part of their job. The same is true for on-the-job training, which is not “learn as you work” training. The purpose and structure of on-the-job training must be to teach workers and help them develop, through observation and practice, the necessary skills and proficiency to climb fixed ladders without fall protection before assigning them to perform regular climbing jobs unsupervised. OSHA did not receive any comments on the proposed provision and adopts it as discussed above.
Final paragraph (h)(4), like the proposed rule, requires that employers permit workers to climb fixed ladders
Ellis recommended eliminating “qualified climbers” unless OSHA requires that employers supervise all climbing on fixed ladders (Ex. 155). OSHA does not believe Ellis' recommendation is needed. The final rule requires that outdoor advertising workers who climb fixed ladders without fall protection receive extensive training before employers assign them to perform regular climbing activities. That training includes classroom or hands-on training plus observation of worker climbing proficiency. In addition, employers must train those workers in fall and equipment hazards, and provide retraining as necessary (see final § 1910.30). OSHA believes the training requirements in the final rule are adequate to ensure that outdoor advertising workers have the skills necessary to climb fixed ladders unsupervised without fall protection during the phase-out period. Therefore, OSHA did not adopt the commenter's recommendation.
Final paragraph (i) establishes criteria and practice requirements for ladder safety systems permanently attached to fixed ladders or immediately adjacent to such ladders. A ladder safety system is a system designed to eliminate or reduce the possibility of falling from a ladder (see definition of “ladder safety system” in final § 1910.21(b)). According to this definition, it usually consists of the following:
• A carrier, also called “a lifeline,” which is a rigid or flexible track attached to or adjacent to the fixed ladder;
• A safety sleeve, which is moving component that travels on the carrier;
• A lanyard;
• Connectors; and
• A body harness.
Although the existing rule (§ 1910.21(e)(13)) defines “ladder safety devices,” which serve the same purpose as ladder safety systems, the existing rule does not specify criteria or practice requirements for those devices. As a result, OSHA drew many of the proposed ladder safety system criteria and practice requirements from the construction ladder standard (§ 1926.1053(a)(22) and (23)).
Final paragraph (i)(1) requires that employers must ensure each ladder safety system allows workers to climb up and down the fixed ladder with both hands free for climbing. The final rule also specifies that the design of the ladder safety system must be such that it does not require that workers continuously hold, push, or pull any part of the system while they are climbing. Final paragraph (i)(1) is consistent with the construction ladder standard in § 1926.1053(a)(22)(ii) and A14.3 (Section 7.3.1).
In commenting on the proposed rule, NGS pointed out:
Some forms of ladder safety systems (
The purpose of the proposed provision was to ensure that the ladder safety system allows workers to use both hands while they are in the process of climbing up and down the fixed ladder; it does not prohibit them from using their hands to position or adjust components of the ladder safety system, such as rope grabs, while stopping and standing in place at certain points along the ladder. OSHA believes the ladder safety system lanyard will protect workers from falling to a lower level in these situations; however, their hands must be free when they resume climbing. The final rule clarifies the provision by adding the term “continuously” in place of “continually.” OSHA believes this change reinforces clearly that workers need to hold onto the ladder with both hands while climbing, but they may perform tasks when they stop climbing.
Final paragraph (i)(2), like the proposed rule, requires that employers ensure the connection between the carrier or lifeline and the point of attachment to the body harness or belt does not exceed 9 inches in length. The purpose of this provision is to limit the length of any fall and resulting arrest forces. The final rule ensures that no fall exceeds 18 inches, which will limit the arresting forces. The final rule is almost identical to the construction ladder standard in § 1926.1053(a)(22)(iv). The A14.3-2008 standard (Section 7.3.3) also limits the lanyard length to 9 inches.
Ellis commented that OSHA should prohibit the use of body belts with ladder safety systems, and pointed out that the A14.3-2008 standard specifies harnesses instead of body belts as part of a ladder safety system (Ex. 155). He added that “[a]ll manufacturers have changed at this stage to harness[es] for this climbing device” (Ex. 155). OSHA agrees that most employers provide body harnesses for use with ladder safety systems because harnesses distribute arresting forces across a broader portion of the body, which makes them safer than body belts. However, since the final rule limits the lanyard length to 9 inches, the maximum free fall will be 18 inches. OSHA believes a maximum free fall of 18 inches will not put an excessive arresting force on workers even if they are using body belts instead of harnesses. As such, like the construction ladder standard, OSHA does not believe it is necessary to prohibit the use of body belts with ladder safety systems.
Final paragraph (i)(3), like the proposed rule, requires employers to ensure that mountings for rigid carriers are attached at each end of the carrier, with intermediate mountings spaced, as necessary, along the entire length of the carrier so the system has the strength to stop worker falls. The requirements in the final rule are consistent with the construction ladder standard (§ 1926.1053(a)(23)(i)). The A14.3-2008 standard (Section 7.3.4) also requires that rigid carriers on ladder safety systems have mountings at the end of each carrier and intermediate mountings along the carrier. However, that standard establishes specification requirements for intermediate mountings instead of the performance-based language in the final rule. A14.3-2008 requires intermediate mountings spaced along the carrier in accordance with manufacturer's recommendations, and installed within one foot below each splice on the carrier, with at least one mounting every 25 feet.
The purpose of final paragraph (i)(3) is to ensure the ladder safety system carrier remains in place and supports the worker, if a fall occurs, by attaching the carrier (or lifeline) firmly to the fixed ladder throughout the length of the ladder. To ensure that the carrier has the strength necessary to hold a falling worker, the final rule requires that employers install an adequate number of mountings spaced “as necessary” along the entire carrier length. OSHA believes that manufacturer's instructions likely identify the number
Final paragraph (i)(4), similar to the proposed rule, requires that employers ensure flexible carriers have mountings attached at each end of the carrier. The final rule also requires the installation of cable guides for flexible carriers at least 25 feet apart, but not more than 40 feet apart, along the entire length of the carrier. The final rule is consistent with both the construction ladder standard (§ 1926.1053(a)(23)(ii)) and A14.3-2008 (Section 7.3.5). The purpose of the requirement is to ensure the system has the strength necessary to stop worker falls and, as the construction ladder standard indicates, to prevent wind damage to the ladder safety system and its components. OSHA did not receive any comments on the proposed provision and finalizes it with the clarifications discussed above.
Final paragraph (i)(5), like the proposed rule, reinforces final paragraphs (i)(3) and (i)(4) by requiring employers to ensure that the design and installation of mountings and cable guides do not reduce the design strength of the ladder. The final rule is consistent with both the construction ladder standard in § 1926.1053(a)(23)(iii) and A14.3-2008 (Section 7.1.4). OSHA did not receive any comments on the proposed provision and adopts it with a minor change for clarity.
Final paragraph (i)(6), like the proposed rule, requires that employers ensure ladder safety systems and their support systems are capable of withstanding, without failure, a drop test consisting of an 18-inch drop of a 500-pound weight. This drop test, therefore, must arrest and suspend the 500-pound weight without damage to or failure of the ladder safety system and its support system and without the test weight hitting a lower level (such as the ground). The final rule is consistent with both the construction ladder standard in § 1926.1053(a)(22)(i) and A14.3-2008 (Section 7.1.3).
Ellis recommended that the final rule include a test to determine whether horizontal thrust will cause the ladder safety system to fail (Ex. 155). He also recommended that the final rule incorporate the program of eight tests Great Britain's Health and Safety Executive established. OSHA notes the A14.3 Committee did not adopt those tests, and footnote 7 in the A14.3-2008 standard states there is no scientific determination currently available (in 2008) on this issue to support any action. Ellis did not provide any evidence to support adopting his recommendation.
Ameren recommended that OSHA only require that employers comply with the ladder safety systems criteria and practice requirements when they install new or replacement fixed ladders and ladder safety systems, stating, “It could very easily be financially burdensome for an employer to replace safe, operating systems to meet proposed requirements” (Ex. 189). The final rule basically follows the approach Ameren recommends. The final rule (final § 1910.28(b)(9)) does not require that employers immediately install ladder safety systems (or personal fall arrest systems) on existing fixed ladders (
Final paragraph (j), like the proposed rule, requires that body belts, body harnesses, and other components used in personal fall arrest systems, work positioning systems, and travel restraint systems, meet the applicable requirements in final § 1910.140. The final § 1910.140 preamble discusses the criteria and practice requirements for those personal fall protection systems, and addresses stakeholder comments.
As discussed earlier in this preamble, the final rule in § 1910.28(c) requires that employers protect workers from being hit by falling objects by keeping objects, including tools, materials, and equipment, far enough away from the exposed edge to prevent them from falling to a lower level, and by using one or more of the following falling object protection measures: (1) Toeboards, screens, or guardrail systems; (2) canopy structures; or (3) barricading the area and prohibiting workers from entering the barricaded area.
Final paragraph (k) establishes criteria and practice requirements for the measures that final § 1910.28(c) requires. The existing rule in § 1910.23(e)(4) contains limited requirements for toeboards and guardrails, and OSHA drew criteria and practice requirements for these measures from the construction fall protection standard in § 1926.502(j), A10.18-2012 (Section 4.1.5), and A1264.1-2007 (Section 5.7).
Final paragraph (k)(1) establishes criteria and practice requirements for toeboards, which the final rule in § 1910.21(b) defines as a low protective barrier that is designed to prevent materials, tools, and equipment from falling to a lower level. The final definition also specifies that toeboards protect workers from falling to a lower level.
Final paragraph (k)(1)(i), similar to proposed paragraph (k)(1), requires that employers ensure toeboards, when used for falling object protection, are erected along the exposed edge of the overhead walking-working surface for a length that is sufficient to protect workers below. In determining how much of the walking-working surface must have toeboards, employers not only must provide toeboards where objects are placed or piled, but also take into account that objects may move or roll on a walking-working surface before going over an exposed edge. In addition, employers must consider where employees may be working on a lower level. The final rule is consistent with the construction fall protection standard in § 1926.502(j)(1). OSHA did not receive any comments on the proposed provision and adopts it as proposed, with minor editorial revisions.
Final paragraph (k)(1)(ii), like proposed paragraph (k)(2)(i), requires that employers ensure the minimum vertical height of toeboards is 3.5 inches, as measured from the top edge of the toeboard to the level of the walking-working surface. The existing rule in § 1910.23(e)(4) requires a four-inch nominal vertical toeboard height, but does not indicate the permissible deviation from that height. However, to make the provision consistent with the construction fall protection standard,
OSHA stresses that, like the construction fall protection standard in § 1926.502(j)(3), the required 3.5-inch toeboard height is the minimum height. If employers have objects or materials near the toeboard that are higher than the toeboard, they must ensure the toeboard height is sufficient to prevent the objects from falling over the edge to a lower level, as specified in final paragraph (k)(2). OSHA notes that when objects are piled higher than the toeboard, final paragraph (k)(2) requires employers to erect guardrail systems that have paneling or screening installed from the top edge of the toeboard to the top rail or midrail of the guardrail system. (See further discussion of final paragraph (k)(2) below.) OSHA did not receive any comments on the proposed requirement and finalizes it as discussed above.
Final paragraph (k)(1)(iii), similar to existing § 1910.23(e)(4) and proposed paragraph (k)(2)(i), requires that employers ensure toeboards do not have an opening or clearance of more than 0.25 inches above the walking-working surface. This is measured from the walking-working surface to the bottom of the toeboard. The purpose of this requirement is to ensure that objects cannot fall off the walking-working surface through any drainage openings in the toeboard. The final rule is consistent with the construction fall protection standard (§ 1926.502(j)(3)), A10.18-2012 (Section 5.7), and A1264.1-2007 (Section 4.1.5).
Final paragraph (k)(1)(iv) is a companion provision to final paragraph (k)(1)(iii). Like proposed (k)(2)(i), it requires that employers ensure toeboards are solid or, if they have openings, the openings do not exceed 1 inch at their greatest dimension. OSHA acknowledges that the toeboards employers use in outdoor work areas may need drainage openings to prevent water from collecting on the walking-working surface, resulting in slips and falls. Therefore, this provision, along with final paragraph (k)(1)(iii), requires employers to ensure that such drainage openings do not exceed a height of
OSHA did not receive any comments on the requirements in proposed paragraph (k)(2)(i) and adopts final paragraphs (k)(1)(iii) and (iv) as discussed above.
Final paragraph (k)(1)(v), like proposed paragraph (k)(2)(ii), requires that employers ensure toeboards used around vehicle repair, service, and assembly pits (pits) have a minimum height of 2.5 inches. The height is measured from the walking-working surface to the top edge of the toeboard. The final rule also includes an exception, which specifies that employers do not have to erect toeboards along the exposed edges of a pit if they can demonstrate the toeboard would prevent access to a vehicle that is over the pit.
The final rule recognizes that shorter toeboards are adequate to protect workers from being hit by falling objects when vehicles are over the pit because the space between the toeboard and the vehicles is small enough to prevent most objects from falling into the pit. When vehicles are not over the pit, toeboards are not necessary because employees are not working in the pit and, thus, not exposed to a falling object hazard. Therefore, the exception is necessary because toeboards, even short ones, would prevent workers from accessing the vehicle to perform repair, service, or assembly work.
The final rule clarifies the proposed toeboard exception in two respects. First, the final rule states more clearly than the proposal that the toeboard exception applies only when “employers can demonstrate” that erecting toeboards would prevent access to a vehicle. In the preamble to the proposal, OSHA explained that employers have the duty to show that toeboards would prevent vehicle access (75 FR 28899). The final rule adds that language to the regulatory text to clarify this requirement.
Second, the final rule clarifies that the exception is limited. It only applies to those parts and sections of exposed edges where erecting toeboards would prevent access to a vehicle that is over a pit. The final rule still requires that employers erect toeboards at other exposed edges. OSHA did not receive any comments on the proposed provision and exception, and finalizes them with the clarifications explained above.
Final paragraph (k)(1)(vi), like proposed paragraph (k)(4), requires that employers ensure toeboards are capable of withstanding, without failure, a force of at least 50 pounds, applied in any downward or outward direction at any point along the toeboard. OSHA drew the requirement from the construction fall protection standard in § 1926.502(j)(2). The existing rule in § 1910.23(e)(4) does not include this requirement; rather, the existing provision specifies that employers securely fasten toeboards and they be made of “any substantial material.”
As defined in final § 1910.21(b), “failure” means a load refusal (
Final paragraph (k)(2)(i), like proposed (k)(3), establishes criteria and practice requirements where tools, equipment, or materials are piled higher than the toeboard. Where such items are piled higher than the toeboard, the employer must install paneling or screening from the toeboard to the midrail of the guardrail system and for a length that is sufficient to protect employees below. If the items are piled higher than the midrail, the employer must install paneling or screening to the top rail of the guardrail and for a length that is sufficient to protect employees below.
The final provision uses the same approach as the construction fall protection standard in § 1926.502(j)(4) when objects are piled higher than the toeboard. The construction standard requires that employers install paneling or screening from the walking-working surface or toeboard to the top of the guardrail or midrail. In addition to requiring that employers use guardrail systems in such cases, final § 1910.28(c)(2) requires that employers must protect workers from falling objects by keeping objects far enough from the exposed edges to prevent them from falling to a lower level. OSHA
OSHA notes final paragraph (k)(2)(i) requires that employers use guardrail systems equipped with “paneling or screening” rather than vertical members specified in final § 1910.29(b). Even though the final rule requires that the distance between vertical members must not exceed 19 inches, OSHA believes that some items, such as heavy tools, can fall through those openings. Paneling, such as solid paneling, or screening will prevent piled objects from falling through the guardrail system to a lower level.
Final paragraph (k)(2)(i), like proposed paragraph (k)(5), also requires that employers ensure the paneling or screening they install extends for a distance along the guardrail system that is sufficient to protect workers below from falling objects. The final rule is consistent with the guardrail requirement in final paragraph (b)(2) of this section, and the construction fall protection standard in § 1926.502(j)(4). Final paragraph (k)(2)(i) also is consistent with existing § 1910.23(e)(4). The A1264.1-2007 standard (Section 5.7) allows employers to use guardrail systems equipped with screening or additional toeboards, to protect workers from falling objects.
Final paragraph (k)(2) consolidates into one provision the proposed criteria and practice requirements for guardrail systems used as falling object protection (see proposed paragraphs (k)(3) and (5)). OSHA believes this consolidation makes the final rule easier to understand and follow than the proposal.
OSHA notes that, except when specified elsewhere, guardrail systems used for falling object protection also must meet the guardrail requirements in final paragraph (b) of this section, such as the strength requirements for paneling and screening (see final paragraph (b)(5)).
OSHA received one comment on the proposed rule. Ellis supported the proposed requirement to install barriers to prevent objects from falling through openings (Ex. 155). He also recommended that materials used for paneling or screening include sheet metal, gratings, and netting (Ex. 155). OSHA notes that A1264.1-2007 (Section 5.7) requires that paneling or screening used for falling object protection have at least 18-gauge thickness. Although the final rule uses performance-based language, OSHA notes that paneling or screening that meets the ANSI/ASSE standard would comply with final paragraph (k)(2).
Final paragraph (k)(2)(ii), like proposed paragraph (k)(5), requires that employers ensure openings in guardrail systems are small enough to prevent objects from falling through the openings. The final rule is consistent with the construction fall protection standard in § 1926.502(j)(5). OSHA is adopting the proposed rule with only minor editorial change.
Final paragraph (k)(3) establishes requirements for using canopies as falling object protection. Like proposed paragraph (k)(6), the final rule establishes a performance-based provision requiring that employers ensure canopies are strong enough to prevent collapse and penetration when struck by any falling object. The final rule adds language clarifying that the strength requirements in final paragraph (k)(3) only apply to canopies that employers use to protect workers from falling objects, not to all canopies. OSHA did not receive any comments on the proposed measure and finalizes the provision with the editorial change discussed above.
Final paragraph (l) specifies criteria and practice requirements for grab handles that employers provide, such as at a hoist area. Workers often use grab handles when they lean through or over the edge of the access opening to facilitate hoisting operations. The final rule in § 1910.21(b) defines a “hoist area” as any elevated access opening to a walking-working surface through which equipment or materials are loaded or received.
The final rule does not retain a portion of proposed § 1910.28(b)(2)(ii), which required that employers provide a grab handle on each side of the access opening at hoist areas whenever guardrail systems, gates, or chains are removed to facilitate a hoisting operation and a worker must lean through the opening or over the edge of the access opening. However, if employers do provide grab handles, final paragraph (l) requires that they must ensure the grab handles meet the criteria and practice requirements in final paragraph (l). The existing rule requires that employers provide grab handles on each side of wall openings and holes, and on “extension platforms onto which materials can be hoisted for handling” (see existing § 1910.23(b)(1)(i) and (ii)), and also establishes criteria that wall opening grab handles must meet (see existing § 1910.23(e)(10)). Neither the construction fall protection standard in § 1926.501 nor any national consensus standard requires the use of grab handles at hoist areas.
OSHA decided to retain the criteria and practice requirements in final paragraph (l) to clarify that employers who provide grab handles must ensure those handles are safe and effective. Moreover, retaining the criteria and practice requirements addresses Ameren's recommendation that OSHA explain what qualifies as a grab handle in the final rule, requesting that OSHA “be specific as to not cause confusion or misinterpretation” (Ex. 189).
Final paragraph (l)(1), like the proposed rule, requires that grab handles employers provide must be at least 12 inches in length. This final provision is consistent with the existing rule in § 1910.23(e)(10). OSHA believes that 12-inch handles will provide workers with an adequate grip space.
Final paragraph (l)(2), similar to existing § 1910.23(e)(10) and the proposed rule, specifies that grab handles employers install at hoist access openings must provide at least three inches of clearance from the framing or opening. OSHA believes a three-inch clearance is essential to ensure workers have adequate space to wrap their hands around the handle and grip it firmly, if they lean out of the opening during hoisting operations, thereby preventing falls.
Final paragraph (l)(3), like the proposed rule, specifies that grab handles employers provide must be capable of withstanding a maximum horizontal pull-out force equal to two times the maximum intended load or 200 pounds, whichever is greater. The existing rule in § 1910.23(e)(10) has similar language requiring that grab handles be capable of withstanding 200 pounds applied horizontally at any point along the handle. OSHA believes the required strength criteria will ensure that grab handles remain in place when workers hold onto them and lean their bodies out of an access opening. OSHA is adopting final paragraph (l) with the clarifications discussed.
Final § 1910.30, like the proposed rule, adds training requirements to 29 CFR part 1910, subpart D (subpart D). OSHA drew most of the new training requirements from the construction fall protection standard (29 CFR 1926.503). Final § 1910.30 requires training on fall and equipment hazards and, in certain situations, retraining. The final training
Some commenters said that employers are not providing fall protection training, which puts employees at significant risk of injury (Exs. 329 (1/19/2011, p. 86); 329 (1/20/2011, p. 99)). One worker testified that he received no training at any company where he worked, saying, “It was learn as you go” (Ex. 329 (1/19/2011, p. 86)).
OSHA believes that the new training requirements are necessary, and effective worker training is one of the most critical steps employers can take to prevent employee injuries and fatalities. Generally, commenters supported adding training requirements to subpart D (Exs. 53; 73; 96; 127; 172; 189; 205; 216; 222; 226; 329 (1/19/2011, pgs. 22, 24); 364). For example, the AFL-CIO said, “[T]raining requirements are necessary to ensure that workers can identify the fall hazards they face in their workplaces and understand how they can be protected” (Ex. 172). The American Society of Safety Engineers (ASSE) agreed, saying, “[A]ppropriate training is a key element of managing every kind of workplace safety risks” (Ex. 127).
The National Grain and Feed Association (NGFA) stated, training “programs are vital, first and foremost, to safeguard lives and prevent injuries” (Ex. 329 (1/20/2011, p. 248)). Sam Terry, president of Sparkling Clean Window Company, and Dana Taylor, executive vice president of Martin's Window Cleaning, also stressed that proper training is critical to reduce workplace injuries and illnesses (Exs. 222; 362). Mr. Terry said, “The lack of proper training is probably the most significant contributor to accidents and incidents when suspended work is performed” (Ex. 362). He added that most, if not all, of the accidents involving rope descent systems and suspended scaffolding since 1977 that he reviewed “could have been prevented if the employees had received proper training” (Ex. 163). Similarly, Mr. Russell Kendzior, president of the National Floor Safety Institute (NFSI), stated, “Approximately 8 percent of all slips, trips and falls are directly caused by improper or lack of employee training” (Ex. 329 (1/21/2011, p. 204)). The International Window Cleaning Association (IWCA), which has spent years researching and analyzing accident data and industry practices, told OSHA that “inadequate training” was one of the leading causes of accidents among window cleaners (Ex. 364).
Some commenters, however, opposed the proposed training requirements. Mr. Charles Lankford, of Rios & Lankford International Consulting, opposed the application of some training requirements because they do not exempt employers who rely exclusively on guardrails or safety net systems. He said, “[Those] systems . . . are completely passive in their protective characteristics and do not require any special knowledge on the part of the protected employees” (Ex. 368). OSHA does not agree with the commenter. Regardless of whether a fall protection system is passive, it will be effective only if it is installed, inspected, used, maintained, and stored properly and safely. OSHA believes that workers need special and specific knowledge to perform these tasks correctly. For example, to ensure that safety net systems protect employees in the event of a fall, employees must know, or be able to calculate, how much weight the net will hold in the particular situation. Therefore, OSHA believes that workers who use any type of fall protection system must receive proper training. (See discussion of final paragraph (b)(1) for additional explanation.)
The National Chimney Sweep Guild (NCSG) opposed the proposed training requirements for workers who use personal fall protection systems, saying that they duplicated and overlapped the personal protective equipment (PPE) training that § 1910.132(f) requires:
This would place an inappropriate and unnecessary burden on employers, employees and compliance personnel in sorting out the confusion presented by the redundant, overlapping and varying provisions addressing the same issues. Furthermore, unless the rule would allow sweeps to receive generic hazard training (rather than site-specific training), this requirement would be economically infeasible for sweeps (Ex. 150).
As explained in the proposal, OSHA acknowledges that some of the training requirements in § 1910.30 may overlap those in § 1910.132. To the extent that any provisions do overlap, OSHA does not believe that it burdens employers because training that complies with one standard satisfies the employer's obligation under the other standard. That said, OSHA believes that the training requirements in final §§ 1910.30 and 1910.132(f) complement each other and, therefore, ensure that workers receive comprehensive training. For example, final § 1910.30(a)(3)(i) requires that employers train workers how to recognize the need for PPE while § 1910.132(f)(1)(i) requires that employers train employees to know what PPE is necessary and fits. Also, § 1910.30(a)(iii) requires that employers train workers in the correct and safe use of personal fall protection systems, while § 1910.132(f)(1)(iv) requires training on the limitations of those systems.
The final rule does not require that training be site-specific; that is, provided the site where employees are performing the job. However, to be effective the training that employers provide needs to address the hazards which their employees may be exposed. OSHA believes that NCSG already may be providing this training. For example, NCSG said they provide shop classes at individual businesses as well as on-the-job training. In addition NCSG said the chimney sweep training program lasts six to 12 months and during that training workers are “exposed to a lot of different situations” (Ex. 329 (1/18/2011), p. 274).
Commenters also supported OSHA's performance-based approach to the training requirements. For example, the National Cotton Ginners' Association (NCGA) (Ex. 73) and the Texas Cotton Ginners' Association (TCGA) (Ex. 96) both said, “We believe it is most beneficial to keep this section general so that each employer may review their own operation to determine which employees need to receive specific training.”
Final paragraph (a), like the proposed rule, contains training requirements related to fall hazards.
Final paragraph (a)(1) also requires that employers train each worker required to receive training under subpart D. Subpart D requires worker training in several situations, including:
• When employees use a rope descent system (RDS) (§ 1910.27(b)(2)(iii));
• When employees work on an unguarded working side of a platform
• When employees operate motorized equipment on dockboards not equipped with fall protection (
In the proposed rule, OSHA invited comment on whether the final rule should expand the scope of the fall hazard training in paragraph (a)(1) to cover all fall hazards over four feet (including ladders); training on the safe use of ladders; and training to avoid slips, trips, and falls on the same level of a walking-working surface (75 FR 28900). Some commenters urged OSHA to expand the scope of the training requirements. For instance, Mr. Bill Kojola of the AFL-CIO said, “It is our view that the training requirements in the final rule need to be expanded to include training for all workers exposed to fall hazards over 4 feet (including those using ladders), those using portable guardrails, and for all workers using portable and fixed ladders” (Ex. 172;
Mr. Kojola also urged OSHA to expand training to cover “the hazards of falls on the same level” (Ex. 363). He cited the testimony of Mr. Kendzior (NFSI) who said that the current annual cost of falls to the same level “tops more than 80 billion dollars a year” (Ex. 363, citing Ex. 329 (1/21/2011, p. 201)).
The American Federation of State, County and Municipal Employees (AFSCME) also supported expanding the scope of paragraph (a)(1), stressing the importance of training for employees who use ladders:
Training should not be limited to workers who used a specific fall protection system. All workers should have hazard recognition training that includes prevention of falls from any height or surface. Because ladders are so common in the workplace, they are often considered “safe.” Yet many incident reports include injuries or near misses using a ladder. Any worker who is required to use a ladder in his/her work duties should get basic information on use, care, and limitations of ladders (Ex. 226).
Ellis Fall Safety Solutions also supported adding ladder training to the final rule (Ex. 155).
On the other hand, some commenters opposed expanding the scope of the training requirements. NCGA and TCGA both said:
It is a difficult task to predict where falls may occur in an individual operation and it becomes an insurmountable task to predict where falls are most likely to occur on a general industry basis. Having a more prescriptive list of instances in this section may lead an employer to focus on the list, rather than focusing on the areas of highest risk in his individual facility (Exs. 73; 96).
After analyzing the comments and other information in the record, OSHA decided to adopt the proposed fall hazard training scope without substantive change. For several reasons, OSHA believes that the scope of final paragraph (a)(1) is appropriate, and it is not necessary to expand the paragraph's scope. First, the scope of final § 1910.30(a)(1) is broad. It requires that employers train all workers who use personal fall arrest systems, travel restraint systems, and positioning systems. The final rule, like the proposal, gives employers great flexibility in selecting what type of fall protection system to use, and OSHA believes that many employers will use personal fall protection systems to protect their workers from fall hazards.
Second, in addition to the workers who must receive training under final paragraph (a)(1), final § 1910.30(b) requires that employers also train each worker who uses equipment covered by subpart D in the proper use, inspection, care, maintenance, and storage of that equipment. The equipment includes, but is not limited to, ladder safety systems, safety net systems, portable guardrails, and mobile ladder stands and platforms. Thus, as AFL-CIO, AFSCME, and other commenters recommended, employers must train each worker who uses fixed ladders equipped with ladder safety systems so they know the proper use, inspection, care, maintenance, and storage of that equipment.
Third, employees are also protected by the inspection, control, work practice, and design requirements in subpart D. For instance, final § 1910.23 specifies many design and work practice requirements for portable ladders. Under the final rule, employers are responsible for providing portable ladders that comply with the design requirements, as well as for ensuring that their workers understand and follow the work practices in § 1910.23. OSHA believes that the measures in the final rule, taken as a whole, establish an effective plan to protect workers from slip, trip, and fall hazards.
In final paragraph (a)(1), OSHA added language to clarify the date by which employers must train workers who use personal fall protection systems or who are required to be trained on fall hazards as specified elsewhere in subpart D. Additionally, the Agency added language to the final rule requiring employers to train workers before the worker can be exposed to the fall hazard. As noted in the preamble to the proposed rule, OSHA intended to include this language in the regulatory text (75 FR 28899). Accordingly, employers must train their current workers after OSHA publishes the final rule, and train newly-hired workers before initially assigning them to a job where they may be exposed to a fall hazard. To give employers adequate time in which to develop and provide initial training, OSHA is allowing employers six months, on or before May 17, 2017, to train their workers in the requirements specified in § 1910.30(a).
Edison Electric Institute (EEI) said OSHA should not require employers to provide initial training if they have previously trained workers:
The proposed regulation should allow employers to consider previously delivered training as compliant. Employers should not be required to retrain employees just because the new regulation is finalized. Work practices by many employers will not be changed by the new regulation and they should not be required arbitrarily to retrain employees (Ex. 207).
OSHA agrees with EEI's comment. An employer whose workers have received training, either from the employer or another employer, that meets the requirements of final § 1910.30(a) will not need to provide additional initial training. However, many of the training requirements in final § 1910.30 are new, and if the initial training workers already have received does not meet all of the requirements in the final rule, employers will need to provide initial training on those requirements.
OSHA does not think the requirement to provide training for workers whose previous training does not meet the final rule or to provide initial training for new workers will pose significant difficulties for employers. Many commenters said that they train workers annually or continually (Ex. 329 (1/19/2011, pgs. 25, 45, 240, 413); 329 (1/20/2011, p. 284)). Since the final rule allows employers six months to provide initial training that complies with final § 1910.30, OSHA believes that most employers will be able to work the required training into their existing annual or continuing training schedule.
Finally, in final paragraph (a)(1), OSHA deleted the second sentence of
Final paragraph (a)(2), like the proposed rule, requires that employers ensure a qualified person trains each worker in the requirements specified in § 1910.30(a). Final § 1910.21(b) defines “qualified” as a person who, by possession of a recognized degree, certificate, or professional standing, or who by extensive knowledge, training, and experience has successfully demonstrated the ability to solve or resolve problems relating to the subject matter, the work, or the project. OSHA believes that having a person who has a degree, certificate, or professional standing (hereafter “degree”) or extensive knowledge, training, and experience (hereafter “extensive knowledge”) in fall hazards, and who demonstrates ability to solve problems related to fall hazards, will help to ensure that employees receive effective training. Moreover, to stress the importance of this requirement and its application to all the training that § 1910.30 requires, OSHA made a separate provision for this requirement in the final rule.
OSHA notes that the construction fall protection standard, instead of specifying that a qualified person must train workers, requires that employers ensure that a competent person is qualified to train workers in each of the items and topics specified in § 1926.503(a)(2)(i)-(viii). Despite the difference in language between final §§ 1910.30(a)(2) and 1926.503(a)(2), OSHA believes the standards are consistent. OSHA believes that competent persons
For purposes of the final rule, a trainer must have, at a minimum, a “degree” that addresses, or “extensive knowledge” of: The types of fall hazards, how to recognize them, and the procedures to minimize them; the correct procedures for installing, inspecting, operating, maintaining, and disassembling personal fall protection systems; and the correct use of personal fall protection systems and other equipment specified in § 1910.30(a)(1). Because of the breadth of knowledge and demonstrated ability trainers in the final rule must have, OSHA believes that specifying that qualified persons must train workers best describes the capabilities necessary for training workers in the subjects § 1910.30(a) requires.
OSHA received several comments about the “qualified” person requirement in proposed paragraph (a)(2). Some commenters supported the proposed requirement. For instance, Mark Reinhart, owner of Award Window Cleaning Services (AWCS), said, “[T]raining must be by a person or persons that are experienced in the correct training procedures and competent in each area of training” (Ex. 216). He told of a company where he worked that used a veteran window cleaner to train a worker who, in turn, trained another worker:
The problem was they were all trained to be risk takers—no safety lines, no three points of contact on ladders, no safety for the public, nothing at all about fall protection. So my employer put me at risk without knowing or researching the industry to find best practices or rules governing the window cleaning industry (Ex. 216).
On the other hand, some commenters opposed the “qualified” person requirement in proposed (a)(2). One commenter said the requirement was “too stringent and restrictive” (Ex. 329 (1/20/2011, p. 298)). Mr. Lankford said that requiring qualified persons to train workers meant that trainers would have to be “a specialist in fall protection, such as a vendor, manufacturer or consultant-trainer” and not a “crew chief, foreman, operations person or similar positions, even if knowledgeable” (Ex. 368). Based on his interpretation of proposed paragraph (a)(2), Mr. Lankford concluded, “There is no convincing argument that the training would not be equally effective if provided by a competent person” (Ex. 368).
OSHA believes Mr. Lankford's interpretation of proposed paragraph (a)(2) is not accurate. The definition of “qualified” in the final rule (§ 1910.21(b)) allows employers to have crew chiefs, supervisors, operations personnel, or other individuals train workers, provided they have the necessary “degree” or “extensive knowledge” outlined in the definition of qualified, and specified in final § 1910.30(a). Final § 1910.30(a)(2) does not require that trainers possess a degree if they have the necessary knowledge, training, and experience. In fact, OSHA believes that many employers will draw upon the extensive knowledge and experience of their staffs to provide effective training. OSHA also notes that final § 1910.30(a)(2) does not require that employers use qualified persons who are employees. Employers are free to use outside personnel to train workers.
Mr. Lankford and EEI also raised concerns that requiring a qualified person to train workers would prohibit employers from using different training formats and technologies (Exs. 207; 368). Mr. Lankford said, “The [qualified person] requirement seems to exclude the use of audio-visual or computer-based-training for the purpose of complying with this requirement” (Ex. 368). Addressing the same issue, EEI said:
The OSHA regulation should allow employers to use technology to deliver training. Stand up training by a qualified person is not the only effective method of training. The OSHA regulation should allow employers to use computer based training, web based training, and video training to meet fall protection training requirements (Ex. 207).
Final paragraph (a)(2) does not require or prohibit a specific format for delivering training to workers. OSHA supports the use of different formats (
• A qualified person, as defined in § 1910.21(b), developed or prepared the training;
• The training content complies with the requirements in final § 1910.30; and
• The employer provides the training in a manner each worker understands (§ 1910.30(d)).
OSHA discusses this issue in further detail in the explanation of final paragraph (d) below.
OSHA notes that employers may provide training using a format that is web based or interactive computer-based. In such cases, a qualified person must be available to answer any questions workers may have to comply with final paragraph § 1910.30(a)(2).
Final paragraph (a)(3) specifies the minimum subjects and topics that fall hazard training must cover. Final paragraph (a)(3) requires that employers provide training in at least the following topics:
• The nature of fall hazards in the work area and how to recognize them (final paragraph (a)(3)(i));
• The procedures that must be followed to minimize the hazards (final paragraph (a)(3)(ii));
• The correct procedures for installing, inspecting, operating, maintaining, and disassembling the personal fall protection systems that the worker uses (final paragraph (a)(3)(iii)); and
• The correct use of personal fall protection systems and equipment, including, but not limited to, proper hook-up, anchoring, and tie-off techniques, and methods of equipment inspection and storage as specified by the manufacturer (final paragraph (a)(3)(iv)).
OSHA drew most of the requirements in final paragraph (a)(3) from the construction fall protection standard (§ 1926.503(a)(1) and (2)). However, OSHA revised final paragraph (a)(3) in several ways. First, as discussed above under final paragraph (a)(1), OSHA added to final paragraph (a)(3) the requirements to train workers in hazard recognition and the procedures to minimize fall hazards, which were in proposed paragraph (a)(1).
Second, OSHA revised final paragraph (a)(3)(iv), proposed paragraph (a)(2)(iv), to eliminate training employees on the “limitations” of personal fall protection systems. OSHA believes it is not necessary to include that requirement in final paragraph (a)(3) because § 1910.132(f)(1)(iv) already requires training that addresses the limitations of PPE, which includes personal fall protection systems.
Third, final paragraph (a)(3) does not include the proposed requirement that employers train workers in the use and operation of “guardrail systems, safety net systems, warning lines used in designated areas, and other protection” (proposed paragraph (a)(2)(iii)). OSHA does not believe this provision is necessary because final paragraph (b) already addresses most of these fall protection systems and measures.
Finally, OSHA changed the word “erecting” to “installing” in final paragraph (a)(3)(ii) (proposed paragraph (a)(2)(ii)). OSHA believes this clarification more accurately expresses the intent of the proposed paragraph.
Although commenters generally supported the required worker training topics and subjects outlined in final paragraph (a)(3) (Exs. 53; 189; 216; 226), others said OSHA should increase or eliminate some of the training requirements. Mr. Horton said that window cleaners need more detailed training than what OSHA proposed (Ex. 329 (1/19/2011, p. 22)). The Society of Professional Rope Access Technicians (SPRAT) recommended that OSHA specify “at least topics for knowledge, skills, and capabilities for each level of employee,” and require specific training and certification by an industry organization for rope access (Ex. 205). OSHA did not incorporate SPRAT's recommendations in the final rule. The Agency believes that the performance-based language in the final rule provides flexibility for employers, and does not prohibit employers from providing more specialized training or requiring certification or demonstration of the employee's knowledge, skills, and capabilities.
Ameren Corporation opposed requiring training to install and disassemble personal fall protection systems. Ameren said such training was not always necessary because some employees may not perform these tasks (Ex. 189). OSHA agrees that employers need not train employees in tasks that they do not perform. However, under the final rule, if a worker has to install and disassemble personal fall protection systems, the employer must ensure the worker knows how to perform those tasks safely and correctly before beginning the work.
Final paragraph (b), like the proposed rule, contains training requirements related to equipment hazards. The provisions require that employers ensure workers are trained in the following:
• The proper care, inspection, storage, and use of equipment covered by subpart D (final paragraph (b)(1));
• How to properly place and secure dockboards to prevent unintentional movement (final paragraph (b)(2));
• How to properly rig and use a rope descent system (RDS) (final paragraph (b)(3)); and
• How to properly set up and use designated areas (final paragraph (b)(4)).
Final paragraph (b)(1) applies to the extent that workers use equipment covered by subpart D. Under this provision employers must train workers in equipment as well as fall protection systems that final paragraph (a) does not cover. Therefore, as mentioned above, training in final paragraph (b)(1) must cover equipment such as safety net systems, ladder safety systems, warning lines, portable guardrails, and motorized materials handling equipment used on dockboards.
EEI said that OSHA should not require training in portable guardrails because “the purpose and use of these devices is obvious” (Ex. 207). While some workers may know how to set up and use portable guardrails, the same is not true for all workers, particularly new workers. Thus, final paragraph (b)(1) must cover portable guardrails to protect all workers from falls.
OSHA added language to final paragraph (b)(1) to clarify the date by which employers must train workers in equipment hazards. Accordingly, employers must train their current workers after OSHA publishes the final rule, and train newly hired workers before initially assigning them to a job where they may be exposed to a fall hazard. To give employers adequate time in which to develop and provide initial training, OSHA is allowing employers six months, until May 17, 2017, to provide the required training.
Like final paragraph (a), employers whose workers have received training, either from the employer or another employer, that meets the requirements of final § 1910.30(b) will not need to provide additional initial training to those workers. However, the training requirements in final § 1910.30 are new, and if the initial training workers already have received does not meet all of the requirements in the final rule, employers will need to provide initial training on those requirements.
Final paragraph (b)(2) requires employers to train workers who use dockboards on how to properly place and secure them to prevent unintentional movement. The Agency believes training in the proper positioning of dockboards (
Final paragraph (b)(3) requires employers to train workers who use RDS in the proper rigging and use of the equipment, in accordance with § 1910.27. The final rule eliminates the retraining requirement specified for RDS in proposed paragraph (b)(3) because final paragraph (c) of final § 1910.30
Paragraph (b)(4) is a new paragraph that OSHA added to the final rule requiring employers to train each worker who uses a designated area in the proper set up and use of the area. OSHA inadvertently left this training requirement out of the proposed rule. But OSHA intended to include this requirement in the proposed rule, and the preamble noted that “it is essential for authorized employees in designated areas” to be trained (75 FR 28889). Under the final rule in some situations OSHA permits employers to protect workers from “unprotected sides and edges” on low-slope roofs by using designated areas, which final § 1910.21(b) defines as “a distinct portion of a walking-working surface delineated by a warning line in which work may be performed without additional fall protection.”
Designated areas are not conventional fall protection systems or engineering controls. Designated areas are alternative fall protection methods that are effective only when set up and used correctly and safely. This alternative method relies heavily on employers properly delineating the designated area and successfully keeping workers within that area. To ensure workers follow the requirements for designated areas, OSHA believes it is important that employers train them so they know when they can use designated areas and how to set up designated areas and work in them safely.
Final paragraph (c), like the proposal, requires that employers retrain workers when they have reason to believe that those workers do not have the understanding and skill that final paragraphs (a) and (b) require. In particular, final paragraph (c) requires that employers retrain workers in situations including, but not limited to, the following:
• When workplace changes render previous training obsolete or inadequate (final paragraph (c)(1));
• When changes in the types of fall protection systems or equipment workers use renders previous training obsolete or inadequate (final paragraph (c)(2)); or
• When inadequacies in a worker's knowledge or use of fall protection systems or equipment indicate that the worker does not have the requisite understanding or skill necessary to use the equipment or perform the job safely (final paragraph (c)(3)).
The training requirements in this section impose an ongoing responsibility on employers to maintain worker proficiency. As such, when workers are no longer proficient, the employer must retrain them in the requirements of final paragraphs (a) and (b) before workers perform the job again. Examples of when retraining is necessary include:
• When the worker performs the job or uses equipment in an unsafe manner;
• When the worker or employer receives an evaluation or information that the worker is not performing the job safely; or
• When the worker is involved in an incident or near-miss.
Several commenters supported the proposed retraining requirements. For example, Andrew Horton, representing the SEIU Local 32BJ Window Cleaning Apprentice Training Program, said retraining is “imperative whenever there are changes in the working conditions, or there is an indication that prior training has not been effective” (Ex. 329 (1/19/2011, p. 24)).
OSHA received only one comment opposing retraining. Mr. Steve Smith of Verallia said the proposed retraining requirement was “too subjective and vague to allow for consistent application and/or enforcement.” He recommended that OSHA require “training upon initial employment and annually thereafter,” which OSHA's portable fire extinguisher standard requires (§ 1910.157) (Ex. 171).
OSHA disagrees that the performance-based language in proposed paragraph (c) is too vague and subjective. OSHA believes that final paragraph (c) specifies clearly when retraining is necessary. The language in final paragraph (c) is similar to the retraining provisions in other OSHA standards, including the PPE (§ 1910.132(f)(3)), lockout/tagout (§ 1910.147(c)(7)(iii)), and powered industrial truck standards (§ 1910.178(l)(4)). Those standards have been effective in ensuring that workers receive additional training when necessary. OSHA also believes that the performance-based retraining requirements in final paragraph (c) provide greater flexibility for employers than requiring annual retraining.
OSHA also disagrees with Mr. Smith's recommendation that OSHA limit the final rule to “training upon initial employment and annually thereafter.” This language appears to require that employers must train new workers, but would not have to train current employees after OSHA publishes the final rule. As discussed above, OSHA believes that employers need to provide retraining to current workers in accordance with final § 1910.30 when previous training is obsolete or inadequate. Finally, OSHA believes that identifying the specific situations when employers must provide retraining more precisely targets the real need for additional training than does an inflexible requirement such as annual training. Therefore, OSHA believes the final rule will be more effective, and will provide employers with more flexibility, than the alternative Mr. Smith recommends.
Final paragraph (d), like the proposed rule, requires that employers provide information and training to each worker in a manner that the employee understands. This language indicates that employers must provide information and instruction in a manner that workers receiving the training are capable of understanding so they will be able to perform the job in a safe and proper manner.
The final rule makes clear that training must account for the specific needs and learning requirements of each worker. For example, if a worker does not speak or adequately comprehend English, the employer must provide training in a language that the worker understands. Also, if a worker cannot read, employers will need to use a format, such as audio-visual, classroom instruction, or a hands-on approach, to ensure the worker understands the training they receive. Similarly, if a worker has a limited vocabulary, the employer must provide training using vocabulary the worker comprehends.
An increasing number of employers are using computer-based and web-based training (Exs. 207; 329 (1/20/2011, p. 191); 368). In such situations, final paragraph (d) requires that employers ensure that workers have adequate computer skills so they can operate the program and understand the information presented. Moreover, to ensure that employees “understand” computer-based training, as well as
OSHA believes that employers should not have difficulty complying with final paragraph (d), or any other provision in § 1910.30. Many industry, labor, and professional organizations; training consultants; vendors; and manufacturers already provide employers with training and training materials to ensure that workers understand how to perform the job and use equipment correctly and safely (Exs. 329 (1/18/2011, pgs. 82, 117, 186, 258); 329 (1/20/2011, pgs. 182, 287); 329 (1/21/2011, pgs. 9, 92, 200, 206)).
A number of commenters said they already provide bi-lingual or multi-lingual training (Exs. 329 (1/19/2011, pgs. 118, 241, 319, 352, 413, 416, 462)). In addition, training and professional organizations have bi-lingual training materials available. For instance, the International Window Cleaning Association Safety Certification Program provides a bi-lingual study curriculum (Ex. 222).
Many commenters said they already use different formats (
Some commenters said they are using “interactive training” to make training understandable. For instance, SEIU Local 32BJ said their window cleaner training programs are “highly interactive” (Ex. 329 (1/19/2011, pgs. 120-121)), and they support requiring “interactive” training. Diane Brown, senior health and safety specialist with AFSCME, agreed, stating, “Training should be as interactive as possible. We support . . . [adopting] training methods that ensure workers get the information they need” (Ex. 226). Eric Frumin, health and safety director with Change to Win, stated:
[I]t's not sufficient for OSHA to simply require employers to provide training in a language that workers understand. . . . It's one of the most important advances in OSHA rulemaking, to assure that the training is not only done in a language the workers understand, but that it's interactive, that workers have a chance to ask questions (Ex. 329 (1/19/2011, p. 119)).
Some commenters said OSHA should require that employers use specific training methods and techniques. For example, SEIU said training should include “some combination of hands-on and classroom training methods that have been so successful in our training” (Ex. 329 (1/19/2011, pgs. 25-26)). Ellis Fall Safety Solutions said that training methods must include the following:
[T]here has to be a written curriculum, a presentation and written or recorded tests [that] see if the material has been picked up and the final thing is to check by observing discretely if the work is being done to the proper methodology that was taught. All these are subject to verification by a CSHO (Ex. 155).
Some commenters said that supervision is necessary to ensure training is successful. For instance, Mr. Frumin said, “You can't take the chance that someone didn't understand the training. You've got to supervise them,” (Exs. 329 (1/19/2011, pgs. 122-23); 329 (1/21/2011, p. 21)).
OSHA agrees that many of the training methods and elements the commenters recommend can help to make workplace training understandable, and generally supports their use. The Agency also believes that the final rule should give employers flexibility to develop training programs and use those training methods that best fit the needs of their workers and workplace. Therefore, OSHA finalizes paragraph (d) with only minor revisions for clarity.
OSHA also received comment on other training issues, including whether the final rule should require a minimum amount of time for worker training. Mr. Horton of SEIU Local 32BJ urged that OSHA mandate that training be a “minimum number of hours to prevent any inadvertent or negligent training failures” (Ex. 329 (1/19/2011, p. 25)). In contrast, Mr. Robert Miller, senior safety supervisor with Ameren Corporation, said OSHA should not set time requirements for providing training because it would interfere with the performance-based approach in the proposed rule (Ex. 189). Proposed § 1910.30 did not require that training meet a minimum time requirement, and there is no minimum time requirement for training in final § 1910.30. OSHA notes that the preliminary and final economic analysis include times for training, but the Agency notes that it included those times only for the purpose of the estimating the costs of the final rule.
Finally, ASSE suggested that § 1910.30 include a specific reference to the ANSI/ASSE Z490.1 consensus standard (Criteria for Accepted Practices in Safety, Health and Environmental Training) as a source of guidance information for employers (Ex. 127). That voluntary standard establishes criteria for safety, health, and environmental training programs. OSHA agrees that the consensus standard may be a valuable source of information about training programs. However, it does not address walking-working surfaces or fall and equipment hazards and OSHA has decided to not reference the standard in the final rule.
OSHA is adding a new section to subpart I Personal Protective Equipment (PPE) (29 CFR 1910, subpart I) to address personal fall protection systems, which include personal fall arrest, travel restraint, and positioning systems (29 CFR 1910.140). The new section establishes requirements for the design, performance, use, and inspection of personal fall protection systems and system components (
OSHA also is adding two non-mandatory appendices that provide information to help employers select, test, use, maintain, and inspect personal fall protection equipment (Appendix C) and examples of test methods for personal fall arrest and positioning systems to ensure that they meet the requirements of § 1910.140 (appendix D).
In the final rule, OSHA adapts many provisions from its other fall protection standards, primarily Powered Platforms for Building Maintenance (29 CFR 1910.66, appendix C); Personal Fall Arrest Systems in Shipyard Employment (29 CFR 1915.159); Positioning Device Systems in Shipyard Employment (29 CFR 1915.160); and Fall Protection in Construction (29 CFR part 1926, subpart M). These adaptations ensure that OSHA fall protection rules are consistent across various industries. OSHA notes that other standards also require the use of
Similar to the final rule revising 29 CFR part 1910, subpart D, final § 1910.140, when appropriate, also draws from national consensus standards addressing personal fall protection systems. Those standards include:
• ANSI/ALI A14.3-2008, American National Standards for Ladders—Fixed (A14.3-2008) (Ex. 8);
• ANSI/ASSE A10.32-2012, Personal Fall Protection Used in Construction and Demolition Operations (A10.32-2012) (Ex. 390);
• ANSI/ASSE Z359.0-2012, Definitions and Nomenclature Used for Fall Protection and Fall Arrest (Z359.0-2012) (Ex. 389);
• ANSI/ASSE Z359.1-2007, Safety Requirements for Personal Fall Arrest Systems, Subsystems, and Components (Z359.1-2007) (Ex. 37);
• ANSI/ASSE Z359.3-2007, Safety Requirements for Positioning and Travel Restraint Systems (Z359.3-2007) (Ex. 34);
• ANSI/ASSE Z359.4-2013, Safety Requirements for Assisted-Rescue and Self-Rescue Systems (Z359.4-2013) (Ex. 22);
• ANSI/ASSE Z359.12-2009, Connecting Components for Personal Fall Arrest System (Z359.12-2009) (Ex. 375); and
• ANSI/IWCA I-14.1-2001, Window Cleaning Safety (I-14.1-2001) (Ex. 10).
The final rule adopts a number of the provisions in proposed § 1910.140 with only minor, non-substantive technical or editorial changes. For many of these provisions, OSHA did not receive any comments from the public. Other provisions in the final rule include revisions based on information in the record and comments OSHA received. OSHA also revised provisions in the proposed rule to clarify the final rule, thereby making it easier for employers, workers, and others to understand.
Paragraph (a) of the final rule specifies that employers must ensure each personal fall protection system that part 1910 requires complies with the performance, care, and use criteria specified in § 1910.140. This section defines “personal fall protection system” as a system that workers use to provide protection from falling, or safely arrest a fall if one occurs (§ 1910.140(b)). As mentioned earlier, personal fall protection systems include personal fall arrest, travel restraint, and positioning systems.
OSHA notes that not only does § 1910.140 apply to the new and revised requirements in subpart D, but also it applies to existing requirements in part 1910 that mandate or allow employers to protect workers from fall hazards using personal fall protection systems (§§ 1910.66; 1910.67; 1910.268; and 1910.269).
OSHA believes that the scope of final § 1910.140 and the requirements the final rule establishes are necessary. Importantly, OSHA did not receive any comments opposing the scope and application in paragraph (a). OSHA believes that without establishing design and performance criteria, there is risk that personal fall protection systems, particularly personal fall arrest
• The wrong or inadequate system (especially one that is not strong enough for the particular application in which it is being used);
• A system not tested or inspected before use;
• A system not rigged properly;
• A system that does not have compatible components; or
• A system on which workers are not properly trained.
For several reasons, OSHA believes that employers should not experience significant difficulty complying with the final rule. Most of the requirements in the final rule come from OSHA's existing fall protection standards, as well as national consensus standards addressing fall protection, which also have been in place for years and represent industry best practices. Accordingly, OSHA believes that virtually all personal fall protection systems manufactured today meet the requirements in those standards as well as final § 1910.140. In addition, to assist employers in complying with the rule, OSHA includes an appendix in the final rule to provide employers with readily accessible information that will help them comply with final § 1910.140.
Final paragraph (b) defines terms that are applicable to final § 1910.140. OSHA believes that defining key terms will make the final rule easier to understand and, thereby, will increase compliance.
OSHA drew most of the definitions in paragraph (b) from existing OSHA and national consensus standards on fall protection. For instance, many of the terms in this paragraph also are found in the Powered Platforms standard (§ 1910.66(d) and appendix C); construction standards (§§ 1926.450(b), 1926.500(b) and 1926.1050(b)), and the shipyard employment PPE standard (§ 1915.151). OSHA believes that having consistent definitions across the Agency's standards will increase understanding of OSHA's fall protection rules, decrease the potential for confusion, and enhance worker safety. Having consistent definitions also will help to increase understanding and compliance for workers engaged in more than one type of work, such as general industry and construction activities.
Final paragraph (b) differs from the proposed rule in several respects. First, the final rule does not retain the proposed definitions for the following terms because OSHA does not use these terms in final § 1910.140: “buckle” and “carrier.” Second, final paragraph (b) adds two new terms to the proposed definitions: “carabiner” and “safety factor.” Third, the final rule also substantially modifies the definition of “competent person” from the proposed rule. OSHA believes that additional revisions, particularly those made in response to commenter suggestions, clarify the meaning of the terms, and ensure that they reflect current industry practice.
OSHA carries forward the following terms and definitions from the proposed rule without change, or with mostly minor editorial and technical changes. In revising final paragraph (b), OSHA used plain and performance-based language. The Agency believes these types of revisions make the terms and definitions easy for employers and workers to understand. OSHA believes many of the remaining definitions are “terms of art” universally recognized by those who use personal fall protection systems. Even so, OSHA still received comments on a number of the definitions, as discussed below.
OSHA notes that the anchorage definition in the Powered Platforms standard requires that the anchorage must be “independent of the means of supporting or suspending the employee.” The final rule also includes this requirement in § 1910.140(c)(12), discussed below. OSHA did not receive any comments on the proposed definition.
Neither existing OSHA fall protection standards nor I-14.1-2001 define the term. Although OSHA believes the meaning of “belt terminal” is clear, the Agency is including the definition in the final rule to clarify the system or criteria of requirements for window cleaner's positioning systems (see discussion of § 1910.140(e)). OSHA did not receive any comments or opposition to including the definition, and adopts the definition as proposed.
The Z359.0 standard uses the term “body support” instead of body belt, and defines it as “an assembly of webbing arranged to support the human body for fall protection purposes, including during and after fall arrest” (Section 2.17). A note to the definition explains that body support generally refers to a harness (full body, chest, chest-waist) or body belt. OSHA did not receive any comments on the definition and adopts the definition as proposed.
The final rule is nearly identical to the definition of “body harness” in OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66, appendix C, Section I(b); 1915.151(b); 1926.500(b)), as well as the definition of “body support” in A10.32 (Section 2.9). The Z359.0 standard includes definitions of various types of body harnesses, including chest harnesses, chest-waist harnesses, evacuation harnesses, full-body harnesses, and positioning harnesses. The definition in the final rule is consistent with the “full body harness” definition in Z359.0 (Section 2.83).
In the proposal, OSHA requested comment on whether the Agency should define other types of harnesses in the final rule, specifically those harnesses that do not have a waist strap or component (75 FR 28903). ISEA (Ex. 185) and CSG (Ex. 198) both said that ISEA-member companies reported that it was more common for body harnesses not to have waist straps. They said this type of harness distributes fall arrest forces over the entire torso and has assemblies that prevent the shoulder straps from separating to the extent that the worker could fall out of the harness. OSHA concludes that this type of harness meets the definition of “body harness,” and it is not necessary to revise the term. However, in the final rule, OSHA did not include the other specific types of body harnesses (
With one exception, the definition in the final rule also is consistent with I-14.1-2001. The definition of “body harness” in I-14.1-2001 permits the distribution of fall arrest forces over “any combination” of the thighs, pelvis, waist, chest, and shoulders, rather than across all of those parts of the worker's body combined (Section 2). The final rule, by contrast, does not incorporate the “any combination” language in I-14.1. OSHA believes that adopting the language from I-14.1-2001 would allow employers to use harnesses that concentrate fall arrest forces in a small anatomical area, rather than across the entire torso and thighs. The dangers of concentrating fall arrest forces in a limited anatomical area (
• Automatic locking, with a self-closing and self-locking gate that remains closed and locked until intentionally unlocked and opened for connection or disconnection;
• Manual locking, with a self-closing gate that must be manually locked by the user and that remains closed and locked until intentionally unlocked and opened by the user for connection or disconnection; and
• Non-locking, with a self-closing gate cannot be locked.
Commenters recommended that OSHA apply to carabiners the same criteria applicable to snaphooks (Exs. 185; 198). For example, the International Safety Equipment Association (ISEA) said that applying the snaphook performance criteria to carabiners would ensure that the final rule specifically covers the two most common types of connectors (Ex. 185). OSHA agrees, and added a definition of carabiner to the final rule that is almost identical to the one in Z359.0-2012 (Section 2.20) and A10.32-2012 (Section 2.12). Those definitions note that there are three types of carabiners: Automatic locking (
• Is capable of identifying existing and predictable hazards in any personal fall protection system or component as well as in their application and uses with related equipment; and
• Has the authorization to take prompt corrective measures to eliminate the identified hazards.
The definition in the final rule differs from the proposed definition in two ways. First, the final rule requires that the competent person be capable of identifying both “existing and predictable hazards,” while the proposal specified that the competent person identify existing “hazardous or dangerous conditions.” Second, the final rule adds language specifying that competent persons must have authority to take prompt, corrective actions to eliminate the hazards that they identified. These changes expand the definition of competent person and make the final rule consistent with the definition applicable to OSHA's construction standards (§ 1926.32), as well as the definition in Z359.0-2012 (Section 2.30) and A10.32-2012 (Section 2.16).
Under the final rule employers must ensure that the worker(s) they select to be the competent person(s) have the capability and competence to identify existing hazards and predictable hazards (
OSHA added the language requiring that competent persons have authority to take prompt corrective action in response to the large number of commenters who urged OSHA to adopt that language from OSHA's construction standards (§ 1926.32), Z359.0, and A10.32. OSHA did not include the language in the proposed rule because the Agency believed that competent persons dealing with personal fall protection systems in general industry were likely to serve a different function than competent persons in the construction industry (75 FR 28904). In the preamble to the proposed rule, OSHA said that the competent person in general industry most likely would be an outside contractor who specializes in fall protection systems, designs fall protection systems, and/or provides fall protection training. OSHA said it would be unlikely that employers would grant an outside contractor authority over work operations. In addition, OSHA said it did not believe the definition of competent person in § 1926.32 was widely recognized and accepted in general industry. Thus, in the proposed rule OSHA used the definition of competent person from appendix C of § 1910.66.
By contrast, when OSHA promulgated the construction fall protection standards, the Agency applied the definition of “competent person” in § 1926.32 because the Agency found that the construction industry widely recognized the term, which OSHA adopted in 1971 pursuant to Section 6(a) of the OSH Act (29 U.S.C. 655(a)). However, commenters on the proposed rule said that the construction industry definition is as widely known, accepted, and used in general industry as it is in the construction industry (Exs. 74; 122). They urged OSHA to incorporate the construction industry definition of competent person in § 1910.140.
Many commenters who disagreed with the proposed definition said that it is essential that the competent person have authority to take prompt corrective action when they find hazards (Exs. 69; 74; 185; 190; 198; 226). They argued that the duty of the competent person is to ensure that personal fall protection systems, components, and related equipment are safe, and they cannot carry out that duty without having the ability to take corrective action to keep the system working properly and the workplace safe. In addition, they said that employers, workers, fall protection equipment suppliers, and national consensus standards all operate with the expectation that a competent person will have authority to take action when needed to correct problems. The American Foundry Society, for instance, pointed out:
Without any such authority, a competent person under this definition will be put in the position of being able to recognize the hazard, but likely not be able [to] do anything about it. That is not a truly competent person and does not reflect the needed level of competence to help ensure worker safety (Ex. 190).
The American Federation of State, County and Municipal Employees (AFSCME) (Ex. 226) also supported giving the competent person authority to take prompt, corrective action. AFSCME said that many employers may seek outside assistance in assessing the risks and types of fall protection systems, but that no outside party should be an employer's competent person:
It is more likely that an internal supervisor would be given the responsibility for ensuring the employer's fall protection systems are in place, equipment is inspected, and that employees are trained and using equipment properly. This person or persons should be competent in the meaning of the standard, and should have the authority to correct hazards when found (Ex. 226).
ISEA made a similar point, saying that it was in the best interest of worker protection to have an on-site accountable decision maker because the competent person would be able to examine the personal fall protection systems, components, and related equipment and know firsthand the risks involved. Armed with that knowledge, ISEA said an on-site competent person would be less likely to take risks with workers' lives. ISEA said that manufacturers and other knowledgeable sources who are not on-site will not have the knowledge to make service-life decisions about fall arrest equipment. Capital Safety Group (CSG) (Ex. 198) agreed, saying that on-site, accountable decision makers who are fully aware of the risks associated with fall protection equipment are less likely to put workers' lives in jeopardy. Access Rescue (Ex. 69) and Extreme Access, Inc. (Ex. 74), expressed similar concerns.
OSHA agrees with commenters that, to ensure workers have safe personal fall protection systems, components, and related equipment the competent person must have authority to take necessary corrective action when they identify hazards. In addition, adding the language to the final rule will make the definition consistent with the widely known term in OSHA's construction standard and national consensus standards, which should increase employer compliance.
OSHA also agrees with commenters that, to carry out their role, competent persons should be on-site. With appropriate training and experience, OSHA believes that a worker at the worksite can function as the competent person.
The definition in the final rule is derived from OSHA's Powered Platforms, construction, and shipyard employment fall protection standards, as well as Z359.0-2012 (Section 2.36) and A10.32-2012 (Section 2.18). The definition of “connector” in those standards includes information explaining that connectors may be independent components of a personal fall protection system or integral parts sewn into the system. Since the final rule permits employers to use connectors that are either independent or integral components of a personal fall protection system, OSHA does not believe it is necessary to include the explanatory material in the final definition of “connector.” OSHA did not receive any comments and adopts the definition as proposed.
• Harnesses, as an integral attachment element or fall arrest attachment;
• Lanyards, energy absorbers, lifelines, or anchorage connectors as an integral connector; or
• A positioning or travel restraint system as an attachment element.
“Integral” means the D-ring cannot be removed (
Although OSHA's existing fall protection standards do not define “D-ring,” the final rule is consistent with Z359.0-2012 (Section 2.41). The A10.32-2012 standard does not explicitly define “D-ring,” but the definition of “connector” includes D-ring as an example of an integral component of a body harness. The definition also says a D-ring is a connector sewn into a body harness or body belt (Section 2.18). OSHA did not receive any comments on the proposed definition and has adopts the definition with minor editorial revisions.
Although the Z359.0 standard does not define “deceleration device,” it includes definitions for “energy (shock) absorber,” “fall arrester,” and “self-retracting lanyard” (Sections 2.46, 2.60, 2.159). In the Powered Platforms and construction fall protection rulemakings, commenters recommended replacing “deceleration device” with those terms. OSHA also received similar recommendations in this rulemaking (Exs. 121; 185; 198). For instance, ISEA (Ex.185) and CSG (Ex. 198) recommended defining “fall arrester” and “energy absorber” because they said “deceleration device” is not a commonly used term. Clear Channel Outdoor, Inc. (Ex. 121), also supported replacing “deceleration device” with the terms in Z359.0 “to increase consistency.” By contrast, Ameren said “deceleration device” was “standard verbiage” in OSHA fall protection standards, and removing the term was not necessary “[a]s long as there is no confusion with the terms” (Ex.189).
OSHA agrees with Ameren that using the term “deceleration device” makes the final rule consistent with OSHA's other fall protection standards and would eliminate, rather than generate, confusion. In the preamble to the final construction fall protection standard, OSHA explained why the Agency was not adding definitions for “fall arrester” and “energy absorber,” stating:
It was suggested that [deceleration device] be eliminated and replaced with three terms, “fall arrester,” “energy absorber,” and “self-retracting lifeline/lanyard” because the examples listed by OSHA in its proposed definition of deceleration device serve varying combinations of the function of these three suggested components. In particular, it was pointed out that a rope grab may or may not serve to dissipate a substantial amount of energy in and of itself. The distinction that the commenter was making was that some components of the system were “fall arresters” (purpose to stop a fall), others were “energy absorbers” (purpose to brake a fall more comfortably), and others were “self-retracting lifeline/lanyards” (purpose to take slack out of the lifeline or lanyard to minimize free fall). OSHA notes, however, that it is difficult to clearly separate all components into these three suggested categories since fall arrest (stopping) and energy absorption (braking) are closely related. In addition, many self-retracting lifeline/lanyards serve all three functions very well (a condition which the commenter labels as a “subsystem” or “hybrid component”). OSHA believes that the only practical way to accomplish what is suggested would be to have test methods and criteria for each of the three component functions. However, at this time, there are no national consensus standards or other accepted criteria for any of the three which OSHA could propose to adopt.
In addition, OSHA's approach in the final standard is to address personal fall arrest equipment on a system basis. Therefore, OSHA does not have separate requirements for “fall arresters,” “energy absorbers,” and “self-retracting lifeline/lanyards” because it is the performance of the complete system, as assembled, which is regulated by the OSHA standard. OSHA's final standard does not preclude the voluntary standards writing bodies from developing design standards for all of the various components and is supportive of this undertaking (59 FR 40672 (8/9/1994) (citing 54 FR 31408, 31446 (7/28/1989))).
OSHA believes the preamble discussion in the earlier rulemakings holds true today and supports only including the definition of “deceleration device” in the final rule. Accordingly, the final rule adopts the definition of “deceleration device” specified in the proposal.
The definition in the final rule is almost identical to the definition in OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66, appendix C, Section I(b); 1915.151(b); 1926.500(b)), but does not reference body belts because the final rule prohibits the use of body belts in personal fall arrest systems. The final rule also is consistent with A10.32-2012 (Section 2.20) and with the definition and explanatory note in Z359.0-2012 (Section 2.40). OSHA did not receive any comments on the proposed definition of “deceleration device” and adopts the proposed definition.
Verallia (Ex. 171) commented that the proposed definition was “too subjective and vague to allow for consistent application and/or enforcement.” Verallia also said the proposal outlined the skill set necessary to be a “qualified” person, and that it should be sufficient if a qualified person selects the alternative designs, equipment, materials, or methods. OSHA disagrees with Verallia's characterization of the proposed definition. Since 1974, OSHA used the same definition of “equivalent” in various standards (
The definition in the final rule is essentially the same as the definition in OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66 appendix C, Section I(b); 1915.151(b); 1926.500(b)). In addition, the final rule is consistent with the definition in Z359.0-2012 (Section 2.74) and A10.32-2012 (Section 2.27). OSHA did not receive any comments on the proposed definition.
The final rule is consistent with the definition of lifeline in Z359.0-2012 (Section 2.96) and A10.32-2012 (Section 2.33), however, it differs slightly from OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66(b) and appendix C, Section I(b); 1915.151(b); 1926.500(b)). OSHA's existing standards only apply to personal fall arrest systems, and define “lifeline” as a component of such a system. The final definition specifies that a lifeline is a component of a personal fall protection system, which includes fall arrest, positioning, and travel restraint systems. The final definition also includes some minor editorial revisions. OSHA did not receive any comments on the proposed definition and adopts the definition as discussed.
The definition in the final rule is consistent with OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66(b) and appendix C, Section I(b); 1915.151(b); 1926.500(b)). Those OSHA standards, however, specify that a fall arrest system may consist of either a body harness or a body belt. Since the time OSHA promulgated those standards, the Agency phased out the use of body belts in personal fall arrest systems due to safety concerns. Effective January 1, 1998, OSHA banned the use of body belts as part of personal fall arrest systems in the construction and shipyard employment standards (§§ 1926.502(d); 1915.159), and this final rule also prohibits their use in personal fall arrest systems.
The final rule is consistent with Z359.0-2012 (Section 2.115) and A10.32-2012 (Section 2.38). The consensus standards, like the final rule and OSHA's existing standards, require the use of body harnesses in personal fall arrest systems, and prohibit body belts.
Some commenters (Exs. 155; 185; 198) said that OSHA should not use
OSHA does not believe that employers will mistake the term “personal fall protection system” to include passive fall protection devices such as guardrails and safety nets. The Z359.0-2012 standard includes two types of fall protection systems: Active and passive. Z359.0 defines “active fall protection system” as a fall protection system that requires workers “to wear or use fall protection equipment” (Section 2.2), and lists fall restraint, fall arrest, travel restriction, and administrative controls as examples. The Z359.0 standard, however, defines “passive fall protection system” as one “that does not require the wearing or use of fall protection equipment,” such as safety nets and guardrail systems (Section 2.113). Like the distinction that the Z359.0 standard draws between active and passive fall protection systems, OSHA believes that using the term “personal fall protection system” establishes the same type of distinction. That is, a personal fall protection system is one that employers must ensure that workers actively use to protect them, while a passive fall protection system, such as a guardrail, is one that does not require any action by workers to be safe, so long as employers maintain the system properly. OSHA believes this distinction is helpful, and that the regulated community recognizes and understands the distinction. Therefore, the term is carried forward in the final rule.
OSHA revised the final definition to expressly clarify the Agency's intent in the proposed rule that personal fall protection systems include all components of those systems.
The definition in the final rule is essentially the same as the definition in OSHA's construction and shipyard employment fall protection standards (§§ 1915.151(b), 1926.500(b)). The final rule also is similar to A10.32-2012 (Section 2.39, 2.40) and Z359.0-2012 (Section 2.120). Weatherguard Service, Inc. (Ex. 168) supported the proposed definition.
A note to the definition in Z359.0 explains that “a positioning system used alone does not constitute fall protection,” and that a separate system that provides backup protection from a fall is necessary (Section E2.120). Ellis (Ex. 155), who also commented on OSHA's positioning system requirements, supported adding such a requirement to the final rule. OSHA did not incorporate this recommendation (see discussion in final paragraph (e) (positioning systems)). OSHA adopts the proposed definition with minor editorial changes.
The final rule, however, differs from the definition in the Powered Platforms standard (§ 1910.66, appendix C, Section I(b)) and Z359.0-2012. Those standards require that qualified persons have a degree, certification, or professional standing,
Several commenters opposed the proposed definition of “qualified” and supported the definition of qualified in § 1910.66 and Z359.0 (Exs. 155; 193; 367). They also recommended revising the definition to specifically require that only engineers could serve as qualified persons. For example, Ellis said:
In America, anchorages are mostly guesswork and this does not do justice to “the personal fall arrest system” term that OSHA is seeking to establish unless the engineering background is added. Furthermore the design of anchorages can easily be incorporated into architects and engineers drawings but is presently not because there is no requirement for an engineer. This simple change may result in saving over one half the lives lost from falls in the USA in my opinion (Ex. 155).
OSHA proposes to require that horizontal lifelines be designed, installed and used under the supervision of a qualified person and that they be part of a complete fall arrest system that maintains a factor of safety of two. To allow a person without an engineering degree and professional registration would not only be dangerous but would be contradictory to every current requirement for other building systems as required by the building codes. Further, in this specific instance, the design of a horizontal lifeline presents specific engineering challenges that should not be performed by anyone without the professional standing and experience to do so (Ex. 193).
We take exception with the change from “AND” to “OR.” A person with a structural engineering degree does not necessarily know the full requirements (clearances, proper PPE selection, use and rescue procedures, etc.) of a personal fall arrest system. That knowledge can be obtained only through special training or experience in the subject matter. Vice versa, someone with knowledge of the system requirements may not know how to properly design an anchorage support and can only gain this knowledge through a professional degree. As stated in our previous comments, many building codes only allow a professional engineer to design and stamp a building design or changes to the loading of a structure. The explanation to make 1910 consistent with the existing construction and shipyard employment standard is not a good enough reason in our opinion. OSHA states that personal fall protection systems will “in some cases, [may] involve their design and use.” By using the word “OR,” the proposed regulation eliminates the need for an engineer's involvement. The ANSI/ASSE Z359.0-2007 standard uses “AND”. These consensus standards are developed with a considerable level of thought and consideration and were recently vetted by the industry, so we suggest OSHA reconsider this change (Ex. 367).
Second, the Agency believes the performance-based definition in the final rule gives employers flexibility in selecting a qualified person who will be effective in performing the required functions. The performance-based definition also allows employers to select the qualified person who will be the best fit for the particular job and work conditions. Employers are free to use qualified persons who have professional credentials and extensive knowledge, training, and experience, and OSHA believes many employers already do so.
Finally, the workers the employer designates or selects as qualified persons, the most important aspect of their qualifications is that they must have “demonstrated ability” to solve or resolve problems relating to the subject matter, work, and project. Having both professional credentials and knowledge, training, and experience will not protect workers effectively if the person has not demonstrated capability to perform the required functions and solve or resolve the problems in question.
When the person the employer designates as a qualified person has demonstrated the ability to solve or resolve problems, which may include performing various complex calculations to ensure systems and components meet required criteria, the qualifications of that person are adequate. OSHA also notes that an employer may need to select different qualified persons for different projects, subject matter, or work to ensure the person's professional credentials or training, experience, and knowledge are sufficient to solve or resolve the problems associated with the subject matter, work, or project. For example, the employer may determine that an engineer is needed for a particular project, and the final rule provides the employer with that flexibility. Accordingly, OSHA adopts the definition of qualified as proposed.
OSHA disagrees with Ellis' assertion that architects and engineers are not designing anchorages into drawings because, according to Ellis, § 1910.140 does not require qualified persons to be engineers. OSHA believes that building owners and others work with engineers and architects in the planning stage to design anchorage points into buildings and structures so that the anchorages will effectively support personal fall protection systems used to perform work on the building. OSHA also believes that the number of building owners consulting engineers about the design of anchorages will increase under the final rule. Section 1910.27 of the final rule requires that, when employers use rope descent systems (RDS), building owners must provide information to employers and contractors ensuring that a qualified person certify building anchorages as being capable of supporting at least 5,000 pounds (29 CFR 1910.27(b)(1)). OSHA believes that building owners will likely consult and work with engineers to ensure that all building anchorages, including anchorages that support RDS and personal fall protection systems, meet the requirements in § 1910.27. Thus, OSHA does not believe it is necessary to limit the definition of “qualified” person to engineers to ensure that building owners include building anchors in building design plans.
The final rule is essentially the same as the definition in OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66, appendix C, Section I(b); 1915.151(b); 1926.500(b)). The A10.32 and Z359.0-2012 standards do not define “rope grab,” but the definition of “fall arrester” in Z359.0 (Section 2.60) is similar to the definition in this final rule. In addition, the explanatory note to the “fall arrester” definition identifies a “rope grab” as an example of a fall arrester. The A10.32-2012 standard requires rope grabs to automatically lock (Section 5.4.3). OSHA did not receive any comments on the proposed definition of “rope grab,” and the final rule adopts it as proposed.
The new definition is the same as the one proposed in subpart D and is consistent with the one in § 1926.32(n). OSHA believes that adding this term will increase employer understanding and compliance with the requirements in this section.
The definition in the final rule is consistent with OSHA's Powered Platforms and construction fall protection standards (§§ 1910.66, appendix C, Section I(b); 1926.500(b)) and with Z359.0-2012 (Section 2.159) and A10.32-2012 (Section 2.46). There were no comments on the proposed definition, and the final rule adopts it as proposed.
The final definition, like the proposal, identifies two general types of snaphooks—an
The definition in the final rule is the same as the definition in OSHA's Powered Platforms and construction fall protection standards (§§ 1910.66, appendix C, Section I(b); 1926.500(b)). It also is consistent with Z359.0-2012 (Section 2.168) and A10.32-2012 (Sections 2.50, 2.50.1, 2.50.2). OSHA
The definition in the final rule is the same as the definition in OSHA's shipyard employment fall protection standard (§ 1915.151(b)). The definition in § 1915.151(b) notes that manufacturers do not necessarily design travel restraint lines to withstand forces resulting from a fall. OSHA did not receive any comments on the proposed definition, and the final rule adopts the definition as proposed.
Second, the final definition deletes the second sentence of the proposed definition, which stated that a travel restraint system “is used such that it does not support any portion of the worker's weight; otherwise the system would be a positioning system or personal fall arrest system.” OSHA believes the revised language in the final definition is sufficient to convey this requirement. In addition, OSHA addresses this issue in the discussion of § 1910.140(c)(14) below.
The definition in the final rule is consistent with the definition in Z359.0-2012 (Section 2.204) and A10.32-2012 (Sections 2.53). The definition in A10.32 stresses that the purpose of a travel restraint system is to limit travel in such a manner that the user is not exposed to a fall hazard. OSHA did not receive comments on the proposed definition and finalizes the definition as discussed.
The final rule revises the proposed definition to explicitly clarify that a window cleaner's belt is a component of a window cleaner's positioning system, and thus is designed to support the window cleaner on an elevated vertical surface. OSHA notes that a window cleaner's belt differs from a window cleaner's tool belt, which holds the window cleaner's tools and materials used for performing the job. Employers use the tool belt mainly for convenience of the window cleaner and not as safety equipment. The only commenter on the proposed definition, Weatherguard (Ex. 168), supported the proposed definition. Accordingly, the final rule adopts the definition with the revision discussed above.
OSHA based the final definition on the one in I-14.1-2001 (Section 2). OSHA's existing fall protection standards do not specifically address window cleaning operations, and do not define terms related to those operations. Weatherguard (Ex. 168), the only commenter, supported including the definition in the final rule. The final rule adopts the definition as proposed.
Paragraph (c) of the final rule specifies the general requirements employers must ensure that each personal fall protection system meets. The general requirements in paragraph (c) are criteria for the common components of personal fall protection systems, such as connectors, anchorages, lanyards and body harnesses. Paragraphs (d) and (e) contain additional requirements for personal fall arrest systems and positioning systems, respectively.
The provisions in final paragraph (c) are drawn from or based on requirements in OSHA's personal fall protection standards, including Powered Platforms (§ 1910.66, appendix C), construction (§ 1926.502), and shipyard employment (§ 1915.160). They also are drawn from national consensus standards addressing fall protection, including Z359.1-2007, Z359.3-2007, A10.32-2012, and I-14.1-2001.
Paragraph (c)(1) of the final rule requires that employers ensure connectors used in personal fall protection systems are made of drop-forged, pressed or formed steel, or equivalent material. Final paragraph (c)(2) requires connectors to have corrosion-resistant finishes, as well as smooth surfaces and edges to prevent damage to interfacing parts of the personal fall protection system.
The requirements in paragraphs (c)(1) and (2) will ensure that connectors retain the necessary strength characteristics for the life of the fall protection system under expected conditions of use, and that the surfaces and edges do not cause damage to the belts or lanyards attached to them. Employers must not allow workers to use personal fall protection equipment if wear and tear reaches the point where equipment performance might be compromised. For example, corroded or rough surfaces can cause wear and tear on connectors and other components of personal fall protection system, which may reduce their strength.
Final paragraphs (c)(1) and (2) are consistent with OSHA's other fall protection standards, including Powered Platforms (§ 1910.66, appendix C, section I, paragraphs (c)(1) and (c)(2)); construction (§ 1926.502(d)(1), (d)(3), and (e)(4)); and shipyard employment (§ 1915.159(a)(1) and (2)). The Z359.1-2007 standard also contains similar requirements. There were no comments on the proposed provisions and OSHA adopts them without substantive change.
When employers use vertical lifelines, paragraph (c)(3) of the final rule requires that employers ensure each worker is attached to a separate lifeline. OSHA believes that allowing more than one
Paragraphs (c)(4) and (5) of the final rule set minimum strength requirements for lanyards and lifelines used with personal fall protection systems. Paragraph (c)(4) requires that employers ensure lanyards and vertical lifelines have a minimum breaking strength of 5,000 pounds. Breaking strength refers to the point at which a lanyard or vertical lifeline will break because of the stress placed on it.
The final rule requires the same strength requirements for vertical lifelines and lanyards as OSHA's other fall protection standards (§§ 1910.66, appendix C, section I, paragraphs (c)(4); 1926.502(d)(9); 1915.159(b)(3)). The strength requirement also is the same as Z359.1-2007. OSHA believes the strength requirements in all of these standards provide an adequate level of safety. (OSHA notes that the final rule also requires that travel restraint (tether) lines be capable of supporting a minimum tensile load of 5,000 pounds (see discussion of paragraph (c)(14)).
The lanyards and vertical lifelines requirement in paragraph (c)(4) also includes self-retracting lifelines/lanyards (SRL) that allow free falls of more than 2 feet, as well as ripstitch, tearing and deforming lanyards. The proposed rule addressed those lifelines and lanyards in paragraph (c)(6); however, that paragraph duplicated paragraph (c)(4), and OSHA removed it from the final rule. Proposed paragraph (c)(4) also included a note, which OSHA re-designated as paragraph (c)(6) of the final rule (see discussion of § 1910.140(c)(6)).
Paragraph (c)(5) of the final rule, like the proposed rule, provides an exception to the 5,000-pound strength requirement for SRL that automatically limit free fall distance to 2 feet or less. The final provision allows a lower strength requirement because the fall arrest forces are less when free falls are limited to 2 feet. These lifelines and lanyards must have components capable of sustaining a minimum tensile load of 3,000 pounds applied to the device with the lifeline or lanyard in the fully extended position. Tensile load means a force that attempts to pull apart or stretch an object, while tensile strength means the ability of an object or material to resist forces that attempt to pull apart or stretch the object or material.
Final paragraph (c)(5) is the same as OSHA's other fall protection standards (§§ 1910.66, appendix C, section I, paragraphs (c)(5); 1926.502(d)(13); 1915.159(b)(4)) and Z359.1-2007 (Section 3.2.8.7) and A10.32-2012 (Section 5.3.1). OSHA received comments on the proposed strength requirements in paragraphs (c)(4) and (5). As far back as the 1990 proposal, one commenter said that the strength requirements for lanyards and vertical lifelines were too high and would be difficult to maintain (75 FR 28907). OSHA acknowledged in the proposed rule that wear and deterioration to personal fall protection systems inevitably would occur from normal use of lanyards and lifelines, and that ultraviolet radiation, water, and dirt also can reduce the strength of lanyards and lifelines.
That said, OSHA believes that employers are able to purchase and maintain personal fall protection system and components that consistently meet the strength requirements in the final rule. These strength requirements have been in place for many years, and virtually all personal fall protection systems manufactured in or for use in the United States meet the requirements in paragraphs (c)(4) and (5). Since 1990, OSHA has not received any information indicating that the strength requirements should not be maintained. However, to ensure that lifelines and lanyards continue to comply with the requirements in paragraph (c)(5), paragraph (c)(18) of the final rule requires that employers inspect personal fall protection systems before each use and immediately remove worn or deteriorated systems and components from service. In addition, § 1910.132(a) requires that employers maintain personal protective equipment in reliable condition.
ISEA and CSG commented on the orientation of SRL with regard to lanyard and lifeline strength requirements. ISEA said:
Proposed paragraph (c)(6) also included a provision to establish strength requirements for SRL that do
OSHA requested comment on whether proposed paragraph (c)(6) was necessary, or whether paragraph (c)(4) of the final rule adequately addressed the issue (75 FR 28907). The Society of Professional Rope Access Technicians (SPRAT) said it would be acceptable to adopt either proposed provisions (c)(4) through (6) or the requirements in Z359.1 (Ex. 205). However, ISEA and CSG said proposed paragraph (c)(6) was not necessary, and, if OSHA retained the provision in the final rule, the Agency should remove SRL from it (Exs. 185; 198). OSHA believes that paragraph (c)(4) adequately addresses the issue of SRL that do not limit the free fall to a maximum of 2 feet plus ripstitch, tearing, and deforming lanyards; therefore, proposed paragraph (c)(6) is not necessary. Accordingly, OSHA
In final paragraph (c)(6), OSHA replaces proposed paragraph (c)(6) with the requirement that a competent or qualified person must inspect each knot in lanyards and vertical lifelines, before a worker uses the lanyard or lifeline, to ensure that they still meet the minimum strength requirements in paragraphs (c)(4) and (5). This new requirement is based on the note OSHA included in proposed paragraph (c)(4) warning employers that the use of knots “may significantly reduce the breaking strength” of lanyards and vertical lifelines. The debate about whether knots should be permitted in lanyards and lifelines has been ongoing for at least 20 years. Although the proposal did not ban the use of knots, the Agency considered it, noting that Z359.1-2007 prohibits them: “No knots shall be tied in lanyards, lifelines, or anchorage connectors. Sliding-hitch knots shall not be used in lieu of fall arresters” (Section 7.2.1). The A10.32-2012 standard also prohibits the use of knots in lifelines, lanyards or other direct-impact components and also prohibits knots used for load-bearing end terminations (Sections 4.5.4 and 5.5.1.3).
As far back as the 1990 proposal, OSHA received comments supporting and opposing the use of knots. In the preamble to that proposed rule, OSHA said available information indicated that knots could be used safely in some circumstances, and that employers should be allowed the flexibility to use them as long as they verify that the strength requirements of the rule continue to be met. OSHA also noted that strength reduction can be a concern because the use of knots in lanyards and vertical lifelines can reduce breaking strength (75 FR 28907).
In this proposed rule, OSHA invited comment on whether the Agency should allow or prohibit the use of knots, or require a competent person to inspect all knots (75 FR 28907). Several commenters said OSHA should prohibit knots in personal fall arrest systems, noting they generally are no longer used in modern fall arrest applications (Exs. 185; 198; 251). Other commenters, including Martin's Window Cleaning Corp. (Martin's) (Ex. 222) and SPRAT (Ex. 205), opposed a prohibition on the use of knots. Martin's said, “A properly tied knot is much stronger than a swedge or splice,” which the proposed rule did not prohibit (Ex. 222). SPRAT said appropriately tied knots were useful at the end and throughout rope spans, and cited Cordage Institute data indicating knots commonly used in life-safety systems had an efficiency range of 75-90 percent (Ex. 205). SPRAT also said their employers require that competent persons inspect all knots tied in industrial rope access systems. They added that the rule must require that workers be trained in uses, limitations, and proper inspection techniques of knots and hitches.
At the hearing on the proposed rule, the American Wind Energy Association (AWEA) also opposed banning the use of knots. Grayling Vander Velde, an AWEA member, said, “Knots are widely used in industrial rope access for competent persons trained and certified in their proper use and limitations,” and “line failure due to installation of knots has not shown to be the cause of mainline or backup line failures” (Ex. 329 (1/21/2011, pgs. 19-20)). He stated that ropes used for fall arrest must meet the 5,000-pound minimum strength requirement in the final rule. Also, he noted that SPRAT's training covers the issue of possible strength reduction in knotted lanyards.
After considering the record as a whole, OSHA continues to believe that knots can be used safely in certain situations, and that the worker making the knot must be adequately trained to know the strength of the rope being used and take into consideration any strength reduction that may occur if a knot is used. As the commenters pointed out, any rope that has a knot must still meet the strength requirements in final paragraphs (c)(4) and (5) to ensure that workers have an appropriate level of safety (Ex. 205). To ensure that lanyards and vertical lifelines that have knots are safe, OSHA added a new requirement in paragraph (c)(6) of the final rule specifying that a competent or a qualified person must inspect each knot to ensure that it meets the minimum strength requirements before any worker uses the lanyard or lifeline. OSHA believes the additional requirement will preserve employer flexibility while providing an adequate level of safety.
Paragraphs (c)(7) through (10) of the final rule establish criteria for D-rings, snaphooks, and carabiners, which are devices used to connect or couple together components of personal fall protection systems. OSHA added “carabiners” to these final paragraphs because they are a type of connector commonly used in currently-manufactured personal fall protection systems. Paragraph (c)(7) of the final rule requires that D-rings, snaphooks, and carabiners be capable of sustaining a minimum tensile load of 5,000 pounds. OSHA believes these devices, like lanyards and vertical lifelines, must be able to sustain 5,000-pound loads to ensure worker safety. If the connectors cannot sustain the minimum tensile load, it makes no difference what strength requirements the other components of the system can meet because the system may still fail.
Final paragraph (c)(7) is the same as the strength requirements in OSHA's other fall protection standards (§§ 1910.66, appendix C, Section I, paragraph (d)(6); 1915.159(a)(3); 1926.502(d)(3)). OSHA did not receive any comments on the proposed provision and is adopting it as discussed.
Paragraph (c)(8) of the final rule requires that D-rings, snaphooks, and carabiners be proof tested to a minimum tensile load of 3,600 pounds without cracking, breaking, or incurring permanent deformation. OSHA also added a new requirement to final paragraph (c)(8) specifying that the gate strength of snaphooks and carabiners also must be proof tested to 3,600 pounds in all directions. Since proof testing has been the industry standard since 2007 (Z359.1-2007, Section 3.2.1.7), OSHA believes that connectors of this type already in use meet the requirements of paragraph (c)(8) and no grandfathering is necessary.
The 3,600-pound strength requirement ensures that D-rings, snaphooks, and carabiners meet a safety factor of at least two when used with body harnesses. This strength requirement will, in turn, limit maximum fall arrest forces to 1,800 pounds. Final paragraph (c)(8) is similar to requirements in OSHA's Powered Platform, construction, and shipyard employment fall protection standards (§§ 1910.66, appendix C, Section 1, paragraph (c)(7); 1915.159(a)(4); 1926.502(d)(4)), but those standards do not require proof testing gate strength. The Z359.12-2009 standard is the same as proposed paragraph (c)(8).
A number of commenters supported the proposed requirement (Exs. 155; 185; 198). Several commenters also recommended that OSHA include two additions to the proposed requirement: (1) Proof testing the gate strength of carabiners and snaphooks; and (2) proof testing the gate strength in all directions (Exs. 155; 185; 198). ISEA and CSG said that past interpretations of snaphook strength requirements led to confusion, and that including a gate strength requirement would help to clarify this issue (Exs. 185; 198).
Ellis said adding a requirement that the gate strength of snaphooks and carabiners also be proof tested to 3,600 pounds would make paragraph (c)(8) consistent with the Z359.12-2009 standard, and be more protective than
Ellis also recommended that OSHA require proof testing snaphook and carabiner gate strength “in all directions” (Ex. 155). The purpose of proof testing gate strength in all directions is to ensure that no matter in which direction the pressure is applied, the connector gate will not fail. Such proof testing will provide greater protection for workers, therefore, OSHA added the requirement to proof test the gate strength of snaphooks and carabiners in all directions. Since this testing has been industry practice for several years (see Z359.1-2007, Section 3.2.1.7), OSHA does not believe that employers will have difficulty complying with the new requirement in paragraph (c)(8).
Paragraph (c)(9) of the final rule requires employers to use automatic locking snaphooks and carabiners in personal fall protection systems. Automatic locking snaphooks and carabiners require at least two separate, consecutive actions to open, which reduce the danger of “rollout” (
Final paragraph (c)(9) is consistent with OSHA's shipyard employment and construction fall protection standards (§§ 1915.159(a)(5); 1926.502(d)(5)). In addition, Z359.12-2009 (Section 3.1.1.3) and A10.32-2012 (Sections 2.12 and 2.50.1) both require the use of locking snaphooks and carabiners for personal fall protection systems.
In the proposed rule, OSHA explained that as far back as the 1990 proposed rule, commenters expressed widespread support for prohibiting non-locking snaphooks (75 FR 28908). In OSHA's rulemaking on fall protection in the construction industry, several commenters said the rule should mandate the use of locking snaphooks, citing the rollout problems experienced with non-locking (single-action) snaphooks (59 FR 40672, 40705 (8/9/1994)). Those commenters also provided information indicating that locking snaphooks are superior to non-locking snaphooks in minimizing rollout. Based on that and other information in that rulemaking record, OSHA determined that it was necessary to require the use of locking snaphooks in personal fall protection systems used in the construction industry, finding that “in general, locking snaphooks provide a higher level of protection to workers than the single-action (non-locking) type of snaphooks” (59 FR 40705).
Likewise, OSHA has determined that locking snaphooks and carabiners are necessary to protect employees in general industry. In the proposed rule, OSHA asked for comment on whether the requirement should be phased in, but received no comment on the issue. OSHA does not believe it is necessary to provide a phase-in period, because the construction rule has been in place since 1998. Accordingly, OSHA believes that manufacturers currently are making personal fall protection systems available with automatic locking snaphooks and carabiners, and most employers already are using snaphooks and carabiners that comply with the final rule.
Paragraph (c)(10) of the final rule prohibits employers from using snaphooks or carabiners for certain connections unless they are designed for that connection. Accordingly, the final rule specifies that employers may connect snaphooks or carabiners to the following objects
• Directly to webbing, rope, or wire rope;
• To each other;
• To a D-ring to which another snaphook, carabiner, or connector is attached;
• To a horizontal lifeline; or
• To any object that is incompatibly shaped or dimensioned in relation to the snaphook or carabiner such that unintentional disengagement could occur when the connected object depresses the snaphook or carabiner gate and allows the components to separate.
Final paragraph (c)(10) is the same as OSHA's construction and shipyard employment fall protection standards (§§ 1915.159 (a)(6); 1926.502(d)(6)). The Powered Platforms standard addresses the connection compatibility issue a little differently than this final rule, requiring that snaphooks “be sized to be compatible with the member to which they are connected so as to prevent unintentional disengagement” of the snaphook (§ 1910.66, appendix C, Section I, paragraph (d)(8)). Similarly, the Z359.1-2007 standard requires: “Snaphooks and carabiners shall be compatibly matched to their associated connectors to reduce the possibility of rollout . . . Snaphooks and carabiners shall not be connected to each other” (Section 7.2.2.). Explanatory notes accompanying this provision state that multiple connections (
OSHA believes that the final rule will help to reduce the potential of rollout. Certain connections, such as ones that are incompatibly sized or dimensioned, increase the likelihood of rollout, and OSHA believes the provision is needed to provide adequate assurance of worker safety. Accordingly, OSHA adopts the proposed provision, with the addition of “carabiners,” a commonly used connector.
In paragraph (c)(11) of the final rule, like the proposal, OSHA establishes two requirements for horizontal lifelines. The provision specifies that employers must ensure horizontal lifelines are: (1) Designed, installed, and used under the supervision of a qualified person (paragraph (c)(11)(i)); and (2) are part of a complete personal fall arrest system that maintains a safety factor of at least two (paragraph (c)(11)(ii)).
Paragraph (c)(11) is the same as OSHA's Powered Platforms (§ 1910.66, appendix C, Section I(c)(9)) and construction fall protection standards (§ 1926.502(d)(8)). In addition, A10.32-2012 contains similar requirements (Section 4.4). Although Z359.1-2007 does not address horizontal lifelines specifically, it provides: “A PFAS [personal fall arrest system] which incorporates a horizontal lifeline (outside the scope of this standard) shall be evaluated in accordance with acceptable engineering practice to determine that such system will perform as intended” (Section 3.1.4).
OSHA believes the requirements in paragraph (c)(11) are necessary because horizontal lifelines present unique safety issues. For example, horizontal lifelines may be subject to greater impact loads than the loads imposed by other attached components. Horizontal lifelines also result in potentially greater fall distances than some other fall protection devices. Even a few additional feet of free fall can increase fall arrest forces significantly, possibly to the point of exceeding the strength of the system. In addition, forces applied in a perpendicular direction to a horizontal lifeline create much larger forces at the anchorages. The potential for increased fall arrest forces and impact loads associated with horizontal lifelines explains the need for employers to ensure that personal fall arrest systems used with horizontal lifelines maintain a safety factor of at
OSHA received one comment on the proposed provision. Ellis said OSHA should require that horizontal lifelines be positioned overhead when the personal fall arrest system is made ready for use because of increased forces when the line is at waist level. He added, “Due to stretch the fall factor increases fall distance when the line is below shoulder height” (Ex. 155). OSHA recognizes that using horizontal lifelines at waist level may be unavoidable in some circumstances. Requiring that a qualified persons design, install, and supervise the use of horizontal lifelines with personal fall arrest systems helps to ensure that issues such as the positioning of horizontal lifelines will be properly considered and resolved before the personal fall arrest system is used.
Paragraph (c)(12) of the final rule, like the proposed rule, requires that employers ensure anchorages used to attach to personal fall protection equipment are independent of any anchorage used to suspend workers or work platforms. This requirement ensures that if the anchorage holding other equipment (such as a powered platform or RDS) fails, the worker will still be protected by the separate, independent anchorage to which the personal fall protection system is secured. The purpose of the requirement, which the shipyard employment and construction fall protection standards also require (§§ 1915.159(a)(8); 1926.502(d)(15)), is to ensure that anchorages used to suspend workers or work platforms are not the anchorages that workers use for their personal fall protection system.
The Industrial Truck Association (ITA) said the provision was not a workable requirement for mobile work platforms such as those on powered industrial trucks:
On powered industrial trucks that have elevating platforms, such as high-lift order pickers, the anchorage for the lanyard that comprises part of the personal fall protection equipment is necessarily a part of the overhead guard or some other structural member that elevates with the operator platform and through the same mechanism (the lift chains) as the platform. This is inherent in mobile equipment, which cannot depend on some separate fixed anchorage point for the personal fall protection equipment. The concern is that the anchorage used for attaching the personal protective equipment, since it moves up and down with the operator platform, could be considered not “independent” of the anchorage being used to support the platform. Since OSHA obviously did not intend by the proposed revision to eliminate the use of high-lift order pickers or other powered industrial truck platforms, it appears that 1910.140(c)(12) requires a clarification for mobile equipment (Ex. 145).
OSHA agrees with the issue the commenter raised and exempts mobile work platforms on powered industrial trucks from the requirement in final paragraph (c)(12) that anchorages be independent. Therefore, OSHA has added language to the final rule to address anchorages used to attach to personal fall protection equipment on mobile work platforms on powered industrial trucks. The new language specifies that those anchorages must be attached to an overhead member of the platform, at a point located above and near the center of the platform. OSHA modeled this language on the anchorage requirements in the national consensus standard on powered industrial trucks (ANSI/ITSDF B56.1-2012, Safety Standard For Low Lift and High Lift Trucks (Ex. 384; Section 7.37)).
Paragraph (c)(13) of the final rule adopts strength requirements for anchorages for personal fall protection systems, and includes a performance-based alternative. The final provision, like the proposal, requires that anchorages either (1) be capable of supporting at least 5,000 pounds for each worker attached, or (2) be designed, installed, and used under the supervision of a qualified person as part of a complete personal fall protection system that maintains a safety factor of at least two. The anchorage strength requirement applies to personal fall arrest, travel restraint, and positioning system anchorages, but not to window cleaner's belt anchors, which are addressed separately in paragraph (e).
Paragraph (c)(13) is the same as the personal fall protection system anchorage requirement in OSHA's Powered Platforms, shipyard employment and construction fall protection standards (§§ 1910.66, appendix C, Section (c)(10); 1915.159(a)(9); 1926.502(d)(15)). The A10.32-2012 standard also contains similar requirements (Section 5.1.1). Although the anchorage requirements in Z359.1-2007 and I-14.1-2001 are similar to the final rule, they differ to some extent. For example, the Z359.1 standard requires:
Anchorages selected for [personal fall arrest systems] shall have a strength capable of sustaining static loads, applied in the directions permitted by the PFAS, of at least: (a) Two times the maximum arrest force permitted on the system, or (b) 5,000 pounds (22.2kN) in the absence of certification. When more than one PFAS is attached to an anchorage, the anchorage strengths set forth in (a) and (b) above shall be multiplied by the number of personal fall arrest systems attached to the anchorage (Section 7.2.3).
The I-14.1 standard requires that all components of personal fall arrest systems, including anchorages, comply with the Z359.1 standard, with some exceptions, such as window cleaner's belts (Section 9.2.2(a)).
OSHA did not receive any comments opposing proposed paragraph (c)(13), and Ameren specifically supported the performance language alternative: “Ameren agrees with this language so as to allow use to determine suitable anchorage points because of capacity and not be restricted due to other designations of the equipment” (Ex. 189).
As discussed above, OSHA believes that all of the strength requirements in the final rule are necessary to provide a reasonable margin of safety for workers. At the same time, the final rule gives employers flexibility in meeting the anchorage strength requirement in specific circumstances. The final rule does not require a 5,000-pound anchorage point in every situation. An employer may use an anchorage that meets a different strength, provided that (1)
The Agency anticipates that even employers who cannot achieve 5,000-pound anchorage strength should have no difficulty meeting the alternative 2:1 safety factor. For example, I-14.1-2001 requires that anchorages for positioning systems be capable of supporting 3,000 pounds or at least twice the potential impact load of a worker's fall, whichever is greater (Section 9.2.3(b)). The I-14.1 requirement has been in place for more than 10 years, and employers are familiar with the standard.
Ellis recommended that OSHA require employers using the alternate anchorage strength procedures in (c)(13) to document the anchorage “with at least a sketch or engineering drawing” because “anchorages are mostly guesswork” (Ex. 155). OSHA believes that the requirement in paragraph (c)(13), that qualified persons design, install, and supervise the use and maintenance of anchorages, is sufficient, and will be more effective in protecting workers than documentation by a person who may not have the qualifications of a qualified person. Qualified persons, as paragraph (b) specifies, must possess the type of
OSHA notes that an employer may use more than one qualified person to comply with the final rule. For example, some employers may choose to have an outside qualified person design the anchorages to meet the requirements of the final rule and an in-house, on-site qualified person to supervise their installation and use.
Paragraph (c)(14) of the final rule, like the proposed rule, requires that restraint lines in travel restraint systems be capable of sustaining a tensile load of at least 5,000 pounds. OSHA's existing fall protection standards do not include any requirements that specifically address travel restraint systems or lines. The requirement is drawn from two national consensus standards: (1) The A10.32-2012 standard specifies that component parts of travel restraint systems be designed and manufactured to meet the standard's requirements for personal fall arrest systems (Section 4.6.1); and (2) the Z359.3-2007 standard requires that positioning and travel restraint lanyards be capable of sustaining a minimum breaking strength of 5,000 pounds (Section 3.4.8).
OSHA believes the strength requirement for travel restraint lines in final paragraph (c)(14) is necessary for several reasons. First, the requirement ensures that the restraint line provides adequate protection if a restraint line is ever used as a lifeline. For example, if a travel restraint system is not rigged properly or is inadvertently used with a personal fall arrest system, and the worker falls off the walking-working surface, the restraint line essentially becomes a lifeline. Because of this possibility, OSHA believes it is necessary that travel restraint lines have the same 5,000-pound minimum breaking strength required of personal fall protection system lifelines and lanyards (see paragraph (c)(4)).
Second, according to CSG (Ex. 329 (1/18/2011, p. 110)) and Mine Safety Appliances (MSA) (Ex. 329 (1/18/2011, p. 199)) travel restraint systems (including lines and lanyards) currently are designed and manufactured to support a 5,000 pound load. Further, MSA said they were not aware of any company that still manufacturers travel restraint lines that support only 3,000 pounds.
Finally, setting the strength requirement at 5,000 pounds for travel restraint lines makes the provision consistent with other strength requirements in § 1910.140 for components of personal fall protection systems (
Paragraph (c)(15) of the final rule requires that employers ensure lifelines are not made of natural fiber rope. Natural fiber rope of the same size is weaker than its synthetic counterpart and may burn under friction. When the employer uses polypropylene rope, the final rule requires that it must contain an ultraviolet (UV) light inhibitor. Final paragraph (c)(15) is consistent with OSHA's Powered Platforms, shipyard employment, and construction fall protection standards (§§ 1910.66, appendix C, Section (c)(11); 1915.159(c)(2); 1926.502(d)(14)). Those standards specify that ropes and straps (webbing) used in lanyards, lifelines, and strength components of body belts and body harnesses be made from synthetic fibers or, with the exception of the construction standard, wire rope; however, those standards do not require that lifelines made of polypropylene rope contain a UV light inhibitor.
The final rule provision also is consistent with Z359.1-2007 and with A10.32-2012, which provide useful guidance to help employers meet the requirement in final paragraph (c)(15). For example, the Z359.1 standard provides: “Rope and webbing used in the construction of lanyards shall be made from synthetic materials of continuous filament yarns made from light and heat resistant fibers having strength, aging, and abrasion resistant characteristics equivalent or superior to polyamides” (Section 3.2.3.1). The A10.32 standard specifies, “Harnesses, lanyards, lifelines and other load-bearing devices shall not be made of natural fibers (including, but not limited to, cotton, manila and leather)” (Section 4.5.5). The I-14.1-2001 standard requires that all personal fall arrest systems used in window cleaning operations comply with Z359.1, and prohibits ropes made entirely of polypropylene (Sections 6.8, 9.2.2(a)). In addition, the standard requires that all rope and webbing used in suspending RDS seat boards be made of synthetic fiber, preferably nylon or polyester (Section 14.3(d)).
Like the Z359.1 standard, OSHA recognizes that degradation due to exposure to ultraviolet light can be a serious problem, especially for polypropylene rope. However, OSHA believes that polypropylene rope has certain advantages compared to other synthetic materials. Polypropylene rope is strong and flexible, and may be less costly than rope made of other materials. Moreover, many newer polypropylene ropes are made with UV light inhibitors, so employers can use polypropylene rope without the risk of degradation from UV light. The Agency believes the final rule provides adequate protection for workers while embracing technological advances that give employers greater flexibility in complying with paragraph (c)(15). Additionally, OSHA removed “carriers” from the final provision. Carriers are used exclusively in ladder safety systems, which are covered in § 1910.23, and not in personal fall protection systems. OSHA did not receive any comments on the proposed provision, and adopts it as discussed.
Paragraph (c)(16) of the final rule, like the proposed rule, requires that all personal fall protection systems and components be used only for worker fall protection. Paragraph (c)(16) also prohibits personal fall protection systems from being used for any other purpose, such as hoisting materials or equipment. The final rule applies to all personal fall protection systems, including personal fall arrest systems, positioning devices and travel restraint systems and components such as anchorages, harnesses, connectors, and lifelines.
The final rule is similar to OSHA's Powered Platforms, shipyard employment and, construction fall protection standards (§§ 1910.66, appendix C, Section I, paragraph (c)(6); 1915.159(c)(9); 1926.502(d)(18)).
OSHA received one comment on the proposed requirement. Although Verallia “agree[d] with OSHA's goal of using . . . personal fall protection equipment only for its intended purpose,” they said:
[A]nchorage points—while clearly performing a function related to the use of personal fall protection—fall outside the intended goal of preserving intact the equipment itself. In other words, anchorage points are designed for and have many uses outside of fall protection in industrial settings. Their occasional use for tasks other than personal fall protection is consistent with their design (Ex. 171).
OSHA agrees anchorages have uses other than for personal fall protection. Anchors are used for suspended work platforms, rope descent systems, and other equipment. For example, using a structural beam as an anchorage does not mean the structural beam can never be used as a structural member. OSHA intends this provision to apply to those components that would typically be found in a personal fall protection kit,
Paragraph (c)(17) of the final rule, like the proposed rule, requires that any personal fall protection system or its component subjected to impact loading must be removed from service immediately. This requirement applies to impact loading due to a free fall, but not to impact loading during static load testing. The final rule also specifies that the employer must not use the system or component again until a competent person inspects the system or component and determines that it is not damaged and is safe to use for worker personal fall protection.
The final rule is the same as the Powered Platforms, shipyard employment and construction fall protection standards (§§ 1910.66, appendix C, Section I, paragraph (e)(7); 1915.159(c)(6); 1926.502(d)(19)). The Z359.1-2007 (Section 5.3.4) and A10.32-2012 (Section 3.4) standards also require that impact loaded systems and components be removed from service; however, neither standard specifies requirements that allow or prohibit reuse of such equipment.
OSHA believes that paragraph (c)(17) will ensure that employers implement procedures for inspection and evaluation of impact-loaded personal fall protection systems and components to prevent reuse of damaged equipment. OSHA believes that the requirements in paragraph (c)(17), as well as the other requirements in the final rule, provide sufficient safeguards to allow the reuse of impact-loaded personal fall protection systems after the competent person inspects and repairs or replaces the damaged components.
The final rule provides the following safeguards to ensure the dangers of impact-loaded personal fall protection systems are addressed properly before reuse:
• Paragraph (c)(18) of the final rule, discussed below, requires that employers ensure personal fall protection systems are inspected for damage before each use, and remove defective components from service;
• Section 1910.30 of the final rule requires that each worker be trained in the proper inspection of fall protection equipment; and
• Appendix C to § 1910.140 provides useful information on inspecting fall protection equipment and components.
OSHA requested comment on whether the proposed approach provides adequate protection. In particular, OSHA asked for comment on whether the final standard should require destruction of ropes, lanyards, belts, and harnesses subjected to impact loading (75 FR 28909). Impact loading can cause damage to fibers that cannot be discovered easily. OSHA notes these components are relatively inexpensive to replace.
OSHA received comments supporting the proposed requirement (Exs. 185; 198; 251). ISEA (Ex. 185) and CSG (Ex. 198) both said that manufacturers commonly indicate in user instructions and product labels how to handle personal fall protection equipment after an impact, and recommended that: “OSHA should err on the side of worker protection and recommend that when components of personal fall arrest systems such as ropes, lanyards, or harnesses are impact loaded, they should be permanently taken out of service and disposed of” (Ex. 185). ISEA and CSG pointed out that some fall protection components have an impact load indicator that alerts users when a product must be taken out of service (Exs. 185; 198). This device makes it easy for employers to know when they need to remove personal fall protection systems and components from service and replace them. One commenter on the 1990 proposed rule said that only manufacturers should inspect systems to determine if they are suitable for reuse (Ex. OSHA-S057-2006-0680-0048).
By contrast, Edison Electric Institute (EEI) opposed requiring removal of equipment subjected to impact loading. EEI said, “Inspection by a competent person is adequate to determine whether the component is still functional” (Ex. 207). Similarly, SPRAT opposed the destruction of equipment that is “retired” (Ex. 205).
OSHA believes that impact loading may adversely affect the integrity of personal fall protection systems, but also recognizes that many other factors can affect a system's potential capability for reuse after impact loading. These factors include the type of deceleration device used, and the length of the fall. For example, a short fall of one foot may not damage the harness, but a long fall, such as six feet or more, may damage or even destroy the harness. OSHA believes that if an impact-loaded system or component is damaged or fails the employer must remove it from service immediately so a competent person can inspect the system or component and determine whether it can be reused for worker fall protection. However, when a competent person's careful inspection of the entire system and evaluation of the factors involved in the fall indicates no damage has occurred, and the personal fall protection system or component continues to meet the strength requirement and other criteria necessary for continued use, OSHA does not believe it is necessary that employers permanently remove the system or component from use. OSHA notes that the employer should be allowed to reuse such system and components. In addition, OSHA believes that a competent person, as defined in paragraph (b) of the final rule, has the ability to carefully inspect the personal fall protection system and its components, evaluate the various factors involved in the fall, and make a determination about whether the equipment is safe for reuse. Moreover, the competent person has the authority to take prompt corrective action, including prohibiting the reuse of the equipment or any component that may have been damaged.
Paragraph (c)(18) of the final rule, like the proposal, requires that before initial use during each workshift, personal fall protection systems must be inspected for mildew, wear, damage, and other deterioration. The provision also requires that employers remove from service any defective component.
Final paragraph (c)(18) clarifies two key terms: “before each use” and “defective component.” Proposed paragraph (c)(18) specified that workers must inspect personal fall protection systems “before each use.” The final rule expressly clarifies that OSHA's intention in the proposed rule was that workers inspect their personal fall protection systems before initial use during each workshift. Thus, if the personal fall protection system is used in more than one workshift during a day, the system must be reinspected at the start of each of those workshifts.
The final rule is generally consistent with OSHA's Powered Platforms, construction, and shipyard employment standards (§§ 1910.66, appendix C, Section I(f); 1915.159(c)(5); 1926.502(d)(21)), as well as with Z359.1-2007 (Section 6.1) and A10.32-2012 (Section 4.1).
OSHA believes that paragraph (c)(18), like paragraph (c)(17), will ensure that employers have a procedure in place for inspecting personal fall protection systems and components and removing defective, damaged, or weakened components from service. Appendix C to § 1910.140 provides useful information to help employers with the inspection requirement in the final rule, including a list of the types of defects that can require removal. (See appendix C to § 1910.140, Section (g)).
OSHA received only one comment on inspection of personal fall protection systems. Verallia recommended that OSHA require “prior to use, each employee must visually inspect the anchorage points for wear and obvious deformities” (Ex. 171). OSHA does not believe it is necessary to add the language in Verallia's recommendation because paragraph (c)(18) already requires that employers inspect anchorage points. Paragraph (c)(18) requires that employers inspect personal fall protection systems. The definition of personal fall protection system in the final rule identifies personal fall arrest systems, positioning systems, and travel restraint systems as examples of personal fall protection systems. The definitions of each of those systems explain that they consist of various components (“a system of equipment”), including anchorages. Therefore, employers must ensure that the inspection covers every component of the personal fall protection system, including anchorages, so the entire system is safe to use.
Paragraph (c)(19) of the final rule requires employers to ensure that ropes, lanyards, harnesses, and belts used for personal fall protection are compatible with the connectors being used. Although the final rule does not define “compatible,” Z359.0-2012 defines compatible as follows:
Capable of orderly, efficient integration and operation with other elements or components in a system, without the need of special modification or conversion, such that the connection will not fail when used in the manner intended (Section 2.29).
OSHA believes compatibility between personal fall protection components and connectors is essential to prevent hazards such as rollout, exceeding system strength, and long free fall distances that can increase fall arrest forces significantly. For example, a lifeline or harness can disengage from a connector if its size or dimension is incompatibly sized or configured for use with the connector.
In addition, the Agency has found that it is common practice for employers to interchange or replace components of personal fall protection systems (
Appendix C to final § 1910.140 provides important information to help employers ensure they maintain compatibility when replacing personal fall protection components. For example, the appendix cautions: “Any substitution or change to a personal fall protection system should be fully evaluated or tested by a competent person to determine that it meets applicable OSHA standards before the modified system is put to use” (§ 1910.140, appendix C, Section (d)). OSHA notes that final paragraph (c)(19) and appendix C are consistent with Z359.1-2007 (Section 7.1.7), which requires that connectors, regardless of whether they are integral elements of the personal fall protection system, individual components, or replacements produced by the same or different manufacturers, must be suitably configured to interface compatibly with associated connectors which will be attached to them.
Final appendix C to § 1910.140 states the ideal way for employers to ensure the compatibility of components of personal fall protection systems is to supply workers with complete systems (appendix C to § 1910.140, Section (d)).
The final rule is similar to the shipyard employment fall protection standard, which requires that system components be compatible with “their hardware” (§ 1915.159(c)(3)). Both Z359.1-2007 and A10.32-2012 include similar compatibility requirements. For example, A10.32 specifies: “All equipment used in a fall protection system shall be compatible to limit force levels, maintain system strength, and prevent accidental disengagement” (Section 1.4.3;
Commenters raised two concerns about proposed paragraph (c)(19). First, ISEA and CSG seem to imply that the compatibility requirement in final paragraph (c)(19) is not necessary (Exs. 185; 198). For support, they point out that Z359.12 (Section 7.1) requires that snaphooks and carabiners be designed to prevent “forced rollout,” which ISEA and CSG appear to believe is an adequate solution without requiring that employers also comply with paragraph (c)(19). In addition, ISEA and CSG pointed out that manufacturers currently are designing connectors to prevent forced rollout. However, the explanatory note in Z359.12 states:
While connectors which are compliant with ANSI/ASSE Z359.12 reduce the possibility or risk of failure as a result of incompatible connections, they do not eliminate it (Z359.12-2009 (Section E7.1)).
Moreover, OSHA notes that rollout is not the only hazard that component incompatibility can cause. The A10.32-2012 standard specifies that components of personal fall protection systems must be compatible in order “to limit force levels, maintain system strength, and prevent accidental disengagement” (Section 1.4.3). Accordingly, OSHA believes the component compatibility requirement in final paragraph (c)(19) is necessary because it will protect workers from all of those hazards.
Second, ASSE argues that it is not feasible to eliminate incompatible connections:
The reality is that there are too many non-certified anchorages and structural variations where gate loading or pressure on the connector will occur.
It is not enough just to require a locking type snap hook. Connectors that have significantly stronger gates are readily available and have been for many years to the point where ANSI has made it a requirement for construction and design of connectors. Connectors tested and approved to the ANSI Z359.12 standard provide workers with an additional level of security that would help prevent fatalities (Ex. 127).
OSHA does not agree with, and national consensus standards do not support, ASSE's argument. The Z359.12-2012 and A10.32-2012 standards include component
ASSE also maintains that the requirement in proposed (c)(19) is not feasible because “we continue to see fatalities related to incompatible connections and gate failure” after OSHA included a connector compatibility requirement in § 1910.66, appendix C, and the construction fall protection standard (29 CFR part 1926, subpart M) (Ex. 127). OSHA does not agree with ASSE's conclusion. The fact that accidents, fatalities, injuries, or illnesses may occur after OSHA implements a standard does not mean that the controls the standard requires are not feasible. Rather, it is more likely that those incidents are the result of noncompliance with the connector compatibility requirements in § 1910.66 and the construction fall protection. Accordingly, the final rule adopts the proposed requirement that employers must ensure ropes, belts, lanyards, and harnesses used for personal fall protection are compatible with all connectors used, regardless of whether the components are integral elements of the personal fall protection system, individual components, or replacements produced by the same or different manufacturers.
Paragraph (c)(20) of the final rule, like the proposal, requires that employers ensure all ropes, lanyards, lifelines, harnesses, and belts used for personal fall protection systems are protected from being cut, abraded, melted, or otherwise damaged. OSHA believes that these components of personal fall protection systems need to be protected from the specified hazards, which could cause damage and deterioration that results in components losing strength and failing.
Final paragraph (c)(20) is broader than the requirements in OSHA's shipyard employment and construction fall protection standards (§§ 1915.159(c)(4), 1926.502(d)(11)), which only address protecting lanyards and lifelines from damage. By contrast, Appendix C of the Powered Platforms standard specifies that any component of a personal fall arrest system with any significant defect which might affect its efficiency must be withdrawn from service immediately, or destroyed (§ 1910.66, appendix C, Section III(f)). The Z359.1-2007 and A10.32-2012 standards contain several provisions requiring lifelines, lanyards, ropes, webbing, and other fall protection system components to be protected from the types of damage the final rule specifies.
In addition to protecting fall protection equipment components from cuts, abrasions, and melting, the final rule requires that employers protect fall protection equipment from other damage (
The A10.32-2012 standard requires that employers protect fall protection equipment from abrasion, cutting, welding, electrical, and chemical hazards (Section 7.5). Similarly, Z359.1 requires that fall protection equipment be made of “abrasive and heat resistant materials” (Sections 3 and 5). OSHA did not receive any comments on the proposed provision, and adopts paragraph (c)(20) with the minor revisions mentioned above. In addition, appendix C to § 1910.140 includes many hazards employers should consider when inspecting personal fall protection systems (appendix C to § 1910.140, Section (g)).
Paragraph (c)(21) of the final rule, like the proposed rule, requires that employers provide for the prompt rescue of workers in the event of a fall. This requirement is necessary because workers suspended after a fall are in danger of serious injury due primarily to suspension trauma.
The final rule is consistent with the rescue requirements in OSHA's Powered Platforms, shipyard employment, and construction fall protection standards (§§ 1910.66, appendix C, Section I(e)(8); 1915.159(c)(7); 1926.503(d)(20)). Those standards require that employers “provide for prompt rescue of employees in the event of a fall or shall assure the self-rescue capability of employees” (Powered Platforms (§ 1910.66, appendix C, Section I(e)(8)).
The final rule also is drawn from three national consensus standards. The A10.32-2012 standard specifies that employers develop a “project-specific” rescue plan that provides an appropriate form of employee rescue (Section 7.2.2.). The standard also requires that the rescue plan include providing adequate rescue equipment and training workers in self-rescue or alternate means. The Z359.4-2007 standard provides useful information to assist employers in planning for rescues in the event of a fall. Finally, Z359.1-2007 requires that worker training address fall rescue (Section 7.3.2).
Paragraph (c)(21) of the final rule sets forth two fundamental points: (1) Employers must provide for the rescue of workers when a fall occurs, and (2) the rescue must be prompt. With regard to the first point, the final rule requires that employers must “provide” for rescue, which means they need to develop and put in place a plan or procedures for effective rescue. The plan needs to include making rescue resources available (
Appendix C to § 1910.140 provides guidance to employers on developing a rescue plan (appendix C to § 1910.140, Section (h)) as does Z359.4-2007. For example, appendix C recommends that employers evaluate the availability of rescue personnel, ladders, and other rescue equipment, such as mechanical devices with descent capability that allow for self-rescue and devices that allow suspended workers to maintain circulation in their legs while they are awaiting rescue. OSHA's Safety and Health Bulletin on Suspension Trauma/Orthostatic Intolerance identifies factors that employers should consider in developing and implementing a rescue plan, including recognizing the signs and symptoms of suspension trauma and factors that can increase the risk of trauma, rescuing unconscious workers, monitoring suspended and rescued workers, providing first aid for workers showing signs and symptoms of orthostatic intolerance (see SHIB 03-24-
OSHA notes that although an increasing number of employers provide devices that allow workers to rescue themselves, where self-rescue is not possible, the employer must ensure that appropriate rescue personnel and equipment is available for prompt rescue. For example, unconscious workers will not be able to move so they cannot pump their legs to maintain circulation or relieve pressure on their leg muscles. Workers who are seriously injured or in shock also may have difficulty effecting self-rescue.
On the second point, the final rule requires that employers provide “prompt” rescue of workers who are suspended after a fall. A number of commenters asked OSHA to clarify the meaning of “prompt” rescue, for example, asking whether it means “immediately” or “quickly” (Exs. 145; 185; 198). ISEA and CSG urged OSHA to require that suspended workers be rescued “quickly,” pointing out the life-threatening dangers of suspension trauma and orthostatic intolerance (Exs. 185; 198). In 2000, OSHA adopted the language ISEA and CSG recommends in answering the question of prompt rescue as it applies to the construction fall protection standard: “[T]he word “prompt” requires that rescue be performed quickly—in time to prevent serious injury to the worker” (Letter to Mr. Charles E. Hill, August 14, 2000).
OSHA's definition of “prompt” is performance based. Employers must act quickly enough to ensure that the rescue is effective; that is, to ensure that the worker is not seriously injured. If the worker is injured in the fall, the employer must act quickly enough to mitigate the severity of the injury and increase the survivability of the worker. OSHA's performance-based definition recognizes, and takes into account, the life-threatening dangers of prolonged suspension:
Orthostatic intolerance may be experienced by workers using fall arrest systems. Following a fall, a worker may remain suspended in a harness. The sustained immobility may lead to a state of unconsciousness. Depending on the length of time the suspended worker is unconscious/immobile and the level of venous pooling, the resulting orthostatic intolerance may lead to death. . . . Unless the worker is rescued promptly using established safe procedures, venous pooling and orthostatic intolerance could result in serious or fatal injury, as the brain, kidneys, and other organs are deprived of oxygen.
Prolonged suspension from fall arrest systems can cause orthostatic intolerance, which, in turn, can result in serious physical injury, or potentially, death. Research indicates that suspension in a fall arrest device can result in unconsciousness, followed by death, in less than 30 minutes (SHIB 03-24-2004).
OSHA also finds that the emergency-aid and first-aid response needs to be available within a few minutes “in workplaces where serious accidents such as those involving falls . . . are possible” (Letter to Mr. Charles Brogan, January 16, 2007).
In summary, prompt rescue means employers must be able to rescue suspended workers quickly enough to ensure the rescue is successful—quickly enough to ensure that the worker does not suffer physical injury, such as injury or unconsciousness from orthostatic intolerance, or death. Many employers provide self-rescue equipment so workers can rescue themselves quickly after a fall, ensuring that the rescue is prompt and risks associated with prolonged suspension are minimized. OSHA believes the performance-based approach in the final rule ensures prompt rescue of workers after a fall, while also giving employers flexibility to determine how best to provide prompt and effective rescue in the particular circumstance.
OSHA also received several comments on what the final rule requires to protect workers from orthostatic intolerance. ITA requested that OSHA clarify whether the final rule requires workers to carry self-rescue equipment (Ex. 145). ISEA and CSG recommended that OSHA require employers to equip workers with suspension-relief devices and revise the definition of “personal fall arrest system” to include those devices. They said there are widely available devices that permit a suspended worker to relieve pressure from the harness and to “maintain circulation in the large muscles of legs, reducing the potential for suspension trauma until help arrives” (Exs. 185; 198). According to ISEA and CSG, the devices are lightweight, portable, and low cost, and workers can carry them as part of the personal fall arrest system. OSHA agrees that the benefits these devices offer are promising, and recommends that employers provide them, particularly in those situations where self-rescue may not be possible.
Paragraph (c)(22) of the final rule requires that workers wear personal fall protection systems with the attachment point of the body harness in the center of the worker's back near shoulder level. The final rule includes one exception—the attachment point may be located in the pre-sternal position if the free fall distance is limited to 2 feet or less.
The final rule differs from OSHA's Powered Platforms, construction, and shipyard employment fall protection standards, which do not permit the attachment point to be located in the pre-sternal position (§§ 1910.66, appendix C, Section I(e)(4); 1915.159(c)(1)(i); 1926.502(d)(17)). OSHA drew the exception for pre-sternal positioning in final paragraph (c)(22) from Z359.1-2007, which permits a front-mounted attachment point when the maximum free fall distance is two feet and the maximum arrest force is 900 pounds (Section 3.2.2.5a). A note to that section explains: “The frontal attachment element is intended for the use in rescue, work position, rope access, and other ANSI/ASSE Z359.1 recognized applications where the design of the systems is such that only a limited free fall of two feet is permitted” (Section E3.2.2.5a). The I-14.1-2001 standard incorporates this requirement from Z359.1 (Section 9.2).
The final rule differs from the proposed rule in two respects. First, the language “or above the employee's head” has been eliminated from the first sentence of the proposed provision because OSHA believes this language is inaccurate. A properly sized and adjusted harness should not allow the attachment point to be above the wearer's head. Second, the proposal would have required that front-mounted attachment points be limited to situations where the maximum fall arrest force does not exceed 900 pounds. OSHA deleted this requirement in this final rule because the Agency does not believe that the requirement is necessary. Final paragraph (c)(22) permits pre-sternal attachment only when the maximum free fall limit is two feet. OSHA believes this limit is sufficient to ensure fall arrest forces are reduced significantly in the event of a fall. ISEA (Ex. 185) and CSG (Ex. 198) opposed the 900-pound fall arrest requirement, which they said was “too prescriptive and restrictive.”
Several commenters supported allowing a front-mounted attachment in certain situations, and OSHA did not receive any comments opposing its use. ISEA (Ex. 185) and CSG (Ex. 198) supported allowing front-mounted attachment points because it allowed workers to “conduct a variety of tasks, such as rotating and leaning.” AWEA also supported pre-sternal connection points, noting, “Rope access workers around the world have been employing this technique for decades with excellent results” (Ex. 329 (1/21/2011, p. 22)).
OSHA believes that allowing pre-sternal attachment when the free fall distance is limited to two feet will have only a minimal effect on the distribution of fall arrest forces, thereby reducing the risk of serious neck and back injury. Such use will make self-rescue easier in specific situations, such as confined spaces, window cleaning, and climbing activities because it is easier to work in front of the body than work behind one's body. In addition, permitting a front-mounted attachment point provides greater flexibility for employers in certain activities, such as climbing or using rope descent systems for window washing. Accordingly, the final rule retains the proposed exception for front-mounted attachment points when the maximum free fall distance is two feet.
Paragraph (d) of the final rule establishes specific requirements for using personal fall arrest systems. A personal fall arrest system is one type of personal fall protection system. The final rule defines a personal fall arrest system as a system used to arrest a worker in a fall from a walking-working surface. A personal fall arrest system consists of a body harness, anchorage, and a connector. The means of connection may include a lanyard, deceleration device, lifeline, or a suitable combination of these. OSHA notes that the provisions in paragraph (d) apply in addition to those provisions in paragraph (c), which apply to all types of personal fall protection systems.
Paragraph (d) of the final rule includes some changes in the regulatory text from the proposal that clarify and simplify the language. Those changes do not affect the meaning or purpose of the provisions in paragraph (d). OSHA believes that the changes make the requirements in paragraph (d) easier for employers to understand, which should increase worker safety, and compliance with the final rule. Paragraph (d) consists of two primary components: Paragraph (d)(1) establishes performance criteria for personal fall arrest systems, while paragraph (d)(2) addresses the use of personal fall arrest systems. OSHA based the requirements for personal fall arrest systems on OSHA's Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66, appendix C; 1915.159; 1926.502(d)), as well as on several national consensus standards, including Z359.1-2007, A10.32-2012, and I-14.1-2001.
Paragraph (d)(1)(i) of the final rule requires that employers ensure personal fall arrest systems limit the maximum fall arrest forces on a worker to 1,800 pounds. OSHA discussed the requirement extensively in the preamble to the Powered Platforms final rule, noting that the Agency proposed “a force limit of 10 times the worker's weight or 1,800 pounds (8 kN) whichever is less” (54 FR 31450). OSHA explained that the Powered Platforms proposed rule was consistent with ANSI A10.14-1975 and a report by the National Bureau of Standards (now the National Institute for Science and Technology) (54 FR 31450). In addition, OSHA said comments from the United States Technical Advisory Group, an advisory group representing both government and private interests, also supported the 1,800-pound maximum fall arrest limit for personal fall arrest systems.
When the Z359.1 standard was first published in 1992, it also incorporated the 1,800-pound maximum fall arrest force for personal fall arrest systems used with body harnesses, and retained the requirement in every update since 1992. The updated versions of Z359.1 (1992, 2002, and 2007) each explained the basis for the 1,800-pound maximum arresting force (MAF) limit as follows:
The 1,800 pound (8 kN) MAF criteria included in this standard is based on the following considerations. In the mid-1970's medical information developed in France confirmed earlier United States research which observed that approximately 2,700 pounds (12 kN) is the threshold of significant injury incidence for physically fit individuals subjected to drop impacts when wearing harnesses. The French arbitrarily halved the above force and established 1,350 pounds (6 kN) as their national standard for MAF in PFAS. Canada's Ontario Ministry of Labor reviewed this information and elected to establish 1,800 pounds (8 kN) for MAF. This MAF has been in effect since 1979 in the Ontario Provincial standard. Since that time there have been no reported deaths or serious injuries associated with the arresting of accidental falls of individuals. In addition, ISO/TC94/SC4, in working drafts, has established the 1,800 pounds (8 kN) limit on MAF. On the basis of this information, 1,800 pounds (8 kN) is considered the appropriate MAF for inclusion in this standard where harnesses are to be used in arresting falls (Section E3.1.2).
Based on this research, OSHA believes that the 1,800 pound fall arrest force will adequately protect workers. OSHA did not receive any comments opposing the proposed provision, and is adopting it in the final rule with only minor editorial changes.
Paragraph (d)(1)(ii) limits the maximum deceleration distance to 3.5 feet. This requirement pertains only to the operation of the deceleration device itself and not to the 6-foot free fall distance specified in paragraph (d)(2)(ii). The 3.5-foot deceleration distance in this paragraph is in addition to the 6-foot free fall distance. Accordingly, once the free fall ends and the deceleration device begins to
The final rule is the same as the requirement in the Powered Platforms, construction, and shipyard employment fall protection standards (§§ 1910.66, appendix C, Section I (d)(1)(iii); 1915.159(b)(6)(iii); 1926.502(d)(16)(iv); also see 54 FR 31450 and 59 FR 40708). Paragraph (d)(1)(ii) also is consistent with Z359.1-2007 (Section 3.1.2). In addition, the 3.5 deceleration distance has been an industry and manufacturer standard for years. OSHA did not receive any comments on the proposed requirement, and the final rule is adopting it as proposed with only minor changes.
Paragraph (d)(1)(iii) requires personal fall arrest systems to have sufficient strength to withstand twice the potential impact energy of the worker free falling a distance of 6 feet, or the free fall distance permitted by the system. In the final rule, OSHA has clarified the provision by removing the proposed language “whichever is less.” Both ways of meeting the standard are acceptable and the removed language is unnecessary. OSHA notes that the alternative free fall distance is the one the manufacturer lists in the instructions or specifications for the specific personal fall arrest system.
Compliance with this requirement ensures that the personal fall arrest system will not fail even if subjected to twice the design shock load. For example, a personal fall arrest system harness that just meets the maximum permitted arresting force allowed in final paragraph (d)(1)(i) must be able to withstand an impact force of 3,600 pounds, which is twice the 1,800-pound potential arresting force of a worker using the system falling up to 6 feet. The Agency determined that a safety factor of two is necessary to ensure that the personal fall arrest system will not fail even if there is unavoidable wear on the system as a result of normal use. In practice, fall arrest forces should never approach the design shock load because the free fall distance likely will be 6 feet or less, and because lifelines which absorb energy, often will be used. OSHA also determined that a safety factor of two provides adequate protection and makes the final rule consistent with the approach in OSHA's Powered Platforms, construction, and shipyard employment fall protection standards.
Paragraph (d)(1)(iv) is a new paragraph added to the final rule requiring that fall arrest systems be capable of sustaining the worker within the system or strap configuration without making contact with the worker's neck and chin area. The National Institute for Occupational Safety and Health (NIOSH) recommended adding this provision, saying: “[S]tudies have shown that during suspended condition, the chest strap and ring of the harness can ride up on the worker's neck if the harness does not fit properly, posing a risk of injury to the worker [Hsiao et al., 2007; Hsiao et al., 2009]” (Ex. 164).
NIOSH also noted that “individuals with soft hip and thigh musculature are at increased risk of chest and neck strap interference to the neck and chin area when suspended after a successful arrest of fall” (Ex. 164). OSHA agrees with NIOSH that a specific requirement is needed to ensure workers are not injured while using a personal fall arrest system. If employers select personal fall arrest systems that do not fit workers properly or fail to train workers in how to use systems properly, the system may not keep the worker safe within the strap configuration or body harness if a fall occurs, or may injure the worker's neck and chin area.
OSHA does not believe that adding the requirement imposes any new burden on employers, but rather reinforces other requirements with which the employer must comply. Specifically, the general requirements that apply to all PPE, including personal fall arrest systems, require that employers “[s]elect PPE that properly fits each affected employee” (29 CFR 1910.132(d)(1)(iii)). If the personal fall arrest system does not fit properly, the worker may not be protected adequately if a fall occurs. OSHA also notes that applicable training requirements in its PPE standard require employers to train workers in “[h]ow to properly don, doff, adjust, and wear PPE” (29 CFR 1910.132(f)(1)(iii)).
Final paragraph (d)(1)(v), proposed as a note to paragraph (d)(1), makes clear that personal fall arrest systems meeting the criteria and protocols set out in appendix D to § 1910.140 will be deemed to be in compliance with the requirements of paragraphs (d)(1)(i) through (iii) when used by a worker who has a combined tool and body weight of less than 310 pounds. Appendix D provides one method that will allow employers to evaluate the ability of the personal fall arrest system to meet the necessary criteria. However, appendix D is restricted to situations in which the total body and tool weight is less than 310 pounds because the test methods were designed for that weight. If a personal fall arrest system needs to support a greater weight, the test methods in appendix D may still be used, provided the employer modifies them to account for the additional weight, such as by using a heavier or lighter test weight to reflect the heavier or lighter weight of the worker. Ellis supported using the 310-pound weight in final paragraph (d) and in the test methods specified by appendix D to § 1910.140 (Ex. 155).
Paragraph (d)(2)(ii) requires the personal fall arrest system to be rigged so that a worker cannot free fall more than 6 feet, nor contact a lower level.
U.S. manufacturers of fall protection equipment test their equipment in accordance with test procedures prescribed in ANSI standards (ANSI A10.32 and ANSI Z359) which calls for equipment to be tested based on a 6-foot free fall distance. Unless the equipment has been tested for a free fall greater than 6 feet, the results are unknown. Therefore, if an employer must exceed the free fall distance, the employer must be able to document, based on test data, that the forces on the body will not exceed the limits established by the standard, and that the personal fall arrest system will function properly.
See interpretation M-3 on OSHA's Web site:
In the final rule, OSHA added an exception that permits a free fall to be more than 6 feet provided the employer can demonstrate the manufacturer designed the system to allow a free fall of more than 6 feet and tested the system to ensure a maximum arresting force of 1,800 pounds is not exceeded. If the system is not designed for such a purpose, allowing a longer free fall distance could mean the strength and deceleration criteria are not adequate to protect the worker. This added language is consistent with OSHA's interpretation of 29 CFR part 1926, subpart M.
Paragraph (e) establishes specific requirements for positioning systems, including window cleaner's positioning systems. These requirements apply in addition to the general requirements in paragraph (c), which apply to all types of personal fall protection systems. Positioning systems, which sometimes are called “work-positioning systems,” are a type of personal fall protection system. The final rule defines positioning system as a system of equipment and connectors that, when used with its body harness or body belt, allow a worker to be supported on an elevated vertical surface (
OSHA received several general comments on the proposed requirements for positioning systems. For example, Ellis recommended that workers who use positioning systems should have additional fall protection (Ex. 155). OSHA notes that workers using positioning systems are attached to two separate anchor points. If one anchor were to fail, the worker would still be protected from falling by the attachment to the other anchor.
Weatherguard said, “If OSHA does not want to promulgate the preciseness that is required to accomplish this, a reference to the I-14 Standard would direct readers to what they need to have for compliance” (Ex.168). Regarding Weatherguard's recommendation, OSHA notes that the Agency drew a number of requirements from I-14.1-2001, and this preamble explains those provisions so employers know what action is necessary to comply with the final rule.
The Tree Care Industry Association (TCIA) expressed concern that workers in their industry would not be allowed to use positioning systems as these systems were defined in the proposed rule (Ex. 174). OSHA notes that the TCIA is commenting on the proposed revision to § 1910.67(c)(2)(v), which permits workers to use positioning systems or personal fall arrest systems when working in aerial lifts. TCIA said:
Line clearance tree trimmers and other arborists often work in aerial lifts that are elevated to work positions directly
A narrow requirement governing all situations, such as the one OSHA has proposed, does not promote worker safety to the extent that it could or should. It is important for OSHA to preserve the performance-based nature of subpart I requirements and allow the employer to assess the hazards and choose the fall protection that in its estimation will provide the greatest measure of safety in a given situation. The hazard we have illustrated could be addressed with a simple note under 1910.67(c)(2)(v): “NOTE: If the employer can demonstrate that a greater hazard to the aerial lift operator is created by contact with structures or electrical conductors below the elevated lift, then a body belt and lanyard of up to three feet in length may be employed for fall protection” (Ex. 174).
Positioning systems, as defined in § 1910.140(b), cannot be used in aerial lifts because the workers are not on a vertical surface such as a wall, but rather on the horizontal surface of the aerial lift bucket. Therefore, OSHA is revising the requirement in § 1910.67(c)(2)(v) to allow workers to use either travel restraint or personal fall arrest systems.
OSHA also addressed the issue of fall protection systems for workers performing construction activities in aerial lifts in a memorandum dated August 22, 2011.
As has been the Agency's longstanding policy, an employer may comply with OSHA's fall protection requirements for aerial lifts in one of three ways:
1. Use of a body belt with a tether anchored to the boom or basket (fall restraint system),
2. Use of a body harness with a tether (fall restraint system), or
3. Use of a body harness with a lanyard (fall arrest system).
Ellis said that OSHA's policy provided a more complete answer to the issue of fall protection for workers in aerial lifts, and recommended that OSHA add the language to the final rule (Ex. 155). OSHA does not believe such a revision is necessary because the final rule already makes clear that personal fall arrest systems can only be used with a body harness and that travel restraint systems may use a body harness or body belt.
Paragraph (e)(1)(ii)(A) of the final rule, like the proposed rule, requires employers to ensure that window cleaners' positioning systems are capable of withstanding, without failure, a drop-test consisting of a 6-foot drop of a 250-pound weight. Paragraph (e)(1)(ii)(B) requires that these systems limit the initial fall arresting force on the falling worker to not more than 2,000 pounds, with a duration not exceeding 2 milliseconds, and any subsequent fall arrest forces do not to exceed 1,000 pounds. Window cleaners' positioning systems have a potential for greater free fall distances. As such, the final rule requires a more rigorous drop test for these systems than for other positioning devices. The rigorous drop test for window cleaners' positioning systems, combined with the limit on initial arresting forces ensures workers will not be injured if a free fall occurs. The final rule uses the same approach for positioning systems as the shipyard employment standard (29 CFR 1915.160(b)(2)).
Final paragraph (e)(1)(iii), proposed as a note, is applicable to paragraphs (e)(1)(i) and (ii) and explains that positioning systems, including window cleaners' positioning systems, meeting the tests methods and procedures outlined in appendix D to § 1910.140 are considered to be in compliance with these provisions. The proposed rule included two notes and, for simplicity, the final rule combined these notes into one provision in the actual regulatory text.
Weatherguard recommended that OSHA reference the I-14.1-2001 standard in the final rule (Ex. 168). The final rule uses provisions from that standard both as a basis for a number of requirements and in the reference section as a resource for further information. There were no other comments and the provisions are finalized as discussed.
Paragraph (e)(1)(iv) addresses criteria applicable to lineman's body belt and pole strap systems. Although positioning equipment used in electric power transmission and distribution work is not to be used as insulation from live parts, when a worker is working near live parts, it is possible that the lineman's body belt and pole strap systems may come into contact with them. As such, it is important that these systems provide some level of insulation.
Paragraphs (e)(1)(iv)(A) through (C) require employers to ensure that a lineman's body belt and pole strap system be capable of passing dielectric and leakage current tests, as well as a flammability test. The requirements in paragraphs (e)(1)(iv)(A) and (B), like the proposed rule, are consistent with those in §§ 1910.269(g)(2)(iii)(G) and 1926.954(b)(2)(vii). OSHA notes that the voltages listed in these paragraphs are alternating currents. OSHA included these tests in the final rule because the Agency believes that requiring positioning straps to be capable of passing the electrical tests in final paragraphs (e)(1)(iv)(A) and (B) will provide an additional measure of protection to workers, for example, if a conductor or other energized part slips and lands on the strap or if the strap slips from the worker's hand and lands on an energized part. The requirements of final paragraphs (e)(1)(iv)(A) and (B) are the same as those in revised § 1910.269 (79 FR 20316 (4/11/2014)). Additionally, the tests in the final rule are equivalent to the ones ASTM F887-12e1 (Section 15.3.1 and Note 2) requires.
Paragraph (e)(1)(iv)(C) is a new paragraph that OSHA added to the final rule requiring that lineman's body belt and pole strap systems meet the flammability test in Table I-7. This test is equivalent to the one in 29 CFR 1926, subpart V. The flammability test in Table I-7 specifies the step-by-step process employers must ensure is followed when lineman's body belt and pole strap systems are tested. The table also includes the specific criteria the strap must meet to pass the flammability test.
OSHA added the flammability test to the final rule because employees working near energized parts must be provided with the same level of protection regardless of whether they are performing general industry or construction activities. OSHA believes lineman's body belt and pole strap systems already meet these requirements, so the final rule will not impose additional costs and burdens on employers.
The proposal contained notes indicating that positioning straps which passed direct current tests at equivalent voltages would be considered to be in compliance with paragraphs (e)(1)(iii)(A) and (B). Because these notes were more in the nature of guidance, OSHA did not carry them forward in the final regulatory text. Nonetheless, this is still a way that employers may demonstrate compliance with the requirements of paragraphs (e)(1)(iii)(A) and (B) of the final rule.
OSHA drew the requirements in paragraph (e)(2) from the I-14.1-2001 standard that addresses the design, strength, and installation of window cleaners' positioning systems. OSHA believes that these criteria, in conjunction with the general requirements in paragraph (c) that are applicable to all personal fall protection systems, provide a reasonable and necessary level of safety for workers using these systems. OSHA believes that window cleaners' positioning systems and their associated anchors are not used as commonly as they once were. However, since these systems are still used on some buildings, OSHA finds that these minimum requirements are still necessary to ensure workers are protected during window cleaning operations.
Final paragraph (e)(2)(i)(A) requires the employer to ensure that window cleaners' belts are designed and constructed so belt terminals will not pass through the fastenings on the body belt or harness if a terminal comes loose
Final paragraph (e)(2)(i)(B), like the proposed rule, requires the employer to ensure that window cleaners' belts be designed and constructed so the length of the runner from the tip of one terminal end to the tip on the other end does not exceed eight feet. This requirement is consistent with I-14.1-2001 (Section 10.2.9(c)) and OSHA believes it is necessary to limit the length of runners to 8 feet so that workers are not leaning too far back from the window they are cleaning. Leaning too far back may cause the worker to lose balance and become inverted, possibly striking the building and becoming injured. There were no comments on the proposed provision and it is finalized without revision.
Final paragraph (e)(2)(ii) requires the employer to ensure that window anchors used for attaching window cleaners' belts are installed in the side of window frames or mullions at a height not less than 42 inches and not more than 51 inches above the window sill. This requirement is consistent with I-14.1-2001 (Section 10.2.5) and OSHA believes it is widely accepted within the industry. Prior to the I-14.1 standard, the provision was also present in the ANSI/ASME A39.1 standard, which dates back to 1933. There were no comments on the proposed provision and it is finalized with only minor revisions for clarity.
Final paragraph (e)(2)(iii) requires that employers ensure window anchors are capable of supporting a minimum load of 6,000 pounds. It is consistent with I-14.1-2001 (Section 10.2.4). The final provision is similar to the proposal but it does not include the proposed requirement that the structures to which window anchors are attached also must support a 6,000-pound minimum load requirement.
Weatherguard opposed the proposed requirement, saying:
[This requirement was] not consistent with the current codes and standards. The requirement that has been in place for at least the last 60 years is that the anchor be capable of supporting a 6,000-pound load without fracture in the direction that it may be loaded. The structure to which it is attached does not have that requirement (Ex. 168).
OSHA agrees with Weatherguard. In order for the anchor to support the minimum 6,000 pound load, so must the structure to which it is attached. Therefore, OSHA removed the language because it is not necessary.
Final paragraph (e)(2)(iv) like proposed paragraph (e)(2)(vi), requires employers to ensure that window anchors are not used for any purpose other than attaching window cleaners' belts. Window anchors are built for the specific purpose of supporting a worker using a window cleaner's positioning system and OSHA believes they must only be used for their intended purpose. Using the anchors for other purposes may cause deterioration that could result in failure of the anchor when window cleaners then use the anchors. The requirement is consistent with I-14.1-2001 (Section 10.2.1). There were no comments on this provision and it is finalized with only minor editorial revisions for clarity.
Final paragraph (e)(2)(v), like the proposed rule, requires employers to ensure window anchors that have damaged or deteriorated fastenings or supports are removed, or the window anchor head is detached so the anchor cannot be used. If damaged or deteriorated anchors are not removed and replaced, the anchor may fail or break when a window cleaner's positioning system is attached, which could lead to the worker falling and being seriously injured or killed. There were no comments on this provision and it is finalized with editorial revisions for clarity.
Final paragraph (e)(2)(vi), like proposed paragraph (e)(2)(iv), requires employers to ensure rope that has wear or deterioration that affects its strength is not used. OSHA believes that deterioration or wear that significantly reduces a rope's strength may lead to worker death or injury if that rope fails. OSHA realizes that some minimal wear may occur on the sheath of modern kernmantle rope during normal use. That type of wear is expected during the life of the rope, however, if the sheath is so damaged as to expose the core of the rope (which could lead to damage), or other such damage affects the strength of the rope, that rope must be retired and no longer used by workers. There were no comments on this provision and it is finalized with minor editorial revisions for clarity.
Final paragraph (e)(2)(vii), like the proposed rule, requires employers to ensure both terminals of the window cleaner's belt are attached to separate window anchors during any cleaning operation. When the worker is moving into position, entering, or exiting the building or structure before or after cleaning, or traversing to another window, it is not always possible to have both terminals attached to separate window anchors; however, while cleaning the window the terminals must be attached to separate anchors. This requirement is consistent with I-14.1-2001 (Section 5.3.9). There were no comments on this provision and it is carried forward to the final rule with only minor editorial changes.
Final paragraph (e)(2)(viii) requires employers to ensure that no employee works from a window sill or ledge on which there is snow, ice, or any other slippery condition, or one that is weakened or rotted. As in other OSHA requirements (
Final paragraph (e)(2)(ix) of the final rule prohibits employers from allowing window cleaning work on a window sill or ledge unless:
• The sill or ledge is a minimum of 4 inches wide and slopes no more than 15 degrees below horizontal (final paragraph (e)(2)(ix)(A)); or,
• The 4-inch minimum width of the sill or ledge is increased 0.4 inches for every degree the sill or ledge slopes beyond 15 degrees, up to a maximum of 30 degrees (final paragraph (e)(2)(ix)(B)).
OSHA believes that this requirement presents the minimum sill or ledge width necessary for workers using window cleaners' positioning systems to safely perform their tasks. This provision is consistent with the A39.1 standard (Section 3.8). No comments were received on this provision and it is adopted with minor revisions for clarity.
Final paragraph (e)(2)(x) requires employers to ensure that the worker attaches at least one belt terminal to a window anchor before climbing through the window opening, and keeps at least one terminal attached until completely back inside the window opening. This provision ensures that the worker is securely attached to at least one anchor before going outside the building and being exposed to a fall. This provision has been revised from the proposed rule for clarity and is also consistent with I-14.1-2001 (Section 5.3.8 and 5.3.10). No comments were received on this provision and it is adopted as discussed.
Final paragraph (e)(2)(xi), like proposed paragraph (e)(2)(xi)(A), requires that employers ensure workers travel from one window to another by returning inside the window opening
Final paragraph (e)(2)(xii), similar to proposed paragraph (e)(2)(xi)(B), specifies that employers may allow workers to move from one window to another while outside of the building provided:
• At least one window cleaner's belt terminal is attached to a window anchor at all times (final paragraph (e)(2)(xii)(A));
• The distance between window anchors does not exceed 4 feet horizontally. The distance between window anchors may be up to 6 feet horizontally if the window sill or ledge is at least 1 foot wide and the slope is less than 5 degrees below horizontal (final paragraph (e)(2)(xii)(B));
• The sill or ledge between windows is continuous (final paragraph (e)(2)(xii)(C)); and
• The width of the window sill or ledge in front of the mullions is at least six inches wide (final paragraph (e)(2)(xii)(D)).
OSHA believes that all of these conditions must be present and requirements must be met to ensure workers are protected from falling when they move from window to window on the outside of the building. These requirements, for example, ensure that workers always have a continuous walking-working surface (
Final paragraph (e)(2)(xii) differs from the proposed rule in two respects. First, the final rule deletes the proposed requirement prohibiting workers from moving from one window to another on the outside of the building if a window unit is not “readily accessible.” Final paragraph (e)(2)(xii)(B) more clearly specifies what OSHA intends by window units being readily accessible; therefore, OSHA does not believe the proposed provision is necessary. Second, the final rule reorganizes and restates the proposed requirement so it is easier for employers to understand and follow. OSHA did not receive any comments on the proposed rule and adopts as discussed.
OSHA added two appendices to § 1910.140 that provide information, guidance, and examples pertaining to the types of personal fall protection systems this section regulates. These appendices are not mandatory;
Appendix C provides information and guidance concerning the use of personal fall protection systems. The information includes considerations for planning, selection of personal fall protection systems, worker training, and maintenance and inspection of personal fall protection systems. Appendix D provides test methods for personal fall arrest and positioning systems.
OSHA drew the appendices from the OSHA construction fall protection standards (29 CFR part 1926, subpart M), which the Agency issued in 1994. OSHA based the appendices in the construction fall protection standards on national consensus standards. In addition, experts on OSHA's construction staff, including engineers, assisted in developing the guidance and test methods in the appendices.
OSHA revised the proposed appendices for several reasons. First, some of the language and terms in the proposed appendices were geared to the construction industry. For example, the proposed appendices used “rebar hooks,” which are not used in general industry. OSHA revised the appendices to incorporate language and terms that are familiar to general industry employers and workers and are used in the regulatory text of § 1910.140.
Second, OSHA updated the proposed appendices with information that has become available since OSHA published the construction fall protection standard. For example, Appendix C includes information about the danger of orthostatic intolerance due to prolonged suspension in a personal fall protection system.
Third, OSHA also made changes to the proposed appendices to incorporate recommendations commenters suggested. Those additions are discussed below.
Fourth, OSHA reorganized some of the sections of Appendix C so they follow the same order as the regulatory text of § 1910.140. The Agency believes this reorganization will help employers locate more quickly the information they need to comply with the final rule.
Finally, OSHA made revisions to the appendices to comply with the goals of the Plain Writing Act of 2010 (PWA) (Pub. L. 111-274, enacted January 5, 2010). It was only after OSHA published the proposed rule and appendices that the requirements of the PWA applied to the Agency. The PWA requires that OSHA use plain writing in every “covered document” of the Agency that it issues or substantially revises (Pub. L. 111-274, sec. 4(b)). The PWA defines covered documents as “any document that explains to the public how to comply with a requirement that the Federal Government administers or enforces” (Pub. L. 111-274, sec. 3(2)(iii)). Since the purpose of these non-mandatory appendices is to help employers comply with the new rule, they meet the PWA's definition of “covered documents.” OSHA believes the revisions to the proposed appendices will make them easier to understand and use, thereby increasing compliance with the final rule.
OSHA requested comment on whether any of the provisions in appendix C should be included in the regulatory text of § 1910.140, and whether the appendices should include other information.
NIOSH recommended that OSHA consider adding the following information to appendix C regarding harness sizes: “The employer should ensure sufficient body harness sizes and configurations to accommodate diverse body sizes and shapes in the workforce.” NIOSH added:
There have been significant changes in body dimensions among the U.S. civilian population over the last several decades. The diverse workforce in the construction workforce by gender and ethnicity showed a greater variation in range of body dimensions and shapes compared to that in the 1970s and 1980s [citations omitted]. The modern full body harness has evolved to become a more comfortable, easy-to-use body support system that offers a high level of security for a variety of work tasks at height [citations omitted]. Sufficient body harness sizes and configurations to accommodate diverse body
Many commenters from the outdoor advertising industry (Exs. 75; 80; 81; 82; 87; 90; 92; 102; 104; 119; 120; 143) opposed including a list of “approved equipment” in Appendix C because employers should be able to use newer or improved safety devices as they become available rather than waiting for devices to be approved in a “lengthy bureaucratic process.” For example, Chris McGinty said:
[T]here is some consideration of the creation of a “list” of approved equipment. I suggest that this would be an error due to the reality of a safety products industry that is constantly designing, testing and introducing improved or enhanced safety devices. . . . By trying to control the exact brands and models allowable, such a program would invariably be months behind technology and might indirectly lead to losses (Ex. 143).
Appendices C and D do not include a list of approved equipment, systems, components, or devices. In 1999, the Agency reiterated its long held position regarding equipment approval:
OSHA does not approve, endorse, or recommend any particular manufactured product because the manufacturer cannot ensure how the product will be used. The final determination of compliance with OSHA's standards must take into account all factors pertaining to the use of such product at a particular worksite with respect to employee safety and health. This must include an evaluation, through direct observation, or employee work practices and all conditions in the workplace. Therefore, under the Occupational Safety and Health Act of 1970, only the employer is responsible for compliance with the Act and for the safe use of any product by their employees (letter to Ron Oxentenko from Richard Fairfax, Directorate of Compliance Programs, September 17, 1999).
The final rule lists the requirements that employers are responsible for ensuring their personal fall protection systems meet. Appendices C and D both provide guidance that employers may use in evaluating whether the personal fall protection system they are considering will meet the requirements in the final rule.
Regarding paragraph (h) of appendix C, ITA expressed concern about mentioning self-rescue equipment (
OSHA does not agree that mentioning self-rescue equipment will cause a significant impact on the market. This equipment has been marketed and readily available for a number of years. OSHA's Powered Platforms standard, issued in 1989, requires that employers provide for prompt rescue or “shall assure the self-rescue capability of employees” (§ 1910.66, appendix C, Section I(e)(8)). The construction (1994) and shipyard employment (1996) standards contain the same requirement (§§ 1926.502(d)(20); 1915.159(c)(7)).
In 2000, OSHA responded to an inquiry from Mr. Charles Hill with Southwestern Bell Telephone Company, chair of the National Telecommunications Safety Panel, about whether employers must provide self-rescue equipment when working in bucket trucks and aerial lifts. In 2004, OSHA published a Safety and Health Information Bulletin on Suspension Trauma/Orthostatic Intolerance (SHIB 3-24-2004, updated 2011) that identified self-rescue equipment. The proposed rule also discussed self-rescue equipment for personal fall protection systems (75 FR 28910).
OSHA believes that employers, including members of ITA, are aware of self-rescue equipment and likely have been aware of such equipment for some time. In the past decade, OSHA has not seen any data suggesting that employer awareness of self-rescue equipment has resulted in an adverse impact on the market, nor did ITA provide such data in its comment. Therefore, OSHA does not believe there is likely to be an adverse impact now.
ITA also requested OSHA “clarify the circumstances when [self-rescue equipment is] deemed to be necessary” (Ex. 145). OSHA stresses that neither the final rule nor the appendices require that employers provide self-rescue equipment. Rather, the final rule requires that employers provide for “prompt rescue” of workers in the event of a fall. To ensure rescue is prompt, employers may use self-rescue equipment, but they also may provide prompt rescue through other means (see detailed discussion of “prompt” rescue in the explanation of § 1910.140(c)(21) above).
With regard to paragraph (i) of Appendix C on “Tie-off considerations”, Ellis suggested that OSHA “point out the drastic consequences of allowing a SRL [self-retracting lifeline or lanyard] cable or web that passes over almost any edge except wood will break unless there is an energy absorber at the hook end” (Ex. 155). OSHA agrees that the potential for breakage is greater in the circumstance Ellis describes and believes the language of paragraph (i)(2) of appendix C adequately addresses his concern. OSHA believes that system manufacturers also include such a warning in their instructions and recommendations.
Regarding paragraph (j) of appendix C, Verallia commented that recommending use of “extreme care” for horizontal lifelines is “too subjective and vague” to be consistently applied or enforced, and that OSHA should clarify or remove the language. OSHA disagrees with this comment. The paragraph on horizontal lifelines says employers should use extreme care in doing a specific task, using multiple tie-offs in horizontal lifelines. The paragraph then explains specifically why employers need to use extreme care (
In addressing paragraph (n) of appendix C, Verallia asserted that the statement in this paragraph notifying employers that they should “be aware” that a personal fall protection system's maximum fall arrest force is evaluated under normal use conditions is too vague, and recommended that this statement be clarified if an employer is going to be potentially subject to enforcement for lack of awareness. OSHA does not agree with Verallia's comment. Not only does paragraph (n) indicate that employers need to understand that testing personal fall
OSHA asked for comment on test methods in appendix D, and whether the Agency should include any test methods in the regulatory text of § 1910.140 or test methods and procedures in Appendix D, and whether any of the test methods need updating.
Ameren recommended that OSHA delete the test methods in appendix D because product testing rests with the manufacturer instead of the end user. Ameren also said that that if OSHA believes it is necessary for employers to test their personal fall arrest systems, appendix D should add an option allowing employers to test systems “per manufacturer's instructions” (Ex. 189). Ameren explained:
Testing of fall protection lies more with the manufacturer of the equipment and less with the end user, whereas the inspection and checking of the equipment lies with the user. As long as a manufacturer is required to meet certain standards prior to selling their products, there should be no need for post purchase testing, hence no requirement for detailed, outlined testing instructions for the employer (Ex. 189).
Second, the final rule and appendices do not require employers to test personal fall protection systems. Employers are free to select personal fall protection systems that manufacturers have tested rather than testing them themselves. However, employers are ultimately responsible for ensuring that the systems they provide to their workers meet the requirements of § 1910.140. Manufacturer instructions and specifications often will explain that equipment or systems have been tested and meet the requirements of an OSHA or national consensus standard. However, when the manufacturer has not tested the system according to appendix D or other recognized test methods, or does not affirm that the system meets the requirements of § 1910.140, then employers cannot use the system without verifying independently that it meets the requirements of § 1910.140. Using such a system without verifying its safety puts workers at risk of harm.
Finally, OSHA stresses that appendix D and the test methods in it are not mandatory. Employers are free to use personal fall protection systems that have been tested using other methods, provided those test methods ensure the systems meet the requirements in § 1910.140.
Penta Engineering Group, Inc. recommended that OSHA add several test methods in appendix D:
ANSI/IWCA 1-14.1-2001 requires testing anchors by applying a minimum static load of twice the design load in each (primary) direction that the load might be applied and that this outlines a good generic method adequate for load testing tie-back safety anchors at most buildings. Also included in the ANSI/IWCA I-14.1-2001 is that any testing procedure should be developed and performed under the direction of a registered professional engineer. This language should also be part of the proposed rule (Ex. 193.)
SPRAT offered another suggestion regarding test methods. They recommended that OSHA accept markings on equipment as meeting the ANSI Z359 family of standards. They said this would help to ensure test methods and equipment are consistent with and meet current national consensus standards.
OSHA does not agree. The Agency does not have the resources to ensure all manufacturers accurately mark their products. As noted in the final rule and appendices, employers and manufacturers are not required to use the test methods in appendix D. They are free to test personal fall protection systems using other recognized test methods and procedures, including those specified by ANSI and other national consensus standards, provided those test methods ensure that the systems meet the requirements in § 1910.140.
Verallia recommended adding a requirement to paragraph (b)(2) of appendix D requiring that each employee visually inspect anchorage points prior to use (Ex. 171). OSHA does not believe that Verallia's recommendation is appropriate for appendix D. Appendix D addresses methods employers and manufacturers may use for testing personal fall protection systems to ensure they meet the requirements in § 1910.140 prior to the purchase and use of the systems. Verallia's recommendation applies to use of personal fall protection systems after the systems are in use in the workplace. However, OSHA notes that paragraph (c)(18) of the final rule addresses Verallia's recommendation by requiring that the employer ensure the entire personal fall protection system, which the final rule defines to include the anchorage, be inspected before initial use in each workshift. In addition, OSHA added language to Appendix C mentioning this requirement, and included anchorages as one of the examples.
The final rule also includes changes to provisions in subparts F, N, and R of 29 CFR part 1910. Primarily, the changes are technical in nature and are necessary so all sections in part 1910 conform to final subparts D and I.
Most of the changes in subparts F, N, and R update references to final subparts D and I. For example, existing § 1910.265(f)(6)—Sawmills, requires that ladders comply with existing § 1910.27 (Fixed ladders). However, the final rule reorganizes subpart D and the ladder requirements are no longer in § 1910.27. Instead, requirements applicable to ladders are contained in other sections of final subpart D (
Some changes in subparts F, N, and R replace existing references with
Similarly, in final § 1910.269(c)(2)(i) OSHA replaces references to personal fall arrest system provisions in 29 CFR part 1926, subpart M—Fall Protection, with citations to the personal fall protection requirements in finalsubpart I.
Finally, the final rule revises subpart F (§ 1910.67(c)(2)(v)) to require that employees wear either a personal fall arrest system or travel restraint system that complies with final subpart I when they are working from an aerial lift. Existing § 1910.67(c)(2)(v) allows employees to wear a body belt and lanyard for fall protection in aerial lifts while the proposed rule would have required that aerial lift operators use a “positioning system” or personal fall arrest system. Neither the existing nor proposed rules are consistent with OSHA general industry (§§ 1910.140 and 1910.269) and construction standards (§§ 1926.453, 1926.502, and 1926.954). To resolve this discrepancy, in final § 1910.67(c)(2)(v) OSHA revises the existing and proposed rules in two ways.
First, final § 1910.67(c)(2)(v) eliminates the existing requirement, which specifies that employees use body belts and lanyards for fall protection when working from aerial lifts, because it is not consistent with final subpart I (final § 1910.140(d)(3)). Final subpart I, like the construction fall protection standard (§ 1926.502(d)), prohibits the use of body belts as part of a personal fall arrest system. OSHA has determined, as the Agency did in the construction fall protection rulemaking (59 FR 40672 (8/9/1994)), that body belts must be prohibited because they do not afford a level of protection equivalent to body harnesses and present unacceptable risks in fall arrest situations. Specifically, as OSHA discussed in the explanation of § 1910.140, fall arrest forces are more concentrated for a body belt than a body harness, therefore, the risk of injury in a fall is much greater when workers use a body belt. In addition, in a fall, workers are more likely to slip out of a body belt than a body harness and be killed or seriously injured. Moreover, if a fall occurs, the hazards associated with prolonged suspension in a body belt are substantially more severe than suspension trauma associated with body harnesses. (Also see discussion of the prohibition of body belts in the preamble revising the general industry and construction Electric Power Generation, Transmission, and Distribution and Electric Protective Equipment standards (hereafter referred to as “subpart V”) (79 FR 20316, 20383-88 (4/11/2014)).
To make final § 1910.67(c)(2)(v) consistent with final subpart I, OSHA replaces the existing provision with the requirement that workers use a personal fall arrest system or travel restraint system that meets the requirements of final subpart I when working from an aerial lift. This revision also makes final § 1910.67 consistent with the construction aerial lift (§ 1926.453(b)(2)(v) note 1) and fall protection standards (§ 1926.502(d)) as well as subpart V (§§ 1910.269(g)(2)(iv)(C)(
OSHA notes that final subpart I (final § 1910.140(b) and (d)(3)), like the construction aerial lift and fall protection standards, allows the use of body belts with a travel restraint system when employees work from an aerial lift (
Second, final § 1910.67(c)(2)(v) revises the proposed rule to require that employees must use a personal fall arrest system or travel restraint system when working in an aerial lift. The proposed rule specified, mistakenly so, that employees use a personal fall arrest system or “positioning system” for fall protection when they work from an aerial lifts. In actuality, OSHA does not permit employees to use positioning systems when working from an aerial lift (Letters to Mr. Jessie L. Simmons (5/11/2001) and Mr. Charles E. Hill (8/14/2000)). A positioning system is defined in the proposed and final rules as a system that support employees on an elevated “vertical” surface, such as a wall or window sill (final §§ 1910.21(b) and 1910.140(b)). However, employees working from aerial lifts are on horizontal surfaces. Positioning systems are “designed specifically to stop a worker from falling from a static, head-up position” (Letter to Mr. Jessie L. Simmons (5/11/2001)); however, falls from a horizontal surface, such as an aerial lift, can begin with the worker in other than a static, head-up position (Letter to Mr. Jessie L. Simmons (5/11/2001); also see, 79 FR 20384). The final rule corrects the proposed rule and, in so doing, makes final § 1910.67(c)(2)(v) consistent with subpart V (§§ 1910.269(g)(2)(iv)(C)(
OSHA received several comments on the proposed revision of § 1910.67(c)(2)(v) (Exs. 59; 174; 183; 207). Darren Maddox, with Central Alabama Electric Coop (CAEC), supported requiring the use of personal fall arrest systems when employees work from aerial lifts (Ex. 59). He pointed out positioning straps do not provide fall protection, and that CAEC's employees now use personal fall arrest systems when working in aerial lifts (Ex. 59). Edison Electric Institute, on the other hand, said OSHA should not require fall protection for employees working in bucket trucks (Ex. 207).
The Utility Line Clearance Coalition (ULCC) and Tree Care Industry Association (TCIA) both recommended
ULCC raised similar arguments supporting the use of body belts and lanyards when line-clearance arborists work from aerial lifts, particularly above power lines. They contended that using belts and lanyards in those situations has not resulted in undue risk to employees and requiring that employees use body harnesses, which typically have longer lanyards, would increase the risk of contact with power lines (Ex. 183). ULCC also argued that using body harnesses puts line-clearance arborists at greater risk of injury from falling into tree limbs and stubs from “reduction cuts” (Ex. 183). In addition, they contended line-clearance arborists feeding limbs and brush into chippers are a greater risk of serious injury or death because longer lanyards typically used with body harness could get dragged into the chipper.
ULCC also argued that the proposed rule does not provide an explanation for eliminating the use of body belts and lanyards when working from aerial lifts and fails to provide fall protection options for line-clearance work performed from aerial lifts.
TCIA and ULCC raised these same issues and arguments in the subpart V rulemaking and OSHA addressed them in great detail in the preamble to that final rule (79 FR 20383-88). OSHA did not find TCIA's and ULCC's arguments in the subpart V rulemaking to be convincing and nothing in their comments in this rulemaking changes OSHA's conclusion. Since TCIA's and ULCC's comments in this rulemaking are the same as those they made in the subpart V rulemaking, OSHA incorporates by reference the explanation OSHA provided in final subpart V and need not repeat that full discussion here. For the following reasons, consistent with final subpart V, OSHA has not adopted TCIA's and ULCC's recommendation that employers be permitted to use body belts and lanyards when their employees work from aerial lifts.
First, OSHA does not find persuasive TCIA's and ULCC's argument that body harnesses (
Second, TCIA's and ULCC's unsupported claim that body belts allow workers to self-rescue is not correct. To the contrary, body belts significantly reduce the possibility of self-rescue after a fall because of the increased probability of serious internal injuries sustained from the initial impact forces, from body belt suspension trauma (especially unconscious suspension), or both.
Third, as discussed in detail in the preamble to final subpart V, OSHA does not consider the risk of falling into power lines to be as serious as TCIA and ULCC portray. Line-clearance arborists do not always work directly over power lines; they may work at the same height, below or to the side of power lines. In any event, stakeholders in the subpart V rulemaking said employers can reduce the risk of falling into power lines, without exposing workers to greater arrest forces and suspension trauma, by using personal fall arrest systems that have shorter lanyards (79 FR 20385).
Fourth, ULCC's argument that using body harnesses with longer harnesses puts line-clearance arborists at risk of getting caught in a chipper is unpersuasive. The final rule does not require that line-clearance arborists wear harness when they are not working on an elevated surface (
Employers also can reduce the risk by providing line-clearance arborists with harnesses that have a shorter lanyard.
Fifth, final § 1910.67(c)(2)(v), like subpart V (§ 1910.269(g)(2)(iv)(C)(
This collection of final standards governing occupational exposure to slip, trip, falling-object and fall hazards on walking and working surfaces is a “significant regulatory action” under Executive Order 12866. Accordingly, the Office of Regulatory Analysis within OSHA prepared this Final Economic and Final Regulatory Flexibility Screening Analysis (FEA) for the final standard. In developing the FEA, OSHA, to the extent possible given the available resources, endeavored to meet the requirements of OMB's Circular A-4 (OMB, 2003), a guidance document for regulatory agencies preparing economic analyses under Executive Order 12866. In addition to adherence to Executive
This FEA addresses issues related to the costs, benefits, technological and economic feasibility, and economic impacts (including small business impacts) of the Agency's final revisions to subpart D, Walking-Working Surfaces, and subpart I, Personal Protective Equipment. OSHA's final feasibility and impact analysis builds upon the preliminary economic analysis that OSHA developed in support of the proposed standard and the record developed in this rulemaking. The analysis also evaluates regulatory alternatives to the final rule. The Office of Information and Regulatory Affairs in the Office of Management and Budget reviewed this rule as required by Executive Order 12866. Terminology, analytic methods, and standards appearing in a particular section of this FEA correspond to the source(s) of that section's requirements; for example, the legal concept of “economic feasibility,” which is a key subject of section V.G, is not recognized in E.O.s 12866 or 13563 or their associated guidance document, OMB Circular A-4. OSHA uses legal concepts, appropriate under the OSH Act and associated case law but distinct from any concepts in Circular A-4, in discussing economic feasibility (see Section III—Pertinent Legal Authority). Furthermore, OSHA discusses how benefit and cost estimates may differ given the differing analytic approaches set forth by the OSH Act, as interpreted in case law, and Circular A-4.
The purpose of the FEA is to:
• Identify the establishments and industries potentially affected by the final rule;
• Estimate current exposures to slip, trip, and fall hazards in general industry, and assess the technologically feasible methods of controlling these exposures;
• Estimate the benefits of the rule in terms of the number of worker deaths and injuries that employers will prevent by coming into compliance with the standard;
• Evaluate the costs that establishments in the regulated community will incur to achieve compliance with the rule;
• Assess the economic impacts and the economic feasibility of the rule for affected industries; and
• Evaluate the principal regulatory alternatives to the final rule that OSHA considered.
The Regulatory Flexibility Act (5 U.S.C. 601
This FEA contains the following sections in addition to this Introduction:
To develop the FEA, OSHA relied considerably on (1) the record created throughout the history of this rulemaking, (2) an analysis by OSHA's contractor, Eastern Research Group (ERG) (ERG, 2007), and (3) OSHA's Preliminary Economic Analysis (PEA) supporting the Walking-Working Surfaces NPRM and published in the
Earlier in this preamble OSHA discussed the major revisions to the existing standards for walking-working surfaces and personal protective equipment (subparts D and I of part 1910) finalized by this rulemaking. OSHA designed the final standards to prevent a significant number of slips, trips, and falls that result in injuries and fatalities in general industry, including falls from ladders, roofs, scaffolds, and stairs.
The final standard also addresses hazards associated with falling objects. However, as noted below in Section D. Benefits, Net Benefits, Cost Effectiveness, and Sensitivity Analysis, and Section F. Costs of Compliance, because the final standard introduces no additional burden on employers beyond existing requirements, and because there were no comments in the record suggesting that additional economic impacts would result, OSHA expects that the final falling-object provisions will involve no new costs or benefits.
Some examples from OSHA's inspection database (OSHA, 2012a and 2007), provided in the following paragraphs, best illustrate the kinds of accidents the standards will prevent, and how the revised standards will prevent them.
A repairperson for a specialty metals producer in Pennsylvania was replacing a water cooling panel (approximately 8-ft. high by 12-ft. long) on a basic oxygen furnace vessel. To access the panel, he placed a ladder on an 8-in. diameter pipe. When the employee attempted either to gain access to the panel or to secure the ladder, he fell 22 feet to the ground. He sustained a blunt-force trauma injury to his head and died. OSHA cited and fined the employer for a violation of § 1910.23(c)(1), Protection of open-sided floors, platforms, and runways, and § 1910.25(d)(2)(i), Use of ladders, along with other standards. OSHA believes that the clarifications of the requirements for the safe use of ladders and the duty to have fall protection will prevent accidents such as the one described above (OSHA, 2007, Inspection No. 123317679).
In a window cleaning operation, two employees were working from boatswain's chairs suspended from a roof by two transportable roof rollers; they lowered their chairs down the side of the building using controlled-descent devices. A third employee was on the roof pushing the rollers back and forth to move his coworkers from window to window. The third employee was moving the roller on one end of the building when one of its wheels slipped off the edge of the parapet wall, causing the rollers, which were tied together, to fall between six and seven stories to the ground. The first two employees, with their lifelines attached only to the suspension point on the rollers, also fell to the ground and sustained serious injuries. When one of the rollers went over the edge, it catapulted the third employee off the roof; that employee fell approximately 84 feet to the ground and died from the fall. In the investigation, OSHA determined that the employer did not anchor the rollers to the roof, and cited the employer for violating the general duty clause (Section 5(a)(1)) of the OSH Act. OSHA believes that compliance with the requirements for rope descent systems in the final standard (§ 1910.27(b)) will help to prevent this type of accident (OSHA, 2007, Inspection No. 303207633).
A 49-year-old service technician fractured five vertebrae and eventually died from the injuries received when he fell 11 feet from a fixed ladder to a concrete landing while performing air-conditioning service work on the roof of a shopping mall. OSHA's investigation of the August 24, 2004, accident identified the likely cause as the
As a final example, an employee in a South Dakota feed mill was atop a soybean storage bin gauging the level of the contents when he fell approximately 24 feet onto a concrete surface. The employee suffered head and upper body injuries that resulted in his death. The subsequent OSHA investigation resulted in citations for violations of the general duty clause and provisions in existing subpart D regulating floors, platforms, and railings. OSHA believes that the final revisions to subpart D will remove any ambiguity in the scope or purpose of the rule, which will prevent falls from storage bins and related surfaces (OSHA, 2007, Inspection No. 102761012).
The accidents described above represent a small sample of the many slip-, trip-, and fall-related fatality and injury cases that OSHA's final standards are designed to prevent. Appendix A presents a larger set of preventable fatal workplace accidents taken from the OSHA Integrated Management Information System (IMIS) database for 2006-2010 that involve slips, trips, or falls.
When establishing the need for an occupational safety and health standard, OSHA must evaluate available data to determine whether workers will suffer a material impairment of their health or functional capacity resulting from exposure to the safety or health hazard at issue. Prior to promulgating a standard, the Agency also must determine that “a significant risk of harm exists and can be eliminated or lessened by a change in practices.” See
OSHA determined that the best available data for quantitatively estimating the risks associated with slips, trips, and falls in general industry come from the Bureau of Labor Statistics (BLS) injury and illness survey and census. OSHA relies on federal survey and census data from recent years to determine the risk to similarly exposed employees across industry in analyzing other safety standards (
Other regulatory and non-regulatory entities for research and policymaking widely accept and use these data sets.
As previously discussed in section II of this preamble (Analysis of Risk), OSHA determined that hazards associated with walking and working on elevated, slippery, or other surfaces pose significant risks to employees, and that the revisions to subparts D and I are reasonable and necessary to protect affected employees from those risks. Based on the BLS data showing the number of injuries and fatalities currently occurring and OSHA's judgments about the percentage of these injuries and fatalities that would be averted as a result of the standards, the Agency estimates that full compliance with the revised walking-working surfaces standards will prevent 29 fatalities and 5,842 lost-workday injuries annually. These benefits constitute a substantial reduction of significant risk of material harm for the exposed population of approximately 5.2 million employees in general industry.
The Agency must show that the standards it promulgates are technologically and economically feasible. (See 58 FR 16612.) A standard is
A standard is
OSHA prepared an economic analysis to estimate the benefits and costs of the revisions to subparts D and I as required by E.O. 12866. Since 2002, under the direction of the Office and Management and Budget, the Agency “monetized” the value of the injuries, illnesses, and fatalities that new standards will prevent,
To characterize the effects of a new standard, the Agency estimates the costs and benefits expected to accrue as regulated entities move from the current state of affairs to full compliance with the rule. Accordingly, OSHA does not include injuries or fatalities already preventable through compliance with existing regulations in its assessment of the benefits expected from compliance with the new standard. Similarly, the Agency does not include the cost of complying with existing standards in its assessment of what it will cost employers to comply with the new standard. The Agency assumes that all employers will fully comply with the standard. OSHA's analysis also assumes that employers incur all costs in the first year following promulgation of the final standard (with ongoing costs incurred annually beginning in Year 1), and that benefits result immediately.
The Agency employs a “willingness-to-pay” (WTP) methodology to estimate benefits. Data from the BLS provide the number of expected injuries and fatalities occurring currently and assumed to continue into the future in the absence of this regulatory standard, OSHA makes expert judgments about the percentage of these injuries and fatalities averted as a result of the standard, and the Agency uses WTP estimates from the extant literature to assign monetary values to these injuries and fatalities. OSHA bases its estimates of willingness to pay on empirical studies that statistically analyze the effects of fatality and injury rates on wage rates to arrive at individuals' trade-off between higher wages and an incremental increase in occupational risk. That trade-off allows economists to calculate the implicit value of a statistical life (VSL).
For discussion on WTP methodologies, see Viscusi and Aldy (2003).
The primary alternative to a WTP approach is a “cost-of-injury” (COI) approach. The COI approach accounts for the various costs to all parties associated with an injury or fatality, including medical costs, the costs of work disruption from accidents and accident investigations, indirect costs to employers (
The Agency's calculation of benefits and costs adopts the perspective of society as a whole. Compliance costs are borne directly by affected employers but these costs may ultimately be borne by a wide variety of parties including employers, consumers, government, and employees. Benefits accrue to employees, families, insurers, and government, as well as to employers.
Employees throughout general industry are exposed to slip, trip, and fall hazards that cause serious injury and death. OSHA estimates that, on average, approximately 202,066 serious (lost-workday) injuries and 345 fatalities occur annually among workers directly affected by the final standard. Although better compliance with existing safety standards may prevent some of these incidents, research and analyses conducted by OSHA found that many preventable injuries and fatalities would continue to occur even if employers were complying fully with the existing standards. Even if there were full compliance with the existing standards, OSHA estimates that full compliance with the final standard will prevent an additional 5,842 lost-workday injuries and 29 fatalities each year.
An additional benefit of this rulemaking is that it will provide updated, clear, and consistent safety standards for walking and working surfaces and personal fall protection equipment. Most of the existing OSHA standards for walking-working surfaces are over 30 years old and inconsistent with both national consensus standards and more recently promulgated OSHA standards addressing fall protection.
Presently, OSHA's standards for fall protection on walking-working surfaces in general industry differ from the comparable standards for construction work. In most instances, employees use similar work practices to perform similar tasks, irrespective of whether they are performing construction or general industry work. Whether OSHA's construction or general industry standards apply to a particular job depends on whether the employer is altering the system (construction work) or maintaining the system (general industry work). For example, replacing an elevated ventilation system at an industrial site would be construction work if it involves upgrading the system, but general industry work if it involves an in-kind replacement. Since the work practices used by the employees would most likely be identical in both situations, it would ease compliance if OSHA's general industry and construction standards were as consistent as possible. Under OSHA's existing requirements, however, different requirements might apply to similar work practices,
OSHA neither quantified nor monetized several other benefits of the final standard. First, OSHA did not estimate the number of fall injuries prevented that do not result in lost workdays. Second, OSHA did not estimate the improvements in efficiency of compliance associated with clarifying the existing rule and making it consistent with current national consensus standards.
OSHA's benefit estimates are most sensitive when it comes to estimating the percentage of current injuries and fatalities that full compliance with the final standard will avoid. The true benefits of the final standard depend on how well the cases reviewed represent actual fall-related fatalities in general industry.
The Agency believes that its estimate of about 345 annual fatalities in general industry involving slips, trips, and falls is more certain than the estimate of the percentage of fatalities avoided because the estimate of the annual number of baseline fatalities comes from seven years of recent incident data that corroborate eleven prior years of incident data. OSHA's estimate of fatalities avoided is more sensitive because it is based on professional judgment after reviewing incident reports in the record. Moreover, OSHA believes that its benefit estimates have a tendency toward underestimation, as training and work practices adopted in an effort to comply with the final rule will likely increase the use of safety equipment and safer work techniques, thereby further reducing fatalities and injuries.
The impacts exhibit below presents a summary of the annualized costs and benefits for each section of the final standard, assuming a discount rate of seven percent. In addition to estimating annualized costs using a discount rate of seven percent, OSHA, for sensitivity purposes, also used OIRA's recommended alternative discount rate of three percent. Under the alternative scenario of a three-percent discount rate, OSHA estimates that annualized costs would decline from $305.0 million to $297.0 million. For both this scenario and for the primary (seven-percent rate) scenario, OSHA assumed that employers will incur all costs (first-year and recurring) on implementation of the final standard. OSHA also is assuming that the benefits outlined in this section will accrue once the rule takes effect. Section D of this FEA (Benefits, Net Benefits, Cost Effectiveness, and Sensitivity Analysis) describes in detail the other cost-related uncertainties.
As shown below in the summary table for Section B of this FEA (Assessing the Need for Regulation), OSHA projects that the final rule will produce annual benefits of 29 fatalities and 5,842 lost-workday injuries prevented, while annualized costs will total $305.0 million. OSHA's preliminary estimate of benefits (in the Preliminary Economic Analysis (PEA) for the proposed rule) was 20 fatalities and 3,706 lost-workday injuries prevented, and the Agency's preliminary estimate of costs in the PEA totaled $173.2 million. The later sections of this FEA explain the reasons for these changes in detail. To summarize, OSHA notes that the primary factors contributing to larger benefits and costs (in relation to the PEA) are: (1) Explicit requirements for ladder safety systems for fixed ladders and structures with step bolts, guardrails for slaughtering platforms, and roof anchor systems for rooftop operations; (2) additional time allotted for inspection of walking-working surfaces for dust and other hazardous substances, consistent with a clarification in the regulatory text; and (3) an increase in the number of workers in outdoor advertising and other activities who will need training in using fall protection equipment.
To determine the appropriate approach for addressing the occupational risks associated with slips, trips, and falls in general industry, OSHA considered many different factors and potential alternatives. The Agency examined the incidence of injuries and fatalities, and their direct and underlying causes, to ascertain revisions to the existing standards. OSHA reviewed these standards, assessed current practices in the industry, collected information and comments from experts, and scrutinized the available data and research.
OSHA faces several constraints in determining appropriate regulatory requirements. Under Section 3(8) of the OSH Act, OSHA standards must be “reasonably necessary or appropriate to provide safe or healthful employment and places of employment.” Also, under Section 6(b)(8) of the OSH Act, to the extent an OSHA standard differs substantially from existing national consensus standards, the Agency must explain why the OSHA standard will better accomplish the purposes of the OSH Act. As noted elsewhere, OSHA standards also must be technologically and economically feasible and cost effective, in the sense of the term as used in the OSH Act as interpreted by the courts.
The more stringent alternative would require that employers provide cages, wells, landing platforms, and ladder safety devices for all fixed ladders; the cost of this alternative would be highly significant, while the incremental benefits would be modest relative to the preferred alternative. OSHA notes that the 1990 NPRM estimated the annualized cost for cages, wells, and other safety devices for fixed ladders to be $1.6 billion in 1990 dollars. Evidence in the record suggests that cages and wells are an outdated technology that do not provide adequate fall protection for workers climbing ladders, and that ladder safety devices are a recent development that provide a feasible alternative, or complement, to cages and wells (Exs. 113; 198). Therefore, if employers could not use such devices, the more stringent alternative requiring cages, wells, and landing platforms would be far more expensive than to the final rule.
OSHA previously considered non-regulatory alternatives and established the need for regulation of walking-working surfaces when it promulgated the standard for fall protection in construction (59 FR 40672). The Agency asserts that the same need for regulation applies when employees in general industry are engaged in tasks on walking-working surfaces. Employees in general industry performing work on floors, other ground-level surfaces, or at heights are exposed to a variety of significant hazards—particularly slips, trips, and falls—that can and do cause serious injury and death. Although some of these incidents might have been prevented by better compliance with existing safety standards, research and analyses conducted by OSHA have found that many preventable injuries and fatalities could continue to occur even if employers fully complied with the existing standards. Relative to full compliance with the existing standards, OSHA estimates, in Section D of this FEA, that full compliance with the final standard would prevent an estimated additional 5,842 injuries and 29 fatalities annually.
Executive Order 12866 provides that “[e]ach agency shall identify the problem that it intends to address [via regulation] . . . including, where applicable, the failures of private markets.” Executive Order 13563 reiterates that requirement. In the absence of regulations, market failures can prevent free markets from providing the levels of occupational safety—and particularly the levels of safety for workers affected by this standard—that would maximize net benefits to society.
In the absence of regulation, many employees would simply be unaware of the hazards that walking-working surfaces present or the procedures to follow to protect against such hazards. Even those employees with years of experience working at elevated or other surfaces may lack training on fall protection, information about specific fall hazards, or needed equipment for preventing or limiting the impact of falls.
The final standard for walking-working surfaces in general industry addresses these problems. The benefits analysis presented in Section D of this FEA shows that many accidents are
To better understand the market failures that create the need for this rule, it is necessary to examine the economic incentives that underlie employer decisions with respect to workplace safety and health. An employee typically accepts the risks associated with a particular job in return for two forms of compensation—(1) a wage premium for assuming that risk, and (2) expected compensation for damages in the event of occupational injury or illness. The rational profit-maximizing employer will make investments in workplace safety to reduce the level of risk to employees only if such expenditures result in at least an offsetting reduction in the employer's payouts of wage premiums for risk and compensation for damages. To the extent that the sum of the costs of wage premiums and compensation for damages accurately represents the total damages associated with workplace accidents, the rational employer will accordingly arrive at the socially optimal level of accident prevention from an economic efficiency viewpoint.
Consequently, the major possible sources of market failure, resulting in an “under-provision” of health and safety, would be either: (1) The existence of occupational accident costs that are borne neither by the employee nor by the employer or (2) the wage premiums or compensation for damages are not fully responsive to changes in employer-specific workplace risk. Both cases apply here.
In the first case, there are some occupational injury and illness costs that are incurred by neither the employer nor the employee. For instance, neither of those two parties has a vested interest in Federal and State taxes that go unpaid as a result of an employee injury. Such taxes typically represent 15 percent (for Social Security alone) to 26 percent of the total value of the income loss to the employee (IRS, 2013; Urban Institute/Brookings, 2012).
In the second case, as discussed below, the costs employers pay in compensation for damages or wage premiums are not fully responsive to changes in employer-specific workplace risk.
Most employers cover—and are required to cover—compensation for injured employees through workers' compensation insurance. (Some very large employers may self-insure in some states.) States highly regulate premiums for workers' compensation insurance and generally employ a combination of a class rating and an experience rating in deriving premiums (NCCI, 2013; Ashford, 2006). The class rating is based on the average risk for employees in the same occupations as those working for the employer. The basis of the experience rating is the employer's actual workers' compensation claims over the past several years. Very small firms are almost entirely class-rated; even medium-sized firms are partly class-rated; and it will take even firms that are fully experience-rated several years before their insurance premium levels fully reflect any change in their workplace safety performance.
Furthermore, workers' compensation covers only a small fraction of most estimates of the willingness to pay to prevent a fatality.
Having to pay wage premiums for risk is another economic incentive for employers to mitigate occupational risk. However, wage premiums do not respond to changes in risk level very strongly, due to information asymmetries. For an employer to have an adequate incentive to implement measures that will prevent workplace accidents, it is not sufficient that employees simply know that their work is dangerous, or even know quantitatively that their occupation has a given risk. Employees must know the exact nature and likely quantitative effects of their employer's safety measures and systems; have a reasonable expectation that their employer will continue to provide existing safety measures in the future; and be able to act on their knowledge of risk by readily changing workplaces or changing wage demands in response to differences in levels of risk.
In summary, OSHA believes that: (1) The provisions of the final rule are necessary to assure that employees have the information, procedures, and equipment they need to protect themselves; (2) neither employers nor
This section presents OSHA's profile of the firms, establishments, and employees within the industries affected by OSHA's revision to 29 CFR part 1910, subparts D and I. The Agency based this profile on data assembled and organized by its contractor, Eastern Research Group (ERG, 2007), and updated using more recent data from the same data series used previously.
Revised subparts D and I apply to employers and industries covered by OSHA's standards for general industry in 29 CFR part 1910. Similarly, all other subparts in part 1910 affected by these revisions to OSHA's walking-working surfaces standards would impose requirements on employers in general industry under OSHA's jurisdiction.
The walking-working surfaces covered by the final standards are present in nearly every establishment. Therefore, OSHA assumes that the number of establishments and employees potentially affected by subpart D includes all establishments and employees in general industry. Table V-1 shows the total number of establishments and employees potentially affected by revisions to subpart D, with the data listed in order by the North American Industry Classification System (NAICS) 4-digit industry code (OMB, 2007). Relying on the U.S. Census' Statistics of U.S. Businesses for 2007, OSHA estimates that the final standard will affect 6.9 million establishments employing 112 million employees; the comparable figures in the PEA were 6.7 million establishments and 112 million employees, based on 2006 data. Table V-1 also provides economic profile statistics for the industries covered by the final standard.
For purposes of estimating training requirements with respect to ladders, OSHA estimated that these provisions would apply to the 5.2 million employees engaged in construction, installation, maintenance, repair, and moving operations in general industry. These employees represent the main group of workers affected by the final standards; however, the final standards may affect employees doing other types of operations and some general industry employees engaged in installation, maintenance, and repair operations will not be affected. Therefore, to estimate the population affected, OSHA identified general industry employees in occupational codes involving construction, installation, maintenance and repair. There certainly are ladder users in other occupations, but the occupations OSHA has included also include many persons whose work typically would not involve the use of ladders (
In the PEA, OSHA used Census
The parts of the final standard that cover ladders, scaffolds, manhole steps, and other working surfaces are most likely to directly affect employees
To assemble the data necessary for a screening analysis to determine potential impacts on small entities as prescribed by the Regulatory Flexibility Act, OSHA developed profiles of small entities in the industries covered by the final OSHA standards for subparts D and I. OSHA used the Small Business Administration's (SBA) small business criterion for each industry and Census data (taken from the
OSHA also used the Census data to develop a profile of entities that employ fewer than 20 employees. Table V-3 provides these estimates.
Based on analysis by ERG (2007), OSHA estimated the numbers of employees using fall protection equipment by extrapolating results obtained from OSHA's 1999 PPE Cost Survey.
Because different employees might use both body harnesses and body belts, OSHA used the combined value of the two percentages in deriving these estimates. For example, if six percent of employees in a given industry used body harnesses while four percent of employees used body belts, OSHA applied the combined percentage (ten percent) as its estimate of the maximum number of employees using either form of fall protection.
For example, only aggregated estimates are available for several groups of service, wholesale, and retail trade industries. To make the fall protection estimates consistent with the numbers of at-risk employees, OSHA constrained the estimated number of employees using personal fall protection equipment in any industry to be less than or equal to the numbers of employees in construction, installation, maintenance, and repair occupations shown in Table V-1. Table V-4 presents, by the 4-digit NAICS industry code, OSHA's estimate of the number of employees using fall protection equipment.
As discussed in detail later in this FEA, OSHA believes that much of the cost impact of the final standard results from the time requirements for additional training and inspections. The Agency based the estimates for these costs on the opportunity cost of the labor time devoted to training, inspections, and installation or deployment of fall protection equipment. OSHA valued these opportunity costs in terms of employees' hourly wages, including benefit and fringe costs. Relying on average hourly earnings as reported by the BLS
Factors of production relevant to the final cost analysis included not only establishments, employers, and employees in general industry, but also the following walking and working surfaces:
This section reviews the populations in general industry that are at risk of occupational injury or death due to hazards associated with slips, trips, or falls to lower levels, and assesses the potential benefits associated with the changes to subparts D and I resulting from the final rule. OSHA believes that compliance with the final rule will yield substantial benefits in terms of lives saved, injuries avoided, and reduced accident-related costs. Applying updated accident data and incorporating information from the record, OSHA revised its preliminary estimate of (1) the baseline level of risk and (2) prevented deaths and injuries due to the final rule.
As described in Section C of this FEA (Industry Profile) above, the employees affected by the final standard work largely in construction, installation, maintenance, and repair. According to the Bureau of Labor Statistics' 2007 Occupational Employment Statistics survey, there are approximately 112.3 million employees in industries within the scope of this final rule: 5.2 million employees engaged in construction, installation, maintenance, and repair operations in general industry that OSHA judges will need ladder training because these occupations are the most likely to use ladders in their work;
This section first examines the available data on the number of baseline injuries and fatalities among affected employees; then assesses the extent to which the standard can prevent those injuries and fatalities; and finally estimates some of the economic benefits associated with the prevented injuries and fatalities. This final standard would produce benefits to the extent that compliance prevents injuries and fatalities that would otherwise occur.
OSHA examined fall fatalities using two databases. As a baseline for determining the average number of fall fatalities per year, OSHA examined data from the BLS
Distinguished from the larger category of all falls—
To assess the benefits of this rule, it is necessary to determine not only the total annual number of fall fatalities, but also the number of various types of fall fatalities. Quantifying the various types of fatal falls is necessary because the
Table V-8, based on BLS's
Table V-9, also based on BLS's
Table V-10, also based on BLS's
Among falls addressed by the final standard, the annual number of falls to a lower level resulting in a lost-workday injury ranges from 4.7 per 10,000
In several sectors, falls down stairs or steps represent a major share of injuries from falls to a lower level. The provisions in the final standard requiring guardrails, handrails, and training would protect employees from these types of falls. The final rule addresses directly falls from floor holes, loading docks, roofs, and scaffolding, but these falls constitute much smaller shares of nonfatal fall accidents.
OSHA's final standard for subparts D and I contains safety requirements designed to prevent falls involving ladders, rope descent systems, unguarded floor holes, and unprotected platform edges, among other conditions. In this FEA, OSHA classifies these types of falls as “falls to [a] lower level.” “Falls on the same level” include slips and trips from floor obstructions or wet or slippery working surfaces. The final rule has relatively few new provisions addressing falls on the same level and therefore OSHA has assigned a preventability rate of 1 percent (
Combining the data in Tables V-6 and V-7 with other fatality data from BLS, Table V-11 shows the estimated number of annual fatalities from falls in general industry. Based on 2006-2012 data, OSHA calculated an average of 345 fatal falls per year, 261 fatal falls to a lower level per year, and 75 fatal falls to the same level. OSHA allocated the average number of falls to a lower level (261) among the different fall categories based on overall fatal fall accident experience from 2006 to 2010 derived from the BLS
In examining the costs of the proposed standard, ERG found, after reviewing inspection results, that most employers are generally in compliance with the existing subpart D standards that have been in place for over 30 years (see Table V-15 in the PEA). However, this general compliance does not necessarily mean that many of the observed fall fatalities and injuries are not the result of failure to comply with existing standards. For example, even if employers are complying with a standard 99.9 percent of the time, it is still possible that many current fall fatalities could still be the result of the 0.1 percent level of employer noncompliance.
For the purposes of the analysis summarized in Table V-11, OSHA did not perform a quantitative analysis of how many fatal falls full and complete
OSHA also considered, and in some cases adopted, the approach of using consensus standards as a baseline. As will be discussed in detail in the cost chapter, in some cases OSHA assumed full compliance with consensus standards for purposes of both benefits and costs. In such cases, OSHA estimated neither costs nor benefits where the OSHA rule did not go beyond consensus standards. However, where consensus standards involve training or work practices required of even the smallest firms who may not even be aware of consensus standards, OSHA estimated both costs and benefits from the existing baseline. This baseline might yield overestimates of true impacts because many follow the consensus standard, but there is some reasonable chance that employers are more likely to meet an OSHA requirement than a consensus standard.
A comparison of the existing and new standards shows that the new provisions largely concern training and inspections, with requirements for additional or more stringent engineering or work-practice controls being less prominent (see Section F (Costs of Compliance) below in this FEA). Nonetheless, OSHA's final cost analysis assigns engineering controls and personal protective equipment to operations and activities that were not assigned such controls in the PEA, including costs for repairs or replacements of equipment as a result of equipment failing inspections. In addition, the new standard simplifies and clarifies certain provisions, and, compared to the existing standard, better aligns them with various national consensus standards. OSHA finds that the benefits in terms of reductions in fatal falls result from increased training, inspections, and certifications (
In the PEA, OSHA based its analysis of accident prevention on ERG's professional judgment and two published studies.
Why has OSHA usually overestimated the effects? One point that OSHA staff emphasized in response to these findings was that the figures they produce should not be viewed as “predictions;” rather, they are estimates of what the impact would be if there were full compliance with the standard.
OSHA staff is well aware that there is not full compliance with OSHA standards. However, despite its lack of realism, the assumption of full compliance seems generally reasonable given the task that the regulatory analysts face. OSHA is required by statute to demonstrate that its standards are technologically and economically feasible, and this demonstration must be made under the assumption that there is full compliance. And if costs are estimated under this assumption, then calculations of the benefits these costs would generate should arguably use it as well.
However, there is a point at which the full compliance assumption does go beyond reasonableness. OSHA appears to assume that if a standard requires workers to avoid working in a hazardous manner or provides them training to change their behaviors, then all such unsafe behavior will be eliminated. This assumption creates the potential for estimating unrealistically large reductions in injuries. When training and work practices are major components of a standard, OSHA should be required to analyze their impacts in a more deliberative and realistic fashion. (Seong and Mendeloff, 2004)
OSHA continues to feel it is important to present full compliance estimates, but agrees with the article that such an assumption should not imply that the training can be expected to prevent accidents as if all lessons provided in training are automatically applied by all workers.
In addition to less than full compliance, there are some methodological limitations to the time trend approach used by Seong and Mendeloff. First they assume that compliance begins on the effective date of the regulation. In reality, some employers begin compliance with new regulations before they are finalized, while others do not start to comply until long after a regulation goes into effect. Many employers start applying many of the provisions of a proposed standard at the time of proposal, in part to get ahead of the curve; to the extent their change in practices is anticipatory of OSHA setting or revising standards, it should be attributed to the OSHA policy. Other employers do not respond to a regulation as soon as it is promulgated. OSHA itself frequently lets employers off with a warning rather than citation in the first year of enforcement of a standard. Finally there is a surprising amount of year-to-year variation in fatality data which create a great deal of noise that makes the effects of rules difficult to interpret. Seong and Mendeloff analyze the results of OSHA analyses from 17 to 27 years ago. OSHA personnel are acknowledged in the articles credits, and OSHA has continued to believe that OSHA should take account of this article in its benefits analysis. In order to assure that this was done, OSHA has shared this concern with its contractors where appropriate. As a result of consideration of this article, OSHA has made clear that reviewers of safety benefits analysis would apply certain principles in their review. First, expert analysts were informed on past overestimates, with the hope that experts would gain in accuracy from feedback on their past inaccuracies and biases. Secondly,
A second major issue is that the failure of OSHA regulations to achieve the anticipated benefits maybe partly due to failure of employers to comply with the regulations. As noted by Seong and Mendeloff, OSHA routinely assume full compliance with regulations for legal reasons. In some cases, if compliance is lower than 100 percent, benefits and costs will be proportionally reduced, with no effect on whether benefits exceed costs. For example, if twenty percent of establishments in an industry are out of compliance with a provision in the baseline, and these twenty percent cause ten percent of all fall fatalities, then if only ten percent come into compliance, rather than twenty percent, accidents would still be reduced by five percent. Under this scenario, a finding that benefits exceed costs under full compliance would be maintained at a lower compliance level, as long as those out of compliance are a homogeneous group.
There is, however, the possibility that those out of compliance are not a homogeneous group but consist of the two subgroups, one of which has found other ways of preventing the same kind of falls, and one of which are “bad actors” who make no efforts of any kind to prevent falls. In this case, if compliance is only by those in the safer group, the effects of noncompliance would not simply be proportional. Such a situation might be particularly likely if there is noncompliance with an existing rule and OSHA adds provisions designed to assure greater compliance. For example, almost all trenching fatalities are the result of complete failure to comply with existing shoring requirements. An attempt to improve compliance by increasing recordkeeping, training, and certification might have little effect on the bad actors who simply fail to use shoring at all while imposing additional costs on those already following existing shoring requirements. If only those in compliance with the existing rule also follow these new provisions, then there would be costs without benefits. OSHA has reviewed this rule and does not believe that this is the case for the provisions of this rule.
Because of the importance of this issue, OSHA examines the effects of possible overestimation of benefits and of noncompliance on both costs and benefits in the sensitivity analysis.
For the PEA, OSHA estimated the number of fatal falls potentially prevented by compliance with the proposed standard, categorized by type of fall. Since proposed subpart D focused heavily on ladder safety, OSHA judged the highest impact—15 percent—would be in preventing fatal falls from ladders. For other types of fatal falls directly addressed in the proposal (
For falls from roofs, OSHA judged in the PEA that compliance with the provisions in proposed subpart D addressing safety systems, work practices, and training associated with the fall hazards encountered on roof surfaces—including the requirements referenced in national consensus standards such as ANSI/ASSE A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Roof Openings; Stairs and Guardrail Systems—would result in a prevention rate of 15 percent. Therefore, in the preliminary analysis of benefits, OSHA applied a prevention rate of 15 percent to roof accidents.
For this final analysis of benefits, OSHA increased the prevention rate for roofs to 20 percent because the final standard: (1) Significantly strengthened fall protection for chimney sweeps (see Section F Costs of Compliance below in this FEA for a discussion of the control measures that OSHA used for the chimney-cleaning services industry), and (2) in greater detail, through association with an analogous standard for construction, extended fall protection in the form of designated areas and work rules intended to limit the movement of workers to within 15 feet of the roof edge when fall protection is not installed and available for use (see Section F below for a discussion of fall protection on rooftops across industries covered by § 1910.28, Duty to have fall protection). OSHA's final analysis of compliance costs for rooftop inspections addressed by final § 1910.28(b)(13), Work on low-slope roofs, includes costs for the installation of fall-arrest anchorages for the small percentage of inspections that identify hazardous conditions at or near roof edges (see discussion in the section “Cost Estimates”, below). These additional rooftop inspections and fall-system enhancements are expected to contribute to the benefits of reduced fatalities and injuries.
Two chimney-sweep accidents reported in OSHA's IMIS database (OSHA, 2012a) illustrate the benefits achievable under the final standard. In the first accident (Inspection No. 311734842), an employee of a Maryland chimney-sweep business died from impact injuries to the head and neck after apparently falling 15 feet. Although no one witnessed the accident, it appears, based on evidence at the scene and an interview with the homeowner, that the employee was using a 12-foot section of a ladder to gain access to three roof levels: the primary roof, the porch roof, and the roof peak. Inspectors found no roof perimeter guardrail or anchorage-based personal fall protection equipment at the site. OSHA believes the final standard at § 1910.28 would prevent such a fall because the employer would have to provide fall protection for an employee exposed to a height of four feet or greater.
In a second chimney-cleaning accident identified by OSHA (Inspection No. 307309054), employees of an air-duct and chimney-service company were installing a protective cap on a chimney. One of the employees was using a 2-foot stepladder leaning against the chimney chase to access the top of the chimney when he fell 24 feet. OSHA's investigation of the fatality showed that the employee was not using personal fall protection equipment, a safety measure required by the final standard.
For this final analysis of benefits, OSHA increased the prevention rate for ladders to 20 percent (from 15 percent in the PEA) because the requirement in the final rule for safety systems on all fixed ladders, including outdoor advertising, will substantially reduce the number of ladder-related accidents.
In addition, OSHA believes that the increased level of worker training on ladder safety systems required by the final rule, and the heightened recognition of the fall hazards associated with ladder safety systems resulting from this training, will yield a
OSHA also increased the prevention rate for falls to lower level, not elsewhere classified, to 5 percent (from 2.5 percent in the PEA) based on the requirements for step bolts in the final rule. OSHA revised its preliminary estimate of the prevention rate based on its determination that employers will increase use of ladder safety systems combined with personal fall protection on structures covered by the final rule that currently use only step bolts or ladders without ladder safety systems, such as pole-mounted lights at sports and performance arenas and other tall structures.
For falls from scaffolds or staging, OSHA judged a prevention rate of 40 percent in the PEA. No commenters raised objections to this estimate, so OSHA retained it for this FEA. OSHA believes that this estimate is reasonable because, according to OSHA and BLS accident data, approximately 40 percent of lost-workday scaffold accidents involve rope-descent systems. Therefore, in view of the final standard's comprehensive coverage of these systems, OSHA believes that it is reasonable to expect that the final standard will prevent at least 40 percent of deaths and injuries associated with scaffolds.
In addition, Table V-11 shows that falls from scaffolds or staging is a leading category of falls in general industry. According to the Bureau of Labor Statistics, such falls caused an average of 18 deaths and 1,474 lost-workday injuries yearly over a recent eleven-year period (1992-2002). For the PEA, OSHA reviewed a subset of scaffold accidents recorded in the Agency's Integrated Management Information System (IMIS) database to expand ERG's analysis of the extent to which the proposed standard would prevent accidents involving commercial window cleaning to gain additional information on prevention of fatal falls (OSHA, 2009). Accordingly, OSHA reviewed 36 incidents (some involving multiple casualties) that occurred during the period January 1995 to October 2001 in which a fall from an elevated scaffold or a similar surface during commercial window cleaning operations either killed or injured workers in general industry. OSHA then applied expert judgment to make determinations about which of these incidents would be preventable by full compliance with each of the following standards:
1. The existing standard for walking-working surfaces;
2. A 1991 memorandum to regional administrators that describes the safe use of descent-control devices (
3. The final standard.
Table V-12 below summarizes OSHA's analysis of the IMIS window cleaning incidents. Table V-12 shows that the existing standard did not account for incidents in three of the four cause-of-incident categories. The existing standard could not account for these incidents because it has no provisions that directly regulate RDSs. Accordingly, OSHA believes that full compliance with the existing standard would not prevent these incidents.
The 21 RDS incidents in the category titled “Malfunction/Mishandling of Rope Descent System or Lifelines” typically involved a malfunction in, or unsafe use of, an RDS rope descent systems (including lifelines). OSHA determined that safety conditions specified in its 1991 memorandum could prevent 19 of these incidents. The final rule could prevent these 19 RDS incidents, as well as the remaining two RDS incidents. As noted earlier, OSHA's existing subpart D would not prevent any of the RDS incidents in this category.
One of the primary causes of accidents in commercial window cleaning is the failure of the rooftop anchorage to support the suspended scaffold, the second cause-of-incident category in Table V-12. The final standard requires that employers use proper rigging, including sound anchorages and tiebacks, with RDS. OSHA identified eight incidents in the IMIS database for which anchorage failure contributed to the incident. In OSHA's judgment, all eight anchorage-related incidents involved factors addressed by the final standard and, therefore, would be preventable under that standard. All but one of these eight incidents involved factors addressed by the 1991 OSHA memo.
The third cause-of-incident category in Table V-12 addresses accidents that are less likely to occur when employers train workers adequately—for example, in the proper use of harnesses and lifelines. OSHA identified 14 incidents in the IMIS database in which death or injury to a worker would be preventable had the worker applied the training required by the final standard. Of these 14 cases, 12 involved factors addressed by the 1991 OSHA memo.
Other factors that led to a fall from elevation, such as equipment failure involving suspension scaffolds and powered platforms, contributed to the death or injury of workers during window cleaning operations. The fourth cause-of-incident category in Table V-12 addresses these incidents. OSHA determined that provisions in the existing standard would prevent four of these incidents, while the provisions of the final standard would prevent six of them. The 1991 OSHA memo had no provisions that would prevent these incidents.
OSHA believes that this analysis illustrates some of the complexities in assigning benefits to the final standard. Chief among these complexities is the assumption that full compliance with the final standard will prevent fatalities not preventable by the existing standard due to the addition in the final standard of major requirements addressing window cleaning operations.
Second, there is the question of the proper baseline for such an analysis. Prior to publication of the final standard, while OSHA did not have a rule addressing RDSs or anchorages for these systems and suspended scaffolds, OSHA could use national consensus standards and enforcement policies, in concert with the general duty clause, to prompt employers to prevent falls to lower levels. Therefore, reductions in fall-related incidents likely occurred as a result of this enforcement practice, even if OSHA applied this practice irregularly. However, OSHA has not treated the 1991 memo as the baseline for either benefits or costs, but has instead estimated costs for most activities required by the 1991 memo and benefits from the current levels of compliance.
Third, there is the issue, already discussed, of how to treat the benefits of training requirements. OSHA normally assumes full compliance with a rule for the purposes of both benefit and cost analysis. For some provisions in a rule, the Agency can readily determine whether full compliance with the rule would prevent an incident. However, for training provisions, it is difficult to determine whether full compliance with the training requirements would prevent the incidents the training is addressing (Seong and Mendeloff, 2004). OSHA's resulting estimate of the effects of the training requirements is specified by Table V-11. According to OSHA's determinations summarized in Table V-12, adequate training, if the instructions in training were followed, could have prevented up to 14 of the 36 window cleaning fall-related incidents reported in IMIS.
Based on the PEA and the rulemaking record, and applying the fatality-prevention rate for scaffolds explained above, OSHA concludes that the final standards will prevent 29 fall fatalities a year,
For the purposes of estimating the number of lost-workday injuries prevented by the final standards, OSHA applied the same prevention factors to lost-workday injuries that it assigned to the defined categories of fatal falls. Table V-13 shows, by type of fall, the distribution of lost-workday injuries for general industry; these injury categories duplicate the categories in Table V-8. The BLS data show that, for non-fatal falls to a lower level, 30.4 percent of injuries are due to falls down stairs or steps, while 22.3 percent are the result of falls from ladders. Averaging total lost-workday fall injuries for 2006-2012, OSHA estimates that 202,066 lost-workday fall injuries occur each year for work operations directly affected by the final revisions to subparts D and I (see Ex. [OSHA Excel Workbook], tabs Injury Fall % 2006-2012 and Prevented Injuries '06-'12).
For this FEA, OSHA notes a significant addition to its preliminary analysis of benefits. In the PEA, OSHA primarily focused on the benefits of preventing falls to a lower level because of the relatively greater certainty of accident avoidance associated with the required control strategies that OSHA anticipates employers will apply to ladders, scaffolds, rope descent systems, roofs, and other elevated surfaces after the Agency issues the final rule. However, based on testimony in the record (Exs. 329 (1/20/2011, pp. 42, 60-61); 329 (1/21/2011, pp. 200-203); 330), OSHA expanded its analysis to include the benefits of preventing slips, trips, and falls on the same level. As shown in Table V-8, 2006-2012 BLS data indicate that falls on the same level resulted in 137,079 lost-workday injuries in work activities in general industry affected by the final rule. OSHA estimates that the provisions of final subpart D addressing general conditions (§ 1910.22) will prevent 1 percent of these accidents, or 1,371 injuries. The 1% prevention rate assumes that the time employers will expend to inspect (two hours per year) and correct hazards (20 minutes for the 10 percent of establishments with unsafe conditions) in compliance with 1910.22(d) will lead to this reduction. This estimate is uncertain, and we examined other prevention rates in our sensitivity analysis.
Using the prevention estimates described above for falls on the same level and the prevention estimates applied to fatal incidents involving falls to a lower level, OSHA estimates that compliance with final subparts D and I will prevent 5,842 lost-workday fall injuries annually. OSHA recognizes that this prevented-injuries estimate is a 58 percent increase over the preliminary estimate (
As noted earlier in this FEA, OSHA did not estimate the improvements in the efficiency of compliance associated with clarifying the existing rule and making it consistent with current national consensus standards. In addition to the benefits associated with those factors, OSHA anticipates that improvements to its walking-working surfaces standard in general industry will yield further benefits. In the following exhibit and in the discussion that follows, OSHA highlights the key substantive differences introduced by the final rule.
Earlier in this preamble, in the summary and explanation of final § 1910.28 Duty to have fall protection and falling-object protection, OSHA described the means by which the final standard provides greater flexibility in controls than is found in the current walking-working standard for preventing slip, trip, and fall accidents. OSHA believes that expanding control flexibility will produce nonquantifiable benefits, and in the following discussion, the Agency reiterates the factors that will help generate the nonquantified benefits supplementing the quantified benefits shown in Impacts Exhibit V-1 and in Tables V-11 and V-13 in this FEA.
This rule, like the construction fall protection standard, allows general industry employers, similar to construction employers, to protect workers from falls hazards by choosing from a range of acceptable fall protection options. The existing general industry standard, however, mandated the use of guardrail systems as the primary fall protection method (
The 1990 proposed revision of subpart D continued to require the use of guardrail systems. However, in the 2003 notice reopening the record, OSHA acknowledged that it may not be feasible to use guardrails in all workplace situations (68 FR 23528, 23533 (5/2/2003)) and requested comment on whether the Agency should allow employers to use other fall protection systems instead of guardrails. Commenters overwhelmingly favored this approach, which the construction fall protection standard adopted in 1994. In response to comments and OSHA's history and experience with the construction fall protection standard, the Agency proposed allowing employers to select from a range of fall protection options instead of requiring employers to comply with the existing mandate to use guardrail systems.
OSHA is adopting the proposed approach for several reasons. First, OSHA believes giving general industry employers flexibility in selecting fall and falling-object protection systems allows them to select the system or method that they determine will work best for the particular work operation and location. Such flexibility allows employers to consider factors such as exposure time, availability of appropriate attachment points, feasibility, cost effectiveness, and cost constraints when selecting the appropriate fall protection system for the work activity.
Second, providing control flexibility allows general industry employers to take advantage of advances in fall protection technology developed since OSHA adopted the existing rule. The existing rule, by contrast, limited choices in fall protection technology.
Third, making the final rule consistent with the construction standard ensures that employers who have workers engaged in both general industry and construction activities are able to use the same fall and falling-object protection while performing both types of activities. It eliminates the need to purchase different fall protection systems when their workers perform general industry operations. Thus, making the general industry and construction rules consistent ensures that final rule is a cost-effective approach for reducing significant risk of harm. As a result, OSHA believes that the additional flexibility and consistency achieved by this final rule in providing fall protection will reduce worker deaths and injuries.
OSHA believes the comprehensive approach to fall protection (that is, duty to provide fall protection, mandatory criteria for controls, regular inspections, and training) that the final rule and the construction fall protection standard incorporate will provide equivalent or greater protection than the existing rule. In addition, the greater flexibility the final rule affords employers will allow them to select the fall protection option that works best in the specific situation and is the most cost-effective protective measure capable of reducing or eliminating significant risk of harm. Moreover, the comprehensive approach in the final rule, like the construction fall protection standard, recognizes that, in some instances, it may not be possible to use guardrail systems or other passive controls to protect workers from falls. For example, employers may not be able to install permanent systems such as guardrails when they do not own the building or structure on which their employees are working. OSHA believes the final rule addresses the concerns of these commenters without limiting employer flexibility or compromising worker safety.
As mentioned, the final rule limits fall protection choices in some situations where the Agency determined that passive/permanent systems provide the requisite level of protection. For example, in final paragraph (b)(5), OSHA specifically requires the use of guardrails on runways and similar walkways. Likewise, guardrail systems or travel restraint systems are the only systems that employers may use to protect workers on slaughter-house platforms (see final paragraph (b)(14)). In these cases, OSHA limited employers' choices to those systems that are possible to use on those walking-working surfaces and that provide an adequate and appropriate level of safety.
The final rule also establishes criteria and work practices addressing personal fall protection systems (§ 1910.140). These criteria include minimum strength and load, locking, and compatibility requirements for components of personal fall protection systems, such as lines (vertical lifelines, self-retracting lines, travel restraint lines), snaphooks, and anchorages. The work practices include requiring employers to ensure inspection of personal fall protection systems before the initial use during each work shift, and to ensure that a competent or qualified person inspects each knot in a lanyard or vertical lifeline. OSHA believes that these criteria and work practices, in conjunction with the training and retraining requirements in the final rule, provide a combination of controls and redundancies that will help to ensure that personal fall protection systems are effective in protecting workers from falls hazards.
OSHA requested comment on the Agency's preliminary analysis of the scaffold accidents described above, and on the various approaches used to determine the estimated benefits achievable from compliance with the other provisions of the proposed standard. The following discussion presents OSHA's summary of the public comments received on OSHA's preliminary benefits analysis.
The National Chimney Sweep Guild (NCSG) questioned the benefits of a fall protection system that involved the use of an anchorage, travel restraint lines, and harnesses for repair and maintenance activities on a residential roof:
Given that the average time on the roof for a typical chimney service is between five and twenty minutes, we believe it is clear that the installation of a single roof anchor (taking 45 to 90 minutes) would expose the chimney sweep to greater hazards for a longer period of time. Installation of the anchor requires extra equipment to be taken to the roof, and increases the number of ground to roof trips. We believe one of the highest hazards is the ladder to roof transition, both getting onto and off of the roof. The work required to install the roof anchor(s) would significantly increase the number of ladder to roof to ladder transition cycles. Furthermore, the anchor would not provide any fall protection during the period before the sweep could attach to it or during the period after the sweep detached from it.
In conclusion, the installation of a roof anchor point roughly equals the cost of an
In this quotation, NCSG argued that, in many cases, the installation of a roof anchor would involve greater hazard, and challenged OSHA's determination that it is feasible to apply these fall protection systems for chimney or other roof work.
With respect to the issue of greater hazard, while some chimney sweep jobs are relatively short (
OSHA also differs with the NCSG's statement above with respect to time requirements and expense for installing fall protections. In response to a question from the OSHA panel on the feasibility and potential benefits of anchorage and lifeline systems on roofs, a representative of the Industrial Safety Equipment Association stated in the public hearing:
In the event of existing construction there are permanent roof anchors that can be installed on residential structures and other types of facilities, buildings and so on that can be installed after the construction. And depending upon the type of construction, those can range in cost anywhere from, you know, $35 to a few hundred dollars. And they have varying degrees of installation, again depending upon the type of structure.
There are also—if it's new construction there are different construction techniques where the anchors can be installed, for instance, on the roof truss before the truss is put up into place so that the anchor's already up there and then you can use first man type systems to anchor your lifeline on the ground before the worker has to climb to do the work at the height.
So there are various types of roof anchor products. And you know, I would—every fall protection equipment manufacturer manufactures a number of different types specifically for the roofing industry (Ex. 329 (1/18/2011), pp. 176-177).
Charles Lankford of Rios & Lankford Consulting International challenged OSHA's finding in the PEA that fatalities involving falls represent a risk so significant that only a revised standard with a scope covering all of general industry will address the problem:
The relative ranking of falls appears to have more to do with the falling rate of workplace homicides than with an increase in fatal falls, since the rate of fatal falls has remained fairly constant at around 5 and 6 fatal falls per million employees for decades.
While it is true that fatal falls were 14% of all fatalities (2009 BLS data), this was not evenly distributed among the industrial sectors. In the “goods producing” sector, falls were the second (or third) leading cause of death, and were ten times more likely than a homicide to be the cause of death. This is the major category that includes mining, agriculture, construction and manufacturing.
In contrast, in the service sector, falls were the third (or fourth) leading cause of death. In the service sector overall, homicides were twice as likely to be the cause of death as a fall. In some NAIC codes, homicides were 4 times more likely to be the cause of death than a fall. The service sectors where fatal falls were relatively more likely were: (1) Durable goods wholesale; (2) utilities; (3) information; and (4) administrative and waste services.
I've focused on fatal falls data rather than non-fatal falls because the non-fatal data are more subject to variations from record-keeping interpretations, data initiatives, etc.
Never-the-less historical incident rates for non-fatal falls also do not display an increasing fall problem. The all-industries non-fatal fall incidence rate has declined every year since 2003 (the oldest year in the BLS Table I consulted), so the decline in rates is not attributable to the current recession. If we exclude 2008 and 2009 data, manufacturing did not show a change. Yet 2006 and 2007 showed lower injury incidence rates than 2003 and 2004 (Ex. 368).
The previous section showed that OSHA judges that complete compliance with the revised standard will result in the prevention of 29 deaths and 5,842 lost-workday injuries each year. Consistent with current federal regulatory methodologies recommended by OMB Circular A-4, discussed below, the Agency assigned a dollar value to these safety benefits.
In estimating the value of preventing a fatality, OSHA followed the approach established by the U.S. Environmental Protection Agency (EPA). EPA's
Viscusi and Aldy (2003) presented a metaanalysis of studies in the economics literature that used a willingness-to-pay (WTP) methodology to estimate the imputed value of life-saving programs, and arrived at a value of approximately $7.0 for each avoided fatality. Applying the GDP deflator (U.S. BEA, 2010), this $7.0-million base number in 2000 dollars yields an estimate of $8.7 million in 2010 dollars for each fatality avoided.
This VSL estimate is consistent with EPA's estimate, and is also within the range of the substantial majority of such estimates in the literature ($1 million to $10 million per statistical life), as discussed in OMB Circular A-4 (OMB, 2003). Applying a VSL of $8.7 million to the estimated number of prevented fatalities, OSHA estimates that the dollar value of the benefits associated with preventing fatal accidents from compliance with revised subparts D and I will be $252.3 million annually.
OSHA also reviewed the available research literature regarding the dollar value of preventing an injury. In the paper cited immediately above, Viscusi and Aldy conducted a critical review of 39 studies estimating the value of a statistical injury (Viscusi and Aldy, 2003). In their paper, Viscusi and Aldy reviewed the available WTP literature to identify a suitable range of estimates; using WTP to value non-fatal injuries is the approach recommended in OMB Circular A-4.
Viscusi and Aldy found that most studies resulted in estimates in the range of $20,000 to $70,000 per injury (in 2000 dollars), although several studies resulted in higher estimates. That some studies used an overall injury rate, and others used only injuries resulting in lost workdays, partly explains the variation in these estimates. The injuries prevented by final subparts D and I often involve hospitalization and, therefore, are likely to be more severe than the majority of lost-workday injuries. In addition, injuries resulting from falls involve more pain and suffering, more expensive treatments, and generally longer recovery periods than other lost-workday injuries.
Thus, it is reasonable to believe that the value of a statistical injury for this rulemaking will be in the upper part of the reported range of estimates. Nevertheless, in the preliminary benefits analysis discussed in the PEA, OSHA used a mid-range estimate—$50,000—to assess monetized benefits for injuries and, for this FEA, raised that estimate to $62,000 (2010 dollars) to account for a rise in the cost of living since 2000, the base year for the monetized values estimated by Viscusi and Aldy when the authors published their 2003 study. Thus, with an estimated 5,842 injuries a year prevented by the final standards, OSHA determined that the dollar value of prevented injuries through compliance with revised subparts D and I will total $362.2 million annually.
OSHA estimates that the combined dollar value of prevented fatalities and injuries through compliance with the final revisions to subparts D and I will total $615 million per year. Comparing gross monetized benefits with costs of compliance (discussed in more detail in section V.F, below), OSHA estimates that the net monetized benefits of the final standard will be $310 million ($615 million in benefits—$305.0 million in compliance costs; all figures rounded). Table V-14 summarizes the compliance costs, benefits, net benefits, and cost effectiveness of the final standards.
There are other benefits of the final standards that OSHA neither quantified nor monetized. First, OSHA did not estimate the number of fall injuries prevented that do not result in lost workdays. Second, OSHA did not estimate improvements in the efficiency of compliance associated with clarifying the existing rule and bringing it into closer correspondence with current voluntary standards.
OSHA reviewed the substantial evidence collected throughout this rulemaking, including the data and comments submitted to the record in response to the earlier proposed standard published on April 10, 1990, the notice reopening the record published on May 2, 2003, and the recent NPRM (May 24, 2010). Accordingly, OSHA determined that compliance with the final revisions to subparts D, I, and other subparts in 29 CFR part 1910 (general industry), as described in this final rule, is technologically feasible. This subsection presents the details of this conclusion with regard to specific requirements.
Section 1910.22 of final subpart D revises existing requirements addressing housekeeping, safe aisles and passageways, covers and guardrails, and floor-loading protection, and introduces new requirements associated with broad areas of safety on walking-working surfaces. Final paragraphs (a), (b), (c), and (d) of this section address, respectively, surface conditions, application of loads, access and egress, and inspection, maintenance, and repair. OSHA received no testimony in the record suggesting that there would be feasibility concerns with final § 1910.22.
Final paragraph (a) requires that employers keep all walking-working surfaces in a clean, dry, orderly, and sanitary condition, and free of hazards such as sharp or protruding objects, loose boards, corrosion, leaks, and spills. Data in OSHA's inspection file analyzed by ERG (ERG, 2007) indicate a high level of compliance with similar requirements in existing subpart D, suggesting that there have been few, if any, technical challenges to employers; therefore, this provision is technologically feasible.
Final § 1910.22(b) requires that employers ensure that each walking-working surface can support the maximum intended load for that surface. This language restates and simplifies the existing regulatory text, and should not present any technological feasibility difficulties. The next provision, final § 1910.22(c), requires that employers provide employees with, and ensure that they use, a safe means of access and egress to and from walking-working surfaces. Although new, this requirement, in OSHA's judgment, will not impose any duties on employers beyond the limits of feasibility.
Paragraph (d) of final § 1910.22 requires employers to regularly inspect and maintain, as necessary, all walking and working surfaces in a safe condition. Employers also must correct and repair all hazardous conditions on walking-working surfaces before employees use them, and guard the surfaces until completing repairs to prevent employee use. A qualified employee must perform or supervise any correction or repair that involves the structural integrity of a walking-working surface. Employers can accomplish the inspection, maintenance, repair, and guarding of surfaces with technologically feasible and currently available methods.
Final § 1910.23 covers ladders. Accordingly, final § 1910.23(a) specifies that the section applies to all ladders except for ladders used only for firefighting, rescue operations, tactical law enforcement operations, or training for these operations, and ladders designed into, or are an integral part of, a machine or piece of equipment. In addition, final § 1910.23(b) provides general requirements for all ladders; final paragraph (c) addresses portable ladders; final paragraph (d) presents standards for fixed ladders; and final paragraph (e) addresses mobile ladder stands and mobile ladder stand platforms. OSHA based the requirements in this section partly on current American National Standards Institute (ANSI) standards, A14 series. The ANSI standards provide guidelines for industry, and are generally compatible with current industry practices and technology. Since manufacturers make and test virtually all manufactured ladders to meet these ANSI standards, OSHA believes there will be few problems regarding technological feasibility.
Most of the requirements for ladders in final subpart D do not represent any change from existing OSHA requirements. For both existing and new requirements, current and readily available technology is capable of meeting or exceeding the design and strength criteria specified for ladders. The final language is clearer and more concise than the existing regulatory text. Moreover, OSHA introduced greater compliance flexibility into the final standard, such as in the case of the range provided in the spacing requirements for rungs, cleats, and steps (see final § 1910.23(b)).
Comments submitted to the docket in response to the 1990 proposed rule generally confirmed OSHA's preliminary conclusion that compliance with the proposed requirements for ladders would be technologically feasible. Although several commenters addressed the appropriateness or the costs associated with the proposed ladder requirements, they did not question the technological feasibility of the requirements. Similarly, during the reopening of the record following publication of the 2010 NPRM, commenters raised concerns about the potential costs for protecting workers on ladders in particular circumstances (see, for example, Exs. 121; 301; 342) or the rationale for excluding ladders from the duty to provide fall protection for heights above four feet (Ex. 185). However, there was no evidence presented that would suggest that the final standard for ladders is technologically infeasible.
OSHA grouped training in the proper care, use, and inspection of ladders with other training requirements under final § 1910.30. Compliance with these training requirements does not require any additional or new technology.
Final subpart D provisions for step bolts and manhole steps address basic criteria for the safe design, construction, and use of these components. For example, final § 1910.24(a)(3) specifies uniform spacing of step bolts between 12 inches (30 cm) and 18 inches (46 cm) measured center to center, while § 1910.24(b)(2)(iv) requires uniform spacing of manhole steps not more than 16 inches (41 cm) apart. Although these requirements will be new to subpart D, OSHA based the engineering criteria on consensus standards established by the American Society for Testing and Materials (ASTM), which have wide acceptance throughout industry. Therefore, OSHA believes that existing technology is capable of meeting these performance criteria and that this technology is feasible to apply.
Section 1910.25 in the final standard describes OSHA safety specifications for stairs, and covers all types of stairs except stairs serving floating roof tanks; stairs on scaffolds; stairs designed into machines or pieces of equipment; and stairs on self-propelled motorized equipment. Requirements in this section address the obligations to install handrails, stair-rail systems, and guardrail systems, as necessary. Other requirements in this section describe design specifications such as the appropriate load capacities that stairs
Section 1910.26 provides for the safe movement of personnel and equipment on dockboards (defined in the final standard to include bridge plates and dock plates), and relocates, updates, and clarifies requirements for dockboards located in existing § 1910.30, Other working surfaces. The design, construction, and maintenance of these surfaces must be such as to support their maximum intended load and prevent transfer vehicles from running off the edge. According to final § 1910.26(c), employers must secure portable dockboards with anchors or other means, when feasible, to prevent displacement while in use. Other requirements in this section prevent the sudden displacement of vehicles on dockboards that are in use, and require handholds or other means for safe handling. Compliance with the final requirements for dockboards does not necessitate the use of any new technologies, materials, or production methods; thus, this section is technologically feasible.
Section 1910.27 introduces to subpart D the existing requirements for scaffolds in the construction standards. Thus, for final subpart D, OSHA directly references subpart L in 29 CFR part 1926. In addition, new requirements for rope descent systems will include inspection prior to each workshift; proper rigging; a separate personal fall arrest system; minimum strength criteria for lines used to handle loads; establishment of rescue procedures; effective padding for ropes; and stabilization for descents greater than 130 feet. In addition, final § 1910.27(b)(2) prohibits the use of rope descent systems for heights greater than 300 feet (91 m) above grade unless the employer can demonstrate that it is not feasible to access such heights by any other means or those other means pose a greater hazard than using RDS. Although new to subpart D, industry adopted these and other specifications for the safe use of scaffolds many years ago owing to the publication of ANSI I-14.1-2001, Window Cleaning Safety (Ex. 14), and a March 12, 1991, OSHA memorandum to Regional Administrators addressing the ANSI standard and the provisions listed above (Ex. OSHA-S029-2006-0662-0019). Therefore, OSHA judges the requirements in this new section on scaffolds to be technologically feasible.
Section 1910.28 restates, clarifies, and adds flexibility and consistency to existing OSHA requirements for providing fall protection to employees. In addition to general requirements for the strength and structural integrity of walking-working surfaces (with reference to § 1910.29, Fall and falling-object protection systems criteria and practices), this section of the final rule also includes detailed specifications on the following surfaces for which employers have a duty to provide fall protection:
• Unprotected sides and edges;
• Hoist areas;
• Holes;
• Dockboards;
• Runways and similar walkways;
• Dangerous equipment;
• Wall openings;
• Repair pits, service pits, and assembly pits less than 10 feet in depth;
• Fixed ladders (that extend more than 24 feet (7.3 m) above a lower level);
• Outdoor advertising (billboards);
• Stairways;
• Scaffolds and rope descent systems;
• Work on low-slope roofs;
• Slaughtering facility platforms; and
• Walking-working surfaces not otherwise addressed.
Hazards on walking-working surfaces can include accidental displacement of materials and equipment. To prevent objects from falling to lower levels and to protect employees from the hazards of falling objects, final § 1910.28(c) requires head protection and screens, toeboards, canopy structures, barricades, or other measures.
The final subpart D standards reaffirm the existing Agency interpretation and enforcement practice that fall protection is generally necessary for fall hazards associated with unprotected sides or edges of any surface presenting a fall hazard of four feet or more. In this regard, the obligation of employers to provide fall protection remains substantially unchanged from existing requirements in final subpart D.
Whereas the existing requirements specify that employers must protect employees by installing standard guardrail systems or equivalent systems, the final standard more clearly allows employers to provide fall protection through any of several methods, including guardrails, personal fall arrest systems, and safety nets. OSHA recognizes that some work surfaces may present difficult challenges for applying fall protection. One participant in the 1990 NPRM (Ex. OSHA-S041-2006-0666-0194) pointed out that maintenance work may require that employees be on equipment such as compressors, turbines, or pipe racks at elevations in the range of 4 to 10 feet above lower surfaces, and that guardrails, platforms, ladders, or tying off would not always be possible in such situations. In the current rulemaking for walking-working surfaces, the Sheet Metal and Air Conditioning Contractors National Association (SMACNA) (Ex. 165) appeared to express a similar concern with respect to the duty to provide fall protection in a manufacturing plant. OSHA notes that its enforcement procedures allow special consideration in unique circumstances when compliance with a particular standard may not be feasible or appropriate.
In general, employers should be able to address and eliminate employee exposures to potential slip, trip, and fall hazards by planning and designing adequate facilities and work procedures. Based on widespread industry practice, OSHA concludes that the fall protection requirements specified by this section of the final standards are technologically feasible.
In § 1910.29, OSHA specifies or provides references for revised criteria for fall protection systems such as guardrail systems; handrails; stair rail systems; cages, wells, and platforms used with fixed ladders; toeboards; designated areas; travel restraint systems; safety net systems; grab handles; and fall protection for the outdoor advertising industry. Final § 1910.140, discussed at length below, provides criteria for personal fall protection systems that OSHA is adding to existing subpart I through this rulemaking.
With regard to guardrail systems (§ 1910.29(b)), the final subpart D standards do not substantially modify existing requirements involving height, strength, or other criteria. In some circumstances on low slope roofs for
Rather than explicitly requiring midrails in guardrail systems as in the existing subpart D standards, the final subpart D standards use performance-oriented criteria that allow midrails, screens, mesh, intermediate members, solid panels, or equivalent intermediate structural members. Compliance with the existing standards would generally also meet the requirements of the final standards. Furthermore, the final standard allows the employer to choose any of a wide variety of currently used and readily available guardrail system materials and designs to meet the performance-oriented criteria. Based on these considerations, the final subpart D requirements for guardrail systems are technologically feasible.
Final § 1910.29(c) references the construction standards to specify criteria for safety net systems. The criteria for safety nets established through this final rulemaking include requirements for drop tests and inspections for each safety net installation. Other criteria for safety nets established in final subpart D involve design and strength standards. Employers can achieve all of these criteria by using existing and commonly available safety net systems. The final requirements for installing safety net systems reflect basic safety considerations already adopted by manufacturers of equipment and by employers. Readily available and currently used technology is capable of meeting these requirements.
The final standard introduces the option of designated areas (see final § 1910.29(d)) as a means of fall protection available to employers, in addition to other acceptable fall protection measures in certain circumstances on low slope roofs. The technology necessary to implement this option consists of basic materials such as rope, wire, or chain, and supporting stanchions. Employers can achieve the strength, height, and visibility criteria specified in the final standard for designated areas with currently available materials and technology.
Requirements for covers for holes in floors, roofs, and other walking-working surfaces in the final standard (see final § 1910.29(e)) simplify and consolidate the proposed requirements for covers and now consist of two new provisions requiring that the cover: (1) Is capable of supporting without failure, at least twice the maximum intended load that may be imposed on the cover at any one time; and (2) Is secured to prevent accidental displacement. The performance-oriented criteria applicable to covers allow for the application of a wide variety of technological solutions.
Requirements in final subpart D for handrail and stair rail systems (§ 1910.29(f)) specify criteria for height, strength, finger clearance, and type of surface, among others. Employers currently meet these criteria with existing technology, and a wide variety of different materials and designs are available to comply with the requirements.
New requirements in final paragraph (g) of this section specify that landing platforms, as well as all platforms used with fixed ladders and cages and wells, provide a horizontal surface that meets specified dimensions are feasible considering the availability of appropriate materials and engineering expertise. Final § 1910.29(g) also sets criteria for ladder cages and wells, if used on fixed ladders. OSHA notes that the Agency is phasing out the use of cages and wells as a means of fall protection on fixed ladders. See full discussion in summary and explanation of § 1910.28(b)(9).
Final paragraph (h) includes requirements for qualifying employees to climb ladders on outdoor advertising that expire two years after publication of the final standard (see § 1910.28(b)(10)). After this two-year period, employers in outdoor advertising must provide one or more of the fall protection systems specified in § 1910.28 for employees who climb fixed ladders. Although new to subpart D, the training and other administrative controls that characterize the development and protection of those working without fall protection have been around for many years. Furthermore, evidence in the record indicates that some employers in outdoor advertising are now providing conventional fall protection for ladders (Ex. 369). Therefore, OSHA concludes that there will be few, if any, technological hurdles for industry to implement the provisions for qualified climbers before and after the two-year expiration date.
Final paragraph (i) establishes criteria and practice requirements for ladder safety systems permanently attached to fixed ladders or immediately adjacent to such ladders. A ladder safety system is a conventional fall protection system designed to eliminate or reduce the possibility of falling from a fixed ladder (see definition of “ladder safety system” in final § 1910.21(b)). According to this definition, it usually consists of the following:
• A carrier, which is a rigid or flexible track attached to or adjacent to the fixed ladder;
• A safety sleeve, which is moving component that travels on the carrier;
• A lanyard;
• Connectors; and
• A body harness.
Although the existing rule at § 1910.21(e)(13) addresses “ladder safety devices,” which serve the same purpose as ladder safety systems, the existing rule does not specify criteria or practice requirements for those devices. As a result, OSHA drew many of the proposed ladder safety system criteria and practice requirements from the construction ladder standard at § 1926.1053(a)(22) and (23). The construction standard allows the use of body harnesses or body belts with ladder safety systems. OSHA also drew ladder safety system criteria and practice from ANSI/ASC A14.3-2008. The Agency notes the national consensus standard does not include the use of body belts with ladder safety systems.
As noted above, the ladder safety system criteria and practice requirements in the final standard have been published in an OSHA construction standard and in a national consensus standard, and therefore any technological feasibility concerns for the range of structures encountered in general industry would very likely have been addressed in the proceedings that led to those publications. Therefore, OSHA concludes that the final requirements for ladder safety systems are technologically feasible.
Final paragraph (j), like the proposed rule, requires that body belts, body harnesses, and other components of personal fall arrest systems, work-positioning systems, and travel restraint systems, meet the applicable requirements in final § 1910.140. Employers currently meet these criteria with existing technology, and a wide variety of different materials and designs are available to comply with the requirements.
Final § 1910.29(k) clearly specifies criteria for systems that provide falling-object protection. OSHA redrafted the provisions in the existing standard addressing toeboards using specification language found in the OSHA construction standard (§ 1926.502(j)(3)) and with national consensus standards (ANSI/ASSE A10.18-2012 (Section 5.7), and ANSI/ASSE A1264.1-2007 (Section 4.1.5) while other requirements for guardrail systems and canopies specified in the design criteria are within current engineering norms. Therefore, OSHA concludes that the
Lastly, final paragraph (l) contains design and strength criteria for grab handles. For the most part, these requirements are consistent with the requirements for grab handles in existing subpart D and are, therefore, technologically feasible.
Section 1910.30 introduces requirements specifying that employees receive training from a qualified person, and that the training, which applies to personal fall protection equipment, prepare employees to recognize fall hazards in the work area, in the procedures to follow to minimize these hazards, and in the installation, inspection, operation, maintenance, disassembly, and correct use of personal fall protection equipment. Employers also must train workers in the proper care, inspection, storage, and use of equipment subpart D covers before workers use that equipment, such as dockboards, RDS, and designated areas. Employers must retrain employees when changes occur in the workplace or in the types of fall protection systems or equipment used that renders the previous training obsolete or inadequate, or employees exhibit an absence of understanding or skill needed to use the equipment or perform the job safely; employers also must train employees in a manner the employees understand. Because of extensive evidence in the record that the training required under the final standard has widespread acceptance throughout industry (Exs. 53; 73; 96; 127; 172; 189; 205; 216; 222; 226; 329 (1/18/2011), pgs. 82, 117, 186, 258; 329 (1/19/2011), pgs. 22, 24; 329 (1/20/2011), pgs. 182, 287; 329 (1/21/2011), pgs. 9, 92, 200, 206; 364), such training will not present technological feasibility concerns.
Revised § 1910.132(g) of subpart I in this final rulemaking requires that employers conduct hazard assessments and training in accordance with the requirements in § 1910.132(d) and (f) in workplaces when employers provide personal fall protection equipment to employees. Survey data indicate that a significant percentage of employers currently assess the occupational fall hazards encountered by their employees, and that a similarly large percentage of employers train their employees in the proper use of personal fall protection equipment (OSHA, 1994). These hazard assessment and training requirements, therefore, will not present technological feasibility concerns.
The final subpart D standards include provisions for personal fall protection systems, including components such as harnesses, connectors, lifelines, lanyards, anchorages, and travel restraint lines. Section 1910.140 of subpart I specifies the criteria that these components must meet when employees use them.
The revisions to the walking-working surfaces and fall protection systems described in the final rule include revisions to several subparts in 29 CFR part 1910 other than subparts D and I. For purposes of this analysis, the determinations of technological feasibility described in this FEA include the revisions of these other subparts.
The requirements applicable to personal fall protection systems specified by this final rulemaking codify basic safety criteria for these systems. These criteria reflect common industry safety practices, and currently and readily available equipment meets these criteria. The final standards generally do not require changes in current technology or practices for employers who use standard safety equipment and follow standard safety procedures. The current and ready availability of personal fall protection systems, including personal fall arrest systems, positioning systems, and travel restraint systems, and the application of these technologies in diverse industrial activities and circumstances, demonstrate the technological feasibility of these requirements in the final standard.
In conclusion, OSHA determined that compliance with the final revisions to subparts D, I, and other affected subparts of 29 CFR part 1910 is technologically feasible. Thus, there is no technological hindrance to the significant improvement of employee safety on walking and working surfaces resulting from implementation of this final rule.
This subsection presents OSHA's final analysis of the compliance costs associated with the final standard for walking-working surfaces and fall protection in general industry. Following discussion on the public comments addressing OSHA's preliminary estimate of compliance costs and OSHA's response to those comments, the cost analysis proceeds into a discussion of the assumptions used in the analysis. OSHA based its final analysis of compliance costs largely on the cost analysis conducted by OSHA's contractor, Eastern Research Group (ERG, 2007), and the Preliminary Economic Analysis. The presentation below focuses on what constitutes the regulatory baseline (
Following the discussion of baseline assumptions, the next subsection reviews the final rule on a paragraph-by-paragraph basis for those paragraphs that potentially could result in costs to industry. The final subsection examines one-time costs to bring employers into compliance with the rule, as well as the annual costs for training new employees and retraining existing employees. OSHA presents the cost estimates by affected industry, and by applicable provision. The final subsection concludes with a discussion and tables that summarize the costs for each section of the standard, and aggregates them to estimate total costs.
OSHA requested comment on the assumptions, unit costs, and analytical methods applied in the preliminary cost analysis for proposed subparts D and I. The discussion below summarizes the public comments addressing OSHA's preliminary cost analysis and OSHA's response to those comments.
The Sheet Metal and Air Conditioning Contractors National Association (SMACNA) was critical of OSHA's estimate of compliance costs, stating:
A review of the anticipated costs indicates that OSHA has under-estimated the actual costs to employers to comply with the requirements of these rules. SMACNA encourages OSHA to conduct further outreach to employers to find the true costs associated with the revisions to company operations, purchasing equipment and conducting training that these proposed standards would require. With over 5 million small businesses affected by these requirements (OSHA's data), it is fair and prudent upon OSHA to outreach to these companies by convening a Small Business Regulatory Enforcement Fairness Act panel. (Ex.165, p. 5.)
With respect to the convening of a Small Business Regulatory Enforcement Fairness Act (SBREFA) panel, OSHA in the NPRM certified that the proposed standard would not have a significant impact on a substantial number of small firms, which satisfied the statutory requirements at the time OSHA published the NPRM. Other stakeholders who also requested that OSHA convene a SBREFA panel include the National Federation of Independent Businesses (Ex. 173) and the U.S. Chamber of Commerce (Ex. 202). With respect to SMACNA's assertion that OSHA underestimated compliance costs, SMACNA did not provide any further details to support its statement, and, therefore, OSHA has no basis to evaluate the criticism.
ORC HSE Networks, a division of Mercer LLC, expressed concerns about the proposed requirement, found in § 1910.29(b)(1), that the top edge of guardrail systems be 42 inches (107 cm), plus or minus 3 inches (8 cm), above the walking-working surface. Mercer's comment reads as follows:
In a footnote on page 28894 of the May 24 notice of proposal, OSHA stated that it decided not to include existing guardrails having top edges as low as 36 inches from the working surface in any of the “grandfathering” provisions of this rule despite such a provision having been included in the previous proposals and acknowledged as a “de minimis” violation of the existing standard in various OSHA letters of interpretation. While OSHA states that it does not consider 36 inches to be “equally safe” to the “42 inches nominal” requirement in the existing standard or the 42 inches plus or minus three inches in the proposed rules, OSHA provided no rationale or support for this proposed decision.
OSHA's economic and benefits analyses should estimate the number of injuries that would be prevented if existing guardrails that have heights between 36 and 39 inches must be replaced with those having at least a 39-inch height. In addition, OSHA should determine the costs that will be associated with replacing guardrails with top edge heights between 36 and 39 inches and include them in the regulatory and economic feasibility analyses for these rules. Clearly, if people have been writing to OSHA to ask about guardrails that are less than the “42 inches nominal” in the existing rule, there are likely to be significant numbers of workplaces that have these non-standard guardrails in place. OSHA should either quantify the benefits and costs of this rule change or grandfather those guardrail installations that occurred prior to the effective date of the new rules. Only new or remodeled facilities should be required to follow the new requirement for top edge height of guardrails. (Ex. 170, p. 6.)
Corporate Cleaning Services, a leading window washing company in Chicago, urged OSHA to consider the economic ramifications of limiting the permitted distance when using rope descent systems (RDS) to 300 feet (Ex. 126). In written testimony, Corporate Cleaning Services stated that the use of suspended scaffolds could add up to 30 percent to the time required to complete a job compared with RDS. By comparison, in a post-hearing comment, Valcourt Building Services estimated that the cost increase would range from 10 to 20 percent if it had to use a permanent scaffold installation as an alternative to RDS (Ex. 358). In response to these comments, OSHA in this FEA estimated the costs and economic impact of the 300-foot distance limitation for RDS specified in the final rule. OSHA discusses the revised cost estimate below under § 1910.27, Scaffolds and rope descent systems.
Charles Lankford of Rios & Lankford Consulting International argued that OSHA's requirement, under the paragraph for general conditions, that walking-working surfaces be designed, constructed, and maintained free of recognized hazards would impose legal responsibilities, and hence, legal costs, on employers that OSHA neglected in the PEA. Mr. Lankford stated:
My review of the risk-benefit analysis in the proposed rule did not find that OSHA considered the costs of defending from citations being issued after the collapse of a surface the employer did not have tested or evaluated by an engineer after a plant purchase, that might have resulted in a fatality. It is reasonable to expect that litigation costs arising from new regulations should be included in an estimate of costs, when conducting a risk-benefit analysis.
OSHA does not seem to have considered all the ramifications, or having considered them, opted to leave them in a grey area so as to more broadly enforce these provisions to the detriment of employers. (Ex. 368.)
In a comment to the record and testimony at the public hearing, the National Chimney Sweep Guild (NCSG) expressed concerns about the costs and economic feasibility of compliance with the proposed standard for the businesses performing chimney-cleaning services and other related work on residential roofs (Exs. 150; 296; 329 (1/18/2011), p. 342; 365). The following post-hearing comment summarizes the views voiced by NCSG throughout the rulemaking:
If adopted and enforced as proposed, the provisions of the Proposed Rule that address the structural integrity and condition of walking-working surfaces, the use of ladders, and the selection and use of fall protection would: (1) substantially affect the manner in which chimney sweeps perform their work; (2) expose sweeps (and/or the roofing trade) to greater hazards than current industry practices; (3) threaten the continuing economic viability of the chimney sweeps industry; and (4) threaten the availability of chimney inspection, sweeping and repair services at affordable prices, which would be expected to result in less chimney inspections/sweeping/repairs and a significant increase in residential fires and/or an increase in falls by homeowners or other self-employed individuals who would perform these tasks. (Ex. 365, pp. 2-3.)
The Office of Management and Budget's guidance on regulatory analysis (OMB, 2003) discusses how to develop a baseline against which to measure the costs and benefits of a rule. The baseline should be the best assessment of conditions absent the proposed standard, and is frequently assumed to resemble the present practice broadly observed among affected employers (although the more technically correct approach from a benefit cost analysis viewpoint, where feasible, is to project the hypothetical future state of the world in the absence
OSHA analyzed Agency inspections for fiscal year 2005 that resulted in a citation (OSHA, 2006a); see Table V-15. The first column in the table presents cases for which OSHA issued a citation for any reason, and the other columns in the table indicate cases of non-compliance with a section of 29 CFR part 1910, subpart D. Table V-15 may overstate the noncompliance rate because it does not include inspections for which no citations were issued.
Based on the analysis presented in Table V-15, OSHA determined that upper-bound non-compliance rates for floor-guarding requirements in current § 1910.23 vary by industry. For example, the Finance, Insurance, and
Thus, for §§ 1910.25 through 1910.29, the assumption of 100 percent industry compliance with the existing requirements may be reasonable.
If meeting an existing requirement also would meet the final requirement, OSHA did not assign costs to the provision. For example, the existing language for § 1910.27(b)(1)(iii) states that the clear length of a rung or cleat in a fixed ladder shall be a minimum of 16 inches. Final § 1910.23(b)(4)(iii) states that rungs and steps on rolling ladders used in telecommunication centers must have a minimum clear step or rung width of 8 inches (20 cm). A rolling ladder in telecommunications that meets existing requirements (16 inches) would also meet the new requirements (a minimum of 8 inches); hence, OSHA assigned no costs to the final requirement. Later in this cost analysis, a detailed provision-by-provision examination of potential costs will provide further concrete examples of OSHA's application of estimates of current industry compliance and practices.
In some instances, the final rule's provisions reflect existing national consensus standards, and OSHA used information on adherence to those standards to estimate compliance rates with the concerned provisions. Due to general adherence to national consensus standards, for purposes of this analysis, national consensus standards serve as the “baseline” against which OSHA measured the incremental costs and benefits of the final standard. If the final standard requires a level of safety equivalent to that in an existing consensus standard, then there is no difference between the final standard and the baseline except that the final standard would be mandatory rather than voluntary. Thus, the costs are those costs associated with the change from a voluntary standard to a mandatory standard. In such cases, OSHA assumes employers in compliance with the voluntary consensus standard incur no additional costs to meet the final rule's requirements. Only that part of the employer population that currently does not comply with the voluntary standards would incur these costs. If, however, the final standard is more stringent than the consensus standard, OSHA assumed that employers who are not already following practices that would constitute compliance with the final standard would incur compliance costs solely attributable to the final OSHA standard.
ERG developed a logic-flow diagram outlining the process for identifying costs associated with new regulatory language (see ERG, 2007, Figure 3-2). The starting point is a side-by-side, provision-by-provision comparison of the existing and final regulatory language. In many cases, the language changed to enhance comprehension of the regulation without changing the scope of activities covered or its requirements. In some cases, the final language gives the employer alternative methods of compliance that provide protection for employees equivalent to the original standard, thereby resulting in
If there is a change from the existing to the final standard, the second decision point is to determine whether the final standard is equivalent to an existing consensus standard. If it is, then there would be no costs associated with the final standard for those employers already meeting the consensus standard, but there would be costs for those employers currently not meeting the consensus standard.
Table V-16 lists the national consensus standards used in subparts D and I and the associated section of the final rule for subparts D and I that refer to each of these consensus standards.
At the next decision point, if the final standard differs from the existing requirements, the presence or absence of a “grandfather” provision determines whether employers incur costs to retrofit and upgrade to the new requirements when the standard becomes effective or when employers replace infrastructure or equipment at a time of their choosing. OSHA discusses the cost effects of grandfather provisions in more detail below and in the ERG report (ERG, 2007).
Some equipment addressed by the final standard, such as portable ladders or mobile ladder stands, is commercially available to employers in ready-to-use condition. OSHA believes that manufacturers design and fabricate such equipment, in virtually all cases, to meet current consensus standards because equipment manufacturers seek to avoid: (1) The small market represented by employers that would purchase non-compliant equipment, and (2) the liabilities associated with manufacturing non-compliant equipment.
Typically, employers use architects, engineers, and/or contractors to design, fabricate, and install certain types of site-specific equipment. While it is conceivable that an employer might insist on installing nonconforming equipment, OSHA believes that professional standards for architects and engineers, local building codes, and potential liability concerns dictate that virtually all employers voluntarily use equipment conforming to existing national consensus standards. For these reasons, OSHA concludes that compliant equipment will be available to meet the final requirements of subparts D and I. For example, final § 1910.23(b)(1) specifies that ladder rungs and steps must be parallel, level, and uniformly spaced when the ladder is in a position for use. While existing § 1910.25(c)(2)(i)(b) covers steps, no existing OSHA standard covers rungs. However, current national consensus standards cover both rungs and steps (see Table V-16).
Likewise, the spacing requirements for the steps of step stools and the rungs, steps, and cleats of ladders covered by final paragraphs § 1910.23(b)(3) and (4) are new (
In conclusion, for establishing a baseline, OSHA assumed that equipment and work practices met the national consensus standard in effect at the time of installation, and did not estimate costs when the provisions in the final standard and the current national consensus standards were equivalent. For additional analysis of the interface between national consensus standards and OSHA standards, see ERG, 2007, pp. 3-6 and 3-14.
Consistent with past practice, OSHA assumed that employers would meet a regulatory requirement by choosing the least expensive means to do so. For example, under final § 1910.28(b)(1), an employer can meet the duty to have fall protection for an employee on a walking-working surface with an unprotected side or edge by using: (A) Guardrail systems, (B) safety net systems, or (C) personal fall protection systems such as personal fall arrest, travel restraint, or work-positioning systems. If (A)-(C) are not feasible or create a greater hazard for residential roofing work, the final standard permits a fourth option,
In some cases, when the final rule gives an employer a lower-cost compliance option than is currently available, the employer could realize a cost savings. However, OSHA did not estimate such savings in this analysis.
Table V-17 lists the paragraphs in the final standard with new requirements, but which also have a “grandfather” provision for existing conditions. A grandfather provision exempts equipment that currently is in place from requirements that strengthen or upgrade the safety features of the equipment. Therefore, employers do not incur costs associated with modifying or replacing equipment covered by these paragraphs.
This subsection provides a brief paragraph-by-paragraph review of the final rule. OSHA took a two-step approach to determining the cost impacts of the final rule. First, the Agency looked at requirements that represent changes from the existing walking working surfaces and personal protective equipment standards to determine whether they might involve additional incremental costs. That analysis is described in this subsection and subsection 5. In subsection 6, “Cost Estimates,” OSHA discusses how it reached an estimate of the costs for each provision OSHA identified as involving additional costs.
Table V-18 summarizes the paragraphs in the final subparts D and I that represent changes from the existing standards and might result in costs to employers if current industry practice falls short of the requirements of the rule. In the PEA, these costs primarily involved inspection and training; for this FEA, OSHA also identified significant costs for engineering and administrative controls and personal protective equipment. For the purpose of this analysis, OSHA distinguished between informal and formal training. For example, final § 1910.23(b)(11) states that an employee must face the ladder when ascending or descending. For this provision, OSHA assumed that employers provide such instruction on an in-house basis (
Finally, three requirements in the standard specify that employers must provide training in accordance with § 1910.30 or the equivalent:
• § 1910.27(b)(2)(iii): Rope descent systems;
• § 1910.28(b)(1)(ii)(C): Unprotected sides and edges; and
• § 1910.28(b)(4)(ii)(C): Dockboards.
The costs for § 1910.30 include the costs for the three paragraphs listed above.
In the following subsection, organized by regulatory provision, OSHA discusses the potential cost implications of the new requirements. OSHA described earlier in this cost analysis final changes to the existing standard that likely will result in little or no costs; OSHA does not address these changes in the discussion below.
Final § 1910.23(b)(4) specifies a minimum clear rung, step, or cleat width of 11.5 inches for portable ladders and 16 inches for fixed ladders; thus, the distance from the centerline to the inside edge of the ladder ranges from roughly 6 to 8 inches. Adding the existing requirement of 2.5 inches from the nearest edge of the ladder to the nearest edge of the structure or equipment to the 6- to 8-inch centerline width required by the final standard results in a step-across width of 8.5 to 10.5 inches for the purposes of the final standard. Thus, any fixed ladder that meets the existing requirements also meets the final requirements. OSHA assigned no costs to this paragraph in the PEA. Therefore, absent comment by the public or any other evidence in the record that would alter this preliminary assessment, the Agency assigned no costs for this paragraph in this FEA.
As discussed earlier in this preamble, OSHA removed paragraph (d)(2) of the proposed rule from the final rule because OSHA believes that the performance criteria specified in final § 1910.23(d)(1) provide an adequate level of safety for employees. Therefore, because paragraph (d)(1) reflects industry practice as documented in ANSI A14.3-2002, there are no costs associated with this provision.
All other provisions in § 1910.23(e) meet the national consensus standard in the ANSI A14 series. An analysis of fiscal year 2005 OSHA inspection data for violations of existing subpart D indicate that the failure to provide safe ladders is low (
The requirements for step bolts are new to subpart D. In the preliminary regulatory impact analysis for the 1990 proposed rule, OSHA noted, “Manufactured products, such as ladders, step bolts, manhole steps . . . generally meet or exceed proposed OSHA specifications” (OSHA, 1990a). A 2003 OSHA interpretation document comments that OSHA believes that the IEEE 1307-1996 consensus standard, in most cases, prevents or eliminates serious hazards (OSHA, 2003a). IEEE 1307-1996 defines “failure” in a step bolt as occurring when it is bent more than 15 degrees below the horizontal, and § 1910.24(a)(9) in the final standard for subpart D mirrors that definition. Because IEEE revised the standard in 2004, OSHA, in the most recent PEA for subparts D and I, assumed that industry was using the more up-to-date consensus standard. For this FEA, OSHA continues to assume that industry is complying with the 2004 IEEE standard.
• Type 0: Hot-dip, zinc-coated bolts made of low or medium carbon steel (ASTM 394-08, Section 1.1.1);
• Type 1: Hot-dip, zinc-coated bolts made of medium carbon steel, quenched and tempered (ASTM 394-08, Section 1.1.2); and
• Type 3: Bare (uncoated), quenched and tempered bolts made of weathering steel (ASTM 394-08, Section 1.1.4).
Appendix A.2 of the consensus standard mentions that bolts should be Type 0 unless agreed upon by the manufacturer and purchaser. That is, the default condition is to use zinc-coated bolts; therefore, such bolts would meet the OSHA requirement for corrosion resistance. Presumably, the use of any other bolt type means that the manufacturer and purchaser agreed that the bolt is appropriate for the intended environment and use. Since manufacturers of step bolts are unlikely to make non-compliant step bolts, OSHA assigned no costs to § 1910.24(a)(1) in the PEA and also assigned no cost to this provision in this FEA.
The requirement that a step bolt must be capable of supporting its maximum intended load is consistent with IEEE 1307-2004, Standard for Fall Protection for Utility Work. Section 9.1.1.1(d) in that standard reads:
Step bolts shall [b]e capable of supporting the intended workload [as defined for the application specified by the appropriate ANSI standard(s)], but in no case shall the minimum design live load be less than a simple concentrated load of 271 kg (598.4 lb) applied 51 mm (2 inches) from the inside face of the step bolt head.
Therefore, OSHA assigned no costs to this provision in the PEA and, after considering all factors associated with this provision, did not alter this estimation for this FEA.
In prehearing comments, The Southern Company questioned OSHA's proposed load criterion, stating, “Instead of using the four times the maximum intended load, OSHA should consider using the criteria of the NESC or IEEE 1307” (Ex. 192, p.3). OSHA noted earlier in the summary and explanation for this paragraph that, under this performance-based final rule, employers may use a range of methodologies, including criteria found in consensus standards, to determine the load capabilities of step bolts. Therefore, since bolt manufacturers are producing bolts that meet these design criteria, OSHA believes that there will be little, if any, additional cost burden on employers who must use step bolts that meet OSHA's load requirement, and, therefore, assigned no compliance costs to this provision in the final rule.
• Manhole steps must have slip-resistant surfaces such as corrugated, knurled, or dimpled surfaces;
• Manhole steps must be constructed of, or coated with, material that protects against corrosion in an environment where corrosion may occur; and
• The design of manhole steps must prevent the employee's foot from slipping or sliding off the end of the manhole step.
ASTM C478-13 permits the use of uncoated or untreated ferrous steps as long as they are at least 1 inch in cross-section, but is silent with regard to a slip-resistant surface or design. Because the final requirements appear to exceed the requirements in the consensus standard, the PEA determined that there would be incremental costs for slip-resistant and corrosion-resistant surfaces when employers rebuild or replace a manhole section. Moreover, the specifications in the final standard, unlike the consensus standard, define when a step fails while still in the manhole; thus, as noted in the PEA, there would also be step replacement costs associated with this provision. OSHA discusses these costs below under “Cost estimates.”
Commenting on the proposed revision to this paragraph, Ameren Corporation expressed concerned about the proposed 90-day grandfathering timeline:
Lead time for material orders are often quite longer than three months often up to years to order material for large capital projects. Small projects with possibly only a small amount of material being required shouldn't have much of an issue of complying depending on the manufacturer capabilities and their imposed deadlines. Stipulations of “ordered” material should be imposed in regard to the date of the final rule because the time between ordering and placing into service is often greater than 90 days. (Ex. 189, p. 6.)
Employers typically install ship stairs with slopes of 50 degrees or greater; however, the existing standard for fixed stairs addresses stairs installed at angles between 30 and 50 degrees, but does not specifically address ship stairs. Recently, OSHA issued an interpretation stating that if ship stairs conformed to the 1990 proposed standard for subpart D,
The definition of a dockboard in ANSI MH30.2-2005, Section 2.2, contains the language “as well as providing a run-off guard, or curb,” similar to the requirement in this final provision. OSHA believes, as it stated in the PEA, that nearly all dockboards manufactured currently conform to the ANSI standard; however, should an employer encounter an older, out-of-compliance dockboard, OSHA believes that the costs for them to comply with the final standard will be minimal. Therefore, in the absence of comment on this analysis, OSHA is not assigning costs in this FEA for final § 1910.26(b).
The intent of the [IWCA I-14.1] standard was not to stop window cleaning, it was to improve the level of safety of our industry by having a shared responsibility between the window cleaner and the building owner. If you have outdated equipment or are using equipment that doesn't meet the standard, phase it out. If you have buildings you're working on that are dangerous and are using creative rigging, phase them out and work with the building owners toward compliance. (IWCA, 2014.)
ANSI/IWCA I-14.1, Section 17, lists options for roof support equipment, including:
• Parapets, cornices, and building anchorages (Section 17.1);
• Davits and davit fixtures (a crane-like structure, Section 17.2);
• Sockets (Section 17.3);
• Tiebacks (Section 17.4);
• Counterweighted outriggers (Section 17.5);
• Parapet clamps and cornice hooks (Section 17.6); and
• Overhead monorail tracks and trolleys (Section 17.7);
Several of these options, such as counterweighted outriggers, are transportable and likely supplied by the contractor. Thus, the work plan delineates how the employer is to perform the work using a mix of contractor and property-owner equipment. The consensus standard provides several acceptable options for roof support equipment, and specifies that both the contractor and property owner concur with the work plan, and that the work plan describe how the contractor will perform the job safely. For the PEA, OSHA presumed that voluntary compliance with the consensus standard is likely to be high. However, as described in detail below, comments in the record indicate that industry compliance with the provision for sound anchorages varies considerably. In the PEA, OSHA assigned no costs for equipment; however, the Agency did estimate costs for inspections and certification that anchorages meet requirements. OSHA discusses these costs below in the subsection titled “Cost estimates.”
Since this is a work-practice as opposed to an equipment-specification requirement, incremental costs are attributable to the OSHA standard only to the extent that employers would not voluntarily comply with the IWCA standard and to the extent that employers provide excess-risk documentation to OSHA. Employers, therefore, would incur costs from this provision only when (1) a building is 300 feet tall or higher, and (2) there is an alternative to the rope descent system that is feasible and at least as safe as an RDS. For the PEA, ERG examined a database developed by the Council on Tall Buildings and Urban Habitat (CTBUH) and identified slightly more than 1,900 buildings in the United States that are 300 feet (91.7 m) tall or higher (CTBUH, 2006). Over 25 percent of these buildings are in New York City, where state law does not allow the use of rope descent systems for window cleaning (DiChacho, 2006). Accordingly, ERG derived an estimate of 1,500 potentially affected buildings nationwide (ERG, 2007). For the PEA, OSHA assumed that some of these 1,500 buildings have permanently installed power platforms for access to the exterior of the building, and further assumed that using a platform would be less expensive than setting up an RDS.
For this FEA, OSHA examined the CTBUH database described above and determined that, currently: Approximately 1,960 existing buildings are 300 feet or higher; of that total, roughly 600 buildings with a height of 300 feet or greater are in New York City; and two states—California and Minnesota—have statutes that limit the RDS descent distance to, respectively, 130 feet and 300 feet (CA-DIR, 2012; Minnesota, 2012). After subtracting the number of buildings in those three states from the total, OSHA conservatively estimates that the 300-foot limit specified by this final standard would affect 1,300 buildings with a height of 300 feet or greater.
The final set of buildings for which § 1910.27(b)(2) could result in costs are those buildings for which employers use RDS due to technical factors specific to a building's history, architecture, or style of operation. For example, to wash regularly the windows of a tall building with many sharp angles or tiered levels, management may find it cost-effective to contract for RDS rather than powered platforms. OSHA expects that there will be additional costs to the building owners in these situations because of factors discussed below under “Cost estimates.”
• Training employees in the use of the equipment;
• Inspecting the equipment each day before use and removing of damaged equipment from service;
• Using proper rigging, including sound anchorages and tiebacks, in all cases, with particular emphasis on providing tiebacks when using counterweights, cornice hooks, or similar non-permanent anchorage systems;
• Using a separate personal fall arrest system;
• When installing lines, using knots, swages, or eye splices when rigging RDS that are capable of sustaining a minimum tensile load of 5,000 pounds;
• Providing prompt rescue of employees;
• Effectively padding ropes where they contact edges of a building, anchorage, obstructions, or other surfaces that might cut or weaken the rope; and
• Providing stabilization at the work location when descents are greater than 130 feet.
A provision in the OSHA memo not duplicated in the ANSI standard is the requirement in final § 1910.27(2)(b)(xi), which specifies that no employee may use an RDS under hazardous weather conditions, such as storms or gusty or excessive wind. OSHA estimates that this new provision is not likely to present a significant burden on employers because of the relatively high levels of current compliance with the provision (see, for example, Ex. 329 (1/19/2011), pp. 213, 346, 411-412) and the Agency's expectation, based on comments in the record (Ex. 329 (1/19/2011), pp. 235-236, 361), that employers will respond to wind conditions by adjusting window cleaning operations to minimize lost revenue and added project costs (for example, scheduling window cleaning operations on short buildings when weather conditions would create a hazard for window cleaning operations on tall buildings).
The proposed regulatory text updated the 1991 OSHA memo by using terminology such as “prompt rescue” rather than “rescue” and “harness” rather than “body belt,” but, as it stated in the PEA, OSHA did not believe that these revision would increase compliance costs. Other revisions to the 1991 OSHA memo made in the proposal, and now in the final standard, include the addition of three safety provisions to the original list of safety provisions described above. These three provisions include:
• Using equipment in accordance with the instructions, warnings, and design limitations set by manufacturers or qualified persons (final § 1910.27(2)(b)(ii));
• Securing equipment by a tool lanyard or similar method to prevent equipment from falling (final § 1910.27(2)(b)(xii)); and
• Protecting suspension ropes from exposure to open flames, hot work, corrosive chemicals, or other destructive conditions (final § 1910.27(2)(b)(xiii)).
In the PEA, OSHA stated that the eight safety provisions listed in the 1991 OSHA memo, the provision dealing with wind and other weather hazards, and the additional three provisions described in the previous paragraph, would not impose significant costs on employers. None of the comments submitted to the proposal provided any evidence contradicting this analysis.
OSHA determined in the PEA that the training requirements in proposed § 1910.27(b)(2)(ii), now codified as final § 1910.27(b)(2)(iii), imposed costs on employers. Final § 1910.27(b)(2)(iii) specifies that employers provide training in accordance with § 1910.30. Therefore, OSHA assigned the costs for training beyond that noted in its 1991 memorandum to § 1910.30. OSHA discusses these costs under “Cost estimates” below.
The Agency identified two additional provisions, final § 1910.27(b)(2)(xii) and (b)(2)(xiii), in the PEA as having potential costs.
The requirement in final § 1910.27(b)(2)(xiii) that employers protect suspension ropes from exposure to open flames, hot work, corrosive chemicals, or other destructive conditions, is an extension of the requirement to protect the integrity of the ropes specified in OSHA's 1991 OSHA memorandum. OSHA attributed the costs for meeting this requirement under the training costs estimated in § 1910.30, and described below under “Cost estimates.”
The revised regulatory text for final § 1910.28 consolidates the fall protection requirements in the existing rule, with two major revisions. First, comments submitted in response to the reopening of the rule in 2003 recommended that the fall protection requirements in subpart D be consistent with the requirements in subpart M of the construction standards. The final text for § 1910.28 makes the general industry fall protection requirements consistent with the construction requirements, which may impose additional costs on employers in general industry. In addition, the existing standard does not address the use of restraint systems, designated areas, or safety net systems, nor does the existing standard clarify when employers can use personal fall protection systems. In contrast, the final standard allows employers to choose from various options in providing fall protection,
In the proposal, OSHA requested public comment on the expenses that employers typically would incur to comply with this requirement. Stakeholders raised concerns about the compliance burden of this provision when conducting routine inspections on roofs. These stakeholders included the Property Casualty Insurers Association of America (Ex. 98), the Massachusetts Institute of Technology (MIT; Ex. 156), the National Roofing Contractors Association (NRCA; Ex. 197), and the U.S. Chamber of Commerce (Ex. 202). MIT's comments, presented below, are typical of these responses:
Under Subpart D—Walking-Working Surfaces, Section 1910.21(a) reads as follows: (a) Scope and application. This subpart applies to all general industry workplaces. It covers all walking-working surfaces unless specifically excluded by individual sections of this subpart. Following paragraph (a), MIT recommends adding the following narrow exception: “Exception: The provisions of this subpart do not apply when employees are making routine inspections, investigations, or assessments of workplace conditions.” Reason for comment: Periodic routine inspections, investigations, and assessments should be allowed on flat roof tops without installing guard rails, designated areas, or fall restraint/arrest systems. Employees engaged in routine inspections, investigations, and assessments of workplace conditions are exposed to fall hazards for very short durations, if at all, since they most likely would be able to accomplish their work without going near the danger zone. Requiring the installation of fall protection systems under such circumstances would expose the employee who installs those systems to falling hazards for a longer time than the person performing an inspection or similar work. As a result, the Proposed Rule could potentially create a greater hazard, rather than reducing a hazard. As stated above, the fall protection exemption anticipates that inspectors likely would be able to accomplish their work without going near the danger zone; yet installing such protections for a short time period would be
• § 1910.23(b): Wall openings;
• § 1910.23(c)(1): Open-sided floors or platforms; and
• § 1910.23(c)(2): The open sides of any runway.
Comments to the proposal informed OSHA that chimney cleaning exposes workers to fall hazards resulting from work on residential roofs, and that protection from these fall hazards would require additional control measures. OSHA's analysis of the compliance costs for chimney cleaning, one industry among several industries found in NAICS 56179, Other Services to Buildings and Dwellings, appears below under “Cost estimates.”
The final revision to § 1910.28(b)(3) also provides protection for stairway floor holes, ladderway floor holes, and hatchways and chute-floor holes, and updates existing § 1910.23(a) by incorporating the best practices found in industry consensus standards (notably ANSI/ASSE A1264.1-2007). This subparagraph also clarifies application of the provision (
The final rule provides more than one method to comply with § 1910.28(b)(8). That is, an employer may use a conventional fall protection system or implement specific safe work practices (
In paragraph (b)(9) and elsewhere in the final standard, OSHA no longer permits employers to use qualified climbers beginning two years after publication of the final rule. In addition, after two years employers must equip new fixed ladders and replacement ladders and ladder sections with ladder safety systems or personal fall arrest systems. However, employers still can meet the fall protection requirement for existing fixed ladders extending more than 24 feet above a lower level by using cages, wells, personal fall arrest systems, and ladder safety systems for 20 years after publication of the final rule; after 20 years, employers must use either personal fall arrest systems or ladder safety systems for fixed ladders. For this FEA, OSHA assigned costs for using ladder safety systems on fixed ladders. OSHA's describes its analysis of costs for fall protection on fixed ladders below in “Cost estimates.”
Final § 1910.28(b)(10)(ii)(A) requires employees in outdoor advertising who climb a fixed ladder be qualified climbers as specified in § 1910.29(h) when the fixed ladder does not come equipped with a cage, well, personal fall arrest system, or a ladder safety system. Therefore, OSHA assigned the costs for this paragraph to § 1910.29(h). In doing so, the Agency conservatively assumed in both the PEA and in this FEA that all employees in NAICS 5418 (Advertising and Related Services) who climb fixed ladders will receive training as qualified climbers (see the discussion for § 1910.29(h) below). OSHA notes that the provision for qualified climbers in outdoor advertising will expire two years after publication of the final rule, at which time employers must use other means and methods of fall protection. The Agency assigned the costs of fall protection for these workers after the second year as initial and ongoing costs (see the discussion below under “Cost estimates).”
Final § 1910.28(b)(10)(ii)(B) requires that qualified climbers in outdoor advertising wear a body harness equipped with an 18-inch (46 cm) rest lanyard. Both the proposed rule at paragraph (b)(10)(i) and OSHA's outdoor advertising directive contain a similar requirement. The lanyard allows workers to tie off to the fixed ladder and rest during the climb. Proposed paragraph (b)(10)(i) and outdoor advertising directive both include a requirement permitting employers to provide, and allow workers to use, a body harness or body belt. However, the final rule does not permit the use of body belts as a part of a personal fall arrest system, thus OSHA deleted body belts from final § 1910.28(b)(10)(ii)(B). This also makes the final provision consistent with OSHA's construction industry rule, which does not allow body belts to be used for personal fall arrest (§ 1926.502(d)).
According to comment from the Outdoor Advertising Association of America (OAAA), OAAA's training program emphasizes “the duty to provide fall protection for employees working above 4-6 feet including equipment such as harnesses, lanyards and any supplemental PPE uses.” (Ex. 359) Therefore, because the use of harnesses and lanyards is central to the training program of the leading outdoor advertising industry association, OSHA
Under final § 1910.28(b)(10)(ii)(D), climbers must use an appropriate fall protection system after they reach their work positions. OSHA attributed the cost of these systems to the existing standard for fixed ladders. Thus, the Agency estimated no additional costs for equipment required by this provision in either the PEA or in this FEA.
Proposed § 1910.28(b)(10)(iii) required that employers follow inspection procedures for ladder safety systems. Final § 1910.29(i) now delineates the inspection procedures identified in the proposed requirement. OSHA did not specify in the proposed rule the frequency of inspection, but in the PEA assumed that inspections would occur prior to each use. OSHA assigned costs to this paragraph in the PEA, and discusses these costs below under “Cost estimates” in this FEA.
Final paragraph (b)(11) requires that employers protect workers from falling off stairway landings and the exposed sides of all stairways. Stairways, as defined in the final rule in § 1910.21(b)), includes standard stairs, ship stairs, spiral stairs, and alternating tread-type stairs. As noted earlier in the summary and explanation of the final standard, final paragraph (b)(11)(i), like the proposal, requires that employers ensure each worker exposed to an unprotected side or edge of a stairway landing that is four feet or more above a lower level is protected by a guardrail or stair rail system. The final requirement is consistent with the requirements for stairway landings specified by the existing general industry standard in § 1910.24(h) and the construction standard in § 1926.1052(c)(12). The final provision is also consistent with A1264.1-2007 (Section 7.1), NFPA101-2012 (Sections 7.1.8 and 7.2.2.4.5), and ICC IBC-2012 (Section 1013.2), except that NFPA and IBC require guards on open-sided walking surfaces that are located more than 30 inches above the floor or grade below.
Final paragraph (b)(11)(ii), consistent with existing § 1910.23(d)(1) and proposed paragraph (b)(11)(ii), requires that employers ensure each flight of stairs having at least three treads and at least four risers is equipped with a stair rail system and handrails as specified in Table D-2.
Final paragraph (b)(11)(iii), like the proposal, requires that employers ensure ship stairs and alternating tread-type stairs are equipped with handrails on both sides. Both of those types of stairs have slopes that are 50 to 70 degrees from the horizontal, and OSHA believes that workers need handrails on both sides to safely climb those stairs. This requirement is consistent with ICC IBC-2012 (Section 1009.15) and NFPA 101-2012 (Section 7.2.11.2).
In the PEA, OSHA recognized that compliance with existing consensus standards for stairways and stairway landings will eliminate much of the employee exposure to fall hazards addressed by proposed § 1910.28(b)(11). Therefore, the Agency estimated no costs for this paragraph in the PEA. OSHA received no comments in the record that contradicted this preliminary assessment. Because as shown above in Table V-16, updated versions of the same consensus standards for stairways apply to the final standard, OSHA assigned no costs to paragraph (b)(11) in this FEA.
Final § 1910.28(b)(12)(ii) requires that employers ensure that each employee using a rope descent system more than four feet (1.2 m) above is protected from falling by a lower level using a personal fall arrest system. Such systems must meet the requirements of 29 CFR part 1910, subpart I. OSHA addresses the costs associated with rope descent systems in “Cost estimation” below as part of the discussion of § 1910.27, Scaffolds and rope descent systems.
• Erecting toeboards, screens, or guardrail systems to prevent objects from falling to a lower level (final paragraph (c)(1));
• Erecting canopy structures and keeping potential falling objects far enough from an edge or opening to prevent them from falling to a lower level (final paragraph (c)(2)); or
• Barricading the area into which objects could fall, prohibiting workers from entering the barricaded area, and keeping objects far enough from the edge or opening to prevent them from falling to the lower level (final paragraph (c)(3)).
Final paragraph (c) simplifies the final rule by consolidating into a single paragraph all of the provisions that address falling objects found in the existing standard at § 1910.23(b)(5) and (c)(1) and the proposed rule at paragraphs (b)(3)(iii), (b)(5)(i), (b)(14)(ii)). The final rule is consistent with the proposal and patterned on the construction standard (§ 1926.501(c)).
Final § 1910.29, like the proposed rule, establishes system criteria and work practice requirements for fall protection systems and falling object protection specified by final § 1910.28, Duty to have fall protection and falling object protection, and § 1910.140, Personal fall protection equipment.
Final § 1910.29 requires that employers ensure the fall protection system and falling object protection they select meets the specified criteria and practice provisions. In general, OSHA patterned the system criteria and work practice requirements in final § 1910.29 to be consistent with its construction standards (§§ 1926.502 and 1926.1053). As mentioned in the preamble to final § 1910.28 and § 1910.29, many commenters supported making the general industry fall and falling object protection requirements consistent with those in the construction industry (
Final § 1910.29 reorganizes the existing rule so that the format of the final rule is consistent with the format in the construction fall protection standard at § 1926.502 and also draws provisions from, and is consistent with, national consensus standards addressing personal fall protection systems and falling object protection, including:
• ANSI/ASC A14.3-2008: American National Standards for Ladders-Fixed (A14.3-2008) (Ex. 8);
• ANSI/ASSE A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Roof Openings; Stairs and Guardrails Systems (ANSI/ASSE A1264.1-2007)(Ex. 13); and
• ANSI/ASSE A10.18-2012, Safety Requirements for Temporary Roof and Floor Holes, Wall Openings, Stairways, and Other Unprotected Edges in Construction and Demolition Operations (ANSI/ASSE A10.18-2012) (Ex. 388).
Final paragraph (b) contains system requirements employers must follow to ensure guardrail systems they use will protect workers from falling to lower levels. In developing final paragraph (b), OSHA carried forward, with some revision, many of the requirements from the existing rule (
OSHA analyzed the potential economic impacts of final § 1910.29(b) and anticipates that only paragraphs (b)(13) and (15) could potentially impose significant cost impacts, while the existence of the consensus standards listed above and other factors affecting current practice will result in no costs for all other paragraphs in § 1910.29(b). The Agency's review of the impacts associated with paragraphs (b)(13) and (15) is given immediately below.
In two separate comments, Intrepid Industries, Inc. (Intrepid), recommended that OSHA clarify the proposed requirement by recognizing recent technological developments in ladderway gates. Intrepid noted in its comments that when OSHA published the 1990 proposal, multiple horizontal rails were “ `foreign' to industry,' ” that since publication of the 1990 proposal, “a majority of protection devices have both a top rail and a mid rail similar to that of the guardrail . . . ,” and that such gates are equivalent in strength and design to guardrail systems and are widely available throughout industry (Exs. 68; 366). Therefore, having adopted Intrepid's recommended clarification in the final rule, OSHA estimates that few affected employers will need to replace current ladderway gates, resulting in a negligible cost burden for employers. Accordingly, as in the PEA, OSHA did not assign any costs to this provision.
The final standard permits the use of qualified climbers up to two years after publication of the rule, after which outdoor advertising employers must protect employees engaged in outdoor advertising from fall hazards in accordance with provisions of § 1910.28. Therefore, although OSHA's estimate of costs associated with the criteria enumerated in § 1910.29(h) would not apply two years after publication of the final rule, OSHA retained those costs in this final analysis to account for any training costs connected with transitioning to the use of ladder safety systems or other fall protection measures on fixed ladders. OSHA discusses the cost estimates for final § 1910.29(h) below under “Cost estimates.”
The other requirements in final § 1910.29, include the requirements found in final paragraphs (d) Designated areas, (e) Covers, and (f) Handrail and stair rail systems, (g) Cages, wells, and platforms used with fixed ladders, (i) Ladder safety systems, (j) Personal fall protection systems, (k) Protection from falling objects, and (l) Grab bars (specified as “Grab handles” in the NPRM). OSHA in the PEA noted that there already is significant, widespread compliance with the proposed requirements among general industry employers, resulting in the proposed requirements imposing minimal incremental cost burden on employers. OSHA requested feedback from the public on this analysis, but received no comments to this request. Therefore, in this FEA, OSHA assigned no costs to paragraphs (d) Designated areas, (e)
This new section requires that employers in general industry train their employees regarding fall and equipment hazards, and retrain them when necessary. In the PEA, OSHA assumed that an employer that trains employees in compliance with § 1910.30 would choose to maintain records of the training, and the cost estimates in the PEA took account of this time burden on employers. The training costs estimated for proposed § 1910.30 included requirements from other proposed paragraphs that specify that the employer must conduct the training in accordance with proposed § 1910.30 (see Table V-18 for examples). OSHA discusses these costs in more detail below under “Cost estimates”; in this analysis, incremental training costs apply only to the percentage of establishments that do not already provide regular safety training.
In the NPRM, OSHA proposed to add a new section, § 1910.140, to 29 CFR part 1910, subpart I, to address personal fall protection equipment. The proposed text for § 1910.140 added specific design and performance requirements for personal fall protection systems to existing subpart I. In addition, the proposed standard required that the provisions for hazard assessment found in existing § 1910.132 apply as well to personal fall protection systems.
The text of the final standard is virtually identical to that of the proposed rule, and although a number of commenters raised concerns about the technical specifications and criteria that would apply to personal fall protection systems, OSHA received few, if any, comments directly addressing the PEA. The discussion below describes OSHA's general treatment of costs for subpart I; the next subsection, “Cost estimates,” provides additional details on the specific method for estimating costs.
Similar to the final rule revising 29 CFR part 1910, subpart D, final § 1910.140, when appropriate, also draws from national consensus standards addressing personal fall protection systems, details of which are provided in Section IV.B. of this document. Therefore, with the exception of one paragraph in § 1910.140, paragraph (c)(18), OSHA in the PEA estimated that current industry practice is widespread, and there were no comments objecting to that preliminary estimate. Final § 1910.140(c)(18) requires that employers inspect personal fall protection systems prior to the initial use during each workshift. In the PEA, OSHA identified significant costs in connection with the proposed requirement; the Agency discusses costs for this final paragraph below under “Cost estimates.”
This subsection presents OSHA's detailed estimates of the costs associated with the final rule, provision by provision. These compliance costs represent the incremental burden incurred by employers beyond the current baseline of fall-related safety expenditures. OSHA did not estimate potential cost savings to industry from increased flexibility in meeting specific requirements, such as using personal fall protection systems rather than the currently mandated handrail/guardrail systems, even if some of the new requirements might be safer than the currently mandated requirements.
For a number of cost categories, there were no public comments on the PEA. For those cases, OSHA updated the applied unit wage and the numbers of affected employers and employees to reflect the revised profile, but retained the cost methodology used in the PEA. For provisions in the final standard for which OSHA adjusted the preliminary cost estimate, the Agency describes the form of the cost revision and the public comments that lead to the final cost estimate.
Labor costs associated with compliance with the final standard generally involve additional employer and supervisor time for training and inspection. OSHA took the number of establishments and employees from
OSHA based employee and supervisor wages (see Table V-5) on data reported by the Bureau of Labor Statistics through their
Final § 1910.22 contains three paragraphs with new requirements:
• § 1910.22(d)(1): Perform regular and periodic inspection, and maintenance, of walking-working surfaces;
• § 1910.22(d)(2): Correct and repair hazardous conditions on walking-working surfaces, and guard unsafe conditions until corrected or repaired; and
• § 1910.22(d)(3): Have a qualified person perform or supervise any
There were no public comments that addressed OSHA's preliminary approach to estimating costs the costs for these paragraphs. For the final standard, OSHA revised all three provisions from the proposed language for clarification.
For the purpose of estimating costs for § 1910.22(d)(1), OSHA in the PEA assumed that a significant percentage of facilities already include regular and periodic inspections of walking-working surfaces. OSHA used the non-compliance rates for floor-guarding in proposed § 1910.23 (which has the highest non-compliance rates, see Table V-15) to estimate the number of establishments that need to perform regular and periodic inspections of walking-working surfaces. OSHA assumed that a supervisor would spend 15 minutes every quarter performing the inspection, for a total of 1 hour per year. Based on these unit costs, OSHA preliminarily estimated that the total annual inspection cost would be $15.3 million.
Relative to the existing and proposed standards, the final standard provides more specificity in the types of hazards for which employers will be inspecting walking-working surfaces (namely, protruding or sharp objects, loose boards, corrosion, leaks and spills). Included among the inspected surfaces will be residential roofs (addressed in § 1910.28(b)(1)), low-slope roofs (§ 1910.28(b)(13)), and slaughtering facility platforms (§ 1910.28(b)(14)), surfaces whose inclusion in the scope of the proposed standard is recognized by OSHA in this final notice. As a result of further analysis of these affected surfaces, OSHA believes that regular and periodic inspections will be more extensive than determined in the PEA. For this final analysis, OSHA raised the quarterly inspection time from 15 minutes to 30 minutes. Therefore, OSHA estimated the final cost for paragraph § 1910.22(d)(1) to be $32.8 million.
For estimating the costs of § 1910.22(d)(2), OSHA in the PEA projected that within a year, 10 percent of affected establishments would identify an unsafe condition, and that it takes an employee 15 minutes to set up a guard mechanism (
For § 1910.22(d)(3), OSHA in the PEA estimated that it takes five minutes for a supervisor or qualified person to inspect the repair of the unsafe condition. Final § 1910.22(d)(3) was revised to read that when any correction or repair involving the structural integrity of the walking-working surface is conducted, a qualified person must perform or supervise the correction or repair. Applying the five-minute time unit across all affected employers, OSHA preliminarily estimated that the costs for a supervisor or qualified person to inspect repairs would total $0.13 million, and, applying the five-minute unit for this FEA, determined that final costs will be slightly higher, at $0.14 million for performance or supervision of the correction or repair.
Summing costs for the three paragraphs in final § 1910.22(d) with cost impacts, the total estimated cost for compliance with § 1910.22(d) is, after rounding, $33.2 million per year.
In the PEA, eight paragraphs in proposed § 1910.23 specify new training requirements for protecting employees from slip, trip, and fall hazards during operations involving ladders. Table V-21 summarizes these eight new training requirements.
The PEA determined that employers could address all eight of these new provisions in a single training session. In addition, OSHA determined that employers can comply with these provisions using informal training; therefore, the Agency did not include administrative costs for employers. For this FEA, OSHA added a ninth provision, § 1910.23(c)(9), addressing stabilization of ladders on slippery surfaces, to its analysis of costs, and applied the same cost modeling parameters here as it did in the PEA.
OSHA's Web site includes a resource center with a loan program for training videos (OSHA, 2012b). The index lists 12 training videos for ladders and stairways, with run times ranging from 5 to 19 minutes, for an average of 12 minutes. Accordingly, for the purposes of estimating costs for ladder safety training, OSHA in the PEA and this FEA applied a 15-minute training period per video.
In OSHA's cost model, employers can train 10 employees per session, with one supervisor in attendance. OSHA further assumed that employers incur $1 in materials cost for handouts for each employee trained.
Some establishments already provide regular safety training. For each affected NAICS industry, OSHA applied an estimate for the percentage of employees already providing training. OSHA's derived its industry-by-industry baseline estimate for safety training from the NIOSH
The cost to train employees at establishments that do not offer regular safety training is a one-time cost annualized over a 10-year period at a discount rate of 7 percent. Summing across all affected employers, the total first-year cost is $11.5 million, with an annualized cost of $1.6 million.
New employees who begin affected jobs also will need training. For the purpose of estimating this cost, OSHA in the PEA assumed that training received from a prior employer was not sufficient to meet the proposed subpart D requirement. ERG's analysis of 2002 hires data collected by the Bureau of Labor Statistics (ERG, 2007) formed the basis in the PEA for OSHA's analysis of the annual costs of training employees new to the workforce; for this FEA, OSHA used 2007 BLS industry hires-rate data to correspond to the employment levels (2007) used in the analysis. Table V-22 below summarizes these data for the NAICS codes affected by this final standard. Under these assumptions, the estimated cost is $5.4 million per year to train new employees in ladder safety.
In the PEA, to estimate the costs of mobile ladder stands and mobile ladder stand platforms that conform to the design requirements specified in § 1910.23(e), OSHA's cost formula included all establishments potentially covered by proposed subpart D. OSHA assumed that the typical lifetime for a ladder is five years; thus, one-fifth of the establishments would purchase a ladder meeting the design requirements each year.
• Utility poles;
• Communication structures; and
• Pole-mounted lights in sports and performance arenas.
OSHA assumed that employees in the affected industry group—NAICS 2211, Electric Power Generation, Transmission and Distribution—climb one percent of the poles once each year and that it takes a production worker (at an hourly wage of $45.11, including benefits) one minute to inspect the step bolts on a pole. Therefore, the estimated annual cost in the PEA for inspecting step bolts was $1.5 million. In the absence of any comment on the record taking exception to this analysis, in this FEA, OSHA estimated the cost for this requirement to be $1.6 million, allowing for an increase in wages since publication of the NPRM.
• Height is 200 feet or higher;
• Height <199 feet if within 5 miles of an airport and fails the glide calculation (part 17 requirement); or
• Height of the extension (
Summing costs for utility poles, communication structures, and sports and performance arenas, OSHA estimated in the PEA that the total annual inspection costs for step bolts would be $1.54 million; for this FEA, total inspection costs are $1.72 million. In the proposal, OSHA requested, but did not receive: (1) Comment on the extent to which employers currently conduct visual inspection
For this final economic analysis, OSHA included, within the total costs for the final standards for step bolts under final § 1910.24, the costs for repairing or replacing defective step bolts identified in inspections required by the final rule. Based on a review of OSHA 2005 inspection data for the Transportation and Utility sectors, OSHA calculated that 0.34% of inspected step bolts will be found to be out of compliance.
Summing costs for inspection of step bolts and repair or replacement of defective step bolts, OSHA estimates that the costs for the provisions addressing step bolts under final § 1910.24 will total $2.0 million.
• Manhole steps must have slip-resistant surfaces such as corrugated, knurled, or dimpled surfaces;
• Manhole steps must be constructed of, or coated with, material that protects against corrosion in an environment where corrosion may occur; and
• The design of manhole steps must prevent the employee's foot from slipping or sliding off the end of the manhole step.
OSHA expects that employers will identify any deficiencies in manhole steps through compliance with final paragraph (b)(3); that provision requires that employers ensure manhole steps are inspected at the start of the work shift, and maintained in accordance with § 1910.22. In estimating the cost of the manhole-step inspection requirement specified by proposed paragraph (b)(3) in the PEA, OSHA estimated there are between 6.6 million and 13.2 million manholes, with a mid-point estimate of 9.9 million, nearly all of which are in water, sewage, and related utilities. Of these manholes, approximately 85 percent, or 8.4 million manholes, are 20 feet or less in depth, while the remainder, 15 percent or 1.5 million manholes, are more than 20 feet in depth. In the PEA, OSHA estimated that employees would enter 10 percent of all manholes, on average, and that it would take one minute to inspect the steps prior to entering the manhole. That analysis resulted in an estimated annual cost of $0.4 million for the industry most affected by this requirement, NAICS 2213 (Water, sewage, and other systems). After updating the wage rate for production workers in NAICS 2213, OSHA's final estimate for inspection of manhole equipment, including steps, totals $0.5 million.
Other industries also use manholes for access, such as electric-power generation, transmission, and distribution (NAICS 2211) and natural-gas distribution (NAICS 2212). ERG, however, had no data on the number of manholes for those industry groups, and although OSHA assumed in the PEA that the costs would be proportional to the number of manholes estimated for water and sewage systems, OSHA was not able to estimate costs for NAICS 2211 and 2212. The Agency requested, but did not receive, public comment in the proposal on the impact of the inspection requirement on these and any other affected industries. Therefore, for this FEA, OSHA assumed that, for NAICS 2211 and 2212, employers seldom encounter manholes, and that when they do encounter manholes, they routinely inspect the manhole steps to ensure that the steps meet or exceed the requirements of the final rule. Therefore, OSHA determined that, under the final standard, any incremental costs for manhole fall protection in NAICS 2211 and 2212 will not be significant.
Employers would incur costs for slip-resistant and corrosion-resistant manhole step surfaces required by proposed paragraphs (b)(2)(i) and (ii) in the future because employers would replace manholes with steps at the end of their useful life. As described above, OSHA estimates there are 9.9 million manholes, of which 85 percent are 20 feet or less in depth and 15 percent are more than 20 feet in depth. In the PEA, OSHA assumed that manholes less than or equal to 20 feet in depth used portable ladders, fixed ladders, and steps in equal shares, resulting in 2.9 million manholes with steps, while it assumed that manholes more than 20 feet in depth used fixed ladders and steps in equal shares, resulting in 0.7 million manholes with steps. This analysis, therefore, indicates that the proposed requirement would affect 3.6 million manholes. The manhole step selected from vendor lists in the PEA had a per-unit cost of $8.50, and OSHA assumed that this price included a 10 percent premium for the steps to meet the proposed requirements (ERG, 2007).
Applying the unit values and methodological assumptions described above for this FEA, OSHA estimated annual replacement costs for steps by applying a 10 percent rate for annual entry of manholes and, of that number, applying a 10-percent rung failure rate. At the incremental cost of $0.85 each (10 percent of $8.50 per rung), the estimated annual replacement cost for steps is $0.03 million ($31,000). OSHA estimated annual replacement costs for all manhole-access equipment (including steps, but excluding manhole covers) assuming a baseline of ten percent and further assuming that employers would replace 5 percent of this equipment each year and would install steps every 16 inches. Accordingly, the estimated yearly manhole replacement cost is $1.6 million, and combining this cost with OSHA's final estimate of costs for inspection of manhole equipment, including steps ($0.5 million), OSHA derives a total cost of $2.1 million for manhole fall protection under the final rule (after rounding).
For this FEA, OSHA has included the labor costs for annual replacement of manhole steps or rungs that are judged to be out of compliance with the final standard. OSHA applied a baseline compliance rate of ten percent for affected utilities, estimated that removal of the old rung or step and replacement with a new one will involve 15 minutes of labor per rung or step (hourly loaded wage of $30.47 for a production worker in NAICS 2213 (water, sewage utilities)), and multiplied unit labor cost times the total number of affected steps, or 1.83 million steps after adjusting for baseline.
Combining costs for inspections and repair of step bolts and manhole steps, OSHA estimates that the final costs associated with § 1910.24, Stepbolts and manhole steps, will total $16.0 million.
According to an industry expert contacted by ERG, an estimated 3.0 million window cleaning descents take place annually at 750,000 buildings in the U.S. (ERG, 2007). In the absence of comments on the PEA in the proposal, OSHA is retaining these estimates in this FEA for the inspection and certification requirements specified by final § 1910.27(b)(1)(i). Using data collected by the Department of Energy (DOE) for surveys on energy use, ERG compared this estimate with the number of commercial and residential buildings with four or more floors. The
OSHA assumed that each commercial building has its windows cleaned annually, thereby accounting for 140,000 of the estimated 750,000 window cleanings per year. If the 3.3 million residential buildings account for the remaining 610,000 cleanings, each of these buildings would, on average, have its windows cleaned every five to six years.
ERG's industry expert estimated that a minimum of 20 percent of the building owners complied with the anchorage-inspection requirement, and that the number was increasing. However, comments submitted to the Agency in response to the 2003 reopening were inconsistent regarding the likelihood that building owners inspect their anchorages on a periodic basis. Amodeo (2003) noted that some clients view ANSI I-14.1 as voluntary and resist having inspections. Kreidenweis (2003) commented that engineers seldom inspect anchorages.
OSHA's final standard provides more detailed requirements for anchorages used with rope descent systems than the proposed standard. Final § 1910.27(b)(1)(i) states that before any rope descent system is used, the building owner must inform the employer, in writing, that the building owner has identified, tested, certified, and maintained each anchorage so it is capable of supporting at least 5,000 pounds (268 kg), in any direction, for each employee attached. The information must be based on an annual inspection by a qualified person and certification of each anchorage by a qualified person, as necessary, and at least every 10 years.
Therefore, for this FEA, OSHA revised upward its estimate of the baseline level for anchor certification. Accordingly, OSHA believes that the current baseline is at least 35 percent nationwide, and may be much higher in some markets. For example, the owner of Chicago's largest window cleaning company testified in OSHA's public hearings on the NPRM that in Chicago, 60 to 70 percent of building owners provide documentation of anchor certification (Ex. 329 (1/19/2011), p. 218). Similarly, the owner of one of Houston's leading window cleaning companies testified that every building owner that he works with provides certification of anchorages (Ex. 329 (1/19/2011), p. 310). Recognizing that in some smaller markets, anchor certification may not be as widespread or frequent as suggested by these commenters, OSHA applied a baseline level of 35 percent for anchor certification and inspection in estimating costs for this requirement in the FEA.
Therefore, if 65 percent of the approximately 750,000 buildings that have windows cleaned each year must now comply with the final inspection and certification requirement, then OSHA estimates that 487,500 buildings will require annual inspections and decennial certifications. In the PEA, OSHA further assumed that a production supervisor would perform the annual inspections, and that it would take this supervisor one hour to perform the inspection. Annual costs in the PEA for the building inspections totaled $16.7 million; after adjusting wage rates to 2010 levels and applying the revised baseline estimate, OSHA in this FEA estimates annual costs of $14.1 million for the inspection of building roof anchorages.
Table V-23 summarizes the range in costs for a professional engineer to certify building anchorages; OSHA drew these cost estimates from comments in the record, and adjusted the estimates to 2003 dollars using as the deflator the
A cost breakdown of inspections and anchor installations provided by Valcourt Building Services (Valcourt; Ex. 358) confirms OSHA's preliminary estimate of the cost for the certification of building anchorages; Valcourt's quote for initial roof certification was $1,090. For this final cost analysis, OSHA applied the ratio of the 2011 GDP deflator and the 2005 GDP deflator to its preliminary estimate to derive an estimate of $1,122 in 2011 dollars for initial roof anchor certifications.
Assuming, as indicated earlier, that building owners would certify building anchorages every 10 years, OSHA estimates that 48,750 buildings (one-tenth of 487,500 buildings) would need anchorage certification each year. At an average cost of $1,122 for certification, annual costs for anchorage certification would total $54.7 million.
During the course of decennial certifications and annual inspections, engineers will determine that a small percentage of anchorages will need replacement due to failure to meet building codes or other applicable requirements. For this final economic analysis, OSHA has included the cost for the purchase and installation of replacement anchorages. Based on a review of OSHA 2005 inspection data for the Service industry sector (NAICS 54-81), OSHA calculated that 0.23% of inspected anchorages will be found to be out of compliance.
Summing costs for inspecting and certifying building anchorages and replacing faulty anchors, OSHA estimates that annual costs would total $71.1 million for employer compliance with the anchorage inspection and certification requirements specified by final § 1910.27(b)(1).
In addition to the labor costs associated with this distance limitation, a small fraction of affected buildings will now need to acquire suspended scaffolds (
Table V-24 lists the requirements in this section that are likely to result in new cost burdens on employers.
• Pre-installation of anchors requiring one-half hour of a production worker's time, at a loaded wage = $19.39/hour, per anchor;
• Monthly replacement of roof anchors due to deterioration; and
• A production worker's time of five minutes per job to use the lifeline and lanyard system (productivity loss).
Combining annualized initial costs and annual recurring costs for fall protection of chimney sweeps (NAICS 56179), OSHA estimates that the new costs associated with this industry will total $12.7 million, or $2,124 per chimney-sweep company each year.
Initial system installation = no. of chimney sweep companies * time to pre-install anchors * production worker loaded wage * (1 − industrybaseline) = 6,000 * 0.5 hour * $19.39 * (100% − 10%) = $52,581.
Annual costs = roof anchor unit costs * no. of chimney sweep companies * monthly anchors per company * months per year + production worker loaded wage * lifeline productivity loss * sweep calls per day * workdays per year * no. of chimney sweep companies * (1 − industry_baseline) = $66.95 * 6,000 * 1 * 12 + $19.39 * .083 hours * 3 * 250 * 6,000 * (100% − 10%) = $4,820,400 + $6,572,621 = $11,393,021.
Additional, relatively minor training and other costs related to hazard communication and rule familiarization bring the total annualized costs for chimney cleaning services to approximately $12.7 million.
In post-hearing comments, the National Chimney Sweep Guild stated that compliance with the proposed standard is infeasible and would pose a greater hazard during sweep activities typically performed by their members (Ex. 342, p. 3). However, the sweeps guild did not provide information or data on the extent of the infeasibility that the requirement would impose on NCSG members. Indeed, OSHA notes that NCSG's quoted price for the initial installation of a roof anchor-system ($578) (Ex. 365) is consistent with OSHA's estimate of combined up-front cost for (1) a roof anchor kit ($368), (2) monthly replacement of a worn roof anchor ($67) per company, (3) a full-body harness ($118) for each of the sweeps, and (4) labor for installation of each new or replaced anchor ($18); Section H of this FEA demonstrates that these costs are feasible economically.
In response to NCSG's concerns, OSHA notes that final § 1910.28(b)(1) provides an exception to the duty for fall protection for work on residential roofs when an employer can demonstrate that it is not feasible, or creates a greater hazard, to use guardrail, safety-net, or personal fall arrest systems. In such a case, the employer must develop and implement a fall protection plan that meets the requirements of 29 CFR 1926.502(k) and training that meets the requirements of 29 CFR 1926.503(a) and (c). Based on comment in the record by NCSG (Exs. 342; 365), OSHA determined that, for a small percentage of chimney-sweep jobs, chimney-sweep employers will find it infeasible to install roof anchors or other fall protection systems for technological, contractual, or other reasons. In these cases, the employer must develop a fall protection plan and provide training in accordance with the requirements in subpart M of the construction standards cited above. For this FEA, OSHA did not estimate the costs for fall protection plans and training because it believes that these costs will not exceed the equipment and labor costs described previously. Therefore, OSHA determined that the total cost for employers to protect their employees from fall hazards during chimney-sweep jobs ($12.8 million, or $2,128 per chimney-sweep company) is the maximum or worst-case value.
ERG estimated that a substantial proportion of dockboards would either not incur costs due to height or would fall under the exception. Thus, OSHA believes that any costs incurred under this provision are unlikely to be substantial. In the proposal, OSHA requested, but did not receive, comment on the potential impacts associated with the duty to protect employees on dockboards from falls. Therefore, OSHA applied its preliminary estimate of non-substantial costs associated with dockboard fall protection in this final analysis.
OSHA assigned costs for fall protection on fixed ladders as follows:
• The Agency distributed ladders among NAICS codes according to the number of affected establishments in the industry represented by a NAICS code; for example, if the 85,000 silos with fixed ladders were primarily in NAICS 3111, Animal Food Manufacturing, OSHA distributed the costs of ladder safety systems among the 1,817 establishments in NAICS 3111;
• OSHA averaged the cost of two leading ladder safety systems (DBI, Miller; average total upfront cost = $983, including two-hour installation by a production supervisor; the systems are 30 feet in length, and include the cable, cable sleeve, and carabiner);
• The Agency estimated that fixed ladders have an average life of 30 years, that replacement of the fixed ladders would occur evenly across a 30-year period (10,921 ladders replaced each year by new ladders equipped with a safety system), and, with a phase-in date 20 years after publication, some ladders still would require replacement anywhere from one to 10 years after the 20-year phase-in date;
• OSHA calculated first-year costs, then used a seven percent discount rate to annualize over 10 years; first-year costs total $8.5 million, and annualized costs total $1.2 million;
• Billboards with fixed ladders greater than 20 ft. were each assigned a 30-ft. ladder safety system; initial costs of $20.1 million were annualized over ten years, resulting in annualized costs of $2.9 million.
Therefore, the initial costs for fall protection on fixed ladders total $28.6 million, with annualized costs of $4.1 million.
As specified in § 1910.28(b)(10)(ii), until the requirement for fall protection on fixed ladders in outdoor advertising becomes effective two years after publication of the final standard, employees who routinely climb fixed ladders on billboards must satisfy the criteria for qualified climbers found in § 1910.29(h),
To estimate compliance costs for this provision, OSHA determined that the most significant incremental burden involves inspections or assessments of rooftop conditions prior to performing any work on the roof. The Agency assumed that most work on rooftops is infrequent and temporary, and occurs in areas that are six to 15 feet from the roof edge, thereby eliminating the need for guardrails, travel restraint systems, and personal fall arrest systems, and using designated areas instead.
Similarly, for work performed 15 feet (4.6 m) or more from the roof edge, OSHA anticipates that most employers will adapt, at minimal cost, existing company work rules and training programs to comply with the final rule. As discussed earlier in this Preamble, OSHA's choice of regulatory text for § 1910.28(b)(13)(iii) makes the final rule consistent with OSHA policy specified in a series of Agency interpretations of the construction fall protection standard for work performed 15 feet or more from the edge of a roof (see,
For work six feet or less from the roof edge with extensive fall exposure, and for work that is less than 15 feet from the edge that is not infrequent and temporary, OSHA believes that, where feasible, the majority of employers currently provide conventional fall protection (guardrails, travel restraint systems, or personal fall arrest systems) and therefore compliance costs will be insubstantial. OSHA bases this estimate in part because the final rule is consistent with provisions in the construction standard that require employers to provide conventional fall protection for workers exposed to unprotected sides and edges, and most leading edges (§ 1926.501(b)(1) and (2)). In addition, OSHA recognizes that awareness of existing consensus standards on fall protection—including ANSI A1264.1-2007, Safety Requirements for Workplace Walking/Working Surfaces and Their Access; Workplace, Floor, Wall and Floor Openings; Stairs and Guardrail Systems—have heightened use of conventional fall protection at roof perimeters and will minimize any incremental costs associated with final § 1910.28(b)(13).
Assuming one affected rooftop per affected establishment, OSHA estimated that twice per year, with the exception of establishments in agriculture, forestry, fishing, and hunting, affected employers would direct a production worker to conduct a five-minute assessment of all fall-related conditions on the low-slope roofs of facilities (the inspection time includes any follow-up assessment addressing safety concerns). Summing these labor costs across all affected NAICS codes, OSHA estimates that employer expenditures for inspection of low-slope roofs will total $34.2 million annually in this FEA.
A small percentage of roof-top inspections are expected to reveal to employers the need for conventional fall protection near unprotected sides and edges. Basing calculations on 2005 OSHA inspection data, OSHA estimates that, depending on the NAICS sector, the probability of identifying an unguarded hazard during a rooftop climb and inspection will range from 0.07% to 0.28%. Applying these probabilities to the number of inspections (described above) and assuming that any enhancement of fall safety will be roughly equivalent to a fifteen-minute labor expense in the installation of an anchor ($67) suitable for use with a personal lifeline and full-body harness (fully supplied at the baseline), OSHA estimates that the costs for addressing hazards identified in rooftop climbs and inspections will total $1.85 million. (See Ex. [OSHA Excel Workbook], Tab annual_28.)
Summing employer expenditures for roof inspections and the costs of correcting the hazards identified in those inspections, total costs will be approximately $36.1 million.
To derive compliance costs for this provision, OSHA estimated that, of the 3,817 establishments in NAICS 3116, Animal slaughtering and processing, 25 percent are currently in compliance. The Agency based this estimate on comments by the United Food and Commercial Workers at the OSHA public hearing (Ex. 329 (1/20/2011), pp. 63, 90) indicating that a few large meatpacking plants already installed travel restraint systems for fall protection on slaughter (kill) platforms. OSHA believes that, while the meatpacking plants identified in the rulemaking record determined that travel restraint systems are technologically feasible, other affected plants will choose instead to install guardrails at a cost that is potentially lower than the cost of travel restraint systems. Therefore, the Agency estimated that, on average, 10 platforms per establishment will need fall protection and that each establishment will install two portable guardrails, at an initial cost of $256 per guardrail, on the unprotected working side of slaughter-facility platforms stations, with the installation taking 10 minutes of labor per guardrail (production worker wage = $17.19/hour). OSHA estimates that initial costs for 2,863 establishments in NAICS 3116 will total $14.7 million. Annualized over 10 years at a seven percent discount rate, compliance costs will sum to a little under $2.1 million per year for employers in animal slaughtering and processing facilities.
For proposed § 1910.29, OSHA determined that two requirements would impose significant new burdens on employers. Below are the details of OSHA's approach to estimating costs for this section of the standard.
• Number of guardrail systems;
• Proportion that use manila, plastic, or synthetic rope used as toprails or midrails;
• Number of inspections per year;
• Time required for each inspection (hours); and
• Average wage per inspector per industry ($/hr.).
For the PEA, OSHA lacked data on the proportion of guardrail systems that use manila, plastic, or synthetic rope as top rails or midrails. However, OSHA considered it likely that employers would include the inspection of these alternate materials for toprails and siderails in the inspections performed under § 1910.22, the general inspection requirements for walking-working surfaces for safety. Therefore, OSHA allocated no additional costs to this provision in the PEA.
For this FEA, OSHA estimated that a small percentage of employers would identify defective rope (in rail systems) as a result of the inspections implied by final § 1910.29(b)(15) and that these employers would purchase and install replacement rope. At $2.12 per foot for an estimated 20-foot (rescue-grade) guardrail rope with a working load limit of 900 lb. to 1,195 lb., and after accounting for baseline compliance with current floor guarding regulations (see Ex. [OSHA Excel Workbook], tab annual_29_b), and with an installation time of 10 minutes, OSHA estimates that the costs for repair or replacement of guardrail rope will total $0.67 million.
• Be physically capable of performing the climbing duties (§ 1910.29(h)(1));
• Undergo training or an apprenticeship program (§ 1910.29(h)(2));
• Be retrained as necessary (§ 1910.29(h)(2));
• Have the skill necessary to climb ladders, as demonstrated through formal classroom training or on-the-job training, and personal observation (§ 1910.29(h)(3)); and
• Perform climbing duties as one of their routine work activities (§ 1910.29(h)(4));
For the purposes of estimating costs, OSHA in the PEA assumed that 90 percent of the employees in the outdoor advertising industry who climb already had training as qualified climbers. Thus, there would be one-time costs associated with qualifying the remaining 10 percent of climbers. OSHA annualized these costs over 10 years at a rate of seven percent. The industry incurs annual costs for:
• Classroom training of new employees (§ 1910.29(h)(2) and (h)(3)));
• Retraining of employees as necessary (§ 1910.29(h)(2));
• Employer performance observation (§ 1910.29(h)(3)); and
• Administrative costs to document training and retraining.
For calculating one-time costs in the PEA, OSHA estimated that 713 out of 7,132 of the employees (10 percent) who perform construction, installation, maintenance, and repair operations in NAICS 5418 (Advertising and related services) would need to undergo training to be qualified climbers.
The National Association of Tower Erectors developed a climber-training standard with varying levels of expertise (authorized, competent, and competent rescuer), but does not offer training itself (NATE, 2006). The OSHA Training Institute offers three-day and four-day training courses in fall protection, the fees for which range from $549 to $795. Commercial courses in fall protection reviewed by ERG on the internet in the mid-2000s ranged from one to five days with costs ranging from $500 to $2,500 per course (ERG, 2007). The prices include materials and the trainer's time.
For the purpose of estimating costs, OSHA in the PEA estimated that employers could meet the requirements in the proposed standard by sending employees to a four-day training course at a cost of $1,500 for the course and $684 for the employee's time (based on an average wage of $21.39/hour for 32 hours), for a total of $2,184. Furthermore, the Agency estimated that the administrative tasks to document the training would require 15 minutes of a supervisor's time ($36.22/hour) for every 10 employees trained. OSHA in the PEA estimated that the one-time cost to qualify the estimated 713 climbers would be $1.56 million, and the annualized cost would be $0.22 million per year.
For the purposes of estimating the annual costs associated with this provision, OSHA, consistent with the method presented in the PEA, applied the following unit estimates and assumptions:
• A supervisor observes each of the estimated 8,000 qualified climbers for 15 minutes per quarter or 1 hour per qualified climber per year;
• A supervisor spends 15 minutes per year per qualified climber on administrative tasks for training and retraining;
• Ten percent of the climbers need retraining;
• Retraining consists of an eight-hour refresher course at a cost of $500; and
• The turnover rate is 47 percent;
• In the absence of this rule, no newly-hired workers would receive training that is compliant with the rule's requirements.
Based on these estimates and assumptions, OSHA determined that the annual cost of this provision would be $12.2 million, of which $11.6 million
• Include the types of fall hazards found in the workplace;
• Describe the procedures employees are to follow to minimize these hazards;
• Address the correct and safe procedures for installing, inspecting, operating, maintaining, and disassembling the personal fall protection systems the employee uses; and
• Address the correct and safe use of personal fall protection systems and equipment specified by this section, including, but not limited to, proper hook-up, anchoring, and tie-off techniques, and methods of equipment inspection and storage, as specified by the manufacturer.
Final § 1910.30(b) addresses training with respect to equipment hazards. In particular, employers must train employees in the proper:
• Care, storage, use, and inspection of equipment covered by subpart D before their use in accordance with recognized industry practices and manufacturer's recommendations;
• Placement and securing of dockboards to prevent unintentional movement;
• Rigging and safe use of rope descent systems; and
• Set-up and use of designated areas.
OSHA included the costs for training required under final § 1910.27(b)(2) (Use of rope descent systems), § 1910.28(b)(1) (Unprotected sides and edges), and § 1910.28(b)(4) (Dockboards) in the cost estimate for final § 1910.30.
In a previous analysis, ERG estimated the number and percent of employees by industry that use personal protective equipment (PPE) such as body belts and body harnesses (ERG, 1999; Ex. 318). For the PEA, OSHA applied these industry-specific percentages to the number of at-risk employees in 2007 to estimate the number of employees that need the type of training required under § 1910.30. For this FEA, OSHA applied the preliminary industry-specific PPE percentages to the number of at-risk employees to derive an estimate of employees requiring PPE training.
Some companies already provide this training. OSHA used data from the NOES survey (described above) to estimate, by NAICS code, the level of training already provided. For the purpose of estimating costs in the PEA, OSHA assumed that employees not already trained and using personal fall protection systems would undergo six hours of training on fall hazards and equipment hazards to address the requirements in proposed § 1910.30(a) and (b)(1). For this FEA, OSHA applied the PEA's per-employee estimate of six hours of training for determining the costs of final § 1910.30(a) and (b)(1).
In the PEA cost model, OSHA assigned employees in the utility, sewage, and communications industry sectors (NAICS 2211-2213 and 5121-5191) an additional half-day of training to specifically address the proposed requirements for step bolts (for a total of 10 hours of training). Similarly, the Agency assigned employees in NAICS codes 4881 through 4884 (support activities for transportation by air, rail, water, and road, respectively) a half-day of training specifically to address requirements for dockboards. OSHA assigned window washers, found in NAICS 5617 (Services to buildings and dwellings), an entire day of training on rope descent systems (for a total of 14 hours of training). OSHA applied these preliminary training-cost estimates to this FEA. In addition, for this FEA, OSHA applied an hour of training on the use of fall protection equipment to employees in every NAICS code, except those codes listed immediately above, for which OSHA's PPE cost survey (ERG, 1999) indicated the presence of employees who use fall protection equipment.
As specified in the final standard, a qualified person provides the required training. For the purpose of estimating costs, OSHA (as it did in the PEA and also in this FEA) assumed that the qualified person conducts the training at the workplace for a fee of $500 per day. The training fee includes instruction, travel, lodging, and per diem expenses, as well as hand-out materials. Employers incur this fee for every 10 employees (
The estimated total initial one-time cost for final § 1910.30(a) and (b) is $123.6 million. The annualized cost over 10 years at a discount rate of seven percent is $17.6 million. There also is an annual cost for training new employees on PPE and dockboards. OSHA applied BLS hires rates to estimate the annual number of new employees requiring training;
Ameren Corporation appeared to believe that OSHA's time estimates of course durations used in its cost algorithms for training implied that the Agency would enforce minimal time standards for training. Ameren stated, “There should be no time requirement. This moves away from performance based completely. The training should
• 1 to 19 employees: 1 hour
• 20 to 99 employees: 2 hours
• 100 to 499 employees: 3 hours
• 500+ employees: 4 hours
Furthermore, OSHA assumed:
• All establishments in the forestry, oil and gas, utility, manufacturing, and transportation sectors (NAICS 1131 through 3399 and 4811 through 4931) would perform a hazard assessment because of the high level of risk involved in these sectors;
• Half the establishments in wholesale and retail sales (NAICS 4231 through 4543) would have slip, trip, or fall hazards such that they would be required to perform a hazard assessment;
• One-quarter of the establishments in the service industries (NAICS 5111 through 8139) would have slip, trip, or fall hazards such that they would be required to perform a hazard assessment; and
• According to the original Regulatory Impact Analysis for PPE and as reported in the 2013 Information Collection Request for PPE in general industry, 47 percent of establishments conduct the initial hazard assessment as a usual and customary practice.
In addition to the costs for assessing hazards in walking-working environments where the use of fall protection will be necessary, OSHA anticipates that employers will incur expenditures to address any hazards identified during the assessments. According to 2005 OSHA inspection data, the likelihood of a compliance violation of current Subpart D ranges from 0.24 percent (of inspections) for the Finance and Insurance industry sector to 0.81 percent for Wholesale Trade sector. Multiplying these noncompliance rates by the annual number of new employers entering business (determined by NAICS code as the product of a 7 percent establishment turnover rate and the number of establishments) and the cost of a typical correction—the purchase and ten-minute installation of a 6-ft. portable guardrail ($256 per guardrail + labor)—OSHA estimates that the costs for correcting hazards identified by the assessments required under § 1910.132(d) will total $0.52 million. (See Ex. [OSHA Excel Workbook], tabs Compliance and Hazard Assessment & Training.)
Summing the costs for hazard assessment and hazard correction implied by compliance with final § 1910.132(d), OSHA estimates that total costs for this provision will be approximately $12.7 million.
Ameren Corporation questioned whether, in light of existing OSHA standards, OSHA's assignment of costs for this provision was necessary. Ameren stated, “This seems to be redundant whereas currently assessing fall protection needs is performed in accordance to the specific standard in which it is addressed” (Ex. 189). In response, OSHA notes that, prior to the publication of the fall protection requirements in final subpart I, no standard explicitly requiring hazard assessment for fall protection in the workplace existed for general industry; therefore, OSHA must account for the incremental compliance burden resulting from these requirements.
Inspection of personal fall arrest systems will likely lead to the discovery of defective PPE, resulting in costs to repair or replace out-of-compliance PPE. OSHA expects that most employers will
Summing the costs for PPE inspection and PPE replacement, OSHA estimates that employers will incur $11.0 million in new costs associated with the final provisions under § 1910.140.
For this final economic analysis, OSHA has added an estimate for the compliance expenditures incurred by employers to gain familiarity with the final rule. OSHA estimated costs for rule familiarization by applying the methodology described above for Hazard Assessment and Training (§ 1910.132(d)), shown in the following exhibit. All other training costs associated with the final standard are addressed above under § 1910.30.
For the industries with less than 100 percent share needing hazard assessment, OSHA applied the estimated percentage to the time assumptions shown in Exhibit V-3. For example, for a very small (<20 employees) retail establishment: 50% needing familiarization * 10 minutes = 5 minutes per employer. For the industries where 100 percent of establishments will conduct hazard assessment, the average unit time per employment range (1-19, 20-99, etc.) shown in the exhibit was multiplied times the entire number of number of establishments whose employment falls within the range, by four-digit NAICS industry.
Tables V-25 through V-27 summarize the costs by industry for each paragraph in the final standard. Table V-25 lists the first-year costs, which employers incur once to comply with the new requirements. For evaluating economic impacts, OSHA annualized these one-time costs over a 10-year period at a discount rate of 7 percent. Total first-year costs for final subparts D and I are $319.5 million, with annualized costs for the first year of $45.5 million.
Table V-26 lists the recurring annual costs, such as inspections, training new employees, and maintaining safe conditions when fall hazards remain; OSHA estimates these costs to be $259.0 million. Table V-27 lists the annual costs by industry, which include the sum of the recurring costs and the annualized one-time costs; OSHA estimated these costs at $305.0 million.
Listing annualized costs in descending order by section of the rule, OSHA projects that the most costly provisions address training programs ($74.2 million), scaffolds and rope descent systems ($71.6 million), duty to have fall protection and falling-object protection ($55.9 million), and general requirements ($33.2 million). Of these final costs, the most significant change in costs from the PEA involve the costs associated with the duty to have fall protection and falling-object protection (§ 1910.28) ($55.9 million in FEA vs. $0.09 million in the PEA) because the strengthened requirements for fixed ladders, roof edges, slaughtering platforms, and step bolts lead to additional employer expenditures for equipment and labor.
For the category with the second largest compliance costs, scaffolds and rope descent systems, the final standard provides greater specificity than the proposal regarding the need for proper rigging, including sound anchorages and tiebacks. The final rule at § 1910.27(b)(1)(i) and (ii) states that before any rope descent system is used, the building owner must inform the employer, in writing that the building owner has identified, tested, certified, and maintained each anchorage so it is capable of supporting at least 5,000 pounds (22.2 kN) in any direction, for each employee attached and, moreover, that the employer must ensure that no employee uses any anchorage before the employer has obtained written information from the building owner that each anchorage meets the requirements of paragraph (b)(1)(i). Finally, the employer must keep the information on building anchorages for the duration of the job. The information must be based on an annual inspection conducted by a qualified person, with certification of each anchorage performed by a qualified person, as necessary, but at least every 10 years. As described earlier in this cost analysis, OSHA assumed that building owners and employers would comply with this requirement by scheduling periodic inspections and certifications of building anchorages.
Because of the hazards associated with cleaning windows of office buildings and other tall structures while suspended on scaffolds or other devices (see Table V-6 for the number of reported fatalities in NAICS 561, Administrative and Support Services), OSHA raised the issue of proper safety during window cleaning in the 2003 notice that reopened the rulemaking record, and in the 2010 NPRM. In those notices, OSHA requested comment on the hazards associated with window cleaning and the safe practices recommended and implemented for the use of rope descent systems (68 FR 23534; 75 FR 28862). OSHA based its analysis of the costs of ensuring sound anchorages and rigging, described above, as well as the Agency's analysis of the costs for protecting workers on rope descent systems and suspended scaffolds, on the experiences and observations of the industry representatives who responded to OSHA's request for comment in 2003 and in OSHA's 2010 NPRM; therefore, the Agency believes that the record fully supports this cost analysis.
OSHA determined that the costs of complying with the requirements of final subparts D and I will not impose substantial economic impacts on employers in the industries affected by the final rule. The costs imposed by the final standards are modest, and the increased safety and reduction in injuries and fatalities associated with the standards will reduce employers' direct and indirect costs. OSHA based this final economic-impacts analysis on the PEA, the rulemaking record, and revisions to OSHA's preliminary data as described above in section C (“Profile of Affected Industries, Firms, and Workers”) and section F (“Costs of Compliance”).
Table V-28 summarizes OSHA's final estimate of impacts (annualized costs) for the two-digit NAICS industry groups affected by the final standards. “Minimum” and “Maximum” refer to the lowest and highest costs among the four-digit NAICS industries categorized within the two-digit group. The following section discusses OSHA's methodology for assessing the significance of the impacts at the aggregate level presented in Table V-29 and at levels of greater industry detail.
To determine whether the final rule's projected costs of compliance would raise issues of economic feasibility for employers in affected industries,
As noted, OSHA examined the potential impacts of the final rule two ways,
For this FEA, OSHA applied
OSHA compared the baseline financial data with total annualized incremental costs of compliance by computing compliance costs as a percentage of revenues and profits. The Agency considers this impact assessment for all firms, presented in Tables V-28 and V-29, to be a screening analysis and the first step in OSHA's analysis of whether the compliance costs potentially associated with the final standards would lead to significant impacts on establishments in the affected industries. The impact of the final standards on the viability of establishments in a given industry depends, to a significant degree, on the price elasticity of demand for the services sold by establishments in that industry.
Price elasticity refers to the relationship between the price charged for a service and the quantity of that service demanded; that is, the more elastic the relationship, the less able is an establishment to pass the costs of compliance through to its customers in the form of a price increase, and the more it will have to absorb the costs of compliance from its profits. When demand is inelastic, establishments can recover most of the costs of compliance by raising the prices they charge for that service; under this scenario, profit rates remain largely unchanged, and the industry remains largely unaffected. Therefore, any impacts are primarily on the consumers using the relevant services. However, when demand is elastic, establishments cannot recover all the costs simply by passing the cost increase through in the form of a price increase. Instead, they must absorb some of the increase from their profits, commonly by both reducing the quantity of goods and services produced and reducing total profits, though, in some cases, profits rate may remain unchanged. If demand is not perfectly elastic and if at least some of the costs in question are variable rather than fixed, “when an industry is subject to a higher cost, it does not simply swallow it, it raises its price and reduces its output, and in this way shifts a part of the cost to its consumers and a part to its suppliers,” as the court stated in
The court's summary is in accordance with micro-economic theory (subject to some caveats discussed below). In the long run, firms can only remain in business if their profits are adequate to provide a return on investment that ensures that investment in the industry will continue. Over time, because of rising real incomes and productivity, firms in most industries are able to maintain adequate profits. As technology and costs change, however, the long-run demand for some products increases and the long-run demand for other products decreases. In the face of rising external costs, firms that otherwise have a profitable line of business may have to increase prices to stay viable. Commonly, increases in prices result in reduced quantity demanded, but rarely eliminate all demand for the product. Whether this decrease in production results in smaller production for each establishment within the industry or in closing some plants within the industry, or a combination of these two effects, depends on the cost and profit structure of individual firms within the industry.
If demand is completely inelastic (
If demand is perfectly elastic (
A common intermediate case would be a price elasticity of one. In this situation, if the costs of compliance amount to 1 percent of revenues and are entirely variable rather than fixed, then production would decline by 1 percent and prices would rise by 1 percent over the long run. In this case, the industry revenues would stay the same, with somewhat lower production, but with similar profit rates. However, consumers would get less of the product or the service for their expenditures, and producers would have lower total profits; this, as the court described in
If compliance costs are fixed—that is, they do not depend on quantity of output produced—they cannot be passed through to consumers in the short run. In the medium- to long-run, however, some producers may exit the industry, or new producers may fail to enter an industry to replace natural exit, thus decreasing total supply, increasing prices, and reducing the portion of costs borne by producers that remain in the industry (except in the case of perfectly elastic demand, as discussed above).
However, there is still the question of whether these costs will reduce significantly the industry's competitive structure. For example, if an industry faces a 20 percent increase in costs due to a standard, and its product has an elasticity of demand of one, the industry may likely remain viable. However, if the standard leads to closing all small firms in the industry, this result would indicate that standard impaired the competitive structure of the industry. For this reason, when costs are a significant percentage of revenues, OSHA examines the differential costs by size of firm and other classifications that may be important.
As indicated by the impact estimates shown in Tables V-28 and V-29, OSHA determined that, for all affected establishments in general industry, revenue impacts will not exceed 0.2 percent for any affected industry group, and profit impacts will not exceed 3.1 percent for any affected industry group. Therefore, the economic impact of the final rule will most likely consist of a small increase in prices of less than 0.2 percent for the goods and services provided by the affected employers. It is unlikely that a price increase of the magnitude of 0.2 percent will significantly reduce the quantity of goods or services demanded by the public or any other affected customers or intermediaries. If industry can recoup substantially the compliance costs of the final rule with such a minimal increase in prices, there may be little effect on profits.
In general, for most establishments, it would be unlikely that they could not pass some of the compliance costs along in the form of increased prices. In the event that unusual circumstances may inhibit even a price increase of 0.2 percent, profits in the majority of
In profit-earning entities, a combination of increases in prices or reduction in profits generally can absorb compliance costs. As discussed above, the extent to which the impacts of cost increases affect prices or profits depends on the price elasticity of demand for the products or services produced and sold by the entity.
Given the small incremental increases in prices potentially resulting from compliance with the final standards, and the lack of readily available substitutes for the products and services provided by the covered industry sectors, OSHA expects demand to be sufficiently inelastic in each affected industry to enable entities to substantially offset compliance costs through minor price increases without experiencing any significant reduction in total revenues or in net profits.
Positive net benefits of a regulation can only be realized in the presence of an externality or other market failure; until now, society externalized many of the costs associated with the injuries and fatalities resulting from the hazards addressed by the final rule. That is, the prices of goods and services did not reflect the costs incurred by society from the fall-related injuries and death that occur during the production of these goods and services. The workers who suffer the consequences associated with the fall hazards also assume some of the costs of production. To the extent that society externalizes fewer of these costs, the price mechanism will enable the market to produce a more socially efficient allocation of resources. However, reductions in externalities alone do not necessarily increase efficiency or social welfare unless the benefits outweigh the costs of achieving the reductions.
OSHA concludes that compliance with the requirements of the final standards is economically feasible in every affected industry sector. The Agency basis this conclusion on the criteria established by the OSH Act, as interpreted in relevant case law. In general, the courts hold that a standard is economically feasible if there is a reasonable likelihood that the estimated costs of compliance “will not threaten the existence or competitive structure of an industry, even if it does portend disaster for some marginal firms” (
OSHA does not expect compliance with the requirements of the final standards to threaten the viability of entities, or the existence or
The Regulatory Flexibility Act, as amended in 1996, requires the preparation of a Final Regulatory Flexibility Analysis (FRFA) for any rule that determined to have a significant economic impact on a substantial number of small entities (5 U.S.C. 601-612). Under the provisions of the law, each such analysis must contain:
• A description of the impact of the rule on small entities;
• A statement of the need for, and objectives of, the rule;
• The response of the Agency to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule, and a detailed statement of any revisions made to the proposed rule in the final rule as a result of these comments;
• A statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the assessment of the agency of such issues, and a statement of any revisions made in the proposed rule as a result of such comments;
• A description and an estimate of the number of small entities to which the rule will apply, or an explanation of why no such estimate is available;
• A description of the projected reporting, recordkeeping, and other compliance requirements of the rule, including an estimate of the classes of small entities that will be subject to the requirements and the type of professional skills necessary for preparation of the report or record; and
• A description of the steps the agency took in the final rule to minimize the significant economic impact on small entities consistent with the stated objectives of the applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule, and why the agency rejected each of the other significant alternatives to the rule considered by the agency that affect the impact on small entities.
To determine the need for a FRFA, OSHA conducted a regulatory flexibility screening analysis to assess the potential impacts of the proposed standards on affected small entities. On the basis of the screening analysis, presented below, the Assistant Secretary certifies that it does not expect the final standards for walking-working surfaces and personal protective equipment to have a significant impact on a substantial number of small entities.
Based on the PEA and comments in the rulemaking record, OSHA estimated compliance costs and economic impacts for small entities affected by the final rule. Tables V-2 and V-3 in Section C presented, respectively, the profiles for two classes of general industry entities: Those entities classified as small according to Small Business Administration (SBA) criteria, and those entities with fewer than 20 employees. OSHA assigned costs to small entities by first determining the per-employee compliance costs for those cost items that are a function of the number of affected employees at a facility, and the per-establishment cost for those items that do not vary with establishment size. OSHA then calculated, by industry, the average number of employees for each of the two classes of small entities, multiplied these averages by per-employee compliance cost, and then added the establishment-based cost to determine the average compliance cost for each class of small entity. The Agency then multiplied these average costs by the numbers of small entities to produce the total compliance costs in each industry incurred by small entities.
Table V-30 shows the resultant annualized compliance costs by industry sector for SBA-defined small entities, while Table V-31 shows the costs for entities with fewer than 20 employees. Compliance costs for SBA-defined small entities totaled $202.6 million, compared to $305.1 million for all entities. Compliance costs for entities with fewer than 20 employees totaled $161.6 million.
OSHA calculated the economic impacts of these costs by comparing average compliance costs with average receipts and profits. Tables V-32 and V-33 display the results of these calculations by four-digit NAICS industry sectors; these results are OSHA's final assessment of impacts on
For one industry group, chimney-cleaning services, found in NAICS 56179, Other Services to Buildings and Dwellings, OSHA estimates that, for the approximately 6,000 establishments providing chimney-cleaning services affected by the final rule, economic impacts could be significant. OSHA estimates that compliance costs could reach 0.6 percent of pre-regulation revenue if the establishments passed all costs forward to customers (primarily homeowners) or, at the other extreme, costs could approach 15.4 percent of pre-regulation profits if the establishments passed none of the costs forward to customers, but instead absorbed the costs from profits. For several reasons, OSHA believes that demand for chimney-cleaning services is relatively inelastic and, therefore, cost impacts are more likely to result in price adjustments than profit reduction.
On the question of passing compliance costs forward to customers, the National Chimney Sweep Guild noted in a pre-hearing comment:
Unless the homeowner is willing to pay for this added time, then each job becomes less profitable. Furthermore, the additional time required to perform the work would significantly reduce the number of jobs that could be performed per day to the point where the business would have to double its staff to perform the same number of jobs and the business would no longer be profitable. Especially in the current economic climate, homeowners are generally unwilling to absorb these added costs. (Ex. 296, p. 29.)
Second, chimney-cleaning services involve almost exclusively domestic American businesses. Therefore, international-trade factors would not present competitive pressures to keep prices at the baseline levels (thereby reducing profits).
Third, under the final rule, in the event that conventional fall protection is infeasible or creates a greater hazard, employers could develop a fall protection plan, the costs of which are likely to be minimal because templates for such plans should be readily available on the Internet. In such cases, employers likely would pass the cost forward to customers.
Finally, OSHA believes the increase in price resulting from the cost increase would be modest. Accordingly, the price increase would not dissuade homeowners from continuing a contractual relationship with chimney-cleaning services.
OSHA's impact analysis for small entities indicates that one other industry, NAICS 2213—Water, sewage and other systems, will experience
Moreover, there is reason to think that OSHA's data understates actual profits for small utilities. Many small utilities are organized as cooperatives and a modest percentage of utilities file income tax returns as S Corporations, and the tax law allows both types of entities to pass profits back to members without being taxed as income at the business level. According to IRS data,
Employees in general industry performing construction, installation, maintenance, and repair tasks are exposed to a range of significant slip, trip, and fall hazards that cause serious injury and death. OSHA estimates that approximately 202,100 serious injuries and 345 fatalities occur annually among these employees. Although employers could prevent some of these incidents with increased compliance with existing safety standards, research and analyses conducted by OSHA found that many preventable injuries and fatalities would continue to occur even if employers achieved full compliance with the existing standards. Without counting incidents that employers could potentially prevent by complying fully with existing standards, OSHA estimates that full compliance with these final standards would prevent 5,842 additional injuries and 29 fatalities annually, even with full compliance with the existing standard.
As explained above, additional benefits associated with this rulemaking involve providing updated, clear, and consistent safety standards regarding fall protection in general industry to the relevant employers, employees, and interested members of the public. The existing OSHA standards for walking-working surfaces in general industry are over 30 years old and inconsistent with the more recently promulgated standards addressing fall protection in construction. OSHA believes that the final updated standards are easier to understand and to apply than the existing standard, thereby benefiting employers and employees by facilitating compliance and improving safety.
The Small Business Administration's Chief Counsel for Advocacy (SBA Advocacy) submitted comments into the rulemaking record following publication of the NPRM. SBA Advocacy's comments (Ex. 124) covered four broad areas; OSHA addresses each area below.
The U.S. Chamber of Commerce (“the Chamber”) addressed the absence of a review process under the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 601
OSHA's decision to forgo SBREFA panel review for this rulemaking is even more troubling when one considers that the agency has undertaken SBREFA reviews with a number of rulemakings that have impacted a smaller number of workplaces and employees than this proposed walking-working surfaces revision will impact. . . . [T]his rulemaking will have a direct effect on a wide array of employers, both large and small, across all types of operations. This rulemaking is broader in application than many of the rulemakings noted above, with new requirements for training, and associated levels of personal protection. There are a large number of variables that will determine how these requirements will actually impact employers, especially small employers, and the agency would have benefited from the opportunity to obtain data and information from small employers. This is particularly true with respect to OSHA's effort to synchronize the general industry and construction industry provisions where small businesses are most likely to be confused and would have been able to provide useful input on achieving this goal. The scope of this regulation is so broad, and it will impose fall protection on so many workplaces for the first time, that OSHA should have conducted a panel to gather from affected entities direct information on how to better tailor this regulation. The Chamber urges OSHA to conduct a SBREFA panel review before proceeding to a final regulation. (Ex. 202,p. 2.)
OSHA's analysis of the impacts of this final rule includes an analysis of the type and number of small entities impacted by the final rule. The final rule primarily impacts workers performing installation, maintenance, and repair tasks throughout general industry. To determine the number of small entities potentially affected by this rulemaking, OSHA used the definitions of small entities developed by the Small Business Administration for each industry. In section C of this FEA, OSHA discussed its methodology for determining the number of affected small entities, and presented its estimates of the number in Table V-2. As shown in that table, OSHA estimates that the final standards would cover 5.1 million small entities, employing 43.8 million workers, including 2.3 million workers directly exposed to slip, trip, and fall hazards. Industries (four-digit NAICSs) expected to have the highest number of affected at-risk employees include automotive repair and maintenance (390,000 employees), wired telecommunications carriers (170,000 employees), and lessors of real estate (84,000).
OSHA issued the existing standards in subpart D in 1971 under Section 6(a) of the Occupational Safety and Health Act of 1970 (the Act) (29 U.S.C. 655). During the period since OSHA issued existing subpart D, interested parties recommended revisions to its standards. In addition, the majority of the existing OSHA standards for walking-working surfaces are inconsistent with numerous national consensus standards and the more recently issued OSHA standards addressing fall protection elsewhere in general industry (
Section F, Costs of Compliance, above described, for categories of employee training, the administrative costs for employers. Accordingly, OSHA does not consider the costs to document the training and retraining of employees to be recordkeeping, but rather typical expenses involved in administering a safety program.
OSHA evaluated several alternatives to the final standards to ensure that the requirements would accomplish the stated objectives of applicable statutes and minimize the economic impact on small entities. For example, OSHA considered an alternative that would exempt small entities from the rule; however, the Agency rejected this alternative because it would unduly jeopardize the safety and health of affected employees. Throughout Section IV of this document, Summary and Explanation of the Final Rule, OSHA discusses other alternatives considered, generally in response to public comment.
In developing the final rule, especially establishing compliance or reporting requirements or timetables that affect small entities, OSHA took the resources available to small entities into account. OSHA clarified, consolidated, and simplified the compliance and reporting requirements applicable to small entities to the extent practicable. Wherever possible, OSHA allowed the employer multiple options to control fall hazards. Therefore, OSHA made every effort to provide maximum flexibility in the choice of controls required by the final rule.
To demonstrate the relative economic efficiency (
OSHA also considered non-regulatory alternatives in determining the appropriate approach to reducing occupational hazards associated with work on elevated or slippery surfaces in general industry. The Agency discusses these alternatives in Section B of this FEA.
In this subsection, OSHA presents the results of two different types of sensitivity analysis to demonstrate how robust the estimates of net benefits are to changes in selected cost and benefit parameters. In the first sensitivity analysis (the “standard sensitivity analysis”), OSHA makes a series of isolated changes to individual cost and benefit parameters to determine their effects on the Agency's estimates of annualized costs, benefits, and net benefits. In the second sensitivity analysis—the “break-even sensitivity analysis”—OSHA investigates isolated changes to individual cost and benefit parameters, but with the objective of determining the magnitude of the changes needed for annualized costs to equal annualized benefits. The Agency is conducting these analyses for informational purposes only.
OSHA provides below a sensitivity analysis of some assumptions underlying the Agency's estimates of the annualized costs and benefits of the final rule. The calculations underlying the Agency's estimate that the compliance costs, benefits, and economic impacts associated with this rulemaking are generally linear and additive. Accordingly, the changes in the costs or benefits should generally be proportional to variations in the relevant input parameters. For example, if the estimated time for supervisors to inspect the conditions of walking-working surfaces (to ensure that they are free of hazards) increased by 100 percent, the corresponding labor costs for that task also should increase by 100 percent.
OSHA evaluated a series of such changes in input parameters to test the validity of the general conclusions derived from the economic analysis. Overall, OSHA found these conclusions to be robust as even sizeable changes in the values of several input parameters did not substantially alter the estimates of the costs, benefits, or net benefits. Furthermore, the rule produces significant positive net benefits regardless of the revisions made to costs, benefits, or the discount rate. Table V-35 below provides the summary results of these sensitivity tests. In each sensitivity test, parameters other than the ones tested remained unchanged.
In the first sensitivity test, OSHA adjusted the estimated noncompliance rates applied to the costs for the requirements for inspections and hazard corrections in final § 1910.22(d). When OSHA doubles the noncompliance rates (deriving noncompliance rates that range from 6 percent to 27 percent), annualized costs rise by $33.2 million (10.9 percent), with total compliance costs summing to $338.2 million, and net benefits are reduced by an equal amount ($33.32 million), to a level of $276.4 million. In the benefits sensitivity analysis, OSHA also considered the effect of changing these provisions on benefits.
In the second sensitivity test on costs, when OSHA increased by 100 percent the estimated time for supervisors to inspect walking-working surfaces for the presence of hazards (from one hour to two hours), the estimated total costs of compliance increased by $33 million annually, or about 11 percent of overall costs. In the third sensitivity test on costs, OSHA increased a set of values for variables critical to the estimated compliance costs for fall protection on fixed ladders as follows:
• Increased the estimate of the number of fixed ladders per establishment by 100 percent (0.45 to 0.9); and
• Increased the installation time for ladder safety systems by 100 percent (two hours to four hours).
This sensitivity test increased the estimated annualized compliance costs by $0.4 million annually, about 0.1 percent of overall costs.
In the fourth sensitivity test on costs, OSHA extended from 20 years to 25 years after publication of the rule the date when OSHA would no longer accept cages and wells for fall protection, thereby requiring employers to install other forms of fall protection such as ladder safety systems on fixed ladders that extend more than 24 feet above a lower level. This sensitivity test decreased the estimated annualized compliance costs by $1.0 million annually, or about 0.3 percent of overall costs.
In the fifth sensitivity test on costs, OSHA retrofitted all fixed ladders over 20 feet in length with ladder safety systems (not just those ladders that extend more than 24 feet above a lower level) according to a 20-year deadline specified by final § 1910.28(b)(9)(i)(D), with the result that costs increased by $10.1 million annually, or 3.3 percent of overall costs.
OSHA believes this stringent test represents a highly unlikely scenario because the current consensus standard for fixed ladders—ANSI A14.3-2008, American National Standard for Ladders—Fixed—Safety Requirements—requires use of a ladder safety system only for single climbs in excess of 24 feet, whereas the 2002 version of that standard prescribed the use of ladder safety systems for climbs in excess of 50 feet. Furthermore, current § 1910.27(d)(5) permits the use of ladder safety devices instead of cages on tower, water-tank, and chimney ladders over 20 feet in unbroken length. In addition, evidence in the record suggests that firms with a choice of a cage/platform or ladder safety systems generally install ladder safety systems for ladders reaching heights above 30 feet, and that safety engineers are now designing solutions using ladder safety systems for fall protection during all long ladder climbs (Exs. 127; 369). Therefore, OSHA believes that only a small percentage of fixed ladders,
In a sixth sensitivity test on costs, OSHA increased by 100 percent the estimated time for employee training, which increased the estimated costs of compliance by $54.1 million annually, or about 18 percent of overall costs.
Finally, in a seventh sensitivity test on costs, OSHA increased by 100 percent the estimated time for a supervisor to conduct a hazard assessment needed before issuing personal fall protection equipment. This sensitivity test increased the estimated costs of compliance by $11.6 million annually, or roughly 4 percent of overall costs.
In addition, OSHA examined the effect on annualized costs and benefits of changing the discount rate. Changing the discount rate from seven percent, used in the base case, to three percent would reduce the estimated costs of the final rule from $305.0 million to $297.0 million per year (while leaving estimated annual benefits unaffected), thereby increasing the estimated net benefits by $7.9 million. For both this scenario and for the primary (seven-percent rate) scenario, with the exception of the 20-year deadline for installation of specific types of fall protection on certain fixed ladders, OSHA assumed that employers would incur all costs (first-year and recurring) upon implementation of the final standards (
OSHA recognizes that there is not one uniform approach to estimating the marginal cost of labor. For the economic analysis in support of the final rule, OSHA has estimated the marginal costs of labor as wages plus a fringe benefit rate of 41.5% (which includes some fixed costs such as health insurance). However, this approach does not account for overhead costs. For illustrative purposes in the context of this sensitivity analysis, OSHA has modified the cost estimates by including an overhead rate when estimating the marginal cost of labor. It is important to note that there is not one broadly accepted overhead rate in academic literature and estimating the most appropriate overhead rate for this FEA would require significant modeling, including as regards the interaction between overhead costs and the equipment and other costs that have been separately estimated. Further, the Department has not further analyzed an appropriate quantitative adjustment. Therefore, DOL adopted for the purposes of this specific exercise an overhead rate of 17%. This rate has been used by the EPA in its final rules (see for example, EPA Electronic Reporting under the Toxic Substances Control Act Final Rule, June 17, 2013), and is based upon a Chemical Manufacturers Association study.
Using an overhead rate of 17% would increase costs by $24.4 million per year, or 8.0 percent above the best estimate of costs. (See Table V-35)
OSHA also performed sensitivity tests on a set of input parameters used to estimate the benefits of the final rule. In the first test, OSHA estimated that the final preventability rates for falls from ladders (20 percent), falls from roofs (20 percent), and falls to lower levels not elsewhere classified (5 percent) did not increase from the estimates applied in the PEA, but instead remained the same for this FEA (
In a second benefits sensitivity test, OSHA reduced the preventability rate for falls on the same level from 1 percent to 0 percent. As a result, monetized benefits fell 13.8 percent ($85.0 million) to $530.0 million, and net benefits fell to $225.0 million.
In a third benefits sensitivity test, OSHA doubled the preventability rate for falls on the same level from 1 percent to 2 percent. As a result, monetized benefits rose 13.8 percent ($85.0 million) to $699.6 million, and net benefits rose to $394.6 million.
OSHA's benefits estimates are most sensitive when it comes to estimating the percentage of current injuries and fatalities avoided by full compliance with the final standards. OSHA closely examined available reports of fatalities related to the provisions in the existing and final standards and found that full compliance with the final standards would prevent 29 fatalities, or approximately 9 percent of all slip-, trip-, and fall-related fatalities in general industry (including, among the global group, accidents not directly addressed by the final standards). The true benefits of the final rule depend on how well these fatalities represent actual fall-related fatalities in general industry that compliance with the final rule would prevent. OSHA believes that the benefits in this FEA (see Table V-11) are representative of actual prevented fatalities; however, an average estimate such as presented here can mask year-to-year variations.
The Agency believes that its estimate of annual fatalities involving slips, trips, and falls (about 345) in general industry is a much less sensitive estimate of actual fatalities than the estimate of the percentage of fatalities avoided. The estimate of the annual number of baseline fatalities is derived from 7 years of recent accident data with percent-distributed averages corroborated by 11 prior years of data, whereas the estimate of percentage of fatalities avoided is based on professional judgment (the determinations from which were placed into the record and reviewed by rulemaking stakeholders). Furthermore, as noted earlier, OSHA believes that its benefits estimates are low. Specifically, the Agency believes the training and work-practices requirements specified by the final standards would likely improve the use and application of safety equipment (including personal fall protection equipment), thereby further reducing fatalities and injuries.
In conclusion, these sensitivity tests demonstrate that even with relatively large variations in the input parameters, there are no large changes in the estimates of compliance costs or benefits.
In the benefits section, OSHA noted that an article by Seong and Mendeloff suggested that OSHA had, in a period of 17 to 27 years ago, estimated reductions in fatalities that were not in fact reflected in the observed data over the next ten years. All of the analyses in question assumed full compliance with the rule, as does this analysis. The resulting failures to meet observed declines could have been the result of either failure to comply with OSHA's rule, or overestimates of the effectiveness of OSHA's rule. OSHA believes that it was a combination of the two—there were both overestimates of effectiveness and failures to comply with the rule. Unfortunately, there are no studies that enable us to distinguish between the two phenomena. Further, OSHA believes that its estimates for this rule reflect lessons learned from the Seong and Mendeloff article. Still OSHA believes it is important to analyze the possibilities that the article might reflect OSHA's current practice and that it might reflect the possibility that OSHA's overestimates are solely due to noncompliance with the rule.
In Appendix A, OSHA derives a set of factors for reducing OSHA's benefits estimates based on the assumption that Seong and Mendeloff's observations correctly state the standard's effectiveness rates. These factors represent a possible correction to OSHA's base estimates. The exact possible correction factors and their limitations are given in Appendix A to this FEA.
Using these correction factors, OSHA found that the standard would prevent from 9 fatalities and 1,753 non-fatal injuries (=0.3*29 and 0.3*5,842), with a value of $184 million, to 14 fatalities and 2,746 non-fatal injuries (=0.47*29 and 0.47*5,842), with a value of $289 million. If application of these correction factors to OSHA's estimation methodology better represent the true benefits of the rule, then this lower range of benefits would be more compliant with OMB Circular A-4, than the 29 fatalities and 5,842 non-fatal injures presented at the summary results elsewhere in this FEA.
If lack of employer compliance is the only driver of the disparities between OSHA's estimates and actual declines in fatalities and if non-compliance is close to homogeneous across employers covered by this rule (in other words, if baseline slip, trip and fall injuries are not largely concentrated amongst bad actors who do not attempt to comply with OSHA standards), then the appropriate cost estimates to compare to the above benefits estimate would be $91 million (=0.3*$305 million) to $143 million (=0.47*$305 million), and net benefits remain positive.
To the extent that OSHA has not corrected any overestimation of effectiveness that is not the result of noncompliance, then costs could exceed benefits. As noted, OSHA is aware of the possible overestimation for reasons other than less than full compliance and has tried to correct this overestimation.
This break-even sensitivity analysis determines how much cost and benefits would have to vary for the costs to equal benefits. According to the Agency's models for estimating costs and monetized benefits, the final standards generate considerable positive net benefits; that is, expected benefits are much greater than expected costs. Only significant errors in OSHA's analysis would bring true net benefits to, or below, zero. Therefore, in the first break-even sensitivity test in this analysis, which addresses cost, for net monetized benefits to fall to zero, for example, the Agency would have to underestimate the number of buildings with anchorages subject to inspection and certification by two-fold (from about 750,000 buildings to 1.5 million buildings), and would also have to underestimate the number of employees requiring training by four-fold (from 504,000 to 2.0 million). In this case, estimated compliance costs would rise to roughly $593 million annually, thereby approaching the value of estimated monetized benefits and reducing the net monetized benefits approximately to zero.
In a second break-even sensitivity test in this analysis, which addresses benefits, OSHA examined how much its estimate of the final rule's aggregate benefits in terms of avoided fatalities and injuries would have to decline for the costs to equal the benefits, thereby eliminating the net monetized benefits. Net monetized benefits would decline to zero if, for example, the Agency overestimated fatalities prevented by the final standards by roughly 93 percent (if prevented fatalities were 15 rather than 29) and overestimated injuries prevented by the standards by roughly 108 percent (if prevented injuries were 2,814 rather than 5,842).
OSHA believes that a ten percent overestimate of fatalities is unlikely given the conservative (low) accident preventability rates projected for many provisions of the final standards. Further, OSHA notes, as discussed earlier, that some of the other benefits of the rule are non-quantifiable, such as the benefits resulting from making several provisions in this final standard compatible with provisions in the Agency's construction fall protection standards. OSHA believes that these benefits would increase the overall net benefits of the final rule.
To derive possible quantitative adjustment factors from the Seong and Mendeloff study OSHA examined each of their case studies. In most cases, Seong and Mendeloff did not derive a quantitative difference between what happened and what OSHA estimated. Instead their goal was to qualitatively establish that overestimation was routine and in some cases extremely large. To derive quantitative estimates from this data requires making some assumptions. First, OSHA has assumed that all declines that actually occurred are attributable to a new standard. This will tend to overestimate the effectiveness of standards. Second, in some cases declines take place over time, and are significant over the long run but show little effect in the first year. If there is no decline in early years but a major one thereafter, OSHA has developed two estimates, one based on the first year and one based on what happened over time.
• Scaffolding for General Industry (61 FR 46026, August 30, 1996): OSHA originally predicted that the scaffolding rule would reduce fatalities by 59 percent, whereas Seong and Mendeloff find an actual reduction of 21 percent, yielding a realized-to-projected effectiveness ratio of 0.36 (=0.21/0.59).
• Electrical Work Practices for General Industry (55 FR 31984, August 6, 1990)—OSHA's predicted reduction was 41.4 percent. The actual decrease was negligible immediately upon finalization of the rule and up to 48 percent in the latter portion of the post-implementation decade, thus yielding a range of ratios from 0 (=0/0.414) if the immediate post-implementation result is interpreted as the amount attributable to the rule, or up to 0.61 (=0.25/0.414 where 0.25 is the annualization over a ten-year period with a 7 percent discount rate of a reduction pattern that rises linearly from 0 immediately upon finalization to 48 percent after a decade) if the longer-term reduction is interpreted as attributable to the rule.
• Process Safety Management (PSM) in General Industry (57 FR 6356, February 24, 1992)—OSHA's predicted reduction was 40 percent in the first five years and at least 80 percent in subsequent years, and the actual decrease was a reduction of around 50 percent in the first year (though a substantial portion of this was probably attributable to the rule taking effect in a recession) and then no further decreases in subsequent years, yielding a ratio of 0.88 (=0.54/0.61 where 0.54 and 0.61 are annualizations over a ten-year period with a 7 percent discount rate of the reduction patterns just listed).
• Permit-Required Confined Spaces for General Industry (58 FR 4462, January 14, 1993)—OSHA's predicted reduction was 85 percent, and the actual decrease is described by Seong and Mendeloff as probably at least 50 percent (though the discussion of relative results in greater- and lesser-affected states undermines the claim of the rule's effectiveness), yielding a ratio of 0.59 (=0.5/0.85).
• Electrical Power Generation (59 FR 4320, January 31, 1994)—OSHA's predicted reduction was 68 percent, but actual deaths “dipped in 1993, the year the standard became effective, then went back to their pre-standard levels through 1997,” and subsequently dropped by one-third or one-half, depending on the measure used. The resulting ratios range from approximately 0 (=0/0.68) if the immediate post-implementation result is interpreted as the amount attributable to the rule, up to 0.41 (=0.28/0.68 where 0.28 is the annualization over a ten-year period with a 7 percent discount rate of a reduction pattern of zero in the first four years and 50 percent subsequently) if the longer-term reduction is interpreted as attributable to the rule.
• Logging Operations (59 FR 51672, October 12, 1994)—OSHA's predicted reduction was 70 percent, but there is no indication that injuries decreased at all, yielding a ratio of 0 (=0/0.7).
The average of the six ratios ranges from 0.3, if the lower end of a range is used, to 0.47, if the higher end is used.
OSHA has reviewed the final rule in accordance with Executive Order (E.O.) 13132 on Federalism (64 FR 43255 (8/10/1999)). This E.O. requires that Federal agencies, to the extent possible, refrain from limiting state policymaking discretion; consult with states prior to taking action that restricts state policy options; and take action that has federalism implications only where (1) there is “constitutional and statutory authority” for such action, and (2) the problem is of “national significance” (E.O. 13132, Section 3(b)).
Section 4 of E.O. 13132 allows Federal agencies to preempt state law, but only (1) where the Federal statute contains an express preemption provision or there is some other clear evidence that Congress intended preemption of state law, or (2) where the exercise of state authority conflicts with the exercise of Federal authority under the Federal statute. The E.O. further provides that Federal agencies must limit any such preemption of state law to the extent possible.
The final rule complies with E.O. 13132. The FEA (Section V) and other information in the rulemaking record shows that worker exposure to walking-working surface hazards, particularly fall hazards, is very widespread. Workers throughout general industry are exposed to walking-working surface hazards that can result in slips, trips and falls and other injuries and fatalities. According to the Bureau of Labor Statistics (BLS) data, slips, trips, and falls are a leading cause of workplace fatalities and injuries in general industry. As discussed in the Analysis of Risk section (Section II), workplace deaths due to slips, trips, and falls are second only to motor-vehicle accidents as the leading cause of worker fatalities.
Congress enacted the Occupational Safety and Health Act of 1970 (OSH Act) (29 U.S.C. 651
Section 18 of the OSH Act addresses the role of states in regulating workplace safety and health issues (29 U.S.C. 667). Section 18(a) provides that the OSH Act does not prevent states from asserting jurisdiction under state law over a workplace safety and health issue with respect to which no Federal OSHA standard is in effect (29 U.S.C. 667(a)). Where Federal OSHA has regulated an occupational safety and health issue, Section 18(b) gives states the option of developing and enforcing their own occupational safety and health standards through establishment of a State Plan. Section 18(b) specifies: “Any State which, at any time, desires to assume responsibility for development and enforcement therein of occupational safety and health standards relating to any occupational safety or health issue with respect to which a Federal standard has been promulgated . . . shall submit a State plan for the development of such standards and their enforcement.”
Section 18(c) provides that the Secretary of Labor will issue approval of a State Plan if the plan provides for the development and enforcement of standards for occupational safety and health that are at least as effective in providing safe and healthful workplaces as federal OSHA standards. (29 U.S.C. 667(c)). State Plan standards may have different or additional requirements from OSHA's standards.
Currently, 27 U.S. states and territories, including New York, have OSHA-approved State Plans. However, the New York State Plan is limited in coverage; it is one of five state and local government only State Plans (29 CFR part 1956, subpart F). As such, the New York State Plan only covers state and local government workers and does not cover private sector employers or employees.
Approximately 40 years before Congress passed the OSH Act, New York's legislature had enacted a statute addressing the “[p]rotection of the public and of persons engaged at window cleaning and cleaning of exterior surfaces of buildings”
Section 202 also authorized the Industrial Board of Appeals (Industrial Board) to “make rules to effectuate the purposes of the section.” It specifies that those rules shall be applicable exclusively throughout the state, notwithstanding any other general or local law or regulation, and that the Commissioner of Labor shall have “exclusive authority” to enforce sec. 202 and the rules issued thereunder (N.Y. Lab. Law sec. 202). Pursuant to sec. 202, the Industrial Board has issued regulations for the “protection of persons engaged at window cleaning;” however, they do not include specific provisions directed at protecting the public (N.Y. Comp. Codes R. & Regs. part 21). The regulations specify, among other things, that employees shall not be permitted to clean windows other than “in accordance with an
• Working from safe surfaces;
• Working from window sills or ledges;
• Working from ladders;
• Working from boatswain's chairs;
• Working from scaffolds (12 N.Y. Comp. Codes & Regs. sec. 21.4).
The authorized means and methods do not include rope descent systems (RDS)
The final rule (§ 1910.27(b)), on the other hand, allows employers to use RDSs for activities performed at elevated heights, including window cleaning. Final § 1910.27(b)(2)(i) limits the use of RDSs to elevations not exceeding 300 feet above grade; however, employers may use RDSs at greater heights if they can demonstrate that it is not feasible to access such heights by any method other than an RDS or other means pose a greater hazard than using an RDS.
OSHA received many comments on the proposed rule. Many stakeholders, including window cleaning companies and window cleaners, supported allowing employers to use RDSs, including at heights above 300 feet (
The question of whether a state law is preempted by Federal law is one of congressional intent (
A four-justice plurality determined the state law, absent an approved State Plan, is impliedly pre-empted” (
The unavoidable implication of [Section 18(b)] is that a State may not enforce its own occupational safety and health standards without obtaining the Secretary's approval (
The plurality noted that other parts of Section 18 also support preemption absent an approved plan (
The Court also reached the same conclusion regarding the preemptive effect of a law that regulates public as well as workplace safety and health (
[I]t would defeat the purpose of section 18 if a state could enact measures stricter than OSHA's and largely accomplished through regulation of worker safety and health simply by asserting a non-occupational purpose for the legislation' (
Therefore, the Court said it must look at the “effects of the law” as well legislature's professed purpose (
Based on the following, OSHA finds that sec. 202 “directly, substantially, and specifically regulates occupational safety and health.” Although the title of sec. 202 specifies that its purpose is “[p]rotection of the public and of persons engaged at window cleaning and cleaning of exterior surfaces of buildings,” the language in sec. 202 clearly indicates it is promulgated primarily for the protection of workers rather than the public. For example, Section 202 directs employers and contractors to “provide safe means” for workers to clean windows and building surfaces and “require his employees . . . to use the equipment and safety devices” while cleaning windows and building surfaces, but does not contain any requirements directed at members of the public. As such, protection of the
The title of the Industrial Board regulations that implement sec. 202, “Protection of persons employed at window cleaning—structural requirements, equipment and procedure,” also support that sec. 202 is primarily directed to protecting workers (N.Y. Comp. Codes R. & Regs. Part 21). The regulations' findings of fact reinforce this:
The board finds that the trade, occupation or process of cleaning the windows of public buildings involves such elements of danger to the lives, health or safety of persons employed therein as to require special regulations for the protection of such persons, in that such trade, occupation or process necessarily involves the constant hazard of falling from dangerous heights and creates a substantial risk of serious injury to such persons and others (12 N.Y. Comp. Codes & Regs. 21.0).
In addition to the “authorized means and methods” employers must use to clean windows, the regulations as well as the advisory standards also establish work practice and equipment requirements employers and workers must follow. Like OSHA standards, New York's laws and regulations establish the means and methods “reasonably necessary or appropriate to provide safety and health employment and places of employment” for workers who clean windows and exterior surfaces of public buildings.
Looking at sec. 202 and its implementing regulations and advisory standards as a whole, the substantial effect they have on workplace safety and health shows they are occupational safety and health standards within the meaning of the OSH Act. Since New York's laws regulate the same occupational safety and health issue as the final rule, pursuant to
Finally, OSHA notes Congress saved two areas from federal preemption. In addition to section 18(a), discussed above, Section 4(b)(4) of the OSH Act evidences Congress' clear intent to preserve state laws that that create liability for personal injury (
Section 202 creates a private right of action for violations of the window cleaning regulations (N.Y. Comp. Codes R. & Regs. Part 21), which the New York courts have consistently upheld (See
Since
Although Section 4(b)(4) does not protect NYSDOL's ability to enforce § 202 and the regulations implementing it, OSHA believes § 202 survives preemption to the extent that it provides workers with a private right of action for damages for injuries.
When Federal OSHA promulgates a new standard or more stringent amendment to an existing standard, the 27 States and U.S. Territories with their own OSHA-approved occupational safety and health plans must:
• Amend their standards to reflect the new standard or amendment; or
• Show OSHA why such action is unnecessary; for example, because an existing State standard covering this area is “at least as effective” as the new Federal standard or amendment (29 CFR 1953.5(a)).
The State standard must be at least as effective as the final Federal rule, must be applicable to both the private and public (State and local government employees) sectors, and must be completed within 6 months of the promulgation date of the final Federal rule. When OSHA promulgates a new standard or amendment that does not impose additional or more stringent requirements than an existing standard, State-Plan States are not required to amend their standards, although the Agency may encourage them to do so.
The 21 States and one U.S. Territory with OSHA-approved occupational safety and health plans covering private employers and State and local government employees are: Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming. In addition, four States and one U.S. Territory have OSHA-approved State Plans that apply to State and local government employees only: Connecticut, Illinois, New Jersey, New York, and the Virgin Islands.
This final rule results in more stringent requirements for the work it covers. Therefore, States and Territories with OSHA-approved State Plans must adopt comparable amendments to their standards within 6 months of the date of publication of this final rule in the
OSHA reviewed this final rule according to the Unfunded Mandates Reform Act of 1995 (“UMRA“; 2 U.S.C. 1501
OSHA standards do not apply to State or local governments except in States that have elected, under a voluntary agreement, to adopt a State Plan that OSHA has approved. State Plan States enforce compliance with their State standards on public sector entities, and these agreements specify that these State standards must be equivalent to OSHA standards. Thus, although OSHA has included compliance costs for the affected public-sector entities in its analysis of the expected impacts associated with the final rule, the final rule does not involve any unfunded mandates being imposed on any State or local government entity. Consequently, this final rule does not meet the definition of a “Federal intergovernmental mandate” (see Sec. 421(5) of the UMRA (2 U.S.C. 658(5))). Therefore, for the purposes of the UMRA, the Agency certifies that this final rule does not mandate that State, local, and tribal governments adopt new, unfunded regulatory obligations.
OSHA reviewed this final rule in accordance with Executive Order 13175, (65 FR 67249 (Nov. 9, 2000)) and determined that it does not have “tribal implications” as defined in that order. The final rule does not 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.
The final general industry Walking-Working Surfaces (29 CFR part 1910, subpart D) and Personal Protective Equipment (Fall Protection PPE) (29 CFR part 1910, subpart I) standards, like the proposed rule, contain collection of information (paperwork) requirements that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA-95) (44 U.S.C. 3501
Under PRA-95, a Federal agency cannot conduct or sponsor a collection of information unless OMB approves it and the collection of information displays a currently valid OMB control number. In addition, notwithstanding any other provision of law, no employer shall be subject to penalty for failing to comply with a collection of information that does not display a currently valid OMB control number.
OSHA has OMB approval for the collection of information requirements contained in both existing subparts D and I. These Information Collection Requests (ICRs) (paperwork burden hour and cost analysis), both of which expire August 31, 2019, are titled:
• Standard on Walking-Working Surfaces (29 CFR part 1910, subpart D), OMB control number 1218-0199; and
• Personal Protective Equipment (PPE) for General Industry (29 CFR part 1910, subpart I), OMB control number 1218-0205.
In accordance with PRA-95 (44 U.S.C. 3506(c)(2)), OSHA included revised ICRs for subparts D and I in the proposed rule and solicited public comment (75 FR 28862, 29129 (5/24/2010)). OSHA also submitted the revised ICRs to OMB for review as PRA-95 requires (44 U.S.C. 3507(d)). On July 26, 2010, OMB issued a Notice of Action (NOA) for the revised subpart D ICR, filing comment on the request that did not approve the request at that time and stating: “Terms of the previous clearance remain in effect.”
On October 11, 2010, OMB issued a NOA for the revised subpart I ICR, also filing comment on the proposed revisions to the ICR and stating: “OMB is not approving the collection of information in the proposed rule at this time. Prior to publication of the final rule, the agency should provide a summary of all comments related to the information collection requirements contained in the proposed rule and a description of any changes made in response to these comments.” OSHA did not receive any public comments on the burden estimates in the proposed revised ICRs. However, the Agency received a number of comments on the proposed rule, discussed earlier in this preamble, that include information relevant to the paperwork analysis. OSHA addresses these comments in detail in the final ICR for subparts D and I.
Concurrent with publication of this final rule, the Department is submitting ICRs to revise the authority for the information collections under the Paperwork Reduction Act. The Department will publish an additional
Final subpart D contains several new collection of information requirements and removes three existing collection of information requirements from this ICR.
This final rule replaces the specifications in the existing rule (§ 1910.22(d)(1)) with performance-based language and, in so doing, deletes the collection of information requirement. In the preamble of the proposed and final rules, OSHA explained that the specification requirement in the existing rule was not necessary for two reasons: (1) Load-limit information is available in building plans and from other sources, and (2) maximum loads are taken into consideration when surfaces are designed.
Under the final rule, employers can obtain information about current walking-working surfaces from plates posted in accordance with the existing rule. For new buildings, structures and walking-working surfaces, employers can obtain information on load limits in various ways, such as from building plans, local codes, third-party certification, or self-evaluations.
The existing rule also requires tagging defective ladders, but the requirement only applies to portable wood and metal ladders (§§ 1910.25(d)(1)(x) and 1910.26(c)(2)(vii), respectively). In addition, the subpart D ICR only takes paperwork burden hours and costs for portable metal ladders, not wood ones. This is because the existing standard for wood ladders provides the specific language that employers must use for the tags on defective ladders (“Dangerous: Do Not Use”). When OSHA supplies the exact language that employers must provide to employees, the Agency is not required to take paperwork burdens because the requirement does not come within the definition of “collection of information” under PRA-95 (5 CFR 1320.3(c)(2)).
In the proposed rule, the Agency proposed removing the word “Dangerous” from the existing tag language and requiring that tags state “Do Not Use” or similar language that complies with § 1910.145. After further analysis, however, OSHA concluded that retaining the signal word is necessary to get workers' attention in order to provide them with basic information that a hazard exists and they must not use the ladder. OSHA did not receive any comments on proposed paragraph (b)(10).
OSHA notes that the final rule applies the tagging requirement to all ladders final § 1910.23 covers, which includes fixed ladders, mobile ladder stands and mobile ladder stand platforms in addition to portable wood and metal ladders. As a result, the final rule expands the collection of information requirement.
Final paragraph § 1910.27(a), like the proposed rule, replaces the existing general industry scaffold standards (§§ 1910.28 and 1910.29) with the requirement that employers ensure scaffolds used meet the requirements in the construction scaffolds standards (29 CFR part 1926, subpart L). As the record indicated, many general industry employers use scaffolds to perform both general industry and construction activities. OSHA believes that allowing employers to comply with the same scaffold requirements regardless of whether they are performing general industry or construction activities will increase understanding of and compliance with the final rule, and thus, provide greater protection for workers.
By replacing the existing general industry requirements, the final rule deletes the collection of information requirement in existing § 1910.28(e)(3). That provision requires that employers ensure outrigger scaffolds are constructed and erected in accordance with table D-16, if they are not designed by a licensed professional engineer, and keep a copy of the detailed drawings and specifications at the job.
Final paragraph § 1910.27(b), like the proposal, adds new requirements that addresses the use of RDS. Final paragraphs (b)(1)(i) and (ii) contain a new collection of information requirement. Final paragraph (b)(1) requires that, before any RDS is used, the building owner must inform the employer in writing (final paragraph (b)(1)(i)), and the employer must obtain written information from the building owner (final paragraph (b)(1)(ii)), that the building owner has identified, tested, certified, and maintained each anchorage to ensure it is capable of supporting at least 5,000 pounds in any direction for each worker attached. The final rule specifies that the written information the building owner provides must be based on:
• An annual inspection; and
• A certification of each anchorage, as necessary, and at least every 10 years.
The requirement that anchorages be certified “as necessary” means the building owner must have a qualified person recertify any anchorage when the owner knows or has reason to believe recertification is needed (final paragraph (b)(1)(i)). The final rule gives building owners flexibility in determining when anchorage recertification is necessary. As discussed in Section IV, factors or conditions indicating that recertification may be needed include, but are not limited to, an accident involving the use of an RDS; a report of damage to an anchorage, major alteration to the building; exposure of the anchorage to destructive industrial substances; and location of the building in an area that might accelerate corrosion, such as areas having exposure to high rainfall, high humidity, or sea air.
Final paragraph (b)(1)(ii) requires that employers keep the written information obtained from the building owner for the duration of the job.
OSHA believes the requirement that building owners provide written information on anchorages to employers is essential to ensure that employers know the anchorages are safe for their workers who use RDS. In addition, the requirement that employers retain the written information throughout the job is important to keep workers informed about which anchorages are safe to use. This is particularly true if the job involves multiple workshifts or work crews, the employer adds new workers during the job, or there are changes in on-site supervisors.
Final paragraph (b)(1)(ii) is a new requirement. The provision requires that when the employer can demonstrate that it is not feasible or creates a greater hazard to use a guardrail, safety net, or personal fall protection systems on residential roofs, the employer must develop and implement a fall protection plan that meets the requirements of 29 CFR 1926.502(k). This requirement was added to the final rule based on public comment to allow employers greater flexibility in using PPE on residential roofs and to be more consistent with OSHA's construction's fall protection standard.
Final paragraph (b)(8)(iii), like the proposal, is a new requirement that addresses fall hazards associated with repair, service, and assembly pits less than 10 feet deep. The provision requires that employers post readily-visible warning signs in pit areas that state “Caution—Open Pit” and also comply with the requirements in § 1910.145.
The proposed standard would have required that employers post caution signs stating “Caution—Open Floor” or a “similar legend.” In the revised ICR published in the proposed rule, OSHA said proposed § 1910.28(b)(8)(iii) contains a new collection of information requirement and took a paperwork burden. The final rule, however, does
Final § 1910.140, like the proposed rule, adds a new section to subpart I that addresses personal fall protection systems, such as personal fall arrest systems, travel restraint systems and positioning systems. Although final § 1910.140 does not contain any collection of information requirements, employers whose workers use a personal fall protection system also must comply with § 1910.132. Section 1910.132(d)(2) requires employers certify in writing they have performed the required workplace hazard assessment (§ 1910.132(d)(1)) to determine whether fall or falling-object hazards are present, or likely to be present, that make the use of personal fall protection systems necessary. The written certification must identify the date and workplace assessed and the person who is certifying that the hazard assessment was performed. In addition, the written document must identify that it is a workplace hazard assessment certification. The written certification requirement is a collection of information under PRA-95.
At the time OSHA published the proposed rule, general industry employers also were required to comply with § 1910.132(f)(4). That provision required employers to certify in writing that each worker has received and understood the PPE training. The standard also required that the written certification specify name of each employee trained plus the date and content of the training. In the revised ICR that OSHA published in the proposed rule, the Agency said § 1910.132(f)(4) imposes a new information collection requirement for personal fall protection systems and took a paperwork burden. Thereafter, as part of the Standards Improvement Project—Phase III final rule, OSHA deleted § 1910.132(f)(4) (76 FR 33590, 6/8/3011). Therefore, OSHA has removed the information collection requirement from the final ICR for Personal Protective Equipment (PPE) for General Industry.
However, for some of the new requirements in the final rule, OSHA is providing employers with additional time to come into compliance. The extended compliance dates give employers time to get familiar with the new requirements, evaluate changes they may need to make, purchase equipment necessary to comply with the final rule, and develop and present required training. In addition, the extended compliance dates allows employers to upgrade their fall protection systems as part of the normal “business cycle” or “useful life” of equipment (
The following table specifies the amount of additional time OSHA is giving employers to certify anchorages, equip fixed ladders with fall protection, and train workers:
For additional information about these compliance deadlines, see discussion of §§ 1910.27(b)(1), 1910.28(b)(9), and 1910.30 in Section IV.
Falls, Fall arrest, Fall protection, Fall restraint, Guardrails, Incorporation by reference, Ladders, Occupational safety and health, Scaffolds, Stairs, Walking-working surfaces.
This document was prepared under the direction of David Michaels, Assistant Secretary of Labor for Occupational Safety and Health. This action is taken pursuant to sections 29 U.S.C. 653, 655, 657; Secretary of Labor's Order No. 1-2012 (77 FR 3912 (1/25/2012)); and 29 CFR part 1911.
For the reasons set forth in the preamble, OSHA amends part 1910 of title 29 of the Code of Federal Regulations as follows:
29 U.S.C. 653, 655, 657; Secretary of Labor's Order Numbers 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), 6-96 (62 FR 111), 3-2000 (65 FR 50017), 5-2002 (67 FR 65008), 5-2007 (72 FR 31159), 4-2010 (75 FR 55355), or 1-2012 (77 FR 3912), as applicable.
Sections 1910.6, 1910.7, 1910.8 and 1910.9 also issued under 29 CFR 1911. Section 1910.7(f) also issued under 31 U.S.C. 9701, 29 U.S.C. 9a, 5 U.S.C. 553; Public Law 106-113 (113 Stat. 1501A-222); Pub. L. 11-8 and 111-317; and OMB Circular A-25 (dated July 8, 1993) (58 FR 38142, July 15, 1993).
29 U.S.C. 653, 655, and 657; Secretary of Labor's Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), and 1-2012 (77 FR 3912), as applicable; and 29 CFR part 1911.
(a)
(b)
(a)
(1) All places of employment, passageways, storerooms, service rooms, and walking-working surfaces are kept in a clean, orderly, and sanitary condition.
(2) The floor of each workroom is maintained in a clean and, to the extent feasible, in a dry condition. When wet processes are used, drainage must be maintained and, to the extent feasible, dry standing places, such as false floors, platforms, and mats must be provided.
(3) Walking-working surfaces are maintained free of hazards such as sharp or protruding objects, loose boards, corrosion, leaks, spills, snow, and ice.
(b)
(c)
(d)
(1) Walking-working surfaces are inspected, regularly and as necessary, and maintained in a safe condition;
(2) Hazardous conditions on walking-working surfaces are corrected or repaired before an employee uses the walking-working surface again. If the correction or repair cannot be made immediately, the hazard must be guarded to prevent employees from using the walking-working surface until the hazard is corrected or repaired; and
(3) When any correction or repair involves the structural integrity of the walking-working surface, a qualified person performs or supervises the correction or repair.
(a)
(1) Used in emergency operations such as firefighting, rescue, and tactical law enforcement operations, or training for these operations; or
(2) Designed into or is an integral part of machines or equipment.
(b)
(1) Ladder rungs, steps, and cleats are parallel, level, and uniformly spaced when the ladder is in position for use;
(2) Ladder rungs, steps, and cleats are spaced not less than 10 inches (25 cm) and not more than 14 inches (36 cm) apart, as measured between the centerlines of the rungs, cleats, and steps, except that:
(i) Ladder rungs and steps in elevator shafts must be spaced not less than 6 inches (15 cm) apart and not more than 16.5 inches (42 cm) apart, as measured along the ladder side rails; and
(ii) Fixed ladder rungs and steps on telecommunication towers must be spaced not more than 18 inches (46 cm) apart, measured between the centerlines of the rungs or steps;
(3) Steps on stepstools are spaced not less than 8 inches (20 cm) apart and not more than 12 inches (30 cm) apart, as measured between the centerlines of the steps;
(4) Ladder rungs, steps, and cleats have a minimum clear width of 11.5 inches (29 cm) on portable ladders and 16 inches (41 cm) (measured before installation of ladder safety systems) for fixed ladders, except that:
(i) The minimum clear width does not apply to ladders with narrow rungs that are not designed to be stepped on, such as those located on the tapered end of orchard ladders and similar ladders;
(ii) Rungs and steps of manhole entry ladders that are supported by the manhole opening must have a minimum clear width of 9 inches (23 cm);
(iii) Rungs and steps on rolling ladders used in telecommunication centers must have a minimum clear width of 8 inches (20 cm); and
(iv) Stepstools have a minimum clear width of 10.5 inches (26.7 cm);
(5) Wooden ladders are not coated with any material that may obscure structural defects;
(6) Metal ladders are made with corrosion-resistant material or protected against corrosion;
(7) Ladder surfaces are free of puncture and laceration hazards;
(8) Ladders are used only for the purposes for which they were designed;
(9) Ladders are inspected before initial use in each work shift, and more frequently as necessary, to identify any visible defects that could cause employee injury;
(10) Any ladder with structural or other defects is immediately tagged “Dangerous: Do Not Use” or with similar language in accordance with § 1910.145 and removed from service until repaired in accordance with § 1910.22(d), or replaced;
(11) Each employee faces the ladder when climbing up or down it;
(12) Each employee uses at least one hand to grasp the ladder when climbing up and down it; and
(13) No employee carries any object or load that could cause the employee to lose balance and fall while climbing up or down the ladder.
(c)
(1) Rungs and steps of portable metal ladders are corrugated, knurled, dimpled, coated with skid-resistant material, or otherwise treated to minimize the possibility of slipping;
(2) Each stepladder or combination ladder used in a stepladder mode is equipped with a metal spreader or locking device that securely holds the front and back sections in an open position while the ladder is in use;
(3) Ladders are not loaded beyond the maximum intended load;
The maximum intended load, as defined in § 1910.21(b), includes the total load (weight and force) of the employee and all tools, equipment, and materials being carried.
(4) Ladders are used only on stable and level surfaces unless they are secured or stabilized to prevent accidental displacement;
(5) No portable single rail ladders are used;
(6) No ladder is moved, shifted, or extended while an employee is on it;
(7) Ladders placed in locations such as passageways, doorways, or driveways where they can be displaced by other activities or traffic:
(i) Are secured to prevent accidental displacement; or
(ii) Are guarded by a temporary barricade, such as a row of traffic cones or caution tape, to keep the activities or traffic away from the ladder;
(8) The cap (if equipped) and top step of a stepladder are not used as steps;
(9) Portable ladders used on slippery surfaces are secured and stabilized;
(10) The top of a non-self-supporting ladder is placed so that both side rails are supported, unless the ladder is equipped with a single support attachment;
(11) Portable ladders used to gain access to an upper landing surface have side rails that extend at least 3 feet (0.9 m) above the upper landing surface (see Figure D-1 of this section);
(12) Ladders and ladder sections are not tied or fastened together to provide
(13) Ladders are not placed on boxes, barrels, or other unstable bases to obtain additional height.
(d)
(1) Fixed ladders are capable of supporting their maximum intended load;
(2) The minimum perpendicular distance from the centerline of the steps or rungs, or grab bars, or both, to the nearest permanent object in back of the ladder is 7 inches (18 cm), except for elevator pit ladders, which have a minimum perpendicular distance of 4.5 inches (11 cm);
(3) Grab bars do not protrude on the climbing side beyond the rungs of the ladder that they serve;
(4) The side rails of through or side-step ladders extend 42 inches (1.1 m) above the top of the access level or landing platform served by the ladder. For parapet ladders, the access level is:
(i) The roof, if the parapet is cut to permit passage through the parapet; or
(ii) The top of the parapet, if the parapet is continuous;
(5) For through ladders, the steps or rungs are omitted from the extensions, and the side rails are flared to provide not less than 24 inches (61cm) and not more than 30 inches (76 cm) of clearance. When a ladder safety system is provided, the maximum clearance between side rails of the extension must not exceed 36 inches (91 cm);
(6) For side-step ladders, the side rails, rungs, and steps must be continuous in the extension (see Figure D-2 of this section);
(7) Grab bars extend 42 inches (1.1 m) above the access level or landing platforms served by the ladder;
(8) The minimum size (cross-section) of grab bars is the same size as the rungs of the ladder.
(9) When a fixed ladder terminates at a hatch (see Figure D-3 of this section), the hatch cover:
(i) Opens with sufficient clearance to provide easy access to or from the ladder; and
(ii) Opens at least 70 degrees from horizontal if the hatch is counterbalanced;
(10) Individual-rung ladders are constructed to prevent the employee's feet from sliding off the ends of the rungs (see Figure D-4 of this section);
(11) Fixed ladders having a pitch greater than 90 degrees from the horizontal are not used;
(12) The step-across distance from the centerline of the rungs or steps is:
(i) For through ladders, not less than 7 inches (18 cm) and not more than 12 inches (30 cm) to the nearest edge of the structure, building, or equipment accessed from the ladders;
(ii) For side-step ladders, not less than 15 inches (38 cm) and not more than 20 inches (51 cm) to the access points of the platform edge;
(13) Fixed ladders that do not have cages or wells have:
(i) A clear width of at least 15 inches (38 cm) on each side of the ladder centerline to the nearest permanent object; and
(ii) A minimum perpendicular distance of 30 inches (76 cm) from the centerline of the steps or rungs to the nearest object on the climbing side. When unavoidable obstructions are encountered, the minimum clearance at the obstruction may be reduced to 24 inches (61 cm), provided deflector plates are installed (see Figure D-5 of this section).
Section 1910.28 establishes the employer's duty to provide fall protection for employees on fixed ladders, and § 1910.29 specifies the criteria for fall protection systems for fixed ladders.
(e)
(i) Mobile ladder stands and platforms have a step width of at least 16 inches (41 cm);
(ii) The steps and platforms of mobile ladder stands and platforms are slip resistant. Slip-resistant surfaces must be either an integral part of the design and construction of the mobile ladder stand and platform, or provided as a secondary process or operation, such as dimpling, knurling, shotblasting, coating, spraying, or applying durable slip-resistant tapes;
(iii) Mobile ladder stands and platforms are capable of supporting at least four times their maximum intended load;
(iv) Wheels or casters under load are capable of supporting their proportional share of four times the maximum intended load, plus their proportional share of the unit's weight;
(v) Unless otherwise specified in this section, mobile ladder stands and platforms with a top step height of 4 feet (1.2 m) or above have handrails with a vertical height of 29.5 inches (75 cm) to 37 inches (94 cm), measured from the front edge of a step. Removable gates or non-rigid members, such as chains, may be used instead of handrails in special-use applications;
(vi) The maximum work-surface height of mobile ladder stands and platforms does not exceed four times the shortest base dimension, without additional support. For greater heights, outriggers, counterweights, or comparable means that stabilize the mobile ladder stands and platforms and prevent overturning must be used;
(vii) Mobile ladder stands and platforms that have wheels or casters are equipped with a system to impede horizontal movement when an employee is on the stand or platform; and
(viii) No mobile ladder stand or platform moves when an employee is on it.
(2)
(i) Steps are uniformly spaced and arranged, with a rise of not more than 10 inches (25 cm) and a depth of not less than 7 inches (18 cm). The slope of the step stringer to which the steps are attached must not be more than 60 degrees, measured from the horizontal;
(ii) Mobile ladder stands with a top step height above 10 feet (3 m) have the top step protected on three sides by a handrail with a vertical height of at least 36 inches (91 cm); and top steps that are 20 inches (51 cm) or more, front to back, have a midrail and toeboard. Removable gates or non-rigid members, such as chains, may be used instead of handrails in special-use applications; and
(iii) The standing area of mobile ladder stands is within the base frame.
(3)
(i) Steps of mobile ladder stand platforms meet the requirements of paragraph (e)(2)(i) of this section. When the employer demonstrates that the requirement is not feasible, steeper slopes or vertical rung ladders may be used, provided the units are stabilized to prevent overturning;
(ii) Mobile ladder stand platforms with a platform height of 4 to 10 feet (1.2 m to 3 m) have, in the platform area, handrails with a vertical height of at least 36 inches (91 cm) and midrails; and
(iii) All ladder stand platforms with a platform height above 10 feet (3 m) have guardrails and toeboards on the exposed sides and ends of the platform.
(iv) Removable gates or non-rigid members, such as chains, may be used on mobile ladder stand platforms instead of handrails and guardrails in special-use applications.
(a)
(1) Each step bolt installed on or after January 17, 2017 in an environment where corrosion may occur is constructed of, or coated with, material that protects against corrosion;
(2) Each step bolt is designed, constructed, and maintained to prevent the employee's foot from slipping off the end of the step bolt;
(3) Step bolts are uniformly spaced at a vertical distance of not less than 12 inches (30 cm) and not more than 18 inches (46 cm) apart, measured center to center (see Figure D-6 of this section). The spacing from the entry and exit surface to the first step bolt may differ from the spacing between the other step bolts;
(4) Each step bolt has a minimum clear width of 4.5 inches (11 cm);
(5) The minimum perpendicular distance between the centerline of each step bolt to the nearest permanent object in back of the step bolt is 7 inches (18 cm). When the employer demonstrates that an obstruction cannot be avoided, the distance must be at least 4.5 inches (11 cm);
(6) Each step bolt installed before January 17, 2017 is capable of supporting its maximum intended load;
(7) Each step bolt installed on or after January 17, 2017 is capable of supporting at least four times its maximum intended load;
(8) Each step bolt is inspected at the start of the workshift and maintained in accordance with § 1910.22; and
(9) Any step bolt that is bent more than 15 degrees from the perpendicular in any direction is removed and replaced with a step bolt that meets the requirements of this section before an employee uses it.
(b)
(2) The employer must ensure that each manhole step installed on or after January 17, 2017:
(i) Has a corrugated, knurled, dimpled, or other surface that minimizes the possibility of an employee slipping;
(ii) Is constructed of, or coated with, material that protects against corrosion if the manhole step is located in an environment where corrosion may occur;
(iii) Has a minimum clear step width of 10 inches (25 cm);
(iv) Is uniformly spaced at a vertical distance not more than 16 inches (41 cm) apart, measured center to center between steps. The spacing from the entry and exit surface to the first manhole step may differ from the spacing between the other steps.
(v) Has a minimum perpendicular distance between the centerline of the manhole step to the nearest permanent object in back of the step of at least 4.5 inches (11 cm); and
(vi) Is designed, constructed, and maintained to prevent the employee's foot from slipping or sliding off the end.
(3) The employer must ensure that each manhole step is inspected at the start of the work shift and maintained in accordance with § 1910.22.
(a)
(b)
(1) Handrails, stair rail systems, and guardrail systems are provided in accordance with § 1910.28;
(2) Vertical clearance above any stair tread to any overhead obstruction is at least 6 feet, 8 inches (203 cm), as measured from the leading edge of the tread. Spiral stairs must meet the vertical clearance requirements in paragraph (d)(3) of this section.
(3) Stairs have uniform riser heights and tread depths between landings;
(4) Stairway landings and platforms are at least the width of the stair and at least 30 inches (76 cm) in depth, as measured in the direction of travel;
(5) When a door or a gate opens directly on a stairway, a platform is provided, and the swing of the door or gate does not reduce the platform's effective usable depth to:
(i) Less than 20 inches (51 cm) for platforms installed before January 17, 2017; and
(ii) Less than 22 inches (56 cm) for platforms installed on or after January 17, 2017 (see Figure D-7 of this section);
(6) Each stair can support at least five times the normal anticipated live load, but never less than a concentrated load of 1,000 pounds (454 kg) applied at any point;
(7) Standard stairs are used to provide access from one walking-working surface to another when operations necessitate regular and routine travel between levels, including access to operating platforms for equipment. Winding stairways may be used on tanks and similar round structures when the diameter of the tank or structure is at least 5 feet (1.5 m).
(8) Spiral, ship, or alternating tread-type stairs are used only when the employer can demonstrate that it is not feasible to provide standard stairs.
(9) When paragraph (b)(8) of this section allows the use of spiral, ship, or alternating tread-type stairs, they are installed, used, and maintained in accordance with manufacturer's instructions.
(c)
(1) Are installed at angles between 30 to 50 degrees from the horizontal;
(2) Have a maximum riser height of 9.5 inches (24 cm);
(3) Have a minimum tread depth of 9.5 inches (24 cm); and
(4) Have a minimum width of 22 inches (56 cm) between vertical barriers (see Figure D-8 of this section).
(5)
(d)
(1) Have a minimum clear width of 26 inches (66 cm);
(2) Have a maximum riser height of 9.5 inches (24 cm);
(3) Have a minimum headroom above spiral stair treads of at least 6 feet, 6 inches (2 m), measured from the leading edge of the tread;
(4) Have a minimum tread depth of 7.5 inches (19 cm), measured at a point 12 inches (30 cm) from the narrower edge;
(5) Have a uniform tread size;
(e)
(1) Are installed at a slope of 50 to 70 degrees from the horizontal;
(2) Have open risers with a vertical rise between tread surfaces of 6.5 to 12 inches (17 to 30 cm);
(3) Have minimum tread depth of 4 inches (10 cm); and
(4) Have a minimum tread width of 18 inches (46 cm).
(f)
(1) Have a series of treads installed at a slope of 50 to 70 degrees from the horizontal;
(2) Have a distance between handrails of 17 to 24 inches (51 to 61 cm);
(3) Have a minimum tread depth of 8.5 inches (22 cm); and
(4) Have open risers if the tread depth is less than 9.5 inches (24 cm);
(5) Have a minimum tread width of 7 inches (18 cm), measured at the leading edge of the tread (
The employer must ensure that each dockboard used meets the requirements of this section. The employer must ensure:
(a) Dockboards are capable of supporting the maximum intended load in accordance with § 1910.22(b);
(b)(1) Dockboards put into initial service on or after January 17, 2017 are designed, constructed, and maintained to prevent transfer vehicles from running off the dockboard edge;
(2)
(c) Portable dockboards are secured by anchoring them in place or using equipment or devices that prevent the dockboard from moving out of a safe position. When the employer demonstrates that securing the dockboard is not feasible, the employer must ensure there is sufficient contact between the dockboard and the surface to prevent the dockboard from moving out of a safe position;
(d) Measures, such as wheel chocks or sand shoes, are used to prevent the transport vehicle (
(e) Portable dockboards are equipped with handholds or other means to permit safe handling of dockboards.
(a)
(b)
(ii) The employer must ensure that no employee uses any anchorage before the employer has obtained written information from the building owner that each anchorage meets the requirements of paragraph (b)(1)(i) of this section. The employer must keep the information for the duration of the job.
(iii) The requirements in paragraphs (b)(1)(i) and (ii) of this section must be implemented no later than November 20, 2017.
(2)
(i) No rope descent system is used for heights greater than 300 feet (91 m) above grade unless the employer demonstrates that it is not feasible to access such heights by any other means or that those means pose a greater hazard than using a rope descent system;
(ii) The rope descent system is used in accordance with instructions, warnings, and design limitations set by the manufacturer or under the direction of a qualified person;
(iii) Each employee who uses the rope descent system is trained in accordance with § 1910.30;
(iv) The rope descent system is inspected at the start of each workshift that it is to be used. The employer must ensure damaged or defective equipment is removed from service immediately and replaced;
(v) The rope descent system has proper rigging, including anchorages and tiebacks, with particular emphasis on providing tiebacks when counterweights, cornice hooks, or similar non-permanent anchorages are used;
(vi) Each employee uses a separate, independent personal fall arrest system that meets the requirements of subpart I of this part;
(vii) All components of each rope descent system, except seat boards, are capable of sustaining a minimum rated load of 5,000 pounds (22.2 kN). Seat boards must be capable of supporting a live load of 300 pounds (136 kg);
(viii) Prompt rescue of each employee is provided in the event of a fall;
(ix) The ropes of each rope descent system are effectively padded or otherwise protected, where they can contact edges of the building, anchorage, obstructions, or other surfaces, to prevent them from being cut or weakened;
(x) Stabilization is provided at the specific work location when descents are greater than 130 feet (39.6 m);
(xi) No employee uses a rope descent system when hazardous weather conditions, such as storms or gusty or excessive wind, are present;
(xii) Equipment, such as tools, squeegees, or buckets, is secured by a tool lanyard or similar method to prevent it from falling; and
(xiii) The ropes of each rope descent system are protected from exposure to open flames, hot work, corrosive chemicals, and other destructive conditions.
(a)
(2) This section does not apply:
(i) To portable ladders;
(ii) When employers are inspecting, investigating, or assessing workplace conditions or work to be performed prior to the start of work or after all work has been completed. This exemption does not apply when fall protection systems or equipment meeting the requirements of § 1910.29 have been installed and are available for workers to use for pre-work and post-work inspections, investigations, or assessments;
(iii) To fall hazards presented by the exposed perimeters of entertainment stages and the exposed perimeters of rail-station platforms;
(iv) To powered platforms covered by § 1910.66(j);
(v) To aerial lifts covered by § 1910.67(c)(2)(v);
(vi) To telecommunications work covered by § 1910.268(n)(7) and (8); and
(vii) To electric power generation, transmission, and distribution work covered by § 1910.269(g)(2)(i).
(b)
(A) Guardrail systems;
(B) Safety net systems; or
(C) Personal fall protection systems, such as personal fall arrest, travel restraint, or positioning systems.
(ii) When the employer can demonstrate that it is not feasible or creates a greater hazard to use guardrail, safety net, or personal fall protection systems on residential roofs, the employer must develop and implement a fall protection plan that meets the requirements of 29 CFR 1926.502(k) and training that meets the requirements of 29 CFR 1926.503(a) and (c).
There is a presumption that it is feasible and will not create a greater hazard to use at least one of the above-listed fall protection systems specified in paragraph (b)(1)(i) of this section. Accordingly, the employer has the burden of establishing that it is not feasible or creates a greater hazard to provide the fall protection systems specified in paragraph (b)(1)(i) and that it is necessary to implement a fall protection plan that complies with § 1926.502(k) in the particular work operation, in lieu of implementing any of those systems.
(iii) When the employer can demonstrate that the use of fall protection systems is not feasible on the working side of a platform used at a loading rack, loading dock, or teeming platform, the work may be done without a fall protection system, provided:
(A) The work operation for which fall protection is infeasible is in process;
(B) Access to the platform is limited to authorized employees; and,
(C) The authorized employees are trained in accordance with § 1910.30.
(2)
(i) Each employee in a hoist area is protected from falling 4 feet (1.2 m) or more to a lower level by:
(A) A guardrail system;
(B) A personal fall arrest system; or
(C) A travel restraint system.
(ii) When any portion of a guardrail system, gate, or chains is removed, and an employee must lean through or over the edge of the access opening to facilitate hoisting, the employee is protected from falling by a personal fall arrest system.
(iii) If grab handles are installed at hoist areas, they meet the requirements of § 1910.29(l).
(3)
(i) Each employee is protected from falling through any hole (including skylights) that is 4 feet (1.2 m) or more above a lower level by one or more of the following:
(A) Covers;
(B) Guardrail systems;
(C) Travel restraint systems; or
(D) Personal fall arrest systems.
(ii) Each employee is protected from tripping into or stepping into or through any hole that is less than 4 feet (1.2 m) above a lower level by covers or guardrail systems.
(iii) Each employee is protected from falling into a stairway floor hole by a fixed guardrail system on all exposed sides, except at the stairway entrance. However, for any stairway used less than once per day where traffic across the stairway floor hole prevents the use of a fixed guardrail system (
(iv) Each employee is protected from falling into a ladderway floor hole or ladderway platform hole by a guardrail system and toeboards erected on all exposed sides, except at the entrance to the hole, where a self-closing gate or an offset must be used.
(v) Each employee is protected from falling through a hatchway and chute-floor hole by:
(A) A hinged floor-hole cover that meets the criteria in § 1910.29 and a fixed guardrail system that leaves only one exposed side. When the hole is not in use, the employer must ensure the cover is closed or a removable guardrail system is provided on the exposed sides;
(B) A removable guardrail system and toeboards on not more than two sides of the hole and a fixed guardrail system on all other exposed sides. The employer must ensure the removable guardrail system is kept in place when the hole is not in use; or
(C) A guardrail system or a travel restraint system when a work operation necessitates passing material through a hatchway or chute floor hole.
(4)
(ii) A guardrail system or handrails are not required when:
(A) Dockboards are being used solely for materials-handling operations using motorized equipment;
(B) Employees engaged in these operations are not exposed to fall hazards greater than 10 feet (3 m); and
(C) Those employees have been trained in accordance with § 1910.30.
(5)
(ii) When the employer can demonstrate that it is not feasible to have guardrails on both sides of a runway used exclusively for a special purpose, the employer may omit the guardrail on one side of the runway, provided the employer ensures:
(A) The runway is at least 18 inches (46 cm) wide; and
(B) Each employee is provided with and uses a personal fall arrest system or travel restraint system.
(6)
(i) Each employee less than 4 feet (1.2 m) above dangerous equipment is protected from falling into or onto the dangerous equipment by a guardrail system or a travel restraint system, unless the equipment is covered or guarded to eliminate the hazard.
(ii) Each employee 4 feet (1.2 m) or more above dangerous equipment must be protected from falling by:
(A) Guardrail systems;
(B) Safety net systems;
(C) Travel restraint systems; or
(D) Personal fall arrest systems.
(7)
(i) Guardrail systems;
(ii) Safety net systems;
(iii) Travel restraint systems; or,
(iv) Personal fall arrest systems.
(8)
(i) Limits access within 6 feet (1.8 m) of the edge of the pit to authorized employees trained in accordance with § 1910.30;
(ii) Applies floor markings at least 6 feet (1.8 m) from the edge of the pit in colors that contrast with the surrounding area; or places a warning line at least 6 feet (1.8 m) from the edge of the pit as well as stanchions that are capable of resisting, without tipping over, a force of at least 16 pounds (71 N) applied horizontally against the stanchion at a height of 30 inches (76 cm); or places a combination of floor markings and warning lines at least 6 feet (1.8 m) from the edge of the pit. When two or more pits in a common area are not more than 15 feet (4.5m) apart, the employer may comply by placing contrasting floor markings at least 6 feet (1.8 m) from the pit edge around the entire area of the pits; and
(iii) Posts readily visible caution signs that meet the requirements of § 1910.145 and state “Caution—Open Pit.”
(9)
(A)
(B)
(C)
(D)
(ii) When a one-section fixed ladder is equipped with a personal fall protection or a ladder safety system or a fixed ladder is equipped with a personal fall arrest or ladder safety system on more than one section, the employer must ensure:
(A) The personal fall arrest system or ladder safety system provides protection throughout the entire vertical distance of the ladder, including all ladder sections; and
(B) The ladder has rest platforms provided at maximum intervals of 150 feet (45.7 m).
(iii) The employer must ensure ladder sections having a cage or well:
(A) Are offset from adjacent sections; and
(B) Have landing platforms provided at maximum intervals of 50 feet (15.2 m).
(iv) The employer may use a cage or well in combination with a personal fall arrest system or ladder safety system provided that the cage or well does not interfere with the operation of the system.
(10)
(ii) When an employee engaged in outdoor advertising climbs a fixed ladder before November 19, 2018 that is not equipped with a cage, well, personal fall arrest system, or a ladder safety system the employer must ensure the employee:
(A) Receives training and demonstrates the physical capability to perform the necessary climbs in accordance with § 1910.29(h);
(B) Wears a body harness equipped with an 18-inch (46 cm) rest lanyard;
(C) Keeps both hands free of tools or material when climbing on the ladder; and
(D) Is protected by a fall protection system upon reaching the work position.
(11)
(i) Each employee exposed to an unprotected side or edge of a stairway
(ii) Each flight of stairs having at least 3 treads and at least 4 risers is equipped with stair rail systems and handrails as follows:
(iii) Each ship stairs and alternating tread type stairs is equipped with handrails on both sides.
(12)
(i) Each employee on a scaffold is protected from falling in accordance 29 CFR part 1926, subpart L; and
(ii) Each employee using a rope descent system 4 feet (1.2 m) or more above a lower level is protected from falling by a personal fall arrest system.
(13)
(ii) When work is performed at least 6 feet (1.6 m) but less than 15 feet (4.6 m) from the roof edge, the employer must ensure each employee is protected from falling by using a guardrail system, safety net system, travel restraint system, or personal fall arrest system. The employer may use a designated area when performing work that is both infrequent and temporary.
(iii) When work is performed 15 feet (4.6 m) or more from the roof edge, the employer must:
(A) Protect each employee from falling by a guardrail system, safety net system, travel restraint system, or personal fall arrest system or a designated area. The employer is not required to provide any fall protection, provided the work is both infrequent and temporary; and
(B) Implement and enforce a work rule prohibiting employees from going within 15 feet (4.6 m) of the roof edge without using fall protection in accordance with paragraphs (b)(13)(i) and (ii) of this section.
(14)
(A) Guardrail systems; or
(B) Travel restraint systems.
(ii) When the employer can demonstrate the use of a guardrail or travel restraint system is not feasible, the work may be done without those systems provided:
(A) The work operation for which fall protection is infeasible is in process;
(B) Access to the platform is limited to authorized employees; and
(C) The authorized employees are trained in accordance with § 1910.30.
(15)
(i) Guardrail systems;
(ii) Safety net systems; or
(iii) Personal fall protection systems, such as personal fall arrest, travel restraint, or positioning systems.
(c)
(1) Erecting toeboards, screens, or guardrail systems to prevent objects from falling to a lower level;
(2) Erecting canopy structures and keeping potential falling objects far enough from an edge, hole, or opening to prevent them from falling to a lower level; or
(3) Barricading the area into which objects could fall, prohibiting employees from entering the barricaded area, and keeping objects far enough from an edge or opening to prevent them from falling to a lower level.
(a)
(1) Ensure each fall protection system and falling object protection, other than personal fall protection systems, that this part requires meets the requirements in this section. The employer must ensure each personal fall protection system meets the requirements in subpart I of this part; and
(2) Provide and install all fall protection systems and falling object protection this subpart requires, and comply with the other requirements in this subpart before any employee begins work that necessitates fall or falling object protection.
(b)
(1) The top edge height of top rails, or equivalent guardrail system members, are 42 inches (107 cm), plus or minus 3 inches (8 cm), above the walking-working surface. The top edge height may exceed 45 inches (114 cm), provided the guardrail system meets all other criteria of paragraph (b) of this section (see Figure D-11 of this section).
(2) Midrails, screens, mesh, intermediate vertical members, solid panels, or equivalent intermediate members are installed between the walking-working surface and the top edge of the guardrail system as follows when there is not a wall or parapet that is at least 21 inches (53 cm) high:
(i) Midrails are installed at a height midway between the top edge of the guardrail system and the walking-working surface;
(ii) Screens and mesh extend from the walking-working surface to the top rail and along the entire opening between top rail supports;
(iii) Intermediate vertical members (such as balusters) are installed no more than 19 inches (48 cm) apart; and
(iv) Other equivalent intermediate members (such as additional midrails and architectural panels) are installed so that the openings are not more than 19 inches (48 cm) wide.
(3) Guardrail systems are capable of withstanding, without failure, a force of at least 200 pounds (890 N) applied in a downward or outward direction within 2 inches (5 cm) of the top edge, at any point along the top rail.
(4) When the 200-pound (890-N) test load is applied in a downward direction, the top rail of the guardrail system must not deflect to a height of less than 39 inches (99 cm) above the walking-working surface.
(5) Midrails, screens, mesh, intermediate vertical members, solid panels, and other equivalent intermediate members are capable of withstanding, without failure, a force of at least 150 pounds (667 N) applied in any downward or outward direction at any point along the intermediate member.
(6) Guardrail systems are smooth-surfaced to protect employees from injury, such as punctures or lacerations, and to prevent catching or snagging of clothing.
(7) The ends of top rails and midrails do not overhang the terminal posts, except where the overhang does not pose a projection hazard for employees.
(8) Steel banding and plastic banding are not used for top rails or midrails.
(9) Top rails and midrails are at least 0.25-inches (0.6 cm) in diameter or in thickness.
(10) When guardrail systems are used at hoist areas, a removable guardrail section, consisting of a top rail and midrail, are placed across the access opening between guardrail sections when employees are not performing hoisting operations. The employer may use chains or gates instead of a removable guardrail section at hoist areas if the employer demonstrates the chains or gates provide a level of safety equivalent to guardrails.
(11) When guardrail systems are used around holes, they are installed on all unprotected sides or edges of the hole.
(12) For guardrail systems used around holes through which materials may be passed:
(i) When materials are being passed through the hole, not more than two sides of the guardrail system are removed; and
(ii) When materials are not being passed through the hole, the hole must be guarded by a guardrail system along all unprotected sides or edges or closed over with a cover.
(13) When guardrail systems are used around holes that serve as points of access (such as ladderways), the guardrail system opening:
(i) Has a self-closing gate that slides or swings away from the hole, and is equipped with a top rail and midrail or equivalent intermediate member that meets the requirements in paragraph (b) of this section; or
(ii) Is offset to prevent an employee from walking or falling into the hole;
(14) Guardrail systems on ramps and runways are installed along each unprotected side or edge.
(15) Manila or synthetic rope used for top rails or midrails are inspected as necessary to ensure that the rope continues to meet the strength requirements in paragraphs (b)(3) and (5) of this section.
The criteria and practices requirements for guardrail systems on scaffolds are contained in 29 CFR part 1926, subpart L.
(c)
(d)
(i) Employees remain within the designated area while work operations are underway; and
(ii) The perimeter of the designated area is delineated with a warning line consisting of a rope, wire, tape, or chain that meets the requirements of paragraphs (d)(2) and (3) of this section.
(2) The employer must ensure each warning line:
(i) Has a minimum breaking strength of 200 pounds (0.89 kN);
(ii) Is installed so its lowest point, including sag, is not less than 34 inches (86 cm) and not more than 39 inches (99 cm) above the walking-working surface;
(iii) Is supported in such a manner that pulling on one section of the line will not result in slack being taken up in adjacent sections causing the line to fall below the limits specified in paragraph (d)(2)(ii) of this section;
(iv) Is clearly visible from a distance of 25 feet (7.6 m) away, and anywhere within the designated area;
(v) Is erected as close to the work area as the task permits; and
(vi) Is erected not less than 6 feet (1.8 m) from the roof edge for work that is both temporary and infrequent, or not less than 15 feet (4.6 m) for other work.
(3) When mobile mechanical equipment is used to perform work that is both temporary and infrequent in a designated area, the employer must ensure the warning line is erected not less than 6 feet (1.8 m) from the unprotected side or edge that is parallel to the direction in which the mechanical equipment is operated, and not less than 10 feet (3 m) from the unprotected side or edge that is perpendicular to the direction in which the mechanical equipment is operated.
(e)
(1) Is capable of supporting without failure, at least twice the maximum intended load that may be imposed on the cover at any one time; and
(2) Is secured to prevent accidental displacement.
(f)
(1)
(ii) The height of stair rail systems meets the following:
(A) The height of stair rail systems installed before January 17, 2017 is not less than 30 inches (76 cm) from the leading edge of the stair tread to the top surface of the top rail; and
(B) The height of stair rail systems installed on or after January 17, 2017 is not less than 42 inches (107 cm) from the leading edge of the stair tread to the top surface of the top rail.
(iii) The top rail of a stair rail system may serve as a handrail only when:
(A) The height of the stair rail system is not less than 36 inches (91 cm) and not more than 38 inches (97 cm) as measured at the leading edge of the stair tread to the top surface of the top rail (see Figure D-13 of this section); and
(B) The top rail of the stair rail system meets the other handrail requirements in paragraph (f) of this section.
(2)
(3)
(4)
(5)
(6)
(7)
(g)
(1) Cages and wells installed on fixed ladders are designed, constructed, and maintained to permit easy access to, and egress from, the ladder that they enclose (see Figures D-14 and D-15 of this section);
(2) Cages and wells are continuous throughout the length of the fixed ladder, except for access, egress, and other transfer points;
(3) Cages and wells are designed, constructed, and maintained to contain employees in the event of a fall, and to direct them to a lower landing; and
(4) Platforms used with fixed ladders provide a horizontal surface of at least 24 inches by 30 inches (61 cm by 76 cm).
Section 1910.28 establishes the requirements that employers must follow on the use of cages and wells as a means of fall protection.
(h)
(1) Is physically capable, as demonstrated through observations of actual climbing activities or by a physical examination, to perform the duties that may be assigned, including climbing fixed ladders without fall protection;
(2) Has successfully completed a training or apprenticeship program that includes hands-on training on the safe climbing of ladders and is retrained as necessary to maintain the necessary skills;
(3) Has the skill to climb ladders safely, as demonstrated through formal classroom training or on-the-job training, and performance observation; and
(4) Performs climbing duties as a part of routine work activity.
(i)
(1) Each ladder safety system allows the employee to climb up and down using both hands and does not require that the employee continuously hold, push, or pull any part of the system while climbing;
(2) The connection between the carrier or lifeline and the point of attachment to the body harness or belt does not exceed 9 inches (23 cm);
(3) Mountings for rigid carriers are attached at each end of the carrier, with intermediate mountings spaced, as necessary, along the entire length of the carrier so the system has the strength to stop employee falls;
(4) Mountings for flexible carriers are attached at each end of the carrier and cable guides for flexible carriers are installed at least 25 feet (7.6 m) apart but not more than 40 feet (12.2 m) apart along the entire length of the carrier;
(5) The design and installation of mountings and cable guides does not reduce the design strength of the ladder; and
(6) Ladder safety systems and their support systems are capable of withstanding, without failure, a drop test consisting of an 18-inch (41-cm) drop of a 500-pound (227-kg) weight.
(j)
(k)
(i) Are erected along the exposed edge of the overhead walking-working surface for a length that is sufficient to protect employees below.
(ii) Have a minimum vertical height of 3.5 inches (9 cm) as measured from the top edge of the toeboard to the level of the walking-working surface.
(iii) Do not have more than a 0.25-inch (0.5-cm) clearance or opening above the walking-working surface.
(iv) Are solid or do not have any opening that exceeds 1 inch (3 cm) at its greatest dimension.
(v) Have a minimum height of 2.5 inches (6 cm) when used around vehicle repair, service, or assembly pits. Toeboards may be omitted around vehicle repair, service, or assembly pits when the employer can demonstrate that a toeboard would prevent access to a vehicle that is over the pit.
(vi) Are capable of withstanding, without failure, a force of at least 50 pounds (222 N) applied in any downward or outward direction at any point along the toeboard.
(2) The employer must ensure:
(i) Where tools, equipment, or materials are piled higher than the top of the toeboard, paneling or screening is installed from the toeboard to the midrail of the guardrail system and for a length that is sufficient to protect employees below. If the items are piled higher than the midrail, the employer also must install paneling or screening to the top rail and for a length that is sufficient to protect employees below; and
(ii) All openings in guardrail systems are small enough to prevent objects from falling through the opening.
(3) The employer must ensure canopies used for falling object protection are strong enough to prevent collapse and to prevent penetration by falling objects.
(l)
(1) Is not less than 12 inches (30 cm) long;
(2) Is mounted to provide at least 3 inches (8 cm) of clearance from the framing or opening; and
(3) Is capable of withstanding a maximum horizontal pull-out force equal to two times the maximum intended load or 200 pounds (890 N), whichever is greater.
(a)
(2) The employer must ensure that each employee is trained by a qualified person.
(3) The employer must train each employee in at least the following topics:
(i) The nature of the fall hazards in the work area and how to recognize them;
(ii) The procedures to be followed to minimize those hazards;
(iii) The correct procedures for installing, inspecting, operating, maintaining, and disassembling the personal fall protection systems that the employee uses; and
(iv) The correct use of personal fall protection systems and equipment specified in paragraph (a)(1) of this section, including, but not limited to, proper hook-up, anchoring, and tie-off techniques, and methods of equipment inspection and storage, as specified by the manufacturer.
(b)
(2) The employer must train each employee who uses a dockboard to properly place and secure it to prevent unintentional movement.
(3) The employer must train each employee who uses a rope descent system in proper rigging and use of the equipment in accordance with § 1910.27.
(4) The employer must train each employee who uses a designated area in the proper set-up and use of the area.
(c)
(1) When changes in the workplace render previous training obsolete or inadequate;
(2) When changes in the types of fall protection systems or equipment to be used render previous training obsolete or inadequate; or
(3) When inadequacies in an affected employee's knowledge or use of fall protection systems or equipment indicate that the employee no longer has the requisite understanding or skill necessary to use equipment or perform the job safely.
(d)
29 U.S.C. 653, 655, and 657; Secretary of Labor's Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), 5-2007 (72 FR 31159), or 1-2012 (77 FR 3912), as applicable; and 29 CFR part 1911.
The revisions read as follows:
(b) * * *
(2) * * *
(i) Permanent installations in existence and/or completed before July 23, 1990 shall comply with paragraphs (g), (h), (i), (j) and appendix C to subpart I of this part.
(c) * * *
(3) Building owners of all installations, new and existing, shall inform the employer in writing that the installation has been inspected, tested, and maintained in compliance with the requirements of paragraphs (g) and (h) of this section and that all anchorages meet the requirements of § 1910.140(c)(13).
(f) * * *
(5) * * *
(ii) * * *
(L) The platform shall be provided with a secondary wire rope suspension system if the platform contains overhead structures which restrict the emergency egress of employees. A horizontal lifeline or a direct connection anchorage shall be provided as part of a personal fall arrest system that meets the requirements of subpart I of this part for each employee on such a platform.
(M) A vertical lifeline shall be provided as part of a personal fall arrest system that meets the requirements of subpart I of this part for each employee on a working platform suspended by two or more wire ropes, if the failure of one wire rope or suspension attachment will cause the platform to upset. If a secondary wire rope suspension is used, vertical lifelines are not required for the personal fall arrest system, provided that each employee is attached to a horizontal lifeline anchored to the platform.
(iii) * * *
(B) Each single point suspended working platform shall be provided with a secondary wire rope suspension system which will prevent the working platform from falling should there be a failure of the primary means of support, or if the platform contains overhead structures which restrict the egress of
(j)
(c) * * *
(4)
(c) * * *
(2) * * *
(v) A personal fall arrest or travel restraint system that meets the requirements in subpart I of this part shall be worn and attached to the boom or basket when working from an aerial lift.
(b) * * *
(8) * * *
(ii)
(12)
29 U.S.C. 653, 655, 657; Secretary of Labor's Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), 6-96 (62 FR 111), 3-2000 (65 FR 50017), 5-2002 (67 FR 65008), 5-2007 (72 FR 31159), 4-2010 (75 FR 55355), or 1-2012 (77 FR 3912), as applicable; and 29 CFR part 1911.
(g) Paragraphs (d) and (f) of this section apply only to §§ 1910.133, 1910.135, 1910.136, 1910.138, and 1910.140. Paragraphs (d) and (f) of this section do not apply to §§ 1910.134 and 1910.137.
(a)
(b)
(i) In a harness as an integral attachment element or fall arrest attachment;
(ii) In a lanyard, energy absorber, lifeline, or anchorage connector as an integral connector; or
(iii) In a positioning or travel restraint system as an attachment element.
Examples of personal fall protection systems include personal fall arrest systems, positioning systems, and travel restraint systems.
(i) Automatic-locking type (permitted) with a self-closing and self-locking gate that remains closed and locked until intentionally unlocked and opened for connection or disconnection; and
(ii) Non-locking type (prohibited) with a self-closing gate that remains closed, but not locked, until intentionally opened for connection or disconnection.
(c)
(1) Connectors must be drop forged, pressed or formed steel, or made of equivalent materials.
(2) Connectors must have a corrosion-resistant finish, and all surfaces and edges must be smooth to prevent damage to interfacing parts of the system.
(3) When vertical lifelines are used, each employee must be attached to a separate lifeline.
(4) Lanyards and vertical lifelines must have a minimum breaking strength of 5,000 pounds (22.2 kN).
(5) Self-retracting lifelines and lanyards that automatically limit free fall distance to 2 feet (0.61 m) or less must have components capable of sustaining a minimum tensile load of 3,000 pounds (13.3 kN) applied to the device with the lifeline or lanyard in the fully extended position.
(6) A competent person or qualified person must inspect each knot in a lanyard or vertical lifeline to ensure that it meets the requirements of paragraphs (c)(4) and (5) of this section before any employee uses the lanyard or lifeline.
(7) D-rings, snaphooks, and carabiners must be capable of sustaining a minimum tensile load of 5,000 pounds (22.2 kN).
(8) D-rings, snaphooks, and carabiners must be proof tested to a minimum tensile load of 3,600 pounds (16 kN) without cracking, breaking, or incurring permanent deformation. The gate strength of snaphooks and carabiners, must be proof tested to 3,600 lbs. (16 kN) in all directions.
(9) Snaphooks and carabiners must be the automatic locking type that require at least two separate, consecutive movements to open.
(10) Snaphooks and carabiners must not be connected to any of the following unless they are designed for such connections:
(i) Directly to webbing, rope, or wire rope;
(ii) To each other;
(iii) To a D-ring to which another snaphook, carabiner, or connector is attached;
(iv) To a horizontal life line; or
(v) To any object that is incompatibly shaped or dimensioned in relation to the snaphook or carabiner such that unintentional disengagement could occur when the connected object depresses the snaphook or carabiner gate, allowing the components to separate.
(11) The employer must ensure that each horizontal lifeline:
(i) Is designed, installed, and used under the supervision of a qualified person; and
(ii) Is part of a complete personal fall arrest system that maintains a safety factor of at least two.
(12) Anchorages used to attach to personal fall protection equipment must be independent of any anchorage used to suspend employees or platforms on which employees work. Anchorages used to attach to personal fall protection equipment on mobile work platforms on powered industrial trucks must be attached to an overhead member of the platform, at a point located above and near the center of the platform.
(13) Anchorages, except window cleaners' belt anchors covered by paragraph (e) of this section, must be:
(i) Capable of supporting at least 5,000 pounds (22.2 kN) for each employee attached; or
(ii) Designed, installed, and used, under the supervision of qualified
(14) Travel restraint lines must be capable of sustaining a tensile load of at least 5,000 pounds (22.2 kN).
(15) Lifelines must not be made of natural fiber rope. Polypropylene rope must contain an ultraviolet (UV) light inhibitor.
(16) Personal fall protection systems and their components must be used exclusively for employee fall protection and not for any other purpose, such as hoisting equipment or materials.
(17) A personal fall protection system or its components subjected to impact loading must be removed from service immediately and not used again until a competent person inspects the system or components and determines that it is not damaged and safe for use for employee personal fall protection.
(18) Personal fall protection systems must be inspected before initial use during each workshift for mildew, wear, damage, and other deterioration, and defective components must be removed from service.
(19) Ropes, belts, lanyards, and harnesses used for personal fall protection must be compatible with all connectors used.
(20) Ropes, belts, lanyards, lifelines, and harnesses used for personal fall protection must be protected from being cut, abraded, melted, or otherwise damaged.
(21) The employer must provide for prompt rescue of each employee in the event of a fall.
(22) Personal fall protection systems must be worn with the attachment point of the body harness located in the center of the employee's back near shoulder level. The attachment point may be located in the pre-sternal position if the free fall distance is limited to 2 feet (0.6 m) or less.
(d)
(i) Limit the maximum arresting force on the employee to 1,800 pounds (8 kN);
(ii) Bring the employee to a complete stop and limit the maximum deceleration distance the employee travels to 3.5 feet (1.1 m);
(iii) Have sufficient strength to withstand twice the potential impact energy of the employee free falling a distance of 6 feet (1.8 m), or the free fall distance permitted by the system; and
(iv) Sustain the employee within the system/strap configuration without making contact with the employee's neck and chin area.
(v) If the personal fall arrest system meets the criteria and protocols in appendix D of this subpart, and is being used by an employee having a combined body and tool weight of less than 310 pounds (140 kg), the system is considered to be in compliance with the provisions of paragraphs (d)(1)(i) through (iii) of this section. If the system is used by an employee having a combined body and tool weight of 310 pounds (140kg) or more and the employer has appropriately modified the criteria and protocols in appendix D, then the system will be deemed to be in compliance with the requirements of paragraphs (d)(1)(i) through (iii).
(2)
(i) On any horizontal lifeline that may become a vertical lifeline, the device used to connect to the horizontal lifeline is capable of locking in both directions on the lifeline.
(ii) Personal fall arrest systems are rigged in such a manner that the employee cannot free fall more than 6 feet (1.8 m) or contact a lower level. A free fall may be more than 6 feet (1.8 m) provided the employer can demonstrate the manufacturer designed the system to allow a free fall of more than 6 feet and tested the system to ensure a maximum arresting force of 1,800 pounds (8 kN) is not exceeded.
(3)
(e)
(i)
(ii)
(A) Be capable of withstanding without failure a drop test consisting of a 6-foot (1.8-m) drop of a 250-pound (113-kg) weight; and
(B) Limit the initial arresting force on the falling employee to not more than 2,000 pounds (8.9 kN), with a duration not exceeding 2 milliseconds and any subsequent arresting forces to not more than 1,000 pounds (4.5 kN).
(iii) Positioning systems, including window cleaners' positioning systems, that meet the test methods and procedures in appendix D of this subpart are considered to be in compliance with paragraphs (e)(1)(i) and (ii).
(iv)
(A) A dielectric test of 819.7 volts, AC, per centimeter (25,000 volts per foot) for 3 minutes without visible deterioration;
(B) A leakage test of 98.4 volts, AC, per centimeter (3,000 volts per foot) with a leakage current of no more than 1 mA; and
(C) A flammability test in accordance with Table I-7 of this section.
(2)
(i) Window cleaners' belts are designed and constructed so that:
(A) Belt terminals will not pass through their fastenings on the belt or harness if a terminal comes loose from the window anchor; and
(B) The length of the runner from terminal tip to terminal tip is 8 feet (2.44 m) or less;
(ii) Window anchors to which belts are fastened are installed in the side frames or mullions of the window at a point not less than 42 inches (106.7 cm) and not more than 51 inches (129.5 cm) above the window sill;
(iii) Each window anchor is capable of supporting a minimum load of 6,000 pounds (26.5 kN);
(iv) Use of installed window anchors for any purpose other than attaching the window cleaner's belt is prohibited;
(v) A window anchor that has damaged or deteriorated fastenings or supports is removed, or the window anchor head is detached so the anchor cannot be used;
(vi) Rope that has wear or deterioration that affects its strength is not used;
(vii) Both terminals of the window cleaner's belt are attached to separate window anchors during any cleaning operation;
(viii) No employee works on a window sill or ledge on which there is snow, ice, or any other slippery condition, or one that is weakened or rotted;
(ix) No employee works on a window sill or ledge unless:
(A) The window sill or ledge is a minimum of 4 inches (10 cm) wide and slopes no more than 15 degrees below horizontal; or
(B) The 4-inch minimum width of the window sill or ledge is increased 0.4 inches (1 cm) for every degree the sill or ledge slopes beyond 15 degrees, up to a maximum of 30 degrees;
(x) The employee attaches at least one belt terminal to a window anchor before climbing through the window opening, and keeps at least one terminal attached until completely back inside the window opening;
(xi) Except as provided in paragraph (e)(2)(xii) of this section, the employee travels from one window to another by returning inside the window opening and repeating the belt terminal attachment procedure at each window in accordance with paragraph (e)(2)(x) of this section;
(xii) An employee using a window cleaner's positioning system may travel from one window to another while outside of the building, provided:
(A) At least one belt terminal is attached to a window anchor at all times;
(B) The distance between window anchors does not exceed 4 feet (1.2 m) horizontally. The distance between windows may be increased up to 6 feet (1.8 m) horizontally if the window sill or ledge is at least 1 foot (0.31 m) wide and the slope is less than 5 degrees;
(C) The sill or ledge between windows is continuous; and
(D) The width of the window sill or ledge in front of the mullions is at least 6 inches (15.2 cm) wide.
The following information generally applies to all personal fall protection systems and is intended to assist employers and employees comply with the requirements of § 1910.140 for personal fall protection systems.
(a) Planning considerations. It is important for employers to plan prior to using personal fall protection systems. Probably the most overlooked component of planning is locating suitable anchorage points. Such planning should ideally be done before the structure or building is constructed so that anchorage points can be used later for window cleaning or other building maintenance.
(b) Selection and use considerations. (1) The kind of personal fall protection system
(2) Where lanyards, connectors, and lifelines are subject to damage by work operations, such as welding, chemical cleaning, and sandblasting, the component should be protected, or other securing systems should be used. A program for cleaning and maintaining the system may be necessary.
(c) Testing considerations. Before purchasing a personal fall protection system, an employer should insist that the supplier provide information about its test performance (using recognized test methods) so the employer will know that the system meets the criteria in § 1910.140. Otherwise, the employer should test the equipment to ensure that it is in compliance. Appendix D to this subpart contains test methods which are recommended for evaluating the performance of any system. There are some circumstances in which an employer can evaluate a system based on data and calculations derived from the testing of similar systems. Enough information must be available for the employer to demonstrate that its system and the tested system(s) are similar in both function and design.
(d) Component compatibility considerations. Ideally, a personal fall protection system is designed, tested, and supplied as a complete system. However, it is common practice for lanyards, connectors, lifelines, deceleration devices, body belts, and body harnesses to be interchanged since some components wear out before others. Employers and employees should realize that not all components are interchangeable. For instance, a lanyard should not be connected between a body harness and a deceleration device of the self-retracting type (unless specifically allowed by the manufacturer) since this can result in additional free fall for which the system was not designed. In addition, positioning components, such as pole straps, ladder hooks and rebar hooks, should not be used in personal fall arrest systems unless they meet the appropriate strength and performance requirements of part 1910 (
(e) Employee training considerations. As required by §§ 1910.30 and 1910.132, before an employee uses a fall protection system, the employer must ensure that he or she is trained in the proper use of the system. This may include the following: The limits of the system; proper anchoring and tie-off techniques; estimating free fall distance, including determining elongation and deceleration distance; methods of use; and inspection and storage. Careless or improper use of fall protection equipment can result in serious injury or death. Employers and employees should become familiar with the material in this standard and appendix, as well as manufacturers' recommendations, before a system is used. It is important for employees to be aware that certain tie-offs (such as using knots and tying around sharp edges) can reduce the overall strength of a system. Employees also need to know the maximum permitted free fall distance. Training should stress the importance of inspections prior to use, the limitations of the equipment to be used, and unique conditions at the worksite that may be important.
(f) Instruction considerations. Employers should obtain comprehensive instructions from the supplier or a qualified person as to the system's proper use and application, including, where applicable:
(1) The force measured during the sample force test;
(2) The maximum elongation measured for lanyards during the force test;
(3) The deceleration distance measured for deceleration devices during the force test;
(4) Caution statements on critical use limitations;
(5) Limits of the system;
(6) Proper hook-up, anchoring and tie-off techniques, including the proper D-ring or other attachment point to use on the body harness;
(7) Proper climbing techniques;
(8) Methods of inspection, use, cleaning, and storage; and
(9) Specific lifelines that may be used.
(g) Inspection considerations. Personal fall protection systems must be inspected before initial use in each workshift. Any component with damage, such as a cut, tear, abrasion, mold, or evidence of undue stretching, an alteration or addition that might affect its effectiveness, damage due to deterioration, fire, acid, or other corrosive damage, distorted hooks or faulty hook springs, tongues that are unfitted to the shoulder of buckles, loose or damaged mountings, non-functioning parts, or wear, or internal deterioration must be removed from service immediately, and should be tagged or marked as unusable, or destroyed. Any personal fall protection system, including components, subjected to impact loading must be removed from service immediately and not used until a competent person inspects the system and determines that it is not damaged and is safe to use for personal fall protection.
(h) Rescue considerations. As required by § 1910.140(c)(21), when personal fall arrest systems are used, special consideration must be given to rescuing an employee promptly should a fall occur. The availability of rescue personnel, ladders, or other rescue equipment needs to be evaluated since there may be instances in which employees cannot self-rescue (
(i) Tie-off considerations. Employers and employees should at all times be aware that the strength of a personal fall arrest system is based on its being attached to an anchoring system that can support the system. Therefore, if a means of attachment is used that will reduce the strength of the system (such as an eye-bolt/snaphook anchorage), that component should be replaced by a stronger one that will also maintain the appropriate maximum deceleration characteristics. The following is a listing of some situations in which employers and employees should be especially cautious:
(1) Tie-off using a knot in the lanyard or lifeline (at any location). The strength of the line can be reduced by 50 percent or more if a knot is used. Therefore, a stronger lanyard or lifeline should be used to compensate for the knot, or the lanyard length should be reduced (or the tie-off location raised) to minimize free fall distance, or the lanyard or lifeline should be replaced by one which has an appropriately incorporated connector to eliminate the need for a knot.
(2) Tie-off around rough or sharp (
(3) Knots. Sliding hitch knots should not be used except in emergency situations. The one-and-one sliding hitch knot should never be used because it is unreliable in stopping a fall. The two-and-two, or three-and-three knots (preferable) may be used in emergency situations; however, care should be taken to limit free fall distances because of reduced lifeline/lanyard strength. OSHA requires that a competent or qualified person inspect each knot in a lanyard or vertical lifeline to ensure it meets the strength requirements in § 1910.140.
(j) Horizontal lifelines. Horizontal lifelines, depending on their geometry and angle of sag, may be subjected to greater loads than the impact load imposed by an attached component. When the angle of horizontal lifeline sag is less than 30 degrees, the impact force imparted to the lifeline by an attached lanyard is greatly amplified. For example, with a sag angle of 15 degrees the force amplification is about 2:1, and at 5 degrees sag it is about 6:1. Depending on the angle of sag, and the line's elasticity, the strength
(k) Eye-bolts. It must be recognized that the strength of an eye-bolt is rated along the axis of the bolt, and that its strength is greatly reduced if the force is applied at right angles to this axis (in the direction of its shear strength). Care should also be exercised in selecting the proper diameter of the eye to avoid creating a roll-out hazard (accidental disengagement of the snaphook from the eye-bolt).
(l) Vertical lifeline considerations. As required by § 1910.140(c)(3), each employee must have a separate lifeline when the lifeline is vertical. If multiple tie-offs to a single lifeline are used, and one employee falls, the movement of the lifeline during the arrest of the fall may pull other employees' lanyards, causing them to fall as well.
(m) Snaphook and carabiner considerations. As required by § 1910.140(c)(10), the following connections must be avoided unless the locking snaphook or carabiner has been designed for them because they are conditions that can result in rollout:
(1) Direct connection to webbing, rope, or a horizontal lifeline;
(2) Two (or more) snaphooks or carabiners connected to one D-ring;
(3) Two snaphooks or carabiners connected to each other;
(4) Snaphooks or carabiners connected directly to webbing, rope, or wire rope; and
(5) Improper dimensions of the D-ring, rebar, or other connection point in relation to the snaphook or carabiner dimensions which would allow the gate to be depressed by a turning motion.
(n) Free fall considerations. Employers and employees should always be aware that a system's maximum arresting force is evaluated under normal use conditions established by the manufacturer. OSHA requires that personal fall arrest systems be rigged so an employee cannot free fall in excess of 6 feet (1.8 m). Even a few additional feet of free fall can significantly increase the arresting force on the employee, possibly to the point of causing injury and possibly exceeding the strength of the system. Because of this, the free fall distance should be kept to a minimum, and, as required by § 1910.140(d)(2), must never be greater than 6 feet (1.8 m). To assure this, the tie-off attachment point to the lifeline or anchor should be located at or above the connection point of the fall arrest equipment to the harness. (Otherwise, additional free fall distance is added to the length of the connecting means (
(o) Elongation and deceleration distance considerations. During fall arrest, a lanyard will stretch or elongate, whereas activation of a deceleration device will result in a certain stopping distance. These distances should be available with the lanyard or device's instructions and must be added to the free fall distance to arrive at the total fall distance before an employee is fully stopped. The additional stopping distance may be significant if the lanyard or deceleration device is attached near or at the end of a long lifeline, which may itself add considerable distance due to its own elongation. As required by § 1910.140(d)(2), sufficient distance to allow for all of these factors must also be maintained between the employee and obstructions below, to prevent an injury due to impact before the system fully arrests the fall. In addition, a minimum of 12 feet (3.7 m) of lifeline should be allowed below the securing point of a rope-grab-type deceleration device, and the end terminated to prevent the device from sliding off the lifeline. Alternatively, the lifeline should extend to the ground or the next working level below. These measures are suggested to prevent the employee from inadvertently moving past the end of the lifeline and having the rope grab become disengaged from the lifeline.
(p) Obstruction considerations. In selecting a location for tie-off, employers and employees should consider obstructions in the potential fall path of the employee. Tie-offs that minimize the possibilities of exaggerated swinging should be considered.
This appendix contains test methods for personal fall protection systems which may be used to determine if they meet the system performance criteria specified in paragraphs (d) and (e) of § 1910.140.
Test methods for personal fall arrest systems (paragraph (d) of § 1910.140).
(a) General. The following sets forth test procedures for personal fall arrest systems as defined in paragraph (d) of § 1910.140.
(b) General test conditions.
(1) Lifelines, lanyards and deceleration devices should be attached to an anchorage and connected to the body harness in the same manner as they would be when used to protect employees.
(2) The fixed anchorage should be rigid, and should not have a deflection greater than 0.04 inches (1 mm) when a force of 2,250 pounds (10 kN) is applied.
(3) The frequency response of the load measuring instrumentation should be 120 Hz.
(4) The test weight used in the strength and force tests should be a rigid, metal cylindrical or torso-shaped object with a girth of 38 inches plus or minus 4 inches (96 cm plus or minus 10 cm).
(5) The lanyard or lifeline used to create the free fall distance should be supplied with the system, or in its absence, the least elastic lanyard or lifeline available should be used with the system.
(6) The test weight for each test should be hoisted to the required level and should be quickly released without having any appreciable motion imparted to it.
(7) The system's performance should be evaluated, taking into account the range of environmental conditions for which it is designed to be used.
(8) Following the test, the system need not be capable of further operation.
(c) Strength test.
(1) During the testing of all systems, a test weight of 300 pounds plus or minus 3 pounds (136.4 kg plus or minus 1.4 kg) should be used. (See paragraph (b)(4) of this appendix.)
(2) The test consists of dropping the test weight once. A new unused system should be used for each test.
(3) For lanyard systems, the lanyard length should be 6 feet plus or minus 2 inches (1.83 m plus or minus 5 cm) as measured from the fixed anchorage to the attachment on the body harness.
(4) For rope-grab-type deceleration systems, the length of the lifeline above the centerline of the grabbing mechanism to the lifeline's anchorage point should not exceed 2 feet (0.61 m).
(5) For lanyard systems, for systems with deceleration devices which do not automatically limit free fall distance to 2 feet (0.61 m) or less, and for systems with deceleration devices which have a connection distance in excess of 1 foot (0.3 m) (measured between the centerline of the lifeline and the attachment point to the body harness), the test weight should be rigged to free fall a distance of 7.5 feet (2.3 m) from a point that is 1.5 feet (46 cm) above the anchorage point, to its hanging location (6 feet (1.83 m) below the anchorage). The test weight should fall without interference, obstruction, or hitting the floor or ground during the test. In some cases a non-elastic wire lanyard of sufficient length may need to be added to the system (for test purposes) to create the necessary free fall distance.
(6) For deceleration device systems with integral lifelines or lanyards that automatically limit free fall distance to 2 feet (0.61 m) or less, the test weight should be rigged to free fall a distance of 4 feet (1.22 m).
(7) Any weight that detaches from the harness should constitute failure for the strength test.
(d) Force test.
(1) General. The test consists of dropping the respective test weight specified in paragraph (d)(2)(i) or (d)(3)(i) of this appendix once. A new, unused system should be used for each test.
(2) For lanyard systems. (i) A test weight of 220 pounds plus or minus three pounds (100 kg plus or minus 1.6 kg) should be used. (See paragraph (b)(4) of this appendix.)
(ii) Lanyard length should be 6 feet plus or minus 2 inches (1.83 m plus or minus 5 cm) as measured from the fixed anchorage to the attachment on the body harness.
(iii) The test weight should fall free from the anchorage level to its hanging location (a total of 6 feet (1.83 m) free fall distance) without interference, obstruction, or hitting the floor or ground during the test.
(3) For all other systems. (i) A test weight of 220 pounds plus or minus 2 pounds (100 kg plus or minus 1.0 kg) should be used. (See paragraph (b)(4) of this appendix.)
(ii) The free fall distance to be used in the test should be the maximum fall distance physically permitted by the system during normal use conditions, up to a maximum free fall distance for the test weight of 6 feet (1.83 m), except as follows:
(A) For deceleration systems having a connection link or lanyard, the test weight should free fall a distance equal to the connection distance (measured between the centerline of the lifeline and the attachment point to the body harness).
(B) For deceleration device systems with integral lifelines or lanyards that automatically limit free fall distance to 2 feet (0.61 m) or less, the test weight should free fall a distance equal to that permitted by the system in normal use. (For example, to test a system with a self-retracting lifeline or lanyard, the test weight should be supported and the system allowed to retract the lifeline or lanyard as it would in normal use. The test weight would then be released and the force and deceleration distance measured).
(4) Failure. A system fails the force test when the recorded maximum arresting force exceeds 2,520 pounds (11.2 kN) when using a body harness.
(5) Distances. The maximum elongation and deceleration distance should be recorded during the force test.
(e) Deceleration device tests.
(1) General. The device should be evaluated or tested under the environmental conditions (such as rain, ice, grease, dirt, and type of lifeline) for which the device is designed.
(2) Rope-grab-type deceleration devices. (i) Devices should be moved on a lifeline 1,000 times over the same length of line a distance of not less than 1 foot (30.5 cm), and the mechanism should lock each time.
(ii) Unless the device is permanently marked to indicate the type of lifelines that must be used, several types (different diameters and different materials), of lifelines should be used to test the device.
(3) Other self-activating-type deceleration devices. The locking mechanisms of other self-activating-type deceleration devices designed for more than one arrest should lock each of 1,000 times as they would in normal service.
Test methods for positioning systems (paragraph (e) of § 1910.140).
(a) General. The following sets forth test procedures for positioning systems as defined in paragraph (e) of § 1910.140. The requirements in this appendix for personal fall arrest systems set forth procedures that may be used, along with the procedures listed below, to determine compliance with the requirements for positioning systems.
(b) Test conditions.
(1) The fixed anchorage should be rigid and should not have a deflection greater than 0.04 inches (1 mm) when a force of 2,250 pounds (10 kN) is applied.
(2) For window cleaners' belts, the complete belt should withstand a drop test consisting of a 250 pound (113 kg) weight falling free for a distance of 6 feet (1.83 m). The weight should be a rigid object with a girth of 38 inches plus or minus 4 inches (96 cm plus or minus 10 cm). The weight should be placed in the waistband with the belt buckle drawn firmly against the weight, as when the belt is worn by a window cleaner. One belt terminal should be attached to a rigid anchor and the other terminal should hang free. The terminals should be adjusted to their maximum span. The weight fastened in the freely suspended belt should then be lifted exactly 6 feet (1.83 m) above its “at rest” position and released so as to permit a free fall of 6 feet (1.83 m) vertically below the point of attachment of the terminal anchor. The belt system should be equipped with devices and instrumentation capable of measuring the duration and magnitude of the arrest forces. Failure of the test should consist of any breakage or slippage sufficient to permit the weight to fall free of the system. In addition, the initial and subsequent arresting forces should be measured and should not exceed 2,000 pounds (8.5 kN) for more than 2 milliseconds for the initial impact, or exceed 1,000 pounds (4.5 kN) for the remainder of the arrest time.
(3) All other positioning systems (except for restraint line systems) should withstand a drop test consisting of a 250 pound (113 kg) weight free falling a distance of 4 feet (1.2 m). The weight must be a rigid object with a girth of 38 inches plus or minus 4 inches (96 cm plus or minus 10 cm). The body belt or harness should be affixed to the test weight as it would be to an employee. The system should be connected to the rigid anchor in the manner that the system would be connected in normal use. The weight should be lifted exactly 4 feet (1.2 m) above its “at rest” position and released so as to permit a vertical free fall of 4 feet (1.2 m). Failure of the system should be indicated by any breakage or slippage sufficient to permit the weight to fall free to the ground.
29 U.S.C. 653, 655, 657; Secretary of Labor's Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), 6-96 (62 FR 111), 3-2000 (65 FR 50017), 5-2002 (67 FR 65008), 5-2007 (72 FR 31159), 4-2010 (75 FR 55355), or 1-2012 (77 FR 3912), as applicable; and 29 CFR part 1911.
(j)
(c) * * *
(2)
(d) * * *
(3)
(4) * * *
(iii) Ladders shall be permanently and securely fastened in place and constructed in compliance with subpart D of this part.
29 U.S.C. 653, 655, 657; Secretary of Labor's Order No. 12-71 (36 FR 8754), 8-76 (41 FR 25059), 9-83 (48 FR 35736), 1-90 (55 FR 9033), 6-96 (62 FR 111), 5-2007 (72 FR 31159), 4-2010 (75 FR 55355), or 1-2012 (77 FR 3912), as applicable; and 29 CFR part 1911.
(c) * * *
(15) * * *
(ii) Where conveyors cross passageways or roadways, a horizontal platform shall be provided under the conveyor, extended out from the sides of the conveyor a distance equal to 1
(e) * * *
(4)
(g) * * *
(2) * * *
(ii) The worker shall be provided with eye protection, a supplied air respirator and a personal fall protection system that meets the requirements of subpart I of this part, during inspection, repairs or maintenance of acid towers. The line shall be extended to an attendant stationed outside the tower opening.
(13) * * *
(i) Blow-pit openings preferably shall be on the side of the pit instead of on the top. Openings shall be as small as possible when located on top, and shall be protected in accordance with subpart D of this part.
(h) * * *
(1)
(j) * * *
(4) * * *
(iii) When beaters are fed from the floor above, the chute opening, if less than 42 inches (1.06 m) from the floor, shall be provided with a guardrail system that meets the requirements in subpart D of this part, or other equivalent enclosures. Openings for manual feeding shall be sufficient only for entry of stock, and shall be provided with at least two permanently secured crossrails or other fall protection system that meet the requirements in subpart D.
(5) * * *
(i) All pulpers having the top or any other opening of a vessel less than 42 inches (107 cm) from the floor or work platform shall have such openings guarded by guardrail systems that meet the requirements in subpart D of this part, or other equivalent enclosures. For manual changing, openings shall be sufficient only to permit the entry of stock, and shall be provided with at least two permanently secured crossrails, or other fall protection systems that meet the requirements in subpart D.
(k) * * *
(6)
(13) * * *
(i) A guardrail that complies with subpart D of this part shall be provided at broke holes.
(15)
(r)
(c) * * *
(4) * * *
(v)
(5) * * *
(i)
(f) * * *
(6)
The revisions read as follows:
(g)
(h)
(g) * * *
(2) * * *
(i) Personal fall arrest systems shall meet the requirements of subpart I of this part.
(iv) * * *
(B) Personal fall arrest systems shall be used in accordance with subpart I of this part.
Fall protection equipment rigged to arrest falls is considered a fall arrest system and must meet the applicable requirements for the design and use of those systems. Fall protection equipment rigged for work positioning is considered work-positioning equipment and must meet the applicable requirements for the design and use of that equipment.
(C) * * *
(1) Each employee working from an aerial lift shall use a travel restraint system or a personal fall arrest system.
Bureau of Land Management, Interior.
Final rule.
The Bureau of Land Management (BLM) is promulgating new regulations to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian (other than Osage Tribe) leases. The regulations also clarify when produced gas lost through venting, flaring, or leaks is subject to royalties, and when oil and gas production may be used royalty-free on-site. These regulations replace the existing provisions related to venting, flaring, and royalty-free use of gas contained in the 1979 Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL-4A), which are over 3 decades old.
The final rule is effective on January 17, 2017.
Timothy Spisak at the BLM Washington Office, 20 M Street SE., Room 2134LM, Washington, DC 20003, or by telephone at 202-912-7311. For questions relating to regulatory process issues, contact Faith Bremner at 202-912-7441.
Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service (FRS) at 1-800-877-8339 to contact these individuals during normal business hours. FRS is available 24 hours a day, 7 days a week to leave a message or question with these individuals. You will receive a reply during normal business hours.
This final regulation aims to reduce the waste of natural gas from mineral leases administered by the BLM. This gas is lost during oil and gas production activities through venting or flaring of the gas, and through equipment leaks. While oil and gas production technology has advanced dramatically in recent years, the BLM's rules to minimize waste of gas have not been updated in over 30 years. The Mineral Leasing Act of 1920 (MLA) requires the BLM to ensure that lessees “use all reasonable precautions to prevent waste of oil or gas developed in the land,” 30 U.S.C. 225, and that leases include “a provision that such rules . . . for the prevention of undue waste as may be prescribed by [the] Secretary shall be observed,”
The BLM's onshore oil and gas management program is a major contributor to our nation's oil and gas production. The BLM manages more than 245 million acres of land and 700 million acres of subsurface estate, making up nearly a third of the nation's mineral estate. Domestic production from 96,000 Federal onshore oil and gas wells accounts for 11 percent of the Nation's natural gas supply and 5 percent of its oil. In Fiscal Year (FY) 2015, operators produced 183.4 million barrels (bbl) of oil, 2.2 trillion cubic feet (Tcf) of natural gas, and 3.3 billion gallons of natural gas liquids (NGLs) from onshore Federal and Indian oil and gas leases. The production value of this oil and gas exceeded $20.9 billion and generated over $2.3 billion in royalties, which were shared with tribes, Indian allottee owners, and States.
Venting, flaring, and leaks waste a valuable resource that could be put to productive use, and deprive American taxpayers, tribes, and States of royalty revenues. In addition, the wasted gas may harm local communities and surrounding areas through visual and noise impacts from flaring, and contribute to regional and global air pollution problems of smog, particulate matter, and toxics (such as benzene, a carcinogen). Finally, vented or leaked gas contributes to climate change, because the primary constituent of natural gas is methane, an especially powerful greenhouse gas (GHG), with climate impacts roughly 25 times those of carbon dioxide (CO
Congress has directed the BLM to oversee Federal and Indian oil and gas activities under multiple laws, including the MLA, the Mineral Leasing Act for Acquired Lands of 1947 (MLAAL), the Federal Oil and Gas Royalty Management Act (FOGRMA), the Federal Land Policy and Management Act of 1976 (FLPMA), the Indian Mineral Leasing Act of 1938 (IMLA), the Indian Mineral Development Act of 1982 (IMDA), and the Act of March 3, 1909.
Advancing those mandates, this rule replaces the BLM's decades-old NTL-4A requirements related to venting and flaring, and to royalty-free use of oil and gas production; amends the BLM's oil and gas regulations at 43 CFR part 3160 to include requirements for a waste minimization plan; and adds new subparts 3178 and 3179 to 43 CFR part 3170 that address royalty-free use of lease production (subpart 3178) and waste prevention through reduction of venting, flaring and leaks (subpart 3179). This rule will apply to all Federal and Indian (other than Osage Tribe) onshore oil and gas leases as well as leases and business agreements entered into by tribes (including IMDA agreements), as consistent with those agreements and with principles of Federal Indian law.
This rule implements recommendations from several oversight reviews, including reviews by the Office of the Inspector General of the Department of the Interior (OIG) and the Government Accountability Office (GAO). These reviews raised concerns about waste of gas from Federal and Indian production, found that the BLM's existing requirements regarding venting and flaring are insufficient and outdated, and expressed concerns about the “lack of price flexibility in royalty
The BLM has engaged in substantial stakeholder outreach in the course of developing this proposal. In 2014, the BLM conducted a series of forums to consult with tribal governments and to solicit stakeholder views to inform the development of this proposed rule, with public meetings (some of which were livestreamed) in Colorado, New Mexico, North Dakota, and Washington, DC.
The BLM is not the only regulator with the responsibility to oversee aspects of onshore oil and gas production, and throughout this rulemaking the BLM has focused on potential interactions of this rule with other Federal, State, or tribal regulatory requirements. For example, the U.S. Environmental Protection Agency (EPA) issued rules in 2012 and early 2016 to control emissions of methane and volatile organic compounds (VOCs) from new, modified and reconstructed oil and gas wells and production equipment, and many States and tribes regulate aspects of the oil and gas production process to address safety, waste, production accountability, and/or air quality concerns. Regulatory agencies often have overlapping authority and may adopt very similar measures to realize those complementary goals, such as improving air quality and reducing waste. For example, measures in this rule that aim to avoid the waste of methane gas through venting or leaks will also reduce methane pollution.
The BLM recognizes that overlapping regulatory regimes can create difficulties for operators, and has therefore very carefully considered and minimized potential overlaps with other Federal, State, or tribal regulations. The BLM aligned the requirements of this new rule with similar requirements adopted by the EPA and States, where practicable, and exempted equipment complying with relevant EPA requirements from overlapping requirements of this rule. In addition, this rule includes a provision that authorizes the BLM to grant variances from particular BLM requirements if a State or tribe demonstrates that a State, local, or tribal regulation imposes equally effective requirements.
It is critical to note, however, that neither EPA nor State and tribal requirements obviate the need for this rule. First, the BLM has an independent legal responsibility and a proprietary interest as a land and resource manager to oversee and minimize waste from oil and gas production activities conducted pursuant to Federal and Indian (other than Osage Tribe) leases, as well as to ensure that development activities on Federal and Indian leases are performed in a safe, responsible, and environmentally protective matter. The BLM's existing venting and flaring requirements are over 30 years old and predate significant technological developments. Updating and clarifying those requirements will make them more effective, more transparent, and easier to understand and administer; and will reduce operators' compliance burdens in some respects. The BLM must carry out its responsibility, delegated by Congress, to ensure that the public's resources are not wasted and are developed in a manner that provides for long-term productivity and sustainability.
Second, as a practical matter, neither EPA nor State and tribal regulations fully address the issue of waste of gas from BLM-administered leases. The EPA regulations are directed at air pollution reduction, not waste prevention; they cover only new, modified and reconstructed sources; and they do not address wasteful routine flaring of associated gas from oil wells, among other things. Similarly, no State or tribe has established a comprehensive set of requirements addressing all three avenues for waste—venting, flaring, and leaks—and only a few States have significant requirements in even one of these areas. The BLM therefore believes this rule is a necessary step in fulfilling its statutory mandate to minimize waste of the public's and tribes' natural gas resources.
This rule requires operators to take various actions to reduce waste of gas, establishes clear criteria for when flared gas will qualify as waste and therefore be subject to royalties, and clarifies which on-site uses of gas are exempt from royalties. The rule focuses on several key points or processes in the oil and gas production process where waste-prevention actions are most effective and least costly: Venting and flaring of associated gas from development oil wells (routine flaring occurs at oil wells that dispose of gas as a waste product), gas leaks from equipment at the well site or elsewhere on the lease, operation of high-bleed pneumatic controllers and certain pneumatic pumps, gas emissions from storage vessels, downhole well maintenance and liquids unloading, and well drilling and completions. The following discussion summarizes the rule's requirements applicable to each of these aspects of the production process, and also outlines the rule's provisions with respect to royalties, and the interaction between the rule and related EPA and State or tribal regulations.
In 2014, operators vented about 30 Bcf and flared at least 81 Bcf of natural gas from BLM-administered leases, totaling 4.1 percent of the total production from those leases in that year, and sufficient gas to supply nearly 1.5 million households with gas for a year.
This rule prohibits venting of natural gas, except under certain specified conditions, such as in an emergency or when flaring is technically infeasible.
The final rule gives operators the option to meet their capture targets on a lease-by-lease basis, or an average basis over all of their Federal or Indian production from development oil wells county-by-county or State-by-State. Giving operators the ability to average their rates of gas capture over geographic areas beyond individual leases enhances flexibility and makes the targets less costly to meet. Similarly, the more extended phasing in of the capture targets eases costs and compliance burdens, while allowing appropriate planning and investment by industry to meet more stringent targets in out years. At the same time, the BLM recognizes that it has a statutory responsibility to ensure that operators minimize waste of public resources. Accordingly, the BLM has structured the capture targets to ensure that operators will achieve overall reductions in wasteful flaring that are comparable to, and eventually slightly greater than, what the BLM estimated would have been achieved under the proposed rule.
The BLM estimates that, once fully implemented, the capture targets will reduce flaring by up to 49 percent relative to 2015 levels. Like the proposed rule, the final rule also retains the BLM's discretion to craft alternative requirements for certain operators that cannot meet the baseline flaring reduction obligations. Specifically, the final rule allows the BLM to adjust the capture target for an operator on an existing lease that demonstrates to the BLM that meeting the target would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease. In assessing the operator's showing, the BLM will consider the costs of gas capture, and the costs and revenues of all oil and gas production on the lease.
As explained in the proposed rule, the initial flaring limitations were intended to motivate operators to increase their capture of gas associated with oil development, since a reduction in flaring is achieved most effectively by an increase in capture. Consequently, flaring limitations and capture requirements are two sides of the same coin. Increasing capture is the BLM's primary goal in imposing these waste prevention requirements, and we concluded that it would be a more direct means of achieving that goal to require capture rather than merely encourage it through the imposition of flaring limits. In modifying the rule in this way, we have determined that both approaches are expected to achieve comparable results, in terms of both increasing capture and reducing wasteful flaring.
In addition, this rule finalizes the proposal to require operators to submit a Waste Minimization Plan when they apply for a permit to drill a new development oil well. Preparation of a Waste Minimization Plan ensures that the operator carefully considers and plans for how it will capture the gas that will be produced, before the operator drills a well. While the provisions of a plan will not be enforceable against the operator, plan submission is mandatory, and the plan must include specific elements listed in the regulations. As in the proposed rule, failure to submit a complete and adequate plan could be grounds for denial of an application for permit to drill (APD).
Based on our estimates, leaks are the second largest source of vented gas from Federal and Indian leases, accounting for about 4 Bcf of the natural gas lost in 2014.
Like the proposed rule, the final rule requires operators to use an instrument-based approach to leak detection. The final rule allows operators to use optical gas imaging equipment, portable analyzers deployed according to the protocol prescribed in EPA's Method 21,
Like the proposed rule, the final rule includes requirements to update old, inefficient equipment and to follow best practices to minimize waste through venting. These provisions address gas losses from pneumatic controllers and pumps, storage vessels, liquids
We estimate that on BLM-administered leases in 2014, operators lost about 14.9 Bcf of natural gas from pneumatic controllers and about 2.3 Bcf from pneumatic pumps.
For pneumatic pumps, the final rule requires the operator to replace pneumatic diaphragm pumps that operate 90 or more days per year with zero-emissions pumps, or route the pump exhaust gas to processing equipment. If use of a pneumatic pump is required based on the function the pump must serve, and the operator determines that routing the exhaust gas to processing equipment would be technically infeasible or unduly costly, the operator must route the pneumatic diaphragm pump to a combustor or flare, if one is located on the site.
The BLM modified the requirements in the proposed rule for pneumatic pumps in response to comments and to better align with the EPA's final subpart OOOOa requirements. For example, the BLM eliminated the proposed requirements for chemical injection pumps and diaphragm injection pumps that operate relatively infrequently, as we believe that these pumps vent relatively small quantities of gas. Like the proposed rule, the final rule does not apply to pneumatic pumps that are subject to EPA regulations.
The final rule provides that an operator can receive an exemption from the requirements for pneumatic controllers or pumps if the operator demonstrates and the BLM concurs that replacing the pneumatic pump(s) would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease. In making this determination, the BLM will consider the costs of capture, and the costs and revenues of all oil and gas production on the lease.
We estimate that 2.94 Bcf of natural gas was lost in 2014 from storage tank venting on Federal and Indian lands.
Like the proposed rule, this final rule includes requirements to reduce gas losses from existing storage vessels, which are not covered by the EPA standards. Using the same applicability threshold as EPA and Colorado (6 tpy of VOCs, which the BLM is using as a proxy for natural gas losses since the VOCs in this context are coming from the natural gas from storage vessels), the rule requires operators to route storage vessel vapor gas to a sales line, if the storage vessel has the potential to emit at least 6 tpy of VOCs. If an operator determines that compliance with this requirement is technically infeasible or unduly costly, the operator may instead route the tank vapor gas to a combustor or flare. Like the proposed rule, this final rule allows operators to request an exemption from these requirements if the operator demonstrates, and the BLM concurs, that complying with the requirements would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease. In making this determination, the BLM will consider the costs of compliance, and the costs and revenues of all oil and gas production on the lease.
We estimate that 3.26 Bcf of natural gas was lost in 2014 during liquids unloading operations on Federal and Indian lands.
The final rule does not adopt the provision from the proposed rule that would have prohibited manual well purging from new wells, due to concerns about the technical feasibility of such a ban. Instead, the final rule requires an operator to: (1) Minimize gas vented to unload liquids, consistent with safe operations; (2) optimize the operation of the plunger lift or automated well control system, at wells equipped with such a system, to minimize gas losses from the system to the extent possible; (3) consider other methods for liquids unloading and determine that they are technically infeasible or unduly costly, prior to manually purging a well for the first time; and (4) comply with specified procedures and document venting events when unloading liquids by manual well purging.
We estimate that in 2014, 1.12 Bcf of natural gas was lost during drilling, completion, and refracturing (sometimes referred to by the broader term “workover”) operations on BLM-administered leases.
The final rule revises 43 CFR 3103.3-1, which governs royalty rates applicable to onshore oil and gas leases, to make the rule text parallel to the BLM's statutory authority, which specifies that competitively-issued BLM-administered leases “shall be conditioned upon the payment of a royalty at a rate of
Like the proposed rule, the final rule specifies the fixed, statutory rate of 12.5 percent for all noncompetitive leases issued after the effective date of the rule, as required by statute.
Like the proposed rule, the final rule also updates the pre-existing royalty provisions in NTL-4A to more clearly and specifically define when a loss of gas is considered “unavoidable” and royalty-free, and when it is considered “avoidable” and subject to royalties. A loss of gas is deemed unavoidable when an operator has complied with all applicable requirements and taken prudent and reasonable steps to avoid waste, and the gas is lost from one of the operations or sources specified in this final regulation, subject to certain limitations. The specified operations and sources include emergencies; well drilling, completions, and tests; normal operations of pneumatic devices and storage vessels; liquids unloading; leaks; equipment or pipeline maintenance requiring depressurization; and residual gas after stripping of natural gas liquids. A loss of gas is also deemed unavoidable when gas is flared from a well that is not connected to a gas pipeline, provided the BLM has not otherwise determined that the loss of gas is avoidable. All other losses of gas, as well as any gas flared in violation of the capture requirement (regardless of whether the well is connected to a pipeline), are deemed avoidable and subject to royalties. By establishing clear-cut categories for unavoidable and avoidable losses, the final rule will dramatically reduce the large number of requests for approval to flare royalty-free that operators have had to file and the BLM has had to process each year.
Like the proposed rule, this final rule seeks to minimize regulatory overlap. Thus, if EPA and/or States or tribes have adopted requirements that are at least as effective as and would potentially overlap with the provisions of this rule, the final rule provides a means for operators to comply with the EPA, State, local or tribal requirements in lieu of the BLM requirements. Specifically, in cases in which EPA rules limit venting from equipment or require leak inspections and repairs, those operators that are in compliance with those EPA requirements are deemed, under this rule, to be in compliance with the comparable BLM requirements. With respect to State, local, or tribal rules, the final rule allows a State or tribe to request a variance from a particular BLM regulation. If the variance is granted, the BLM has the authority to enforce the specific provisions of the State, local, or tribal rule for which the variance was granted, in lieu of the comparable provisions of the BLM rule. As clarified in the final rule, the BLM may grant a State or tribal variance request only if the BLM determines that the State, local, or tribal rule would perform at least as well as the BLM provision to which the variance would apply, in terms of reducing waste of oil and gas, reducing environmental impacts from venting and/or flaring of gas, and ensuring the safe and responsible production of oil and gas.
Like the proposed rule, the final rule includes provisions that update and clarify pre-existing BLM requirements regarding when operators may use oil or gas from a lease for production activities without owing royalties on the oil or gas used. In addition, like the proposed rule, the final rule includes provisions specifying when operators must measure the volumes of gas vented or flared, and requiring operators to report to ONRR volumes of gas vented or flared.
Overall, the BLM estimates that the benefits of this rule would outweigh its costs by a significant margin. Under certain assumptions, for example, the rule is expected to produce net benefits ranging from $46 million to $199 million per year (annualizing capital costs using a 7 percent discount rate) or from $50 million to $204 million per year (annualizing capital costs using a 3 percent discount rate).
The BLM estimates that this rule will pose costs ranging from $114-$279 million per year (using a 7 percent discount rate to annualize capital costs) or $110-$275 million per year (using a 3 percent discount rate to annualize capital costs) over the next 10 years.
In some areas, operators have already undertaken, or plan to undertake, voluntary actions to address gas losses. To the extent that operators are already in compliance with the requirements of this final rule, the above estimates overstate the likely impacts of the rule.
We expect that cost impacts on individual operators would be small, even for businesses with less than 500 employees. In the Regulatory Impact Analysis (RIA), we estimate that average costs for a representative small operator would increase by about $55,200, which would result in an average reduction in
We measure the benefits of the rule as the cost savings that the industry would receive from the recovery and sale of natural gas and the environmental benefits of reducing the amount of methane (a potent GHG) and other air pollutants released into the atmosphere. As with the estimated costs, we expect benefits on an annual basis. The BLM estimates that this rule would result in monetized benefits of $209-$403 million per year (using model averages of the social cost of methane with a 3 percent discount rate).
Adoption of the final rule will also have numerous ancillary benefits. These include improved quality of life for nearby residents, who note that flares are noisy and unsightly at night; reduced release of VOCs, including benzene and other hazardous air pollutants; and reduced production of nitrogen oxides (NOx) and particulate matter, which can cause respiratory and heart problems.
Overall, the BLM estimates that the benefits of this rule outweigh its costs by a significant margin. The BLM expects net benefits ranging from $46-$199 million per year (using a 7 percent discount rate to annualize capital costs) or $50-$204 million per year (using a 3 percent discount rate to annualize capital costs). Specifically, assuming a 7 percent discount rate to annualize capital costs, we estimate the following annual net benefits in selected years:
• $99-$115 million in 2018;
• $51-$93 million in 2022; and
• $120-$189 million in 2026.
Assuming a 3 percent discount rate to annualize capital costs, we estimate the annual net benefits would be:
• $103-$119 million in 2018;
• $55-$97 million in 2022; and
• $125-$193 million in 2026.
The final rule has a number of requirements that are expected to influence the production of natural gas, NGLs, and crude oil from onshore Federal and Indian oil and gas leases. We estimate the following incremental changes in production, noting the representative share of the total U.S. production in 2015 for context. We estimate additional natural gas production, ranging from 9-41 Bcf per year (representing 0.03-0.15 percent of the total U.S. production), and a reduction in crude oil production ranging from 0.0-3.2 million bbl per year (representing 0-0.07 percent of the total U.S. production). We also expect 0.8 Bcf of gas to be combusted on-site that would have otherwise been vented. Combined, the rule will reduce venting by about 35 and reduce flaring by 49%, depending on the year.
Since the relative changes in production are expected to be small, we do not expect that the final rule will significantly impact the price, supply, or distribution of energy.
We estimate that this final rule will produce additional royalties of $3-$10 million per year (discounted at 7 percent) or $3-$14 million per year (discounted at 3 percent).
The BLM's onshore oil and gas management program is a major contributor to the nation's oil and gas production. The BLM manages more than 245 million acres of land and 700 million acres of subsurface estate, comprising nearly a third of the nation's mineral estate. Domestic production from over 96,000 Federal onshore oil and gas wells accounts for 11 percent of the Nation's natural gas supply and 5 percent of its oil supply. In FY 2015, the ONRR reported that operators produced 183.4 million bbl of oil, 2.6 Tcf of natural gas, and 3.3 billion gallons of NGLs from onshore Federal and Indian oil and gas leases. The production value of this oil and gas exceeded $20.9 billion and generated over $2.3 billion in royalties.
Over the past decade, the United States has experienced a dramatic increase in oil and natural gas production due to technological advances, such as hydraulic fracturing combined with directional drilling. This boost in production has brought many benefits in the form of expanded and more secure domestic supplies, lower prices, increased economic activity in certain regions of the country, and greater royalty revenues for Federal, State, and tribal governments.
At the same time, the American public has not benefited from the full potential of this increased production, as the increase in oil production has been accompanied by significant and growing quantities of wasted natural gas. Between 2009 and 2015, operators on BLM-administered leases wasted enough natural gas to serve over 6.2 million homes for 1 year, according to data reported to ONRR.
As explained in the proposed rule preamble section IV.B, natural gas is a limited and valuable public resource, which is critical to U.S. energy security and national security. Natural gas also provides significant economic benefits as an energy source for electricity generation and industrial and residential use, and as a feedstock for manufacturing. Royalty payments on natural gas sales provide Federal, State, and tribal governments with over $3 billion in revenues each year.
Venting, flaring, and leaks of natural gas from production on BLM-administered sites waste this limited natural resource and deprive the American public and tribes of the security and economic benefits that this resource, which belongs to the public and tribes, would otherwise provide. In addition to the economic and security losses, the waste of natural gas also imposes public health and environmental costs, in the form of air pollution, such as smog and regional haze; emissions of hazardous air pollutants, some of which are carcinogenic; and emissions of methane, a powerful contributor to global warming and a primary target for reduction under the President's Climate Action Plan.
The purpose of this rule is to reduce waste of natural gas owned by the American public and tribes, which occurs during the oil and gas production process. While the BLM already regulates venting and flaring of natural gas during oil and gas production on Federal and Indian (other than Osage Tribe) leases, the current requirements are over 30 years old and do not reflect modern technologies, practices, and understanding of the harms caused by venting, flaring, and leaks of gas. Oversight reviews have also suggested that the current requirements are insufficiently clear in their directives, which complicates implementation for BLM staff and creates uncertainty for oil and gas operators. Today's rule updates the existing provisions to direct operators to take reasonable and common-sense measures to prohibit routine venting, minimize the quantities of natural gas routinely flared, reduce natural gas losses through leaks, and deploy up-to-date technology to reduce routine losses from production equipment.
As explained in the proposed rule preamble section IV.H.1, while there is some uncertainty regarding the total volume of natural gas lost during production on public and tribal lands, the volume is unacceptably high.
There is no single definitive source for the total volume of natural gas losses from oil and gas production on Federal Lands. BLM efforts to estimate the total volume are informed by the Oil and Gas Operations Report Part B (OGOR-B) filed with the ONRR, the EPA Greenhouse Gas Inventory,
These data are reported by operators on BLM-administered leases, but the production is actually derived from lands with various ownership patterns. Of the vented and flared gas reported to ONRR, 15 percent came from wells extracting only Federal minerals; 8.8 percent came from wells extracting only Indian minerals, and 76.2 percent from wells extracting minerals with mixed ownership (some combination of Federal, Indian, fee (private) and State minerals).
Finally, the BLM notes that available data suggest the problem of natural gas loss on BLM-administered leases is growing. The total amounts of annual reported flaring from Federal and Indian leases increased by over 1000 percent from 2009 through 2015.
Another indicator of the increase of flaring on Federal and Indian lands is the increased number of applications to vent or flare royalty-free that the BLM has received from operators. In 2005, the BLM received just 50 applications to vent or flare gas. In 2011, the BLM received 622 applications, and this doubled again within 3 years to 1,248 applications in 2014. BLM field offices indicate that most of the additional applications were for flaring of associated gas from oil wells in New Mexico, Montana, the Dakotas, and, to a lesser extent, Wyoming.
The proposed rule preamble section IV.H.2 discussed recent efforts to improve our understanding of the quantities of natural gas lost through venting and leaks during the production process, and it highlighted a number of recent studies. These include both “bottom up” studies, which attempt to improve the accuracy and understanding of current estimates by conducting site-specific intensive measurements of losses during the production process, and “top down” studies, which use aircraft and tracers to quantify atmospheric methane levels and attribute them to oil and gas production activities. Several of these recent studies by government, industry, and environmental organizations suggest that emission levels are higher than those estimated using the DOI and EPA data, and in particular, some studies highlighted emissions levels two to three times higher than those based on EPA data. They also provided information on the distribution of gas leaks, which are heavily concentrated at “super-emitter” facilities, and highlighted the challenges in predicting which sites will experience super-emitter conditions. Commenters on the proposed rule pointed to additional studies, some issued after the proposal, that further demonstrate significant gas loss, the potential to reduce such waste through various technologies and practices, and the need for widespread leak detection and repair.
Commenters pointed to both bottom up and top down studies that suggest BLM's estimate of natural gas waste is conservative. For example, EPA's 2016 GHG Inventory was released in April 2016 (after BLM issued its proposed rule), and provides estimates of methane loss from the oil and gas sector that are significantly greater than previous estimates.
Commenters also referenced a 2013 top-down study led by the National Oceanic and Atmospheric Administration (NOAA) that estimated emissions from an oil and natural gas production field in Uintah County, Utah, using atmospheric measurements in a mass balance approach. The measurements, published in Geophysical Research Letters, suggested an emission rate between 6.2 and 11.7 percent of production, allowing for uncertainties in gas composition and gas production.
In meetings pursuant to E.O. 12866, stakeholders referenced a new study published in
There have also been recent and ongoing studies of so-called “super-emitters,” which account for a disproportionate quantity of the losses. One of these is a study by Zavala et al., published on July 7, 2015, in
In 2015, a team of scientists at Colorado State University published studies based on direct measurements of emissions from 114 gathering facilities at sixteen different processing plants. The study found that 30 percent of facilities were responsible for approximately 80 percent of the venting. Substantial venting occurred at liquid storage tanks at approximately 20 percent of the facilities where emission rates were four times the average rate. Moreover, the high emitting facilities were generally capable of immediate emission reductions through operating adjustments, such as adjusting the operating pressure of the separation equipment.
In 2012, the City of Fort Worth, Texas, sponsored a study of 375 oil and gas production facilities. It found that thief hatches were the largest source, and pneumatic controllers were the most frequent source, of fugitive emissions at well pads and compressor stations. These leaks were often due to operator error or inadequate maintenance.
Commenters also pointed to the largely random nature of significant leaks. A recent study, authored by Lyon et al., used optical gas imaging to survey 8,220 oil and gas well pads through aerial surveys. The study found only a small correlation between the probability of detection of a leak and site characteristics, such as well count, well age, gas production, oil production, and water production. The stochastic and diverse nature of the sites with leaks, along with the level of waste observed, provides further support for broadly applicable leak detection and repair programs.
Both the Zavala and Lyon studies observed that leak rates are not strongly correlated with well production rates—that is, higher and lower producing wells can both have significant levels of natural gas waste. Specifically, the Zavala study found small producing sites (10-100 Mcf/day) were twice as likely as those sites an order of magnitude larger (100-1,000 Mcf/day) to be among the 5% of sites with the
Another recent study by the Colorado Air Pollution Control Division surveyed oil and gas wells over two years using optical gas imaging. The research revealed a significant number of leaks, but also highlighted that it is possible to achieve immediate reduction or minimization of waste from production facilities with timely identification and repair of leaks. The survey spanned from July 2013 through June of 2015 and covered over 4,400 facilities. The optical gas imaging technology identified gas lost through leaks or vents at more than 25 percent of the facilities, with the majority of these leaks or vents occurring at storage tanks.
As discussed in detail in the proposed rule preamble at section IV.E, venting, flaring, and royalty-free uses of oil and natural gas on BLM-administered leases are currently governed by NTL-4A. This “Notice to Lessees” was issued by the U.S. Geological Survey on December 27, 1979, before the BLM assumed oversight responsibility for onshore oil and gas development and production. NTL-4A places limitations on venting or flaring of gas-well or oil-well gas, unless approved in writing by BLM. NTL-4A also specifies the circumstances under which an operator owes royalties on oil or gas that is lost from a lease.
In the past 37 years since NTL-4A was issued, oil and gas production technologies and practices have advanced considerably, particularly with the development of modern hydraulic fracturing techniques and directional drilling. Technologies for capturing and using gas on-site, detecting leaks, powering equipment, controlling vapors from storage vessels, removing liquids from gas wells, and many other aspects of the production process have also advanced. Not surprisingly, NTL-4A neither reflects today's best practices and advanced technologies, nor is particularly effective in minimizing waste of public minerals, as the previously described data and studies show. In addition, as discussed in the preamble to the proposed rule, ambiguities have arisen regarding how NTL-4A is interpreted and implemented by various BLM offices and industry entities. There is a compelling need to update these requirements to make them clearer, more effective, and reflective of modern technologies and practices.
External oversight reviews strongly support the BLM's conclusion that the current NTL-4A requirements need to be updated, and many of the changes made in this rule implement recommendations from relevant oversight reviews. As discussed in the proposed rule, key oversight reviews that influenced the development of this rule include: (1) A December 2007 Royalty Policy Committee (RPC) report,
In July 2016, the GAO issued another report relevant to this rule. The 2016 report entitled, “
Understanding that other Federal, State and tribal rules also apply to aspects of onshore oil and gas production, the BLM has aimed to ensure that this rule will complement other regulatory requirements. As noted earlier, for example, the EPA issued rules in 2012 and May of 2016 to control emissions of methane and VOCs from new, modified and reconstructed oil and gas wells and production equipment, and many States and tribes also regulate aspects of the production process to address safety, waste, production accountability, and/or air quality concerns.
In updating the BLM regulations, the BLM carefully considered and accounted for these potentially overlapping regimes. Thus, to the maximum extent possible, today's rule aligns its requirements with similar requirements adopted by the EPA or the States, exempts equipment and processes covered by EPA requirements, and authorizes the BLM to grant variances from particular rule provisions if a petitioner State or tribe can show that a State, local, or tribal requirement is at least as effective as the corresponding provision of this rule. The BLM is also committed to working with the EPA to ensure that any future EPA regulations align to the extent possible with the BLM requirements. To
As noted earlier, even though EPA, State, and tribal requirements address some gas waste, there is still a clear need for this rule. For one thing, the BLM has independent legal and proprietary responsibilities to prevent waste in the production of Federal and tribal minerals, as well as to ensure the safe, responsible, and environmentally protective use of BLM-managed lands and resources. This rule will update the BLM's decades-old venting and flaring requirements, and represents an important element of BLM's larger effort to ensure that its oil and gas regulations are effective, transparent, and easy to understand and administer, and that the provisions of those regulations adequately account for significant recent technological advances in the industry.
The BLM also notes that this regulation covers a range of sources and activities that are not adequately addressed by existing BLM, State, or tribal regulations. Further, EPA regulations cover only new, modified, and reconstructed sources, not the many existing and unmodified sources on BLM-administered leases. EPA regulations also do not address flaring or activities such as liquids unloading. Finally, State and tribal regulations are effective only within the jurisdiction of the relevant State or tribe, and State and tribal regulations do not consistently address all the sources of waste BLM seeks to prevent via this rule. Indeed, no State or tribe has requirements covering all the sources of waste addressed by this rule.
In the proposed rule preamble section IV.I.2., the BLM also discussed the commendable efforts that some oil and gas operators have made to reduce waste of gas through venting, flaring, and leaks. While steps in the right direction, these voluntary efforts are insufficient by themselves, given the large and growing volumes of waste. Moreover, for the one specific activity area for which industry has identified a reduction in gas losses over the past few years—well completions at hydraulically fractured gas wells—the decreases appear to be largely driven by the adoption of the EPA subpart OOOO requirements for green completions at those wells.
The following sections provide a brief overview of EPA and State regulations that are particularly relevant to this rulemaking.
The EPA regulates air pollution from oil and gas production, and since measures to reduce emissions tend to limit releases of natural gas, the EPA's air pollution regulations to reduce emissions from the oil and gas sector have the co-benefit of reducing waste of natural gas and increasing gas capture. BLM very carefully coordinated the waste prevention requirements under today's rule with EPA requirements applicable to some of the same sources, to minimize compliance burdens for operators and to avoid unnecessary duplication.
As explained in section IV.I.3 of the proposed rule preamble, the EPA adopted new source performance standards (NSPS) in 2012 (subpart OOOO) that require new, modified, or reconstructed sources to limit the release of VOCs by requiring that operators use “green completions” at hydraulically fractured natural gas wells.
On September 18, 2015, EPA proposed NSPS standards that would update the 2012 standards to limit methane in addition to VOCs, as described in the BLM proposed rule, to be codified in proposed 40 CFR part 60 subpart OOOOa.
On May 12, 2016, EPA also announced the availability of Control Technique Guidelines (CTGs) to help States reduce VOC emissions from
The EPA has also taken the first steps to gather information to promulgate regulations that would require subsequent State regulation of existing sources under Clean Air Act (CAA) section 111(d). When the EPA establishes NSPS for new sources in a particular source category, as it did for the oil and gas sector in its OOOOa regulations promulgated in May 2016, the EPA is also required, under CAA section 111(d)(1), to prescribe regulations for States to submit plans establishing emissions performance standards for existing sources in that source category. Acting under this CAA mandate, in March of 2016 the EPA announced its intention to regulate existing oil and gas sources for methane and VOC emissions.
In developing this rule, the BLM consulted with State regulators and reviewed analogous State requirements related to waste of oil and gas resources. Specifically, the BLM reviewed requirements from Alaska, California, Colorado, Montana, North Dakota, Ohio, Pennsylvania, Utah, and Wyoming. Most of these State requirements were discussed in the preamble to the proposed rule, which also explained that these State requirements, and the outcomes they produce, vary widely.
The BLM also notes that at least two States have recently expressed an intent to further reduce methane emissions through regulatory action. On February 1, 2016, California's Air Resources Board proposed new rules to reduce emissions of methane through venting and leaks during oil and gas production, processing, and storage.
Pursuant to a delegation of Secretarial authority, the BLM is authorized to regulate oil and gas activities on Federal and Indian lands under a variety of statutes, including the MLA, the MLAAL, FOGRMA, FLPMA, the IMLA, the IMDA, and the Act of March 3, 1909.
The MLA rests on the fundamental principle that the public should benefit from mineral production on public lands.
Another important means of ensuring that the public benefits from mineral production on public lands is minimizing and deterring the waste of oil and gas produced from the Federal mineral estate. To this end, the MLA requires oil and gas lessees to “use all reasonable precautions to prevent waste of oil or gas developed in the land, . . .”
In addition to ensuring that the public benefits from oil and gas production from public lands, the BLM is also tasked with regulating the physical impacts of oil and gas development on public lands. The MLA directs the Secretary to “regulate all surface-disturbing activities conducted pursuant to any lease” and to “determine reclamation and other actions as required in the interest of conservation of surface resources.”
The MLA additionally requires oil and gas leases to contain “a provision that such rules for the safety and welfare of the miners . . . as may be prescribed by the Secretary shall be observed . . . .”
FLPMA further authorizes BLM to “regulate” the “use, occupancy, and development” of the public lands via “published rules.”
FLPMA requires the BLM to manage public lands under principles of multiple use and sustained yield.
Finally, the promulgation of this rule helps to meet the Secretary's statutory trust responsibilities with respect to the development of Indian oil and gas interests. The Secretary's management and regulation of Indian mineral interests carries with it the duty to act as a trustee for benefit of the Indian mineral owners.
In short, the BLM has the authority to manage public and tribal oil and gas resources to reduce waste and ensure environmentally responsible development. In response to the notice of proposed rulemaking, the BLM received many comments asserting a range of different arguments regarding the BLM's exercise of its legal authority in promulgating this rule. The most salient of these arguments are addressed later in this preamble, but the BLM did not make any changes to this rule based on comments about the BLM's authority.
In 2014 and again in in 2016, the BLM conducted a series of forums to consult with tribal governments
As part of our pre-proposal outreach efforts, the BLM accepted informal comments generated as a result of the public/tribal outreach sessions through May 30, 2014. A total of 29 unique comments were received: 12 from the oil and gas industry and trade associations, 6 from NGOs representing 37 organizations, 2 from government officials or elected representatives, and 9 from private citizens. Two hundred and sixty comments from private citizens were part of an email campaign.
After the proposed rule was published on February 8, 2016, we conducted a second series of paired outreach meetings, with a tribal meeting each morning and a public meeting each afternoon. We held these meetings at four locations: Farmington, New Mexico (February 16, 2016), Oklahoma City, Oklahoma (February 18, 2016), Denver, Colorado (March 1, 2016), and Dickinson, North Dakota (March 3, 2016). Again, in advance of the tribal outreach sessions, the BLM sent letters to over 200 tribal leaders that have previously expressed interest in oil and gas related matters. These letters explained generally the proposed rule, invited the tribal leaders to attend the outreach sessions, provided contact persons for further information, and provided an email address for submitting comments. The public outreach sessions included a telephone conference call-in number to allow members of the public who could not attend in person to listen live to the proceedings.
In addition, the BLM conducted outreach to States with extensive oil and gas production on BLM-administered leases. Prior to the proposal, the BLM reviewed State regulations and guidance, and contacted State regulatory bodies that oversee aspects of oil and gas production to discuss their requirements and practices. After issuing the proposal, the BLM conducted seven online meeting sessions with State regulators from Alaska, Colorado, New Mexico, North Dakota, Utah (two meetings), and Wyoming.
In response to the proposed rule and these outreach meetings, the BLM received approximately 330,000 total comment submissions from Federal, State, and local governments and agencies, tribal organizations, industry representatives, non-governmental organizations, individuals, and other stakeholders. Of the approximately 330,000 comment submissions, approximately 1,000 were unique comments, with the remaining comments coming from mass-mailing campaigns from several organizations. The BLM closely reviewed and analyzed the comments we received, and made revisions to the proposed rule based on the information, data, analysis, insights, and viewpoints provided in the comments. The final rule reflects the very extensive input that the BLM gathered from these public meetings, discussions with States and tribes, and the public comment process.
Like the proposed rule, the final rule focuses on key areas in the oil and gas production process where waste-prevention actions are most effective and least costly. Specifically, we are adopting requirements to reduce waste from the following: Venting or flaring of associated gas from producing oil wells; gas leaks from equipment and facilities located at the well site, as well as from compressors located on the lease; operation of high-bleed pneumatic controllers and certain pneumatic pumps; gas emissions from storage vessels; well maintenance and liquids unloading; and well drilling and completions. Based on the available data regarding methane emissions and the numbers and types of sources of gas losses from Federal and Indian leases, we believe that these aspects of the production process offer the best opportunities for reducing waste.
Like the proposed rule, the final rule requires operators to flare gas rather than vent it, except in specified circumstances, such as emergencies, the routine operation of certain equipment, and when flaring is technically infeasible. The final rule then requires operators to avoid wasteful flaring of gas by capturing for sale or using on-site specified percentages of their adjusted total gas production. Beginning one year from the effective date of the final rule, operators must capture 85 percent of their adjusted total gas production each month, and this gradually increases to 98 percent by 2026. An operator's adjusted total gas production is based on the quantity of high pressure gas produced from the operator's development wells that are in
With respect to leaks, the final rule largely follows the proposed rule, except that the required frequency of inspection is set at two times a year, and does not vary according to the number of leaks found. Operators must use optical gas imaging equipment or portable analyzers deployed according to Method 21, and leaks must be repaired and retested within specified time frames. The final rule clarifies the approval process for alternative leak detection devices and for operators' individual alternative leak inspection programs.
Like the proposed rule, the final rule includes requirements to update old and inefficient equipment, and to follow best practices to minimize waste through venting. Thus, operators must replace high-bleed pneumatic controllers and certain pneumatic pumps with less wasteful controllers and pumps, and capture or flare any high volumes of gas that would otherwise be vented from tanks. In addition, the final rule requires operators to capture, flare, use, or reinject gas produced during well drilling and well completions, and it limits the quantities of gas that may be vented royalty-free during well testing.
The final rule continues to address whether and when lost oil or gas is royalty-bearing, based on whether the loss is deemed unavoidable (royalty-free) or avoidable (royalty-bearing). Relative to the proposed rule, and after our evaluation of public comments, the final rule somewhat expands the list of circumstances in which a loss of oil or gas is deemed unavoidable (thereby expanding the circumstances under which the loss of gas is considered royalty-free), and retains the proposed approach that all oil or gas that is not specifically defined as unavoidably lost is deemed to be avoidably lost and subject to royalties. Unavoidable losses include oil or gas lost in emergencies, losses from normal equipment operation when the operator is in compliance with all requirements to update equipment, and gas that is flared from wells not connected to a gas pipeline (unless the operator has not met applicable gas capture requirements). Because the BLM believes that it is reasonable to expect operators to reduce waste in order to comply with the final rule's capture percentage requirements, any quantities of flared gas that cause the operator to violate the applicable capture requirements are deemed avoidable losses and subject to royalties.
In addition, the BLM is finalizing the proposed change to the royalty provisions, to align the provisions with the BLM's statutory authority and allow the BLM to set royalties for competitive leases at or above 12.5 percent. At this time, however, the BLM is not setting the royalty rate above 12.5 percent in this regulation.
Like the proposed rule, the final rule aligns the requirements of this rule to the extent practicable with EPA and State requirements. It also avoids potential regulatory overlap by exempting certain equipment covered by relevant EPA rules, and deeming the operator's compliance with relevant EPA requirements to satisfy the BLM requirements as well.
The final rule also allows a State or tribe to request a variance from particular BLM requirements. If the variance is granted, the BLM has authority to enforce the specific provision(s) of the State, local, or tribal rule for which the variance was granted, instead of the comparable provision(s) of the BLM rule. As clarified in the final rule, the BLM may grant a State or tribal variance request if the BLM determines that the State, local, or tribal rule would perform at least as well as the affected BLM regulatory provision in reducing waste of oil and gas, reducing environmental impacts from venting and or flaring of gas, and ensuring the safe and responsible production of oil and gas.
Based on information that has become available since the proposed rule, and the extensive material BLM received through public comments, the BLM has made changes and adjustments to the proposed regulatory text. This section of the preamble summarizes the most significant of those changes and addresses some of the key public comments.
This section only addresses a few substantive areas in which the BLM made significant changes from the proposed rule. Section VI discusses significant comments received on other aspects of the rule. The final text of all of the rule provisions, and changes made in light of all public comments, are discussed in Section VII, Section by Section. Finally, additional public comments are addressed in the separate Response to Comments document, which is available to the public on the BLM Web site and is part of the rule-making record.
As discussed in section III.B.2.a of this preamble, routine venting and flaring of gas from oil or gas wells waste significant volumes of natural gas. In 2014, for example, operators vented about 30 Bcf and flared at least 81 Bcf from BLM-administered leases—4.1 percent of the total production from those leases in that year, and sufficient gas to supply nearly 1.5 million households with gas for a year.
First, final rule § 3179.6 prohibits venting from oil and gas wells, except under certain enumerated conditions. The circumstances in which venting is permissible include: When flaring is technically infeasible, such as when the gas is not readily combustible or the volumes are small; when the gas is vented during normal operation of an on-site, gas-activated pneumatic pump or controller; when the gas is vented from a storage vessel, provided that § 3179.203 does not require flaring of the gas; when the gas is vented during downhole well maintenance or liquids unloading, provided those operations are conducted in accordance with § 3179.204 of the final rule; and when gas is vented through a leak, provided that the operator is complying with the rule's LDAR provisions in §§ 3179.301-3179.305. Venting is also permissible during “emergencies,” which final rule § 3179.105 defines as situations in which the loss of gas is “uncontrollable,” and venting or flaring is “necessary to avoid risk of an immediate and substantial adverse impact on safety, public health, or the environment.” In addition, venting is allowed if necessary to allow facility or pipeline non-routine maintenance to be performed. Any venting of gas from oil or gas wells that does not fit within one of the circumstances listed in § 3179.6 is a violation of this rule and could result in enforcement actions. In addition, gas vented in violation of this rule will be deemed “avoidable” under final rule § 3179.4, and thus subject to royalties under final rule § 3179.5.
The final venting prohibition largely tracks proposed section § 3179.6, although the BLM modified a few provisions and added additional express exemptions in response to comments received. First, proposed § 3179.6(a)(3), which exempted gas vented from storage vessels subject to conditions specified in § 3179.203, has been renumbered § 3179.6(b)(4) and reworded for clarity. Second, proposed § 3179.6(a)(4), which exempted gas vented during normal operations of natural gas-activated pneumatic controllers and pumps, has been renumbered § 3179.6(b)(3). Third, the BLM added a provision, final rule § 3179.6(b)(5), to clarify that gas may be vented during downhole well maintenance or liquids unloading activities, provided those activities are performed in compliance with § 3179.204. This change responds to comments noting that while this rule requires operators to use best practices to minimize venting from liquids unloading operations, these operations will still release some quantity of gas, and it is not practical to capture and flare that gas regardless of whether the operator uses plunger lifts, manual purging, or another method to unload liquids. Fourth, in response to comments noting that there are additional losses through venting not listed in the proposed provision, the BLM added § 3179.6(b)(6) to the final rule, to clarify that an operator is not required to flare gas that is lost due to leaks, provided the operator is in full compliance with the leak detection and repair requirements in final rule §§ 3179.301-305. Fifth, the BLM added § 3179.6(b)(7) to the final rule, to respond to commenters' concern that some gas is released when pressurized equipment must be depressurized for maintenance, and their assertion that it is difficult and costly to route such infrequent, low-volume emissions to capture or a flare. This exemption from the venting prohibition is limited to venting associated with non-routine maintenance activities. In justifying their request for an exemption for venting associated with maintenance activities, commenters emphasized that these activities release only small quantities of gas in total because they occur infrequently and each incidence involves a relatively small volume of gas. The BLM is aware, however, that activities such as pigging a gathering line may release a not insignificant volume of gas, and, under some circumstances, operators conduct pigging routinely, such as monthly, weekly, or even several times a day. Under those circumstances, the BLM expects that a prudent operator would configure its operations or deploy capture or flaring equipment so as to avoid routine venting, and the final rule requires operators to avoid such routine venting. Finally, the BLM added § 3179.6(b)(8) to the final rule in response to commenters' observations that it may be necessary to vent gas when applicable laws, regulations, or permit terms prohibit flaring in particular areas or at particular times, such as flaring prohibitions that may be imposed in permafrost areas or during an extreme fire hazard.
The second prong of the final rule's approach to routine venting and flaring is laid out in final rule §§ 3179.7 and 3179.8, which together target routine flaring of associated gas from “development” oil wells.
First, in response to comments, the final rule shifts from numerical limits on per-well flaring volumes (the approach taken in proposed rule § 3179.6(b)) to a more flexible approach modeled in part on existing North Dakota rules. The new approach sets targets for the percent of associated gas from development oil wells that must be captured in a given month, either on a per lease/unit/communitized area basis or averaged over a county or state. The capture targets do not, however, apply to the full volume of gas that an operator flares. Instead, like the proposed rule, the final rule allows operators to flare a specified volume of gas that declines over time. In the final rule, however, this allowed flaring has been recast as a “flaring allowable” volume that operators can subtract from their total flaring volume
The mechanics of implementing this approach are as follows. First, final rule § 3179.7 establishes required capture targets that incrementally increase over the first nine years of rule implementation. The schedule for the capture targets is provided in § 3179.7(b)(1)-(4) and reproduced in Table 1:
Section 3179.7(c)(3) of the final rule then provides that, in order to demonstrate compliance with the relevant monthly capture target, operators must choose the “relevant area” over which they intend to assess their capture percentage(s). An operator may choose whether to comply with the capture targets on each of the operator's leases, units, or communitized areas (the “lease-by-lease approach,” see final rule § 3179.7(c)(3)(i)), or instead to comply on a county-wide or state-wide basis (the “averaging approach,” see final rule § 3179.7(c)(3)(ii)). An operator that chooses the lease-by-lease approach must demonstrate that
The second step to demonstrating compliance with the capture targets, detailed in final rule § 3179.7(c), is for an operator to determine its total volume of gas produced from development oil wells in the relevant
More specifically, the volume of gas that the operator sold or used is the volume of gas that the operator sold over the month from all of the operator's development oil wells in the relevant area plus the volume of gas that the operator used on lease, unit, or communitized area across the relevant area. The volume of gas flared is the volume that the operator flared from high pressure flares over the month in the relevant area. The flaring allowable concept derives from the flaring limits introduced in proposed rule § 3179.6(b), and it represents the volume of flared gas that is exempt from the capture target. Flaring allowable equals the total number of development oil wells “in production”
If the operator's actual capture percentage for a given lease, unit, or communitized area (lease-by-lease approach), or for the county or State (averaging approach), falls short of the required capture target for the given month, then the operator may face enforcement action, and must pay royalties on the excess flared gas, which is considered avoidably lost. The excess flared gas is the volume of gas by which the operator missed its required capture target, and it is calculated as follows:
Alternatively, an operator may request that the BLM establish an alternative capture target under final rule § 3179.8, if three conditions are met: (1) The operator has chosen to comply with the capture target using the lease-by-lease basis rather than the averaging approach; (2) the potentially noncompliant lease was issued before the effective date of this final rule; and (3) the operator demonstrates via Sundry Notice, and the BLM agrees, that the applicable capture percentage under final rule § 3179.7 “would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.”
Proposed rule § 3179.6(b) would have imposed a monthly limit on flaring, beginning on the effective date of the final rule, with the specific limit decreasing over the first three years of the final rule. Specifically, the proposed rule would have established a flaring limit of 7,200 Mcf/month per development oil well in production on the lease, unit, or communitized area, for the first year the rule was in effect (proposed rule § 3179.6(b)(1)); 3,600 Mcf/month per development oil well in production on the lease, unit, or communitized area for the second year the rule was in effect (proposed rule § 3179.6(b)(2)); and 1,800 Mcf/month per development oil well in production on the lease, unit, or communitized area for every month beginning in year three and thereafter (proposed rule § 3179.6(b)(3)).
The proposed rule included a broad request for comments on a range of issues relating to this section, including: The feasibility and costs of imposing a long-term limit on routine flaring of associated gas from development oil wells; whether the specific long-term flaring limit should be lower or higher than 1,800 Mcf/month/well, to further reduce flaring or reduce compliance costs, respectively; operators' likely operational response(s) to the imposition of a flaring limit; the feasibility and costs of the proposed three-year timeline for decreasing the flaring limit from 7,200 to 1,800 Mcf/month/well; and the effectiveness of the proposed method and conditions in § 3179.7 for allowing operators to obtain an alternative flaring limit.
The BLM developed the capture target approach in final rule § 3179.7, and the alternative capture target provisions in final rule § 3179.8, after careful consideration of the many comments received on the flaring limit approach set forth in proposed rule §§ 3179.6(b) and 3179.7. In particular, the BLM gave careful consideration to operators' assertions that the numerical values of the proposed flaring limits, the proposed schedule for meeting those limits, and the prescriptive nature of the limits would make it prohibitively expensive—and, in some areas of the country, technically impossible—for operators to comply with the terms of the proposed rule. After reviewing the flaring data provided by these commenters, obtaining additional updated and more detailed data from ONRR, and reanalyzing these provisions, the BLM determined that the final rule should phase in its approach to routine flaring over a longer period of time, and provide operators with more flexibility to take better account of variable conditions on different leases, units, and communitized areas in different parts of the country.
The BLM remains committed to requiring operators to significantly reduce routine flaring of associated gas from development oil wells on BLM-administered leases, thereby increasing gas capture. We have structured final rule §§ 3179.7 and 3179.8 to achieve a comparable volume of flaring reductions as proposed rule §§ 3179.6(b) and 3179.7, although over a somewhat longer timeframe, and then to achieve additional reductions in later years.
The final rule's capture targets and the proposed rules flaring limits operate in a similar manner, with the latter approach a refinement of the former to enhance opportunities for compliance. For example, the long-term flaring limit of 1,800 Mcf/month/well in proposed rule § 3179.6(b)(3) is
That said, the proposed and final approaches to reducing routine flaring do differ in certain key respects, as a result of public comments. The five most significant differences are as follows.
First, the final rule uses specified capture targets, rather than requiring that operators capture 100 percent of their associated gas above fixed volumetric limits as initially proposed, in response to comments indicating that, in some states (notably North Dakota and New Mexico), gas volumes are so high and the availability of capture infrastructure so variable that it is extremely difficult to identify a fixed volumetric limit on flaring that would both be achievable and also provide meaningful reductions in all States. Commenters asserted that given the high gas-to-oil ratios (GOR) in the Bakken basin, there are certain areas where an operator could exceed the proposed flaring limit of 1,800 Mcf/month/well in a period of hours. Commenters argued that even after averaging over a month and across a lease, as the proposed rule would have allowed, the 1,800 Mcf/month/well limit would significantly impact future development in the Bakken and Permian basins. Operators in these areas suggested that allowing averaging of flaring volumes across multiple leases, units, or communitized areas—or even across counties or across a State—would enable operators to use high capture rates in areas with low GOR and/or significant gas capture capability to offset lower capture rates in other areas, and thereby avoid having to curtail production.
Based on these concerns, the BLM restructured the fixed flaring limits as capture targets both to better take account of geographically varying volumes of associated gas and to allow operators some greater flexibility to absorb the impacts of intermittent interruptions or reductions in capture capacity. Final rule § 3179.7, therefore, requires capture of a specified percentage of gas above the flaring allowable volume; this specified capture target incrementally increases from 85 percent in year two (
Second, the BLM extended the compliance dates in response to commenters' concern that coming into compliance with a long-term flaring limit of 1,800 Mcf/month/well would take longer than the three years that the BLM had proposed. The final rule postpones the effective date of any capture requirements for one full year after the effective date of the rule. Thereafter, the final rule incrementally increases the required capture targets over a nine year period and incrementally decreases the flaring allowable volumes over an eight year period. Final rule § 3179.7(b) extends the time an operator has to meet the flaring allowable volume of 1,800 Mcf/month/well until calendar year 2021, about four years after the effective date of the final rule (and about two additional years after the 1,800 Mcf/month/well fixed flaring limit would have taken effect under § 3179.6(b)(3) of the proposed rule).
Third, and conversely, the BLM has reduced the long-term flaring allowable volumes that apply once the final rule is fully phased in, in response to other commenters' concerns that the proposed approach allowed significant quantities of wasteful flaring to continue unabated from 2020 on and did not provide sufficient incentives for industry to continue to decrease flaring over time. Natural gas is a valuable resource that should be put to productive use, and the MLA requires that we minimize the waste of public resources, consistent with existing lease obligations. In addition, if the only changes the BLM made to the final rule were to allow averaging over a broad geographic area and to impose capture targets that never ramp up to 100%, the final rule would achieve far less of a reduction in wasteful flaring than the proposed rule. While providing operators more flexibility to reduce flaring at lower costs by shifting from the proposed rule's fixed flaring limits to the final rule's capture targets and allowable flaring volumes, the BLM strived to ensure that the final rule still achieves meaningful flaring reductions, comparable to the reductions that the BLM expected from the proposed rule. The key change necessary to meet that goal was the shift from a fixed long-term flaring limit of 1,800 Mcf/month/well (proposed rule § 3179.6(b)(3)) over three years to a flaring allowable volume that decreases over time to 750 Mcf/month/well in year 2025 (final rule § 3179.7(c)(2)(iv)).
Fourth, the final rule allows greater flexibility in how operators may comply with the capture targets. Commenters indicated that leases, units, and communitized areas vary greatly in both the volumes of associated gas produced from oil wells and the availability of gas capture infrastructure, and asserted that complying with a single flaring limit that applies uniformly to every lease, unit, and communitized area would be prohibitively expensive or even, in some areas of the country, technically impossible. Commenters contended that as a result, they would be forced to submit numerous Sundry Notices under proposed rule § 3179.7 to request alternative flaring limits. Commenters asserted that North Dakota's approach, which allows operators to comply with capture targets on a statewide average basis, would reduce the need to request alternative limits and thus achieve comparable overall flaring reductions at significantly lower cost. The BLM agrees, and has in response to these comments structured the final rule to provide operators with greater discretion in how they choose to comply. Specifically, final rule § 3179.7(c)(3) allows an operator to choose whether to comply with the capture targets on a county- or state-wide average basis, or instead to comply on each lease, unit, or communitized area. This flexibility, too, is modeled on North Dakota's regulations, which allow for compliance on a well-, field-, county- or state-wide basis, as described in the preamble to the proposed rule.
Fifth and finally, the final rule makes certain changes to the alternative flaring provisions (proposed rule § 3179.7, renumbered as final rule § 3179.8) in part to address some commenters' concerns that the proposed renewable 2-year exemption (proposed rule § 3179.7(d)) would allow too many operators to evade the flaring limits and should therefore be eliminated. The changes also account for the change in the final rule from flaring limits to capture targets, and for the BLM's decision to allow operators to choose to demonstrate compliance with the capture targets on an area-wide average basis. Specifically, the BLM deleted the proposed 2-year exemption provision and restyled proposed rule § 3179.7 as an alternative capture target rather than
To set the capture targets and flaring allowable volumes in the final rule, the BLM conducted a detailed analysis of 2015 data submitted to ONRR of sales, on lease use and flaring volumes month-by-month for operators within a state. These data go substantially beyond what was available to BLM in preparing the proposed rule, and while the results show that the proposed rule would have reduced flaring less than we initially estimated, we have higher confidence in the updated estimates. Using the new data to reanalyze the likely flaring reductions from the proposed rule, the BLM estimates that the proposed rule would have reduced the quantity of flared gas in 2020 by 42 percent relative to 2015 levels.
Using the same data and assumptions, the BLM estimates that the final rule's approach, which allows operators to average over their statewide production and establishes a capture target of 98% over time, will reduce the quantity of flared gas in 2020 by roughly 26 percent relative to 2015 levels. With the additional time and flexibility provided in the final rule, operators will be able to plan for and build out the additional infrastructure necessary to capture and transport greater volumes of gas in later years. Thus, the final rule further steps down the allowable flaring volumes after 2020, and likewise steps up the required capture percentages, to achieve almost a 50% reduction in flaring by 2025, 8 years after the rule comes into effect.
Thus, the BLM expects that the final rule's schedule and targets for reducing flaring will achieve a total volume of flaring reductions somewhat greater than the proposed rule, and at lower cost, though over a longer timeframe. Moreover, the final rule establishes a structure in § 3179.7 for reducing routine flaring that could be adapted to achieve more ambitious flaring reductions, if and when the BLM deems those reductions to be technologically feasible and cost effective. The BLM has only specified capture targets and flaring allowable volumes out to 2026. As additional data on flaring become available, and capture technologies improve, the BLM could choose to increase the capture targets further over time, and/or decrease the flaring allowable volumes, through future rulemakings in order to continue to reduce routine flaring of associated gas from BLM-administered leases, units, and communitized areas, consistent with the United States' March 2016 endorsement of the World Bank's Zero Routine Flaring by 2030 Initiative.
As discussed in detail in the RIA, we estimate using data from the EPA GHG Inventory that about 4.01 Bcf of natural gas was lost in 2014 as a result of leaks or other fugitive emissions from various components, including valves, fittings, pumps, storage vessels and compressors on well site operations on BLM-administered leases.
LDAR programs are a cost-effective means of reducing waste of gas in the oil and gas production process, as indicated by the studies and State programs discussed in the proposed rule, as well as additional information provided since the proposal, which is discussed in the background section III. Provisions in §§ 3179.301 through 3179.305 of the final rule require operators to carry out leak inspections and repairs at their well sites and associated equipment, meeting specified standards for leak detection methodology and frequency, and for the timing of repairs. Within one year of the effective date of the rule (or within 60 days of beginning production, for new sites), operators must use an instrument-based approach to conduct semi-annual inspections at well sites and quarterly inspections at compressor stations. Operators may also request BLM approval of an alternative instrument-based leak detection program, which the BLM may approve if it finds that the program would reduce leaked volumes by at least as much as the BLM program. Operators must repair a leak within 30 days of discovery, absent good cause, and verify that the leak is fixed. Operators must also keep records documenting the dates and results of leak inspections, repairs, and follow-up inspections, and submit annual reports with this information.
Section 3179.301 provides that the leak detection requirements in the final rule apply to sites
In response to multiple requests from industry and NGO commenters, the final rule provides greater specificity on what constitutes a “leak”, which includes releases not associated with the normal operation of the component (
Section 3179.301(j) and (k) integrate the final rule with EPA NSPS requirements for operators to conduct a fugitive emissions inspection and repair program. Section 3179.301(j) provides that for new, modified or reconstructed equipment, an operator will be deemed to be in compliance with the BLM LDAR requirements if the operator is in compliance with the EPA subpart OOOOa requirements applicable to the equipment. Paragraph (k) further allows an operator to choose to comply with the EPA fugitive emissions monitoring requirements in subpart OOOOa and apply those requirements to all sites and equipment on a lease not already deemed in compliance with the BLM LDAR provisions, in lieu of complying with the BLM LDAR provisions. This provision allows an operator with new, modified or reconstructed facilities (which must comply with subpart OOOOa) as well as existing facilities (which are not subject to subpart OOOOa) to apply a single leak detection regime to all of their facilities, rather than complying with subpart OOOOa for some facilities and the BLM requirements for others.
The final BLM LDAR provisions also apply to a few specific types of equipment that EPA addresses under requirements that are separate from EPA's subpart OOOOa fugitive emissions program—specifically, certain covers and closed vent systems, and thief hatches or other openings on controlled storage vessels, which are covered under 40 CFR 60.5411a or 60.5395a, rather than under the fugitive emissions requirements in subpart OOOOa. The final rule provides that if an operator chooses to comply with the EPA subpart OOOOa fugitive emissions requirements in lieu of the BLM LDAR requirements for all equipment on a lease, the operator must apply the EPA fugitive emissions requirements to sources covered under 40 CFR 60.5411a or 60.5395a as well.
The final rule requires operators to use an instrument-based approach to leak detection. This is consistent with the proposed rule, and with EPA, Colorado, and Wyoming leak detection requirements. Under final rule § 3179.302, operators must use an optical gas imaging device (also commonly referred to as an infrared camera), or a portable analyzer device capable of detecting leaks and used according to the specifications of Method 21, a protocol prescribed by EPA for effectively using these devices.
Final section 3179.302 also allows any person to request and the BLM to approve the use of an alternative monitoring device, accompanied by a monitoring protocol, and, in response to comments, this section also details the information that must be included in a request. The BLM may approve an alternative leak detection device and inspection protocol, if the BLM finds that the alternative would achieve equal or greater reduction of gas lost through leaks, compared with optical gas imaging used as required. The BLM may approve the device for use for all or most applications, or may approve use on a pilot project or demonstration basis. Finally, the BLM will provide public notice of a request for approval of an alternative monitoring device and will post on the BLM Web site a list of each approved monitoring device and protocol, along with any limitations on its use. The BLM intends that the decision to approve the use of an alternative monitoring device would be made only at the national level, by the Director, Deputy Director, or an Assistant Director, as, once approved, the alternative monitoring device could be used anywhere in the country.
Section 3179.303 specifies the required frequency for inspections, which is fully aligned with the requirements of Subpart OOOOa. Operators must inspect each well site at least semi-annually, with consecutive inspections spaced at least four months apart. Operators must inspect each compressor station at least quarterly, with consecutive inspections spaced at least 60 days apart.
In addition to alternative monitoring devices, the final rule allows for BLM approval of alternative monitoring programs. Specifically, like the proposed rule, the final rule allows an operator to request the BLM to approve an alternative instrument-based leak detection program in place of the program specified in the regulations. The BLM may approve the alternative program if it finds that the alternative program would achieve equal or greater reduction of gas lost through leaks compared with the approach specified in the regulations. Because approval of inadequate alternative programs could unintentionally but significantly undermine the effectiveness of the LDAR requirements, the BLM intends that the decision to approve an alternative program would be made only by the relevant BLM State Director, or, with respect to requests that cover operations in more than one State, at the national level by the BLM Director, Deputy Director, or an Assistant Director. In addition, the BLM will post approved alternative programs online both to provide public transparency and to allow other operators to see examples of alternative programs that the BLM believes will be effective.
Section 3179.304 requires operators to repair the leaks that they find. Operators must repair a leak as soon as practicable, and within 30 days of discovery, unless there is good cause to delay the repair. When an operator repairs a leak, the operator must verify that the repair was effective within 30 days of the date of the repair using optical gas imaging, a portable analyzer using Method 21, or a soap-bubble test.
Section 3179.305 requires operators to keep records related to leak detection inspections and repairs, make them available to the BLM upon request, and submit an annual summary report on the previous year's inspection activities.
The final rule provisions on leak detection and repair largely track the proposal, however, we adjusted the frequency of inspections, based upon public comments along with a desire to
Another change from proposed to final rule concerns the effective date of the leak detection requirements. The proposed rule would have imposed the leak detection requirements as of the effective date of the rule, with the first inspection required within six months of that date. In response to comments, the final rule extends the time for initial compliance to give operators one year from the effective date of the rule to make their first inspection.
The BLM made several other changes that adopt commenters' suggestions. We added a provision allowing approval of an alternative, potentially less effective, leak detection program for an operator that demonstrates that compliance with the LDAR requirements would impose such costs as to cause the operator to cease production and abandon significant recoverable oil or gas reserves. We also added a requirement that operators provide an annual summary report on the results of their leak inspections. Consistent with the final subpart OOOOa, the final rule also includes a new exemption from LDAR requirements for sites that contain only a wellhead(s), and no other equipment.
In addition, the BLM made various smaller changes to enhance the clarity of the final rule. The final rule has refined and clarified the specific sites and equipment subject to the leak inspection requirements. The final rule applies to all equipment handling Federal or Indian gas, upstream of and including the site where the royalty measurement point is located—whether the equipment is on or off the lease and regardless of the ownership of the equipment. The final rule also specifies that with respect to equipment associated with the storage, measurement, or disposal of produced water, the leak detection requirements apply only to such equipment operated by the operator and located on the Federal or Indian lease.
The final rule retains and refines the proposed rule's provision allowing an operator to satisfy the leak detection requirements by complying with the EPA leak detection requirements under 40 CFR part 60, subpart OOOOa. First, the final rule provides that for new, modified and reconstructed equipment, an operator that is in compliance with the EPA fugitive emissions requirements will be deemed to be in compliance with the BLM LDAR requirements, without any requirement to file a Sundry Notice and demonstrate compliance, as the BLM had proposed. Second, it clarifies that that an operator who chooses to comply with the EPA fugitive emissions monitoring requirements in subpart OOOOa in lieu of the BLM LDAR requirements must apply the EPA requirements to all sites and equipment on a lease not already deemed in compliance with the BLM LDAR provisions.
The final rule includes this change because leaks from some types of new, modified and reconstructed equipment, such as covers and closed vent systems, and thief hatches on controlled storage vessels, are not covered by the fugitive emissions requirements under subpart OOOOa, but instead are addressed through specific provisions for storage vessel affected facilities and any associated covers and closed vent systems in subpart OOOOa—namely 40 CFR 60.5395a and 60.5411a. These provisions establish comprehensive control programs for storage vessel affected facilities, including separate and distinct inspection regimes. This final rule ensures that if an operator elects to comply with the EPA fugitive emissions requirements in lieu of the BLM leak detection requirements for equipment on a given lease, the operator must apply the EPA fugitive emissions requirements to all equipment covered by the BLM leak detection requirements, including equipment such as covers, closed vent systems, and thief hatches. Absent this provision, operators could potentially avoid any leak detection program with respect to existing sources in these categories.
The final rule also modifies the requirement in the proposed rule that operators who choose to comply with the EPA requirements in lieu of the BLM requirements must file a Sundry Notice demonstrating compliance with the EPA rule. The final rule provides that the operator need only notify the BLM through a Sundry Notice that it is complying with the EPA rule in lieu of the BLM requirements for equipment on a lease. While the BLM needs to know for oversight purposes if an operator has elected not to comply with the BLM requirements, we agree with commenters that requiring a “demonstration” of compliance with the EPA requirements is unnecessary.
As noted earlier, the final rule also contains a more detailed definition of a “leak” than the proposed rule, as well as more detailed specifications of approved leak detection instruments and methods. In addition, the final rule separates approval of an alternative monitoring device and protocol from approval of an operator's alternative leak detection program, and it adds specificity on what is required for each of these. The final rule also adds a required minimum interval between inspections, which was not specified in the proposal, but is consistent with final subpart OOOOa. Other minor changes that align the rule with final subpart OOOOa include: A 30- rather than 15-day period for repair and follow-up inspections; additional detail on what constitutes good cause for delay of repair; and a new, two-year outer limit on the timeline for completing repairs delayed for good cause. In addition, while the proposal had required operators to verify the effectiveness of repair using the same method used to identify the leak, in response to comments, the final rule allows operators to use any approved monitoring instrument or the soap bubble test to verify the effectiveness of repair.
Commenters provided many detailed comments on numerous aspects of the leak detection program. This section highlights the most significant comments; additional comments are addressed in Section V. and the Response to Comments document. Comments addressed here include: Coverage of the program (
Some commenters urged the BLM to exclude sites where the commenters asserted that there is less likelihood of leaks and/or smaller leaks. For example, they suggested excluding oil or gas low production wells (also commonly called “marginal” or “stripper” wells) that produce less than 15 barrels of oil equivalent per day; oil well sites that produce crude oil with either an API gravity less than 18° or a GOR less than 300 scf/bbl; and sites that have just wellheads without co-located production equipment.
Some commenters alleged that wells producing less than 15 BOE per day do not have the potential to emit at the same rate as larger producing facilities or enough production to have significant waste from leaks. Hence, they argued, the costs of LDAR for a marginal well far outweigh any benefits in terms of recovery of lost gas. One commenter stated that sites with marginal wells have less equipment on-site, fewer components that could leak, and thus a smaller likelihood of leaks. Commenters also noted that the EPA proposed to exclude low production wells from its fugitive emissions program, and argued that the BLM should do the same. Some asserted that these wells are only marginally profitable to begin with, and the costs of LDAR could make these wells uneconomical, leading to premature shut-in and a loss of mineral resources. Commenters also recommended that, at minimum, these low production wells should be subject to more relaxed LDAR requirements, such as one-time or annual instrument-based inspections, possibly in combination with AVO inspections, rather than semi-annual instrument-based inspections.
Commenters also asserted that the requirement to inspect for leaks should be limited to certain specified facilities or components because those facilities or components are more likely to leak, and to have higher leak rates. Various commenters recommended that the rule focus on valves, open-ended lines, pumps, or components with potential to operate at or above sales line pressure. Other commenters suggested limiting the LDAR requirements to facilities with components that tend to vibrate or are in thermal operation, and specifically those with controlled storage vessels, compressors, and/or vapor recovery units. Commenters also asserted that the 2013 Carbon Limits Study and the 2014 CAPP study show that compressor stations leak more than well sites, and that components tend to have greater average emissions when subjected to frequent thermal cycling, vibrations or cryogenic service.
In addition, commenters urged the BLM to exclude from the LDAR requirements storage vessels that would not be required to have emission controls under the proposed BLM and final EPA rules (
On the other hand, other commenters strongly opposed narrowing the applicability of the LDAR program, and in particular, excluding low production wells from that program. These commenters cited recent peer-reviewed studies concluding that the occurrence of leaks is fairly random; the probability of a production site being among the highest emitting sites does not increase uniformly with production volumes; and relatedly, both high- and low-producing sites can be associated with high-emitting events. These commenters provided estimates of calculated methane emissions from low production and non-low production wells nationwide based on data reported to EPA and the EPA GHG Inventory, finding that 83 percent of the total methane emissions from oil and gas wells was attributable to low production wells, while only 17 percent was attributable to other wells. The commenters also provided calculations based on an EPA estimate of the cost of semi-annual inspections. These calculations showed, the commenters argued, that even for low production wells, the cost of LDAR compliance would on average be only a small fraction of the annual revenue per well. These commenters further argued that the majority of all existing wells, including those on public lands, meet the definition of “marginal,” and that excluding such wells from the LDAR requirements would allow large amounts of gas waste to continue unabated.
The BLM carefully considered numerous and varied approaches that might improve the program's cost-effectiveness by narrowing the coverage of the LDAR program while maintaining its benefits. In evaluating suggestions to exclude certain types of sites from the LDAR requirements, the BLM looked for evidence indicating that the frequency of leaks, size of leaks, and overall amounts of gas lost through leaks relate to the type of site being inspected. In requesting comments on this topic, the BLM had urged commenters to present data or other information to support their assertions, and specifically requested “information regarding the relationship between well production and levels of leaked methane from a site.”
With respect to suggestions that the BLM exclude low production wells from the LDAR requirements, we note that roughly 85 percent of wells on Federal and Indian leases are classified as low production wells (
The information submitted by commenters on low production wells does not support their exclusion from the LDAR requirements. As discussed above, some commenters suggested, without providing supporting data, that sites with low production would be expected to lose smaller quantities of gas overall from leaks. However, others disagreed, pointing to the Zavala-Araiza study. As discussed in section III, this study showed that the probability of a production site being among the highest emitting sites does not increase uniformly with production volume, and it found significant opportunities to reduce losses by finding and fixing leaks at lower production wells. These commenters noted that the Lyon et al. study also demonstrates that both high- and low-production sites can be associated with high-emitting events with roughly 15 percent of the identified high-emissions sites in that study being associated with low production wells. Commenters urging an exclusion for low production wells did not provide data refuting these findings. Without additional data on this issue, the BLM simply cannot conclude that low-production sites pose
As commenters noted, the EPA had proposed to exclude wells with less than 15 barrels a day oil-equivalent production from the OOOOa fugitive emissions requirements. In the final OOOOa rule, however, the EPA reached the same conclusion as the BLM and dropped the proposed exemption. EPA found that the record for the final rule did not support excluding these wells from the fugitive emissions requirements. In the preamble to the final rule, EPA stated: “We did not receive data showing that low production well sites have lower GHG (principally as methane) or VOC emissions other [sic] than non-low production well sites. In fact, the data that were provided indicated that the potential emissions from these well sites could be as significant as the emissions from non-low production well sites because the type of equipment and the well pressures are more than likely the same.”
In addition, the BLM does not anticipate a significant number of individual well shut-ins or any lease-wide shut-ins as a result of the LDAR requirements, even with respect to low production wells. As discussed in the RIA, third-party providers offer LDAR services at a relatively modest cost, and operators may recoup some of the costs of the program through the saved gas. Also, operators have the option to design and request approval of an alternative LDAR program that is less costly for their particular circumstances, provided they can demonstrate that their alternative program is equally effective. Finally, an operator may request approval of an alternative leak detection program that is
With respect to oil well sites that produce crude oil with either an API gravity less than 18° or a gas-to-oil ratio (GOR) less than 300 scf/bbl, as with low production wells, the BLM does not have data to be able to conclude that these oil well sites are likely to be responsible for a sufficiently small quantity of gas lost through leaks that they should be excluded from the LDAR requirements or subject to less stringent requirements.
The BLM does, however, agree with commenters that the risk of leaks is substantially lower at sites with only a wellhead, compared to sites with one or more pieces of production equipment, such as a tank, compressor, dehydrator, or vapor recovery unit. Industry commenters asserted that there is a greater likelihood of leaks from moving or vibrating equipment, or from equipment in thermal operation, because a valve may stick open, vibrations may cause a connection to loosen, or heat may cause a seal to degrade. While the BLM does not have data about the likelihood and/or size of leaks in these circumstances, the BLM's experience in the field supports the general point. In addition, studies have identified many leaks from the identified equipment, including tanks, compressors, and dehydrators.
Other than the exclusion for sites with only a wellhead, the BLM is not limiting the LDAR requirement to covering only certain specified types of equipment or equipment components. BLM does not believe that it has sufficient information to appropriately distinguish between types of production equipment or equipment components on the basis of the likely quantity of gas lost through leaks. In addition, once an operator is at a site conducting a leak detection inspection, inspecting all of the on-site equipment should add little time and cost, particularly when the operator is using optical gas imaging. The BLM believes that trying to identify and exclude specific types of equipment from inspection adds complexity to the inspection system and introduces the likelihood of errors that would allow leaks to escape detection. It is simpler and more effective for operators simply to inspect all of the equipment located at a site. If, however, an operator has data that show it is possible to conduct an equally effective LDAR monitoring program while excluding certain types of equipment, or sites that only have that type of equipment, the operator may submit a proposed alternative monitoring protocol to BLM for review and potential approval.
Some commenters pointed out that pneumatic controllers are designed to vent and argued that these releases should not be considered leaks. The BLM agrees, and has excluded normal operation of this equipment from the final rule's leak definition. The BLM notes, however, that pneumatic controllers can and do malfunction, such as getting stuck in an open position, which can lead to unnecessary losses of gas. Additionally, as other commenters stated, these malfunctions can be identified through leak inspections. The BLM, therefore, believes it would be inappropriate to exclude this equipment from the rule's LDAR requirements.
Commenters make similar arguments with respect to uncontrolled storage vessels (
As an initial point, uncontrolled tanks are not open to the atmosphere—rather, they are typically vapor tight, slightly pressurized, and equipped with a thief hatch to allow measurement of production and a pressure relief valve to allow gas release of overpressure. This standard industry practice, which preserves the product and prevents unlimited release of vapors, was recently reinforced in the BLM's oil measurement rule, 43 CFR subpart 3174. The oil measurement rule requires oil storage tanks, hatches, connections, and other access points to be vapor tight, and it sets specifications for pressure relief valves. Using leak inspections to ensure that thief hatches are closed, seals are sound, and pressure relief valves are operating properly will reduce waste of gas.
Moreover, as discussed in section III., recent studies indicate that tanks are a very significant source of lost gas. As noted earlier, the Lyon et al. study, a helicopter survey of over 8,000 oil and gas wells, reported that over 90 percent of the detected emission incidences were from tanks. Similarly, the Colorado State University studies found substantial venting at tanks, and the City of Fort Worth study found that thief hatches are the largest source of fugitive emissions. The BLM believes that including both controlled and uncontrolled storage tanks in the LDAR program will allow operators to identify leaks and malfunctions that allow significant quantities of gas to be lost.
Many commenters suggested that BLM identify the quality or quantity of a release that would trigger repair requirements under the leak detection program. Commenters generally supported defining a leak as any visible hydrocarbon emission detected by use of an optical gas imaging instrument, or the formation of visible bubbles when equipment is tested with soap solution. With respect to portable analyzers, commenters generally supported setting a numeric threshold, but differed on the number. Some commenters urged the BLM to use 10,000 ppm of hydrocarbon as the threshold for a “leak,” while others recommended using 500 ppm, stating that this is protective and consistent with the Colorado requirements.
The purpose of a leak detection program is to find and fix losses of gas that are not part of normal operations. A prudent operator should conduct reasonable levels of monitoring, staff training, and preventative maintenance to minimize the occurrence and duration of such losses. We are adopting a definition of “leak” sufficiently broad in coverage to give operators the incentive to avoid wasteful losses, whether they occur due to aging equipment or due to operator error, including errors in appropriately sizing equipment to handle the quantities of production. As found in multiple recent surveys, all of these types of unnecessary losses occur and they are frequently identified using leak detection methods.
The BLM has also slightly modified the definition of “leak component,” and clarified that the inspection requirement applies to leak components at a covered site. Industry commenters had requested that the BLM limit the inspection requirement to specific components on a site. For the reasons previously discussed, the BLM believes it is reasonable to require operators to inspect all pieces of equipment that have the potential to leak gas and that can be tested for leaks. Moreover, as discussed in the proposed rule, repairing leaks generally pays for itself over a reasonably short time-frame through gas savings. To provide additional clarity, the BLM has added to the definition of “leak component” examples of specific types of components that are covered, including but not limited to: Valves, connectors, pressure relief devices, open-ended lines, flanges, covers and closed vent systems, thief hatches or other openings on a storage vessel, compressors, instruments, and meters.
With respect to leak thresholds, and consistent with the proposed rule, EPA and State provisions, and commenters' suggestions, the BLM is defining “leak” as including “a visible hydrocarbon emission” detected using optical gas imaging, or a release of gas forming visible bubbles with soap solution. Including soap solution allows operators to deploy an additional detection methodology that is inexpensive and effective in confirming that leak repairs have worked. The BLM agrees with commenters that portable analyzers can detect extremely small releases, so the rule needs to specify a threshold for the size of leak that requires repair. The final rule identifies 500 ppm as the appropriate threshold. This threshold is consistent with both the Colorado and EPA fugitive emissions programs, and aligning the BLM and other Federal, State and tribal programs is important to enhance clarity and consistency and reduce confusion and costs. Additionally, the BLM does not believe that this threshold is too burdensome for operators because once a leak is identified, repairs are generally cost-effective. On average, many repairs pay for themselves in terms of gas savings, and even if some smaller leaks may cost more to repair than they return in gas savings, we generally expect that the benefits to the public exceed the costs of repair.
While commenters generally supported fixed frequency inspections, different commenters supported different frequencies. Some called for quarterly inspections, while others preferred annual. Still others suggested an approach like Colorado's, which requires different frequencies, from monthly to once, depending on the estimated uncontrolled VOC emissions from the highest emitting storage tank at a site.
Commenters supporting a requirement for quarterly inspections asserted that: The costs are reasonable (and lower than calculated by the BLM); Colorado, Wyoming, and other states already require quarterly inspections for many sites; and optical gas imaging is most effective when performed frequently, which can make up for its tendency to miss smaller leaks compared to other leak detection methods. Commenters who recommended annual inspections asserted that: The costs of LDAR programs outweigh the benefits (and are higher than calculated by the BLM); operators find far fewer leaks after the initial inspection, so repeated inspections produce diminishing
Requiring semi-annual inspections also aligns the BLM and EPA requirements. The BLM notes that it is not possible to align the BLM program's inspection frequency with both EPA requirements and all State requirements because the EPA and States have different inspection frequencies, and frequencies differ even among the States and among different EPA leak detection programs for different sources. The BLM expects that States with comprehensive and effective LDAR requirements that differ from the requirements of this rule are likely to obtain variances under section 3179.401, which would eliminate conflict concerns. Also, as a legal matter, operators on a Federal or Indian lease, unit, or communitized area will be subject to EPA fugitive emissions requirements for their new, modified and reconstructed facilities and BLM LDAR requirements for their existing facilities. By aligning the timing of the BLM and EPA requirements, and separately allowing operators to comply with EPA requirements in lieu of BLM requirements, the rule provides operators with options for implementing a single leak inspection program across all of their facilities on a lease, unit, or communitized area.
Many commenters urged the BLM to detail the information that must be included in an application for approval of alternative technologies, as well as the process and criteria that the BLM would use to respond to an application. Various commenters emphasized that the process should be rapid, efficient, transparent, predictable, consistent, and rigorous. In addition, commenters suggested that any person should be able to submit an application, and that any operator should be able to use an approved technology.
Once a device is approved for general use, any operator may use it without the need for additional notification or approval. Because an approved device could potentially be used by an operator on any Federal or Indian lease, unit, or communitized area, the BLM intends that the request will be evaluated by the BLM Director, Deputy Director, or Associate Director. The BLM may approve the device if the BLM finds that the device would achieve equal or greater reduction of gas lost through leaks compared to optical gas imaging used in a leak detection program that meets the rule requirements. The BLM believes that this is an appropriate criterion for approval because it ensures that the program will achieve its leak reduction goals regardless of the type of leak detection device used. The BLM understands that different types of devices may achieve equivalent results. For example, a device that monitors continuously, but is less sensitive than optical gas imaging, might achieve results equivalent to optical gas imaging due to the gas savings from early detection. The information submitted must be sufficient to support such a
The BLM also clarified the distinction between alternative leak detection devices or methods and alternative leak detection programs, which are both included in the proposed and final rules. Separate from the provisions for approval of an alternative device, the final rule allows an operator to request BLM approval of an alternative leak detection program that uses optical gas imaging, a portable analyzer or another approved device according to approved specifications. As with an alternative device, the final rule spells out the information that an operator would need to submit to request approval of an alternative program. The BLM intends that the request would be reviewed and potentially approved by the BLM State Director (or Director, if the request covers operations in more than one State). The BLM could approve an alternative leak detection program if the BLM finds that the alternative program would achieve equal or greater reduction of gas lost through leaks compared to the leak detection program required under the rule. The rule does not allow other operators to use an alternative leak detection program requested by and approved for a specific operator, as the results may not be transferable. The BLM expects each operator to make a detailed showing, specific to their particular circumstances, that an alternative program would be equally or more effective. For example, an operator might propose a program that included more frequent inspections for some sites and less frequent for others, compared to the final rule requirements, or an operator may be able to deploy an alternative leak detection device or system, approved by the BLM, on a continuous basis and achieve results that would allow for less frequent inspections using optical gas imaging.
Second, some commenters urged the BLM to allow 30 rather than 15 days for leak repair. Commenters stated that some leaks require more time to repair due to safety issues, availability of personnel or replacement parts, hostile weather conditions, or other logistical issues related to sites being remote, dispersed, unmanned, and un-electrified. One commenter argued that if an operator contracts with a consultant to perform the monitoring, the consultant will not be able to make the repair at the time the leak is detected, thus requiring more time to complete the repairs.
Third, commenters requested more clarification on what would constitute “good cause” for delay of repair, noting that where the operator must blowdown (depressurize) the equipment before making the repair, this could release more gas than would be released by the leak prior to the next scheduled equipment blowdown.
The BLM also has modified the final rule to provide operators up to 30 days to make a repair, although the rule still requires operators to repair leaks as soon as practicable. We recognize that some State LDAR programs require repairs to be made sooner—within 5 to 15 days of finding a leak. The requirement to repair leaks as soon as practicable means that many leaks will be repaired upon discovery or within a shorter timeframe than 30 days, as many leaks can be repaired on the spot or as soon as a maintenance technician can get out to the site. However, according to industry commenters, allowing up to 30 days will meaningfully reduce the time and costs involved in filing Sundry Notices for leaks that could not be fixed in 15 days but could be fixed in 30.
The final rule also provides additional detail regarding what constitutes “good cause” for delay of repair beyond 30 days. Good cause for delay exists if repair within 30 days is technically infeasible; would require a pipeline blowdown, a compressor station shutdown, or a well shut-in; or would be unsafe to conduct during operation of the unit. In addition, the operator must complete the repair at the earliest opportunity, and in no case may the repair be delayed beyond two years. Technical infeasibility includes a need to order parts, in which case the operator must complete the repair as soon as the parts are available. Where the cause for delay is the need to blowdown or shut-down equipment, the operator must complete the repair during the next equipment blowdown or shutdown that occurs after the leak is found.
The BLM notes that there are a few small differences between the BLM and EPA programs, but these should not increase compliance burdens for operators. First, while the programs both cover largely the same sources, the programs differ somewhat in their coverage. The BLM LDAR provisions apply to all covers, closed vent systems, and storage vessels, while the EPA fugitive emissions requirements only apply to covers and closed vent systems not subject to § 60.5411a, and thief hatches or other openings on a controlled storage vessel not subject to § 60.5395a. Subpart OOOOa has a separate, detailed set of requirements in § 60.5411a for sources covered by that section, and another set of requirements in § 60.5395a for storage vessel affected facilities, and section 60.5416a prescribes a separate and different leak inspection regime for these sources.
For waste reduction purposes, the BLM did not believe it was necessary to adopt separate requirements for storage vessels, covers and closed vent systems. Instead, the BLM elected to require controls for storage vessels with high levels of gas loss and to include storage vessels, covers, and closed vent systems under the LDAR program. Thus, the final rule provides that operators that choose to comply with the EPA fugitive emissions program in lieu of the BLM leak detection program for both new and existing equipment on a lease must apply the EPA fugitive emissions requirements to all equipment covered by the BLM requirements, including storage vessels, covers and closed vent systems, to ensure that these types of equipment are covered by at least one of the agencies' leak detection requirements.
Second, a few elements of the BLM LDAR requirements are less prescriptive than the EPA requirements, but again, the BLM does not believe that these differences would impose any additional burdens on operators. The BLM regulations do not require operators to develop a monitoring plan or specify their walking path for inspections, nor do they include requirements for scheduling inspection of components that are difficult-to-monitor or unsafe-to-monitor. The BLM record-keeping requirements are also less specific than the EPA requirements. The BLM regulations do not provide specific direction to operators on the proper calibration and use of leak detection instruments, instead simply requiring operators to operate the instruments according to the manufacturer's specifications. Also, the BLM requirements define “leak component” slightly more broadly than the EPA definition of “fugitive emissions component.” For existing equipment that is not also subject to the EPA requirements, the final rule provides operators the choice of complying with the EPA or the BLM requirements, allowing operators to comply with a single set of requirements for all of their sources if they so choose, or to comply with the somewhat less prescriptive BLM requirements with respect to their existing sources.
With respect to State leak detection requirements, the BLM notes that because requirements differ both among the individual States and between the EPA and the individual State rules, it is not possible to align the BLM requirements with all of the other potentially applicable requirements. In addition, the BLM does not believe it is appropriate to exempt operators from the BLM requirements if they are subject to any State requirement relating to leak detection, as some commenters suggested. That approach would not ensure achievement of an equivalent reduction in gas losses. Instead, the final rule has a variance provision that allows State or local requirements to substitute for any of the BLM requirements under these rules, upon a showing that the State or local requirement at issue would perform at least equally well in terms of reducing the waste of oil and gas, reducing environmental impacts from venting and or flaring of gas, and ensuring the safe and responsible production of oil and gas.
The requirements to reduce venting from liquids unloading activities at natural gas wells are generally discussed in Section VII. Section by Section. This section highlights one significant change to those provisions from the proposed rule. In the final rule, liquids unloading activities at new wells are subject to the same best practices and reporting requirements as those at existing wells. The BLM had proposed to prohibit liquids unloading through manual well purging at new wells drilled after the effective date of the rule, but we are not carrying this proposal forward into the final rule.
Several commenters apparently assumed that the prohibition on well purging would effectively require operators to install a plunger lift system during initial well construction, and these commenters provided multiple reasons that would not be appropriate. First, they asserted that new wells are not likely to require liquids unloading until later in the life of the well. Second, they argued that the characteristics of the well at the time that deliquification is needed impact the technical feasibility and cost of using methods other than purging for liquids unloading, and that operators are not likely to know during initial construction which option is optimal. Third, commenters contended that installing plunger lift systems at initial construction would also “lock in” technology choices that may preclude the use of more appropriate or improved technology when deliquification is needed. Lastly, commenters asserted that even if equipment was installed on new wells to accommodate plunger lifts, by the time liquids unloading is required, the equipment may need to be fixed or replaced.
Other comments supported BLM's proposal to prohibit purging during liquids unloading activities at new wells. They stated that operators could effectively design wells and deploy mitigation technologies in a way that would eliminate emissions, and that these technologies are cost effective. Citing datasets showing that a small minority of wells are responsible for a large amount of venting during liquids unloading events, these commenters also argued that the BLM should address this issue by applying the purging prohibition to these high-emitting existing wells as well.
Like the proposed rule, the final rule provides a variance procedure to allow an equally or more effective State, local government, or tribal requirement to substitute for the comparable BLM requirement under this subpart. The BLM may grant a variance request submitted by a State or tribe if the BLM State Director finds that the State, local government, or tribal rule or regulation would perform at least as well as the relevant provision of the BLM rule in terms of reducing waste of oil and gas, reducing environmental impacts from venting and/or flaring of gas, and ensuring the safe and responsible production of oil and gas.
The rule identifies what a State or tribe would need to include in a request for a variance. The request must identify the provision or provisions of the BLM requirements from which the State or tribe is requesting a variance, and must identify the State, local, or tribal provisions that would substitute for the BLM provision or provisions. The variance request must also explain why the variance is needed, and demonstrate how the State, local or tribal rules would perform at least as well as the BLM provisions they would replace.
The variance provisions in the final rule largely track the proposed rule, with a few additions and clarifications. The criterion for approval of a variance request in the proposed rule was a determination that the State or tribal regulation “meets or exceeds the requirements of the provision(s) from which the State or tribe is requesting the variance.” The final rule requires instead a finding that the State or tribal rule “would perform at least equally well in terms of reducing waste of oil and gas, reducing environmental impacts from venting and/or flaring of gas, and ensuring the safe and responsible production of oil and gas, compared to the particular provision(s) from which the State or tribe is requesting the variance.” The final rule changes the phrase “any individual provision of this subpart” to “any provision(s) of this subpart,” to make clear that a variance request can apply to a specific provision or a group of provisions.
The final rule also: Allows local government requirements, in addition to State and tribal requirements, to support a variance request and substitute for BLM requirements; adds a requirement that the State or tribe must notify the BLM of any substantive changes to the State, local government, or tribal rules to be applied under the variance; and clarifies that a variance allows State, local government, or tribal rules to apply in place of the BLM requirements, but does not eliminate Federal enforcement of waste prevention requirements on Federal or Indian leases, units, or communitized areas. Rather, under a variance, the BLM has the authority to enforce the rules identified by the State, locality, or tribe as if the requirements were BLM regulations. The final rule further clarifies that State, local, and tribal enforcement of their own regulations would not be affected by the BLM's approval of a variance.
Other commenters suggested changes to make the variance application and approval process more restrictive, or opposed allowing variances altogether. One commenter supported the proposed criteria for approval but suggested strengthening this requirement by specifying how the BLM would evaluate the relative effectiveness of the State program, for example by requiring additional data or modeling to support a variance request. Commenters also requested that variance requests be made publicly available, and that there be an opportunity for the public to comment on the requests.
Several commenters suggested that variances should be allowed for all provisions and for entire State programs, stating that this approach would eliminate an involved process requiring variance requests for specific provisions. Others raised concerns about allowing a programmatic variance, and urged the BLM to limit variances to specific provisions of the rule or allow for a variance only when the State and BLM requirements are duplicative. They noted that in many cases State regulations do not address all of the areas covered by the BLM rule—
First, the goal of the variance provision is to allow State, local, or tribal regulations to substitute for the BLM requirements where they will produce benefits at least equivalent to the expected benefits of the BLM regulations. The final rule spells out this criterion by identifying three key benefits of the BLM rules: (1) Reducing waste of oil and gas; (2) reducing environmental impacts from venting and/or flaring of gas; and (3) ensuring the safe and responsible production of oil and gas. To replace provisions of the BLM rule with a State or tribal requirement, the State or tribe must demonstrate that their rules would perform at least as well in achieving these benefits.
The final rule would allow States and tribes to request variances for specific sets of provisions, as well as individual provisions. For example, a State that had a leak detection program similar to the BLM program, but with a different required inspection frequency, might request a variance for the frequency provisions or for the whole leak detection program. The State would need to demonstrate that even if the State or local program would identify a different set of leaks compared to the BLM program, overall the State or local program would be at least as effective as the BLM program in reducing an equivalent quantity of gas losses—which would, in turn, reduce waste, reduce the environmental impacts of venting, and enhance safe and responsible production.
The final rule provisions are not, however, structured to support a broad approval of a variance for an entire State, local, or tribal oil and gas production oversight program, and the BLM agrees with the commenters who raised concerns about such an approach. The BLM recognizes that all States and many tribes regulate various aspects of oil and gas production, but different States and tribes focus on different aspects of the production process and aim for different goals. For example, one State may primarily regulate flaring, while another aims primarily to reduce methane emissions from tanks. The focus on at least equivalent performance requires a specific look at the results achieved from a particular provision or set of provisions, and it would not allow approval of, for example, a stringent flaring regime to substitute for leak prevention requirements.
The final rule does not require that variance requests be made publicly available or that there be an opportunity for the public to comment on the requests. In the past, the BLM has not made individual variance requests publicly available or provided an opportunity for public comment.
This is in contrast to situations in which a Federal agency is authorized by law to formally delegate administration and enforcement of a regulatory program to a State agency. Here, the BLM is not delegating its regulatory or enforcement authority to the State, locality, or tribe. Rather, the BLM is recognizing that, in the absence of a variance, an operator would be required to comply with overlapping requirements. Where States, localities, or tribes have regulations in place that are different from, but at least as effective as, the BLM requirements, applying two sets of requirements is burdensome for operators and would not generate additional benefits. The variance process avoids the potential duplication and inefficiencies that could otherwise occur in this situation, while still holding the BLM responsible for ensuring that operators meet the requirements and produce the benefits for the public that would have been provided under the BLM regulations.
This section summarizes and responds to some additional comments on the proposed rule, that, while significant, did not lead to major changes in the final rule, and that are more cross-cutting in nature than the provision-specific comments addressed in the Section VI. Section-by-Section. These include comments on: The interaction between the BLM rule and EPA regulations; the BLM's authority to require flaring of vented gas; when gas should be considered “avoidably lost”; application of these requirements to units and communitized areas; delays in permitting for natural gas pipeline rights of way; and the interplay between this rule and the BLM's land use planning activities.
We do not believe that the final BLM and EPA rules impose conflicting requirements on operators, and we further believe that we have addressed issues of regulatory overlap. First, much of this rule regulates activities or areas that are not regulated by EPA. This includes the rule's provisions on routine flaring during the oil and gas production process, well maintenance and liquids unloading, well drilling, well testing, emergencies, royalties due on lost gas, royalty rates, measurement and reporting of lost gas, and operators' royalty-free use of gas. Second, where both EPA and the BLM regulate an activity, the rules largely apply to different sources. In particular, the BLM requirements on venting from pneumatic controllers, pneumatic pumps, and storage vessels all explicitly apply to existing sources that are
Third, in those few instances in which both agencies regulate an activity and could potentially cover the same source—specifically well completions and leak detection—the BLM final rule provides that an operator can comply with just one set of requirements. Specifically, the rule aligns the BLM's requirements with the corresponding EPA requirements to a substantial degree, and also provides that an operator will be deemed to be in compliance with the BLM rules if the operator complies with the applicable requirements of subpart OOOOa.
• EPA issues a final ICR;
• Industry submits the required information;
• EPA develops and proposes a rule under CAA section 111(d);
• EPA reviews public comment on that proposal and finalizes the CAA section 111(d) rule;
• Because rules under section 111(d) do not have independent effect but are implemented by States, States then develop and submit to EPA State plans to implement the 111(d) rule (a process that generally requires State rulemaking and may require State legislation);
• EPA approves the State Plan (or prescribes a Federal implementation plan where the State fails to submit a satisfactory plan); and
• Industry implements the requirements in time to meet compliance deadlines established in the State plans.
Citing several specific provisions of the proposed rule that would require operators to flare rather than vent gas that is not captured for sale or use, including the venting prohibition and provisions on storage tanks, several industry commenters asserted that the BLM lacks the authority to require flaring instead of venting of Federal and tribal gas. These commenters argued that the BLM's sole authority is to prevent waste, and a provision that requires flaring rather than venting does not aim at waste prevention because shifting from venting to flaring does not conserve the gas. The sole purpose of such provisions, these commenters asserted, is to regulate air pollution and GHG emissions. Commenters further asserted that regulation of air pollution and GHG emissions is the exclusive province of the EPA, and by extension, the BLM may not regulate in this arena.
For several reasons, the provisions of the rule that require flaring instead of venting are within the BLM's statutory authority. First, as noted above, the MLA grants the BLM the authority to promulgate rules for the prevention of undue waste or for safety purposes.
Second, as discussed above, the MLA and FLPMA grant BLM the authority to regulate oil and gas development on the public lands, including to protect the public's interest in other natural resources and the quality of the environment.
Third, the rule's provisions requiring flaring rather than venting further the BLM's trust responsibilities with respect to Indian oil and gas development because they will prevent the waste of gas and will reduce the environmental impacts to Indian lands from oil and gas development. The BLM believes that these provisions, like all the provisions in this rule, are in the best interest of Indian mineral owners and that the extension of these provisions to oil and gas production from Indian lands is therefore justified.
Finally, while the CAA indeed delegates responsibility for implementing its air pollution and GHG emissions control program to EPA, nothing in the Act bars the BLM from considering air pollution and GHG emissions when deciding how to regulate the development of federally owned oil and gas deposits. The EPA and the Department of the Interior have distinct statutory authorities and missions that may, in some cases, result in overlapping policy goals. This rule does not infringe on EPA's prerogative to regulate air quality through source-specific performance standards and cooperation with State partners. Nor does EPA's authority infringe on or otherwise restrict the BLM's mandate to prevent waste from and manage the environmental impacts of activities on public lands and using public resources. The CAA does not displace other Federal agencies' Congressionally-granted authority to address environmental and climate change concerns.
As noted above, the MLA requires royalties on oil and gas to be paid as a “percent in amount or value of the production removed or sold from the lease.”
For several reasons, the BLM did not change the final rule based on these comments. As an initial matter, there is no statutory or jurisprudential basis for the commenters' position that the BLM must conduct an inquiry into a lessee's economic circumstances before determining a loss of oil or gas to be “avoidable.” Although the BLM's practice under NTL-4A has generally been to engage in case-by-case economic assessments before making avoidable/unavoidable loss determinations, the BLM has not always done so
Some commenters argued that the BLM's existing interpretation of what constitutes an “avoidable loss” has become a “fundamental term” of the BLM's existing oil and gas lease contracts upon which lessees relied in entering into the contracts and making subsequent business decisions. Citing
On the contrary, in promulgating this final rule the BLM is acting within its authority under the MLA and thus within the terms of existing leases. First, the MLA requires lessees to “use all reasonable precautions to prevent waste of oil or gas,”
The
That said, the BLM is cognizant that some of the requirements of this rule may pose more substantial burdens for existing lessees than for future lessees, because future lessees can take account of the requirements of the rule in making their leasing decisions. Accordingly, certain sections of the rule, including sections 3179.8 and 3179.201, are structured to reduce the burden on existing lessees. For further discussion of these provisions, see Section VII, Section by Section.
Some commenters objected to the application of this rule to operations on State and private tracts that are committed to a Federally-approved unit or communitized area. These commenters admit that the BLM has the authority under FOGRMA to regulate oil and gas activities on such tracts for the purposes of royalty accountability, but fail to recognize the various royalty-accountability purposes of this rule, including identifying and imposing royalties on wasteful losses of oil and gas, clarifying the circumstances under which production may be used royalty free, and setting measurement standards for venting and flaring (some of which is royalty bearing). More to the point, though, these commenters did not explain why the BLM's waste prevention authority under the MLA does not extend to the waste of Federal oil and gas that occurs on non-Federal tracts in a Federally-approved unit or communitized area. Commenters cited the BLM's decision not to apply Onshore Oil and Gas Order No. 1 (“Order 1”) to operations on non-Federal lands in units and communitized areas
Commenters also asserted that because the regulation of State and private minerals is under the jurisdiction of the States, the BLM lacks the authority to apply its waste prevention regulations to units and communitized areas in a manner that would affect the production of State and private minerals unitized or communitized with Federal minerals. While the BLM agrees that the regulation of State and private minerals is under the jurisdiction of the States, the BLM does not agree that States' jurisdiction over State and private minerals precludes the BLM from promulgating a waste prevention regulation that has incidental impacts on State and private minerals unitized or communitized with Federal or Indian minerals. The purpose of this rule is to ensure that operators take reasonable precautions to prevent the waste of Federal and Indian oil and gas, a matter that BLM has the authority to regulate pursuant to its statutory and trust responsibilities described in Section III.C.
The fact that States and private parties have chosen to enter into unitization or communitization agreements whereby State or private oil or gas is commingled with Federal or Indian oil or gas, and produced concurrently with Federal or Indian oil or gas, does not deprive the BLM of its authority to impose reasonable waste prevention requirements on operators producing Federal or Indian oil or gas.
Under section 28 of the MLA, the BLM is responsible for granting most of the ROWs for oil and natural gas gathering, distribution, and transportation pipelines and related facilities on public lands. Specifically, the BLM has ROW approval authority for ROWs that cross lands administered by the BLM, or lands administered by two or more Federal agencies,
Several commenters expressed concern that they have experienced significant delays in obtaining ROW approvals for gathering lines, and that these delays impede producers' ability to capture and sell gas. These commenters stated that the BLM should streamline the ROW approval process. They asserted that accelerating the permitting process for pipeline ROWs would allow energy producers to more easily capture and market gas that might otherwise be flared due to a lack of infrastructure. Some commenters further asserted that the BLM could quickly and easily reduce flaring by processing ROWs in a timely manner, and that streamlining ROW permitting would provide a more cost-effective solution to the problem of gas waste than imposing the requirements in the proposed rule.
Commenters suggested several ways in which the BLM could increase permitting speed for gas gathering lines on Federal land. One commenter stated, for example, that the BLM should expand the use of categorical exclusions under the National Environmental Policy Act (NEPA) when permitting gas gathering lines, and another suggested using a ROW “corridor” approval approach, so that small adjustments in a project footprint would not delay the full approval process.
The BLM's experience is that while processing time for ROW applications can sometimes be an issue, particularly in a handful of offices where staff retention has been difficult over the past few years, processing time is not the primary cause of the large volume of current flaring. For example, BLM data indicate that many applications to flare gas come from wells that are already connected to pipeline infrastructure, or for which operators are not seeking ROWs to build new pipelines. For instance, in Dickinson, North Dakota, large volumes of gas are being flared from over 1,700 Federal and Indian oil wells,
While the BLM data indicate that the current speed of the BLM's ROW processing is not a significant factor in the rate of flaring at most wells, the BLM recognizes the importance of timely ROW approvals and continues to make improvements aimed at increasing the efficiency of the ROW permitting process. A variety of factors, some in the BLM's control but some beyond the BLM's control, can impact the timely approval of ROWs and other actions that may be needed to construct a pipeline or gas processing facility. For example, fee land owners may delay or block a pipeline project that crosses both public and private lands, even when the Federal portion of the ROW is permitted. The time period for permitting ROWs may also be extended if, for example: The ROW grant is pending consultation or concurrence from another agency,
Last year, the BLM instituted key program changes to more quickly process pending oil- and gas-related ROW applications, and we have seen progress as a result of these efforts. These steps included using strike teams to add additional permit-processing resources at high-volume offices, working with the Office of Personnel Management to identify pay strategies to address staff shortages in key offices, and increasing formal training for critical staff. Additionally, particular field offices are actively pursuing other actions to decrease permitting times, including: (1) Coordinating aspects of the pipeline ROW and corresponding APD reviews, so that they occur concurrently rather than consecutively; (2) working with project proponents to minimize surface disturbance to help expedite environmental reviews; (3) fully and consistently utilizing applicable Categorical Exclusions to NEPA to streamline reviews; (4) encouraging project proponents to develop oil and gas Master Development Plans and Master Leasing Plans as well as right-of-way Master Agreements, which are negotiated with a single applicant for processing and monitoring multiple applications covering facilities within a specific geographic area; (5) encouraging unitization to help streamline permitting by avoiding the need for multiple ROWs (or potentially for any ROW at all, if the gas can be gathered and transmitted without crossing Federal or Indian land); and (6) working closely with proponents to determine which projects are priorities.
Finally, many stakeholders requested that the BLM address waste reduction through requirements under the MLA relating to the BLM's land use planning and environmental review processes. Commenters stated that the BLM should use its authority to reduce waste by proactively using all available planning, analysis and permitting tools including Applications for a Permit to Drill (APDs); lease stipulation decisions in resource management plans (RMP); master leasing plans (MLPs); waste minimization plans (WMPs); and unitization agreements. Commenters also stated that the proposed rule fails to exercise the BLM's full authority at the planning and leasing stages, and further, that land-use planning should be used to support well-planned fossil fuel development that would, for example, limit the leasing of lands where infrastructure constraints are expected to be significant, so as to minimize the need for venting or flaring of associated gas.
Commenters asserted that if the BLM conducted more robust NEPA reviews prior to oil and gas development, the reviews would identify additional waste reduction opportunities. Commenters further requested that the rules governing development of RMPs be modified to support the intended purpose of the rule to capture gas and prevent venting or flaring. These commenters also asserted that detailed, site-specific MLPs can support methane capture and waste minimization once an RMP is in place.
Commenters disagreed with the BLM's decision not to propose changes to the BLM land use planning regulations as part of this rulemaking. They suggested that the BLM's failure to link the proposed rule to the BLM's foundational planning and management framework misses opportunities to foster orderly and efficient development of oil and gas that would prevent methane pollution and waste. Some commenters suggested that although changes to the BLM's land use planning rules are not required to enhance the use of planning mechanisms available to the BLM when developing RMPs and MLPs, referencing these tools in the final rule would emphasize their importance.
While the BLM is not making changes to the BLM land use planning regulations or NEPA review processes as part of this rulemaking, as stated in the preamble to the proposed rule, the BLM agrees that the land use planning and NEPA processes are critical to achieving our simultaneous goals of responsible oil and gas development, land stewardship and resource conservation, and protection of air quality on (and reduction of air emissions from) Federal lands.
The BLM already has land use planning and NEPA tools and processes in place that can be used to help achieve the specific goals of this rulemaking—to reduce the wasteful and environmentally harmful loss of gas through venting, flaring, and leaks. The BLM conducts NEPA analyses for both regional planning decisions and project level decisions. These analyses take a hard look at the direct effects, indirect effects, and cumulative effects of the proposed federal action on various resources during the land use planning or project approval process, such as the effects on wildlife, air quality, or recreation opportunities. The BLM's NEPA analyses also quantify GHG emissions associated with the proposed planning decision alternatives under consideration. In particular, the land use planning and NEPA processes for new RMPs and MLPs provide important opportunities to consider the effects of oil and gas development over a larger area and to optimize planned development to minimize impacts from venting and flaring, among other activities. The planning process gives the BLM the opportunity to consider how a specific land management plan could address the timing and location of development of oil and gas and related infrastructure, such as pipelines, and the projected consequences of such decisions in terms of the quantities of vented and flared gas and the impacts associated with those emissions.
Thus, the BLM already has the NEPA processes and tools in place to evaluate the effects of the gas that would be flared, vented, and leaked from proposed oil and gas production, including impacts to wildlife and air quality, as well as GHG emissions, which contribute to climate change. The NEPA analyses can also identify ways to minimize such effects, such as evaluating alternative options for siting and timing of development that would maximize the opportunities for gas capture in lieu of flaring.
In addition, the BLM is in the process of completing a comprehensive update to its land use planning regulations, which should further enhance the opportunities to address gas waste in new oil and gas production approvals. The BLM proposed its new planning regulations in February 2016. The
Some commenters expressed concerns that because the rule provides for operators to request various exemptions through submission of Sundry Notices to the BLM, these provisions could impose a paperwork burden on operators and the requests could be difficult for the BLM staff to process in a timely manner. The BLM believes that the number of requests for exemptions will be fairly limited, as the BLM's analysis does not indicate that the costs of these provisions will be substantial for the vast majority of operators. Nevertheless, the BLM recognizes that these are valid concerns, and is committed to minimizing unnecessary paperwork burdens on operators and continuing to streamline its own operations.
Thus, the BLM is providing here some additional information regarding how we expect operators to submit requests and how we may process them, and we will provide additional guidance as we move forward to implement the final rule. Concerns have been raised in this regard with respect to requests for exemption from multiple requirements of the rule for a lease. Specifically, operators have asked whether they could submit a single request for an exemption from multiple provisions of the rule, and how the BLM would evaluate it. The final rule requires an operator to make a demonstration that each requirement for which the operator is requesting an exemption would itself cause the operator to cease production and abandon significant recoverable reserves on the lease. An operator could not simply add up the costs of compliance with multiple requirements of the rule to show that the cumulative costs of the requirements would cause the operator to cease production and abandon significant recoverable reserves under the lease, and thereby obtain an exemption from all of those requirements. In making the showing for a specific requirement, however, the operator could take into account as part of the baseline costs any requirements of the rule for which an exemption is not being requested. In addition, to the extent that there is common data supporting multiple exemption requests, such as the data on production and revenues from a given lease, the BLM intends that an operator would be able to provide that data once on a single submission containing a separate showing for each of the specific requests, rather than providing multiple separate submissions.
This section discusses the final rule provisions, substantial changes from the proposed rule, and some of the most significant comments received. Public comments not addressed in this section or elsewhere in this preamble are addressed in the separate Response to Comments document, which is available on the BLM Web site and is part of the rule-making record.
The final rule's amendments to existing 43 CFR 3103.3-1 focus on existing § 3103.3-1(a)(1), and do five things: (1) Remove two provisions of the existing regulations that are no longer necessary (§ 3103.3-1(a)(1)(i) and (ii)); (2) add a new § 3103-1(a)(2); (3) specify that the royalty rate on all leases existing at the time the rule becomes effective will remain at the rate “prescribed in the lease or in applicable regulations at the time of lease issuance”; (4) specify the statutory rate of 12.5 percent for all noncompetitive leases issued after the effective date of the final rule; and (5) conform the regulatory regime for competitive leases issued after the effective date of the rule to the regime envisioned by the MLA, which specifies that the royalty rate for all new competitively issued leases be set “at a rate of not less than 12.5 percent.”
The final rule also renumbers existing § 3103-1(a)(2) and (a)(3) as § 3103-1(a)(3) and (a)(4) and makes minor changes to existing § 3103-1(a)(3)) (final § 3103-1(a)(4)) for clarity.
Additionally, the final rule reprints existing §§ 3103-1(b) and (c), for clarity. Finally, the BLM made a minor revision to § 3103.3-1(d) from the proposed rule. To improve the clarity of this provision, final § 3103-1(d) adds the language “from the gas stream” in two places that address any helium component that is not conveyed with the mineral estate in a Federal oil and gas lease.
Several commenters stated that a new royalty rate above the current rate of 12.5 percent would create uncertainty in the leasing process, and would disadvantage Federal leases compared with State and private leases and disincentivize investments on Federal lands. One commenter objected to the proposed rule's use of the term “base rate,” because the BLM did not provide a definition of that term. The commenter also noted that the proposed rule does not describe the process by which the rate will be determined, to whom it will apply, or how and when it will be reevaluated and reset. One commenter noted that under the BLM's recent regulatory revision of Onshore Oil and Gas Order Number 3, the BLM proposes to authorize commingling allocations and approvals (CAAs) for properties with identical fixed royalty rates. The commenter suggested that a variable royalty rate would have the unintended consequence that most CAAs would not be approved.
Other commenters supported the BLM's proposal to ensure that the royalty rate of 12.5 percent represents a floor and not a ceiling. The commenters contended that this would allow the American public to receive a fair market return on their resources. Some commenters suggested that the royalty rate be raised to 18.75 percent to be in line with the royalty rate assessed on Federal offshore leases. Commenters also noted that the current rate is far below several state rates. One commenter suggested that the increase in royalty rate should be informed by the social and environmental costs of oil and gas production, including the social cost of methane emissions. Another commenter stated that if the BLM were to increase the royalty rate, it should be a constant rate, rather than a sliding scale, as this would reduce administrative and reporting burdens. Some commenters requested that the BLM set the royalty rate at least 60-90 days prior to any lease sale and publish notice in the
The BLM did not revise the rule in response to these comments. As stated in the proposed rule preamble, the BLM is not currently proposing to raise the base royalty rate for new competitively issued leases above 12.5 percent; rather, we are conforming the regulatory provisions governing royalty rates for new competitive leases to the
This amendment to § 3160.0-5 deletes the definition of “avoidably lost” that by its terms applies to part 3160. A definition of “avoidably lost” is no longer needed for part 3160, and this definition is superseded by the provisions in new subpart 3179, particularly § 3179.4, governing when the loss of oil or gas is deemed avoidable or unavoidable. The BLM did not receive comments on removing this definition and is finalizing this deletion as proposed.
This section describes the requirements for drilling applications and plans, including the information that an operator must provide with an APD. The BLM is amending this section to add paragraph 3162.3-1(j), which requires that when submitting an APD for an oil well, an operator must also submit a waste minimization plan. Submission of the plan is required for approval of the APD, but the plan will not itself become part of the APD, and the terms of the plan will not be enforceable against the operator.
The purpose of the waste minimization plan is for the operator to set forth a strategy for how the operator will comply with the requirements of subpart 3179 regarding the control of waste from venting and flaring. The waste minimization plan must include information regarding: The anticipated completion date(s) of the proposed well(s); a description of anticipated production from the well(s); certification that the operator has provided one or more midstream processing companies with information about the operator's production plans, including the anticipated completion dates and gas production rates of the proposed well or wells; and identification of a gas pipeline to which the operator plans to connect.
Based on comments received requesting that the information required in the plans be streamlined, the final rule provides that certain kinds of information are only required if an operator cannot identify a gas pipeline with sufficient capacity to accommodate the anticipated production of the proposed well(s). This conditionally-required information includes: A gas pipeline system location map showing the proposed well(s); the name and location of the gas processing plant(s) closest to the proposed well(s); all existing gas trunklines within 20 miles of the well, and proposed routes for connection to a trunkline; the total volume of produced gas, and percentage of total produced gas, that the operator is currently venting or flaring from wells in the same field and any wells within a 20-mile radius of that field; and a detailed evaluation, including estimates of costs and returns, of potential on-site capture approaches.
Some commenters requested that waste minimization plans required by other states, such as North Dakota and New Mexico, should be allowed to satisfy the requirements set forth in this section. The BLM recognizes that some States have similar waste minimization plan requirements under State law. To the extent that an operator is already preparing, under State requirements, a waste minimization plan that meets all or most of the requirements for a waste minimization plan under section 3162.3-1, the BLM requirements should impose little additional burden on the operator. The operator would be able to submit the same plan to the BLM, supplemented as necessary to meet each of the requirements of section 3162.3-1.
Other commenters stated that the preparation and review of the waste minimization plans would be a burden both on applicants and the BLM, because in the commenters' view, the proposed rule significantly underestimated the number of plans that would be required and the time required to prepare them. The commenters asserted that the BLM can be slow in approving APDs, and argued that the review of the additional waste minimization plans could slow the process further. Other commenters suggested that the requirement to prepare a waste minimization plan be limited only to wells that anticipate flaring a high volume of associated gas after completion. The BLM disagrees with these comments and believes that requiring operators to prepare a waste minimization plan for all wells is a reasonable, low cost, and effective way to encourage operators to consider and plan for capturing gas before the development of every new well. As stated previously, however, the final rule streamlines some of the elements required in the plan. Further, the BLM presently plans to review the effectiveness of the plan requirement within 3 years after the final rule's effective date, to assess the costs to operators of preparing the plans, the costs to the BLM of reviewing the plans, and the effectiveness of the plans in driving flaring reductions at new wells.
Commenters also expressed concern that the waste minimization plan requirement could trigger the need for additional analysis under NEPA for non-federal/non-Indian wells within a unit or communitized area. Under existing regulations, wells that are not located on federal or Indian surface and do not pierce federal or Indian minerals are not required to obtain BLM's approval of an APD, even if those wells are within a unit or communitized area from which federal or Indian minerals are produced. Commenters were concerned that the requirement for a waste minimization plan would somehow require those wells to file APDs or subject them to NEPA.
The BLM believes these concerns are unfounded. Operators would be required to submit waste minimization plans only for wells that already require an APD under part 3160—
Commenters also requested that the BLM make the waste minimization plans publicly available. The BLM already publicly posts APDs for a period prior to approval, and we plan to post the waste minimization plans accompanying the APDs in the same manner, subject to any protections for confidential business information.
This section states that the purpose of the subpart is to address circumstances in which oil and gas produced from Federal and Indian leases may be used royalty-free. This subpart supersedes those parts of NTL-4A pertaining to oil or gas used for “beneficial purposes.”
The BLM received a comment on this section requesting that the BLM clarify whether the rule will replace all of NTL-4A, or just those parts “pertaining to use of oil or gas for beneficial purposes.” The BLM notes that Subpart 3178 replaces the portion of NTL-4A pertaining to the use of oil or gas for beneficial purposes and Subpart 3179 replaces the portion of NTL-4A pertaining to venting and flaring of produced gas, unavoidably and avoidably lost gas, and waste prevention. Together, the combined revisions to Subparts 3178 and 3179 supersede NTL-4A in its entirety. The BLM disagrees that the regulatory text requires clarification beyond what is stated here, and did not revise this section in response to this comment.
This section specifies which leases, agreements, wells, and equipment are covered by this subpart. The section also states that the term “lease” in this subpart includes IMDA agreements, unless specifically excluded in the agreement or unless the relevant provisions of this subpart are inconsistent with the agreement. In the final rule, in response to comments, the BLM edited proposed paragraph (a)(5) to clarify the list of items to which this subpart applies. Paragraph (a)(5) in the final rule provides that this subpart applies to wells and production equipment, and also, under specified circumstances, compressors. Additionally, the final rule omits proposed paragraph (a)(6) relating to coverage of gas lines, as the BLM has determined that gas lines do not “use” production for purposes of this subpart.
One commenter suggested replacing “other facilities” with “production equipment,” and suggested distinguishing compressors that promote production at the wellhead from those that promote pipeline flow. The BLM agrees that these suggested changes improve the clarity of the rule, and we have revised the text accordingly. The text now refers to “production equipment” and limits coverage to compressors that both are located on a lease, unit or communitized area and compress production from the same lease, unit or communitized area.
Commenters also suggested distinguishing among flow lines, gathering lines and transmission lines, and requested revisions to highlight the limits of the BLM's authority over gas lines. We believe that these comments are no longer applicable with the elimination of proposed paragraph (a)(6).
This section sets forth the general rule that royalty is not due on oil or gas that is produced from a lease or communitized area and used for operations and production purposes (including placing oil or gas in marketable condition) on the same lease or communitized area without being removed from the lease or communitized area. This section also treats oil and gas produced from unit PAs—that is, the productive areas on a unit—and used for operating and production purposes on the unit, for the same PA, in the same way. Units often include different PAs composed of multiple leases with varied ownership. This section therefore limits royalty-free use of gas from a particular PA to uses that are made on the same unit, to support production from the same unit PA. The reason for this limitation is to prevent excessive use of royalty-free gas by prohibiting a unit operator from using royalty-free production from one PA to power operations on, or treat production from, another PA on the same unit, to the benefit of different owners and to the detriment of the public interest.
As discussed below, § 3178.5 qualifies the general provisions of § 3178.3 by listing specific operations for which prior written BLM approval will be required for royalty-free use.
The BLM received a few relatively technical comments on § 3178.3, which are addressed in the Response to Comments document. The BLM did not make any changes to this section from the proposed rule.
This section identifies uses of produced oil or gas that will not require prior written BLM approval for royalty-free treatment. The uses listed in this section involve routine production and related operations. In addition, paragraph (b) clarifies that even when a use is authorized, the royalty-free volume is limited to the amount of fuel reasonably necessary to perform the operation on the lease using appropriately sized equipment. This ensures that royalty-free on-site use remains subject to the requirement to avoid waste of the resource.
While the royalty-free uses described here are generally similar to the uses identified as “beneficial purposes” in NTL-4A, this rulemaking further clarifies which uses warrant royalty-free treatment.
In addition, this section clarifies that hot oil treatment is an accepted on-lease use of produced crude oil that does not require prior approval to be royalty-free. In this treatment, oil is not consumed as fuel. Rather, after the oil is pumped back into the well to stimulate production, it is produced again. Although the use of produced crude oil for hot oil treatments on the producing lease, unit, or communitized area has historically been understood by the BLM and by operators as a royalty-free use, it is not specifically addressed in NTL-4A but is now included in this final rule.
As mentioned above, the BLM received comments requesting that other uses of oil or gas be identified as royalty-free, including fuel for power generation, pilot and assist gas, fuel for heating, fuel for ancillary equipment,
Regarding using oil as a circulating medium in drilling operations, or injecting gas produced from a lease, unit PA, or communitized area into the same lease, unit, PA, or communitized area to increase the recovery of oil or gas, the BLM had proposed to include these uses in the list in § 3178.5 of uses requiring prior approval. As operators are already required to report the use of oil as a circulating medium in drilling operations under Onshore Order Number 1, and the use of gas for injection under applicable regulations in parts 3100, 3160 and 3180 of this title, however, the BLM has decided not to require prior approval for these uses. In addition to the injection of gas for the purpose of increasing the recovery of oil or gas, the BLM has added the injection of gas “for the purpose of conserving gas” as a royalty-free use that does not require prior written BLM approval under the final rule. Often, gas injection is used to enhance resource recovery by maintaining or slowing the reservoir pressure decline which leads to higher oil recovery. The BLM also understands that, in some circumstances, excess gas that cannot be captured and sold or used on lease may be injected in order to conserve the gas. This practice occurs in Canada's Bakken field. While not all reservoirs are conducive to gas injection, the BLM believes it important to provide that as an option to conserve any gas that can't be sold immediately.
Finally, this rule does not address some uses that are already defined as royalty-free under ONRR provisions, such as the royalty-free use of residue gas to fuel gas plant operations, as provided in 30 CFR 1202.151(b).
Overall, in response to comments received, the BLM made the following changes in the final rule:
• Modified paragraph (a)(1) to more broadly address the use of fuel to generate power, including the use of fuel to operate “combined heat and power,” which is a particularly efficient means of generating power from gas;
• Combined and modified proposed paragraphs (a)(2) and (a)(3) to include artificial lift equipment and completion and workover equipment;
• Renumbered the remaining paragraphs accordingly;
• Added use of gas as a pilot fuel or as assist gas for a flare, combustor, thermal oxidizer, or other control device, as paragraph (a)(5);
• Added treatment of gas to paragraph (a)(6); and
• Added two uses that will not require prior written BLM approval for royalty-free treatment, which were identified in § 3178.5 in the proposed rule as requiring prior approval: (1) Using oil as a circulating medium in drilling operations (paragraph (a)(8)), and (2) injecting gas produced from a lease, unit PA, or communitized area into the same lease, unit PA, or communitized area to for the purposes of conserving gas or increasing the recovery of oil or gas (paragraph (a)(9).
• Added injection of gas that is cycled in a contained gas-lift system, as paragraph (a)(10).
This section identifies uses of oil or gas that will require prior written BLM approval to be deemed royalty-free. The aim of this section is three-fold: (1) To ensure that the BLM retains discretion to grant royalty-free use where the BLM deems the use to be consistent with the MLA's royalty requirement for oil or gas that is produced and then removed from the lease and sold; (2) to increase uniformity in the administration of the royalty provisions by specifying circumstances that warrant particular BLM attention; and (3) to ensure the BLM's awareness of unusual uses that risk the loss or waste of oil and gas.
For all of the identified uses, operators will be required to submit a Sundry Notice requesting BLM approval to conduct royalty-free activities.
The potentially royalty-free uses identified in this section are as follows:
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In response to comments described below, the BLM made the following three changes to the proposed rule requirements: (1) Removed proposed paragraphs (a)(1) and (a)(2) from this section and moved them to § 3178.4 (royalty-free without prior approval); (2) Added language to paragraph (2) (paragraph (4) in the proposed rule) to clarify that the provision applies to the physical characteristics of the gas “that require the gas to be treated or processed prior to use”; and (3) Removed proposed paragraph (c) and added language to paragraph (b)(1) that indicates that royalties must be paid on volumes when the BLM disapproves a request for royalty-free treatment under this section, and that any approvals for royalty-free treatment will be effective from the date the request was filed. Each change is discussed below along with a summary of the comments that lead to the change.
Several commenters indicated that some of the activities in proposed § 3178.5 should not require prior approval. The BLM agrees and, in response to this and other comments on § 3178.4, moved some provisions to § 3178.4, as described previously.
Additionally, some commenters stated that operators should not be required to seek prior approval for the following two royalty-free uses: Gas removed from a pipeline at a location downstream of the FMP and gas initially removed from a lease, unit participating area, or communitized area for treatment or processing where the gas is returned to the lease, unit, or communitized area for lease operation. The BLM disagrees with these comments and retained these paragraphs in paragraphs (a)(1) and (a)(2) of this section. Gas that is removed from a lease, unit participating area, or communitized area would normally be royalty-bearing. Inclusion of these uses in this section allows the BLM the discretion to approve royalty-free uses under the unique circumstances in which gas is removed and returned to the same lease, unit participating area, or communitized area.
Several commenters also stated that the BLM did not adequately explain why operators must ever receive agency approval for royalty-free use of production. Commenters stated that the BLM must specify the standard or
Some commenters argued that the BLM should remove the limitation, included in the proposed rule, that gas removed from the lease may only be used on the lease royalty-free if it was removed for treatment or processing “to address a particular characteristic of the gas.” The commenters stated that the operator should not have the burden of establishing the necessity of off-lease treatment. In response to this comment, the BLM revised paragraph (a)(2) (paragraph (a)(4) in the proposed rule) to clarify that the provision applies to particular physical characteristics of the gas “that require the gas to be treated or processed prior to use.”
Some commenters suggested that an identified use should be royalty-free until the BLM denies it, rather than having to wait for the BLM to approve it. In addition, one commenter suggested that if the BLM does not, within 30 days, respond to a Sundry Notice requesting approval, the Notice should be deemed approved. Another commenter requested that approvals should go into effect when the request is filed. In response to these comments, the BLM revised § 3178.5(b)(1) to indicate that approvals will be effective from the date the request was filed. However, if the BLM disapproves a request, the operator must pay royalties on all volumes used, including those used while the request was pending.
Several commenters stated that exceptions for royalty-free use should not be considered, that the rule allows too much royalty-free venting and flaring, or that the rule does not sufficiently restrict royalty-free use that results in emissions to the environment. As stated in the proposed rule preamble, however, royalty-free on-site use is limited to reasonable uses that are not wasteful. The BLM does not intend to grant prior approval of royalty-free uses under § 3178.5 unless it determines, in light of available technology, that the requested use is reasonable and not wasteful. As a result, the BLM did not revise this section in response to these comments.
This section identifies two circumstances in which royalty-free use of oil or gas that has been moved off the lease, unit, or communitized area would be permitted without prior BLM approval. The first situation is where an individual lease, unit, or communitized area includes non-contiguous areas, and oil or gas is piped directly from one area of the lease, unit, or communitized area to another area where it is used, and no oil or gas is added to or removed from the pipeline, even though the oil or gas crosses lands that are not part of the lease, unit, or communitized area. Under this section, the BLM will consider such production as not having been “removed from the lease.” This will provide the lessee or operator the same opportunity for royalty-free use as if the lease, unit, or communitized area were one contiguous parcel.
The second situation is where a well is directionally drilled, and the wellhead is not located on the producing lease, unit, or communitized area, but produced oil or gas is used on the same well pad for operations and production purposes for that well. In such situations, the rule allows for royalty-free use at the well pad, without prior approval. Use at off-lease well heads is an established royalty-free use.
Commenters asserted that the language in proposed paragraph (a) that described reasons why oil or gas would be moved off the lease, unit, or communitized area was ambiguous. In response to this comment, the BLM simplified the language in this paragraph to clarify the original intent discussed above. Paragraph (a) of the final rule now states: “The oil or gas is transported from one area of the lease, unit, or communitized area to another area of the same lease, unit, or communitized area where it is used, and no oil or gas is added to or removed from the pipeline while crossing lands that are not part of the lease, unit, or communitized area; . . . .”
This section addresses the royalty treatment of oil or gas used in operations conducted off the lease, unit, or communitized area. When production is removed from the lease, unit, or communitized area, it becomes royalty-bearing unless otherwise provided. This principle is reflected in paragraph (a) of this section, which provides that with only limited exceptions, royalty is owed on all oil or gas used in operations conducted off the lease, unit, or communitized area.
Existing NTL-4A does not include a provision that specifically addresses approving off-lease royalty-free use. Such approval is required, however, under ONRR regulations, which provide, “All gas (except gas unavoidably lost or used on, or for the benefit of, the lease, including that gas used off-lease for the benefit of the lease when such off-lease use is permitted by the BOEMRE or BLM, as appropriate) produced from a Federal lease to which this subpart applies is subject to royalty.”
Paragraph (b) of this section identifies circumstances in which, despite the general rule articulated in paragraph (a), the BLM will consider approving off-lease royalty-free use (referred to here as “off-lease royalty-free uses”). These include situations in which the operation is conducted using equipment or at a facility that is located off the lease, unit, or communitized area (under an approved permit or plan of operations, or at the agency's request) because of engineering, economic, resource protection, or physical accessibility considerations. For example, a compressor that otherwise would have been located on a lease may be sited off the lease because the topography of the lease is not conducive to equipment siting. To be approved for off-lease royalty-free use, the operation would also have to be conducted upstream of the approved FMP. This paragraph reflects the BLM's policy to encourage operators to reduce the amount of surface disturbance associated with oil and gas exploration and development projects. In some cases, centralizing production facilities at a location off the lease may serve that objective.
Paragraph (c) requires the operator to obtain BLM approval for off-lease royalty-free use via a Sundry Notice containing the information required under proposed § 3178.9 of this subpart. In response to a comment described below, in the final rule the BLM added the following provision to paragraph (c)
Paragraph (d) of this section clarifies that approval of off-lease measurement or commingling under other regulatory provisions does not constitute approval of off-lease royalty-free use. An operator or lessee must expressly request, and submit its justification for, approval of off-lease royalty-free use. The BLM anticipates that generally such approval would be appropriate only in some of the situations in which the BLM has approved measurement at a location off the lease, unit, or communitized area, or has approved commingling production off the lease, unit, or communitized area and allocating production back to the producing properties.
Paragraph (e) of this section addresses circumstances in which equipment located on a lease, unit, or communitized area also treats production from other properties that are not unitized or communitized with the property on which the equipment is located. An operator is allowed to report as royalty-free only that portion of the oil or gas used that is properly allocable to the share of production contributed by the lease, unit or communitized area on which the equipment is located, unless otherwise authorized by the BLM.
A commenter proposed that an identified use should be royalty-free until the BLM denies an application for prior approval, rather than requiring an operator to wait for the BLM to approve the use. As stated above, in response to these comments, the BLM revised § 3178.7(c) to indicate that approvals will be effective from the date the request was filed. However, if the BLM disapproves a request, the operator must pay royalties on all volumes used, including those volumes used during pendency of the request.
Commenters also suggested that the proposed language in paragraph (e) was inconsistent with the BLM's goal of encouraging operators to reduce the amount of surface disturbance because this provision would discourage production from multiple leases. The BLM disagrees. This section indicates that only the portion of the oil or gas used as fuel that is properly allocable to the lease, unit, or communitized area on which the equipment is located (on-lease) is royalty-free; however, the proportion of the oil or gas used from off-lease production may be approved by the BLM for off-lease royalty-free use. The BLM recognizes both the operating efficiency and resource conservation advantages of locating production equipment from multiple wells on a common site. The BLM did not revise this paragraph in response to these comments.
Another commenter suggested that the BLM should approve all requests unless it can demonstrate that particular circumstances related to lease operations justify disallowing royalty-free use. The BLM disagrees with this comment and did not modify the rule in response to this comment. The MLA exempts from royalties production that is used on the lease for lease operations. This rule allows for royalty-free off-lease uses in some cases, including those specified in § 3178.6 as not requiring prior approval. The circumstances described in § 3178.7 give the BLM the flexibility to approve additional off-lease royalty-free uses where the BLM believes those uses are reasonable and not wasteful.
This section specifies that an operator must measure or estimate the volume of royalty-free gas used in operations upstream of the FMP. In general, the operator is free to choose whether to measure or estimate, with the exception that the operator must in all cases measure the following volumes: (1) Royalty-free gas removed downstream of the FMP and used pursuant to sections 3178.4 through 3178.7; and (2) royalty-free oil used pursuant to sections 3178.4 through 3178.7. When royalty-free oil or gas is removed downstream of the FMP and used pursuant to sections 3178.4 through 3178.7, the operator must apply for a new FMP under section 3173.12 to measure the gas that is removed for use.
If oil is used on the lease, unit or communitized area, it is most likely to be removed from a storage tank on the lease, unit or communitized area. Thus, paragraph (c) also requires the operator to document the removal of the oil from the tank or pipeline.
Paragraph (e) requires that operators use best available information to estimate gas volumes, where estimation is allowed. For both oil and gas, the operator must report the volumes measured or estimated, as applicable, under ONRR reporting requirements. As revisions to Onshore Oil and Gas Orders No. 4 and 5 have now been finalized as 43 CFR subparts 3174 and 3175, respectively, the final rule text now references § 3173.12, as well as § 3178.4 through § 3178.7 to clarify that royalty-free use must adhere to the provisions in those sections. The BLM received few, highly technical comments on this section, which are addressed in the Response to Comments document.
This section describes how to request BLM approval of royalty-free use when prior-approval is required under § 3178.5 or § 3178.7. The operator must submit a Sundry Notice containing specified information, which is necessary for the BLM to determine if approval is appropriate. The information includes a description of the operation to be conducted, the measurement or estimation method, the volume expected to be used, the basis for an estimate (if applicable), and the proposed use of the oil or gas. This section was finalized as proposed, with minor wording changes to improve clarity. The BLM received few, highly technical comments on this section, which are addressed in the Response to Comments document.
This section clarifies that although the operator is not required to own or lease the equipment that uses oil or gas royalty-free, the operator is responsible for all authorizations, production measurements, production reporting, and other applicable requirements. The BLM did not receive significant comments on this section and did not revise this section from the proposed rule.
As in the proposed rule, this section states that the purpose of subpart 3179 is to implement statutes relating to prevention of waste from Federal and Indian (other than Osage Tribe) leases, conservation of surface resources, and management of the public lands for multiple use and sustained yield. The section also provides that subpart 3179 supersedes those parts of NTL-4A that pertain to venting and flaring of produced gas, unavoidably and avoidably lost gas, and waste prevention.
One commenter stated that BLM should clarify whether subpart 3179 replaces NTL-4A and that NTL-4A is no longer applicable, or if subpart 3179 only supersedes part of NTL-4A. As stated previously, subpart 3178 replaces the portion of NTL-4A pertaining to the
This section specifies which leases, agreements, tracts, facilities, and gas lines are covered by this subpart. The section also states that the term “lease” in this subpart includes IMDA agreements, unless specifically excluded in the agreement or unless the relevant provisions of this subpart are inconsistent with the agreement. The BLM did not revise this section from the proposed rule.
Some commenters stated that the scope of the rule is too broad. Some commenters suggested limiting its scope to leases with more than 51 percent Federal interest, while others suggested that the BLM clarify that this subpart does not apply to exploration, wildcat, or delineation wells. The BLM disagrees that the scope of the rule is too broad, and did not revise this section based on these comments. As discussed earlier in this Preamble, the BLM has both the authority to ensure that operators take reasonable precautions to prevent the waste of Federal and Indian oil and gas. The fact that this final rule may impact some leases with minority Federal or Indian interest does not deprive the BLM of its authority to impose reasonable waste prevention requirements on operators producing Federal or Indian oil or gas.
Finally, the BLM notes that the rule generally applies to all oil and gas wells, including exploratory, wildcat, and delineation wells. Provisions of the rule that apply more narrowly explicitly indicate the narrower scope; for example, the gas capture requirements in section 3179.7 apply only to “development oil wells.”
This section contains definitions for terms that are used in subpart 3179: “accessible component”; “automatic ignition system”; “capture” and “capture infrastructure”; “compressor station”; “continuous bleed”; “development oil well” or “development gas well”; “gas-to-oil ratio”; “gas well”; “high pressure flare”; “leak”; “leak component”; “liquid hydrocarbon”; “liquids unloading”; “lost oil” or “lost gas”; “pneumatic controller”; “storage vessel”; and “volatile organic compounds.” Some defined terms have a meaning particular to this rule. Other defined terms may be familiar to many readers, but are defined in the regulatory text to enhance the clarity of the rule.
In response to comments, the final rule adds several definitions that were not included in the proposed rule, including “automatic ignition system”; “continuous bleed”; “high pressure flare”; “leak” and “leak component” (which replaced the term “component” from the proposed rule); and “pneumatic controller.” The final rule also adds a definition of “compressor station” that is consistent with the definition in subpart OOOOa, as the final rule leak detection provisions and the subpart OOOOa leak detection provisions both refer to compressor stations. In addition, the definition of “storage vessel” has been expanded to clarify the types of vessels covered by section 3179.203. The definitions of “development oil well” and “development gas well” include minor wording changes for clarity.
Some commenters expressed concerns that the proposed definition of a storage vessel in § 3179.3 does not match the definition provided in subparts OOOO and OOOOa. Commenters asserted that the definition proposed by the BLM applies the 6 tpy VOC threshold for applicability to a whole tank battery, as well as to a single tank, making the proposed rule significantly more stringent than the EPA OOOOa rule, which only applies if an individual storage vessel exceeds the threshold. Commenters also noted that the EPA definition of storage vessel excludes portable tanks temporarily located at the well site, and they recommended that the BLM take the same approach as the EPA by aligning the BLM's definition with the EPA definition. Other commenters supported the BLM's proposed definition of storage vessel, as it could apply the requirements for storage vessels to a collection of low-emitting single tanks that would not otherwise meet the threshold.
Based on input from commenters, the BLM has revised its definition of storage vessel to be largely consistent with the EPA subpart OOOO and subpart OOOOa definitions. The BLM removed the reference to a “battery of tanks” and added provisions excluding temporary tanks from the definition of a storage vessel. The BLM believes that this is a reasonable approach. The 6 tpy threshold identifies a quantity of lost gas that is reasonably cost-effective to address at an individual tank, without regard to the type of vessel or fluid stored. Avoiding the same quantity of lost gas from a battery of tanks would effectively lower the tank size threshold for coverage and would be considerably less cost-effective, as the same type of equipment would have to be installed on multiple tanks with smaller releases.
The BLM has also excluded from the definition of storage vessel tanks storing hydraulic fracturing fluid prior to implementation of an approved permanent disposal plan under Onshore Oil and Gas Order No. 7. This revision ensures that the final rule will not overlap with BLM rules governing hydraulic fracturing activities.
Commenters also suggested that the BLM adopt definitions for “pneumatic controllers” and “continuous bleed” that are consistent with the definitions in subpart OOOOa. The BLM agrees that aligning the definitions in the BLM and EPA rules to the extent possible will reduce the potential for confusion. Accordingly, § 3179.3 includes definitions for “pneumatic controllers” and “continuous bleed” that are consistent with the definitions of these terms in subpart OOOOa.
In order to provide clarity, BLM has included definitions of “automatic ignitor system” and “high pressure flare” in the final rule. The final rule defines an “automatic ignition system” as an automatic ignitor and, where needed to ensure continuous combustion, a continuous pilot flame. A “high pressure flare” is defined as an open-air flare stack or flare pit designed for the combustion of natural gas leaving a pressurized production vessel (such as a separator or heater-treater) that is not a storage vessel.
This section describes the circumstances under which lost oil or gas is classified as “unavoidably lost.” “Avoidably lost” oil or gas is then defined as oil or gas that is not unavoidably lost. The descriptions in the rule enhance clarity and consistency by listing specific circumstances under which oil and gas may be “unavoidably lost” when the operator has not been negligent, has not violated laws, regulations, lease terms or orders, and has taken prudent and reasonable steps to avoid waste.
The rule also defines as “unavoidably lost” any produced gas that is vented or flared from a well that is not connected to gas capture infrastructure, if the BLM has not determined that the loss of gas through such venting or flaring is otherwise avoidable.
Finally, this section defines “avoidably lost” oil or gas as lost oil or gas that does not meet this section's
In response to comments received, the final rule added two new items to the list of operations and sources that are considered unavoidably lost: (1) Gas lost during facility and pipeline maintenance, such as when an operator must blow-down and depressurize equipment to perform maintenance and repairs, which includes “pigging” of lines to remove liquids, and (2) flaring of gas from which at least 50 percent of natural gas liquids have been removed and captured for market, if the operator has notified the BLM through a Sundry Notice that the operator is conducting such capture.
The final rule also makes the following four clarifications to items that were included on the proposed list of operations and sources that are considered unavoidably lost, and that remain on that list in the final rule: (1) Normal operating losses from a natural gas-activated pneumatic controller or pump are considered unavoidable, provided the controller or pump complies with §§ 3179.201 and 3179.202; (2) normal operating losses from storage vessels and other low pressure production vessels are considered unavoidable provided the vessels are in compliance with §§ 3179.203 and 3174.5; (3) losses from well venting in the course of downhole well maintenance and/or liquids unloading are considered unavoidable provided those operations are conducted in compliance with § 3179.204; and (4) leaks are considered unavoidable, provided the operator has complied with the leak detection and repair requirements of §§ 3179.301 through 3179.305.
The BLM also modified the proposed treatment of gas that is lost from a well that is not connected to a pipeline to align this provision with the revised approach in the final rule that addresses flaring through capture targets instead of flaring limits. The BLM had proposed that gas flared in excess of the applicable flaring limit would be considered avoidable. The final rule deems avoidable any gas that is “excess” relative to the capture target. The term “excess flared gas” is defined in § 3179.7.
The principle underlying both the proposed and final regulatory text with respect to excess flared gas is that a prudent and reasonable operator will not routinely flare an unlimited quantity of natural gas from a development oil well. In this rulemaking, the BLM is modernizing and clarifying the criteria for determining when incidental and necessary disposal of gas accompanying oil production crosses the line into unreasonable waste of public gas resources, and the final rule expresses these criteria in the form of a gas capture target. When an operator is not meeting the applicable gas capture target, specified in § 3179.7 the BLM deems the excess flared gas volume—that is, the volume that caused the operator to fall short of the capture target—to be waste, avoidable, and subject to royalties.
Several commenters disagreed with BLM's proposed definitions of “waste” and “avoidably lost.” Many commenters felt that the BLM should maintain the definitions used in NTL-4A, including applying an economic test to determine what degree of capture is economical for the operator. These comments are addressed in section V.C of this preamble.
Some commenters stated that the BLM should consider gas lost during force majeure events as unavoidably lost. The BLM does not agree that all losses during force majeure events should be considered unavoidable. Such events may be out of the control of operators, but they are often expected and operators can therefore plan for them. The final rule does include as justifications for unavoidable loss some specific events that are generally considered force majeure events, such as emergencies. However, the gas capture requirements in the final rule are structured to provide operators substantial flexibility to meet the capture targets without providing a blanket exemption for all events that the operator does not directly control. For example, scheduled maintenance of downstream pipeline or processing plants is neither unexpected nor unusual, and the BLM believes an operator should be able to plan ahead to address those events—for example, by identifying alternative capture approaches or planning to temporarily reduce production or shut in the well to address these circumstances.
Moreover, as described in Preamble Section V.A, Venting Prohibition and Capture Targets, the final rule allows operators to meet the capture target on average over a month at all of the wells on a lease, unit, or communitized area, or alternatively, on average over a month at all of the operator's wells in a county or state. A prudent and reasonable operator will be able to take advantage of this flexibility to ensure that it has captured enough gas over the month, somewhere in the averaging area, to provide itself a sufficient buffer in meeting the gas capture targets to accommodate force majeure events that may not be within its control, but are common and predictable.
Relatedly, some commenters requested that gas lost because of ROW delays should be considered unavoidably lost. This preamble addresses the issue of ROW delays in Section VI.E. For the reasons discussed there, the BLM declines to make this change, which goes to the central premise of the gas capture requirement. The BLM has determined that it is not reasonable for operators to develop oil wells and plan to use flaring as the primary and routine disposal method for the associated gas. Rather, these rules require oil well operators, over time, to plan to capture an increasing percentage of their associated gas. In the near-term, the BLM believes that the gas capture targets, combined with the quantities of allowable flaring and the ability to average, are sufficiently generous to allow operators to manage short-term delays in planned gas pipeline infrastructure with little difficulty, using production deferment and on-site capture at some wells where necessary. Over the longer term, a reasonable operator can continue to use those tools as well as working with the midstream companies to ensure that there is adequate pipeline capacity available to support transport of associated gas prior to building out large well developments.
Many commenters requested that the BLM grandfather all existing determinations of royalty-free flaring. Again, this change would undercut a key goal of this rulemaking: Gradually, over time, to require operators to reduce routine flaring of associated gas from development oil wells. With the generous phase-in schedule for the gas capture targets and the quantities of allowable flaring, this rule requires only modest near-term reductions in flaring from existing wells. The BLM believes that it is entirely reasonable to expect operators to work, over time, to reduce flaring from their existing wells, as well as from new developments. Moreover, for this rule to have any meaningful effect on flaring, it must cover both existing and new development. Allowing all current determinations of royalty-free flaring to persist in perpetuity is unnecessary and would substantially undercut the effectiveness of this rule.
This section provides that royalties are due on all avoidably lost oil or gas, but not on unavoidably lost oil or gas. We received no significant comments on this section, and the final rule is very similar to the proposed rule with minor wording changes to improve clarity.
This section expressly prohibits all venting and flaring from gas wells, except where the gas is unavoidably lost pursuant to section 3179.4(a). In addition, this section requires operators to flare rather than vent all gas that is not captured, except under certain limited circumstances. Operators will be allowed to vent gas in the following situations: (1) When flaring is technically infeasible—for example if the volumes of gas are too small to operate a flare (such as so-called bradenhead gas), or if the gas is not readily combustible; (2) under emergency conditions, when the loss of gas is uncontrollable or venting is necessary for safety; (3) when the gas is vented through normal operation of a natural gas-activated pneumatic controller or pump; (4) when the gas is vented from a storage vessel, provided that § 3179.203 does not require the combustion or flaring of the gas; (5) when the gas is vented during downhole well maintenance or liquids unloading activities performed in compliance with § 3179.204; (6) when the gas is vented through a leak where the operator is in compliance with § 3179.301-305; (7) when venting the gas is necessary to allow non-routine facility and pipeline maintenance to be performed, such as when an operator must, upon occasion, blow-down and depressurize equipment to perform maintenance or repairs; and (8) when release of gas is unavoidable and flaring is prohibited by Federal, State, local or Tribal law, regulation, or enforceable permit term.
The BLM made the following changes to the proposed rule requirements: (1) Changed the title of this section; (2) added a new section (a) that expressly prohibits venting or flaring gas from gas wells, except where the gas is unavoidably lost pursuant to section 3179.4(a); (3) renumbered paragraphs (a)(1) and (2) paragraphs (b)(1) and (2); (4) moved discussion of venting from a storage vessel from proposed paragraph (a)(3) to paragraph (b)(4) and added language clarifying that such venting is permitted when § 3179.203 does not require combustion or flaring of the gas; (5) renumbered proposed paragraph (a)(4) as paragraph (b)(3) and qualified that venting from a natural gas-activated pneumatic controller or pump is permitted during normal operation and when the pump is in compliance with § 3179.201 and § 3179.202; (6) Added paragraphs (b)(5) through (b)(8) that describe additional cases when venting of gas is permitted (situations 4-8 in the previous paragraph); (7) Removed all of proposed paragraph (b) describing venting or flaring volume limits, because flaring limits are now addressed in a new § 3179.7; and (8) Added a new paragraph (c), which requires that all flares or combustion devices be equipped with an automatic ignition system.
Section 3179.6(a) carries forward NTL-4A's express prohibition on venting and flaring from gas wells. Section IV.A of NTL-4A prohibits the venting or flaring of gas well gas, except for unavoidable losses and short-term venting and flaring during emergencies, well purging and evaluation tests, initial production tests, and wells tests (circumstances now defined as unavoidable in section 3179.4(a)). Similar restrictions on venting and flaring from gas wells were implied in the proposed rule; the BLM has chosen to state this explicitly in the final rule in order to avoid confusion.
Key comments received on this section are discussed in Section III.B.1.b of this preamble. Additional substantial comments received on the venting prohibition provisions are discussed below.
The BLM received comments asserting that the BLM lacked the statutory authority to require operators to flare rather than vent gas that is not captured. Commenters argued that such a requirement does not fall within the BLM's waste-prevention authority under the MLA because shifting from venting to flaring does not prevent waste as the gas is lost in either case. These commenters then argued that the only possible justification for the requirement to flare rather than vent is control of GHGs and other air pollutants, which commenters assert is exclusively within the EPA's domain.
The BLM disagrees with these comments for several reasons. First, the requirement in this section to flare rather than vent does result in waste prevention, because it is paired with provisions that limit total flaring—namely, the gas capture requirements in § 3179.7. Under § 3179.7(c), the denominator in the gas capture percentage calculation is “the total volume of gas captured over the month plus the total volume of gas flared over the month from high-pressure flares from all of the operator's development oil or gas wells in the relevant area, minus” a declining “flaring allowable” volume.. By requiring that operators shift from venting to flaring, the BLM is effectively increasing operators' flared volume in a given month, which in turn increases the total volume of gas that the operators must capture in that month.
Second, directing associated gas to a flare rather than allowing operators to vent it improves waste accounting because under final rule § 3179.9, operators must measure volumes above 50 Mcf per day that are flared from a high pressure flare stack or manifold. By shifting operators from venting to flaring, § 3179.6 will likely increase the number of operators that must measure their flared gas volumes under § 3179.9. This will, in turn, improve operators' (and the BLM's) waste accounting. Better waste accounting is itself a waste prevention measure, because it gives the BLM and operators a better sense of how much gas is being wasted—and thus how much could be made available for productive use and/or sold to offset the costs of waste prevention equipment.
Third, this requirement constitutes waste prevention when applied to operator flaring during activities regulated under §§ 3179.102, 3179.103, and 3179.104. Under §§ 3179.102 and .103, flaring during well completion and initial production testing that exceeds 20 MMcf/well is treated as avoidably lost gas subject to royalties under § 3179.4(a)(1)(C). The BLM believes that in many instances, the venting prohibition in § 3179.6 may result in operators reaching the 20 MMcf/well royalty flaring threshold sooner, thereby providing an additional financial incentive for operators to reduce waste. Under § 3179.104, all flaring during subsequent well tests that exceeds 24 hours is treated as avoidably lost gas subject to royalties under § 3179.4(a)(1)(D).
Fourth, as discussed above, the requirement to flare rather than vent associated gas is justified as a safety measure under the MLA. It is generally safer to combust methane gas than allow it to vent uncombusted into the surrounding air due to concerns over methane's explosiveness and the risks to workers of hypoxia and exposure to various associated pollutants.
Several commenters stated that operators should be required to capture
The BLM has added a requirement in the final rule that flares must be equipped with an automatic ignition system, which will provide the flare system with an effective method of ignition in the case of interruption. The term “automatic ignition system” implies the concept of maintaining an ignition source without specifying a particular type of device, and the BLM believes that operators will utilize devices that are appropriate for the circumstance. The BLM does not believe that requiring a specific device, such as a continuous pilot, would necessarily result in reduced waste relative to a more general requirement for an automatic ignition system.
Some commenters requested that the BLM allow venting when flaring is not economically feasible. The BLM believes that this change is unnecessary, would add substantial ambiguity to the rule, and could significantly weaken the requirement to flare rather than vent. Flaring rather than venting gas that is not being captured is widespread industry practice, due in large part to safety concerns. While there are situations where the quantities of gas are too small or difficult to allow for flaring, the rule explicitly allows venting in lieu of flaring in those situations. It is not clear to the BLM what other circumstances would render flaring “economically infeasible,” or what specific concerns the commenter is trying to address.
A commenter seeking to minimize exceptions to the venting prohibition asked the BLM to define the term “technically infeasible.” Given the wide variety of situations that are likely to occur on a lease that inform an operator's determination of technical feasibility, the BLM does not believe that it is appropriate to add further specificity to this term. If there is a dispute about the term in a specific case, the BLM has the final say in determining whether flaring is, in fact, technically infeasible.
Final rule § 3179.7 houses a modified version of the flaring requirements that were in proposed rule s 3179.6. As discussed in Section III.B.2.a, the final rule alters how the proposed rule constrained the quantities of gas lost through flaring, but achieves similar flaring reductions by requiring operators to meet specified monthly capture targets (subject to shrinking flaring allowances), rather than setting per well numeric flaring limits.
Final rule § 3179.7 establishes capture targets that increase over the first nine years of rule implementation. Paragraphs (a) and (b) describe the capture percentage requirements. The schedule for the capture targets is provided in § 3179.7(b)(1)-(4) and is reproduced in Section III.B.2.a of this preamble. Paragraph (c) defines “capture percentage,” “total volume of gas captured,” “adjusted total volume of gas produced,” and “relevant area.” Under § 3179.7(c)(3), an operator may choose whether to comply with the capture targets on each of the operator's leases, units or communitized areas, or on a county-wide or state-wide basis. Section 3179.7(c)(4) defines when an oil or gas well is considered “in production” and therefore subject to the capture targets in this section. Section 3179.7(d) establishes an equation for determining the quantity of “excess flared gas”—that is, the volume of flared gas that causes an operator to fall short of the applicable capture target in a given month, and that is therefore subject to royalties. Section 3179.7(e) requires operators to prorate the excess flared gas to each lease, unit, or communitized area that reported high-pressure flaring, for purposes of calculating royalties.
As discussed in Section III.B.2 of this preamble, the BLM developed the capture target approach in final rule § 3179.7 after careful consideration of the many comments received on the flaring limit approach taken in proposed rule § 3179.6(b). The key comments received on § 3179.7 and BLM's response to these comments are also discussed in Section III.B of this preamble. Additional substantive comments received on the proposed flaring provisions are discussed below.
Several commenters asserted that the ability to avoid flaring depends on the capacity of gathering lines, and that operators must prove production for a new oil play and initiate larger scale development before gathering and/or processing companies are willing to invest in infrastructure. These comments informed the revisions to the flaring revisions made in the final rule. The BLM also recognizes that currently the optimal mechanism to capture gas is through connecting to a pipeline, which may take time to achieve in some areas due to lagging infrastructure and capacity constraints. As a result, the final rule provides additional time and flexibility for industry to plan and better coordinate development of production wells with development of pipelines to transport the production. As discussed in section III.B.2, the final rule provides an option for operators to comply with the capture targets on a lease-by-lease, county-wide, or state-wide basis, and also phases in the capture targets over a longer period of time. These changes will allow sufficient time and flexibility to enable industry to better align oil development with gas infrastructure over time.
On the other hand, given the BLM's statutory obligation to reduce waste of gas, the clear technical capability of operators to capture gas, the economic value of the gas, and the environmental impacts of not capturing it, the BLM has determined that it is not reasonable to allow operators to dispose of large quantities of associated gas from development oil wells using routine flaring. The final rule therefore structures the capture targets in a way that the BLM estimates will achieve slightly greater flaring reductions than the proposed rule, albeit over a longer timeframe.
Many commenters asserted that on-site capture technologies are not technically feasible and/or economically viable. In the proposed rule, we discussed research indicating that LNG stripping, CNG, and gas-to-power are commercially mature technologies that are portable, scalable, and have been utilized economically at well sites.
Several commenters expressed concern about delays in approvals of ROWs for gas pipelines, and asserted that such delays will prevent operators from complying with the capture targets. These comments are addressed in Section VI.E of this preamble.
Section 3179.8 (§ 3179.7 in the proposed rule) describes an alternative process that is available to an operator that cannot meet the capture targets described in final rule § 3179.7. Under § 3179.8, an operator that cannot meet the capture targets may request that the BLM establish an alternative capture target if three conditions are met: (1) The operator has chosen to comply with the capture target using the lease-by-lease, unit-by-unit, or communitized area-by-communitized areas basis rather than the averaging approach; (2) the potentially noncompliant lease was issued before the effective date of this final rule; and (3) the operator demonstrates via Sundry Notice, and the BLM agrees, that the applicable capture percentage under final rule § 3179.7 “would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.”
As discussed in Section V.B.2.b of this preamble, § 3179.8 was revised in the final rule to reflect the shift to gas capture targets in final rule § 3179.7. Section 3179.8(a) was also revised to reflect the three conditions discussed above. Section 3179.8 (b) describes the information an operator must submit in the Sundry Notice. The final version of this paragraph makes minor modifications relative to the proposed version, including: Adding the phrase, “to the extent that the operator is able to obtain this information,” to the requirements to include pipeline capacity and the operator's projections of the cost associated with installation and operation of gas capture infrastructure; adding cost projections for alternative methods of transportation that do not require pipelines; specifying that the cost projections required in final § 3179.8(b)(5)(i) must be based on the next 15 years or the life of the lease, unit, or communitized area, whichever is less; and dropping the requirement to provide the depths and names of producing formations. Section 3179.8(c) remains similar to the proposed rule (§ 3179.7(c)), with flaring limits changed to capture percentages. The final rule also does not contain the renewable 2-year exemption in proposed § 3179.7(d).
The key comments received on this section and BLM's response to these comments are discussed in Section III.B.2.b of this preamble. Additional substantive comments received on the proposed flaring provisions are discussed below.
Some commenters asserted that the proposed alternative capture and related Sundry Notice requirements were overly burdensome and required submission of confidential information. These commenters contended that oil and gas price and production volume forecasts and pipeline and gas capture costs are considered confidential business information. Commenters also claimed that operators do not have access to information on pipeline capacity.
The BLM does not agree that the Sundry Notice requirements for a request for an alternative capture requirement are unduly burdensome, although the BLM has streamlined the proposed requirements in the final rule where it was possible to do so without losing information that would be necessary to evaluate a request. Commenters did not explain how the BLM would be able to determine whether a request met the criteria for approval absent the required information. Also, operators routinely provide information to the BLM that they consider confidential; if they indicate on the Sundry Notice that the information is considered confidential, the BLM will handle the information in accordance with applicable regulations in 43 CFR part 2. In response to statements that commenters may not have access to information on pipe capacity, the BLM revised the final rule to state that data on pipeline capacity and the operator's projections of the cost associated with installation and operation of gas capture infrastructure is required to the extent that the operator is able to obtain such information.
Some commenters requested that the BLM clarify what “significant” means with regard to recoverable oil reserves in § 3179.8(c), while another recommended that the criteria should be based on an economic test that would grant an alternative limit if the return on investment would be too low for a prudent operator to proceed with compliance. Another commenter stated that new wells should also be allowed to apply for alternative limits. Other commenters asserted that the BLM should eliminate or substantially narrow the approval of alternative limits, with one commenter stating that the BLM should determine approval of alternative limits based on a cost-benefit analysis that includes the consideration of environmental benefits.
The BLM did not revise the rule based on these comments, but we are providing here additional clarification on the BLM's interpretation of this standard. The BLM believes that requiring the operator to demonstrate that the applicable capture percentage under § 3179.7 would “impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves” is an appropriate threshold for granting alternative capture requirements. The BLM recognizes that the term “significant” is a qualitative rather than quantitative metric. The BLM considered development of a quantitative metric, but determined that setting a quantitative threshold, such as number of days of production lost, might be arbitrary and ineffective. Moreover, the BLM has a history of reviewing and effectively evaluating requests based on similar qualitative criteria. While we do not expect there to be a significant change in the review of these requests from prior practice, as discussed in the preamble to the proposed rule, we do expect that spelling out the requirements and
The BLM notes that the phrase “cease production and abandon significant recoverable oil reserves” is not intended to require an operator to demonstrate that the lease could never be developed under any future circumstances. Yet nor would it be sufficient for an operator to show that compliance with the capture targets would cause the operator to shut in the wells on a lease for a limited period of time. Rather, the operator must make a showing that the cost of complying with the capture requirements would cause the operator to shut in the wells on the lease under current market conditions and for the reasonably foreseeable future, taking into account uncertainty regarding the long-term recoverable potential of the lease and reservoir. In other words, the showing should illuminate whether compliance would cause the operator to be deprived of the value of the lease, not simply cause a reduction in profit. For example, depending on the specific economic circumstances of the lease, it may be sufficient for an operator to show that it would have to shut in the wells on a lease for a time period on the order of a year or two. The BLM notes, however, that it is not uncommon for operators to shut in and restart production due to market conditions, and a showing under this exemption should demonstrate a more significant impact that is clearly distinguishable from such normal fluctuations.
With respect to the request to allow an alternative capture target to apply to new wells, the BLM notes that the alternative is limited to existing leases, not existing wells. Thus, the alternative capture target is potentially available with respect to an existing lease with new wells. Moreover, the BLM believes that with the extended phase-in of the capture targets and the state- and county-wide averaging option, operators have ample flexibility to take the capture targets into account as they develop new production wells. Indeed, this rule encourages such planning by requiring operators to submit waste minimization plans with their APDs. Further, the BLM does not believe that the opportunity to request an alternative capture target should be extended to new leases. Operators have broad flexibility to plan to meet the capture targets at the time that they bid on new leases.
Some commenters requested that the Sundry Notices be processed in a timely manner, and that the BLM provide a schedule for applying for and being granted an alternative capture percentage. One commenter suggested that the BLM should align the phase-in of the rule with the time it would take to for the BLM to approve the requests for alternate capture targets. Given that the final rule phases in the capture targets over a longer period of time, the BLM expects that operators will have sufficient time to prepare their Sundry Notice requests for alternative capture targets if needed. Additionally, the BLM does not anticipate receiving a large number of Sundry Notice requests for alternative capture targets, and therefore anticipates that it will have adequate time to review them in a timely manner.
This section (which was § 3179.8 in the proposed rule) requires operators to estimate (using estimation protocols) or measure (using a metering device) all flared and vented gas, whether royalty-bearing or royalty-free. This section further provides that specific requirements apply when the operator is flaring 50 Mcf or more of gas per day from a high pressure flare stack or manifold, based on estimated volumes from the previous 12 months, or based on estimated volumes over the life of the flare, whichever is shorter. Beginning one year from the effective date of the rule, when this volume threshold is met, the operator must measure the volume of the flared gas, or must calculate the volume of the flared gas based on the results of a regularly performed GOR test, so as to allow the BLM to independently verify the volume, rate, and heating value of the flared gas. This section also requires operators to report all volumes vented or flared under applicable ONRR reporting requirements.
This section allows operators that are flaring gas across multiple leases, unit PAs, communitized areas, or non-Federal or non-Indian leases to measure or calculate the flared volumes at a single point. To mitigate environmental impacts, commingling to a single flare may be approved even though the relevant royalty interests may differ. The BLM recognizes that the additional costs of requiring individual flaring measurement and meter facilities for each lease, unit PA, or communitized area are not necessarily justified by the incremental royalty accountability afforded by the separate meters and flares. However, to ensure proper production accountability, the method of allocating the flared volumes to each lease, unit PA, or communitized area must be approved by the BLM where the flared volumes exceed the 50 Mcf/day threshold.
The BLM made the following changes from the proposed rule: The final rule clarifies that (1) this section applies to gas vented and flared from wells, facilities, and equipment on a lease, unit PA, or communitized area, rather than just referencing gas vented and flared from wells; (2) the 50 Mcf/day threshold triggering the requirement to measure is determined by averaging the estimated volumes from a high pressure flare stack or manifold over the previous 12 months, or the life of the flare, whichever is shorter; (3) when the 50 Mcf/day threshold is met, operators have the choice of measuring or calculating the volume of the gas, rather than being required to measure only; (4) the requirement to measure or calculate volumes applies beginning one year from the effective date of the rule; and (5) under new paragraph § 3179.9(c), operators may measure or calculate commingled gas at a single measurement point at the flare, but they must use an allocation method approved by the BLM to allocate the quantities of flared gas across the leases, unit PAs, or communitized areas that can contribute production to a flare that is above the 50 Mcf/day threshold.
The BLM received a range of comments on § 3179.9 (§ 3179.8 in the proposed rule). Some commenters recommended that the BLM disallow estimation of flared or vented gas and requested that gas be measured in all cases or that the threshold for measurement be lowered from 50 Mcf/day. Commenters asserted that requiring measurement and monitoring rather than allowing operators to estimate flared gas volumes will provide the co-benefits of assisting the BLM with compliance assurance, allowing accurate determination of when royalties are due, and further reducing methane emissions.
Other commenters argued that the threshold for measurement should be raised or that the measurement requirement should be eliminated from the rule altogether. One commenter contended that metering simply adds costs and logistical difficulties without providing environmental benefit or reducing waste. Several commenters asserted that metering technology is not available that can accurately or reliably estimate flare gas volumes over the extreme range of pressures and rates typically encountered on producing wells, and that the measurement equipment and methods in Onshore Order 5 and its successor regulations are not applicable to flares. Arguing that there is no current technology that can
Like the proposed rule, the final rule maintains the 50 Mcf/day threshold for triggering more specific standards for determining the volume of flared gas, however, the BLM has modified the standards that apply when a flare stack or manifold exceeds that threshold to allow either metering or a rigorous GOR-based approach. The final rule also clarifies that exceedance of the 50 Mcf/day threshold will be determined based on the average quantity of flaring per day over the life of the flare or over the previous 12 months of flaring activity, whichever is shorter. The BLM agrees that the rule should specify the measurement period for exceeding the threshold, and believes that limiting the averaging period of 12 months (or the life of well) provides a good indication of ongoing, current levels of flaring that are high enough to warrant measurement.
Although the BLM received comments arguing for both higher and lower thresholds, the BLM ultimately concluded that a change in the threshold is not warranted. The 50 Mcf/day threshold represents a level of activity of high-pressure flares that can be measured or calculated with a reasonable degree of accuracy. In addition, particularly when measured or calculated on average over a period of time at a single flare stack or manifold, 50 Mcf/day is a sufficiently high level of flaring that it could reasonably be expected to lead to royalty obligations on flared volumes considered “avoidably lost” under the final rule. When an operator exceeds this threshold, the operator needs to be able to account accurately for the amount of flaring that occurs and validate its compliance with the capture target, particularly as the “flaring allowable” level decreases and the capture target increases in future years.
The BLM has modified the standards that apply to flares that exceed the 50 Mcf/day threshold, however, to allow for either metering or a GOR-based calculation of flare volumes in circumstances where a GOR-based approach would allow the BLM to independently verify the volume, rate, and heating value of the flared gas. As noted above, many commenters argued that metering technology is not available to measure gas volumes at many flares, and they asserted that using GOR-based methods provides sufficient information to accurately calculate flared gas volumes. Other commenters argued that all flared gas volumes should be directly metered.
The BLM believes that technology exists to measure flared volumes, especially on higher-volume flares, and that meters would not be prohibitively expensive to install. For example, the gas measurement requirements in recently adopted subpart 3175 contain standards applicable to metering gas at very-low volume FMPs. These are the BLM's least stringent measurement requirements for gas measurement, and they allow operators to use alternative methods for measuring highly fluctuating gas flows, provided only that the measurements meet the performance goals of section 3175.31. While the specific standards in subpart 3175 are geared to orifice plate measurement, the performance goals for very-low volume FMPs only require that the measurement be verifiable and they do not require the operator to achieve any set level of uncertainty or maintain measurement free of statistically-significant bias. Therefore, the BLM may approve alternate devices for purposes of subpart 3175, such as thermal mass meters, ultrasonic meters, or other technology that industry develops that can provide verifiable measurement, which could also be applicable to measuring flared volumes under this provision. In addition, provisions in newly adopted subparts 3170 and 3175 establish a production measurement team, which will approve technologies for gas metering. Technologies approved by the production measurement team could also be used to comply with the requirements of this section.
Nevertheless, the BLM is sensitive to the performance limitations of many commonly used meters, and the BLM believes that a properly designed GOR-based approach can also produce adequately accurate results. A GOR-based method for calculating volumes of flared gas would use a known GOR and measured volumes of oil production and sold gas. The GOR itself is determined based on a test that directly measures in a controlled manner all of the oil and gas produced by the well over a given period of time. Calculating the volumes of flared gas based on GOR can be quite accurate, if the GOR value used is accurate and the well conditions are relatively stable. Since the GOR will vary as well conditions change, the accuracy of the GOR value for a well can be enhanced by more frequent GOR testing, either on a set frequency and/or in response to changes in the well's production. The BLM expects that to meet the standards of § 3179.9, GOR tests would need to be performed at least monthly for most wells.
Commenters also contended that the rule does not clearly specify the type of gas that must be estimated or measured, and they recommended that the rule not apply to “unavoidably lost” gas volumes. The BLM does not agree that measurement should be required only when the volume of avoidably flared gas exceeds the threshold. As a first step to reducing waste through flaring, it is important for both the operator and the BLM to have an accurate understanding of the total quantity of gas that is being flared. While the BLM agrees that estimation techniques can provide a ballpark volume estimate, the BLM believes that direct measurement methods authorized under subpart 3175 more consistently and accurately identify the actual volume of the losses. Furthermore, the BLM notes that if an operator is flaring high pressure gas at a rate of more than 50 Mcf/day, it becomes more likely that the operator is failing to meet capture requirements. If an operator fails to meet capture requirements, then at least a portion of the flared gas is deemed avoidably lost, and therefore royalty bearing.
Several commenters noted that the rule does not provide methods for estimating vented or flared volumes. One commenter asserted that the BLM must require operators to use estimation techniques that provide accurate and reliable estimates of releases, while others recommended that methods currently allowed under NTL-4A should continue to be allowed for estimating associated gas and royalty-free volumes.
The BLM does not believe that it is necessary to specify estimation methods, as the BLM expects the industry to continue to use well-understood and generally accepted engineering practices for estimating quantities of flared gas below the 50 Mcf/day threshold.
Commenters also requested that the BLM make public the data on volumes of gas reported by operators as flared or vented. The BLM agrees that this is important information for the public, and the BLM plans to make this information available, subject to any
This section (which was § 3179.9 in the proposed rule) provides for a transition period for operators that are operating under existing approvals for royalty-free flaring, as of the effective date of the rule. Further, this section clarifies that nothing in this subpart alters the royalty-bearing status of flaring that occurred prior to January 17, 2017, nor the BLM's authority to determine that status and collect appropriate back-royalties.
Commenters asserted that the rule represents a change in what is considered “avoidable loss” and therefore cannot be applied to existing leases. Commenters also requested that the BLM permanently grandfather existing approvals for royalty-free flaring and only apply the rule requirements to wells drilled after the effective date of the rule, arguing that 90 days is too little time to design and construct gas capture infrastructure.
As discussed in Preamble Section III.C, the BLM's legal and contractual authority to update its regulations governing existing oil and gas leases is well established. The BLM has the authority to revise its interpretation of what constitutes “avoidably lost” oil and gas and may impose this interpretation on existing leases. The BLM revised the rule, however, to extend the grace period for preexisting approvals to flare royalty free from the 90 days specified in the proposed rule to one year after the final rule becomes effective. After one year, those operators with preexisting royalty-free flaring approvals will become subject to all the provisions of the final rule.
This section clarifies that nothing in this subpart alters the BLM's existing authority under applicable laws, regulations, permits, orders, leases, and unitization or communitization agreements to limit the volume of production from a lease, or to delay action on an APD to minimize the loss of associated gas. Specifically, if production from a new well would force an existing producing well already connected to the pipeline to go offline, then notwithstanding the requirements in 3179.7 and 3179.8, the BLM may limit the volume of production from the new well while gas pressures from the well stabilize. In addition, this section clarifies that, consistent with existing authority, the BLM may delay action on an APD or approve it with conditions related to gas capture and production levels, and can suspend the lease under 43 CFR 3103.4-4 if the lease associated with the APD is not yet producing.
In the final rule, the BLM revised both paragraphs § 3179.11(a) and (b) to add additional specificity regarding the sources of the BLM's existing authority. Specifically, the BLM added to both paragraphs (a) and (b) language to the effect that the BLM may exercise its existing authority “under applicable laws and regulations, as well as its authority under the terms of applicable permits, orders, leases, and unitization or communitization agreements.”
The BLM received a number of comments on this section. While some commenters expressed support for BLM's authority on this matter, other commenters expressed concern that the BLM could delay approval of APDs due to infrastructure limitations that are out of the control of the operator (
The BLM did not revise this section based on comments received. As stated in the regulatory text, the BLM is exercising existing authority and this section does not expand upon that authority. The intent of this section is to address operators' concerns that gas from their existing wells could be forced offline by new Federal gas production, and to clarify that the BLM already has the authority to remedy such circumstances when appropriate to minimize waste of oil and gas on BLM-administered leases. If implementation of this section could result in the incidental curtailment of non-Federal production, the BLM will coordinate on a case-by-case basis with the relevant State regulatory authorities pursuant to Section 3179.12. As noted in Preamble Section VI.D, the fact that a regulatory provision aimed at Federal and Indian production may have incidental impacts on State or private production does not impinge on the BLM's authority to ensure that operators take reasonable steps to minimize waste of Federal and Indian minerals.
This section addresses certain “mixed ownership” situations, in which a single well may produce oil and gas from both Federal and/or Indian mineral interests and non-Federal, non-Indian mineral interests. This section provides that to the extent any BLM action to enforce a prohibition, limitation, or order under this subpart might adversely affect production of oil or gas from non-Federal and non-Indian mineral interests, the BLM will coordinate on a case-by-case basis with the State regulatory authority with jurisdiction over that non-Federal and non-Indian production. This is consistent with current practice, in which the BLM and State regulators coordinate closely in regulating and enforcing requirements that apply to operators producing from Federal or Indian interests and from non-Federal, non-Indian mineral interests. The BLM did not revise this section from the proposed rule.
Some commenters asserted that that the propose rule did not indicate what constitutes coordination, and separately, that state-Federal coordination would not reduce duplicative requirements for operators. This provision is aimed at coordinating enforcement of BLM requirements, not intended to address issues related to overlapping state and Federal requirements. The BLM anticipates that its level of coordination will vary by state, and may involve entering into (or revising existing) memoranda of understanding with the relevant State parties.
This section requires that gas reaching the surface as a normal part of drilling operations be used or disposed of in one of four specified ways: (1) Captured and sold; (2) directed to a flare pit or flare stack; (3) used in the operations on the lease, unit, or communitized area; or (4) injected. The final rule specifies that gas may not be vented except under the circumstances specified in § 3179.6(b) or when it is technically infeasible to use or dispose of the gas in one of the ways specified above.
This section also states that gas lost as a result of a loss of well control will be classified as avoidably lost if the BLM determines that the loss of well control was due to operator negligence, in which case it will be subject to royalties.
Several commenters asserted that the proposed requirement that all gas that reaches the surface during drilling be captured and sold, flared, used on-site, or injected is not always technically feasible because such gas can be low
In response to these comments, in addition to the exceptions described in § 3179.6(b), the final rule states that operators also do not have to use or dispose of gas that reaches the surface in one of the ways specified in § 3179.101(a) if it is technically infeasible to do so. The BLM believes that a technical infeasibility option is necessary to address the situations described by commenters, which we expect to occur rarely, where the operator cannot use or dispose of the gas as specified in § 3179.101(a).
The BLM also received comments asserting that it lacks the authority to require that gas reaching the surface during drilling operations be flared if not captured, used on the lease, or injected. Commenters argued that such a requirement does not fall within the BLM's MLA authority because it is not waste prevention, as the gas is lost whether it is vented or flared. These commenters then argued that the only possible justification for the requirement was control of GHGs and other air pollutants, which commenters assert is exclusively within the EPA's domain.
The BLM disagrees with these comments. Flaring during drilling does not count toward an operator's capture target, so the requirement to flare rather than vent this gas does not achieve waste reduction in that way. Nevertheless, the requirement falls squarely within the BLM's authority because, as discussed in connection with § 3179.6, a requirement to flare rather than vent associated gas is a safety measure under the MLA. It is generally safer to combust methane gas than to allow it to vent uncombusted into the surrounding air due to concerns over methane's explosiveness and the risk of hypoxia and exposure to various associated pollutants. In addition, also as discussed in connection with § 3179.6, the BLM has the authority to regulate air quality and GHG impacts on and from public lands pursuant to FLPMA and the MLA.
This section addresses gas that reaches the surface during well completion, post-completion, and fluid recovery operations, after a well has been hydraulically fractured or refractured. It requires the gas to be used or disposed of in one of four specified ways: (1) Captured and sold; (2) directed to a flare pit or stack, subject to a volumetric limitation in section 3179.103; (3) used in the lease operations; or (4) injected. The final rule specifies that gas may not be vented except under the narrow circumstances specified in proposed § 3179.6(b) or when it is technically infeasible to use or dispose of the gas in one of the four ways specified above. It also provides that an operator will be deemed to be in compliance with the gas capture and disposition requirements of § 3179.102(a) if the operator is in compliance with the requirements for control of gas from well completions established under subpart OOOO or subpart OOOOa, or if the well is not a “well affected facility” under either of these subparts.
The final rule also allows an exemption from the requirements of § 3179.102(a) if the operator submits a Sundry Notice to the BLM demonstrating that compliance with these requirements would impose such costs as to cause the operator to cease production and abandon significant oil reserves under the lease.
In response to comments described below, we have made several changes to the proposed rule requirements. Specifically, the final rule: (1) Clarifies that sources subject to, and in compliance with, subpart OOOO and subpart OOOOa are deemed to be in compliance with this section, without filing a Sundry Notice (as the proposed rule would have required); (2) limits coverage of this section to hydraulically fractured or refractured well completions; (3) adds text to clarify that a well that does not meet the definition of a “well affected facility” under either subpart OOOO or subpart OOOOa, will nevertheless be deemed to be in compliance with this section, since the NSPS provides that existing wells that are refractured and follow the well completion procedures in the NSPS are not affected facilities; (4) adds an exemption for technical infeasibility; and (5) adds an exemption from the requirements of this section when the operator can demonstrate that compliance would cause the operator to cease production and abandon significant recoverable oil reserves under the lease due to the cost of compliance.
Several commenters asserted that the requirements for well completions are duplicative with EPA requirements contained in 40 CFR part 60 subpart OOOO and subpart OOOOa. These EPA rules address emissions from flowback operations following completion of new gas and oil wells using hydraulic fracturing treatment. Commenters asserted that the EPA rules effectively cover all wells, because most new wells utilize hydraulic fracturing, and existing wells that undergo “recompletion” hydraulic fracturing will be covered as well, as they are considered a “modified” source post-recompletion. Commenters further argued that the BLM should allow for exemptions for wells that comply with either 40 CFR part 60, subpart OOOO or subpart OOOOa, rather than limiting the exemption to wells that comply with subpart OOOOa as the proposed rule would have done. Commenters asserted that several issues related to controlling emissions from well completion operations have already been worked out in detail with the EPA, and these issues would apply to the BLM's rule as well. These issues include inadequate well pressure or gas content during the well completion to operate surface equipment, and the need for an exemption for wells with less than 300 scf of gas per stock tank barrel of oil produced. Other commenters noted that the EPA's well completion requirements in subpart OOOOa do not cover conventional wells because of their low methane and VOC emissions, but that the proposed BLM rule would apply to conventional wells. Commenters also argued that the Sundry Notice requirement to document EPA compliance was an additional and unnecessary burden for sources already regulated elsewhere.
Although we believe that new wells will generally be subject to subpart OOOOa, after considering these comments, we have added language in the final rule stating that wells that are in compliance with either subpart OOOO or subpart OOOOa are deemed to be in compliance with the requirements of this section. We also agree with commenters that filing a Sundry Notice to this effect is unnecessary, and we have not included that proposed requirement in the final rule. We also revised the text to limit the coverage of this section to fractured and refractured wells. Upon consideration of the comments, the BLM agrees that the loss of gas from conventional well completions is very small and that regulating conventional well completions is not a particularly cost-effective way to reduce waste. We also revised the text to clarify that a well that does not meet the definition of a “well affected facility” under either subpart OOOO or subpart OOOOa, and is exempt from those subparts on that
The BLM is including requirements for well completions in this rulemaking to satisfy its statutory obligations to prevent waste of oil and gas on Federal lands. The well completion requirements are a key part of a comprehensive regulatory regime reducing waste from development of the public's oil and gas resources. The BLM requirements do not require any additional action from an operator that is in compliance with subparts OOOO and OOOOa. Thus, without imposing any burden on an operator, the BLM requirements provide a backstop in the unlikely event that subparts OOOO or OOOOa are no longer in effect. The BLM does not in any way question the validity of the EPA regulations, but we note that some of the same commenters that claim the BLM regulations are unnecessarily duplicative are separately challenging EPA's subpart OOOOa in court.
Commenters also questioned the technical feasibility of the proposed requirement that all gas that reaches the surface during well completion and post completion, drilling fluid recovery, or fracturing or refracturing must be captured and sold, flared, used on-site, or injected. These commenters contended that gas releases during these stages of development, especially immediately following drilling, may involve small quantities, or gas with low BTU or high contaminant concentrations. As a result, the commenters stated, the compliance options in the proposed rule are cost prohibitive and not technically feasible. They further argued that capturing low quantities of gas requires significant compression capacity to enter a sales line, that gas that does not meet pipeline specifications for sales is unlikely to burn (without makeup gas) or be appropriate for beneficial use, and that reinjection of small volumes produced for a limited time is cost prohibitive.
In response to these comments, the final rule includes an exemption from the requirements for handling gas from a well completion when it is technically infeasible to use or dispose of the gas using any of the four identified options. Commenters also asserted that under the proposed rule, absent an exemption, if using any of the four identified compliance options was technically infeasible, the operator would have been forced to abandon the well. While we do not believe that the requirements for well completions are likely to impose such costs as to cause an operator to abandon the lease, the final rule also includes an exemption from § 3179.102(a) when the operator can demonstrate that compliance would cause the operator to cease production and abandon significant recoverable oil reserves under the lease due to the cost of compliance.
The BLM also received comments asserting that it lacks the authority to require that gas reaching the surface during well completions be flared if not captured, used on the lease, or injected. Commenters argued that such a requirement does not fall within the BLM's MLA authority because it is not waste prevention—
The BLM disagrees with these comments for several reasons. First, the requirement in this section to flare rather than vent constitutes waste prevention because (a) all flaring covered by this section and § 3179.103 is subject to a volumetric royalty-free flaring limit of 20 MMcf/well; and (b) flared gas from well completions that exceeds this volumetric limit is treated as avoidably lost gas subject to royalties under § 3179.4(a)(1)(B). This royalty trigger provides an incentive for operators to stay under the 20 MMcf/well flaring limit—and thus to limit their waste. Second, as discussed in connection with § 3179.6, a requirement to flare rather than vent associated gas is a safety measure under the MLA. It is generally safer to combust methane gas than to allow it to vent uncombusted into the surrounding air due to concerns over methane's explosiveness and the risk of hypoxia and exposure to various associated pollutants. In addition, also as discussed in connection with § 3179.6, the BLM has the authority to regulate air quality and GHG impacts on and from public lands pursuant to FLPMA and the MLA.
This section clarifies when gas may be flared royalty-free during a well's initial production test. It provides that gas may be flared royalty-free during initial production testing until the first of the following events: (1) The operator determines that it has obtained adequate reservoir information for the well; (2) 30 days have elapsed; (3) 20 MMcf of gas have been flared (as measured in combination with volumes flared during well completion under section 3179.102); or (4) the beginning of well production. Under any of these scenarios, royalty-free flaring allowed by this section ends when production begins.
Paragraph (b) of this section allows the BLM to approve royalty-free flaring for up to an additional 60 days, if there are well or equipment problems or a need for additional testing to develop adequate reservoir information. Paragraph (d) allows a 90-day period for royalty-free flaring during dewatering and initial evaluation of an exploratory coalbed methane well, and the BLM may approve up to two extensions of 90 days each. This approach recognizes that it generally takes substantially more than 30 days to dewater a coalbed methane well, but the time required can vary considerably between different coalbed methane resources. The operator is required to submit a Sundry Notice to BLM if it wishes to request a longer test period under paragraph (b) or (d) of this section.
In response to comments described below, the final rule includes a new provision in paragraph (c) of this section that allows the BLM to increase the 20 MMcf royalty-free flaring limit by up to an additional 30 MMcf of gas for exploratory wells in remote locations where additional testing is needed in advance of development of pipeline infrastructure. The operator is required submit a Sundry Notice to BLM if it wishes to request this higher limit.
Under any of these circumstances, notwithstanding an extension of the test period, the well will still be subject to the royalty-free flaring limit of 20 MMcf limit or, upon approval through a Sundry Notice, the higher limit specified in paragraph (c) of this section. Volumes vented or flared under this section must be reported to ONRR as directed in § 3179.9 of this subpart.
Several commenters argued that the proposed royalty-free flaring limit of 20 MMcf was too low, and that higher limits are needed due to higher production rates being achieved through advancements in hydraulic fracturing. They further requested that the rule state that the duration and maximum gas volumes for initial production testing do not include the duration of flowback operations and gas volumes produced during those operations. In response to these comments, the BLM added new paragraph (c) of this section (discussed above), which allows the
The requirement in this section is essentially the same as NTL-4A's requirement regarding subsequent well tests. This section limits to 24 hours any royalty-free flaring during production tests conducted after the initial production test, unless the BLM approves or requires a longer test period. The operator must submit via Sundry Notice its request for a longer test period. Volumes vented or flared under this section must be reported to ONRR as directed in proposed § 3179.9 of this subpart. The BLM received few comments on this provision and made no substantive changes to this provision from the proposed to final rule.
This section allows operators to flare (or in some cases vent) royalty-free during an emergency, which is a temporary, infrequent, and unavoidable situation in which the loss of gas is uncontrollable or necessary to avoid immediate and substantial adverse impacts to safety, public health, or the environment. Paragraph (a) further limits royalty-free emergency venting or flaring to a maximum of 24 hours per incident, unless the BLM agrees that the emergency conditions necessitate flaring—and possibly venting—for a longer period. In addition, paragraph (b) clarifies situations that do not constitute an emergency for purposes of royalty assessment, including: More than three failures of the same equipment within any 365-day period; failures from improperly sized, installed, or maintained equipment; failure to limit production when the production rate exceeds the capacity of related equipment or other infrastructure; scheduled maintenance; a situation caused by operator negligence; and when a lease, unit, or communitized area has already experienced three or more emergencies within the past 30 days, except when the BLM determines such emergencies were unanticipated and beyond the operator's control. Volumes vented or flared under this proposed section must be reported to ONRR as directed in § 3179.9 of this subpart.
Based on a number of comments requesting additional clarification, the BLM has added a definition of “emergency” to the final text. Additionally, in response to comments stating that certain emergency situations may necessitate flaring beyond 24 hours, the final rule allows operators to flare or vent royalty-free beyond the 24-hour limit, but only when necessary and with BLM approval. While the BLM asserts that in most cases, 24 hours is a sufficient timeframe to address an emergency and/or make an appropriate business decision, we acknowledge that venting or flaring beyond 24 hours might be necessary in a limited number of cases, such as a natural disaster that prevents access to the site.
Some commenters asserted that the BLM was being too strict in limiting royalty-free flaring in emergencies to 3 emergencies in a 30-day period. BLM believes that after multiple incidents in a short timeframe, operators should identify and correct any maintenance or operational issues, and that repetitive, systemic events do not constitute an emergency situation. Commenters also recommended that the BLM remove the provisions listing improper installation and scheduled maintenance as events that do not constitute emergencies. The BLM did not revise the rule based on these comments, as scheduled maintenance is not an unanticipated disruption and improper installation can be avoided through good work practices.
The BLM notes that the provisions on downhole well maintenance in § 3179.204 cover well maintenance activities.
This section addresses gas losses from pneumatic controllers. Paragraph (a) establishes that this section applies to pneumatic controllers that use natural gas produced from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease, if the controllers (1) have a continuous bleed rate greater than 6 scf/hour (“high-bleed” controllers); and (2) are not covered by EPA regulations that prohibit the new use of high-bleed pneumatic controllers (40 CFR 60, subpart OOOO or subpart OOOOa), but would be subject to those regulations if the controllers were new, modified, or reconstructed sources.
Paragraph (b) of this section requires pneumatic controllers subject to the requirement to be replaced with controllers (including, but not limited to, continuous or intermittent pneumatic controllers) having a bleed rate of no more than 6 scf/hour, subject to the exceptions described below. Paragraph (c) is discussed below, in connection with the exceptions. Under paragraph (d), operators are required to replace such controllers within 1 year from the effective date of the final rule, or within 3 years from the effective date of the rule if the well or facility served by the controller has an estimated remaining productive life of 3 years or less. Under paragraph (e), operators are also required to ensure that pneumatic controllers are functioning within the manufacturers' specifications.
This section provides several exceptions to the replacement requirement in paragraph (b). First, an operator is not required to replace a controller if a high-bleed controller is necessary to perform the needed function. For example, replacement might not be required if a low-bleed controller would not provide a timely response, which would lead to greater waste or create a safety hazard. To avail themselves of this exception, operators must submit a Sundry Notice to the BLM that describes the functional needs requiring the use of higher-bleed controllers. Second, replacement is not required if the controller was routed to a flare device or low-pressure combustor as of the effective date of this rule, and continues to be so-routed. Third, an operator is not required to replace its pneumatic controller if it chooses to route the pneumatic controller exhaust to processing equipment for capture and sale. Fourth, an operator may be exempted from the replacement requirement if it demonstrates through a Sundry Notice (described in paragraph (c)), and the BLM concurs, that replacing the pneumatic controllers on the lease would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
In response to comments and to further clarify the section, the BLM made the following four changes to the proposed rule requirements: (1) Clarified that a pneumatic controller is subject to this section if it is not subject
Several commenters requested that the final rule clarify perceived conflicting regulatory coverage between the proposed rule and the EPA's subparts OOOO and OOOOa. Based on these comments, we revised § 3179.201(a)(2) to further qualify that a pneumatic controller is subject to this section if it “[i]s not subject to any of the requirements of 40 CFR part 60, subpart OOOO or subpart OOOOa, but would be subject to one of those subparts if it were a new, modified, or reconstructed source.” This change ensures that the BLM requirements do not inadvertently apply to existing equipment that would not be covered by the EPA requirements. We believe this change properly conveys our original intent to cover the same types of pneumatic controllers that EPA rules cover.
Some commenters stated that pneumatic controller exhaust should be allowed to be routed to processing equipment, such as a vapor recovery unit, on-site fuel line, or a control device (in addition to a flare), noting that Wyoming's recent regulation for existing pneumatic controllers in the Upper Green River Basin allow operators this flexibility. The BLM agrees with these comments and as stated previously, revised the rule to state that operators may route the pump to processing equipment. However, the final rule clarifies that with respect to routing pneumatic controller exhaust to a flare or low-pressure combustor, an operator may only be exempted from replacement of the controller if it is already routing such exhaust in this manner as of the effective date of the rule, and continues to do so. The BLM believes that given the low cost and high return on pneumatic controller replacement, spending capital to route controller exhaust to a flare or low-pressure combustor is unlikely to make sense from an economic, practical and waste prevention perspective.
Some commenters stated that the BLM should require the use of zero-bleed devices on leases where on-site electrical grid power is used, or that the BLM should require bleed gas to be routed to a flare or other control device. The final rule does not require the use of zero-bleed pneumatic controllers. Many sites using pneumatic controllers are not connected to the electric grid, and the BLM believes that requiring operators to route gas from pneumatic controllers would impose considerable costs on them and involve technical complications which could impact the cost effectiveness of the replacement requirement. The BLM did clarify in the final rule that operators using pneumatic controllers that have a bleed rate greater than 6 scf per hour have the option to route the exhaust to processing equipment rather than replace the controller.
Many commenters stated that one year is insufficient to replace high-bleed pneumatic controllers and requested that requirements be extended to two or three years. The BLM believes that one year is a sufficient time period for operators to replace high-bleed pneumatic controllers, given the relatively low cost and rapid pay-back period of these replacements, as discussed in section V. Discussion of the Proposed Rule of the preamble to the proposed rule. In addition, as included in the proposed rule, if the well or facility that the pneumatic controller serves has an estimated remaining productive life of three years or less from the effective date of the rule, the operator has three years from the effective date of the rule to replace the pneumatic controller, provided that the operator notifies the BLM through a Sundry Notice.
Several commenters argued that operators should not have to submit a Sundry Notice and wait for BLM approval, if they meet one of the exemptions to the requirements. These commenters also asserted that the requirement for submission of a Sundry Notice (and hence, they assumed, BLM approval) set a higher standard for retaining a high-bleed controller based on functional need than the requirements in 40 CFR part 60, subpart OOOOa, under which they claimed EPA only requires recordkeeping to document why a high bleed pneumatic controller is needed.
As provided in the proposed rule, operators seeking exemptions based on a functional need for the equipment need only notify the BLM of that need and do not have to get the BLM's approval. Further, if the exhaust from the pneumatic controller was already being routed to a flare or other control device on the effective date of the rule, or if the operator chooses to route the exhaust to processing equipment, no notice is required. The BLM only requires a Sundry Notice and approval for exemptions based on the cost of replacing the equipment.
The BLM also received comments asserting that it lacks the authority to require operators who opt not to install low-bleed pneumatic controllers to route their existing pneumatic controllers to a flare device (rather than venting). Commenters argued that such a requirement does not fall within the BLM's MLA authority because it is not waste prevention—
The BLM disagrees with these comments. The final rule does not require flaring in lieu of venting as a means of compliance with this section. The primary means of compliance is replacement with a low-bleed pneumatic controller, which prevents waste by reducing the amount of gas diverted to the pneumatic controllers—which, in turn, makes more gas available for capture. An operator is exempted from this requirement if a high-bleed pneumatic controller is required based on functional needs, if the operator directs its controller exhaust to processing equipment for capture, or if the operator is
This section establishes requirements for operators with pneumatic diaphragm pumps that use natural gas produced from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease. It applies to such pumps if they are not covered under EPA regulations at 40 CFR part 60, subpart OOOOa, but would be subject to that subpart if they were a new, modified, or reconstructed
For covered pneumatic pumps, this section requires that the operator either replace the pump with a zero-emissions pump or route the pump exhaust to processing equipment for capture and sale. Alternatively, an operator may route the exhaust to a flare or low pressure combustion device if the operator makes a determination (and notifies the BLM through a Sundry Notice) that replacing the pneumatic diaphragm pump with a zero-emissions pump or capturing the pump exhaust is not viable because (1) a pneumatic pump is necessary to perform the function required, and (2) capturing the exhaust is technically infeasible or unduly costly. If an operator makes this determination and has no flare or low-pressure combustor on-site, or routing to such a device would be technically infeasible, the operator is not required to route the exhaust to a flare or low-pressure combustion device. Further, an operator that is required to replace a pump or route the exhaust gas from a pump either for capture or to a flare or combustion device may be exempt from the requirement if the operator demonstrates through a Sundry Notice, and the BLM concurs, that the cost would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
Operators must comply with these requirements no later than one year after the effective date of the rule. In addition, similar to the requirements for pneumatic controllers and based on the same rationale, this section provides that if the estimated remaining productive life of the well or facility is three years or less, the operator is allowed to notify BLM through a Sundry Notice and replace the pneumatic pump no later than three years from the effective date of this section, rather than within one year. The section also requires that pneumatic pumps function within manufacturers' specifications.
The final rule makes five changes to the proposed rule requirements. First, it restructures the requirements as discussed above to require that operators either replace pneumatic diaphragm pumps with zero emission pumps or capture the exhaust for sale. As explained above, the operator may route the exhaust to a flare or low pressure combustor device if it makes a determination that replacing the pump with a zero-emissions pump is not viable because (a) a pneumatic pump is necessary to perform the function required, and (b) capturing the pneumatic pump exhaust is technically infeasible or unduly costly. If an operator makes this determination and has no flare or low pressure combustor on-site (or flaring to such a device would be technically infeasible), the operator is not required to route the exhaust to a flare or low pressure combustion device. Second, in response to comments and as discussed below, the final rule removes chemical injection pumps from inclusion in this section. Third, it adds paragraph (b) stating that an operator is not required to replace a pump if the pump does not vent exhaust gas to the atmosphere (
Some commenters suggested that the BLM require the use of zero-bleed pumps in all cases except where technically infeasible, while other commenters stated that routing pump exhaust to a flare offers no product recovery potential and does not minimize loss or waste. The BLM agrees that the installation of zero-bleed pumps is technically feasible in many cases. In response to these comments, and to require operators to employ waste minimization practices when feasible, the final rule is restructured to require operators, when feasible, to install zero-bleed pumps or route the pump exhaust to process equipment for capture and sale. However, in making this revision, the BLM does not intend to require operators to replace pumps that are already routed to flare or capture equipment (
Some commenters stated that chemical injection and temporary use pumps should be exempt because they have low aggregate emissions and operate intermittently. The BLM agrees that chemical injection pumps release substantially lower quantities of gas than diaphragm pumps. The BLM also recognizes that some diaphragm pumps are used very intermittently or only for a short portions of the year, and that low usages result in low quantities of lost gas. In the final rule, the BLM has specified that the rule does not apply to chemical injection pumps or to diaphragm pumps that operated fewer than 90 individual days in the prior calendar year. This change also aligns the requirements of this section with the requirements for pneumatic pumps under 40 CFR part 60 subpart OOOOa.
Several commenters requested that the final rule clarify perceived conflicting regulatory coverage between the proposed rule and 40 CFR part 60 subpart OOOOa. In addition to the change to chemical injection pumps, we revised § 3179.202(a)(2) to further qualify that a pneumatic diaphragm pump is subject to this section if it “[i]s not subject to any of the requirements of 40 CFR part 60, subpart OOOOa, but would be subject to that subpart if it were a new or modified source.” This change ensures that the BLM requirements do not inadvertently apply to existing equipment that would have been exempted under the EPA requirements. We believe this change properly conveys our original intent to cover the same types of pneumatic pumps that EPA rules cover.
Similar to comments received on pneumatic controllers, some commenters stated that pneumatic pumps should be allowed to be routed to processing equipment, such as a vapor recovery unit, on-site fuel line, or a control device (in addition to a flare). The BLM agrees with these comments and revised the rule to state that operators may route the pneumatic pump exhaust to processing equipment for capture and sale, or, under certain conditions described above, to either a low-pressure combustor device or a flare.
Several commenters stated that 1 year is insufficient to replace covered pneumatic pumps and requested that the replacement requirements be extended to 3 years. The BLM believes that one year is a sufficient time period for operators to replace pneumatic diaphragm pumps, or route them to a flare that is already installed on-site, given the relatively low cost and rapid pay-back period of these replacements, as discussed in the preamble to the proposed rule, and the relatively low cost of connecting a pump to a pre-existing on-site flare. Moreover, because the BLM is not including chemical injection pumps in this final rule, operators will need to address far fewer
The BLM also received comments asserting that it lacks the authority to require operators who opt not to install zero-emission pneumatic pumps to route their existing pneumatic pumps to a flare device (rather than venting). Commenters argued that such a requirement does not fall within the BLM's MLA authority because it is not waste prevention—
The BLM disagrees with these comments for several reasons. First, the requirement in this section to flare rather than vent associated gas constitutes waste prevention. Requiring operators to (at minimum) direct associated gas that bleeds from their pneumatic pumps to a flare device eliminates the lowest cost method of handling such gas (that is, venting). This, in turn, provides a greater incentive for operators to upgrade to a zero-emission pneumatic pump or capture pump exhaust gas. Upgrading to a zero-emission pneumatic pump prevents waste by reducing the amount of gas diverted to the pneumatic pumps—which, in turn, directs more gas to either a capture line or the high-pressure flare. If an operator chooses to capture, upgrading the pneumatic pump will directly prevent waste by causing more gas to be sold.
Second, as discussed in connection with § 3179.6, a requirement to flare rather than vent associated gas is a safety measure under the MLA. It is generally safer to combust methane gas than to allow it to vent uncombusted into the surrounding air due to concerns over methane's explosiveness and the risk of hypoxia and exposure to various associated pollutants. In addition, also as discussed in connection with § 3179.6, the BLM has the authority to regulate air quality and GHG impacts on and from public lands pursuant to FLPMA and the MLA.
Some commenters raised concerns about differences between the proposed BLM and EPA requirements for pneumatic pumps, asserting that the BLM proposed rules are different and more stringent. First, they asserted that the EPA rule limits “affected facilities” to sites with a control device already on-site, while the proposed BLM requirements would apply to pneumatic pumps regardless of whether a control device is present. Second, commenters asserted that the EPA rule only requires operators to route pump emissions to a control device if one already exists on site, while the BLM proposed rule may require replacement with a zero emission pump in such a circumstance.
Some of these concerns were addressed by the EPA's final subpart OOOOa regulations, while other differences are appropriate given the different authorizing statutes and primary foci of the two sets of regulations. As an initial matter, the BLM requirements apply only to pumps that are not subject to subparts OOOO or OOOOa (but would be if the pump was new, modified, or reconstructed), so no pump will be subject to both regulations.
With regard to the first issue described above, the final BLM and EPA rules apply to the same types of pneumatic pumps. In its final rule, EPA noted that there was some confusion regarding the proposed definition of affected facility, and stated that it had modified the regulatory text to clarify that “all natural gas-driven diaphragm pumps at natural gas processing plants or well sites are affected facilities, except for pumps at well sites that operate less than 90 days per calendar year.”
With regard to the second issue, the BLM final rule does apply somewhat different requirements to pumps covered by the BLM rule as compared to pumps covered by the EPA rule, due to differences between the two agencies' legal authorities. The legal authority for subpart OOOOa is section 111 of the Clean Air Act, which requires the EPA to set standards of performance for new sources and requires a “standard of performance” to be based on the best system of emission reduction (BSER) “adequately demonstrated.”
Additionally, the BLM final rule establishes a preference for operators who do not replace their pumps with a zero-emissions pump to route exhaust gas to capture in lieu of routing to a flare. This emphasis on either replacement or capture is a function of the BLM's waste prevention focus. Thus, unlike subpart OOOOa, the final BLM rule requires operators with a gas-driven pneumatic pump that is currently venting to the atmosphere to replace it with a zero emission pump, if a zero-emission pump would work at that site to perform the function required, or route the exhaust gas to capture. If a zero-emission pump is not viable at that site and routing the exhaust gas to capture is technically infeasible or unduly costly, however, then the operator must comply with a requirement that tracks the requirement under subpart OOOOa—the operator must route the exhaust gas from the pneumatic pump to a flare, if there is already a flare on-site. While the BLM rule establishes an additional requirement on operators, it does not conflict in any way with the EPA rule or increase an operator's burden to comply with both rules. Any pump that is already routed to a flare in compliance with the EPA rule will also be in compliance with the BLM rule. For pumps without a flare on-site, the EPA rule requires no further action, while the BLM rule requires replacement or routing to capture, absent the listed conditions.
The third potential difference that commenters highlighted between the BLM and EPA requirements for pneumatic pumps is the level of documentation required to show that routing to a flare is technically infeasible. To clarify a possible misunderstanding by the commenters, a
Here, the BLM final rule requires an operator to notify the BLM through a Sundry Notice if the operator is not replacing the pump for one of the reasons specified. The operator must also notify the BLM if the operator is not routing the pump to a flare because there is no flare on site or routing to a flare would be technically infeasible. Subpart OOOOa establishes requirements for an engineering evaluation of whether routing to a flare would be technically infeasible, requires the evaluation and determination of technical infeasibility to be certified by a qualified professional engineer, and requires this information to be included in the operator's annual report. Thus, while the specific documentation requirements for pumps covered by the BLM requirements differ from those established by the EPA, both rules require the operator, under specified circumstances, to either route the pump exhaust to a flare or notify the respective agency that the pump meets the criteria for an exemption. The BLM notification requirements are less specific than the EPA requirements, which the BLM believes will make compliance less burdensome for an operator.
This section addresses gas vented from crude oil, condensate, intermediate hydrocarbon liquid, or produced water storage vessels that contain production from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease, and are not subject to 40 CFR part 60, subparts OOOO or OOOOa, but would be if they were new, modified, or reconstructed sources. If such storage vessels have the potential for VOC emissions equal to or greater than 6 tpy, the final rule requires operators to route all gas vapor from the vessels to a sales line. Alternatively, the operator may route the vapor to a combustion device if it determines that routing the vapor to a sales line is technically infeasible or unduly costly. The operator also may submit a Sundry Notice to the BLM that demonstrates that compliance with the above options would cause the operator to cease production and abandon significant recoverable oil reserves under the lease due to the cost of compliance. Operators must meet this requirement no later than one year after the rule becomes effective, or three years after the rule becomes effective if the operator needs to replace the storage vessel in order to comply.
Operators must determine the rate of VOC emissions from the storage vessel within 60 days after this rule is effective, and within 30 days after adding a new source of production to a storage vessel. This determination is based on the maximum average daily throughput for a 30-day period of production, and may take into account any legally and practically enforceable limits in an operating permit or other requirements applicable to the storage vessel. This section no longer applies to a storage vessel whose total uncontrolled VOC emissions rate declines to 4 tpy in the absence of controls for 12 consecutive months.
In response to comments, the BLM has made the following changes to the requirements in the proposed rule: (1) Clarified the exemption for sources subject to 40 CFR part 60, subparts OOOO or OOOOa; (2) extended the initial compliance period from 6 months to 1 year; (3) added a 3-year initial compliance period for operators that must replace storage vessels to comply with the requirements; (4) required gas to be routed to a sales line when that option is neither technically infeasible nor unduly costly, as determined by the operator; (5) added a requirement that operators must determine whether the storage vessel has the potential for VOC emissions equal to or greater than 6 tpy based on the maximum average daily throughput for a 30-day period of production, which may take into account legally and practically enforceable limits applicable to the storage vessel; (6) added a requirement that storage vessels subject to the final rule must be adequately sized to accommodate the operator's production levels and equipped to meet any applicable regulatory requirements for tank vapors; and (7) added a requirement that storage vessels subject to the final rule may only vent through properly functioning pressure relief devices. Each change is discussed below along with a summary of the relevant comments and responses.
Several commenters expressed concerns about differences between the types of new storage vessels that are subject to subparts OOOO or OOOOa and the types of existing storage vessels that would have been subject to the proposed rule. The BLM agrees that applying the requirements of this section, as proposed, to storage vessels “not subject to 40 CFR part 60, subparts OOOO or OOOOa” could encompass storage vessels that neither the EPA nor the BLM intended to cover. In the final rule, § 3179.203(a)(2) covers a storage vessel if it “[i]s not subject to any of the requirements of 40 CFR part 60, subparts OOOO or OOOOa, but would be subject to that subpart if it were a new, modified, or reconstructed source.”
Several commenters argued that the proposed initial period of 6 months to comply with the emission reduction provisions was too short. Commenters stated that it would take longer than 6 months to complete engineering studies of existing storage vessels; design, order and construct the control device; and then install the control device. Commenters recommended various time periods ranging from 1 to 3 years. We believe a 1-year initial compliance period is adequate to perform the tasks necessary to install a control device, and we have modified § 3179.203(c) accordingly.
Commenters also stated that in some cases they would likely have to replace an existing tank in order to meet the emission limitations. In such cases, commenters stated that even more time would be needed to obtain capital funding approval and purchase the new storage vessel. In response, we further amended § 3179.203(c) to provide a 3-year initial compliance period when the operator must replace a storage vessel in order to comply with the rule requirements.
In the proposed rule, § 3179.203(c) allowed the operator to choose between routing emissions from storage vessels subject to the rule to a combustion control device, a continuous flare, or a sales line. Some commenters opposed these provisions because they believe BLM should focus on preventing loss of natural resources. The BLM agrees that this rule should focus on gas capture and use whenever possible, and in the final rule, § 3179.203(c) first requires the operator to route tank vapor gas from a storage vessel to a sales line. If the operator determines that routing the emissions to the sales line is technically infeasible or unduly costly, the operator may route the gas to a combustion device.
We also received numerous comments requesting that we align the final rule as much as possible with the requirements finalized by the EPA in subparts OOOO and OOOOa. As stated in the preamble to the proposed rule, the BLM and the EPA understand that aligning our requirements to the extent possible, provides common standards that ease implementation and reduce confusion for both the regulated industry and
One commenter suggested that the BLM make it clear that venting from access points or pressure relief devices during normal operation is prohibited. The commenter stated that to account for those instances where venting may be necessary, the BLM could adopt the approach taken by Colorado by specifying those instances where venting is reasonably required, such as for “maintenance, gauging or safety of personnel and equipment.” The commenter also recommended that the BLM add a requirement that operators certify that their storage tank facilities are adequately sized in order to capture, convey, and control emissions. They stated that this is required in Colorado and is a direct response to the Air Pollution Control Division and EPA investigations that revealed significant leaks and venting from controlled facilities.
In response to this comment, final rule § 3179.203(f) provides that storage vessels subject to this section must be adequately sized to accommodate production levels and equipped to meet any applicable regulatory requirements for emissions. Also, § 3179.203(g) requires that storage vessels subject to this section may only vent through properly functioning pressure relief devices. We believe both of these provisions embody good engineering practices and should be common practice when operating a storage vessel.
The BLM also received comments asserting that it lacks the authority to require operators who opt not to capture tank vapor gas to route such gas to a flare device (rather than venting). Commenters argued that such a requirement does not fall within the BLM's MLA authority because it is not waste prevention—
The BLM disagrees with these comments for several reasons. First, the requirement in this section to flare rather than vent tank vapor gas constitutes waste prevention. Requiring operators to (at minimum) direct tank vapor gas to a flare device eliminates the lowest cost method of handling such gas (
Second, as discussed in connection with § 3179.6, a requirement to flare rather than vent associated gas is a safety measure under the MLA. It is generally safer to combust methane gas than to allow it to vent uncombusted into the surrounding air due to concerns over methane's explosiveness and the risk of exposure to various associated pollutants. In addition, also as discussed in connection with § 3179.6, the BLM has the authority to regulate air quality and GHG impacts on and from public lands pursuant to FLPMA and the MLA.
Some commenters requested that the BLM require storage vessel vapors to be combusted at an efficiency of 98%. Storage vessel vapors can be combusted at an efficiency of 98% using an enclosed combustor. However, the BLM has determined that requiring the operator to install an enclosed combustor on a location with an existing flaring system would be relatively costly compared to the benefit of modestly higher combustion efficiency applied to a comparatively small volume of vapor coming from storage vessels flares. The BLM believes that in those instances where storage vessel vapors must be controlled on a site that does not have an existing flare system, the operator will likely elect to install an enclosed combustor rather than a flare, because it will more effectively combust the lower volumes of vapor associated with storage vessels.
This section establishes requirements for venting and flaring during downhole well maintenance and liquids unloading. It requires the operator to use practices for such operations that minimize vented gas and the need for well venting, unless the practices are necessary for safety. The rule also requires that for wells equipped with a plunger lift system or an automated well control system, the operator must optimize the operation of the system to minimize gas losses.
For all wells, before the operator manually purges a well for the first time after the effective date of this section, the operator must document in a Sundry Notice that other methods for liquids unloading are technically infeasible or unduly costly. In addition, during any liquids unloading by manual well purging, the person conducting the well purging is required to be present on-site to minimize to the maximum extent practicable any venting to the atmosphere. This section also requires the operator to maintain records of the cause, date, time, duration and estimated volume of each venting event associated with manual well purging, and to make those records available to the BLM upon request.
The operator must notify the BLM by Sundry Notice within 30 days after the first liquids unloading by manual or automated well purging after the effective date of the rule. Additionally, operators must notify the BLM by Sundry Notice within 30 days after the following conditions are met: (1) The cumulative duration of manual well purging events for a well exceeds 24 hours during any production month; or (2) the estimated volume of gas vented in the process of conducting liquids unloading by manual well purging for a well exceeds 75 Mcf during any production month. The final rule also defines “well purging” for purposes of this section and requires operators to report to ONRR gas volumes vented during manual and automated downhole maintenance and liquids unloading, including through the operation of plunger lifts.
In response to comments on the proposed rule, we removed the proposed prohibition on well purging for wells drilled after the effective date of this section, as discussed in above in section III.D.3., and made several smaller changes in the final rule: (1) Removing the proposed requirement to flare unrecovered gas during downhole well maintenance and liquids unloading operations; (2) clarifying recordkeeping and reporting requirements and increased the length of time operators have to submit reports; and (3) revising the definition of “well purging.”
The BLM is aware, and many commenters observed, that flares are not always feasible control options for downhole well maintenance and liquids unloading activities, and we recognize that there may be difficulties separating liquids from the purged gases. For these reasons, we proposed the use of flares
For these reasons, we did not finalize the proposed flaring requirement. Instead, the final rule requires operators to minimize vented gas during downhole well maintenance and liquids unloading operations, and it specifies best management practices that operators must follow. For wells equipped with a plunger lift system or an automated well control system, these practices include optimizing the operation of the system to minimize gas losses.
Proposed § 3179.204(a) would have required the operator to use best practices to maximize the recovery of gas from downhole well maintenance and liquids unloading operations. Commenters expressed concern that the word “maximize” could be construed to imply that the operator must use the technology that provides the absolute highest amount of gas recovery, regardless of other concerns. This is not our intent, as evidenced by our discussion of the proposed requirements in the preamble to the proposed rule. For example, we discuss that some technologies are less costly than others, and that some technologies make more sense to install early in the life of a well rather than later. We also state that we expect most new wells to use plunger lifts, and that the proposed rule would not require (though it would encourage) the use of automated systems.
Several commenters objected to the extent and content of the proposed recordkeeping requirements, but did not identify changes that could be made without compromising the information needed for effective implementation of the rule. The BLM believes the recordkeeping and reporting requirements are essential to verify compliance and to more accurately assess the amount of gas lost through liquids unloading events, including for the purposes of royalty calculations. In response to commenters' concerns, however, the final rule extends the time to submit a Sundry Notice of large quantity liquids unloading events from 14 days to 30 days, to allow operators more time to gather information. Similarly, we have extended the time to submit a Sundry Notice after the first liquids unloading event from 10 days to 30 days.
Some commenters contended that recordkeeping and reporting requirements related to each well purging event are unnecessary, but the BLM does not agree. Large quantities of gas are lost through well purging that cannot be used to supply the country's energy needs and provide no royalty revenues to taxpayers. Building a historical record of the amount of gas lost is key to determining proper management of these events in the future. For example, more accurate knowledge of the amount of gas lost to well purging events will allow operators to make better-informed decisions on the financial viability of each liquids unloading technology. Also, the BLM will be able to better estimate the cost of lost royalties associated with vented gas from well purging activities. We believe these important benefits justify the expenditures related to obtaining and reporting the required records.
A number of commenters asserted that BLM should withdraw the proposed downhole well maintenance and liquids unloading provisions of the rule because of the complexity of the issue. They argued that the BLM does not understand the impacts of the proposed requirements. In particular, they noted EPA's decision not to regulate liquids unloading.
The BLM has engaged numerous stakeholders throughout the rulemaking process to better inform its final rule decisions, and has coordinated closely with the EPA in sharing technical information and expertise.
In explaining its decision not to regulate liquids unloading at this time, the EPA stated that although it had received valuable information from the public on technologies to reduce emissions, “the information was not sufficient to finalize a national standard representing BSER for liquids unloading.”
This section establishes that the LDAR requirements in §§ 3179.301 through 3179.305 of this subpart apply to oil or natural gas wells and all equipment associated with the well sites that produce, process, compress, treat, store, or measure natural gas from a Federal or Indian lease, or from a unit or communitized area, where the site is upstream of or contains the approved point of royalty measurement. These sections also apply to a site and all equipment operated by the operator and associated with a site that is used to store, measure, or dispose of produced water that is located on a Federal or Indian lease. The sections obligate operators to inspect all equipment that is used to produce, compress, treat, store, or measure natural gas or to store, measure or dispose of produced water for gas leaks from leak components, with the exception of wells and well equipment that have been depressurized, and sites that contain only a well head and no other equipment. The first inspection must occur within one year of the effective date of the rule for sites that have begun production prior to the effective date. For production sites that begin production after the effective date, the first inspection must occur within 60 days of beginning production. For sites that were out of service and brought back into service, the first inspection must occur within 60 days of the date the site is brought back into service and
Operators are required to conduct the inspections during production operations, and to fix any leaks found. Subsequent inspections must be conducted according to the schedule in § 3179.303. Operators may satisfy the requirements of §§ 3179.301 through 3179.305 for all of their equipment on a given lease by complying with the fugitive emissions requirements established under 40 CFR part 60, subpart OOOOa with respect to all equipment covered by the BLM leak detection requirements. This includes equipment such as covers and closed vent systems, and thief hatches and other openings on controlled storage vessels, which if new, modified or reconstructed, are subject to 40 CFR 60.5411a or 60.5395a under OOOOa and not the fugitive emissions requirements under OOOOa. Specifically, the operator must treat each of its sites and equipment as if it were a collection of fugitive emissions components as defined in 40 CFR part 60 subpart OOOOa; comply with the requirements of 40 CFR part 60 subpart, OOOOa that apply to affected facility fugitive emissions components at a well site or compressor station, as applicable, under 40 CFR part 60, subpart OOOOa; and notify the BLM through a Sundry Notice of such compliance.
Several changes were made to this section in response to comments and to provide additional clarity. As discussed in Section V.B.2., § 3179.301(a) clarifies the specific sites and equipment subject to the leak inspection requirements, which apply to all equipment handling Federal or Indian gas, upstream of and including the site where the royalty measurement point is located—whether the equipment is on or off the lease and regardless of the ownership of the equipment. This section also specifies that the leak detection requirements apply to equipment handling produced water only if the equipment is operated by the operator and located on the Federal or Indian lease. The BLM added a provision to § 3179.301(b) stating that the LDAR requirements do not apply to a well or well equipment that has been depressurized, nor to a site that contains a wellhead or wellheads and no other equipment. In § 3179.301(c), the BLM clarified that the operator must inspect for gas leaks from leak components. In conjunction with this change, we added definitions for “leak” and “leak component” in § 3179.3. We also moved the definition of “site” from § 3179.303(a) to § 3179.301(e) and revised the definition for clarity.
Additionally, the BLM moved the requirement in proposed § 3179.303(c) that exempts leak components that are not accessible from the inspection and monitoring requirements to paragraph (d) of this section; added paragraph (f) to specify when the first inspection must take place; and replaced proposed paragraph (e) with new paragraph (j) to provide an exemption for sites and equipment that are in compliance with the fugitive emission requirements under 40 CFR part 60, subpart OOOOa.
This section of the preamble discusses additional comments on the LDAR provisions in § 3179.301, beyond the comments discussed in Section IV.A.d. The BLM made changes to clarify the scope of LDAR coverage in the final rule in response to commenters who asserted that the proposed rule was not entirely clear on the scope of coverage. The final rule now explicitly describes the “sites” to which the LDAR provisions apply and no longer makes use of the term “facilities.” The proposed rule covered “facilities,” as well as compressors that were on lease and operated by the operator, regardless of whether they handled Federal or Indian product. “Facility” is defined in section 3170.3 to include a site and associated equipment used to process, treat, store, or measure production from a Federal or Indian lease, unit or communitized area, as well a site and associated equipment used to store, measure, or dispose of produced water. With respect to produced water, the definition of “facility” only includes sites on a Federal or Indian lease, unit or communitized area, but the definition is not similarly limited with respect to sites associated with Federal or Indian production. Using the term “facilities” to define the coverage of the LDAR program would create a distinction between equipment upstream and downstream of the approved point of royalties measurement on an otherwise covered site. In addition, the BLM has not retained in the final rule the proposed coverage for compressors that do not handle Federal or Indian product. Given the potential for confusion here, we believe that it is clearer to simply specify the sites and equipment subject to the LDAR requirements in the final rule, rather than use the term “facilities.”
With respect to the LDAR requirements in this rule, the BLM believes it is reasonable and appropriate to apply the requirements to all equipment at a site that is subject to these requirements. Once an operator is already on-site, inspecting additional equipment adds little cost and burden, particularly if the operator is using optical gas imaging technology, and inspecting such equipment offers the same potential additional benefits as any other inspection. Thus, the BLM believes that requiring inspection of all of the equipment at a given site will make the rule more cost-effective in avoiding waste, as compared to exempting inspection of some equipment at a site that is already being inspected. Moreover, the BLM believes that applying the LDAR requirements to most but not all of the equipment at a single site would heighten the potential for inspection errors and confusion, and make administration and tracking of the results more difficult.
Commenters also urged the BLM to exclude from the LDAR requirements the following additional types of sites or equipment, beyond those discussed in Section IV.A.d,: Wells that are shut-in at the time of an LDAR inspection; sites where there is only a small amount of mineral interest from or allocated to a Federal or Indian lease, unit, or communitization agreement; equipment operated by an entity other than the operator; sites with a legally and practically enforceable leak detection and repair requirement in an operating permit, or other enforceable requirement established under a Federal, State, local or tribal authority; and sites located on the North Slope of Alaska.
With respect to wells that are shut-in at the time an inspection occurs, coverage under LDAR depends on whether the shut-in is temporary, or the well or well equipment has been depressurized. Leaks will only be detectable when a well is operating, so the rule provides that leak inspections must occur during production operations. The BLM agrees that a well that has been depressurized is no longer in operation and should not leak, and the BLM has excluded such wells from the LDAR requirements. Depressurized wells that are brought back into service do not need to be inspected until 60 days after the date that the well is re-pressurized. A well that is temporarily shut-in but not depressurized, however, may have significant leaks when it is brought back into production. Exempting such a well from any inspection obligations might provide an incentive for operators to schedule inspections during shut-ins to reduce the number of sites that would need to be inspected.
With respect to leases where the Federal or Indian mineral interest is a minority interest, the BLM has the authority and an obligation to minimize the waste of Federal and Indian mineral
Similarly, neither legal nor policy considerations support exempting equipment operated by an entity other than the site operator. The operator is responsible for ensuring that operations conducted pursuant to a Federal or Indian lease are in compliance with the lease terms and applicable regulations.
The BLM recognizes that some equipment at the site containing the facility measurement point, such as storage vessels or compressors, may be downstream of the measurement point and may be in control of the purchaser rather than the operator.
In addition, the BLM disagrees with the suggestion to create a blanket exemption from the LDAR requirements for sites with another legally and practically enforceable leak detection and repair requirement in an operating permit or other enforceable Federal, State, local or tribal requirement. The final rule already contains provisions to address overlapping EPA or State requirements, as discussed in sections III.B.3 VI.A. of this preamble. An operator with a specific program contained in its operating permit could, under section 3179.303(b) request approval of that program as an alternative to the BLM requirements, provided the permit program is at least equally effective at detecting and reducing losses from leaks as the BLM requirements. By contrast, exempting any site with existing enforceable LDAR requirements provides no assurance that those requirements will produce results equivalent to the BLM requirement.
The BLM also declines to exclude automatically from the LDAR requirements sites that are located on the North Slope of Alaska. The BLM notes that one operator has argued that conditions on the North Slope make it impossible to meet all of the LDAR requirements, and that the operator has in place alternative practices, equipment, and techniques that reduce the likelihood of leaks and facilitate prompt detection of any that might occur. The final provision allowing the BLM to approve an operator's alternative instrument-based leak detection program is designed to address just this sort of situation.
Certain operators requested that facilities subject to the EPA subpart OOOOa fugitive emissions requirement be exempt from the BLM LDAR requirements. After review of these comments, the BLM agrees that those facilities should not have to comply with both the EPA subpart OOOOa program and a separate BLM LDAR program, and the final rule provides that an operator in compliance with the requirements of subpart OOOOa will be deemed in compliance with the BLM LDAR requirements as well. In addition, even though the BLM and the EPA have largely aligned their leak detection requirements, an operator might prefer to comply with the OOOOa requirements for all of its facilities on a lease, including existing facilities that are not covered by subpart OOOOa, rather than complying with subpart OOOOa for new, modified and reconstructed facilities and the BLM LDAR requirements for existing facilities. Thus, the final rule provides that an operator may satisfy the BLM LDAR requirements by complying with the subpart OOOOa fugitive emission requirements for all sites and equipment on a given lease.
However, by providing that compliance with subpart OOOOa is deemed compliance with the BLM requirements, rather than simply exempting all facilities subject to subpart OOOOa, the BLM maintains enforcement authority if an operator is subject to both subpart OOOOa and the BLM requirements, but complies with neither. Under this approach, a BLM inspector in the field could review information to confirm that the operator is in fact in compliance with one set of leak detection requirements.
This section prescribes the types of instruments that an operator must use to inspect for leaks. Specifically, operators must use: (1) An optical gas imaging device such as an infrared camera; (2) a portable analyzer capable of detecting leaks in compliance with Method 21 of 40 CR part 60, appendix A-7; or (3) a leak detection device not listed in this section that has been approved by BLM. The persons using the above devices must be adequately trained in their use.
Anyone may request approval of an alternative monitoring device and protocol by submitting a Sundry Notice with the information specified in paragraph (c) of this section, subject to the approval of the BLM as specified in paragraph (d).
In the final rule, the BLM amended paragraph (a) of this section by removing reference to monitoring methods since this paragraph specifies monitoring equipment, not methods. In paragraph (a)(2), we added a provision that portable analyzers must be operated in compliance with Method 21 rather than manufacturers specifications. We removed from paragraph (a) the proposed option of using a comprehensive program approved by the BLM under § 3179.303(b).
The BLM also added a provision at paragraph (b) that the person operating the leak detection device must be adequately trained in the proper use of the device. We added an option at
Please see Section III.A.d for a discussion of major comments received on this section of the proposed rule.
This section requires operators to conduct initial site inspections within specified timeframes after the effective date of the rule. The section requires the operator initially to conduct site inspections twice a year, with consecutive semiannual inspections conducted at least four months apart; and to conduct compressor station inspections quarterly, with consecutive quarterly inspections conducted at least 60 days apart. The inspection frequencies are fixed.
Paragraph (b) of this section authorizes the BLM to approve an alternative instrument-based leak detection program if the BLM finds that the alternative would achieve equal or greater reduction of gas lost through leaks compared with the approach specified in §§ 3179.302(a)(1) and 3179.303(a). The operator must submit the request through a Sundry Notice. The operator also has the option to request approval of a leak detection program that does not meet the criterion specified in § 3179.303(b) when it can be demonstrated that compliance with the requirements of §§ 3179.301 through 3179.305 would cause the operator to cease production and abandon significant recoverable oil or gas reserves under the lease.
In the final rule, the BLM clarified in paragraph (a) of this section that the operator must inspect leak components at the site, and that the inspection must be conducted using a leak detection device listed under § 3179.302. The BLM is maintaining a semiannual inspection frequency for each site, and added provisions for quarterly inspections of compressor stations. In the final rule, these inspection frequencies are fixed, and the BLM did not finalize the proposed table of variable, performance-based inspection frequencies.
Paragraph (b) of this section allows for BLM approval of an alternative program, if an operator submits an approval request via a Sundry Notice. It is the BLM's intent that those approvals be made at the State office level for intrastate programs, and at the national or Washington office level for interstate programs. Final § 3179.303(b) differs slightly from the proposed version of this provision. First, the final rule specifies that the approval applies to an “alternative instrument-based leak detection program” instead of the proposed “alternative leak detection device, program, or method.” Next, the rule specifies that the approval is in lieu of complying with paragraph (a) of this section, and that the alternative must achieve equal or greater reduction of gas lost through leaks compared with the approach specified in §§ 3179.302(a)(1) and 3179.303(a). The BLM also added details of what the Sundry Notice must include at § 3179.303(b)(1)-(5), and added paragraph (e) stating that approved alternative LDAR programs will be posted online.
Additionally, the BLM added a provision at paragraph (c) of this section to provide the operator with the option to request approval of a leak detection program that does not meet the criterion specified in § 3179.303(b) when it can be demonstrated that compliance with the requirements of §§ 3179.301 through 3179.305 would cause the operator to cease production and abandon significant recoverable oil or gas reserves under the lease. The BLM also added paragraph (d) setting forth the requirements for the Sundry Notice to support a demonstration under paragraph (c).
Please see Section III.A.d for a discussion of major comments received on this section of the proposed rule.
This section requires operators to repair any leak as soon as practicable and no later than 30 calendar days after discovery of the leak, unless there is good cause for repair to take longer. The rule requires the operator to notify the BLM by Sundry Notice if there is good cause to delay the repairs beyond 30 days, and to complete the repair at the earliest opportunity, but in no case longer than 2 years after discovery. The rule also requires the operator to conduct a follow-up inspection, using an authorized method, to verify the effectiveness of the repair within 30 calendar days after the repair, and to make additional repairs within 15 calendar days if the previous repair was not effective. This repair and follow-up process must be followed until the repair is effective. The BLM does not consider an inspection to verify the effectiveness of a repair to be a periodic inspection under § 3179.303.
In the final rule, the BLM increased the time period for completing repairs from the proposed 15 days to 30 days. Operators also have 30 days, as opposed to the proposed 15 days, to verify the effectiveness of the repair through a follow-up inspection. While the proposed rule would have required that the follow-up inspection be carried out using the method originally used to detect the leak, the final rule specifies that any of the instruments specified or approved under § 3179.302(a) or the soap bubble test under EPA's Method 21, section 8.3.3, may be used.
In paragraph (a) of this section in the proposed rule, the BLM specified that the operator must repair any leak “not associated with normal equipment operations.” In the final rule, we specify that “any leak” must be repaired as soon as practicable, but within 30 days after discovery. In conjunction with this change, we have added to § 3179.3 a definition of “leak” that excludes releases due to normal operation of equipment that is intended to vent.
The proposed rule, as well as the final rule, allows the owner to delay repair if a good cause exists. Although “good cause” was not defined in the proposed rule, we have added a definition in paragraph (a) of the final rule. Also, the final rule allows the operator up to two years to repair a leak if good cause for delay exists, although the operator must submit a Sundry Notice and repair the leak sooner than 2 years if the opportunity arises. Previously, we had proposed that the operator repair the leak within 15 days after the cause for the delay ceases to exist.
Please see Section III.A.d for a discussion of major comments received on this section of the proposed rule.
This section requires operators to maintain records of LDAR inspections and repairs, including dates, locations, methods, where leaks were found, dates of repairs, and dates of follow-up inspections. These records must be made available to the BLM upon request. AVO inspections only have to be documented if they find a leak requiring repair. Paragraph (b) of the section also requires operators to submit to the BLM, by March 31 of each calendar year, an annual summary report on the previous year's LDAR inspection activities. The BLM plans to make these reports available to the public, subject to any protections for confidential business information.
The final rule amends the records that must be maintained. The BLM did not finalize the proposed recordkeeping requirements regarding the equipment or facility inspected, descriptions of each leak, and the date of each leak repair attempt. We clarified, however, that AVO checks need only be documented if they find a leak requiring repair.
Please see Section III.A.d for a discussion of major comments received on this section of the proposed rule.
This section creates a variance procedure under which the BLM State Director may grant a State or tribe's request to have a State, local or tribal regulation apply in place of a provision or provisions of this subpart. The variance request must: (1) Identify the specific provisions of the BLM requirements for which the variance is requested; (2) identify the specific State, local or tribal regulation that would substitute for the BLM requirements; (3) explain why the variance is needed; and (4) demonstrate how the State, local or tribal regulation will satisfy the purposes of the relevant BLM provisions. The BLM State Director will review a State or tribal variance request. To approve a request, the BLM State Director will determine that the State, local or tribal regulation: (1) Would perform at least equally well in terms of avoiding waste of oil and gas, reducing environmental impacts from venting and/or flaring of gas, and ensuring the safe and responsible production of oil and gas, compared to the particular provision(s) from which the State or tribe is requesting the variance, and (2) would be consistent with the terms of the affected Federal or Indian leases and applicable statutes.
This section also clarifies that a variance granted under this proposed section does not constitute a variance from provisions of regulations, laws, or orders other than subpart 3179, and it reserves the BLM's authority to rescind a variance or modify any condition of approval in a variance. Additionally, this section requires States or tribes with approved variances to notify the BLM in writing of any substantive amendments, revisions, or other changes to the applicable State, local or tribal regulation(s) or rule(s). This section further specifies that if the BLM approves a variance for State, local or tribal regulation(s) or rule(s), the variance can be enforced by the BLM as if the regulation(s) or rule(s) were provided for in this Subpart.
In response to comments received, the BLM made the following changes to the proposed rule requirements: (1) Revised paragraph (a)(1) to change a reference to granting a variance from “any individual provision of this subpart” to “any provisions of this subpart”; (2) revised paragraphs (a)(2)(iv) and (b) to state that the State, local or tribal regulations or rules would “perform at least equally well in terms of reducing waste of oil and gas, reducing environmental impacts from venting and/or flaring of gas, and ensuring the safe and responsible production of oil and gas, compared to the particular provision(s) from which the State or tribe is requesting the variance”; (3) added text to allow variances for requirements and regulations of local governments, in addition to State and tribal requirements (though the variance request must still come from the State or tribe, not from a locality); (4) added new paragraph (e) that requires the State or tribe that requested the variance to notify the BLM of substantive amendments, revisions, or other changes to the applicable State, local or tribal regulation(s) or rule(s); and (5) added new paragraph (f) that clarifies that if the BLM approves a variance for State, local or tribal regulation(s) or rule(s), the variance can be enforced by the BLM as if the regulation(s) or rule(s) were provided for in this Subpart. Paragraph (f) also clarifies that a State's or tribe's enforcement of its own regulations would not be affected by the BLM's approval of a variance.
Major comments received on variances are discussed in Section III.E.3 of this preamble; additional comments on variances are discussed below.
Some commenters requested that additional entities be allowed to apply for variances, such as local air authorities, multiple State agencies, or operators. Commenters asserted that allowing only States or tribes to request variances causes uncertainty for operators, and that if a State declined to put forth a variance request, companies would bear the cost and burden of complying with multiple regulatory regimes. As stated above, the BLM has modified the rule to allow local requirements, in addition to State and tribal requirements, to substitute for BLM requirements. Regarding the comment that multiple State agencies may need to request a variance, the final rule does not preclude different State or tribal agencies from requesting variances from different provisions of the rule. The BLM has not modified the final rule to allow localities or operators, in addition to States and tribes, to request a variance to be able to comply with State, local or tribal requirements in lieu of the BLM requirements. Specifically with respect to local requirements, the BLM believes that it is important to ensure that the State supports a variance request, and thus that the State prefers the BLM to enforce the State's or locality's requirements rather than federal requirements. Additionally, we believe that a State has the best understanding of its own regulatory requirements and how those compare to the requirements of this rule.
Several commenters asserted that the variance application and approval processes were unclear and/or overly burdensome. These commenters expressed various concerns, including: (1) Lack of a clear and comprehensive description of the information needed to request a variance; (2) lack of timelines for review and approval; (3) lack of criteria by which the BLM would evaluate variance requests; and (4) lack of provisions stating how the BLM will address future modifications to either this rule or State regulations once variances are approved. Commenters were also concerned about the BLM's ability to review variance requests in a timely manner. To address these concerns, comments suggested clarifying the regulatory text as well as developing formal implementation guidance in consultation with the States prior to the effective date of the rule.
In response to these comments, as discussed in Section III.E.2 of this preamble, the final rule provides three specific criteria for evaluating whether it is appropriate to apply the State, local or tribal requirements in lieu of this rule. In addition, the final rule added new paragraph (e) that requires the State or tribe that requested the variance to
Some commenters also expressed concern with the proposed BLM State Director review of the variance requests. These commenters asserted that delegating the approval process to the BLM State Director could result in uneven treatment among States. The BLM agrees that achieving consistent implementation of the regulations is an important goal, and this is one reason why the BLM does not believe that decisions on variance requests should be made below the BLM State Director level. Further, the BLM believes that BLM State Directors are in a good position to evaluate how State, local or tribal rules or requirements compare to the requirements of this rule, given their familiarity with the regulatory regimes that apply in the relevant State or States. In addition, once the rule is in effect, the BLM would have the opportunity to issue guidance to enhance coordination among State Directors in evaluating variances, as well as with the BLM Washington office, to help ensure consistency across the BLM State Offices. Finally, the more specific criteria in the final rule for evaluating a variance request will enhance consistency across States.
Some commenters also opposed the proposed provision in § 3179.401(d) stating that the “BLM reserves the right to rescind a variance or modify any condition of approval.” These commenters asserted that such a proposal undermines certainty for operators and discourages States and tribes from seeking a variance. Other commenters requested that the BLM include an appeals process for revoked or denied variances, stating that if a variance were requested and denied, States would have no administrative means by which to address the BLM decision without going to court.
The BLM believes that maintaining BLM authority to rescind a variance or modify any condition of approval is necessary to guard against situations in which a variance leads to unintended or unforeseen consequences that run counter to the BLM's determination that the State, local, or tribal regulation performs at least as well as the BLM rule. The BLM expects that such situations will arise infrequently, but the BLM nevertheless believes it is important to include a mechanism for addressing such situations as they occur. After considering the comments, the BLM determined that consideration of waste reduction, environmental, and safety interests outweighs commenters' concerns. As a result, the final rule maintains the BLM's discretion to rescind a variance or modify any condition of approval. Regarding the comments requesting that the BLM include an appeals process for revoked or denied variances, the BLM did not provide for administrative appeals on similar variance decisions under the hydraulic fracturing rule, and the BLM is maintaining this practice in this final rule. Applying this approach also helps to avoid a protracted appeals process with respect to State and tribal variances.
Entities that will be directly affected by the rule include most, if not all, entities involved in the exploration and development of oil and natural gas on Federal and Indian lands. According to AFMSS data (as of March 27, 2015), there are up to 1,828 entities that currently operate Federal and Indian leases.
The potentially affected entities are likely to fall within one of the following industries, identified by the North American Industry Classification System (NAICS) codes:
The Small Business Administration (SBA) has developed size standards to carry out the purposes of the Small Business Act.
To estimate a percentage of small firms involved in oil and gas support activities, we reference Table 9-3d of the RIA, which provides the NAICS information for firms involved in oil and gas support activities based on the size of receipts. The most recent data available from the U.S. Census Bureau for establishment/firm size based on receipts is for 2007. Of the firms providing oil and gas support activities in 2007, about 97 percent had annual receipts of less than $35 million and are classified as small.
Overall, the BLM estimates that this rule will pose costs of about $114-279 million per year (with capital costs annualized using a 7% discount rate) or $110-275 million per year (with capital costs annualized using a 3% discount rate).
The benefits of the rule include the additional production of resources from Federal and Indian leases; reductions in venting, flaring, and leaks of gas, including GHG emissions; and increased opportunities for royalties. We measure the benefits of the rule as the cost savings that the industry will receive from the recovery and sale of natural gas and the projected environmental benefits of reducing the amount of GHG pollution released into the atmosphere. As with the estimated costs, we expect benefits on an annual basis.
The BLM estimates that this rule would result in monetized benefits of $209-403 million per year (calculating the monetized emissions reductions using model averages of the social cost of methane with a 3 percent discount rate).
The rule will also have numerous ancillary benefits. These include improved quality of life for nearby residents, who note that flares are noisy and unsightly at night; reduced release of VOCs, including benzene and other hazardous air pollutants; and reduced production of NO
Overall, the BLM estimates that the benefits of this rule outweigh its costs by a significant margin. The BLM expects net benefits ranging from $46-199 million per year (capital costs annualized using a 7% discount rate) or $50-204 million per year (capital costs annualized using a 3% discount rate).
The rule has a number of requirements that are expected to influence the production of natural gas and crude oil from onshore Federal and Indian oil and gas leases. We estimate the following incremental changes in production, noting the representative share of the total U.S. production in 2015 for context. We estimate additional natural gas production ranging from 9-41 Bcf per year (representing 0.03-0.15 percent of the total U.S. production) and a reduction in crude oil production ranging from 0.0-3.2 million bbl per year (representing 0-0.07 percent of the total U.S. production).
The rule is expected to increase natural gas production from Federal and Indian leases, and likewise, is expected to increase annual royalties to the Federal Government, tribal governments, States, and private landowners. For requirements that would result in incremental gas production, we calculate the additional royalties based on that production. We estimate that the rule will result in additional royalties of $3-13 million per year.
Royalty payments are recurring income to Federal or tribal governments and costs to the operator or lessee. As such, they are private transfer payments that do not affect the total resources available to society. An important but sometimes difficult problem in cost estimation is to distinguish between real costs and transfer payments. While transfers should not be included in the economic analysis of the benefits and costs of a regulation, they may be important for describing distributional effects.
The BLM identified up to 1,828 entities that currently operate Federal and Indian leases. The vast majority of these entities are small businesses, as defined by the SBA. We estimated a range of potential per-entity costs, based on different discount rates and scenarios. Those per-entity compliance costs are presented in the RIA.
Recognizing that the SBA defines a small business for oil and gas producers as one with fewer than 1,250 employees, a definition that encompasses many oil and gas producers, the BLM looked at company data for 26 different small-sized entities that currently hold BLM-managed oil and gas leases. The BLM ascertained the following information from the companies' annual reports to the U.S. Securities and Exchange Commission (SEC) for 2012 to 2014. From data in the companies' 10-K filings to the SEC, the BLM was able to calculate the companies' profit margins
Executive Order 13563 states, “Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation.”
The rule is not expected to materially impact employment within the oil and gas extraction, drilling, and support industries.
The requirements would require the one-time installation or replacement of equipment and the ongoing implementation of an LDAR program, and labor would be necessary to comply with each of these. The Supporting Statement for the Paperwork Reduction Act describes the labor requirements posed by the rule.
This section presents the costs, benefits, net benefits, and incremental production associated with operations on Indian leases, as well as royalty implications for tribal governments.
For impacts on production from leases on Indian lands, the rule is projected to result in additional natural gas production ranging from 1.1-5.8 Bcf per year and a reduction in crude oil production ranging from 0-320,000 bbl per year.
Executive Order
(a) 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;
(b) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(c) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(d) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.
After reviewing the requirements, the BLM has determined that the rule is an economically significant regulatory action according to the criteria of Executive Order 12866, and we have prepared a regulatory impact analysis for the rule.
The Regulatory
The BLM reviewed the Small Business Administration (SBA) size standards for small businesses and the number of entities fitting those size standards as reported by the U.S. Census Bureau in the Economic Census. The BLM concludes that the vast majority of entities operating in the relevant sectors are small businesses as defined by the SBA. As such, the rule will likely affect a substantial number of small entities. The BLM believes, however, that the final rule will not have a significant economic impact on a substantial number of small entities. Although the rule will affect a substantial number of small entities, the BLM does not believe that these effects would be economically significant. The screening analysis conducted by BLM estimates the average reduction in profit margin for small companies will be just a fraction of one percentage point, which is not a large enough impact to be considered significant.
Although it is not required, the BLM nevertheless chose to prepare an Initial Regulatory Flexibility Analysis and Final Regulatory Flexibility Analysis for this rule. Due to the fact that the rule is economically significant and impacts a substantial number of small entities, the BLM believes it is prudent, and potentially helpful to small entities, to provide an IRFA and FRFA for the rulemaking. We do not believe this decision should be viewed as a precedent for other rulemakings.
Under the Unfunded Mandates Reform Act (UMRA), agencies must prepare a written statement about benefits and costs prior to issuing a proposed rule that includes any Federal mandate that is likely to result in aggregate expenditure by State, local, and tribal governments, or by the private sector, of $100 million or more in any 1 year, and prior to issuing any final rule for which a proposed rule was published.
This final rule does not contain a Federal mandate that may result in expenditures of $100 million or more by State, local, and tribal governments, in the aggregate, or by the private sector in any 1 year. Thus, the final rule is also not subject to the requirements of Section 205 of UMRA.
This final rule is also not subject to the requirements of Section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. It contains no requirements that apply to
Under Executive Order 12630, the final rule would not have significant takings implications. A takings implication assessment is not required. The final rule would establish a limited set of standards under which gas can be flared or vented, and under which an operator can use oil and gas on a lease, unit, or communitized area for operations and production purposes, without paying royalty.
Oil and gas operators on BLM-administered leases are subject to lease terms that expressly require that subsequent lease activities be conducted in compliance with applicable Federal laws and regulations. The final rule is consistent with the terms of those Federal leases and is authorized by applicable statutes. Thus, the final rule is not a governmental action capable of interfering with constitutionally protected property rights, it would not cause a taking of private property, and it does not require further discussion of takings implications under this Executive Order.
The final rule would not have a substantial direct effect on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the levels of government. It would not apply to States or local governments or State or local government entities. Therefore, in accordance with Executive Order 13132, the BLM has determined that this final rule does not have sufficient Federalism implications to warrant preparation of a Federalism Assessment.
This final rule would comply with the requirements of Executive Order 12988. Specifically, this rulemaking: (a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and (b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.
In accordance with Executive Order 13175, the BLM has evaluated this rulemaking and determined that it will not have substantial direct effects on federally recognized Indian tribes. Nevertheless, on a government-to-government basis we initiated consultation with tribal governments that the final rule may affect.
In 2014, the BLM conducted a series of forums to consult with tribal governments to inform the development of this proposal. We held tribal outreach sessions in Denver, Colorado (March 19, 2014), Albuquerque, New Mexico (May 7, 2014), Dickinson, North Dakota (May 9, 2014), and Washington, DC (May 14, 2014).
After the proposed rule published on February 8, 2016, the BLM conducted another round of outreach meetings, with the tribal sessions taking place in the morning, and the general-public sessions taking place in the afternoon, with a conference call-in number for the public to listen in remotely. These meetings were held at four locations: Farmington, New Mexico (February 16, 2016), Oklahoma City, Oklahoma (February 18, 2016), Denver, Colorado (March 1, 2016), and Dickinson, North Dakota (March 3, 2016).
The Paperwork Reduction Act (PRA)
This rule contains information collection activities that require approval by the OMB under the PRA. The BLM included an information collection request in the proposed rule. OMB has approved the information collection for the final rule under control number 1004-0211.
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Except for the recordkeeping required by 43 CFR 3179.305, the information-collection activities in the final rule involve new uses and burdens for BLM Forms 3160-3 and 3160-5, the use of which has been cleared by OMB under control number 1004-0137, Onshore Oil and Gas Operations (43 CFR part 3160) (expiration date January 31, 2018). After this rule goes into effect, the BLM plans to request that OMB merge the new uses and burdens of Forms 3160-3 and 3160-5 with control number 1004-0137.
The information collection activities in this rule are described below along with estimates of the annual burdens. Included in the burden estimates are the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each component of the information collection.
This rule adds a new provision to 43 CFR 3162.3-1 that requires a plan to
Section 3178.5 requires submission of a Sundry Notice (Form 3160-5) to request prior written BLM approval for use of gas royalty-free for the following operations and production purposes on the lease, unit or communitized area:
• Using oil or gas that an operator removes from the pipeline at a location downstream of the facility measurement point (FMP);
• Removal of gas initially from a lease, unit PA, or communitized area for treatment or processing because of particular physical characteristics of the gas, prior to use on the lease, unit PA or communitized area; and
• Any other type of use of produced oil or gas for operations and production purposes pursuant to § 3178.3 that is not identified in § 3178.4.
Section 3178.7 requires submission of a Sundry Notice (Form 3160-5) to request prior written BLM approval for off-lease royalty-free uses in the following circumstances:
• The equipment or facility in which the operation is conducted is located off the lease, unit, or communitized area for engineering, economic, resource-protection, or physical-accessibility reasons; and
• The operations are conducted upstream of the FMP.
Section 3178.9 requires the following additional information in a request for prior approval of royalty-free use under section 3178.5, or for prior approval of off-lease royalty-free use under section 3178.7:
• A complete description of the operation to be conducted, including the location of all facilities and equipment involved in the operation and the location of the FMP;
• The volume of oil or gas that the operator expects will be used in the operation and the method of measuring or estimating that volume;
• If the volume expected to be used will be estimated, the basis for the estimate (
• The proposed disposition of the oil or gas used (
Section 3179.7 requires operators flaring gas from development oil wells to capture a specified percentage of the operator's adjusted volume of gas produced over the relevant area. The “relevant area” is each of the operator's leases, units, or communitized areas, unless the operator chooses to comply on a county- or State-wide basis and the operator notifies the BLM of its choice by Sundry Notice by January 1 of the relevant year.
Section 3179.8 applies only to leases issued before the effective date of the final rule and to operators choosing to comply with the capture requirement in section 3179.7 on a lease-by-lease, unit-by-unit, or communitized area-by-communitized area basis. The regulation provides that operators who meet those parameters may seek BLM approval of a capture percentage other than that which is applicable under 43 CFR 3179.7. The operator must submit a Sundry Notice that includes the following information:
• The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;
• The oil and gas production levels of each of the operator's wells on the lease, unit, or communitized area for the most recent production month for which information is available and the volumes being vented and flared from each well;
In addition, the request must include map(s) showing:
• The entire lease, unit, or communitized area, and the surrounding lands to a distance and on a scale that shows the field in which the well is or will be located (if applicable), and all pipelines that could transport the gas from the well;
• All of the operator's producing oil and gas wells, which are producing from Federal or Indian leases, (both on Federal or Indian leases and on other properties) within the map area;
• Identification of all of the operator's wells within the lease from which gas is flared or vented, and the location and distance of the nearest gas pipeline(s) to each such well, with an identification of those pipelines that are or could be available for connection and use; and
• Identification of all of the operator's wells within the lease from which gas is captured;
The following information is also required:
• Data that show pipeline capacity and the operator's projections of the cost associated with installation and operation of gas capture infrastructure, to the extent that the operator is able to obtain this information, as well as cost projections for alternative methods of transportation that do not require pipelines; and
• Projected costs of and the combined stream of revenues from both gas and oil production, including:
○ The operator's projections of gas prices, gas production volumes, gas quality (
○ The operator's projections of oil prices, oil production volumes, costs, revenues, and royalty payments from the operator's oil and gas operations within the lease over the next 15 years or the life of the operator's lease, unit, or communitized area, whichever is less.
Section 3179.102 lists several requirements pertaining to gas that reaches the surface during well completion and related operations. An operator may seek an exemption from these requirements by submitting a Sundry Notice that includes the following information:
(1) The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance; and
(4) Projected costs of and the combined stream of revenues from both gas and oil production, including: the operator's projections of oil and gas prices, production volumes, quality (
The rule also provides that an operator that is in compliance with the EPA regulations for well completions under 40 CFR part 60, subpart OOOO or subpart OOOOa is deemed in compliance with the requirements of this section. As a practical matter, all hydraulically fractured or refractured wells are now subject to the EPA requirements, so the BLM does not believe that the requirements of this section would have any independent effect, or that any operator would request an exemption from the requirements of this section, as long as the EPA requirements remain in effect.
Section 3179.103 allows gas to be flared royalty-free during initial production testing. The regulation lists specific volume and time limits for such testing. An operator may seek an extension of those limits by submitting a Sundry Notice to the BLM.
Section 3179.104 allows gas to be flared royalty-free for no more than 24 hours during well tests subsequent to the initial production test. The operator may seek authorization to flare for a longer period by submitting a Sundry Notice to the BLM.
Section 3179.105 allows an operator to flare gas royalty-free during a temporary, short-term, infrequent, and unavoidable emergency. Venting gas is permissible if flaring is not feasible during an emergency. The regulation defines limited circumstances that constitute an emergency, and other circumstances that do not constitute an emergency. The operator must estimate and report to the BLM on a Sundry Notice the volumes flared or vented in the following circumstances that, as provided by 43 CFR 3179.105, do not constitute emergencies for the purposes of royalty assessment:
(1) More than 3 failures of the same component within a single piece of equipment within any 365-day period;
(2) The operator's failure to install appropriate equipment of a sufficient capacity to accommodate the production conditions;
(3) Failure to limit production when the production rate exceeds the capacity of the related equipment, pipeline, or gas plant, or exceeds sales contract volumes of oil or gas;
(4) Scheduled maintenance;
(5) A situation caused by operator negligence; or
(6) A situation on a lease, unit, or communitized area that has already experienced 3 or more emergencies within the past 30 days, unless the BLM determines that the occurrence of more than 3 emergencies within the 30 day period could not have been anticipated and was beyond the operator's control.
Section 3179.201 pertains to any pneumatic controller that: (1) Is not subject to EPA regulations at 40 CFR 60.5360 through 60.5390, but would be subject to those regulations if it were a new or modified source; and (2) has a continuous bleed rate greater than 6 standard cubic feet (scf) per hour. Section 3179.201(b) requires operators to replace each high-bleed pneumatic controller with a controller with a bleed rate lower than 6 scf per hour within 1 year of the effective date of the rule, unless (1) the pneumatic controller exhaust is routed to processing equipment; (2) the pneumatic controller exhaust was, as of the effective date of the rule, and continues to be routed to a flare device or low pressure combustor; or (3) one of the following applies:
The operator notifies the BLM through a Sundry Notice that use of a pneumatic controller with a bleed rate greater than 6 scf per hour is required based on functional needs that may include, but are not limited to, response time, safety, and positive actuation, and the Sundry Notice describes those functional needs.
The operator demonstrates to the BLM through a Sundry Notice, and the BLM agrees, that replacement of a pneumatic controller would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease. The Sundry Notice must include the following information:
(1) The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance;
(4) Projected costs of and the combined stream of revenues from both gas and oil production, including: The operator's projections of gas prices, gas production volumes, gas quality (
The operator may replace a high-bleed pneumatic controller within 3 years of the effective date of the rule (instead of within 1 year of the effective date) if the operator notifies the BLM through a Sundry Notice that the well or facility that the pneumatic controller serves has an estimated remaining productive life of 3 years or less from the effective date of the rule.
With some exceptions, section 3179.202 pertains to any pneumatic diaphragm pump that: (1) Uses natural gas produced from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease; and (2) Is not subject to EPA regulations at 40 CFR 60.5360 through 60.5390, but would be subject to those regulations if it were a new or modified source. This regulation generally requires replacement of such a pump with a zero-emissions pump or routing of the pump's exhaust gas to processing equipment for capture and sale within 1 year of the effective date of the final rule.
This requirement does not apply to pneumatic diaphragm pumps that do not vent exhaust gas to the atmosphere. In addition, this requirement does not apply if one of the following applies:
A pneumatic diaphragm pump is not subject to section 3179.202 if the
In lieu of replacing a pneumatic diaphragm pump or routing the pump exhaust gas to processing equipment, an operator may submit a Sundry Notice to the BLM showing that replacing the pump with a zero emissions pump is not viable because a pneumatic pump is necessary to perform the function required, and that routing the pump exhaust gas to processing equipment for capture and sale is technically infeasible or unduly costly.
An operator may be exempted from the replacement requirement if the operator submits a Sundry Notice to the BLM that provides an economic analysis that demonstrates, and the BLM agrees, that compliance with these requirements would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease. The Sundry Notice must include the following information:
(1) Well information that must include: (i) The name, number, and location of each well, and the number of the lease, unit, or communitized area with which it is associated; and (ii) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(2) Data that show the costs of compliance with paragraphs (c) through (e) of § 3179.202; and
(3) The operator's estimate of the costs and revenues of the combined stream of revenues from both the gas and oil components, including: (i) The operator's projections of gas prices, gas production volumes, gas quality (
The operator may replace a pneumatic diaphragm pump within 3 years of the effective date of the rule (instead of within 1 year of the effective date) if the operator notifies the BLM through a Sundry Notice that the well or facility that the pneumatic controller serves has an estimated remaining productive life of 3 years or less from the effective date of the rule.
A storage vessel is subject to 43 CFR 3179.203(c) if the vessel: (1) Contains production from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease; and (2) Is not subject to any of the requirements of EPA regulations at 40 CFR part 60, subpart OOOO, but would be subject to that subpart if it were a new or modified source.
Within 60 days after the effective date of this section, and within 30 days after any new source of production is added to the tank, the operator must determine, record, and make available to the BLM upon request, whether the storage vessel has the potential for VOC emissions equal to or greater than 6 tpy based on the maximum average daily throughput for a 30-day period of production. The determination may take into account requirements under a legally and practically enforceable limit in an operating permit or other requirement established under a federal, state, local or tribal authority that limit the VOC emissions to less than 6 tpy.
If a storage vessel has the potential for VOC emissions equal to or greater than 6 tpy, no later than 1 year after the effective date of this section, or 3 years if the operator must and will replace the storage vessel at issue in order to comply with the requirements of this section, the operator must:
(1) Route all tank vapor gas from the storage vessel to a sales line;
(2) If the operator determines that compliance with paragraph (c)(1) of this section is technically infeasible or unduly costly, route all tank vapor gas from the storage vessel to a device or method that ensures continuous combustion of the tank vapor gas; or
(3) Submit an economic analysis to the BLM through a Sundry Notice that demonstrates, and the BLM agrees, based on the information identified in paragraph (d) of this section, that compliance with paragraph (c)(2) of this section would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
To support the demonstration described above, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each well, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance with paragraph (c)(1) or (c)(2) of this section on the lease; and
(4) The operator must consider the costs and revenues of the combined stream of revenues from both the gas and oil components, including: The operator's projections of oil and gas prices, production volumes, quality (
The operator must minimize vented gas and the need for well venting associated with downhole well maintenance and liquids unloading, consistent with safe operations. Before the operator manually purges a well for liquids unloading for the first time after the effective date of this section, the operator must consider other methods for liquids unloading and determine that they are technically infeasible or unduly costly. The operator must provide information supporting that determination as part of a Sundry Notice within 30 calendar days after the first liquids unloading event by manual or automated well purging conducted after the effective date of this section. This requirement applies to each well the operator operates.
For any liquids unloading by manual well purging, the operator must:
(1) Ensure that the person conducting the well purging remains present on-site throughout the event to minimize to the maximum extent practicable any venting to the atmosphere;
(2) Record the cause, date, time, duration, and estimated volume of each venting event; and
(3) Maintain the records for the period required under § 3162.4-1 and make them available to the BLM, upon request.
The operator must notify the BLM by Sundry Notice, within 30 calendar days, if:
(1) The cumulative duration of manual well purging events for a well exceeds 24 hours during any production month; or
(2) The estimated volume of gas vented in liquids unloading by manual well purging operations for a well exceeds 75 Mcf during any production month.
Sections 3179.301 through 3179.305 include information collection activities pertaining to the detection and repair of gas leaks during production operations. These regulations require operators to inspect all equipment covered under § 3179.301(a) for gas leaks. Section 3179.301(k) allows an operator to satisfy the requirements of §§ 3179.301 through 3179.305 for all of the equipment on a given lease by notifying the BLM in a Sundry Notice that the operator is applying the EPA subpart OOOOa fugitive emissions requirements to such equipment.
Section 3175.302 specifies the instruments and methods that an operator may use to detect leaks. Section 3175.302(d) allows the BLM to approve an alternative monitoring device and associated inspection protocol if the BLM finds that the alternative would achieve equal or greater reduction of gas lost through leaks compared with the approach specified in § 3179.302(a)(1) when used according to § 3179.303(a).
Any person may request approval of an alternative monitoring device and protocol by submitting a Sundry Notice to BLM that includes the following information: (1) Specifications of the proposed monitoring device, including a detection limit capable of supporting the desired function; (2) The proposed monitoring protocol using the proposed monitoring device, including how results will be recorded; (3) Records and data from laboratory and field testing, including but not limited to performance testing; (4) A demonstration that the proposed monitoring device and protocol will achieve equal or greater reduction of gas lost through leaks compared with the approach specified in the regulations; (5) Tracking and documentation procedures; and (6) Proposed limitations on the types of sites or other conditions on deploying the device and the protocol to achieve the demonstrated results.
Section 3179.303(b) allows an operator to submit a Sundry Notice requesting authorization to detect gas leaks using an alternative instrument-based leak detection program, different from the specified requirement to inspect each site semi-annually using an approved monitoring device.
To obtain approval for an alternative leak detection program, the operator must submit a Sundry Notice that includes the following information:
(1) A detailed description of the alternative leak detection program, including how it will use one or more of the instruments specified in or approved under § 3179.302(a) and an identification of the specific instruments, methods and/or practices that would substitute for specific elements of the approach specified in §§ 3179.302(a) and 3179.303(a);
(2) The proposed monitoring protocol;
(3) Records and data from laboratory and field testing, including, but not limited to, performance testing, to the extent relevant;
(4) A demonstration that the proposed alternative leak detection program will achieve equal or greater reduction of gas lost through leaks compared to compliance with the requirements specified in §§ 3179.302(a) and 3179.303(a);
(5) A detailed description of how the operator will track and document its procedures, leaks found, and leaks repaired; and
(6) Proposed limitations on types of sites or other conditions on deployment of the alternative leak detection program.
An operator may seek authorization for an alternative leak detection program that does not achieve equal or greater reduction of gas lost through leaks compared to the required approach, if the operator demonstrates that compliance with the leak-detection regulations (including the option for an alternative program under 43 CFR 3179.303(b)) would impose such costs as to cause the operator to cease production and abandon significant recoverable oil or gas reserves under the lease. The BLM may approve an alternative leak detection program that does not achieve equal or greater reduction of gas lost through leaks, but is as effective as possible consistent with not causing the operator to cease production and abandon significant recoverable oil or gas reserves under the lease.
To obtain approval for an alternative program under this provision, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each well, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance on the lease with the requirements of §§ 3179.301-305 and with an alternative leak detection program that meets the requirements of § 3179.303(b);
(4) The operator must consider the costs and revenues of the combined stream of revenues from both the gas and oil components and provide the operator's projections of oil and gas prices, production volumes, quality (
(5) The information required to obtain approval of an alternative program under § 3179.303(b), except that the estimated volume of gas that will be lost through leaks under the alternative program must be compared to the volume of gas lost under the required program, but does not have to be shown to be at least equivalent.
Section 3179.304(a) requires an operator to repair any leak no later than 30 calendar days after discovery of the leak, unless there is good cause for delay in repair. If there is good cause for a delay beyond 30 calendar days, section 3179.304(b) requires the operator to submit a Sundry Notice notifying the BLM of the cause.
Section 3179.305 requires operators to maintain the following records and make them available to the BLM upon request: (1) For each inspection required under § 3179.303, documentation of the date of the inspection and the site where the inspection was conducted; (2) The monitoring method(s) used to determine the presence of leaks; (3) A list of leak components on which leaks were found; (4) The date each leak was repaired; and (5) The date and result of the follow-up inspection(s) required under § 3179.304. By March 31 each calendar year, the operator must provide to the BLM an annual summary report on the previous year's inspection activities that includes: (1) The number of sites inspected; (2) The total number of leaks identified, categorized by the type of component; (3) The total number of leaks repaired; (4) The total number of leaks that were not repaired as of December 31 of the previous calendar year due to good cause and an estimated date of repair for each leak; and (5) A certification by a responsible officer that the information in the report is true and accurate.
By March 31 each calendar year, the operator must provide to the BLM an annual summary report on the previous year's inspection activities that includes:
(1) The number of sites inspected;
(2) The total number of leaks identified, categorized by the type of component;
(3) The total number of leaks repaired;
(4) The total number leaks that were not repaired as of December 31 of the previous calendar year due to good cause and an estimated date of repair for each leak.
(5) A certification by a responsible officer that the information in the report is true and accurate to the best of the officer's knowledge.
The following table details the estimated annual burdens of activities that would involve APDs and Sundry Notices, the use of which has been authorized under Control Number 1004-0137.
The BLM prepared a draft environmental assessment (EA) to determine whether issuance of this proposed regulation pertaining to oil and gas waste prevention and royalty clarification would constitute a “major Federal action significantly affecting the quality of the human environment” under Section 102(2)(C) of the National Environmental Policy Act (NEPA). This EA was posted for public comment for a period of 75 days, from February 8 through April 22, 2016. During the public comment period for the proposed rule and draft EA, BLM received comments that further informed the analysis of the potential environmental impacts of the rule. In response to these comments, BLM incorporated changes in the final EA, which will be released concomitantly with the rule.
The BLM believes that the rule would benefit the environment by reducing emissions of methane (a potent GHG), VOCs (which contribute to smog), and hazardous air pollutants such as benzene (a known carcinogen). In addition, the rule would reduce light pollution and other impacts from flaring. These reductions would contribute to a more robust environmental quality overall. BLM has determined that the rule may also have a certain degree of adverse environmental impacts, primarily due to land disturbance from increased or accelerated construction of gas gathering lines or pipelines and compressors and/or increased truck traffic on existing disturbed surfaces from the increased use of mobile capture technology. After careful consideration of the impacts and alternatives discussed in the final EA, BLM has determined that this action does not meet the criteria of significance under 40 CFR 1508.27 either in terms of context or intensity; therefore, BLM finds that the promulgation of the rule has no significant impact.
Under Executive Order 13211, agencies are required to prepare and submit to OMB a Statement of Energy Effects for significant energy actions. This statement is to include a detailed statement of “any adverse effects on energy supply, distribution, or use (including a shortfall in supply, price increases, and increase use of foreign supplies)” for the action and reasonable alternatives and their effects.
Section 4(b) of Executive Order 13211 defines a “significant energy action” as “any action by an agency (normally published in the
Since the compliance costs for this rule would represent such a small fraction of company net incomes, we believe that the rule is unlikely to impact the investment decisions of firms. Also, the incremental production of gas estimated to result from the rule's enactment constitutes a small fraction of total U.S. production, and any potential and temporary deferred production of oil would likewise constitute a small fraction of total U.S. production. For these reasons, we do not expect that the final rule will significantly impact the supply, distribution, or use of energy. As such, the rulemaking is not a “significant energy action” as defined in Executive Order 13211.
Executive Order 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. The executive order 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. E.O. 13563 emphasizes further 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. We have developed this final rule in a manner consistent with these requirements.
The principal authors of this rule are: Timothy Spisak and James Tichenor of the BLM Washington Office; Eric Jones of the BLM Moab, Utah Field Office; and David Mankiewicz of the BLM Farmington, New Mexico Field Office; assisted by Faith Bremner of the staff of the BLM's Regulatory Affairs Division.
Government contracts; Mineral royalties; Oil and gas reserves; Public lands-mineral resources; Reporting and recordkeeping requirements; Surety bonds.
Administrative practice and procedure; Government contracts; Indians—lands; Mineral royalties; Oil and gas exploration; Penalties; Public lands—mineral resources; Reporting and recordkeeping requirements.
Administrative practice and procedure; Flaring; Government contracts; Incorporation by reference; Indians—lands; Mineral royalties; Immediate assessments; Oil and gas exploration; Oil and gas measurement; Public lands—mineral resources; Reporting and record keeping requirements; Royalty-free use; Venting.
For the reasons set out in the preamble, the Bureau of Land Management amends 43 CFR parts 3100, 3160 and 3170 as follows:
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359 and 1751; 43 U.S.C. 1732(b), 1733, and 1740; and the Energy Policy Act of 2005 (Pub. L. 109-58).
(a) Royalty on production will be payable only on the mineral interest owned by the United States. Royalty must be paid in amount or value of the production removed or sold as follows:
(1) For leases issued on or before January 17, 2017, the rate prescribed in the lease or in applicable regulations at the time of lease issuance;
(2) For leases issued January 17, 2017:
(i) 12
(ii) A rate of not less than 12
(3) 16
(4) The rate used for royalty determination that appears in a lease that is reinstated or that is in force for competitive leases at the time of issuance of the lease that is reinstated, plus 4 percentage points, plus an additional 2 percentage points for each succeeding reinstatement.
(b) Leases that qualify under specific provisions of the Act of August 8, 1946 (30 U.S.C. 226c) may apply for a limitation of a 12
(c) The average production per well per day for oil and gas will be determined pursuant to 43 CFR 3162.7-4.
(d) Payment of a royalty on the helium component of gas will not convey the right to extract the helium from the gas stream. Applications for the right to extract helium from the gas stream will be made under part 16 of this title.
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.
(j) When submitting an Application for Permit to Drill an oil well, the operator must also submit a plan to minimize waste of natural gas from that well. The waste minimization plan must accompany, but would not be part of, the Application for Permit to Drill. The waste minimization plan must set forth a strategy for how the operator will comply with the requirements of 43 CFR subpart 3179 regarding control of waste from venting and flaring, and must explain how the operator plans to capture associated gas upon the start of oil production, or as soon thereafter as reasonably possible, including an explanation of why any delay in capture of the associated gas would be required. Failure to submit a complete and adequate waste minimization plan is grounds for denying or disapproving an Application for Permit to Drill. The waste minimization plan must include the following information:
(1) The anticipated completion date of the proposed well(s);
(2) A description of anticipated production, including:
(i) The anticipated date of first production;
(ii) The expected oil and gas production rates and duration from the proposed well. If the proposed well is on a multi-well pad, the plan should include the total expected production for all wells being completed;
(iii) The expected production decline curve of both oil and gas from the proposed well; and
(iv) The expected Btu value for gas production from the proposed well.
(3) Certification that the operator has provided one or more midstream processing companies with information about the operator's production plans, including the anticipated completion dates and gas production rates of the proposed well or wells;
(4) Identification of a gas pipeline to which the operator plans to connect, with sufficient capacity to accommodate the anticipated production of the proposed well(s), and information on the pipeline, including, to the extent that the operator can obtain it, the following information:
(i) Maximum current daily capacity of the pipeline;
(ii) Current throughput of the pipeline;
(iii) Anticipated daily capacity of the pipeline at the anticipated date of first gas sales from the proposed well;
(iv) Anticipated throughput of the pipeline at the anticipated date of first gas sales from the proposed well; and
(v) Any plans known to the operator for expansion of pipeline capacity for the area that includes the proposed well; and
(5) If an operator cannot identify a gas pipeline with sufficient capacity to accommodate the anticipated production of the proposed well(s), the waste minimization plan must also include:
(i) A gas pipeline system location map of sufficient detail, size, and scale as to show the field in which the proposed well will be located, and all existing gas trunklines within 20 miles of the well. The map should also contain:
(A) The name and location of the gas processing plant(s) closest to the proposed well(s), and of the intended destination processing plant, if different;
(B) The location and name of the operator of each gas trunkline within 20 miles of the proposed well;
(C) The proposed route and tie-in point that connects or could connect the subject well to an existing gas trunkline;
(ii) The total volume of produced gas, and percentage of total produced gas, that the operator is currently flaring or venting from wells in the same field and any wells within a 20-mile radius of that field; and
(iii) A detailed evaluation, including estimates of costs and returns, of opportunities for on-site capture approaches, such as compression or liquefaction of natural gas, removal of natural gas liquids, or generation of electricity from gas.
25 U.S.C. 396d and 2107; 30 U.S.C. 189, 306, 359, and 1751; and 43 U.S.C. 1732(b), 1733, and 1740.
The purpose of this subpart is to address the circumstances under which oil or gas produced from Federal and Indian leases may be used royalty-free in operations on the lease, unit, or communitized area. This subpart supersedes those portions of Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil or Gas Lost (NTL-4A), pertaining to oil or gas used for beneficial purposes.
(a) This subpart applies to:
(1) All onshore Federal and Indian (other than Osage Tribe) oil and gas leases, units, and communitized areas, except as otherwise provided in this subpart;
(2) Indian Mineral Development Act (IMDA) oil and gas agreements, unless specifically excluded in the agreement or unless the relevant provisions of this subpart are inconsistent with the agreement;
(3) Leases and other business agreements and contracts for the development of tribal energy resources under a Tribal Energy Resource Agreement entered into with the Secretary, unless specifically excluded in the lease, other business agreement, or Tribal Energy Resource Agreement;
(4) Committed State or private tracts in a federally approved unit or communitization agreement defined by or established under 43 CFR subpart 3105 or 43 CFR part 3180; and
(5) All onshore wells, and production equipment located on a Federal or Indian lease or a federally approved unit or communitized area, and compressors located on a Federal or Indian lease or a federally approved unit or communitized area and which compress production from the same Federal or Indian lease or federally approved unit or communitized area.
(b) For purposes of this subpart, the term “lease” also includes IMDA agreements.
(a) To the extent specified in §§ 3178.4 and 3178.5, royalty is not due on:
(1) Oil or gas that is produced from a lease or communitized area and used for operations and production purposes (including placing oil or gas in marketable condition) on the same lease or communitized area without being removed from the lease or communitized area; or
(2) Oil or gas that is produced from a unit PA and used for operations and production purposes (including placing oil or gas in marketable condition) on the unit, for the same unit PA, without being removed from the unit.
(b) For the uses described in § 3178.5, the operator must obtain prior written BLM approval for the volumes used for operational and production purposes to be royalty free.
(a) Oil or gas produced from a lease, unit, or communitized area may be used royalty-free for operations and production purposes on the lease, unit, or communitized area without prior written BLM approval in the following circumstances:
(1) Use of fuel to generate power or operate combined heat and power;
(2) Use of fuel to power equipment, including artificial lift equipment, equipment used for enhanced recovery, drilling rigs, and completion and workover equipment;
(3) Use of gas to actuate pneumatic controllers or operate pneumatic pumps at production facilities;
(4) Use of fuel to heat, separate, or dehydrate production;
(5) Use of gas as a pilot fuel or as assist gas for a flare, combustor, thermal oxidizer, or other control device;
(6) Use of fuel to compress or treat gas to place it in marketable condition;
(7) Use of oil to clean the well and improve production,
(8) Use of oil as a circulating medium in drilling operations, if the use is part of an approved Drilling Plan under Onshore Oil and Gas Order No. 1;
(9) Injection of gas for the purpose of conserving gas or increasing the recovery of oil or gas, if the BLM has approved the injection under applicable regulations in parts 3100, 3160, or 3180 of this title; and
(10) Injection of gas that is cycled in a contained gas-lift system.
(b) The volume to be treated as royalty free must not exceed the amount of fuel reasonably necessary to perform the operational function, using equipment of appropriate capacity.
(a) Oil or gas produced from a lease, unit, or communitized area may also be used royalty-free for the following operations and production purposes on the lease, unit, or communitized area, but prior written BLM approval is required to ensure that production accountability is maintained:
(1) Use of oil or gas that the operator removes from the pipeline at a location downstream of the Facility Measurement Point (FMP);
(2) Use of gas that has been removed from the lease, unit PA, or communitized area for treatment or processing because of particular physical characteristics of the gas that require the gas to be treated or processed prior to use, where the gas is returned to, and used on, the lease, unit PA, or communitized area from which it was produced; and
(3) Any other types of use of produced oil or gas for operations and production purposes, which are not identified in § 3178.4.
(b)(1) The operator must obtain BLM approval to conduct activities under paragraph (a) of this section by submitting a Form 3160-5, Sundry Notices and Reports on Wells (Sundry Notice) containing the information required under § 3178.9. If the BLM disapproves a request for royalty-free treatment for volumes used under this
(2) With respect to uses under paragraph (a)(1) of this section, the operator must measure the volume of oil or gas used in accordance with Onshore Oil and Gas Orders No. 4 (oil) and 5 (gas) as applicable, or other successor regulations.
(3) With respect to removals under paragraph (a)(2) of this section, the operator must measure any gas returned to the lease, unit, or communitized area under such an approval in accordance with Onshore Oil and Gas Order No. 5 or other successor regulations.
Oil or gas used after being moved off the lease, unit, or communitized area may be treated as royalty free without prior written BLM approval only if the use meets the criteria under § 3178.4 and when:
(a) The oil or gas is transported from one area of the lease, unit, or communitized area to another area of the same lease, unit, or communitized area where it is used, and no oil or gas is added to or removed from the pipeline while crossing lands that are not part of the lease, unit, or communitized area; or
(b) A well is directionally drilled, the wellhead is not located on the producing lease, unit, or communitized area, and oil or gas is used on the same well pad for operations and production purposes for that well.
(a) Except as provided in § 3178.6(b) and paragraph (b) of this section, royalty is owed on all oil or gas used in operations conducted off the lease, unit, or communitized area.
(b) The BLM may grant prior written approval to treat oil or gas used in operations conducted off the lease, unit, or communitized area as royalty free (referred to as off-lease royalty-free use) if the use is among those listed in § 3178.4(a) and § 3178.5(a) and if:
(1) The equipment or facility in which the operation is conducted is located off the lease, unit, or communitized area for engineering, economic, resource protection, or physical accessibility reasons; and
(2) The operations are conducted upstream of the FMP.
(c) The operator must obtain BLM approval under paragraph (b) of this section by submitting a Sundry Notice containing the information required under § 3178.9. If the BLM disapproves a request for royalty-free treatment for volumes used under this section, the operator must pay royalties on such volumes. If the BLM approves a request for royalty-free treatment for volumes used under this section, such approval will be deemed effective from the date the request was filed.
(d) Approval of measurement or commingling off the lease, unit, or communitized area under other regulations does not constitute approval of off-lease royalty-free use. The operator or lessee must expressly request, and submit its justification for, approval of off-lease royalty-free use.
(e) If equipment or a facility located on a particular lease, unit, or communitized area treats oil or gas produced from properties that are not unitized or communitized with the property on which the equipment or facility is located, in addition to treating oil or gas produced from the lease, unit, or communitized area on which the equipment or facility is located, the operator may report as royalty free only that portion of the oil or gas used as fuel that is properly allocable to the share of production contributed by the lease, unit, or communitized area on which the equipment is located, unless otherwise authorized by the BLM under this section.
(a) The operator must measure or estimate the volumes of royalty-free gas used in operations upstream of the FMP.
(b) The operator must measure the volume of gas that is removed from the product stream downstream of the FMP and used royalty-free pursuant to sections 3178.4 through 3178.7.
(c) The operator must measure the volume of oil that is used royalty-free pursuant to sections 3178.4 through 3178.7. The operator must also document removal of such oil from the tank or pipeline.
(d) If the operator removes oil or gas downstream of the FMP and that oil or gas is used royalty-free pursuant to sections 3178.4 through 3178.7, the operator must apply for an FMP under section 3173.12 to measure the oil or gas that is removed for use.
(e) When estimating gas volumes, the operator must use the best available information to make a reasonable estimate.
(f) Each of the volumes required to be measured or estimated, as applicable, under this subpart, must be reported by the operator following applicable ONRR reporting requirements.
To request written approval of royalty-free use when required under § 3178.5 or § 3178.7, the operator must submit a Sundry Notice that includes the following information:
(a) A complete description of the operation to be conducted, including the location of all facilities and equipment involved in the operation and the location of the FMP;
(b) The volume of oil or gas that the operator expects will be used in the operation, and the method of measuring or estimating that volume;
(c) If the volume of gas expected to be used will be estimated, the basis for the estimate (
(d) The proposed disposition of the oil or gas used (
The operator is not required to own or lease the equipment or facility that uses oil or gas royalty free. The operator is responsible for obtaining all authorizations, measuring production, reporting production, and all other applicable requirements.
The purpose of this subpart is to implement and carry out the purposes of statutes relating to prevention of waste from Federal and Indian (other than Osage Tribe) leases, conservation of surface resources, and management of the public lands for multiple use and sustained yield. This subpart supersedes those portions of Notice to Lessees and Operators of Onshore Federal and Indian Oil and Gas Leases, Royalty or Compensation for Oil and Gas Lost (NTL-4A),, pertaining to, among other things, flaring and venting of produced gas, unavoidably and avoidably lost gas, and waste prevention.
(a) This subpart applies to:
(1) All onshore Federal and Indian (other than Osage Tribe) oil and gas leases, units, and communitized areas, except as otherwise provided in this subpart;
(2) IMDA oil and gas agreements, unless specifically excluded in the agreement or unless the relevant provisions of this subpart are inconsistent with the agreement;
(3) Leases and other business agreements and contracts for the development of tribal energy resources under a Tribal Energy Resource Agreement entered into with the Secretary, unless specifically excluded in the lease, other business agreement, or Tribal Energy Resource Agreement;
(4) Committed State or private tracts in a federally approved unit or communitization agreement defined by or established under 43 CFR subpart 3105 or 43 CFR part 3180;
(5) All onshore wells, tanks, compressors, and other equipment located on a Federal or Indian lease or a federally approved unit or communitized area; and
(b) For purposes of this subpart, the term “lease” also includes IMDA agreements.
As used in this subpart, the term:
(1) A visible hydrocarbon emission detected by use of an optical gas imaging instrument;
(2) At least 500 ppm of hydrocarbon detected using a portable analyzer or other instrument that can measure the quantity of the release; or
(3) Visible bubbles detected using soap solution.
(1) Vessels that are skid-mounted or permanently attached to something that is mobile (such as trucks, railcars, barges or ships), and are intended to be located at a site for less than 180 consecutive days. This exclusion does not apply to well completion vessels or to storage vessels that are located at a site for at least 180 consecutive days.
(2) Process vessels such as surge control vessels, bottoms receivers, or knockout vessels.
(3) Pressure vessels designed to operate in excess of 204.9 kilopascals and without emissions to the atmosphere.
(4) Tanks holding hydraulic fracturing fluid prior to implementation of an approved permanent disposal plan under Onshore Oil and Gas Order No. 7.
For purposes of this subpart:
(1) Produced oil or gas that is lost from the following operations or sources, and that cannot be recovered in the normal course of operations, where the operator has taken prudent and reasonable steps to avoid waste:
(i) Well drilling;
(ii) Well completion and related operations;
(iii) Initial production tests, subject to the limitations in § 3179.103;
(iv) Subsequent well tests, subject to the limitations in § 3179.104;
(v) Exploratory coalbed methane well dewatering;
(vi) Emergencies, subject to the limitations in § 3179.105;
(vii) Normal operating losses from a natural gas-activated pneumatic controller or pump that is in compliance with § 3179.201 and § 3179.202;
(viii) Normal operating losses from a storage vessel or other low pressure production vessel that is in compliance with § 3179.203 and § 3174.5(b);
(ix) Well venting in the course of downhole well maintenance and/or liquids unloading performed in compliance with § 3179.204;
(x) Leaks, when the operator has complied with the leak detection and repair requirements in §§ 3179.301-305;
(xi) Facility and pipeline maintenance, such as when an operator must blow-down and depressurize equipment to perform maintenance or repairs; or
(xii) Flaring of gas from which at least 50 percent of natural gas liquids have been removed and captured for market, if the operator has notified the BLM through a Sundry Notice that the operator is conducting such capture; or
(2) Produced gas that is flared or vented from a well that is not connected to a gas pipeline, provided the BLM has not determined loss of gas through such venting or flaring is otherwise avoidable.
(a) Royalty is due on all avoidably lost oil or gas.
(b) Royalty is not due on any unavoidably lost oil or gas.
(a) Gas well gas may not be flared or vented, except where it is unavoidably lost pursuant to § 3179.4(a).
(b) The operator must flare rather than vent any gas that is not captured, except:
(1) When flaring the gas is technically infeasible, such as when the gas is not readily combustible or the volumes are too small to flare;
(2) Under emergency conditions, as defined in § 3179.105, when the loss of gas is uncontrollable or venting is necessary for safety;
(3) When the gas is vented through normal operation of a natural gas-activated pneumatic controller or pump;
(4) When the gas is vented from a storage vessel, provided that § 3179.203 does not require the combustion or flaring of the gas;
(5) When the gas is vented during downhole well maintenance or liquids unloading activities performed in compliance with § 3179.204;
(6) When the gas is vented through a leak, provided that the operator is in full compliance with §§ 3179.301 through 3179.305;
(7) When the gas venting is necessary to allow non-routine facility and pipeline maintenance to be performed, such as when an operator must, upon occasion, blow-down and depressurize equipment to perform maintenance or repairs; or
(8) When a release of gas is unavoidable under § 3179.4 and flaring is prohibited by Federal, State, local or Tribal law, regulation, or enforceable permit term.
(c) For purposes of this subpart, all flares or combustion devices must be equipped with an automatic ignition system.
(a) Except as provided in § 3179.8, on a monthly basis, each operator must capture for sale or use on site a volume of gas sufficient to meet the “capture percentage” requirement specified in paragraph (b) of this section.
(b) Beginning January 17, 2018, the operator's capture percentage must equal:
(1) For each month during the period from January 17, 2018 until December 31, 2019: 85 percent;
(2) For each month during the period from January 1, 2020 until December 31, 2022: 90 percent;
(3) For each month during the period from January 1, 2023 until December 31, 2025: 95 percent; and
(4) For each month beginning January 1, 2026: 98 percent.
(c) The term “capture percentage” in this section means the “total volume of gas captured” over the “relevant area” divided by the “adjusted total volume of gas produced” over the “relevant area.”
(1) The term “total volume of gas captured” in this section means: for each month, the volume of gas sold from all of the operator's development oil wells in the relevant area plus the volume of gas from such wells used on lease, unit, or communitized area in the relevant area.
(2) The term “adjusted total volume of gas produced” in this section means: the total volume of gas captured over the month
(i) For each month from January 17, 2018 until December 31, 2018: 5,400 Mcf times the total number of development oil wells “in production” in the relevant area;
(ii) For each month in calendar year 2019: 3,600 Mcf times the total number of development oil wells in production in the relevant area;
(iii) For each month in calendar year 2020: 1,800 Mcf times the total number of development oil wells in production in the relevant area; and
(iv) For each month in calendar year 2021: 1,500 Mcf times the total number of development oil wells in production in the relevant area;
(v) For each month in calendar years 2022-2023: 1,200 Mcf times the total number of development oil wells in production in the relevant area;
(vi) For each month in calendar year 2024: 900 Mcf times the total number of development oil wells in production in the relevant area; and
(vii) For each month in calendar year 2025 and thereafter: 750 Mcf times the total number of development oil wells in production in the relevant area.
(3) The term “relevant area” in this section means:
(i) Each of the operator's leases, units, or communitized areas; or
(ii) All of the operator's development oil wells on leases, units, and communitized areas within a county or within a State, if the operator notifies the BLM by Sundry Notice by January 1, of the relevant year that the operator has chosen to comply on a county- or State-wide basis.
(4) An oil well is considered “in production” only after the well has begun producing oil, and only during a month in which it produces gas (that is sold or flared) for 10 or more days.
(d) In any month in which the operator fails to meet the required capture percentage, the “excess flared gas” is royalty-bearing under § 3179.4. The term “excess flared gas” means:
(e) For purposes of calculating royalties on an operator's excess flared gas in a given month, the operator must prorate the excess flared gas across the relevant area to each lease, unit or communitized area
(a) With respect to leases issued before the effective date of this regulation, for operators choosing to comply with the capture requirement in § 3179.7 on a lease-by-lease, unit-by-unit, or communitized area-by-communitized area basis, the BLM may approve a capture percentage lower than the applicable capture percentage specified under § 3179.7, if the operator demonstrates, and the BLM agrees, that the applicable capture percentage under § 3179.7 would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
(b) To support a demonstration under paragraph (a) of this section, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available and the volumes being vented and flared from each well;
(3) Map(s) showing:
(i) The entire lease, unit, or communitized area and the surrounding lands to a distance and on a scale that shows the field in which the well or wells are or will be located (if applicable), and all pipelines that could transport the gas from the well or wells;
(ii) All of the operator's producing oil and gas wells, which are producing from Federal or Indian leases (both on Federal or Indian leases and on other properties) within the map area;
(iii) Identification of all of the operator's wells within the lease, unit, or communitized area from which gas is flared or vented, and the location and distance of the nearest gas pipeline(s) to each such well, with an identification of those pipelines that are or could be available for connection and use; and
(iv) Identification of all of the operator's wells within the lease, unit, or communitized area from which gas is captured;
(4) Data that show pipeline capacity and the operator's projections of the cost associated with installation and operation of gas capture infrastructure, to the extent that the operator is able to obtain this information, as well as cost projections for alternative methods of transportation that do not require pipelines;
(5) Projected costs of and the combined stream of revenues from both gas and oil production, including:
(i) The operator's projections of gas prices, gas production volumes, gas quality (
(ii) The operator's projections of oil prices, oil production volumes, costs, revenues, and royalty payments from the operator's oil and gas operations within the lease over the next 15 years or the life of the operator's lease, unit, or communitized area, whichever is less.
(c) In establishing an alternative capture requirement under this section, the BLM will set the capture percentage at the highest level that the BLM determines, considering the information identified in paragraph (b) of this section, will not cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
(a) The operator must estimate or measure all volumes of gas vented or flared from wells, facilities and equipment on a lease, unit PA, or communitized area and report those volumes under applicable ONRR reporting requirements.
(b) The operator may estimate such volumes, except:
(1) If the operator estimates that the volume of gas flared from a high pressure flare stack or manifold equals or exceeds an average of 50 Mcf per day for the life of the flare, or the previous 12 months, whichever is shorter, then, beginning January 17, 2018 the operator must either:
(i)
(ii) Calculate the volume of the flared gas based on the results of a regularly performed GOR test and measured values for the volumes of oil production and gas sales, so as to allow
(2) If the BLM determines and informs the operator that the additional accuracy offered by measurement is necessary for effective implementation of this Subpart, then the operator must measure the volume of the flared gas.
(c) If measurement or calculation is required under paragraph (b) of this section for a flare that is combusting gas that is combined across multiple leases, unit PAs, or communitized areas, the operator may measure or calculate the gas at a single point at the flare, but must use an allocation method approved by the BLM to allocate the quantities of flared gas to each lease, unit PA, or communitized area.
(a) Approvals to flare royalty free, which are in effect as of the effective date of this rule, will continue in effect until January 17, 2018.
(b) The provisions of this subpart do not affect any determination made by the BLM before or after January 17, 2017, with respect to the royalty-bearing status of flaring that occurred prior to January 17, 2017.
(a) If production from an oil well newly connected to a gas pipeline results or is expected to result in one or more producing wells already connected to the pipeline being forced off the pipeline, the BLM may exercise its authority under applicable laws and regulations, as well as its authority under the terms of applicable permits, orders, leases, and unitization or communitization agreements, to limit the production level from the new well until the pressure of gas production from the new well stabilizes at levels that allow transportation of gas from all wells connected to the pipeline.
(b) If gas capture capacity is not yet available on a given lease, the BLM may exercise its authority under applicable laws and regulations, as well as its authority under the terms of applicable permits, orders, leases, and unitization or communitization agreements, to delay action on an APD for that lease, or approve the APD with conditions for gas capture or limitations on production. If the lease for which an APD is submitted is not yet producing, the BLM may direct or grant a lease suspension under 43 CFR 3103.4-4.
To the extent that any BLM action to enforce a prohibition, limitation, or order under this subpart may adversely affect production of oil or gas that comes from non-Federal and non-Indian mineral interests, the BLM will coordinate, on a case-by-case basis, with the State regulatory authority having jurisdiction over the oil and gas production from the non-Federal and non-Indian interests.
(a) Except as provided in § 3179.6 of this subpart, and unless technically infeasible, gas that reaches the surface as a normal part of drilling operations must be:
(1) Captured and sold;
(2) Directed to a flare pit or flare stack to combust any flammable gasses;
(3) Used in operations on the lease, unit, or communitized area; or
(4) Injected.
(b) If gas is lost as a result of loss of well control, the BLM will make a determination of whether the loss of well control is due to operator negligence. Such gas is avoidably lost if the BLM determines that the loss of well control is due to operator negligence. The BLM will notify the operator in writing when it makes a determination that gas was lost due to operator negligence.
(a) Except as provided in § 3179.6, and unless technically infeasible, after a well has been hydraulically fractured or refractured, gas that reaches the surface during well completion, post-completion, and fluid recovery operations must be:
(1) Captured and sold;
(2) Directed to a flare pit or flare stack to combust any flammable gasses, subject to the volumetric limitations in § 3179.103(a)(3);
(3) Used in operations on the lease, unit, or communitized area; or
(4) Injected.
(b) An operator will be deemed to be in compliance with the requirements of paragraph (a) of this section, if the operator is in compliance with the requirements for control of gas from well completions established under 40 CFR part 60, subpart OOOO or subpart OOOOa or if the well is not a “well affected facility” under either of those subparts.
(c) The requirements of paragraph (a) of this section will not apply where the operator demonstrates through a Sundry Notice, and the BLM agrees, that compliance with paragraph (a) of this section would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
(d) To support a demonstration under paragraph (d) of this section, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance with paragraph (a) of this section on the lease; (4) Projected costs of and the combined stream of revenues from both gas and oil production, including: the operator's projections of oil and gas prices, production volumes, quality (
(a) Gas flared during a well's initial production test is royalty-free under §§ 3179.4(a)(1)(iii) and 3179.5(b) of this subpart until one of the following occurs:
(1) The operator determines that it has obtained adequate reservoir information for the well;
(2) 30 days have passed since the beginning of the production test, except as provided in paragraph (b) and paragraph (d) of this section;
(3) The operator has flared 20 million cubic feet (MMcf) of gas, when volumes flared under this section are combined with volumes flared under § 3179.102(a)(2), except as provided in paragraph (c) of this section; or
(4) Production begins.
(b) The BLM may extend the period specified in paragraph (a)(2) not to exceed an additional 60 days, based on testing delays caused by well or equipment problems or if there is a need for further testing to develop adequate reservoir information.
(c) The BLM may increase the limit specified in paragraph (a)(3) by up to an additional 30 million cubic feet of gas for exploratory wells in remote locations where additional testing is needed in advance of development of pipeline infrastructure.
(d) During the dewatering and initial evaluation of an exploratory coalbed methane well, the 30-day period specified in paragraph (a)(2) of this section is extended to 90 days. The BLM may approve up to two extensions of this evaluation period, of up to 90 days each.
(e) The operator must submit its request for a longer test period or increased limit under paragraphs (b), (c), or (d) of this section using a Sundry Notice.
During well tests subsequent to the initial production test, the operator may flare gas for no more than 24 hours royalty free, unless the BLM approves or requires a longer period. The operator must request a longer period under this section using a Sundry Notice.
(a) An operator may flare or, if flaring is not feasible given the emergency, vent gas royalty-free under § 3179.4(a)(vi) of this subpart during an emergency. For purposes of this subpart, an “emergency” is a temporary, infrequent and unavoidable situation in which the loss of gas or oil is uncontrollable or necessary to avoid risk of an immediate and substantial adverse impact on safety, public health, or the environment. For purposes of royalty assessment, an “emergency” is limited to a short-term situation of 24 hours or less (unless the BLM agrees that the emergency conditions necessitating venting or flaring extend for a longer period) caused by an unanticipated event or failure that is out of the operator's control and was not due to operator negligence.
(b) The following do not constitute emergencies for the purposes of royalty assessment:
(1) More than 3 failures of the same component within a single piece of equipment within any 365-day period;
(2) The operator's failure to install appropriate equipment of a sufficient
(3) Failure to limit production when the production rate exceeds the capacity of the related equipment, pipeline, or gas plant, or exceeds sales contract volumes of oil or gas;
(4) Scheduled maintenance;
(5) A situation caused by operator negligence; or
(6) A situation on a lease, unit, or communitized area that has already experienced 3 or more emergencies within the past 30 days, unless the BLM determines that the occurrence of more than 3 emergencies within the 30 day period could not have been anticipated and was beyond the operator's control.
(c) Within 45 days of the start of the emergency, the operator must estimate and report to the BLM on a Sundry Notice the volumes flared or vented beyond the timeframes specified in paragraph (b) of this section.
(a) A pneumatic controller that uses natural gas produced from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease, is subject to this section if the pneumatic controller:
(1) Has a continuous bleed rate greater than 6 standard cubic feet (scf) per hour; and
(2) Is not subject to any of the requirements of 40 CFR part 60, subpart OOOO or subpart OOOOa, but would be subject to one of those subparts if it were a new, modified, or reconstructed source.
(b) The operator must replace a pneumatic controller subject to this section with a controller (including but not limited to a continuous or intermittent pneumatic controller) having a bleed rate of 6 scf per hour or less within the timeframes set forth in paragraph (d) of this section, unless:
(1) Use of a pneumatic controller with a bleed rate greater than 6 scf per hour is required based on functional needs that may include, but are not limited to, response time, safety, and positive actuation, provided that the operator notifies the BLM through a Sundry Notice that describes the functional needs necessitating the use of a pneumatic controller with a bleed rate greater than 6 scf per hour;
(2) The pneumatic controller exhaust was, as of January 17, 2017 and continues to be, routed to a flare device or low-pressure combustor;
(3) The pneumatic controller exhaust is routed to processing equipment; or
(4) The operator notifies the BLM through a Sundry Notice and demonstrates, and the BLM agrees, based on the information identified in paragraph (c) of this section, that replacement of a pneumatic controller subject to paragraph (a)(1)(i) of this section would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
(c) To support a demonstration under paragraph (b)(4) of this section, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each of the operator's wells, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance with paragraph (b) of this section on the lease;
(4) Projected costs of and the combined stream of revenues from both gas and oil production, including:
(i) The operator's projections of gas prices, gas production volumes, gas quality (
(ii) The operator's projections of oil prices, oil production volumes, costs, revenues, and royalty payments from the operator's oil and gas operations within the lease over the next 15 years or the life of the operator's lease, unit, or communitized area, whichever is less.
(d) The operator must replace the pneumatic controller(s) no later than 1 year after the effective date of this section as required under paragraph (b) of this section. If, however, the well or facility that the pneumatic controller serves has an estimated remaining productive life of 3 years or less from the effective date of this section, then the operator may notify the BLM through a Sundry Notice and replace the pneumatic controller no later than 3 years from the effective date of this section.
(e) The operator must ensure pneumatic controllers are functioning within manufacturers' specifications.
(a) A pneumatic diaphragm pump is subject to this section if it:
(1) Uses natural gas produced from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease; and
(2) Is not subject to any of the requirements of 40 CFR part 60, subpart OOOOa, but would be subject to that subpart if it were a new, modified or reconstructed source.
(b) An operator is not required to comply with paragraphs (c) through (h), with respect to a pneumatic diaphragm pump or pumps if:
(1) The pump does not vent exhaust gas to the atmosphere; or
(2) The operator submits a Sundry Notice to the BLM documenting that the pump(s) operated on less than 90 individual days in the prior calendar year.
(c) For each pneumatic diaphragm pump subject to this section and within the timeframes set forth in paragraph (h) of this section, the operator must:
(1) Replace the pump with a zero-emissions pump, which may be an electric-powered pump; or
(2) Route the pump exhaust gas to processing equipment for capture and sale.
(d) As an alternative to compliance with paragraph (c), the operator may route the pump exhaust gas to a flare or low pressure combustor device within the timeframes set forth in paragraph (h) of this section, if the operator determines and notifies the BLM through a Sundry Notice that:
(1) Replacing the pump with a zero-emissions pump is not viable because a pneumatic pump is necessary to perform the function required; and
(2) Routing the pump exhaust gas to processing equipment for capture and sale is technically infeasible or unduly costly.
(e) If the operator has met the criteria in paragraph (d) allowing the operator to use the compliance alternative provided in paragraph (d), but the operator has no flare or low pressure combustor device on site, or routing the exhaust gas to such a flare or low pressure combustor device would be technically infeasible, the operator need take no further action to comply with paragraphs (c) through (h).
(f) An operator that is required to replace a pump or route the exhaust gas from a pump to capture or a flare or combustion device under this section, may nonetheless be exempt from such requirement if the operator submits a Sundry Notice to the BLM that provides an economic analysis that demonstrates,
(g) The Sundry Notice described in paragraph (f) must include the following information:
(1) Well information must include:
(i) The name, number, and location of each well, and the number of the lease, unit, or communitized area with which it is associated; and
(ii) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(2) Data that show the costs of compliance with paragraphs (c) through (e) of this section on the lease;
(3) The operator must consider the costs and revenues of the combined stream of revenues from both the gas and oil components and provide:
(i) The operator's projections of gas prices, gas production volumes, gas quality (
(ii) The operator's projections of oil prices, oil production volumes, costs, revenues, and royalty payments from the operator's oil and gas operations within the lease over the next 15 years or the life of the operator's lease, unit, or communitized area, whichever is less.
(h) The operator must replace the pneumatic diaphragm pump(s) or route the exhaust gas to capture or to a flare or combustion device no later than 1 year after the effective date of this section, except that if the operator will comply with paragraph (c) of this section by replacing the pneumatic diaphragm pump with a zero-emission pump and the well or facility that the pneumatic diaphragm pump serves has an estimated remaining productive life of 3 years or less from the effective date of this section, the operator must notify the BLM through a Sundry Notice and replace the pneumatic diaphragm pump no later than 3 years from the effective date of this section.
(i) The operator must ensure its pneumatic diaphragm pumps are functioning within manufacturers' specifications.
(a) A storage vessel is subject to this section if the vessel:
(1) Contains production from a Federal or Indian lease, or from a unit or communitized area that includes a Federal or Indian lease; and
(2) Is not subject to any of the requirements of 40 CFR part 60, subparts OOOO or OOOOa, but would be subject to one of those subparts if it were a new, modified or reconstructed source.
(b) Within 60 days after the effective date of this section, and within 30 days after any new source of production is added to the storage vessel, the operator must determine, record, and make available to the BLM upon request, whether the storage vessel has the potential for VOC emissions equal to or greater than 6 tpy based on the maximum average daily throughput for a 30-day period of production. The determination may take into account requirements under a legally and practically enforceable limit in an operating permit or other requirement established under a federal, state, local or tribal authority that limit the VOC emissions to less than 6 tpy.
(c) If a storage vessel has the potential for VOC emissions equal to or greater than 6 tpy under paragraph (b) of this section, no later than one year after the effective date of this section, or three years if the operator must and will replace the storage vessel at issue in order to comply with the requirements of this section, the operator must:
(1) Route all tank vapor gas from the storage vessel to a sales line;
(2) If the operator determines that compliance with paragraph (c)(1) of this section is technically infeasible or unduly costly, route all tank vapor gas from the storage vessel to a device or method that ensures continuous combustion of the tank vapor gas; or
(3) Submit an economic analysis to the BLM through a Sundry Notice that demonstrates, and the BLM agrees, based on the information identified in paragraph (d) of this section, that compliance with paragraph (c)(2) of this section would impose such costs as to cause the operator to cease production and abandon significant recoverable oil reserves under the lease.
(d) To support a demonstration under paragraph (c) of this section, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each well, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance with paragraph (c)(1) or (c)(2) of this section on the lease;
(4) The operator must consider the costs and revenues of the combined stream of revenues from both the gas and oil components and provide:
(i) The operator's projections of oil and gas prices, production volumes, quality (
(e) If the rate of total uncontrolled VOCs released from a storage vessel declines to 4 tpy or less for any continuous 12 month period, the requirements of paragraph (c) no longer apply.
(f) Storage vessels subject to this section must be adequately sized to accommodate the operator's production levels and equipped to meet any applicable regulatory requirements regarding tank vapors.
(g) Storage vessels subject to this section may only vent through properly functioning pressure relief devices.
(a) The operator must minimize vented gas and the need for well venting associated with downhole well maintenance and liquids unloading, consistent with safe operations.
(b) For wells equipped with a plunger lift system and/or an automated well control system, minimizing gas venting under paragraph (a) includes optimizing the operation of the system to minimize gas losses to the extent possible consistent with removing liquids that would inhibit proper function of the well.
(c) Before the operator manually purges a well for liquids unloading for the first time after the effective date of this section, the operator must consider other methods for liquids unloading and determine that they are technically infeasible or unduly costly. The operator must provide information supporting that determination as part of the Sundry Notice required under paragraph (e) of this section.
(d) For any liquids unloading by manual well purging, the operator must:
(1) Ensure that the person conducting the well purging remains present on-site throughout the event to minimize to the maximum extent practicable any venting to the atmosphere;
(2) Record the cause, date, time, duration, and estimated volume of each venting event; and
(3) Maintain the records for the period required under § 3162.4-1 of this title and make them available to the BLM, upon request.
(e) The operator must notify the BLM by Sundry Notice within 30 calendar days after the first liquids unloading event by manual or automated well purging conducted after the effective date of this section. This requirement applies to each well the operator operates.
(f) The operator must notify the BLM by Sundry Notice, within 30 calendar days, if:
(1) The cumulative duration of manual well purging events for a well exceeds 24 hours during any production month; or
(2) The estimated volume of gas vented in liquids unloading by manual well purging operations for a well exceeds 75 Mcf during any production month.
(g) For purposes of this section, “well purging” means blowing accumulated liquids out of a wellbore by reservoir gas pressure, whether manually or by an automatic control system that relies on real-time pressure or flow, timers, or other well data, where the gas is vented to the atmosphere, and it does not apply to wells equipped with a plunger lift system.
(h) Total estimated volumes vented as a result of downhole well maintenance and liquids unloading, including through the operation of plunger lifts and automated well controls, during the production month must be included in volumes reported to ONRR as vented.
(a) The requirements of §§ 3179.301 through 3179.305 of this subpart apply to:
(1) A site and all equipment associated with it used to produce, process, compress, treat, store, or measure natural gas (including oil wells that also produce natural gas) from or allocated to a Federal or Indian lease, unit, or communitized area, where the site is upstream of or contains the approved point of royalty measurement; and
(2) A site and all equipment operated by the operator and associated with a site used to store, measure, or dispose of produced water, where the site is located on a Federal or Indian lease.
(b) The requirements of §§ 3179.301 through 3179.305 of this subpart do not apply to:
(1) A site that contains a wellhead or wellheads and no other equipment; or
(2) A well or well equipment that has been depressurized.
(c) As prescribed in §§ 3179.302 and 3179.303 of this subpart, the operator must inspect all equipment covered under this section, as provided in paragraph (a) of this section, for gas leaks from leak components.
(d) The operator is not required to inspect or monitor a leak component that is not an accessible component.
(e) For purposes of §§ 3179.301 through 3179.305, the term “site” means a discrete area located on a lease, unit, or communitized area, and containing a wellhead, wellhead equipment, or other equipment used to produce, process, compress, treat, store, or measure natural gas or store, measure, or dispose of produced water, which is suitable for inspection in a single visit.
(f) The operator must make the first inspection of each site:
(1) Within one year of January 17, 2017 for sites that have begun production prior to January 17, 2017;
(2) Within 60 days of beginning production for sites that begin production after January 17, 2017; and
(3) Within 60 days of the date when a site that was out of service is brought back into service and re-pressurized.
(g) The operator must make subsequent inspections as prescribed in § 3179.303.
(h) All leak inspections must occur during production operations.
(i) The operator must fix identified leaks as prescribed in §§ 3179.304 and 3179.305 of this subpart. See 43 CFR 3162.5-1 for responsibility to repair oil leaks.
(j) With respect to new, modified or reconstructed equipment, an operator will be deemed to be in compliance with the requirements of this section for such equipment, if the operator is in compliance with the requirements of subpart OOOOa applicable to such equipment.
(k) For each lease, unit, or communitized area, for all covered sites and equipment not already deemed in compliance with the requirements of this section pursuant to paragraph (j), an operator may choose to satisfy the requirements of §§ 3179.301 through 3179.305 by:
(1) Treating each of those sources as if it were a collection of fugitive emissions components as defined in 40 CFR part 60 subpart OOOOa;
(2) Complying with the requirements of 40 CFR part 60 subpart OOOOa that apply to affected facility fugitive emissions components at a well site (or for compressor stations, that apply to affected facility fugitive emissions components at a compressor station) under 40 CFR part 60, subpart OOOOa; and
(3) Notifying the BLM through a Sundry Notice regarding such compliance.
(a) The operator must use one or more of the following instruments, operated according to the manufacturer's specifications or as specified below, to detect leaks:
(1) An optical gas imaging device capable of imaging a gas that is half methane, half propane at a concentration of 10,000 ppm at a flow rate of less than or equal to 60 grams per hour from a quarter inch diameter orifice;
(2) A portable analyzer device capable of detecting leaks, such as catalytic oxidation, flame ionization, infrared absorption or photoionization devices, used for a leak detection survey conducted in compliance with the relevant sections of Method 21 at 40 CFR part 60, appendix A-7, including section 8.3.1. and assisted by audio, visual, and olfactory inspection; or
(3) A leak detection device not listed in this section that is approved by the BLM for use by any operator under § 3179.302(d) of this subpart.
(b) The person operating any of the leak detection devices listed in or approved under this section must be adequately trained in the proper use of the device.
(c) Any person may request approval of an alternative monitoring device and protocol by submitting a Sundry Notice to BLM that includes the following information:
(1) Specifications of the proposed monitoring device, including a detection limit capable of supporting the desired function;
(2) The proposed monitoring protocol using the proposed monitoring device, including how results will be recorded;
(3) Records and data from laboratory and field testing, including but not limited to performance testing;
(4) A demonstration that the proposed monitoring device and protocol will achieve equal or greater reduction of gas lost through leaks compared with the approach specified in § 3179.302(a)(1) when used according to § 3179.303(a) of this subpart;
(5) Tracking and documentation procedures; and
(6) Proposed limitations on the types of sites or other conditions on deploying the device and the protocol to achieve the demonstrated results.
(d) The BLM may approve an alternative monitoring device and associated inspection protocol, if the BLM finds that the alternative would achieve equal or greater reduction of gas lost through leaks compared with the approach specified in § 3179.302(a)(1) when used according to § 3179.303(a) of this subpart.
(1) The BLM will provide public notice of a submission for approval under section 3179.302(c).
(2) The BLM may approve an alternative device and monitoring protocol for use in all or most applications, or for use on a pilot or demonstration basis under specified circumstances that limit where and for how long the device may be used.
(3) The BLM will post on the BLM Web site a list of each approved alternative monitoring device and protocol, along with any limitations on its use.
(a) Except as provided below or otherwise authorized in paragraph (b) of this section, the operator must inspect leak components located on and around the equipment identified in § 3179.301(a) of this subpart for leaks using a leak detection device listed under § 3179.302 according to the following parameters:
(1) The operator must inspect each site at least semi-annually, and consecutive semiannual inspections must be conducted at least 4 months apart; and
(2) The operator must inspect each compressor station at least quarterly, and consecutive quarterly inspections must be conducted at least 60 days apart.
(b) The BLM may approve an operator's request to use an alternative instrument-based leak detection program, in lieu of compliance with the requirements of § 3179.303(a), if the BLM finds that the alternative program would achieve equal or greater reduction of gas lost through leaks compared with the approach specified in §§ 3179.302(a)(1) and 3179.303(a) of this subpart. The operator must submit its request for an alternative leak detection program through a Sundry Notice that includes the following information:
(1) A detailed description of the alternative leak detection program, including how it will use one or more of the instruments specified in or approved under § 3179.302(a) and an identification of the specific instruments, methods and/or practices that would substitute for specific elements of the approach specified in §§ 3179.302(a) and 3179.303(a);
(2) The proposed monitoring protocol;
(3) Records and data from laboratory and field testing, including, but not limited to, performance testing, to the extent relevant;
(4) A demonstration that the proposed alternative leak detection program will achieve equal or greater reduction of gas lost through leaks compared to compliance with the requirements specified in §§ 3179.302(a) and 3179.303(a);
(5) A detailed description of how the operator will track and document its procedures, leaks found, and leaks repaired; and
(6) Proposed limitations on types of sites or other conditions on deployment of the alternative leak detection program.
(c) If the operator demonstrates, and the BLM agrees, that compliance with the requirements of §§ 3179.301-305, including the option for compliance with an alternative leak detection program under § 3179.303(b) would impose such costs as to cause the operator to cease production and abandon significant recoverable oil or gas reserves under the lease, the BLM may approve an alternative leak detection program for that operator that does not meet the criterion specified in § 3179.303(b)(4), but is as effective as possible consistent with not causing the operator to cease production and abandon significant recoverable oil or gas reserves under the lease.
(d) To support a demonstration under paragraph (c) of this section, the operator must submit a Sundry Notice that includes the following information:
(1) The name, number, and location of each well, and the number of the lease, unit, or communitized area with which it is associated;
(2) The oil and gas production levels of each of the operator's wells on the lease, unit or communitized area for the most recent production month for which information is available;
(3) Data that show the costs of compliance on the lease with the requirements of §§ 3179.301-305 and with an alternative leak detection program that meets the requirements of § 3179.303(b);
(4) The operator must consider the costs and revenues of the combined stream of revenues from both the gas and oil components and provide the operator's projections of oil and gas prices, production volumes, quality (
(5) The information required under § 3179.303(b), except that in lieu of the demonstration required under § 3179.303(b)(4), the operator must demonstrate that the alternative program is as effective as possible, consistent with not imposing such costs as to cause the operator to cease production and abandon significant recoverable oil or gas reserves under the lease.
(e) For any BLM approval of an operator's use of an alternative leak detection program under subparagraph (b) or (c) of this section, the BLM will post online the alternative program approved for that operator, including, at minimum, the information required in subparagraph (b)(1), (b)(2), (b)(5), and (b)(6) of this section.
(a) The operator must repair any leak as soon as practicable, and in no event later than 30 calendar days after discovery, unless good cause exists for repair requiring a longer period. Good cause for delay of repair exists if the repair (including replacement) is technically infeasible (including unavailability of parts that have been ordered), would require a pipeline blowdown, a compressor station shutdown, a well shut-in, or would be unsafe to conduct during operation of the unit.
(b) If there is good cause for delaying the repair beyond 30 calendar days, the operator must notify the BLM of the cause by Sundry Notice and must complete the repair at the earliest opportunity, for example during the next compressor station shutdown, well shut-in, or pipeline blowdown. In no case may the repair be delayed beyond 2 years.
(c) Not later than 30 calendar days after completion of a repair, the operator must verify the effectiveness of the repair through a follow-up inspection using one of the instruments specified or approved under § 3179.302(a) or a soap bubble test under Section 8.3.3 of EPA Method 21—Determination of Volatile Organic Compound
Leaks (40 CFR Appendix A-7 to part 60).
(d) If the repair is not effective, the operator must complete additional repairs within 15 calendar days, and conduct follow-up inspections and repairs until the leak is repaired.
(e) A follow-up inspection to verify the effectiveness of repairs does not constitute an inspection for purposes of § 3179.303.
(a) The operator must maintain the following records for the period required under § 3162.4-1 of this title and make them available to the BLM upon request:
(1) For each inspection required under § 3179.303 of this subpart, documentation of:
(i) The date of the inspection; and
(ii) The site where the inspection was conducted;
(2) The monitoring method(s) used to determine the presence of leaks;
(3) A list of leak components on which leaks were found;
(4) The date each leak was repaired; and
(5) The date and result of the follow-up inspection(s) required under § 3179.304 paragraph (c) or (d) of this subpart.
(b) By March 31 each calendar year, the operator must provide to the BLM an annual summary report on the previous year's inspection activities that includes:
(1) The number of sites inspected;
(2) The total number of leaks identified, categorized by the type of component;
(3) The total number of leaks repaired;
(4) The total number leaks that were not repaired as of December 31 of the previous calendar year due to good cause and an estimated date of repair for each leak.
(5) A certification by a responsible officer that the information in the report is true and accurate to the best of the officer's knowledge.
(c) AVO checks are not required to be documented unless they find a leak requiring repair.
(a)(1) At the request of a State (for Federal land) or a tribe (for Indian lands), the BLM State Director may grant a variance from any provision(s) of this Subpart that would apply to all Federal leases, units, or communitized areas within a State or to all tribal leases, units, or communitized areas within that tribe's lands, or to specific fields or basins within the State or that tribe's lands, if the BLM finds that the variance would meet the criteria in paragraph (b) of this section.
(2) A State or tribal variance request must:
(i) Identify the provision(s) of this subpart from which the State or tribe is requesting the variance;
(ii) Identify the State, local, or tribal regulation(s) or rule(s) that would be applied in place of the provision(s) of this subpart;
(iii) Explain why the variance is needed; and
(iv) Demonstrate how the State, local, or tribal regulation(s) or rule(s) would perform at least equally well in terms of reducing waste of oil and gas, reducing environmental impacts from venting and or flaring of gas, and ensuring the safe and responsible production of oil and gas, compared to the particular provision(s) from which the State or tribe is requesting the variance.
(b) The BLM State Director, after considering all relevant factors, may approve the request for a variance, or approve it with one or more conditions, only if the BLM determines that the State, local or tribal regulation(s) or rule(s) would perform at least equally well in terms of reducing waste of oil and gas, reducing environmental impacts from venting and/or flaring of gas, and ensuring the safe and responsible production of oil and gas, compared to the particular provision(s) from which the State or tribe is requesting the variance, and would be consistent with the terms of the affected Federal or Indian leases and applicable statutes. The decision to grant or deny the variance will be in writing and is within the BLM's discretion. The decision on a variance request is not subject to administrative appeals under 43 CFR part 4.
(c) A variance from any particular requirement of this rule does not constitute a variance from provisions of other regulations, laws, or orders.
(d) The BLM reserves the right to rescind a variance or modify any condition of approval.
(e) If the BLM approves a variance under this section, the State or tribe that requested the variance must notify the BLM in writing in a timely manner of any substantive amendments, revisions, or other changes to the State, local or tribal regulation(s) or rule(s) to be applied under the variance.
(f) If the BLM approves a variance under this section, the State, local or tribal regulation(s) or rule(s) to be applied under the variance can be enforced by the BLM as if the regulation(s) or rule(s) were provided for in this Subpart. The State, locality, or tribes' own authority to enforce its regulation(s) or rule(s) to be applied under the variance would not be affected by the BLM's approval of a variance.
Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Summary presentation of final rules.
This document summarizes the Federal Acquisition Regulation (FAR) rules agreed to by the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) in this Federal Acquisition Circular (FAC) 2005-92. A companion document, the
For effective dates see the separate documents, which follow.
The analyst whose name appears in the table below in relation to the FAR case. Please cite FAC 2005-92 and the specific FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755.
Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-92 amends the FAR as follows:
This final rule amends the FAR to establish an annual representation requirement to indicate whether or not and where contractors publicly disclose greenhouse gas emissions and greenhouse gas emission reduction goals or targets. This representation is optional for contractors that received less than $7.5 million in contract awards from the Government during the previous Federal fiscal year. The information obtained from these representations will assist agencies in developing strategies to engage with contractors to reduce supply chain emissions, as directed in the Executive Order 13693, Planning for Federal Sustainability in the Next Decade.
This rule amends the FAR to delete the use of “telegram,” “telegraph,” and related terms. The objective is to delete reference to obsolete technologies no longer in use and replace with references to electronic communications. In addition, conforming changes are made covering expedited notice of termination and change orders.
The rule is not anticipated to have a significant economic impact on small business entities, as the rule provides recognition of current options for transmitting documents between the Government and contractors. The rule also revises the means of disseminating contract termination documents between the Government and contractors; however, this change only affects the Government's responsibility for transmitting termination notices.
Editorial changes are made at FAR 2.101, 7.105, 19.1506, 34.000, 34.005-2, 34.201, 34.203, 42.709, 52.234-2, 52.234-3, and 52.234-4.
Federal Acquisition Circular (FAC) 2005-92 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration.
Unless otherwise specified, all Federal Acquisition Regulation (FAR) and other directive material contained in FAC 2005-92 is effective November 18, 2016 except for items I, and II, which are effective December 19, 2016.
Department of Defense (DoD), General Services Administration (GSA),
Final rule.
DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to establish a representation for offerors to indicate if and where they publicly disclose greenhouse gas emissions and greenhouse gas reduction goals or targets.
Mr. Charles Gray, Procurement Analyst, at 703-795-6328 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite FAC 2005-92, FAR Case 2015-024.
DoD, GSA, and NASA published a proposed rule in the
The information obtained from these representations will assist agencies in developing strategies to engage with offerors to reduce supply chain emissions, as directed in the Executive Order (E.O.) 13693, Planning for Federal Sustainability in the Next Decade. Seventeen respondents submitted comments on the proposed rule.
The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments are provided as follows:
At FAR 52.212-3, Offeror Representations and Certifications—Commercial Items, the representation at (t)(2)(i) has been revised to clarify that the Greenhouse Gas Protocol Corporate Standard is an example of a greenhouse gas accounting standard, and that the emissions reduction goals are to be made accessible on a publicly accessible Web site.
At FAR 52.223-22, Public Disclosure of Greenhouse Gas Emissions and Reduction Goals—Representation, paragraph (b)(1) has been revised to clarify that the Greenhouse Gas Protocol Corporate Standard is intended to serve as an example of a greenhouse gas accounting standard. In paragraph (b)(2) of the same provision, language has been added to clarify that to disclose emissions reduction goals means to make such goals available on a publicly accessible website.
Statutory rulemaking authority for the FAR is listed in FAR rules as 40 U.S.C. 121(c), 10 U.S.C. chapter 137, and 51 U.S.C. 20113.
The concerns expressed by respondents in this area generally fell into four categories: (A) General concerns regarding the clarity of the rule; (B) The use of equivalents to the Greenhouse Gas Corporate Protocol Standard; (C) Reporting requirements for offeror's parent company or for companies that are not the owner of facility; and (D) Concerns regarding the proposed reporting thresholds.
With regard to the reliability of the data obtained, the representation relates only to information made available by the offeror, regardless of where the information is hosted. Since an offeror that responds affirmatively to the representation is also required to provide the website address, the Government will only be directed to the offeror's publicly accessible information.
This rule does not regulate industry, which is why the analytical techniques employed by the EPA were not used. The purpose of the rule is to obtain a better understanding of Federal supply chain greenhouse gas emissions. Utilizing existing public information significantly reduces the burden on potential offerors while providing useful strategic information and encouraging transparency.
Finally, the plain meaning of the phrase “available on a publicly accessible Web site” is that the information must be accessible to the general public.
To further clarify this intent, the language in the final rule has been amended to state that the Greenhouse Gas Protocol Corporate Standard is intended to serve as an example of greenhouse gas accounting standard, rather than the only acceptable standard.
Although the concerns regarding the usefulness of the inventory information are noted, the information gathered will be considered with a variety of other factors.
• Requiring Government agencies to take vendor emission disclosures and emission reduction goals into consideration during source selection;
• Requiring vendors to disclose emissions information and emissions reduction goals, as opposed to indicating “whether or not” they disclose;
• Adding an option to have vendors identify “serious” or “substantial” reduction goals, noting that a 40 percent reduction from the 2008 greenhouse gas baseline was mentioned in E.O. 13693;
• Another respondent observed that the greenhouse gas problem should not be attributed to the companies that sell greenhouse gas-emitting products (such as fuels), but rather, the users that consume these products. This respondent suggested that the Government pursue a revenue neutral course of action.
A number of conforming changes were made to the final rule, due to changes made in the FAR text since the publication of the proposed rule.
This rule establishes a new provision at FAR 52.223-22, Public Disclosure of Greenhouse Gas Emissions and Reductions Goals—Representation, and establishes its commercial item equivalent at FAR 52.212-3, Offeror Representations and Certifications—Commercial Items. The new provision requires offerors that received $7.5 million or more in contracts from the Federal Government during the prior Federal fiscal year, to represent whether or not they publicly disclose their greenhouse gas emissions and whether or not they publicly disclose a quantitative greenhouse gas emissions reduction goal. This information will be used by the Federal Government to assess the scope of greenhouse gas management undertaken by companies seeking to do business with the Federal Government. Application of the provision in solicitations and contracts at or below the SAT and to the acquisition of commercial items, including COTS items, is necessary in order to comply with E.O. 13693. If the requirements of the provision(s) are not made applicable to acquisitions below the SAT, or to acquisitions for commercial items or COTS items, the Government will be unable to obtain valuable information from a large segment of its supplier base, which in turn will undermine the overarching purpose of the rule.
41 U.S.C. 1905 through 1907 make certain provisions of law inapplicable to solicitations and contracts at or below the SAT and to the acquisition of commercial items, including COTS items, unless the FAR Council/Administrator for Federal Procurement Policy determine that such exemption from the statute(s) would not be in the best interest of the Government. However, 41 U.S.C. 1905 through 1907 are only applicable to statutory provisions, not Executive Orders.
Executive Orders (E.O.s) 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601,
As stated in E.O. 13693, Federal agencies shall increase their efficiency and improve their environmental performance, including the reduction of greenhouse gas emissions across Federal operations and the Federal supply chain. In keeping with this policy, the objective of the rule is to obtain information from offerors that will assist agencies in developing strategies to reduce supply chain greenhouse emissions.
Specifically, the rule amends the Federal Acquisition Regulation to create a new provision in which offerors that received $7.5 million in contract awards during the previous Federal fiscal year (FY) are required to represent whether or not they publicly disclose their greenhouse gas emissions and their greenhouse gas emissions reduction goal. We anticipate this rule will apply to approximately 2,700 small entities, based on an analysis of FY 2015 Federal Data Procurement Data (FPDS).
There were no significant issues raised by the public comments in response to the initial regulatory flexibility analysis. The reporting requirements for the rule are considered to be minimal, and there is no recordkeeping associated with the disclosure representation. The economic impact of the rule is minimized by the fact that only offerors that received Federal awards in excess of $7.5 million in the previous Federal fiscal year are required to make this representation.
Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.
The Paperwork Reduction Act (44 U.S.C. Chapter 35) applies. The rule contains information collection requirements. OMB has cleared this information collection requirement under OMB Control Number 9000-0194, titled: Public Disclosure of Greenhouse Gas Emissions and Reduction Goals—Representation, in the amount of 1,375 burden hours.
Government procurement.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 1, 4, 23, and 52 as set forth below:
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
(a) * * *
(25) 52.223-22, Public Disclosure of Greenhouse Gas Emissions and Reduction Goals—Representation.
This subpart—
(a) Sets forth policies and procedures for the acquisition of items that—
(1) Contain, use, or are manufactured with ozone-depleting substances; or
(2) Contain or use high global warming potential hydrofluorocarbons; and
(b) Addresses public disclosure of greenhouse gas emissions and reduction goals.
The additions read as follows:
(c) Lead efforts to reduce greenhouse gas emissions at the Federal level in accordance with Executive Order 13693 and the President's Climate Action Plan of June 2013; and
(d) In order to better understand both direct and indirect greenhouse gas emissions that result from Federal activities, require offerors that are registered in the System for Award Management (SAM) database and received $7.5 million or more in Federal contract awards in the prior Federal fiscal year to—
(1) Represent whether they publicly disclose greenhouse gas emissions;
(2) Represent whether they publicly disclose a quantitative greenhouse gas emissions reduction goal; and
(3) Provide the website for any such disclosures.
The revision and addition reads as follows:
(b) The provision at 52.223-22, Public Disclosure of Greenhouse Gas Emissions and Reduction Goals—Representation, is required only when 52.204-7, System for Award Management, is included in the solicitation (see 52.204-8, Annual Representations and Certifications).
The revision and addition reads as follows:
(c)(1) * * *
(xviii) 52.223-22, Public Disclosure of Greenhouse Gas Emissions and Reduction Goals—Representation. This provision applies to solicitations that include the clause at 52.204-7.)
The revision and addition reads as follows:
(t)
(1) This representation shall be completed if the Offeror received $7.5 million or more in contract awards in the prior Federal fiscal year. The representation is optional if the Offeror received less than $7.5 million in Federal contract awards in the prior Federal fiscal year.
(2)
(ii) The Offeror (itself or through its immediate owner or highest-level owner) [ ] does, [ ] does not publicly disclose a quantitative greenhouse gas emissions reduction goal,
(iii) A publicly accessible Web site includes the Offeror's own Web site or a recognized, third-party greenhouse gas emissions reporting program.
(3) If the Offeror checked “does” in paragraphs (t)(2)(i) or (t)(2)(ii) of this provision, respectively, the Offeror shall provide the publicly accessible Web site(s) where greenhouse gas emissions and/or reduction goals are reported:_____.
The revision reads as follows:
As prescribed in 23.804(b), insert the following provision:
(a) This representation shall be completed if the Offeror received $7.5 million or more in Federal contract awards in the prior Federal fiscal year. The representation is optional if the Offeror received less than $7.5 million in Federal contract awards in the prior Federal fiscal year.
(b)
(1) The Offeror (itself or through its immediate owner or highest-level owner) [ ] does, [ ] does not publicly disclose greenhouse gas emissions,
(2) The Offeror (itself or through its immediate owner or highest-level owner) [ ] does, [ ] does not publicly disclose a quantitative greenhouse gas emissions reduction goal,
(3) A publicly accessible Web site includes the Offeror's own Web site or a recognized, third-party greenhouse gas emissions reporting program.
(c) If the Offeror checked “does” in paragraphs (b)(1) or (b)(2) of this provision, respectively, the Offeror shall provide the publicly accessible Web site(s) where greenhouse gas emissions and/or reduction goals are reported:_____.
(End of provision)
Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Final rule.
DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to delete the use of “telegram,” “telegraph,” and related terms. The objective is to delete references to obsolete technologies no longer in use and replace with references to electronic communications. In addition, conforming changes are made regarding expedited notices of termination and change orders.
Ms. Camara Francis, Procurement Analyst, at 202-550-0935 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite FAC 2005-92, FAR Case 2015-035.
DoD, GSA, and NASA published a proposed rule in
This rule is consistent with the Office of Federal Procurement Policy (OFPP) memorandum dated December 4, 2014, on transforming the marketplace, which describes ongoing actions to support the needs of a 21st century Government.
Two public comments were received supporting the changes.
The Councils reviewed the public comments in development of the final rule.
There were no changes made to the rule as a result of the comments received.
Executive Orders (E.O.s) 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). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under Section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
DoD, GSA, and NASA have prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601,
The final rule amends the Federal Acquisition Regulation (FAR) to delete the use of “telegram,” “telegraph,” and related terms. These terms are replaced with an option for electronic communications. The objective is to delete obsolete technologies no longer in use within the context of the FAR requirements. This proposed rule is consistent with the Office of Federal Procurement Policy (OFPP) memorandum dated December 4, 2014, on transforming the marketplace, which describes ongoing actions to support the needs of a 21st century Government.
There were no significant issues raised by the public in response to the Initial Regulatory Flexibility Analysis provided in the proposed rule.
The final rule would apply to all entities, both small and other than small, performing as contractors or subcontractors on U.S. Government contracts. In 2014 there were about 350,000 active registrants in the System for Award Management (SAM). DoD, GSA, and NASA estimate approximately half of the registrants (175,000) are small entities that will receive a contract or subcontract in a given year. In 2014 small entities received 1,398,605 or about 9 percent of all actions in that year per the Federal Procurement Data System (FPDS). However, the small entities are not expected to be affected by this rule, as the only change provided in this rule is a revision of the means of disseminating contract termination documents between the Government and contractors. This change only affects the Government's responsibility for transmitting termination notices.
Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.
The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
Government procurement.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 5, 14, 19, 22, 25, 28, 43, 47, 49, 52, and 53 as follows:
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
(b) Before amending an invitation for bids, the contracting officer shall consider the period of time remaining until bid opening and the need to extend this period.
Bids shall be submitted so that they will be received in the office designated in the invitation for bids not later than the exact time set for opening of bids.
(a) Bids may be modified or withdrawn by any method authorized by the solicitation, if notice is received in the office designated in the solicitation not later than the exact time set for opening of bids. If the solicitation authorizes facsimile bids, bids may be modified or withdrawn via facsimile received at any time before the exact time set for receipt of bids, subject to the conditions specified in the provision prescribed in 14.201-6(v). Modifications received by facsimile shall be sealed in an envelope by a proper official.
(1) The official shall—
(i) Write on the envelope—
(A) The date and time of receipt and by whom; and
(B) The number of invitation for bids; and
(ii) Sign the envelope.
(2) No information contained in the envelope shall be disclosed before the time set for bid opening.
(c) The contracting officer may issue a change order by electronic means without a SF 30 under unusual or urgent circumstances,
(c) If necessary to meet required delivery schedules, the contracting officer may issue instructions by telephone or electronic means. The contracting officer shall confirm telephonic instructions in writing, and confirm electronic instructions if the contracting officer did not receive confirmation of receipt.
(a)
The revision and addition reads as follows:
The contracting officer may provide expedited notice of termination by electronic means that includes a requirement for the contractor to confirm receipt. If the contractor does not confirm receipt promptly, the contracting officer shall resend the notice electronically, and expedite the letter notice described in 49.601-2. If confirmation of the electronic notice is received, and the electronic notice includes all content in 49.601-2, the contracting officer need not send the letter notice described in 49.601-2.
The revisions read as follows:
* * * This notice shall be sent by certified mail, return receipt requested, or electronically, provided evidence of receipt is received by the contracting officer. If no prior electronic notice was issued, or if no confirmation of an electronic notice was received, use the alternate notice that follows this notice.
(b)(1) Bidders shall acknowledge receipt of any amendment to this solicitation—
(i) By signing and returning the amendment;
(ii) By identifying the amendment number and date in space provided for this purpose on the form for submitting a bid;
(iii) By letter;
(iv) By facsimile, if facsimile bids are authorized in the solicitation; or
(v) By email, if email bids are authorized in the solicitation.
(2) The Government must receive the acknowledgement by the time and at the place specified for receipt of bids.
The revision reads as follows:
Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Final rule.
This document makes amendments to the Federal Acquisition Regulation (FAR) in order to make editorial changes.
Ms. Hada Flowers, Regulatory Secretariat Division (MVCB), 1800 F Street NW., 2nd Floor, Washington, DC 20405, 202-501-4755. Please cite FAC 2005-92, Technical Amendments.
In order to update certain elements in 48 CFR parts 2, 7, 19, 34, 42, and 52 this document makes editorial changes to the FAR.
Government procurement.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 7, 19, 34, 42, and 52 as set forth below:
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
(b) * * *
(2) * * *
(a) A contracting officer shall consider a contract award to an EDWOSB concern on a sole source basis (see 6.302-5(b)(7)) before considering small business set-asides (see 19.203 and subpart 19.5) provided none of the exclusions at 19.1504 apply and—
(1) The acquisition is assigned a NAICS code in which SBA has determined that WOSB concerns are underrepresented in Federal procurement;
(2) The contracting officer does not have a reasonable expectation that offers would be received from two or more EDWOSB concerns; and
(3) The conditions in paragraph (c) of this section exist.
(b) A contracting officer shall consider a contract award to a WOSB concern (including EDWOSB concerns) eligible under the WOSB Program on a sole source basis (see 6.302-5(b)(7)) before considering small business set-asides (see 19.203 and subpart 19.5) provided none of the exclusions at 19.1504 apply and—
(1) The acquisition is assigned a NAICS code in which SBA has determined that WOSB concerns are substantially underrepresented in Federal procurement;
(2) The contracting officer does not have a reasonable expectation that offers would be received from two or more WOSB concerns (including EDWOSB concerns); and
(3) The conditions in paragraph (c) of this section exist.
(c)(1) The anticipated award price of the contract, including options, will not exceed—
(i) $6.5 million for a requirement within the NAICS codes for manufacturing; or
(ii) $4 million for a requirement within any other NAICS codes.
(2) The EDWOSB concern or WOSB concern has been determined to be a responsible contractor with respect to performance.
(3) The award can be made at a fair and reasonable price.
(d) The SBA has the right to appeal the contracting officer's decision not to make a sole source award to either an EDWOSB concern or WOSB concern eligible under the WOSB program.
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113.
The revisions read as follows:
The revisions read as follows:
The revision reads as follows:
Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Small Entity Compliance Guide.
This document is issued under the joint authority of DOD, GSA, and NASA. This
November 18, 2016.
For clarification of content, contact the analyst whose name appears in the table below. Please cite FAC 2005-92 and the FAR case number. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755.
Summaries for each FAR rule follow. For the actual revisions and/or amendments made by these rules, refer to the specific item numbers and subjects set forth in the documents following these item summaries. FAC 2005-92 amends the FAR as follows:
This final rule amends the FAR to establish an annual representation requirement to indicate whether or not and where contractors publicly disclose greenhouse gas emissions and greenhouse gas emission reduction goals or targets. This representation is optional for contractors that received less than $7.5 million in contract awards from the Government during the previous Federal fiscal year. The information obtained from these
This rule amends the FAR to delete the use of “telegram,” “telegraph,” and related terms. The objective is to delete reference to obsolete technologies no longer in use and replace with references to electronic communications. In addition, conforming changes are made covering expedited notice of termination and change orders.
The rule is not anticipated to have a significant economic impact on small business entities, as the rule provides recognition of current options for transmitting documents between the Government and contractors. The rule also revises the means of disseminating contract termination documents between the Government and contractors; however, this change only affects the Government's responsibility for transmitting termination notices.
Editorial changes are made at FAR 2.101, 7.105, 19.1506, 34.000, 34.005-2, 34.201, 34.203, 42.709, 52.234-2, 52.234-3, and 52.234-4.
| 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 |